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Data Science for Social Impact 33

3188

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case no: 379/06 In the matter between: ALTHEA LA DON DE GREE First Appellant DJANGO ANTOINE DE GREE Second Appellant and DAVID WILLIAM WEBB First Respondent CAROLINE WEBB Second Respondent ROODEPOORT CHILD AND FAMILY WELFARE SOCIETY Third Respondent CENTRE FOR CHILD LAW Amicus Curiae CORAM: HEHER, PONNAN JJA AND HANCKE, SNYDERS AND THERON AJJA DATE OF HEARING: 9 MAY 2007 DATE OF DELIVERY: 1 JUNE 2007 Summary: Family Law – Child – Inter-country adoption – Application for sole custody and guardianship – Best interests of the minor child to be removed from the country in terms of an adoption effected in the children’s court pursuant to the provisions of the Child Care Act 74 of 1983. Principle of subsidiarity not satisfied. Neutral citation: This case may be cited as De Gree v Webb [2007] SCA 87 (RSA). THERON AJA/ Introduction [1] Mr and Mrs De Gree (the appellants) instituted proceedings in the Johannesburg High Court for an order that sole custody and guardianship of the minor child, Ruth Joy Webb (Ruth), be awarded to them. The appellants also sought ancillary relief to the effect that Ruth be declared to have been abandoned, that the order by the children’s court placing her in the foster care of Mr and Mrs Webb (the first and second respondents) be discharged and that the appellants be authorised to leave South Africa with Ruth with a view to adopting her in the United States of America. The High Court (Goldblatt J) dismissed the application. It is against this order that the appellants appeal, with the leave of the High Court. Factual background [2] Ruth was found abandoned a few days after her birth, head-first in a bucket, under a tree in a veld in the Roodepoort area on 14 November 2004. She was taken to the premises of the Roodepoort Child and Family Welfare Society (the third respondent) and on 16 November 2004 the third respondent applied for and was granted an order by the Commissioner of Child Welfare (‘the Commissioner’) for Ruth to be placed in the care of the first and second respondents. The first and second respondents, American citizens, now resident in South Africa, have established and administer ‘Baby Haven’, a home for abandoned babies, in Gauteng. Ruth has been in their care since 17 November 2004, and in terms of an order by the Commissioner granted on 11 January 2005, they were appointed her foster parents. To date, neither Ruth’s parents nor family have been traced. [3] During 2005, the appellants, also American citizens, visited the first and second respondents, with whom they shared a long-standing friendship, in South Africa. It was then that the appellants met Ruth. They became extremely fond of her and took steps towards adopting her. To that end, they thereafter met with Ms Deborah Wybrow, their South African attorney, and Ms Karen Law, their American attorney, to discuss their desire to adopt Ruth. The appellants’ suitability as adoptive parents is not in dispute. It is apparent from the evidence that they are fit and proper persons to adopt and that they are possessed of sufficient means to adequately maintain and educate Ruth. As stated by Goldblatt J they are ‘caring and decent persons who for purely altruistic purposes’ wish to adopt Ruth. Issue [4] It is trite that the high court, as upper guardian of all minors, has inherent jurisdiction to grant a custody and guardianship order in respect of a minor child. It is common cause that the children’s court has sole jurisdiction to grant an adoption order. The grant of the order sought by the appellants would result in the sanction, by this court, of an alternative route of an inter-country adoption, under the guise of a custody and guardianship application. In my view, the issue is whether it is in Ruth’s best interests to grant the order sought or to require that an application for her adoption be made in the children’s court. Proceedings in the High Court [5] All three respondents supported the appellants’ application. Goldblatt J was concerned about the unusual order sought and appointed an amicus curiae to assist the court on, inter alia, South Africa’s obligations in terms of the Hague Convention on the Protection of Children and Co-operation in Respect of Inter- country Adoption 1993 (‘the Hague Convention’) and developments in South Africa regarding inter-country adoption since the Constitutional Court decision in Minister of Welfare and Population Development v Fitzpatrick.1 [6] The amicus curiae considered it necessary to obtain affidavits from persons familiar with the policy and practice of inter-country adoption and in response filed heads of argument together with affidavits deposed to by Ms Pamela Wilson, a 1 2000 (3) SA 422 (CC); 2000 (7) BCLR 713 (CC). In Fitzpatrick the Constitutional Court declared s 18(4) of the Child Care Act 74 of 1983, which expressly prohibited adoption of South African children by non-South Africans, unconstitutional. No inter-country adoption had taken place prior to this decision. registered social worker in the employ of the Johannesburg Child Welfare Society and Dr Maria Mabetoa, the Chief Director: Children, Youth and Family in the National Department of Social Welfare (‘the Department’). Wilson states that she has been part of the adoption team at Johannesburg Child Welfare for the past 23 years and has been involved in inter-country adoption since 2001. According to Wilson, the adoption team has, since June 2001, placed 98 children in inter-country adoptions, three of which were to the United States of America. They have finalised adoptions, in the children’s court, to Hague Convention countries as well as countries which are not signatories to the Convention. [7] Dr Mabetoa explained that one of the principles underpinning the Department’s inter-country adoption policy is that a child should be adopted within South Africa and inter-country adoption should only be considered as an alternative when a satisfactory solution cannot be found within South Africa. Dr Mabetoa gave the following overview of the current inter-country adoption policy: ‘A profile on every child that cannot be placed locally, including the efforts undertaken to place the child, must be submitted to the Department …. Only after the Department has agreed in writing, [can an] inter-country adoption … be considered. The Department … reports relevant cases to the national missing person register of the South African Police Service to ensure that a child considered for an inter-country adoption is not a missing child. The inter-country adoptions are done via the Children’s Court and according to provisions prescribed in Chapter 4 of the current Act. The rules as prescribed in the [Hague] Convention are followed as [the] Central Authorities in [both] the countries agree to the adoption.’ [8] The judge a quo found that it was not for the high court to decide what is in Ruth’s best interests – that should be done by the children’s court in accordance with the provisions of the Child Care Act 74 of 1983 (‘the Child Care Act’). He stated that the high court should not be placed in the position of having to fulfill the functions of a Commissioner who is better trained and more experienced in these matters than high court judges. The learned judge considered that he was bound by the dicta in Fitzpatrick that the children’s courts ‘are the sole authority empowered to grant orders of adoption’. Central to the court’s finding, is the following passage by Goldstone J in Fitzpatrick: ‘[In terms of the Act] the children’s courts … are charged with overseeing the well-being of children, examining the qualifications of applicants for adoption and granting adoption orders. The provisions of the Act creating children’s courts and establishing overall guidelines advancing the welfare of the child offer a coherent policy of child and family welfare. If appropriately and conscientiously applied by children’s courts the main provisions of the Act would meet the most serious of the concerns of the Minister and the amicus curiae. [The Minister and the amicus curiae were concerned that if inter-country adoption was to be allowed with immediate effect, three specific problems could result: (a) the inability of the Department to facilitate thorough background investigations of non-citizens; (b) insufficient legislative protection against child trafficking; and (c) inadequate provision to give effect to the principle of subsidiarity.] The provisions of section 24 of the Act are designed to deter the practice of child trafficking, making the exchange of consideration in an adoption a criminal offence. Until the safeguards and standards envisaged by the Minister are introduced, children’s courts are able to prevent the feared abuses in the cases of citizens and non-citizens alike.’2 Adoption in South Africa [9] The Act which governs adoption in South Africa is the Child Care Act. The Act establishes children’s courts, presided over by Commissioners (magistrates and assistant magistrates), which are empowered to deal with adoptions. In terms of this legislation, adoption falls under the exclusive jurisdiction of the children’s court.3 Section 18(1)(b) provides that no adoption order may be made before the consideration of a prescribed report from a social worker. In considering an adoption application the children’s court must take into account the religious and cultural background of the child as well as that of the prospective parents.4 In terms of section 18(4) a children’s court may not grant an adoption order unless it is 2 Para 31. 3 Section 18(1)(a)reads: ‘The adoption of a child shall be effected by an order of the children’s court of the district in which the child concerned resides.’ 4 Section 18(3) read with s 40. satisfied that: (a) the applicant(s) are qualified to adopt in terms of s 17 and possess adequate means to maintain and educate the child; (b) the applicant(s) are of good repute and fit and proper persons to be entrusted with the custody of the child; (c) the adoption will serve the interests and be conducive to the welfare of the child; (d) the necessary consent to the adoption, where applicable, has been given or if the child is in foster care, the foster parent has indicated in writing that he or she does not wish to adopt the child. [10] It was only after the decision in Fitzpatrick that it became necessary to provide a legal framework, consistent with international law, to adequately regulate inter-country adoption. This has led to the promulgation of the Children’s Act 38 of 2005 (‘the Children’s Act’). It is anticipated that this Act will come into operation during 2008. Although the Children’s Act is not yet in operation, it is relevant as a statement of government’s policy approach to inter-country adoption. When the Children’s Act comes into operation, the Guardianship Act 192 of 1993 will be repealed and applications for guardianship will be governed by s 24 of the Children’s Act which provides that such applications may be made to the high court. However, s 25 limits the application of s 24 to South African citizens and provides that a guardianship application by non-South African citizens must be regarded as an inter-country adoption. Section 261 regulates the position regarding inter-country adoption. In terms of this section a foreigner resident in a Hague Convention country who wishes to adopt a South African child must first apply to the central authority of that country, which authority is tasked with submitting a report to the South African central authority. The Act appoints the Director- General of the Department as the central authority5 and no inter-country adoption may take place without the Director-General’s approval. The Director-General is obliged to maintain a register for the purposes of keeping a record of adoptable children and of fit and proper adoptive parents.6 If the central authorities of both 5 Section 257(1). 6 Section 232(1). countries agree, then the application is processed by the children’s court. In terms of s 273 no person may process or facilitate an inter-country adoption otherwise than in terms of the Children’s Act. International Legal Framework for Inter-country Adoption [11] South Africa acceded to the Hague Convention on 21 August 2003. One of the objectives of the Hague Convention is to establish safeguards to ensure that inter-country adoption takes place in the best interests of the child and with respect for the child’s fundamental rights as recognised in international law.7 However, in terms of s 231 of the Constitution, an international treaty shall not have effect until enacted into domestic legislation. The Children’s Act provides for the enactment of the Hague Convention and will bring the latter into operation when the Act itself becomes operational. Despite the fact that the Hague Convention has not yet been enacted into domestic legislation, its provisions cannot be disregarded. The fundamental principles which underlie the Hague Convention are drawn from the United Nations Convention on the Rights of the Child (‘the UNCRC’), particularly Article 21, which South Africa has ratified. [12] South Africa ratified the UNCRC in 1995 and the African Charter on the Rights and Welfare of the Child (‘the African Charter’) in 2000. Article 21 of the UNCRC provides important protections for children.8 In accordance with the 7The objects of the Hague Convention as encapsulated in Article 1 are: ‘(a) to establish safeguards to ensure that intercountry adoptions take place in the best interests of the child and with respect for his or her fundamental rights as recognized in international law; (b) to establish a system of co-operation amongst Contracting States to ensure that those safeguards are respected and thereby prevent the abduction, the sale of, or traffic in children; (c) to secure the recognition in Contracting States of adoptions made in accordance with the Convention.’ 8 Article 21 provides as follows: ‘States Parties that recognize and/or permit the system of adoption shall ensure that the best interests of the child shall be the paramount consideration and they shall: (a) Ensure that the adoption of a child is authorized only by competent authorities who determine, in accordance with applicable law and procedures and on the basis of all pertinent and reliable information, that the adoption is permissible in view of the child's status concerning parents, relatives and legal guardians and that, if required, the principle of subsidiarity, Article 21 provides that inter-country adoption may be considered as an alternative means of child-care, if the child cannot suitably be cared for in terms of domestic measures. Subsidiarity requires that priority be given to placing the child with his or her family of origin and that domestic measures be given preference over inter-country adoption.9 Despite the fact that the principle of subsidiarity has not been expressly provided for in domestic legislation, our courts are obliged, in terms of s 39(1)(b) of the Constitution to take this into account when assessing the best interests of the child, as it is a well established principle of international law.10 The principle of subsidiarity is also enshrined in Article 24(b) of the African Charter, but in somewhat stronger terms; inter-country adoption should only be considered as ‘the last resort’.11 Adoption vis-a-vis Custody and Guardianship12 [13] Counsel for the appellants contended that the same legal consequences flow from a custody and guardianship order as an adoption. For the reasons that follow, I do not agree with that contention. An order of adoption is permanent and the status of the child in relation to his or her adoptive parents is clear. An adopted persons concerned have given their informed consent to the adoption on the basis of such counselling as may be necessary; (b) Recognize that inter-country adoption may be considered as an alternative means of child's care, if the child cannot be placed in a foster or an adoptive family or cannot in any suitable manner be cared for in the child's country of origin; (c) Ensure that the child concerned by inter-country adoption enjoys safeguards and standards equivalent to those existing in the case of national adoption; (d) Take all appropriate measures to ensure that, in inter-country adoption, the placement does not result in improper financial gain for those involved in it; (e) Promote, where appropriate, the objectives of the present article by concluding bilateral or multilateral arrangements or agreements, and endeavour, within this framework, to ensure that the placement of the child in another country is carried out by competent authorities or organs.’ 9Fact Sheet No 36 on Intercountry Adoptions, International Social Service General Secretariat, International Reference Centre for the Rights of Children Deprived of their Family, available http://www.iss-ssi.org/ Resource_Centre/New_Documents/documents/FactSheetNo36ENG.pdf. 10 Minister for Welfare and Population Development v Fitzpatrick 2000 (3) SA 422 (CC); 2000 (7) BCLR 713 (CC) para 32 fn 33. Goldstone J, in para 32 states that one of the concerns ‘that underlie the principle of subsidiarity are met by the requirement in s 40 of the [Child Care] Act that courts are to take into consideration the religious and cultural background of the child, on the one hand, and the adoptive parents, on the other’. In terms of s 39(1)(b) a court is obliged, when interpreting the Bill of Rights, to consider international law. 11 Article 24 reads, in relevant part: ‘States Parties which recognize the system of adoption shall ensure that the best interest of the child shall be the paramount consideration and they shall: (a) … (b) recognize that inter-country adoption in those States who have ratified or adhered to the International Convention on the Rights of the Child or this Charter, may, as the last resort, be considered as an alternative means of a child’s care, if the child cannot be placed in a foster or an adoptive family or cannot in any suitable manner be cared for in the child’s country of origin’. 12 See generally Van Heerden, Cockrell, Keightley, Boberg’s Law of Persons and the Family 2 Ed (1999) 450-452. child is deemed in law to be the legitimate child of the adoptive parents.13 If a child is taken out of the country on the basis of a custody and guardianship order there is a risk that the adoption order in the receiving country may not be granted. There arises a mutual claim for support between the child and the adoptive parents, which also extends to adoptive relations such as grandparents and siblings. Adoption terminates all rights and obligations existing between the child and the pre-adoptive parents and their relatives. A child who has been placed in the custody and under the guardianship of ‘parents’ will not inherit unless specifically named in their will. On the other hand, adoption creates rights of intestate succession between the child and the adoptive parents, which rights extend to the adoptive relatives.14 The child’s biological parents can withdraw consent to the adoption and apply for rescission within the time frames set by the Child Care Act. The biological parents of the child are completely excluded from the adoption process if that process happens in another country. It is acknowledged that there is no apparent prejudice on this score as Ruth has been abandoned. It is however not inconceivable that Ruth’s biological parents may, in the future, make enquiries as to her whereabouts. But the best interests standard applied by the high court is not without limitation. Although, in this matter, the best interests of Ruth are of paramount importance, this court is enjoined, in terms of s 28(2) of the Constitution, which creates a right for all the country’s children, to consider the rights of children generally and the effect which an order of this court may have on other children.15 When an adoption is concluded in South Africa, it must by law be registered with the registrar of adoptions, which allows, inter alia, for the child to trace the details surrounding his or her adoption at a later stage. [14] An important feature of the case is this. According to the immigration information furnished by the appellants’ American attorney, Ruth’s status in 13 Section 29(2) of the Children’s Act 33 of 1960. 14 Sections 1(4)(e) and (5) of the Intestate Succession Act 81 of 1987. 15 Section 28(2) reads: ‘A child’s best interests are of paramount importance in every matter concerning the child.’ See also Sonderup v Tondelli 2001 (1) SA 1171 (CC); 2001 (2) BCLR 152 (CC) paras 28-32. America will be more secure if she was to be adopted by the appellants as opposed to being taken out of South Africa in terms of a custody and guardianship order. Law states that if the appellants were to be granted an adoption order by a South African court, Ruth would, upon entry into the United States of America, automatically be granted American citizenship. In the event that Ruth enters the Unites States under a custody and guardianship order, she will receive lawful permanent residence status which is not a secure status. Law explains: ‘The lawful permanent resident must renew their status periodically. If the lawful permanent resident violates U.S. law, for example, by not renewing his or her status, he or she can be deported. Accordingly, if the status of Ruth is not renewed, she could be deported, and at the renewal stage, the authorities would enquire into the adoption and progress being made to regulate her stay in the United States of America. For this reason, it is critical for lawful permanent residents to secure citizenship as soon as possible.’16 The following evidence of the appellants’ local attorney, confirms Ruth’s precarious status under a custody and guardianship order: ‘I have also, since the inception of this particular matter, been advised by the United States Consulate that it may have difficulty with an order of sole guardianship and sole custody, notwithstanding that similarly worded orders have been the basis upon which visas have been granted in all of our previous applications.’ Wybrow goes on to request that the court, in the exercise of its jurisdiction as upper guardian, ‘grant an adoption’ of Ruth in favour of the appellants. This is, in my view, an acceptance that Ruth will enjoy safeguards under an adoption order, which are not available to her in terms of a custody and guardianship order. [15] The problem with granting a custody and guardianship order with a view to concluding an adoption in a foreign country is that such an approach circumvents local adoption law and falls short of the standards and safeguards provided by such law. This is contrary to the principles of the UNCRC and the African Charter 16 Law states that she and the appellants’ local attorney had previously worked together in connection with the adoption of two South African orphans by an American family. The family were awarded an order for custody and guardianship of the children in December 2004. It is noted that almost a year later, when Law deposed to her affidavit, the adoption of the children had not yet been finalised. which requires that the child concerned enjoys standards and safeguards equivalent to those existing in the case of national adoption.17 These standards and safeguards should apply both to procedures before an adoption order is made and to the status of the child following the grant of such an order.18 South Africans wishing to adopt a child would be required to make application to the children’s court. There is no good reason why an alternate route, via the high court, should be available to foreigners, particularly when there are policies and procedures in place, in the children’s court, to deal with inter-country adoption. Best interests of the child [16] It was submitted, on behalf of the appellants, that the high court, as upper guardian of all minors, has inherent jurisdiction to grant an order for custody and guardianship upon a consideration of the best interests of a minor child and it is in fact ideally suited to consider the permanent placement of minor children.19 It was further contended that the inherent jurisdiction of the high court allows for flexibility in the determination of the best interests of the child, in accordance with the provisions of s 28(1)(b) of the Constitution,20 whereas the children’s court, as a creature of statute, is bound by the statutory limitations imposed upon it. In this regard reliance was placed on the statement by Goldstone J in Fitzpatrick that ‘it is necessary that the [best interests] standard should be flexible as individual circumstances will determine which factors secure the best interests of a particular child’.21 Counsel for the appellants also argued that if this court were to refuse the application it would be placing the interests of the child secondary to departmental policies and procedures. 17 Articles 21(c) and 24(c) of the UNCRC and the African Charter, respectively. 18 Professor Dr. William Duncan, Fundamental Principles of the Hague Convention of 29 May 1993 on Protection of Children and Co-operation in Respect of Intercountry Adoption, a paper delivered at The Hague Forum for Judicial Expertise, in The Hague, Netherlands, 3-6 September 2006. 19 The concept ‘permanent placement’ is not defined in South Africa law. The only form of placement (with non- biological parents) that may be described as ‘permanent’ is adoption. At the hearing counsel for the appellants accepted that permanent placement, in the context of this matter, meant adoption. 20 Section 28(1)(b) provides that every child has the right ‘to family care or parental care, or to appropriate alternative care when removed from the family environment’. 21 Para 18. [17] This reasoning is flawed and I am unable to agree with it. Both the amicus curiae and the Department cautioned against the grant of the order sought on the basis that it would sanction an inter-country adoption, without the necessary safeguards and protections intended for the benefit of the child, in accordance with domestic and international law. The fundamental principle which underlies the relevant international treaties is the best interests of the child. Article 3 (1) of the UNCRC gives content to the best interests requirement as follows: ‘In all actions concerning children, whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.’22 Furthermore, Article 21 of the UNCRC requires States to ensure that the best interests of the child is the paramount consideration in adoption.23 Similarly, the best interests standard is foundational to the objects of the Hague Convention.24 These international instruments seek to protect the best interests of the child by ensuring, inter alia, that inter-country adoptions take place in the best interests of the child, that they are conducted in a responsible and protective manner with the aim of eliminating the various abuses which have been associated with inter- country adoptions. I am of the view that it is in the best interests of children generally that inter-country adoptions be effected in accordance with the principles of these international instruments. [18] The appellants sought, in reply, to make out a case that they had approached the high court for relief on the basis that they were precluded from approaching the children’s court by reason of the Department’s policy not to countenance inter- country adoptions to the United States. In support thereof, the appellants rely on a statement made by an official from the Department, Ms Rose Msini, that: ‘[The Department’s] concern lies with the need of our children to be placed inside the country as far as possible before considering inter-country adoptions, and to ensure that all avenues to 22 The African Charter contains a similar provision, Article 4(1), which reads: ‘In all actions concerning the child undertaken by any person or authority the best interests of the child shall be the primary consideration.’ 23 Above fn 8. 24 Artice 1. Above fn 7. recruit adoptive parents locally are explored. Since we do not have any working agreement with the United States of America, we do not think it will be possible to look at the possibility of inter- country adoption.’(Emphasis added.) The appellants also rely on the statement made to their attorney by Ms Raath, a Commissioner attached to the Johannesburg children's court, on 24 January 2006 (which date is after the launch of this application) that ‘a policy decision had been taken not to allow inter-country adoptions to the United States of America’. As I have already mentioned that is a new case sought to be made out in reply. [19] The first appellant, in her founding affidavit, states that they approached the high court because they were advised by their legal representatives that pending the finalisation of the Children’s Act and the consequent enactment of the Hague Convention, there were no: ‘regulations in place to govern intercountry adoptions. I have therefore been advised by my attorneys that, pending the finalization of the abovementioned legislation and the formal enactment of the Hague Convention, permanent placements are best dealt with by the High Court in its capacity as upper guardian of all minor children. We have been advised that, as upper guardian of all minors, the High Court has, with due regard to the best interests of the minor child, inherent jurisdiction to grant an application for full custody and full guardianship. We have furthermore been advised, in light of the circumstances of this matter, that the appropriate forum would be the High Court, hence this application to the High Court.’ In light of the evidence of Wilson and Dr Mabetoa setting out the current inter- country adoption policy, it is clear that the appellants were incorrectly advised that there were no ‘regulations’ in place to govern such adoptions. It is apparent from this passage that the appellants, on advice, took a conscious decision to approach the high court on the basis of the inherent jurisdiction of that court. It is implied from the passage that the appellants were of the view that the high court was better suited than the children’s court, to properly deal with this matter. This sits ill with their later assertions that having regard to the attitude of the Department, they believed that they could not approach the children’s court. [20] I am not persuaded, on the evidence, that the Department has adopted a policy not to approve inter-country adoptions to the United States. According to Wilson, she has, since 2001, been personally involved in three inter-country adoptions involving American applicants. Dr Mabetoa also confirms that inter- country adoptions to non-contracting states can take place provided they occur within the appropriate framework and with the necessary safeguards. In any event, even if it is accepted, for purposes of this argument, that the Department’s policy was not to allow inter-country adoption to the United States, that does not, in my view, justify the appellants approaching the high court for relief and in the process circumventing the adoption procedure provided for in the Child Care Act. The appellants’ first port of call should have been the children’s court, and if necessary, they could, thereafter, have taken the matter on review or appeal to the high court. [21] Wybrow stated in her affidavit: ‘The position of the Applicants is that the question of legal costs has become a matter of great concern to them and it may prove impossible to secure representation for any future appearances.’ (My emphasis.) By no stretch of the imagination can that be construed as suggesting that the appellants’ financial resources were at an end. Wybrow has continued to act for the appellants and senior counsel appeared on their behalf in this court. It would appear that since the deposition of Wybrow’s affidavit on 27 February 2006, the appellants have secured funding for ‘future appearances’. Even if their financial resources have since been depleted, that would be an entirely irrelevant consideration in the determination of the appeal. Litigation in the high court is undoubtedly expensive. Appeals to this court, more so. The absence of financial resources can hardly tip the scales in favour of a particular litigant. In any event, an adoption application in the children’s court is inexpensive and can be instituted without the use of legal practitioners and private adoption agencies. In fact, the adoption mechanism in the children’s court is aimed at cost-effectiveness and minimising the role of legal practitioners and private adoption agencies. Principle of Subsidiarity [22] To ensure compliance with the principle of subsidiarity as expressed in Article 21 of the UNCRC it must be established that the child cannot be cared for through foster care or adoption or other suitable care in his or her country of origin.25 The appellants allege that during the time Ruth has been in the care of the first and second respondents, no other potential parents had expressed an interest in having Ruth placed with them. It is also alleged that the third respondent has been unable to secure any prospective parents for Ruth. In support of this allegation the appellants rely on the statement in Hanekom’s report that: ‘On 23rd of August 2005, the social worker [in the employ of the third respondent who was responsible for supervising the care of Ruth by the first and second respondents] informed me that the baby will possibly go overseas, and she agreed to it if it is in the child’s best interest.’ (Emphasis added.) That hearsay statement by Hanekom contemplates as early as August 2005 when Ruth was but nine months old, the possibility of her adoption by foreigners. Moreover, it represents the high water mark of the appellants’ case insofar as satisfaction of the principle of subsidiarity is concerned. That, on any reckoning, falls far short of what would ordinarily be required of a prospective adoptive parent in a matter of this kind. And for this reason alone, if nothing else, the appellants had to fail. Ruth’s voice has not been heard in this application. The third respondent, who ought to have represented Ruth’s best interests, has failed to do so. It must be borne in mind that the amicus curiae was appointed to assist the court below on, inter alia, developments in South Africa regarding inter-country adoption, and not to represent Ruth. 25Minister for Welfare and Population Development v Fitzpatrick 2000 (3) SA 422 (CC); 2000 (7) BCLR 713 (CC) para 23 fn 13. [23] It was common cause that the responsibility to have investigated whether there was suitable care available for Ruth in South Africa rested with the third respondent. The third respondent has not indicated what steps, if any, it took to secure suitable local care for Ruth. It would appear that the third respondent had aligned itself with the appellants and had failed to approach the matter on the basis that adoption should be child-suited and not parent-suited. This is precisely one of the practical objectives of the Hague Convention – to ensure that the inter-country adoption process becomes ‘less that of finding a suitable child for a [family] and more that of finding a suitable family for a child’.26 This case is a classic illustration of the need and importance for an ‘independent’ social worker as envisaged by the Department in its current inter-country adoption framework; a social worker who does not deal directly with the prospective adoptive parents. [24] Counsel for the appellants contended that there was nothing more that the appellants could have done in order to satisfy the court that no suitable care was available locally for Ruth. I am not persuaded that that is so. It is trite that it is the appellants, as the parties seeking relief, who must satisfy the court that they are entitled to the relief sought. The Constitutional Court in Fitzpatrick cautioned that, until the new child care legislation is in operation and infrastructure and international agreements are put in place, prospective adoptive applicants: ‘will have a greater burden in meeting the requirements of the [Child Care] Act than they will have thereafter. They will have to rely on their own efforts and resources in placing all relevant information before the children’s court.’27 (Emphasis added.) In my view the appellants have not discharged the ‘burden’ resting on them. The evidence of Hanekom, based on the hearsay evidence of a social worker clearly weighted in favour of the appellants who had omitted to properly investigate the possibility of suitable local care, is, in my view, insufficient to establish that the principle of subsidiarity has been complied with as to justify the removal of Ruth to 26 Professor Dr. Duncan, Fundamental Principles of the Hague Convention of 29 May 1993 on Protection of Children and Co-operation in Respect of Intercountry Adoption, supra. 27 2000 (3) SA 422 (CC); 2000 (7) BCLR 713 (CC) para 34. the United States. The children’s court, in considering an application for adoption, is obliged to refuse such application where all the relevant information has not been placed before the court.28 It is thus, in my view, simply wrong to approach the matter on the basis of a prima facie case. To talk of a rebuttal of a prima facie case, is, with respect, to ignore the provisions of s 18(4) of the Child Care Act.29 [25] There is evidence from Wilson as to the availability of prospective local adoptive parents, including black South Africans, eager to adopt female children from birth to five years of age. It has been suggested that the Department has admitted that there are no procedures to identify prospective adoptive parents. There is no evidence to support such a suggestion. It would appear that there is a flaw in the present system of matching children available for adoption with prospective parents. Prospective parents who are waiting to adopt a child can be ‘bypassed’ by a system that allows some prospective parents to approach the high court and in this way ‘jump the queue’. The bond that has been established between the appellants and Ruth should not come into the reckoning at all. That is precisely the kind of practice that the Hague Convention eschews. The development of a bond with a child by prospective adoptive parents, without following the appropriate channels and getting onto the appropriate waiting lists results in the kind of queue-jumping witnessed here. The Children’s Act will address this problem as it will establish a central register both of children available for adoption and prospective parents. There is not a shred of evidence that anyone made enquiries about the availability of prospective adoptive parents for Ruth. As I have already indicated, the third respondent, whose function it was to do, aligned themselves with this application from the outset. Application to lead further evidence 28 Section 18 of the Child Care Act. Minister of Welfare and Population Development v Fitzpatrick 2000 (3) SA 422 (CC); 2000 (7) BCLR 713 (CC) para 33. 29 Above para 9. [26] The evidence sought to be introduced is to the effect that Ruth has remained in the care of the first and second respondents since the application was heard by the High Court and that no person has shown an interest in adopting or fostering her. In my judgment, that evidence does not take the matter any further. The appellants launched this application on 14 October 2005. The High Court handed down judgment on 21 April 2006 and shortly thereafter, on 12 May 2006, the appellants applied for leave to appeal to this court, which leave was granted on 14 June 2006. In these circumstances it would have been foolhardy to attempt to secure other prospective adoptive parents for Ruth while the matter was sub judice. The matter has in fact been sub judice for almost two years. Conclusion [27] It may indeed be in Ruth’s best interests to be adopted by the appellants. But the process the appellants have chosen is fraught with difficulties. In my view it is not in Ruth’s best interests that she be removed from the country in terms of a custody and guardianship order, without the protection and safeguards of an adoption first effected in the children’s court. This court, as well as the high court, should not sanction an adoption procedure which is in conflict with international treaties which South Africa has ratified and which are designed to safeguard the best interests of the child. The appellants are not without a remedy. It is still open to them to approach the children’s court for relief – a remedy which is by far more cost effective than the route they have chosen. [28] For these reasons, the appeal is dismissed. Snyders AJA concurred. L V Theron Acting Judge of Appeal HEHER JA: [29] I have read the judgment of Theron AJA. I respectfully disagree with her conclusion. In my assessment the best interests of the child Ruth were overwhelmingly favoured by the grant of the application. Introduction [30] Goldblatt J said in the court a quo: ‘Whilst prima facie it appears that if the child is in due course adopted by the applicants she will have a secure and nurturing home and accordingly it was strenuously argued by the applicants that I in my capacity as upper guardian of the child should grant the orders in that this would be in the best interest of the child, as will appear more fully hereunder I am of the view that it is not for this court to decide what is in the best interest of the child and that this should be done in accordance with the procedures set out in terms of the Child Care Act 74 of 1983.’ [31] In my view that manifests a fundamentally flawed approach. Section 28 of the Constitution (to which I shall return later) provides: ‘(2) A child’s best interests are of paramount importance in every matter concerning the child.’ [32] The first task of the learned judge was to determine whether the High Court possessed jurisdiction to try the merits of the application. If it did, he was bound to consider and evaluate all relevant facts placed before him with a view to deciding the issue which was of paramount importance. [33] That process did not exclude the possibility that the best interests of the child might lie in the ultimate decision of another court which for appropriate reasons of law and fact was competent to decide the matter. But that is a conclusion which could only be arrived at as a result of balancing all the relevant aspects affecting the child’s interest, including the public interest and the interest of the applicants in so far as such matters bore on the interest of the child. Similarly, while the interests of children generally are important they are only so to the extent that the child in this case will benefit or be adversely affected by the furtherance or limitation of those interests because this matter concerns the child Ruth and no other. The peculiar facts of this case cannot be determinative or even persuasive of the rights of any other child whose interests are not the same. [34] The learned judge’s approach limited him to legal and policy considerations. The result was, as I shall attempt to demonstrate, an unsatisfactory triumph of form over substance. Jurisdiction [35] The applicants sought an order of sole custody and sole guardianship. That was not a disguised attempt at circumventing the adoption laws. They made it clear that they intended to apply for an adoption order in the United States in due course and they presented their case with a view to showing that the ultimate objective was attainable in fact and law. [36] The high court, as the upper guardian of minors, is empowered and under a duty to enquire into all matters concerning the interest of children. It may make orders for custody and guardianship and does so on a daily basis. The children’s court, a creature of statue, is expressly empowered to make orders for adoption. One may infer from the detail in which the exercise of its powers are circumscribed in the Child Care Act that the legislature intended it to exercise the power of adoption to the exclusion of a high court. However no powers to make orders for sole custody or guardianship are expressly included in its enabling legislation nor, I think, are to be implied. A high court and the children’s court are equally open to persons who are not South African citizens. [37] In the circumstances the High Court was, as to jurisdiction, competent to hear the application. I should note that such competence does not appear to have been disputed in the court a quo and was conceded in this Court. The relevance of adoption procedures to the application [38] I wish to make it clear at the outset that a determination of what is in the best interests of a child who is the subject of an application like the present one required the High Court to ensure that the fullest protection is afforded to the child. Any order which it might ultimately make must needs have been preceded by an investigation which satisfied the court that no reasonable inquiry remained unanswered. The applicants sought an order which would enable them to control the future of the child beyond the protection of South African law. These considerations persuade me that, although the applicants did not seek an order for adoption, the case which they presented should nevertheless have been measured against the standards which they would have been obliged to meet if they had done so. If the application falls materially short of those standards the High Court would have failed in its duty to the child if it granted the application and the appeal cannot succeed. The balance of this judgment is premised on the need to test the application accordingly. Factors relevant to the operation of s 28(2) in the application i) Factors personal to the child At the time of the application Ruth Joy Webb was almost eighteen months old. She has now reached two and a half years. Her parents are unknown and cannot be traced. One cannot exclude the possibility that at some future time the mother may come forward and establish her kinship but that seems unlikely. Ruth is of African origin. She has, since her first week in this world, been cared for by foster parents, the first and second respondents, who are American citizens living in South Africa. They are reaching the stage where, because of multiplying responsibilities, they will be obliged to place her in an orphanage or similar institution unless she is first adopted. The evidence establishes that as a child grows towards the age of five the prospects of adoption diminish. Until the launching of the application no prospective adoptive parent had shown an interest in Ruth. At the hearing of the appeal counsel for the applicants moved to have additional evidence placed before the court by affidavit of the foster father, David Webb, deposed to on 5 December 2006, the essential allegations of which are the following: ‘3. Ruth was placed in the care of the Second Respondent and me on 17 November 2004. To date, no one other than the First and Second Appellants has ever expressed any interest whatsoever in making Ruth a permanent part of his or her life. 4. In particular, no one other than the First and Second Appellants has visited Ruth whilst she has been in our care with a view to adopting her, fostering her in our place and stead, or hosting her for weekends or for any part of each week. 5. In contrast, the First and Second Appellants have been in frequent telephonic and email communication with the Second Respondent and myself, with a view to enquiring about the progress being made by Ruth and to keep themselves appraised of her development and well-being. 6. The Second Appellant even returned to Johannesburg in July 2006, accompanied by his eldest son, Django De Gree Junior, to spend time with Ruth and introduce her to his son. 7. Although several of the other children in the care of Second Respondent and myself have been adopted during the time Ruth has been living with us, Ruth remains in the foster care of the Second Respondent and myself as she has done since 17 November 2004. 8. The Second Respondent and I had agreed to foster Ruth temporarily until a permanent family could be found for her. We are not seeking to adopt Ruth, nor is it our intention to have her live with us permanently. 9. Ruth is now over two years of age. In my opinion, she will languish, in an institution if a permanent family is not found for her: she requires parental care, even if that is in another country.’ [39] The admission of the affidavit was not seriously opposed. Its content is clearly relevant and material. The best interests of a minor child are dynamic not static. In my opinion the affidavit contains information essential to a just and sufficient determination of those interests and should be admitted. Counsel for the amicus curiae, the Centre for Child Law, submitted that it must carry little weight since the application and the pending appeal would probably have discouraged interest in the child. That is an inference which in my view does not reach a level of probability. In any event the future prospects of the child must be judged by what has happened and what is probable in the future and not by what may have happened in different circumstances. [40] What is clear is that Ruth has a need for and a right to family or parental care (s 28(1)(b) of the Constitution). Her prospects of satisfying either the need or the right are bleak and diminishing as the months pass. ii) Factors personal to the applicants [41] I consider it unnecessary to enter upon detail in this regard. The applicants’ case is entirely unquestioned. Their own evidence of a stable, happy and secure family life in reasonably affluent circumstances and an attractive environment is supported by affidavits from persons who know them and by the report of the Virginian adoption agency, Autumn Adoptions Inc, which carried out a comprehensive investigation. Every personal circumstance seems to favour the applicants as future adoptive parents for the child. One is bound to conclude that the future which they offer her is a glowing one which would be difficult to match at a level of material, emotional and spiritual concerns even in the Republic of South Africa. iii) Matters of public interest [42] Goldblatt J quoted the views of the amicus curiae in extenso with approval and a minimum of comment. I think it necessary to examine them in closer detail. South Africa’s international treaty obligations [43] The amicus submitted that the grant of the order would be in conflict with or at least circumvent such obligations. [44] Relevant to this aspect are ss 39(1), 231(2) and (4) and 233 of the Constitution. The correct approach is that formulated by the Constitutional Court in S v Makwanyane 1995 (3) SA 391 (CC) at 413-4: ‘[35] Customary international law and the ratification and accession to international agreements is dealt with in s 231 of the Constitution, which sets the requirements for such law to be binding within South Africa. In the context of s 35(1), public international law would include non- binding as well as binding law. They may both be used under the section as tools of interpretation. International agreements and customary international law accordingly provide a framework within which chap 3 can be evaluated and understood, and for that purpose, decisions of tribunals dealing with comparable instruments, such as the United Nations Committee on Human Rights, the Inter-American Commission on Human Rights, the Inter-American Court of Human Rights, the European Commission on Human Rights, and the European Court of Human Rights and, in appropriate cases, reports of specialized agencies such as the International Labour Organisation, may provide guidance as to the correct interpretation of particular provisions of chap 3.’ [45] South Africa has adopted the Convention on the Rights of the Child. Art 3 affirms the best interests of the child as ‘a primary consideration’ in all actions concerning children whether undertaken by public or private social welfare institutions, courts of law, administrative authorities or legislative bodies. [46] Art 21 provides: ‘States Parties that recognize and/or permit the system of adoption shall ensure that the best interests of the child shall be the paramount consideration and they shall: (a) Ensure that the adoption of a child is authorized only by competent authorities who determine, in accordance with applicable law and procedures and on the basis of all pertinent and reliable information, that the adoption is permissible in view of the child’s status concerning parents, relatives and legal guardians and that, if required, the persons concerned have given their informed consent to the adoption on the basis of such counselling as may be necessary; (b) Recognize that inter-country adoption may be considered as an alternative means of child’s care, if the child cannot be placed in a foster or an adoptive family or cannot in any suitable manner be cared for in the child’s country of origin; (c) Ensure that the child concerned by inter-country adoption enjoys safeguards and standards equivalent to those existing in the case of national adoption; (d) Take all appropriate measures to ensure that, in inter-country adoption, the placement does not result in improper financial gain for those involved in it; (e) Promote, where appropriate, the objectives of the present article by concluding bilateral or multilateral arrangements or agreements, and endeavour, within this framework, to ensure that the placement of the child in another country is carried out by competent authorities or organs. [47] South Africa has adopted but not yet made part of its municipal law the Hague Convention on Protection of Children and Co-operation in Respect of Intercountry Adoption 1993 (‘the Hague Convention’). In this regard The Children’s Act 38 of 2005 has been passed by Parliament. The Act proposes inter alia to provide for inter-country adoptions and to give effect to the Hague Convention. The legislation has been some time in the preparation but even so there is no immediate prospect of it being brought into force. I am prepared to assume that sooner rather than later a date will be fixed for its operation. [48] The relevant provisions of the Hague Convention are the following: ‘Article 4 An adoption within the scope of the Convention shall take place only if the competent authorities of the State of origin- a) have established that the child is adoptable; b) have determined, after possibilities for placement of the child within the State of origin have been given due consideration, that an intercountry adoption is in the child’s best interests; c) have ensured that (1) the persons, institutions and authorities whose consent is necessary for adoption, have been counselled as may be necessary and duly informed of the effects of their consent, in particular whether or not an adoption will result in the termination of the legal relationship between the child and his or her family of origin, (2) such persons, institutions and authorities have given their consent freely, in the required legal form, and expressed or evidenced in writing, (3) the consents have not been induced by payment or compensation of any kind and have not been withdrawn, and (4) the consent of the mother, where required, has been given only after the birth of the child; and (d) have ensured, having regard to the age and degree of maturity of the child, that (1) he or she has been counselled and duly informed of the effects of the adoption and of his or her consent to the adoption, where such consent is required. (2) consideration has been given to the child’s wishes and opinions, (3) the child’s consent to the adoption, where such consent is required, has been given freely, in the required legal form, and expressed or evidenced in writing, and (4) such consent has not been induced by payment or compensation of any kind.’ ‘Article 5 An adoption within the scope of the Convention shall take place only if the competent authorities of the receiving State- a) have determined that the prospective adoptive parents are eligible and suited to adopt; b) have ensured that the prospective adoptive parents have been counselled as may be necessary; and c) have determined that the child is or will be authorized to enter and reside permanently in that State.’ Every principle of the Hague Convention which is relevant to this application (and its spirit) has been satisfied by the evidence presented to the court a quo in so far as that was practicable. [49] In terms of Art 6 of the Hague Convention a contracting state is to designate a Central Authority to discharge the duties which are imposed by the Convention upon such authorities. Chapter IV of the Convention sets up the procedural requirements for inter-country adoptions. The procedure is initiated in the state of the proposed adoptive parents and carried on between the respective Central Authorities who are responsible for the prescribed investigations and reports. Art 21 ensures protection for a child after transfer to the receiving state and before adoption. Art 29 places limits on contact between the prospective adoptive parents and the child’s parents or any other person who has care of the child prior to satisfaction of certain requirements of the Convention. Art 30 provides for preservation of information concerning the child’s origin, parents and medical history. [50] Art 4(b) quoted above recognizes and gives effect to the principle of subsidiarity. Goldstone J in Minister of Welfare and Population Development v Fitzpatrick 2000 (3) SA 422 (CC) (at para 23 fn 13) described subsidiarity as ‘the principle that intercountry adoption should be considered strictly as an alternative to the placement of a child with adoptive parents who reside in the child’s country of birth’. The principle is also referred to in paras 27, 32 of that judgment. To the last-mentioned paragraph Goldstone J added the following footnote, (33 at p 433): ‘Although no express provision is made for the principle of subsidiarity in our law, courts would nevertheless be obliged to take the principle into account when assessing the “best interests of the child”, as it is enshrined in international law, and specifically art 21 (b) of the Constitution that “(w)hen interpreting the Bill of Rights, a court, tribunal or forum . . . must consider international law’. Of particular importance in this context are the remarks of the learned justice in para 32 of the judgment: ‘The concerns that underlie the principle of subsidiarity are met by the requirement in s 40 of the Act [the Child Care Act 74 of 1983] that courts are to take into consideration the religious and cultural background of the child, on the one hand, and the adoptive parents, on the other.’ As I shall attempt to show (in paragraphs 62 to 68 below) all the underlying concerns to which the learned justice referred have indeed been answered by the applicants. [51] In my view any recognition of the ‘Interim Central Authority’ or the children’s court as an implementer of inter-country adoptions in relation to the present application would be inappropriate. The law must be applied as it is, not as it may become, however probable the prospect. There are of course no regulations in place to regulate inter-country adoptions because there is, at the present time, no statute which authorizes the content or making of such regulations. The furthest this Court should go is to give appropriate weight to the content of the prospective law and the views expressed by the representatives of the Department and the Society and to recognize the eventual objectives that they are striving to achieve, all in the context of determining what is in the best interest of the child Ruth Webb. Both the applicants and the child are entitled to the full benefit of the law as it is. An attempt to superimpose the inchoate legislation on the application would be unfair to the child and the applicants, against her best interest (in so far as it puts a damper on an application by prospective adoptive parents in or from the United States) and would subject consideration of the substance of the application to unnecessary delay without the prospect of achieving a concomitant benefit for the child. It is not without relevance that the applicants have indicated, while the proceedings in the High Court were under way, that their financial ability to pursue further litigation in South Africa was in serious doubt.30 Nor do I regard it as fair to the child that her future should depend upon the determination of wholly unnecessary legal battles to determine the form of an application which is to place her in the applicants’ care. [52] Before I consider the relationship between the case made by the applicants and the legal considerations, it is necessary to refer to the interaction between the Hague Convention and the content of the Children’s Act. It was common cause in the application and on appeal that the Department of Social Welfare was in the process of setting up the structures which the Convention contemplates on an interim basis pending the operation of the legislation. It was however also clear that these structures are incomplete and that, in the particular case of proposed adoptions by citizens of the United States, not yet adequate to serve the demands of the Convention. Section 24(1) of the Children’s Act preserves sole jurisdiction in granting orders of guardianship to a high court. However s 25 proposes that an application for guardianship by a non-South African citizen is to be regarded as an inter-country adoption for the purposes of the Hague Convention and Chapter 16 (which legislates for such adoptions). In terms of the proposals in that Chapter adoptions between countries are to be initiated between the Central Authorities of Hague Convention countries or between the competent authority of a non- convention country and the Central Authority of the Republic. The intention 30 In para 3 of the affidavit of their attorney Ms Wybrow dated 27 February 2006. appears to be that the Central Authority will accredit child protection organizations in the Republic to act on its behalf in investigating and reporting on any such application for adoption. To further this purpose such an accredited organization may enter into working agreements with accredited adoption agencies in other countries. [53] The implementation of the procedure cannot be divorced from the creation of adequate structures to cope with inter-country adoptions. The reality at the time that this application was launched (as it still is today) is that- 1) both South Africa and the United States have not passed laws which incorporate the Convention in their domestic law; 2) neither country has created a Central Authority which is empowered by law to exercise the functions which the Convention contemplates (and for which, in South Africa, the Children’s Act will provide the legal framework); 3) ‘accredited’ South African agencies, such as the Johannesburg Child Welfare Society, have established no working agreements with adoption agencies in the United States. [54] I disagree strongly with Theron AJA that the grant of the application would ‘sanction an adoption procedure which is in conflict with international treaties which South Africa has ratified’. [55] The substance of the Hague Convention is the achieving of the child’s best interest through the formal structures which are to be provided by the adopting states. In the overall conclusion which I have reached I am satisfied by the totality of the evidence presented by the applicants that in this case, the goal has been reached despite the structural shortcomings (which should not be laid at the door of the applicants or be allowed to prejudice the child). The policy of the Department and the agency [56] The amicus informed us that the Johannesburg Child Welfare Society (‘the Society’) is accredited by the Department as a body authorized to exercise powers on its behalf under the Child Care Act and in its capacity as Interim Central Authority. Ms Pamela Wilson deposed to an affidavit on its behalf in opposition to the application. She said: ’15. As an agency, we have an adoption policy in place where it is stated that we will only negotiate with approved and recognized adoption agencies in overseas countries. . .’ [57] Dr Maria Mabetoa, the Chief Director: Children, Youth and Families in the Department, deposed as follows: ‘Only organizations/private social workers that have registered a speciality in adoptions, who have a working agreement in place with a foreign accredited organization, can do intercountry adoptions. Organizations and social workers do therefore not work randomly with any country, but with a country they know well and where procedures were spelt out in the working agreement. . . Most of the working agreements currently in place are with other Hague countries that have also ratified the convention. The only exception is a working agreement between Johannesburg Child Welfare and Botswana. This agreement was supported by the Department of Social Development for the following reason: Although the culture of the population in Botswana differs from the population in South Africa, it is not as radical as other countries. . . This Department is of the opinion that when working with a non-Hague country, such as the United States of America, one must be careful with procedures and responsibilities as the Convention does not apply and therefore the necessary safeguards do not exist.’ (The emphasis is mine.) [58] I understand the quoted passages to say that because the Society and the Department do not have working agreements in place with the United States an agency such as the Society cannot negotiate adoptions involving United States citizens, or, at best, will only do so in rare cases. In an affidavit in reply filed by the applicants’ attorney on their behalf it was made clear that my understanding is, if anything, a generous interpretation of a restrictive policy. Ms Wybrow deposed as follows: ’11. In addition and pursuant to my discussions with the Amicus on the refusal of the Department of Social Development to allow placements to the United States of America in particular, I forwarded to the Amicus via email on 7 December 2005, the email I had previously submitted in the Reid matter before this Honourable Court (Case No. 05/27085), wherein the American Applicants were advised by the Department of Social Development that they would not be allowed to adopt South African children, (despite the provisions of Fitzpatrick). 12. I annex hereto and marked “DLW4” a copy of the abovementioned email. 13. I also telephoned Mrs Raath, the Commissioner of Child Welfare, Johannesburg Children’s Court, on 24 January 2006 and was advised that a policy decision had been taken not to allow Inter-Country adoptions to the United States of America. 14. I advised the Amicus of this in an email dated 24 January 2006, a copy of which is annexed hereto and marked “DLW5”. 15. Mrs Raath suggested I telephone Mrs Marike Bloem of the “Interim Central Authority”, which I then did on 25 January 2006. Mrs Bloem confirmed that the stance of her Department remained as per Annexure “DLW4”, in that they would not allow adoptions to the United States of America. I was advised by Mrs Bloem that the only exception would be if it were an “in- family” placement. The reason given to me was that no one in South Africa had “experience” in dealing with the United States of America. 16. Despite receiving the Applicants’ Heads of Argument, the Memorandum of Advocate Skinner S.C., the Memorandum from Advocate Julyan S.C., and the documentation and emails referred to in Paragraphs 6 to 11 above, the Amicus has not seen fit to make any mention of these facts in her submission to this Honourable Court.’ [59] The amicus has also not seen fit to seek leave to rebut any of these averments. As they merely serve to confirm the statements of policy to which I have referred in the affidavits of Wilson and Mabetoa I have no hesitation in accepting them at face value. They tell me that the policy which the Department, its agency and the Johannesburg Children’s court has adopted is not one which is likely to support or assist a United States citizen in the adoption of a South African child, to state the matter at its lowest. Moreover they make it clear that the Department and the agency do not regard themselves as properly equipped to handle such applications by reason of the lack of contact between the social welfare agencies of the respective countries. It is, in the circumstances, hardly surprising that the applicants followed the route of a high court application. But it is astonishing that the main submission of the amicus (accepted by Goldblatt J) was and is that the children’s court is the forum best-equipped to deal with the application in the particular circumstances of this case. [60] The amicus also submitted that if the children’s court shows itself fettered by policy against an adoption by the applicants they would have every right to review its decision. That may be so, but it is hardly an approach which favours the interest of the child in obtaining an appropriate hearing as soon as reasonably practicable and while the applicants are still willing and able to pursue the matter. I think the applicants were well-advised in the circumstances to pursue the route which they did. vi) The concerns of the amicus curiae [61] In amplification of her submission that the children’s court is the proper and appropriate forum the amicus referred to certain matters which, she submitted, would better and more appropriately be investigated and decided by a children’s court. (I do not ignore Ms Julyan’s disturbing submission on behalf of the applicants that in the normal course of events no such investigation is carried out in the children’s court for reasons of lack of capacity, lack of expertise, inertia or sheer indifference. I find it sufficient to test Ms Skelton’s submissions at face value.) Those matters are: i) subsidiarity; ii) potential exploitation for monetary or other reasons; iii) adequate compliance with the adoption procedures and safeguards laid down in the Child Care Act. [62] As to subsidiarity, the principle is one recognized in the interest of children, in order that, wherever possible, a child shall enjoy its parental upbringing in a culture which is familiar to him or her and comparable to that from which he or she would have benefited as a sharer in the opportunities open to most other children in the country of his or her birth with normal parental care. The applicants in presenting their case made the following averments in this regard: a) that since birth the child has been cared for by Mr and Mrs Webb and has been given their surname; b) no other potential parents have expressed an interest in having the child placed permanently with them; c) the Third Respondent, the Roodepoort Child and Family Welfare Society does not have any prospective parents for the child; d) the applicants are of African descent and have been interested in African culture throughout their lives; they have done extensive research on and study in South African history, people, culture and art. e) the applicant’s own children have been raised ‘with a real sense of what it means to be an African-American’, believing that each child should be imbued with a sense of pride as to who they are and where they come from; f) the applicants intend to raise Ruth ‘with an in-depth knowledge of her roots and her history, and to travel back to South Africa with her in future so that she can develop an intimate knowledge of her country of origin’. [63] In her submissions to the court a quo the amicus conceded that ‘there is no clear system relating to establishing whether there are any prospective South African adopters . . . and it is evident that the Department of Social Development will need to establish clear procedures in this regard’. She suggested that, in order to comply with the subsidiarity principle, ‘substantial efforts’ to place the child in foster care or adoption in South Africa must be made. She was not able to suggest in argument on appeal how such efforts were to be made. [64] In her affidavit Ms Wilson deposed that ‘6. Johannesburg Child Welfare Society has prospective local adoptive parents on the waiting list for female babies between the ages of birth – 5 years old. The majority of our adoptive parents are black and most of them prefer to adopt a girl. There are certain cultural beliefs behind the demand for girls rather than boys. There is therefore always a greater demand for girls and the adoptive parents will wait much longer if they especially want a girl. Over the past few years there has been an encouraging increase in the number of local black adopters approaching the agency and we always have people on the waiting list. We also have local applicants wishing to adopt trans-racially. It is for this reason that we usually only consider our older black boys (from 1 year upwards) for inter-country adoption. Johannesburg Child Welfare Society always has prospective adopters on its adoption waiting list, waiting for girls of all ages. There is no acceptable reason why a female baby should be placed out of the country when there is such a demand within the country. 7. With regard to this particular case, our agency has not received any requests for a local family for this baby.’ [65] She does not suggest that the Society, with its list of prospective adopters, has been able to effect a single introduction between such persons and the child. The proof of the pudding must be in the eating. [66] As to what may be the reasonable processes after the exhaustion of which the subsidiarity principle may be deemed to be fulfilled, Dr Mabetoa said ‘A national register of children available for adoption and prospective adoptive parents (RACAP) will have to be established by the Department of Social Development. No child can be considered for an inter-country adoption unless the child has been on the register for 60 days and no fit and proper parents could be found within the country.’ [67] Three inferences arises from this: first, that the ability and means to test the availability of prospective parents is regarded as a national responsibility; second, the dissemination of information about the availability of a child for adoption is a matter to be carried out through the instrumentality of a comprehensive list known by all persons desirous of adoption to be available for perusal; third, in those circumstances an unrewarded period of 60 days will be deemed to satisfy the principle of subsidiarity. It is immediately apparent that such standards have no relevance at all to the present case; in the absence of appropriate structures, they set an impossible level of compliance for the private citizen. In my view the court must deal with the evidence before it. The degree of interest shown in the child until now – which is non-existent – must be regarded as the closest proof to the likelihood that prospective parents will emerge after this case is concluded. [68] There is a further aspect of importance in this regard. The subsidiarity principle does not exist in a vacuum. Goldstone J, as I have earlier noted, regarded s 40 of the Child Care Act as embodying ‘the concerns that underlie the principle of subsidiarity’. Section 18(3) of the Act provides that in considering an application for adoption ‘the children’s court shall have regard to the matters mentioned in section 40’. Those matters are ‘the religious and cultural background of the child concerned and of his parents as against that of the person in and to whose custody he is to be placed or transferred’. But the circumstances of Ruth are not those of an ordinary child from a broken home. She was abandoned at birth. She has no experience of a religious or cultural background other than such as Mr and Mrs Webb have provided for her. Their religious and cultural background is essentially that of the applicants themselves. It seems to me that, in the peculiar circumstances of this case, the subsidiarity principle is very largely reduced in importance by reason of these uncontested facts. In so far as regard should still be had to that inherent and perhaps dormant cultural heritage which is conferred by the fact of being born in a particular environment or background, I have already pointed out that the applicants have undertaken to respect and promote that awareness. It seems to me, as a probability, that the cultural alienation of Ruth, should she be taken by the applicants to the United States and there adopted, will be little different from that of any other young South African child who is taken by his parents to a foreign country. Such children are notoriously adaptable, the more so while very young. [69] The amicus highlighted four possible aspects of exploitation: the grasping adoptive ‘parent’ who seeks to make money out of the child with no bona fide intention to adopt or care for the child; the exploitative and conscienceless adoption agency which will prepare reports to suit its client; the undesirability of contact between ‘adoptive parent’ and the child before adoption other than through or under the supervision of an independent social worker; the inability of a South African court to oversee the continuing care of a child removed under the pretext of an order for custody and guardianship. As to the first two possibilities the evidence presented by the applicants should be approached with care. But, doing so, it clearly and satisfactorily establishes the good faith of both the applicants and Autumn Adoptions Inc. Moreover the Society and the Department to whom it was open to make enquiries through official or private channels have not produced a tittle of evidence which casts doubt or suspicion on either. As to the third consideration it is no doubt desirable that the prospective parents, the reporting social welfare worker and the child should be at arms length during the adoption procedures both to ensure the integrity of the investigation and reports and to avoid the potential of emotional turmoil in the child if the application for adoption fails or is abandoned. In the present instance the applicants employed a South African private social worker of 30 years experience in the field of adoptions, Ms Hanekom, to prepare a report for submission to the High Court. Neither Ms Hanekom nor her report was the subject of any criticism by the professional bodies involved in the matter. In the circumstances it seems to me that the criticism of conflict with good social work practice inherent in that employment is sufficiently met by the acceptable manner in which she in fact carried out her mandate. [70] Lastly, it is true that the court which grants an order in the terms sought by the applicant places itself beyond the possibility of continuing to oversee the welfare of the child. But that, of course, applies to any child lawfully removed from South Africa at the instance of a custodian. The more important question is the integrity and reliability of the custodian and that is on the papers convincingly answered in favour of the applicants. In the present instance the case for removal is visibly strengthened by an affidavit produced by the applicants from Ms Karen Law, an attorney practicing in the State of Virginia of more than 20 years appropriate experience who practices in family law. She speaks to ‘a foreign child’s immigration status upon entry to the United States and to the oversight provided by the United States Citizenship and Immigration Services (‘USCIS’) and the Commonwealth of Virginia from entry until the child’s adoption is finalised’. [71] It is unnecessary to enter upon the detail. The following passages from her affidavit are highly relevant (and indicative of her thoroughness): ’17. After submitting the Immigration documentation, I continued to monitor the progress of the De Gree application to USCIS. The De Gree family received final approval to adopt two orphans from South Africa on the twentienth (20) September 2005. A copy of their approval notice is attached. This approval indicates that the family has satisfied USCIS that they will provide a good home for up to two orphans from South Africa.’ and ’28. Prior to the finalization of the adoption, Ruth Joy’s welfare would be overseen by the Virginia Court system, the Commissioner of Social Services, and Autumn Adoptions, Inc. If there were any mistreatment, Social Services would have jurisdiction to immediately address that in Juvenile and Domestic Relations Court under Section 63.2-1517 of the Virginia Code, 1950 Edition, as amended. In addition, Autumn Adoptions, Inc. is required by Virginia Code Section 63.2-1509, 1950 Edition, as amended, to report any suspicion of child abuse to Social Services. Virginia laws to protect the best interest of the child are very strict with regard to abuse and neglect, and the Juvenile and Domestic Relations Court has the authority to remove a child from home temporarily or permanently where abuse or neglect is suspected. ’29. In addition, for six months after Ruth Joy entered the U.S., the family would be in a probationary period, pursuant to Virginia Code, Section 63.2-1210, 1950 Edition, as amended. During this period, Virginia law requires that the family be visited by a licensed child-placing agency three times with at least ninety days between the first and last visit. Autumn Adoption Agency, Inc. has made a commitment to conduct the three required post-placement visits (See attached). The purpose of the visits is to ensure the well-being of the child in the adoptive family. 30. At the end of the probationary period, the Agency is directed to furnish a full report to the Commissioner of Social Services for review under Virginia Code, Section 63.2-1212, 1950 Edition, as amended. If the Commissioner is concerned about the welfare of the child, he has the authority to refuse to approve the finalization of the adoption. 31. When the six-month probationary period has ended, the adoptive family can file a Petition in Circuit Court to finalize the adoption, pursuant to Virginia Code, ection 63.2-1227-1228, 1950 Edition, as amended. The Petition is then forwarded to the Agency that conducted the post- placement visits during the probationary period. The Agency has ninety days to write a report of Investigation, which is then forwarded to the Commissioner of Social Services for review. If the Commissioner is satisfied with the report and the Circuit Court that has jurisdiction over the prospective adoptive family is satisfied that all other legal requirements have been met, the Court will issue a Final Order of Adoption. Typically, it takes about ten (10) months from the time the family returns home with the orphan until the family is awarded the Final Order of Adoption. 32. I am experienced in handling adoption finalizations and the De Grees have included enough funds in my retainer to cover that process, which I will begin when the required six- month probationary period has elapsed. 33. Once the family has been awarded a Final Order of Adoption, the child automatically becomes a U.S. citizen under the Child Citizenship Act of 2000, because the final requirement for citizenship is satisfied. However, to obtain proof of citizenship, the family files an application for a Certificate of Citizenship with USCIS. The De Grees understand the necessity of applying for a Certificate of Citizenship and I am experienced in assisting families with these types of applications. 34. Because South Africa is a country with whom the United States has diplomatic relations, Virginia gives full faith and credit to the order of the South African court awarding sole custody and sole guardianship to the De Grees. This means that the De Grees would be considered the legal guardian of Ruth Joy in Virginia with the same rights and privileges as if a Virginia court had awarded guardianship. There is no separate procedure in Virginia law to mirror the guardianship order of the South African high court, because the Virginia courts recognize the authority of the South African High Court order.’ In the report of Ms Hanekom, confirmed on oath, she stated ‘It must be said that the United States of America has one of the best adoption After-care Systems in the world. Everything possible will be done to make sure that the children’s best interests are served. By law there are mandatory follow-ups done on the family for a period of two years and a multitude of services are rendered for adopted children and their families.’ [72] No aspect of the evidence of Ms Law or Ms Hanekom was placed in dispute. The possibility of exploitation through lack of supervision is in the circumstances excluded on any reasonable basis and is entirely speculative. I am satisfied that the practices, laws and procedures of the State of Virginia are designed for the best interests of children generally and that Ruth will not be prejudiced by committing her care to the trusteeship of the authorities of that State. The difference in status to which Theron AJA refers in para 14 is of no consequence given what Ms Law says in paras 29 to 33 of her affidavit and the assurance that the applicants will expeditiously pursue the route of an adoption under Virginian law. vii) The procedures and requirements of the Child Care Act [73] The amicus placed reliance on the judgment in Minister of Social Welfare and Development v Fitzpatrick. She submitted that the inference to be drawn from it was that the children’s court alone through its oversight of the operation of the Act was the appropriate forum to bring an adoption application or one which in substance sought to adopt a child. That judgment certainly held that the procedures of the Act applied, were properly and appropriately sufficient to protect a child in cases of adoption. It did not, because it was not necessary to do so, decide that applications for sole custody and guardianship at the instance of a foreign citizen must be brought in the form of an adoption application to a children’s court. I am prepared to accept that in the exercise of its duty as upper guardian in applications like the present a proper exercise of its protective function requires a high court to consider whether the substance of the requirements laid down by the Act for an adoption has been met and I shall do so. In doing so it is also proper to acknowledge the bona fide intentions of the applicants to submit the final determination of the adoption issue to a competent and well-equipped adjudication in a foreign jurisdiction. I do not accept the submission that the children’s court possesses by virtue of training, skills, experience or the facilities available to it for investigation any advantages over a high court. Of course there are exceptions in both courts and on both sides of the line but there is no acceptable basis for such a generalized proposition. [74] Section 18(4) of the Child Care Act prohibits the making of an order for adoption unless the court is satisfied as to certain matters. Specifically, on the facts of this case- (a) both applicants are qualified to adopt the child as contemplated by s 17(a) of the Act, and are possessed of adequate means to maintain and educate the child; (b) both applicants are of good repute and fit and proper to be entrusted with the custody of the child; (c) the proposed order and the eventual adoption in the United States will serve the interests and conduce to the welfare of the child; (d) thee are no known parents to give consent; (e) the foster parents have stated in writing that they do not wish to adopt the child; (f) the requirements of s 40 have for the reasons discussed at length earlier in this judgment, been satisfied. [75] The applicants placed before the High Court at least as much as (and according to counsel for the applicants, far more than) would have been required of them in a children’s court application. This is not, in my view, a case where any necessary safeguards or protections, whether arising from local or international law, have been left unexplored or can reasonably be strengthened by an application to the children’s court. [76] It was submitted that the granting of this order would be the thin end of the wedge, enabling foreigners to take advantage of a loophole not open to South African citizens. I do not regard such an order as anything of the sort. Any South African who is able to make out a case for sole custody and guardianship is at liberty to approach a high court for such an order and thereafter to remove the child from the country without the need to disclose that intention at the time of applying for the order. Nor will he necessarily find his application scrutinized according to the standards which apply to an adoption. I would also point out that the present application presents a total and unique picture which justifies the order which is finally made. Whether any other applicants can satisfy the onus on them will depend entirely on the facts peculiar to that application. In another case the facts may justify the conclusion that the best interests of the child require that he or she be formally adopted in South Africa before being removed from the country. The weight of evidence lies heavily against it in present instance. Conclusion [77] Having attempted to identify the arguments for and against the granting of the order it becomes necessary to decide whether the benefits and advantages to the child in this case outweigh those on the opposite side of the scale to the extent that the level of the child’s best interest is reached in the overall evaluation. I have no doubt that that level is comfortably exceeded. The substantial value to Ruth of a stable, happy and potentially prosperous future with the applicants in the United States and the enormity of the deprivation and prejudice which she will suffer if no adoptive parent should come forward far outweighs the sum of formal compliance with the Child Care Act, the speculative possibility of remotely comparable parents coming to her rescue in South Africa, the preservation of her cultural and religious identity, the maintenance of a rigid and unyielding policy on intercountry adoptions, and the avoidance of the possibility of an undesirable precedent. At the same I remain wholly unpersuaded that an inflexible insistence on strict compliance with every procedural aspect laid down for a formal adoption according to the supervision of a children’s court would have strengthened or weakened the applicants’ case in any material respect. [78] For all these reasons I am left in no doubt that the appeal should succeed. ___________________ J A HEHER JUDGE OF APPEAL PONNAN JA [79] I have had the benefit of reading the judgments of Heher JA and Theron AJA and for the reasons that follow I am in agreement with the conclusion reached by my learned Sister. [80] The success of a litigant's claim is often dependent upon the path chosen to press that claim. A claim should not be decided in splendid isolation but rather within the context of the form chosen to stake the claim. Not infrequently an asserted claim, with at first blush an aura of invincibility, falters because the chosen legal vehicle proves inappropriate for the challenges of the legal journey. [81] The real issue in this matter, to my mind, relates to the procedure adopted by the appellants and the form chosen to press their claim. For it seems to me that the form chosen carries with it its own failure. What the appellants ultimately sought was in effect an inter-country adoption. How they hoped to achieve that was through the guise of some other application. [82] It has been suggested that it was permissible for the high court to be approached in its capacity as the upper guardian of the minor child for the relief sought. There can be no question that the high court has jurisdiction to grant a sole custody and guardianship order. But that was not all that it was being asked to do in this case. That order was no more than a precursor to the authority solicited for the removal of the child to the United States where an adoption order was to be sought from the appropriate court. The High Court was therefore being asked in effect to grant an adoption order to foreign nationals. That it could not do. [83] South African nationals seeking an adoption order are obliged to approach the children's court which has the sole authority and power to grant orders of adoption. I can conceive of no basis on which foreign nationals should escape that stricture. The burden for South African citizens desirous of adopting is quite rightly an onerous one. The Child Care Act offers what the Constitutional Court (Fitzpatrick para 31) describes as a coherent policy of child and family welfare at the heart of which is the children's court. It is the first port of call for citizens seeking to adopt and should likewise be such for non-citizens as well. In terms of s 18(1)(b) of the Act no adoption may be made before consideration of a prescribed report from a social worker. Needless to add the social worker must be an independent social worker with no ties - particularly financial - to the prospective adoptive parents. The children's courts are charged with examining the qualifications of the prospective adoptive parents and granting adoption orders. Importantly, a children's court may not grant an adoption order unless it is satisfied that the requirements contained in s 18(4) of the Act have been met. [84] Article 21(c) of the UNCRC states that State Parties are required to ensure that a child concerned by an inter-country adoption enjoys safeguards and standards equivalent to those existing in the case of national adoptions. In my view, those safeguards and standards clearly apply to both the procedures employed before an order is made and the status of the child following upon the making of an order. [85] Where a child's existing family no longer functions to meet her needs, article 20 of the UNCRC requires the state to provide special protection and assistance to such a child and 'to ensure alternative care' for her. That alternative care may include adoption. Article 21 requires those states which recognise adoption to ensure that 'the best interests of the child shall be the paramount consideration'. Article 21(b) of the UNCRC articulates the principle that inter-country adoption, as an alternative form of child care, may only be considered if there is no suitable alternative for the child in her country of origin. This principle finds expression in article 4(b) of the Hague Convention which provides that the competent authorities of the state of origin must 'have determined after possibilities for placement of the child within the state of origin have been given due consideration, that an inter- country adoption is in the child's best interests'. The African Charter is even more emphatic. It provides that inter-country adoption may, as a last resort, be considered as an alternative means of child care if the child cannot be placed in a foster or an adoptive family or cannot in any suitable manner be cared for in the child’s country of origin. [86] These international instruments promise a more child-centred approach to inter-country adoptions. This approach seeks to eliminate various abuses that have hitherto been associated with the movement of children from one country to another, such as profiteering, bribery, falsification of birth documents, coercion of biological parents, the intervention of unqualified or paid intermediaries and the sale and abduction of children. [87] One of the most important objectives of the Hague Convention is to secure the automatic recognition in all contracting states of adoptions made in accordance with the Convention and thus avoid the legal limbo of non-recognition which has in the past plagued many children who have been the subject of inter-country adoptions. [88] The detailed legal, administrative and procedural provisions of the Hague Convention informed the thinking of the Constitutional Court in Fitzpatrick. That at a stage when this country had neither ratified the Convention nor indicated an intent to do so. Since then not only have we ratified the Convention, but in addition we have gone some way to incorporating it into domestic law. [89] During 1997 the South African Law Commission was tasked by the Ministers for Welfare and Population Development (now Social Development) and Justice to investigate legislative reform proposals in the Child Law sphere. A project committee was appointed and an issue paper was published for general information and comment in May 1998. The issue paper was followed by an extensive process of consultation with all the relevant stake-holders including a large array of NGO’s working in this sphere. The ultimate consequence of all of this was a final three volume report and draft Children's Bill which was released in 2002 by the Commission at the conclusion of that process. [90] The Children's Bill was introduced into Parliament during 2003. The Bill covered areas of both national and provincial constitutional competence. The composite legislative enactment produced by the Commission thus came to be split into what became known as the s 75 Bill and the s 76 Bill (a reference to the constitutional provisions which outline parliamentary procedure for national and provincial Bills respectively). A decision was taken to deal with the s 75 Bill first. It is envisaged that the sections eliminated from the composite Bill will be enacted as an amendment to the principal Act, perhaps during 2008. The s 75 Bill which evolved into the Children's Act No 38 of 2005 was ultimately passed by Parliament on 14 December 2005 and signed into law by the President on 8 June 2006. Once the Act comes into operation, the provisions of the Hague Convention which are contained in Chapter 16 will be incorporated into domestic law. That does not mean, however, that the provisions of the Convention can be safely ignored until then. The Act itself represents the culmination of a protracted legislative process. Notwithstanding the Convention not yet having been incorporated into domestic law, the Department of Social Development has put in place interim arrangements to give effect to this country's international convention obligations. [91] Both the passage of the Act and the implementation of the interim arrangements are a firm and considered statement of governmental policy in regard to inter-country adoptions. Section 273 of the Children's Act is unequivocal in stating that no person may process or facilitate an inter-country adoption otherwise than in terms of Chapter 16. [92] The policy framework underpinning the Children's Act is the clearest signal from the South African state that it intends to honour its international legal obligations in regard to the protection of children who are to be the subject of inter- country adoption. Courts should accordingly not sanction a procedure that flies in the face of this country's treaty obligations. Furthermore, in choosing between two possible procedural options a court should, it seems to me, rather plump for the one that is compatible with this country’s international legal obligations than the one that is not. [93] Section 24(1) of the Children's Act provides: 'Any person having an interest in the care, well-being and development of a child may apply to the High Court for an order granting guardianship of the child to the applicant.' That, however, is qualified by s 25 which reads: 'When application is made in terms of section 24 by a non-South African citizen for guardianship of a child, the application must be regarded as an inter-country adoption for the purposes of the Hague Convention on Inter-country Adoption and Chapter 16 of this Act.' The procedure adopted by the appellants will thus be expressly proscribed once the Act comes into force. Until that occurrence, which is just a matter of time, this Court should be slow to lend its imprimatur to a procedure that ignores the internationally recognised safeguards and standards to be found in the Hague Convention. For a court to permit what is sought in this case, would, I dare say, be akin to embarking upon a law-making function inconsistent with what has already been ordained by the Legislature. This course of conduct would obviously be constitutionally inappropriate. [94] The essential premise of the international instruments is the paramountcy of the criterion of the best interests of the child. Paradoxically we are being asked to jettison all of the procedural and structural safeguards that seek to achieve that end in the context of inter-country adoptions ostensibly because it is in the best interests of this particular child to do so. As interesting as that esoteric debate may be, it is perhaps unnecessary to embark upon it for the truth is that the route chosen by the appellants precluded a proper ventilation of that issue. [95] The safeguards essential to the enquiry, such as independent experts and an inquisitorial procedure of the nature envisaged in the Child Care Act during adoption proceedings, are absent in the procedure chosen by the appellants. Moreover, it is quite inexplicable that in an application of the kind encountered here a curator ad litem had not been appointed to represent the interests of the minor child. Once underway there may well have been a divergence of interests between the minor child and all the other parties, not anticipated at the inception of the application. To my mind a curator ad litem was thus indispensable. Although cited as respondents the foster parents made common cause with the appellants and the Roodepoort Child and Family Welfare Society adopted what can only be described as a supine attitude. In that, in my view, the Roodepoort Child and Family Welfare Society failed the child. The role of the amicus curiae was defined by its brief from Goldblatt J. Despite Ms Skelton's commendable industry for which we are indebted, she was obviously constrained by a rather limited remit. The absence of a curator, as also other independent evidence, is a telling deficiency. It denied the most important role player - the minor child - a voice in those proceedings. [96] An evaluation of the best interests of this child must of necessity entail an enquiry into both her long-term and short-term best interests and the interplay between the two. Undoubtedly a difficulty in applying the standard is the impossibility of predicting whether certain decisions will in the long term benefit a particular child. It is so that the child has been languishing in foster care since birth. It may well be that little if any interest has been shown in her by prospective adoptive parents locally. Why that is so does not emerge satisfactorily on the papers. The immediate allure of her being placed with the appellants is seductively appealing. But to succumb to that allure is, with respect, to distort the enquiry and to subvert the long-term interests of the child to the immediate gratification that a placement with the appellants provides. The instinctive joy that is felt upon learning that a family has been secured for a foundling and the natural reticence to deny such a child the rich opportunities that a placement of that kind will provide, is understandable. Those temptations must however be tempered by the important consideration that an inter-country adoption is an alternative means of child care foundational to which is the principle of subsidiarity. [97] The evidence on behalf of the appellants that the child's prospects of being placed with adoptive parents who reside in this country are slim, is rather perfunctory. With that must be contrasted the evidence solicited by the amicus which is far more cogent. That exercise impels me to the conclusion that the evidence, such as it is, falls far short of establishing that there is an absence of prospective parents in this country for the child, much less that an inter-country adoption would be in her best interests. [98] I pause to record that the evidential and procedural lacunae to which I have alluded would either not have arisen or could have been remedied by the inquisitorial procedure available had the route of the children's court been followed. On that score I hasten to add that nothing in this judgment should be construed as a criticism of the appellants. They appear to be philanthropic people who obviously acted on advice in launching the high court application. The appellants are not remediless. They are still free to approach the children's court, an avenue that, in any event, was open to them after their lack of success in the High Court instead of their pursuing this appeal. Had the appropriate forum been approached with the proper application and had all the requirements been met, an order for adoption would have issued in this country prior to the departure of the appellants and the child to the United States. Instead the High Court was asked in consequence of the grant of the order sought to sanction the removal of the child to the United States in the expectation that an adoption order would be granted there. Until the order is granted there — and there is no guarantee that it will be — the child will be in a state of legal limbo. The security which comes with an adoption order is what the Hague Convention requires and the best interests of the child demands. To fashion relief that is less than that accorded to her by the Convention is, to my mind, the very antithesis of the best interests of the minor child. _____________________ V M PONNAN JUDGE OF APPEAL HANCKE AJA: [99] The legal process has been fiddling for more than 18 months while the child’s prospects are consumed by the delay. The majority of the Court adopts a non-possumus attitude. They seem to be content that the fires be stoked for some while longer. For what? Unless the setting aside of the court order is likely to result in a real benefit to the child, her best interests are merely being held to ransom for the sake of legal niceties. If that is so I want no part of it. An examination of whether such a benefit is likely to flow from the rejection of this appeal results in what follows hereunder. [100] In the circumstances of this case an adoption in South Africa will confer no material advantage on the child, which she could not obtain by adoption in the State of Virginia. [101] The applicants produced evidence sufficient to satisfy the requirements of the law of adoption in South Africa and the Hague Convention on Inter-Country Adoption. There is no advantage to the child in having them rehash the evidence in the children’s court. [102] The applicants cannot reasonably be expected to make a better case in the children’s court than they have done here. [103] There is no real prospect that the applicants will proceed with the adoption, if they are obliged to pursue it in the children’s court. They have not said that they are willing to do so. Their resources are at an end. They must be disillusioned by the South African legal process. The application for adoption will clearly be a gamble given (i) that this Court would have found that the case presented to it was insufficient; (ii) the seeming reluctance of the Department, the Society and the children’s court itself to grapple with adoptions by residents of the United States.31 [104] If the application for adoption is not pursued or is pursued and is unsuccessful the possibility of another good Samaritan appearing to rescue the 31 In this regard it is important to note what Dr Mabetoa, Chief Director: Children Youth and Family said in respect of the procedures that will have to be implemented once the bill comes into operation, namely: ‘When an application is made for guardianship by a non-South African citizen for guardianship of the child, the application must be regarded an intercountry adoption for the purpose of the Convention.’ child is purely speculative. If the possibility of adoption by South Africans is a reasonable one I would have expected the Department, the society or the amicus curiae to have produced evidence to the High Court. On the contrary the Department has admitted that the procedures to identify prospective adoptive parents are not yet in place. [105] All the aforegoing features persuade me that the best interests of the child are served by relying on the case presented by the applicants and not by deferring a decision on the merits. [106] There is one further matter. The suggestion that the child was not represented in the application or the appeal seems to me to be almost frivolous given the involvement of the foster parents, the social worker, the Roodepoort Child Welfare Society, the State and its accredited agency, the Society and the amicus curiae. All are agreed that the applicants established at least prima facie that the best interests of the child lie in the eventual adoption by them. The only issue raised in opposition is whether that prima facie case could and would be rebutted by using the procedures and standards of the Child Care Act, the Convention and the Children’s Act. All these matters have been thoroughly canvassed. It is in the highest degree unlikely that separate representation for the child would have cast any new light on the application. Neither counsel nor the Court a quo thought that a curator was necessary. [107] I agree with the judgment of Heher JA. I would uphold the appeal. ___________________ S P HANCKE ACTING JUDGE OF APPEAL

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: Friday 1 June 2007 Status: Immediate 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 De Gree v Webb In a judgment today the Supreme Court of Appeal has dismissed an appeal by an American couple, for an order of sole custody and guardianship of a minor child, Ruth Joy. Ruth was found abandoned a few days after her birth, head-first in a bucket, under a tree in a veld in the Roodepoort area on 14 November 2004. She was taken to the premises of the Roodepoort Child and Family Welfare Society and on 16 November 2004 the third respondent applied for and was granted an order by the Commissioner of Child Welfare for Ruth to be placed in the care of the first and second respondents. The first and second respondents, American citizens, now resident in South Africa, have established and administer ‘Baby Haven’, a home for abandoned babies, in Gauteng. Ruth has been in their care since 17 November 2004, and in terms of an order by the Commissioner granted on 11 January 2005, they were appointed her foster parents. To date, neither Ruth’s parents nor family have been traced. During 2005, the appellants, also American citizens, visited the first and second respondents, with whom they shared a long- standing friendship, in South Africa. It was then that the appellants met Ruth. They became extremely fond of her and decided to adopt. To this end they met with their attorneys and this application was launched. The appellants’ suitability as adoptive parents is not in dispute. It is apparent from the evidence that they are fit and proper persons to adopt and that they are possessed of sufficient means to adequately maintain and educate Ruth and they are caring and decent persons who for purely altruistic purposes wish to adopt Ruth. The SCA, in a judgment by Theron AJA in which Snyders AJA concurred, (Ponnan JA, in a separate judgment, agreed with the conclusion of Theron AJA) held that while it may indeed be in Ruth’s best interests to be adopted by the appellants, the process the appellants have chosen is fraught with difficulties. It was held that it is not in Ruth’s best interests that she be removed from the country in terms of a custody and guardianship order, without the protection and safeguards of an adoption first effected in the children’s court. It was stated that the courts should not sanction an adoption procedure which is in conflict with international treaties which South Africa has ratified and which are designed to safeguard the best interests of the child. --ends--

1768

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 710/2008 In the matter between: LOUIS JOHANNES JACOBUS GROBBELAAR First Appellant DANIEL JOHANNES MONK HEYNS Second Appellant PETRUS CROUS WELGEMOED Third Appellant and SHOPRITE CHECKERS LIMITED Respondent Neutral citation: Grobbelaar v Shoprite Checkers (710/2008) [2011] ZASCA 11 (11 March 2011) Coram: BRAND, NUGENT, LEWIS, MALAN and MAJIEDT JJA Heard: 15 February 2011 Delivered: 11 March 2011 Summary: Agreement in restraint of trade – breach of – sale of business as going concern – cession of rights – claim for damages - causation _____________________________________________________________________ ORDER On appeal from: Western Cape High Court (Cape Town) (Van der Westhuizen AJ sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel. _____________________________________________________________________ JUDGMENT MALAN JA (BRAND, NUGENT, LEWIS, and MAJIEDT JJA concurring) [1] This is an appeal by the defendants in the court a quo, against the judgment and order of Van der Westhuizen JA in the Cape High Court, declaring the defendants liable to the respondent, the plaintiff in the court below, for damages caused by their breaches of undertakings in restraint of trade. [2] The dispute between the parties arose from the purchase on 23 November 1995 by Shoprite Checkers (Edms) Bpk (SCEB) of the businesses of Sentra Koop Handelaars Bpk and Megasave (Edms) Bpk (the Sentra/Megasave sale). The first defendant was the managing director of and shareholder in both the latter companies, the second defendant was a shareholder and director and the third defendant an employee. The two companies were buying organisations, Megasave conducting a wholesale and Sentra a retail business. A buying organisation acts as a broker between the supplier and the dealer. The dealer becomes a member of the buying organisation which negotiates prices to be paid with the supplier. The buying organisation pays the supplier and thus accepts the credit risk of the member who must reimburse it. The buying organisation earns its revenue from rebates and allowances made by the supplier, part of which is passed on to its members. [3] It was a condition precedent of the Sentra/Megasave sale that the defendants conclude agreements in restraint of trade with SCEB. The terms of the restraint agreements signed by the defendants were identical save that the period of the restraint for the third defendant was 24 months and for the first and second defendants 36 months, from the time the defendants left the employ of SCEB. The first defendant left his employment on 31 May 1998, the second defendant on 30 April 1997 and the third defendant on 30 April 1998. The restraints thus expired on 31 May 2001 and 30 April 2000 respectively. As consideration for agreeing to the restraints the first and second defendants were paid R1,1 million each and the third defendant R 500 000. Clause 3 of each of the restraints provided: ‘Die Werknemer onderneem hiermee teenoor Shoprite [SCEB] en op die basis van ‘n beding ten behoewe van derdes, teenoor elke ander lid van die Shoprite groep vir die duur van die inperkingsperiode, dat hy nie: - 3.1 ‘n Belang sal hê of betrokke sal wees, direk of indirek, in enige hoedanigheid (insluitend maar nie beperk tot adviseur, agent, konsultant, direkteur, werknemer, finansier, bestuurder, lid van ‘n beslote korporasie, lid van ‘n vrywillige assosiasie, vennoot, eienaar, aandeelhouer of trustee) in enige entiteit, direk of indirek, wat gemoeid is in ‘n mededingende aktiwiteit binne die gebied [ie the Republic and Namibia] nie; 3.2 Enige vertroulike inligting sal openbaar aan entiteite ander dan entiteite verbonde aan die Shoprite groep en wat geregtig is op sodanige vertroulike inligting nie; 3.3 Ten opsigte van enige mededingende aktiwiteit binne die gebied direk of indirek betrekkinge sal aanbied of enige dienskontrak sluit met of enige werwing te doen ten opsigte van enige persoon in diens van die Groep; 3.4 Enige poging sal aanwend om enige voorsiener of klant van die Groep te oorreed om enige kontraktuele verhouding van welke aard ook al met die Shoprite groep te beëindig of die terme daarvan te wysig tot nadeel van die Groep nie; 3.5 Binne die gebied en ten opsigte van die besigheid van die Shoprite groep gebruik sal maak van enige handelsverbintenis van die Groep met enige klant of voorsiener, anders as vir die doel om sy verpligtinge as werknemer van Shoprite na te kom nie.’ [4] Pursuant to an agreement of sale concluded on 31 October 1997 Shoprite Holdings Beperk acquired the share capital and loan accounts of OK Bazaars (1929) Ltd from South African Breweries Ltd. OK Bazaars (1929) Ltd, as the plaintiff was then known, became a subsidiary of Shoprite Holdings and a member of the Shoprite Group. [5] In order to make use of an accrued tax loss in OK Bazaars (1929) Ltd a reorganisation and rationalisation scheme was launched by the Shoprite Group in August 1998. To give effect to the scheme the business, assets and rights of SCEB and some 40 other companies in the Shoprite Group (the ‘sellers’) were in terms of an agreement of sale dated 28 August 1998 sold to OK Bazaars (1929) Ltd, the plaintiff, as going concerns with retrospective effect to 1 November 1997 (the ‘SCEB sale’). Thereafter OK Bazaars (1929) Ltd changed its name to Shoprite Checkers (Edms) Bpk (the respondent in this court and plaintiff in the court below). SCEB subsequently changed its name to OK Bazaars (1998) (Pty) Ltd and, having disposed of all its business, became dormant. Clause 2 of the SCEB sale contained the following condition: ‘It is a condition precedent for the transactions embodied in this Agreement acquiring force and effect that the approval of the Commissioner of Inland Revenue be obtained in terms of Section 39 of the Taxation Laws Amendment Act, Act 20 of 1994.’ It is not in dispute that the Commissioner approved the rationalisation scheme on 27 October 1998. SCEB managed the entire business as agent of the plaintiff from 1 November 1997 pending fulfilment of the suspensive condition. [6] The plaintiff’s cause of action is based on its acquisition of the entire business of SCEB with the inclusion of the rights SCEB held in terms of the restraints against the defendants, the plaintiff having taken possession of the business and conducted it. In the alternative the plaintiff relied on a written cession of the rights arising from the restraints dated 24 September 1999. The defendants admitted this cession. [7] The plaintiff alleged in its particulars of claim that the defendants committed breaches of their restraint agreements by becoming involved in competitive activities, disclosing confidential information and by the establishment of a competing buying organisation, The Buying Exchange Company (Pty) Ltd (BEC). The defendants allegedly, directly or indirectly, enabled BEC to conduct a competing buying organisation by providing it with advice, knowledge and financial assistance and by furthering the purpose and aims of BEC. Members of Megasave and Sentra were encouraged to resign and join BEC. The defendants disclosed the identity of suppliers and clients of the Shoprite Group to BEC and persuaded them to sever their contractual relationships with the plaintiff. The plaintiff listed some 11 members who resigned from Megasave and Sentra between 3 February 1999 and 16 March 1999 (the dates of resignation of three members are unknown). This conduct, it was alleged, was unlawful and in breach of the provisions of the restraint agreements. The amount claimed, some R8m, represented the income the plaintiff would have earned, but for the resignation of these members, until termination of the first defendant’s restraint. [8] The defendants pleaded that during the course of the second part of 1998 they considered the establishment of a buying forum, not a buying organisation, in which members of Megasave and Sentra could have taken part. The forum would not have competed with these two organisations. The defendants stated that they had discussions with certain of these members and gave instructions for the registration of BEC, the vehicle through which the buying forum would have conducted business. The defendants were appointed directors of BEC. The defendants added that during November 1998 certain members of Megasave and Sentra, with whom the buying forum was discussed, were dissatisfied with these organisations and indicated that they wanted to resign and to take part in the buying forum through an alternative buying organisation. Consequently, the defendants pleaded, they informed these members on 17 November 1998, when the first board meeting of BEC was held, that they could no longer be involved in the proposed organisation since that might infringe the provisions of their restraint agreements. They gave instructions to Mr B J Van den Berg, BEC’s secretary, to have them removed as directors and terminated their involvement with BEC. [9] At the first hearing before the court a quo Van der Westhuizen AJ granted absolution from the instance on the basis that the plaintiff had not shown that it had acquired the rights arising from the restraint agreements on the limited basis that there was no evidence that SCEB had complied with s 228 of the Companies Act 61 of 1973. In terms of the SCEB sale, SCEB and the other sellers sold their businesses to the plaintiff so that a resolution in terms of s 228 was required. On appeal to this court the order of absolution was set aside and the matter referred back to the trial court. Before the trial commenced a separation order was made, calling on the trial court first to determine the issue of liability, including the question whether the persons or entities listed in the particulars of claim resigned as members and ended their relationship with the plaintiff as a result of the defendants’ alleged breaches of contract. At the resumed hearing only the first defendant gave evidence for the defendants and called as witnesses Mr G S Yusuf, a former employee of the plaintiff and later employed by BEC, and Mr J R Basson, the managing director of the plaintiff. Van der Westhuizen AJ made the declarator holding the defendants liable. As I have said, he also found that the defendants’ conduct caused the resignations of the members of Sentra and Megasave referred to in the particulars of claim. In coming to these conclusions he rejected the evidence of the first defendant and drew adverse inferences from the failure of the second and third defendants to testify and call, amongst others, Van den Berg, as a witness. [10] On appeal the judgment of the trial court was attacked on four bases: First, whether the plaintiff acquired the rights arising from the restraint agreement and, if so, whether the acquisition was prior to the defendants’ breaches of contract or the ‘damage-causing’ events, viz the resignation of members of Megasave and Sentra; secondly, whether the defendants breached their obligations under the restraints; thirdly, whether such breaches, if established, caused the relevant members of Sentra and Megasave to terminate their membership or their relationship with the plaintiff; and, fourthly, whether the plaintiff had acquired the Sentra and Megasave business and their members prior to the resignations of the members (ie whether the plaintiff had in fact suffered loss). [11] The trial court found that in the absence of any contradictory evidence the rights arising from the restraint agreements attached to the businesses of Megasave and Sentra, forming part of their goodwill. These rights included the rights arising from the restraint agreements as well as the right to earn an income from sales made by members of Megasave and Sentra. It was not in dispute that the purpose of the rationalisation scheme was to transfer the whole of the business of SCEB to the plaintiff. The rights referred to, the court found, were transferable and were in fact transferred to the plaintiff with effect from 1 November 1997, but at least on 27 October 1998, when the suspensive condition to the SCEB sale, the approval of the Commissioner for Inland Revenue, was fulfilled. It was not in dispute that SCEB conducted the businesses of Sentra and Megasave from 1 January 1996 as a division of its own business. SCEB also conducted as part of its enterprise a retail chain of supermarkets under the names of ‘Shoprite’ or ‘Checkers’. The plaintiff conducted a retail chain of supermarkets under the names of ‘OK Bazaars’ and ‘Hyperama’. [12] It was common cause that pursuant to the rationalisation scheme the entire business of SCEB was sold and transferred to the plaintiff and merged with the business of the plaintiff. In their additional heads of argument the appellants disputed only the date of the transfer. The rationalisation scheme was implemented to take advantage of the accrued tax loss of the plaintiff and this could be done only if the entire business of SCEB had been transferred to the plaintiff. The plaintiff had in fact used part of the tax loss in the financial year ending June 1998. [13] The best illustration that the entire business of SCEB was transferred to the plaintiff is the fact that SCEB became dormant after the transfer, and the plaintiff became the operating company in the group. These facts were not disputed at the trial. [14] The first ground on which the plaintiff relied for its acquisition of these rights as pleaded in the particulars of claim was that they were transferred and acquired by the plaintiff’s taking possession of the business and conducting it. This is indeed what the court a quo found. The defendants, however, characterized this finding differently and contended that the trial court found that these rights passed to the plaintiff by operation of the SCEB sale per se. This is not correct. The trial found that the plaintiff ‘die gehele onderneming van SCEB met effek 1 November 1997, ingevolge die koopkontrak van 28 Augustus 1998, gekoop, oorgeneem en bedryf het’. [15] What the defendants disputed was the finding of the court a quo that SCEB managed the business of SCEB with effect from 1 November 1997 as the agent for the plaintiff. The defendants contended that SCEB managed, pending fulfilment of the suspensive condition, the business on behalf of Shoprite Holdings Ltd and not on behalf of the plaintiff. This is not correct. The clause 3 of Part Four of the SCEB sale provides that the management and control in respect of the businesses - ‘shall be deemed to have passed to the PURCHASER on the Effective Date, from which date it has been managed and controlled on behalf of the PURCHASER by the SELLERS as its agent.’ The ‘purchaser’ as defined is the plaintiff. Shoprite Holdings Ltd is not one of the ‘sellers’.1 This conclusion is, moreover, borne out by the evidence of Mr A N Van Zyl, the plaintiff’s secretary, and Ms S J De Boor, an employee of the plaintiff’s auditors. In addition, the documents submitted as part of the application for approval of the rationalisation scheme show that the amalgamation of the entire business of SCEB with that of the plaintiff was envisaged. Moreover, the managing director of Shoprite reported in February 1998 to the directors of SCEB and Shoprite Holdings Ltd that the merged businesses were conducted as a single entity from 1 November 1997. The rationalisation scheme was approved on 24 February 1998 by the directors of both SCEB and the plaintiff. The SCEB sale was ratified by Shoprite Holdings Ltd on 7 July 1998. The court a quo was therefore correct in finding that SCEB conducted its business as agent for and on behalf of the plaintiff from 1 November 1997. 1 Clause 1.2.2.18 of Part One of the SCEB sale. Was there a transfer of the right to enforce the restraints to the plaintiff? [16] The defendants contended that there was no evidence that the rights had passed to the plaintiff before 24 September 1999 when the written cession was executed. The relevant members of Megasave and Sentra had all resigned before that date, viz during February and March 1999. It follows, so the argument went, that no rights of the plaintiff were infringed at the time of the resignations and thus no wrongs were committed as against the plaintiff at that time. The defendants submitted that clause 1 of Part Four of the SCEB sale, providing that the effective date of the sale would operate retroactively from 1 November 1997, was a deeming provision inter se that could not affect the parties to the litigation or elevate any prior act of the defendants to the breach of a right which the plaintiff did not have at the time of breach. The only evidence of a cession, it was argued, was the written document of 24 September 1999 which expressly provided for the cession. For the reasons set out these contentions cannot be accepted. [17] There is, as was observed, a distinction between the agreement to cede and the real agreement of cession, although these will often coincide.2 ‘The undertaking to cede and the actual cession will often coincide and be consolidated in a single document, yet they remain discrete juristic acts. However, because they are frequently merged into one transaction the clear distinction between the obligationary agreement to cede and the actual cession sometimes tend to be smudged. They are nevertheless distinct in function and it can be so in time: by the former a duty to cede is created, by the latter it is discharged.’ [18] The SCEB sale was an agreement to effect a cession in future. A cession is an abstract legal act that is independent of the underlying, obligationary, agreement.3 The cession of personal rights is brought about by agreement and no formalities are required. 2 P M Nienaber ‘Cession’ 2 (2) LAWSA 2 ed para 8. See in particular Botha v Fick 1995 (2) SA 750 (A) at 765 A-B. 3 Rabinowitz & another v De Beers Consolidated Mines Ltd & another 1958 (3) SA 619 (A) at 637B-C; Dreyer & another NNO v AXZS Industries (Pty) Ltd 2006 (5) SA 548 (SCA) at 554E-H; 2 (2) LAWSA 2ed para 8. A cession may thus be either express or tacit, to be inferred from the conduct of the parties.4 Clause 4.3 of Part Four of the SCEB sale requires the sellers, including SCEB, to ‘use their best endeavours to procure, with effect from the fulfilment of the condition precedent referred to in clause 2 of Part One [ie the approval by the Commissioner for Inland Revenue], the cession and assignment of all rights and delegation of all obligations under the contracts to the PURCHASER with effect from the Effective Date, [1 November 1997]….’ It does not follow from this clause that a real agreement of cession could not have been concluded tacitly. No formalities were required for the cession envisaged: all the parties had to do was to use their best endeavours to procure it. The intention was clearly that any cession, whenever done and in whatever manner accomplished, would suffice. The evidence was that SCEB conducted its entire business on behalf of the plaintiff from the effective date in order to give effect to the rationalisation scheme. The only inference to be drawn from this is that the parties by their conduct concluded the real agreement of cession transferring the rights flowing from the restraint agreements, being part of the business of SCEB, to the plaintiff.5 This was no ‘mere loose understanding’.6 [19] An agreement to cede may be subject to a suspensive condition, as in this case, or to a time clause relating to the cession, in which event the right will not pass until the condition has been fulfilled or the prescribed period has elapsed. Logically, the transfer of the rights to enforce the restraints was also subject to the same suspensive condition the SCEB sale was subject to. On fulfilment of the condition the parties inter se are then 4 Botha v Fick at 762B-H and 778F-G. 5 See Botha & another v Carapax Shadeports (Pty) Ltd 1992 (1) SA 202 (A) 213A-B and at 214D-F where it was said: ‘[T]he obligationary agreement is the sale of the goodwill, including as it does the contractual right, while the transfer agreement by which the right is conveyed to the purchaser, is constituted by the delivery by the seller, and the acceptance by the purchaser, of the physical possession of the business, pursuant to the sale. The incorporeal assets comprising the goodwill are incidental to the business itself and they are transferred together, in the intendment of the law. … I am convinced that nothing more is required by law to render the cession effective as between cedent and cessionary …’. 6 2 (2) Lawsa 2 ed para 26. placed in that position ex tunc.7 In view of my conclusion below, I need not express an opinion on the effect of such a cession inter omnes, as against third parties, but will accept that as far as third parties are concerned the rights vested in the plaintiff only on fulfilment of the condition, on 27 October 1998, a date before the resignation of the members of Sentra and Megasave. [20] The defendants, however, contended on appeal that the plaintiff had failed to show that the rights in respect of Sentra and Megasave formed part of the SCEB sale. The argument rested on a narrow basis. Clause 3.1.1 of Part One describes the merx as ‘the SC business comprising: the entire retail supermarket business which is being sold as a going concern’ as well as the immovable property and share sales and claims in respect of its subsidiaries. The ‘retail supermarket business’, the argument went, did not include the businesses of Sentra and Megasave: the latter’s members were wholesalers and Sentra did not conduct a supermarket business. The definition of ‘going concerns’ in clause 1.2.2.6 of Part One and, by reference, of ‘SC Business’ in clause 1.2.2.17 again contain the same apparent limitation of the business sold as the ‘retail supermarket business’. It was argued on behalf of the plaintiff that this interpretation was too restrictive and that, when the whole agreement is seen in context and against its factual matrix,8 it became clear that the entire business of the seller under the SCEB sale was to be disposed of. It is not necessary to determine this issue. The trial court found that the businesses of Sentra and Megasave were transferred to and conducted by the plaintiff, initially by SCEB on behalf of the plaintiff and later, after 7 ABSA Bank Ltd v Sweet & others 1993 (1) SA 318 (C) 323B-C: ‘It is also now, it appears, accepted that when a suspensive condition is fulfilled the contract and the mutual rights of the parties relate back to, and are deemed to have been in force from, the date of the agreement and not from the date of fulfilment of the condition, ie ex tunc …’. And at 323H: ‘The effect of the aforegoing would therefore appear to be that rights acquired by third parties during the period of suspension would not be affected by the retroactivity in regard to the rights of the contracting parties’. Schalk van der Merwe, L F van Huyssteen, M F B Reinecke and G F Lubbe Contract General Principles 3ed (2007) p 488 refer to Wolfgang Fikenscher and Andreas Heinemann Schuldrecht (2006) para 59 II A 1 who state: ‘An agreement, according to which the claim should be transferred to the cessionary retroactively, ie with an effect of an earlier date, can only be construed as a cession of the claim with effect ex nunc. This is inevitable for the sake of the protection of the debtor. A retroactive cession is, as matter of principle, excluded and not conceivable. However, the parties to the cession are obliged to treat each other as if the cession would have been effective at the earlier date, especially with respect to interest’ (my translation). 8 KPMG Chartered Accountants (SA) v Securefin Ltd & another 2009 (4) SA 399 (SCA) para 39. fulfilment of the suspensive condition, by the plaintiff itself. For the reasons set out the real agreement of cession was concluded tacitly and pursuant to the rationalisation scheme followed by the SCEB sale which was implemented by SCEB taking possession and managing the entire business on behalf of the plaintiff. Only its effect was suspended pending fulfilment of the condition precedent. Whether or not the rights arising from the restraints formed part of the ‘SC business’ as defined is irrelevant: they formed part of the business of SCEB. Breach of duty to plaintiff [21] The defendants contended that, inasmuch as the plaintiff sought to recover damages suffered in its own right, it had to establish a breach of an obligation owed to it which resulted in the ‘damage-causing’ events, that is the resignation of the members. This again depended on the existence of a contractual obligation at the time of the conduct complained of. The submission was made that it was not within the power of the plaintiff to render an act retroactively wrongful by taking cession of the relevant right at a later stage. The first answer to this contention is that the real agreement of cession on fulfilment of the condition brought about the transfer of the rights of SCEB, arising from the restraint agreements, to the plaintiff. Since the plaintiff acquired the entire business of SCEB, the rights ceded also included all rights that had accrued to SCEB arising from the alleged breaches of the restraints. These rights vested pendente conditione in SCEB, and would in the ordinary course and in an appropriate case have provided a sufficient basis for an interdict at the suit of SCEB. Pending fulfilment of the condition any wrong would have been committed against SCEB, not as against the plaintiff. But on fulfilment of the condition the rights in respect of the restraint agreements and also those arising from their breach vested in the plaintiff. The damages (ie those resulting from the resignation of the members) were suffered only later after the plaintiff had acquired those rights. The claim for damages thus vested in the plaintiff. Defendants’ breaches [22] The defendants contended that, assuming that the cession had taken place before resignation of the members, it was not sufficient for the plaintiff to rely on evidence of generalised breaches of the restraints but that it had to show particular acts on the part of each defendant that were causally linked to the resignation of each member. This, the argument proceeded, was not considered by the court a quo. [23] The trial court found that BEC was a buying organisation that conducted business in competition with Megasave and Sentra. It was established after a meeting in August 1998 by members of these organisations at the Little Switzerland Hotel and convened by the defendants. After the meeting the defendants prepared a business plan for the proposed buying organisation which was handed in as Exhibit S. BEC was registered on the instructions of the first defendant. The office of BEC was set up as a result. The defendants directly or indirectly funded BEC. Their resignation at the first board meeting of BEC was not in good faith and, the court found, they continued to be involved in BEC. I accept these findings and the inferences drawn by the trial court. The conclusion of the court that the defendants planned and funded the establishment of a competing buying organisation seems to me the most likely, if not the only, inference to be drawn. The Little Switzerland Hotel meeting of 12 August 1998 [24] The defendants convened the meeting. The trial court found that what was discussed was not, as alleged by the defendants, the establishment of a forum that would have done business through Megasave but a competing buying organisation. The evidence indeed shows that several of the largest members of Sentra and Megasave were invited. Mr A Allie, a member of Megasave, testified that everyone invited was hand-picked and that they represented some of the largest stores. The meeting was addressed by the first and second defendants, the first defendant playing the leading role. The third defendant attended. Allie had been informed before the meeting by the first and second defendants that a new buying group would be formed and that he would be invited. He indeed received a written invitation and understood the purpose of the meeting to be the formation of a new group to ‘run down Shoprite Checkers’. Allie had no interest in supplying small members: all those invited were businessmen intending to establish a new buying group of which they would be the ‘muscle’. He understood that the rebate system at Shoprite was to be restructured and a franchise operation and administration fee introduced. The defendants were apparently unhappy with this course of events and informed the invitees that the new organisation would be less difficult, offering more benefits to members. Those invited were to be its directors and shareholders. They were encouraged to resign from Sentra and Megasave and take up shares in the new organisation. It was suggested that each had to contribute R100 000 as capital. New members would be recruited after the buying organisation was set up and its structure settled. The defendants undertook to provide a business plan for the new organisation and to submit it to those present for approval. Exhibit S was eventually produced. No reference was made at the meeting to the restraints to which the defendants were subject, not even when it became clear at the meeting, as was put to Allie in cross-examination, that some of those present wanted to form a new buying organisation. [25] The trial court accepted that all three defendants had played a leading role in convening the meeting and that its purpose was the formation of a new buying organisation in competition with Sentra and Megasave. Had it been the intention to establish a buying forum, one would have expected the latter two organisations would have been invited as well, particularly where the concept of a ‘banner group’ had already been discussed by the second defendant with officials of the plaintiff. The meeting was clearly confidential and set up to discuss the establishment of a competing buying organisation. Had the defendants planned a buying forum, one would have expected them to continue with this enterprise. What they did, however, was to support the ‘core’ group. As the court found, Exhibit S, was a detailed plan for the establishment of a buying organisation, produced shortly after the meeting. Exhibit S [26] Exhibit S was distributed under the name of the interim management committee, comprising the first and second defendants. Each of the defendants contributed to it. In the letter accompanying the exhibit those who attended the meeting were thanked for their participation. Paragraph two thereof read that ‘[t]he enthusiasm and support that was shown, convinced us once more of the opportunity to combine our efforts. Attached herewith a draft document listing our plans.’ The two cellphone numbers listed at the foot of the letter were those of the first and second defendants. [27] Exhibit S was headed ‘The Buying Exchange Company’ and commences with the words ‘[i]n order to investigate\evaluate the need for an independent buying group it is necessary to analize certain basic concepts …’. It continued with descriptions of the retail market, the independent market and the future market. Franchises and buying groups were discussed. It was stated that Shoprite intended Sentra and Megasave to become fully franchised operations. This information, the trial court found, could only have come from the first defendant. The formal franchise market was expected to grow but ‘a second market exists for either the true independent or those operating in the informal market’. The ‘Concept for the Future’ was to follow a ‘top down approach’ and to establish a low risk organisation with a small capital base. The ideal structure for the organisation was a company to be owned and controlled by 15 major equal shareholders and directors. The shareholders’ agreement had to provide for ownership to remain in the hands of the major players and for the buy-out of or sale to new members and directors. Participants on the second level were to be involved on a membership or smaller shareholder basis. Provision was also made for an operating company and for the eventual listing on the JSE. It was not intended to sell the proposed company but rather to provide benefits to members through discounts and rebates and growth in the share value. The trial court correctly inferred that the latter provision was probably included to allay the fears of members that, as had happened in the case of Sentra and Megasave, the business of the new organisation would eventually be sold by the defendants. This issue was specifically raised at the Little Switzerland Hotel meeting. [28] The new organisation was to commence with the establishment and equipping of a buying office in Gauteng after the formation of the company and the setting of the share participations. Exhibit S stated that during the initial phase members had to conduct their accounts through their existing buying organisations because rebates usually ran to December of each year. It follows that the eventual resignation of members from their old buying organisations was contemplated. After the initial phase the buying organisation had to be established and second level members recruited. To recruit smaller members and allow for their rebate income it was planned to carry their accounts and pay suppliers on their behalf. It was not the intention to create a franchise operation although it was envisaged that some sort of ‘combining image’ had to be offered to smaller members. A timetable was annexed to Exhibit S requiring the company to be established by 30 September 1998. Dates were set for the establishment of the company, for top members taking up their shares, for the opening of the buying office, for the recruiting of second level members and for the administration and accounts system to be set up. The full organisation had to be functional by July 1999. Exhibit S also contained an income and expense budget, a pro forma letter to suppliers (which included a statement that Mr Leon Volschenk had been appointed as commercial manager) and a draft acceptance form for taking up shares in the company. The last section dealt with computer and software requirements, invoices and statements. [29] The court a quo rejected the evidence of the first defendant that Exhibit S was merely an ‘interim document’ and not a specific guide to be followed. I agree with this assessment. The very wording of Exhibit S reflects that it was a detailed business plan for the establishment of BEC. This conclusion is supported by the reluctance of the defendants to admit its origin. The first defendant at first said in evidence that he gave Exhibit S to his attorneys. Although a document substantially the same as Exhibit S was discovered before the trial, it was only admitted after Allie had given evidence and referred to it. The first defendant, moreover, denied in a discovery affidavit that there existed any documents pertaining to the establishment of BEC or the buying forum. He also denied, after the trial had commenced, that he was in possession of Exhibit S or that it was prepared by him or on his behalf. The trial court correctly drew the inference that the defendants deliberately tried to conceal their role in the drafting of Exhibit S and the establishment of BEC. The trial court, moreover, rejected the contention that an amount of R1,5m was insufficient for the establishment of a buying organisation. The manner of financing the new organisation was detailed in Exhibit S, and it was specifically stated that the capital of the company did not have to be substantial. The founding members were at first going to purchase through their existing buying organisations but thereafter through BEC. Moreover, at the first meeting of the BEC board on 17 November 1998 it was resolved that members would initially have to pay for their purchases in advance. Establishment of BEC [30] Events after the distribution of Exhibit S confirm that the defendants assisted in implementing the business plan. The first defendant instructed Van den Berg to see to the establishment of BEC, which was registered on 8 September 1998. The main business of BEC was to carry on the business of a ‘buying organisation’. The first defendant provided both the name of the company and the description of its main purpose. An office was found and equipped. Volschenk and Van den Berg were appointed as managing director and secretary respectively. The defendants were BEC’s first directors. Some of those who attended the meeting at the Little Switzerland Hotel took up their shares and were appointed directors of BEC. The members of Sentra and Megasave who became members of BEC resigned, as contemplated in Exhibit S, during February and March 1999, after BEC started operating. [31] The minutes of the board meeting of BEC on 17 November 1998 confirm most of these events. It was attended by some of the persons who had attended the meeting at the hotel. Also present was the chairman of Verbruikers Groothandel. It was resolved that ‘an option be exercised to take up shares in The BEC in exchange for shares by The BEC in VGK’. Verbruikers was a competing buying organisation and the undisputed evidence for the plaintiff was that the first defendant knew from early 1998 that it was for sale. Verbruikers, the trial court found, would provide the vehicle through which the members of BEC could make their purchases. It was resolved that the share capital of BEC was to be R1,5m and that there would be 15 main shareholders with ten board members and five executive directors. BEC was to function with a small capital base and members initially had to pay for their purchases in advance. The minutes show that BEC was geared to start operating on 1 February 1999 and that members would be informed of the date on which business would commence so that they could resign their existing membership. Legal opinion on the correct procedure for resignation had to be obtained. The minutes of the meeting of 3 February 1999 reflect that the resignations of members of Sentra and Megasave had been discussed with attorneys. Negotiations with suppliers had already taken place and they required written resignations. The conclusion of the trial court that BEC was established in breach of the defendants’ obligations under their restraints seems unassailable. Funding of BEC [32] Extensive evidence of the funding of BEC by the defendants through the Sengroep group of companies was led. MEGS was a wholly owned subsidiary of Sengroep, the shares of which were held by DSAL, Superbia and Desbel (all private companies). The three defendants were directors of MEGS during 1998 and 1999. They were also directors of Sengroep and DSAL in 1998. Van den Berg was the secretary of most if not all of these companies. Howard, their auditor, described Van den Berg as the ‘de facto executive’ of the group. In the 1998 and 1999 financial years the third defendant and Van den Berg were among the directors of Karaat (a private company associated with the Sengroep group). The latter was also the secretary of BEC. [33] The account into which the funds flowed was an ABSA money market account, the account holder of which was reflected as BEC in the books of the bank on 28 October 1998. The account holder was subsequently indicated as MEGS. The trial court concluded that the account was indeed that of BEC. The defendants in their concise heads of argument filed at the request of this court admitted the findings made by the trial court to the effect that the account was that of BEC. Yet a day before this appeal was heard the defendants filed a supplementary note seeking to withdraw the admissions including the admission that the money market account referred to ‘belonged’ to BEC. The plaintiff had inadequate time to address the issues raised properly. [34] It is not necessary to determine these issues. Clause 3 of the restraints prohibit the defendants from having an interest in or being involved with, directly or indirectly, in any capacity, including that of a financier, a competing activity. The flow of funds commenced with a transfer of R500 000 on 28 October 1998 from an account of MEGS to the current account of Karaat. On the same day BEC’s current account was credited with the amounts of R10 000 and R90 000 and Karaat’s account debited accordingly. On that day an amount of R400 000 was transferred from Karaat’s current account to the disputed BEC money market account. Further transfers were made from this account to BEC’s current account. MEGS also advanced a loan of R500 000 to Volschenk during 1999 while the defendants were its directors. At that time they knew that Volschenk was the managing director of BEC. The ‘transfer’ of this loan to Sengroep, and later to Desbel because the directors of Desbel had approved it does not detract from the conclusion that the defendants funded BEC through companies in the Sengroep group. Whether or not the disputed money market account belonged to BEC or MEGS is of no consequence. The fact is that both amounts originated from MEGS of which all three defendants were directors at the relevant times. They were, therefore, directly or indirectly, involved as financiers in BEC. In addition, the evidence of the first defendant was that, since they were still involved with BEC during October 1998, he requested Van den Berg to have ‘’n paar rand beskikbaar’ for BEC. The transfer of the R100 000 (in two amounts of R10 000 and R90 000) occurred, as he said, ‘in my tyd’. The first defendant also said that he did not put any money of his own into BEC but that if they, the defendants, had contributed then the funds had to be returned. There is no evidence that the amount of R100 000 was repaid after the defendants had allegedly withdrawn from BEC. If any person could have explained the movement of the funds it would have been Van den Berg. The defendants did not call him as a witness. The inference that the defendants, in breach of their restraints, financed BEC is unavoidable. Causation [35] The defendants submitted that the evidence did not establish that the members of Sentra and Megasave resigned as a result of any conduct on the part of each defendant and that the plaintiff had not shown that the resignations were not attributable to other factors related to dissatisfaction with the plaintiff. In addition, it was submitted that the plaintiff had not demonstrated that there was a contract or some other relationship between the plaintiff and these members. The trial court, it was argued, erred in not applying the ‘but for’ test to establish whether the conduct of the defendants was the factual cause of the resignations.9 The argument was that the trial court approached the issue on the basis that the defendants bore some or other burden of showing that the members resigned for reasons other than those alleged by the plaintiff. This is not how I understand the judgment of the court a quo. In this court Combrinck AJA in reversing the order of absolution from the instance held that there was prima facie evidence that the 11 members had resigned because of the conduct of the defendants. The expression prima facie evidence10 ‘is used to mean prima facie proof of an issue the burden of proving which is upon the party giving that evidence. In the absence of further evidence from the other side, the prima facie proof becomes conclusive proof and the party giving it discharges his onus.’ I understand the judgment of the trial court to be saying no more than this. Nor was the question whether the members who resigned were members or buyers from Sentra and Megasave disputed in evidence: they had all resigned. 9 International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 (A) at 700E-H. 10 Ex parte The Minister of Justice: In re Rex v Jacobson & Levy 1931 AD 466 at 478. See the discussion by D T Zeffertt A P Paizes and A St Q Skeen The South African Law of Evidence (formerly Hoffmann and Zeffertt) (2003) p 124 ff. [36] The witnesses for the plaintiff readily conceded that a large number of members resigned from Sentra and Megasave during the period following September 1998 and that there was dissatisfaction among them due to the policy of retaining rebates, the 1999 incentive scheme, the opening of competing stores and stringent structural and policy changes. The defendants relied on allegations to the effect that some of the members resigned as a result of the incentive package that was introduced at the end of 1998. Another member who resigned had requested a special concession which was denied. Other members were upset about competing stores of Shoprite opening or the structural changes that were introduced. The trial court found that there was no admissible evidence of the reasons why the defendants resigned and that the defendants’ contentions were speculative. In addition, it found that the resolution taken by the BEC board at its meeting on 17 November 1998 that members would be advised when to resign from Sentra and Megasave implied that the incentive packages for 1999 could not have played a role in the decisions of four founding members of BEC because the package only became known in December 1998. The letters of resignation of these four members were worded in the same terms, all dated 3 February 1999, and faxed from BEC’s offices. The majority of members who resigned were, by January 1999, reflected as members of BEC although they only resigned in February 1999. This indicates, as Combrinck AJA found, at least prima facie that the resignations were consequences of the defendants’ conduct. In the absence of evidence to the contrary the prima facie proof becomes conclusive. [37] Even if the facts relied upon by the defendants were established they do not assist them. The essence of the plaintiff’s case is that the defendants acted in concert pursuant to a carefully contrived plan to establish, set up and finance BEC. This conduct constituted a breach of clause 3.1 of each of the agreements in restraint of trade. The resignations of the members were consequences of this conduct: these members would probably not have resigned but for the establishment of BEC. A plaintiff suing for breach of contract is, in any event, not required to show that the breach by the defendant was the cause but only that it was a cause of the loss.11 Nor was it necessary for the plaintiff to show particular acts of each defendant that were causally linked to the resignation of each member of Megasave and Sentra. Each defendant is liable for the conduct of the others individually or in co-operation with the other in breach of their respective restraint agreements in order to achieve their common object.12 Their breach, the establishment of BEC, led to the resignations of the members of Sentra and Megasave or contributed to it.13 The trial court found that the defendants acted in concert in pursuit of the common purpose to establish BEC. They intended members of Sentra and Megasave to resign and, a fortiori, caused their resignations.14 It follows that the appeal should be dismissed. Order [38] The appeal is dismissed with costs, including the costs of two counsel. _________________ F R MALAN JUDGE OF APPEAL 11 Thoroughbred Breeders’ Association v Price Waterhouse 2001 (4) SA 551 (SCA) para 66. 12 Aetiology Today CC t/a Somerset Schools v Van Aswegen & another 1992 (1) SA 807 (W) at 816C-E and compare Nedcor Bank Ltd t/a Nedbank v Lloyd-Gray Lithographers (Pty) Ltd 2000 (4) SA 915 (SCA) para 10. The defendants were in a sense ‘joint wrongdoers’ as the term is used in delict. 13 Thoroughbred Breeders’ Association para 66: ‘Where a plaintiff can prove that the breach of the defendant was a cause of the loss (as opposed to the cause thereof) he should succeed even if there was another contributing cause for the loss, be it an innocent one, the actions of a third party … or, logically, the carelessness of the plaintiff himself in failing to take reasonable precautions to avoid it.’ 14 I am not called upon to consider whether all the damages claimed is a consequence of the resignations of the relevant members. APPEARANCES: For Appellant: J G Dickerson SC A Smalberger Instructed by: Edward Nathan Sonnenbergs Inc Cape Town Matsepes Inc Bloemfontein For Respondent: P Coetsee SC D van der Walt Instructed by: Werksmans Inc Cape Town Naudes Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 11 March 2011 Status: Immediate 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. GROBBELAAR v SHOPRITE CHECKERS The Supreme Court of Appeal dismissed an appeal today by three former employees of the plaintiff’s predecessor who were sued in the Cape high court for damages arising from their breaches of agreements in restraint of trade they had entered into with companies subsequently acquired by the plaintiff. The Cape high court upheld the plaintiff’s claim and held that the defendants were liable to the plaintiff. It was ordered that the quantification of the damages allegedly suffered be postponed until after adjudication of the question of liability. The Supreme Court of Appeal found that the defendants had established and funded a buying organisation, The Buyers Exchange Company (Pty) Ltd, in breach of their restraint agreements which competed with Megasave and Sentra, the businesses of which were acquired by the plaintiff’s predecessor and subsequently by the plaintiff, and caused certain members to resign from them. The court also found that the plaintiff had acquired the rights arising from the restraint agreements and their breach when it acquired the entire business of its predecessor.

2926

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT REPORTABLE Case no: 916/2013 In the matter between: PETROS DUMISANE JWARA FIRST APPELLANT VICTOR MPHO JWILI SECOND APPELLANT RATSHEKI LAMPROS MOKGOSANI THIRD APPELLANT and THE STATE RESPONDENT Neutral citation: Jwara v S (916/13) [2015] ZASCA 33 (25 March 2015) Coram: Brand, Ponnan and Willis JJA and Dambuza and Gorven AJJA Heard: 12 March 2015 Delivered: 25 March 2015 Summary: Criminal Law ─ various offences under Prevention of Organised Crime Act 121 of 1998 and other common law crimes ─ admissibility of evidence obtained pursuant to a direction made under Interception and Monitoring Prohibition Act 127 of 1992 ─ exercise of discretion to admit a proper one ─ evidence of crimes sufficient ─ convictions good ─ no basis to interfere with sentences. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: South Gauteng High Court, Johannesburg (Coetzee J) The appeals against the convictions and sentences of all three appellants are dismissed. ________________________________________________________________ JUDGMENT ________________________________________________________________ Gorven AJA (Brand, Ponnan and Willis JJA and Dambuza AJA concurring): [1] Quis custodiet ipsos custodes?1 Thus enquired the satirist Juvenal in his poem on his attempts to enforce moral behaviour. Since Plato, this phrase has been used to lament the corrosive effect of corrupt police and judicial officials. When Captain Sizane, the investigating officer in this matter, stumbled on a reference to the first appellant being involved with a suspected manufacturer of substances proscribed under the Drugs and Drug Trafficking Act2 (the Drugs Act), he was confronted with what appeared to be just such corrupt behaviour. This came about after he had obtained an order under the Interception and Monitoring Prohibition Act3 (the Interception Act) to monitor calls made to and from the cellphone of that suspected drugs manufacturer. The conversation said that the first appellant had undertaken to store the seized drug manufacturing machinery and return it to the suspect after the matter had been resolved. The 1 Juvenal Satire 6.346–348. The translation has been rendered as: „Who will guard the guards themselves?‟ „… I know the plan that my friends always advise me to adopt: "Bolt her in, constrain her!" But who can watch the watchmen? They keep quiet about the girl's secrets and get her as their payment; everyone hushes it up.‟ 2 The Drugs and Drug Trafficking Act 140 of 1992. 3 The Interception and Monitoring Prohibition Act 127 of 1992. first appellant was also said to have told the arrested wife of the suspect what to mention in her warning statement to the police. The first appellant was, at the time, a Superintendent in the South African Police Service (SAPS) and the head of the West Rand Organised Crime Unit. [2] This discovery led Captain Sizane to set about applying for a direction under the Interception Act from the designated judge, Seriti J, to monitor the cellphone calls made to and from the first appellant‟s cellphone. This direction was granted. An extension of that direction was afterwards obtained from the same judge relating to the cellphones of the second and third appellants and one Captain Shange (Shange). The three appellants and Shange were all members of the West Rand Organised Crime Unit at the time. [3] In due course, the three appellants were arraigned, along with Shange, in the South Gauteng High Court, sitting at Johannesburg before Coetzee J. They confronted 13 charges; not all of which applied to all of the accused. Before the trial commenced, Shange died. This left the three appellants as the only accused persons in the trial. They were all acquitted on counts 2, 4, 5 and 8. The remaining charges confronting them, and on which they were convicted as charged, were as follows:  Contravention of s 2(1)(d) of the Prevention of Organised Crime Act 121 of 1998 (the POCA), during the period 2005 to 2007 by acquiring or maintaining an interest in an enterprise – second and third appellants (Count 1);  Contravention of s 2(1)(f) of the POCA, during the same period by managing the operation of an enterprise – first appellant (Count 3);  Dealing in drugs by supplying cocaine, ecstacy and crystal methaqualone to Norman Kokoeng on 8 February 2007 – first and second appellants (Count 6);  Defeating or obstructing the course of justice by releasing a suspect, Kenneth Bogopane and/or causing a false entry to be made in the SAPS occurrence book, resulting in his release on 10 February 2007 – first and second appellants (Count 7);  Theft of 800kg of ephedrine, a scheduled substance, at OR Tambo airport on 3 October 2007 – all three appellants (Count 9);  Supply of ephedrine, a scheduled substance, by selling it for R1 425 000 – all three appellants (Count 10);  Fraud by giving out to MJ Pretorius on 3 October 2007 at OR Tambo airport that they were authorised to seize a consignment of ephedrine for the purposes of investigation – all three appellants (Count 11);  Attempted theft of 5.7 kilograms of cocaine on 9 October 2007 at OR Tambo airport – all three appellants (Count 12);  Fraud by giving out to JD Scott that they were authorised to apply for a certificate in terms of s 252A of the Criminal Procedure Act 51 of 1977 in respect of the ephedrine at OR Tambo airport on 3 October 2007 – all three appellants (Count 13). [4] The first appellant was sentenced to an effective 25 years‟ imprisonment, the second appellant to an effective 22 years‟ imprisonment and the third appellant to an effective 20 years‟ imprisonment. The appellants were all denied leave to appeal by the court below but granted bail pending the outcome of a petition to this court. This court granted leave to appeal against the convictions and sentences on 28 February 2012. [5] The appeal lapsed for failure to file the record timeously. Some six months thereafter the state applied to have the bail of the appellants revoked. Despite opposition, an order to that effect was granted by Satchwell J. This elicited an application for leave to appeal that order by the appellants, which was granted by Satchwell J. Although that appeal was before us, all concerned agreed that events had overtaken it. Nothing more need be said on the matter. [6] An application for reinstatement of the appeal was brought and must be decided. The explanations given for allowing the appeal to lapse were, to put it mildly, somewhat unconvincing. However, consideration of such an application also involves weighing the prospects of success on appeal. Since it was necessary to fully consider the very substantial record for that purpose, it seemed appropriate to deal with the merits of the appeal. The appeal was therefore reinstated at the hearing without objection. [7] I turn to summarise the offences. Count 1, relating to the second and third appellants, concerned acquiring an interest in an enterprise through a pattern of racketeering activity in contravention of s 2(1)(d) of the POCA. The word „enterprise‟ is defined in the POCA as follows: „“Enterprise” includes any individual, partnership, corporation, association, or other juristic person or legal entity, and any union or group of individuals associated in fact, although not a juristic person or legal entity.‟ As was pointed out by this court in S v Eyssen:4 „It is difficult to envisage a wider definition. A single person is covered. So it seems is every other type of connection between persons known to the law or existing in fact; those which the legislature has not included specifically would be incorporated by the introductory word “includes”. Taking a group of individuals associated in fact, which is the relevant part of the definition for the purposes of this appeal, it seems to me that the association would at least have to be conscious; that there would have to be a common factor or purpose identifiable in the association; that the association would have to be ongoing; and that the members would have to function as a continuing unit. There is no requirement that the enterprise be legal, or that it be illegal. It is the pattern of racketeering activity, through which the accused must 4 S v Eyssen 2009 (1) SACR 406 (SCA) para 6. participate in the affairs of the enterprise, that brings in the illegal element; and the concepts of “enterprise” and “pattern of racketeering activity” are discrete. Proof of the pattern may establish proof of the enterprise, but this will not inevitably be the case.‟ [8] Pattern of racketeering activity is, in turn, defined as meaning: „. . . the planned, ongoing, continuous or repeated participation or involvement in any offence referred to in Schedule 1 and includes at least two offences referred to in Schedule 1, of which one of the offences occurred after the commencement of this Act and the last offence occurred within 10 years (excluding any period of imprisonment) after the commission of such prior offence referred to in Schedule 1‟. Schedule 1 includes contraventions of s 3, 4 and 5 of the Drugs Act which deal with the manufacture and supply of scheduled substances, the use and possession of proscribed dependence producing substances and dealing in such dependence producing substances. I shall refer to all of these by way of the general term „drugs‟. Schedule 1 also includes the common law crimes of theft and fraud. This, in effect, means that a group of people, associated in fact, which commits two offences under schedule 1 within a ten year period, maintains an interest in an enterprise through a pattern of racketeering activity. [9] Count 3, relating to the first appellant, was that he contravened s 2(1)(f) of the POCA by managing an enterprise through a pattern of racketeering activity. Apart from the management aspect, the same criteria apply. All of the other counts fall under Schedule 1. [10] It was correctly accepted by the appellants that, apart from counts 6 and 7, the outcome of the appeal hinged largely on the question whether the acceptance into evidence of the intercepted phone conversations obtained under the Interception Act should be set aside on appeal. [11] The court below recognised that the provisions of the Interception Act limit the right to privacy accorded in the Constitution.5 There was no attack on the constitutionality of the Interception Act. Therefore, evidence obtained in accordance with it would thus have been obtained without violating this, or any other, right. Where a right under the Constitution is impinged on by legislation, the prescripts of that legislation must be strictly adhered to. The appellants correctly submitted that the principles governing the obtaining and carrying out of search and seizure warrants apply equally to a direction under the Interception Act. The position on search and seizure was explained by Langa DP in Investigating Directorate: Serious Economic Offences & others v Hyundai Motor Distributors (Pty) Ltd & others; In re Hyndai Motor Distributors (Pty) Ltd & others v Smit NO & others,6 when he said: „On the proper interpretation of the sections concerned, the Investigating Directorate is required to place before a judicial officer an adequate and objective basis to justify the infringement of the important right to privacy. The legislation sets up an objective standard that must be met prior to the violation of the right, thus ensuring that search and seizure powers will only be exercised where there are sufficient reasons for doing so. These provisions thus strike a balance between the need for search and seizure powers and the right to privacy of individuals.‟7 [12] The relevant parts of s 2(2) of the Interception Act read as follows: „Notwithstanding the provisions of subsection (1) or anything to the contrary in any other law contained, a judge may direct that- (a) . . . (b) . . . all communications which have been or are being or are intended to be transmitted by telephone or in any other manner over a telecommunications line, to or from a person, body or organization be intercepted; or 5 Section 14(d) of the Constitution of the Republic of South Africa, 1996. 6 Investigating Directorate: Serious Economic Offences v Hyundai Motor Distributors (Pty) Ltd 2000 (2) SACR 349 (CC) para 55. 7 References omitted. (c) conversations by or with, or communications to or from, a person, body or organization, whether a telecommunications line is being used in conducting those conversations or transmitting those communications or not, be monitored in any manner by means of a monitoring device.‟ Some relevant definitions are: „“monitor” includes the recording of conversations or communications by means of a monitoring device‟. „“monitoring device” means any instrument, device or equipment which is used or can be used, whether by itself or in combination with any other instrument, device or equipment, to listen to or record any conversation or communication‟. „“telecommunications line” includes any apparatus, instrument, pole, mast, wire, pipe, pneumatic or other tube, thing or means which is or may be used for or in connection with the sending, conveying, transmitting or receiving of signs, signals, sounds, communications or other information‟. [13] In their heads of argument, the appellants attacked the admissibility of the evidence obtained under the Interception Act on three fronts. The first was the grant of the initial direction by Seriti J in respect of the first appellant. The gravamen of this was that the application did not comply in all respects with the elaborate procedure set out in the Act. In argument, they conceded that this matter was distinguishable from that of S v Pillay & others8 where the direction was obtained on false information contained in the affidavit supporting the application. In the present matter, it was correctly conceded that, whilst there may have been minor shortcomings in the application, they were at most technical in nature and did not go to the foundation of the application. [14] The second point of attack was that the Interception Act did not provide for the interception of cellphone communications. This was not addressed in argument but was also not expressly abandoned. The reasoning was that, because cellphones were not operative in South Africa when the Act was 8 S v Pillay & others 2004 (2) SACR 410 (SCA). promulgated and because there has been a subsequent amendment to the Act which makes explicit mention of this form of communication, the Act did not provide for interception of that form of communication. As has been seen in the section and the relevant definitions, however, this submission does not bear scrutiny. It was dealt with in S v Cwele & another,9 where Koen J rejected a similar submission. In the light of the diffidence in advancing this argument before us, I need only say that I do not disagree with the finding in Cwele that this form of communication is included in the Act. [15] The third point of attack was directed at the finding of the court below that, even if the application did not strictly comply with the Act, the evidence obtained as a result of the direction was nevertheless admissible. A failure to obtain evidence within the strict confines of the Act means that it falls outside the protective umbrella provided by the Act and results in a violation of the right to privacy. Such evidence may be rendered inadmissible under s 35(5) of the Constitution which provides: „Evidence obtained in a manner that violates any right in the Bill of Rights must be excluded if the admission of that evidence would render the trial unfair or otherwise be detrimental to the administration of justice.‟ A number of factors meriting consideration in this enquiry were mentioned in Pillay, without these being regarded as exhaustive. These were: „. . . the kind of evidence that was obtained, what constitutional right was infringed, was such infringement serious or merely of a technical nature and would the evidence have been obtained in any event.‟10 [16] On the facts of that matter, there were three primary considerations. The direction had been obtained by way of false information in the affidavit supporting the application, the evidence obtained under the Interception Act 9 S v Cwele & another 2011 (1) SACR 409 (KZP). 10 Paragraph 93. was supplemented by additionally tainted evidence by way of a statement obtained by undue influence and there were other means of investigation available. The concern was therefore expressed that: „In our view, to allow the impugned evidence derived as a result of a serious breach of accused 10's constitutional right to privacy might create an incentive for law enforcement agents to disregard accused persons' constitutional rights since, even in the case of an infringement of constitutional rights, the end result might be the admission of evidence that, ordinarily, the State would not have been able to locate.‟11 [17] The court below was alive to the relevant principles and set out clearly several features which weighed in the scale in favour of the admissibility of that evidence. When the appellants were asked whether they could make any submissions to the effect that the discretion was wrongly exercised, they candidly conceded that they could not do so. The deficiencies were of a purely technical nature. There was nothing misleading said in the application. The procedure in the Interception Act was followed as closely as possible. The monitoring of the conversations was the only means to investigate. In this regard, Captain Sizane testified that, since the suspects were all members of the SAPS and because of the endemic corruption therein, he could not use any other investigative tools without jeopardising the investigation. Not only was the exercise of the discretion a proper one but, in my view, it was correct and, in the circumstances of the matter, to have excluded that evidence would have led to a failure of justice. The provisions of s 35(5) therefore did not serve as a basis to exclude the evidence obtained pursuant to the directions and the admission of the evidence by the court below cannot be impugned. [18] The court below dealt in extensive detail with the evidence on each count. This included setting out the intercepted communications which specifically 11 Paragraph 94. bore on the counts in question. The picture that emerged was a clear one. The first appellant was managing the operations of the other two appellants, informers, drug dealers and Shange in seizing and onselling drugs. [19] In brief, the evidence on counts 6 and 7 was as follows. One Kokoeng had been an informer for the first appellant when he was stationed at Vereeniging. When the first appellant was transferred to become the head of the West Rand Organised Crime Unit, he arranged for Kokoeng to be transferred there. He introduced Kokoeng to the second appellant and Shange as being the two loyal juniors who would be running around with him. After a successful raid for drugs, the second appellant misled Kokoeng, saying that it had been unsuccessful. When Kokoeng discovered this, he phoned the second appellant who undertook to straighten it out. The second appellant arranged to meet him in Randfontein with his friend Bogopane. They met the second appellant at a church there and he handed to them some cash and a stash of drugs for which they were to find a buyer. When Bogopane went to meet a prospective buyer, he was arrested. As a result he phoned the first appellant who promised to solve the problem. Whilst he was in the holding cells at Randburg, the second appellant visited him and told him that Shange had told him the arrest was unlawful. The arrest of Bogopane in possession of drugs was confirmed by a reserve police officer who was mystified as to why he was never called to testify in the case against Bogopane. The substances found in his possession were sent for analysis and found to be cocaine, ecstacy and crystal methaqualone, all prohibited substances under the Drugs Act. Despite this, the charges against Bogopane were withdrawn. The police occurrence book recorded that Bogopane was released by the second appellant and Shange on the basis that there was no evidence which connected him to the offence. The second appellant was the investigating officer and the docket subsequently went missing. The court below correctly convicted the first and second appellants on these counts. [20] I turn to consider counts 9, 10, 11 and 13. The evidence of Mr Pretorius, an employee of Swissport Cargo, was that on 3 October 2007 he was approached by three police officials. They introduced themselves as Mokgosane, Shange and Jwili – the first and last also being the names of the third and second appellants respectively - from the West Rand Organised Crime Unit and told him that they were looking for a parcel. They showed him an airways waybill which corresponded with the parcel they were looking for and told him the parcel contained cocaine. He was requested to contact them when the person came to fetch the parcel. They took the parcel with them for safekeeping. The parcel weighed 189 kilograms and they loaded it onto a pickup truck with a forklift. He contacted them when the person came to collect the parcel and all three returned and took the person with them. [21] Captain Scott was approached telephonically on 2 October by Shange to obtain authorisation to do a controlled delivery of the consignment. He received a written request the following morning but heard nothing more. The substance taken was tested and found to be ephedrine, a scheduled substance under s 3 of the Drugs Act. Only 30 000 grams of this was submitted for analysis and subsequent destruction. According to the transcripts of the intercepted communications, the controlled delivery was arranged by the appellants. On 3 October, the third appellant told the first appellant during a conversation which was intercepted that he had taken possession of the ephedrine and that a buyer had already taken two bags and that more would be supplied the following day. The third appellant told the first appellant that he would let him have R1 million that evening. This arrangement was confirmed by Shange in a conversation with the first appellant where they congratulated each other on a successful job. There were further communications concerning payment where it was indicated that R425 000 had been received and that another R1 million was expected. [22] Count 12 related to an incident where an employee of the South African Revenue Service, stationed at OR Tambo airport discovered 5.7 kilograms of cocaine in a container with the assistance of a dog. The second and third appellants and Shange arrived in the search area and informed her that they were waiting for that shipment and were to take it by way of a controlled delivery. They were not authorised to be in the search area and were also not accompanied by an authorised person as was required. They were also unable to produce documents to show that they were entitled to do a controlled delivery with the shipment. After they had been asked for those documents, they disappeared. This attempt at theft of the consignment was also referred to in the transcripts of the phone calls intercepted under the Interception Act. [23] In addition, it was clearly shown by a forensic audit of the financial affairs of the appellants that, in 2007, all three appellants received moneys in excess of their salaries and for which they could not account. The first appellant received R1 044 169.61, the second appellant R69 679.61 and the third appellant R56 430.56. Many of the intercepted communications revolved around the amounts which had been negotiated with purchasers and how payments were being made to the appellants. No point would be served in repeating the analysis of the court below. In argument before us the findings and reasoning of the court below were not seriously challenged. [24] Counts 1 and 2 related to the first appellant managing an enterprise as defined in the POCA and the other two participating in it. Taking into account the other offences, all of which took place during 2007, it is clear that the state proved that the appellants were associated with each other in fact in a pattern of racketeering activity managed by the first appellant and participated in by the second and third appellants. [25] All of this compelling evidence required an explanation. The failure of any of the appellants to call countervailing evidence placed them at risk.12 This, too, was conceded in argument. In my view, considering the evidence in its totality, the court below correctly found that the state had proved its case beyond reasonable doubt. There is therefore no basis on which to set aside the convictions. [26] As regards the sentences, despite an invitation to do so, none of the appellants was able to point to any misdirection by the court below. Neither were they able to submit that the sentences were so startlingly inappropriate as to induce a sense of shock. As a result, this court is not entitled to interfere. [27] In the result, the appeals against the convictions and sentences of all three appellants are dismissed. ___________________ T R Gorven Acting Judge of Appeal 12 Osman & another v Attorney-General, Transvaal 1998 (2) SACR 493 (CC) para 22; S v Boesak 2001 (1) SACR 1 (CC) para 24. Appearances For First Appellant: C Meiring Instructed by: Dolf Jonker Attorneys, Bryanston Symington & De Kock, Bloemfontein For Second & Third Appellants: WB Ndlovu For Respondent: I Bayat Instructed by Director of Public Prosecutions

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 25 March 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. JWARA v STATE (916/2013) [2015] ZASCA 33 (25 March 2015) The SCA today dismissed an appeal by the three appellants who were, at the time, members of the West Rand Organised Crime Unit of the South African Police Service. The appeal against their convictions related to various offences under the Prevention of Organised Crime Act 121 of 1998 by way of managing and participating in an enterprise involved in racketeering through dealing in drugs, obstruction of justice, theft and fraud. The SCA held that evidence obtained under the Interception and Monitoring Prohibition Act 127 of 1992 was properly admitted and that the State had proved the charges beyond a reasonable doubt. The appeal against the sentences was likewise refused.

2629

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 20119/2014 Reportable In the matter between: MSUNDUZI MUNICIPALITY APPELLANT and DARK FIBRE AFRICA (RF) (PTY) LIMITED RESPONDENT Neutral citation: Msunduzi Municipality v Dark Fibre Africa (20119/14) [2014] ZASCA 165 (01 October 2011) Coram: Lewis, Cachalia and Swain JJA and Fourie and Dambuza AJJA Heard: 19 September 2014 Delivered: 01 October 2014 Summary: Interpretation – s 22 of Electronic Communications Act 36 of 2005 – no permission required from landowner for an electronic network services licensee to exercise rights in terms of s 22 – landowner includes state organs – licensees must comply with applicable laws – applicable law cannot be used to limit the very act authorised in the licence - exercise of rights under s 22 constitutes administrative action and subject to PAJA constraints. ORDER On appeal from: Kwazulu-Natal High Court, Pietermaritzburg (Steyn J sitting as court of first instance) The appeal is dismissed with costs, including the costs of two counsel. __________________________________________________________________ JUDGMENT __________________________________________________________________ DAMBUZA AJA (Lewis, Cachalia and Swain JJA and Fourie AJA concurring) [1] This is an appeal, with leave of the court below, against an order of the Kwazulu-Natal Division of the High Court, Pietermaritzburg (Steyn J) dismissing an application to have the respondent interdicted from conducting construction work on municipal land within the area of jurisdiction of the appellant. [2] The appellant is a local municipality established in terms of the Municipal Systems Act 32 of 2000. It controls land and public spaces in the Pietermaritzburg area. [3] The respondent is a private company. It holds an Electronic Communications Network Services licence (ECNS) and an Electronic Communications Network licence (ECN) both issued by the Independent Communications Authority of South Africa in terms of the Electronic Communications Act 36 of 2005 (ECA). [4] The background facts to this appeal are: in July 2012 the respondent notified the appellant of its intention to construct an underground fibre optic cable network along certain streets within Pietermaritzburg. Over the following 16 months, it made numerous attempts to obtain the appellant‟s approval for its construction implementation plans (the wayleaves). The respondent refused to grant such approval. On 9 September 2013 the respondent advised the appellant that if the approval was not granted by 17 September 2013, it would proceed with construction. On 12 November 2013 the respondent commenced construction. On 25 February 2014 the appellant instituted proceedings in the high court, on an urgent basis, seeking an interim interdict stopping the construction. The interim interdict was sought on the basis that the court would grant, as final relief, a declarator that the respondent had no entitlement to exercise any of the powers provided for in s 22 without the appellant‟s prior approval. The appellant contended that, as an alternative to the declaratory order, the respondent‟s decision to exercise rights under s 22 should be reviewed and set aside. It also sought an order that the respondent be permanently interdicted from entering land owned by the appellant and from constructing an electronic communications network or facility thereon. A further anticipated order was that the respondent remove its equipment on land owned by the appellant. The appellant‟s case was that the respondent had failed to obtain permission from it to commence construction. [5] In dismissing the application, the high court followed the decision of this Court in Mobile Telephone Networks (Pty) Ltd v SMI Trading CC1 (MTN) and found that the respondent did not require permission from the appellant to exercise 1 Mobile Telephone Networks (Pty) Ltd v SMI Trading CC 2012(6) SA 638 (SCA) its rights under s 22. That court also found that the appellant had not made out a proper case for review of the respondent‟s decision to commence construction. [6] In MTN, a private licensee (MTN) invoked s 22 to justify its continued occupation, after expiry of its lease, of a base station located on the respondent‟s land. On appeal this court found that a licensee does not require the permission of a landowner to exercise its rights under s 22. [7] Section 22 provides: ‘22. Entry upon and construction of lines across land and waterways. (1) An electronics communications network licensee may – (a) enter upon any land, including any street, road, footpath or land reserved for public purposes, any railway or any waterway of the Republic; (b) construct and maintain an electronic communications network or electronic communications facilities upon, under, over, along or across any land, including any street, road, footpath or land reserved for public purposes, any railway and any waterway of the Republic; and (c) alter or remove its electronic communications network or electronic communications facilities, and may for that purpose attach wires, stays or any other kind of support to any building or other structure. (2) In taking action in terms of subsection (1), due regard must be had to applicable law and the environmental policy of the Republic.‟ [8] Malan JA said: „The powers given by s 22 are, as I have said, required to enable the providers of both fixed-line and wireless telecommunications operators to achieve their objectives…. …the reason for the powers given by s 22(1) would fall away if consent of the owner were to be a requirement. Section 22(1) specifically dispenses with the need to obtain the owner‟s consent…..The words “with due regard” generally mean “with proper consideration” and, in the context, impose a duty on the licensee to consider and submit to the applicable law. This duty arises only when the licensee is engaged “in taking any action in terms of subsection (1)”: the “action” referred to by s 22(1) is entering, constructing and maintaining, altering and removing. These actions are authorised. It is “in their taking” that due regard must be had to the applicable law. A fortiori the “applicable law” cannot limit the very action that is authorised by s 22(1).‟2 (My emphasis.) [9] Thus this court, in MTN, expressly rejected the argument that the consent of a landowner is required to exercise rights under s 22(1). It further held that licensees are obliged to comply with applicable law, an issue to which I shall revert. [10] The appeal was based on three grounds: (a) that this court‟s interpretation of s 22 of the ECA in MTN was incorrect in that the court did not take into account the rights and duties of organs of state in their administrative role; (b) that the respondent‟s decision to exercise its rights under s 22 did not meet the requirements of legality or of lawful administrative action in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA); (c) that the respondent failed to have regard to applicable law within the meaning of s 22(2) of the ECA in executing its s 22 decision. [11] The appellant contended that its delay in approving the respondent‟s wayleaves was justified in view of the respondent‟s attitude that its rights under 2 Paragraphs 14 and 15. s 22 were „absolute‟. This the appellant attributed to an overbroad statement in MTN, on the interpretation of the powers that licensees have under s 22. The argument was that in MTN this court found that licence holders were only obliged to „have due regard to applicable laws‟ but did not necessarily have to comply with them. As already shown above, the court explained, in MTN, that licensees under s 22 are obliged to comply with applicable law, but such law cannot limit the very action that is authorised by section 22(1).3 Counsel for the appellant conceded that if s 22 required the licensee to comply with applicable laws, as in my view was undoubtedly held in MTN, the dictum complained of was not overbroad. [12] In so far as the appellant argued that a distinction must be drawn between private and state organ landowners, that argument also falls to be rejected. The appellant‟s argument was essentially that because of the public order or benefit role that state organs play, the regard that must be had to applicable law is that the law must be complied with, not only in respect of the execution of a decision but also in the taking thereof. [13] There is, however, no scope, in the ECA, for the differential treatment of landowners contended for by the appellant. Express mention, in s 22(1)(a) of „…any land, including any street, road, footpath or land reserved for public purposes, any railway and any waterway of the Republic‟ can only mean that s 22(1) is applicable to land held by state organs as it is to land held by private persons. 3 Paragraph 15 [14] Once counsel for the appellant conceded that the interpretation of s 22 in MTN was not overbroad, the basis for the declarator sought in the main relief fell away, because the respondent did not have to obtain the appellant‟s approval to exercise its rights under s 22. All that the respondent had to do was to comply with applicable law when executing the works. No case was made that it had not done so. [15] The review could also never have succeeded. Indeed, as was held in MTN, the respondent‟s decision to commence construction constituted administrative action. It was therefore subject to review on the grounds listed in s 6 of PAJA.4 But, as submitted on behalf of the respondent, PAJA is exhaustive on the grounds upon which the respondent‟s decision can be challenged; the legality principle is not available as a separate basis for doing so. And even if the decision could be challenged on the legality principle, rationality, on which a legality challenge should be brought, is a much narrower basis than the grounds available under PAJA, which the appellant failed to prove. [16] The appellant‟s argument on legality was not based on rationality. Its argument was that, for the respondent‟s decision to meet the legality requirement, the respondent had to accept the appellant‟s standard terms and conditions or such other conditions as would have the effect of protecting public interest. This was simply another way of imposing a consent requirement on the appellant. If the ECA did not require consent for the exercise of rights under s 22, failure to accept the appellant‟s conditions before taking the decision could not be unlawful and unreasonable. 4 Section 6(2) of PAJA; MTN supra, paras 21, 24 and 35. [17] The appellant contended further that the taking of the decision was procedurally unfair because the respondent had failed to give due notice of the imminent construction to members of the public, refused to agree to the appellant‟s conditions for the construction and abandoned the negotiation process it had started with the appellant. Again, as submitted on behalf of the respondent, the appellant failed to demonstrate that the exercise of the rights had a detrimental effect on members of the public. Further, it did not prove any right to challenge the respondent‟s decision on behalf of persons other than itself. [18] Moreover, regarding the procedural unfairness the respondent had, over a period of approximately 16 months, attempted to prevail upon the appellant to approve its wayleave requests, to no avail. Attempts at reaching agreement on the conditions that the appellant sought to impose failed because of the failure, by the appellant‟s officials, to cooperate with the respondent. [19] Further, the appellant had, as far back as late 2012, taken a unilateral decision to impose a moratorium on new and pending wayleave requests. This was only communicated to the respondent in December 2013, after construction had commenced. At the hearing of the appeal counsel for the appellant readily conceded that he could not make any submissions regarding the moratorium. In the end there was never going to be finality in respect of approval of the wayleaves and settlement on conditions of implementation as the appellant had precluded itself from engagement with the respondent. [20] On lawfulness, the appellant contended that the respondent, in lodging its requests for wayleave approval, had submitted to the appellant‟s processes, raising a legitimate expectation in favour of the appellant, that it would see those processes to finality before commencing with construction. In the light of that,, it was argued, its unilateral decision to commence construction was unlawful. This argument has no legal basis. The respondent was not required by law even to engage in a process of obtaining wayleaves. It did so only to facilitate working together with the appellant, and not because it was legally required to do so. Although the appellant argued that it had become practice for licensees to apply for wayleaves, and that the respondent was accordingly obliged to do so, this cannot be so. It would defeat the very object of s 22 which is to enable a licensee to enter upon land and perform its work without first obtaining the consent of the landowner. But the argument must in any event fail because, on the appellant‟s version, it had put a moratorium in place which would have precluded the respondent from even applying for wayleaves. And in addition, the argument fails to take into account the numerous failures by the appellant itself to cooperate with the respondent. [21] A further argument by the appellant on the unlawfulness of the respondent‟s decision was that the respondent had not complied with applicable law as required under s 22(2) in that it had failed to comply with By-Law 32 of the Motor Vehicle and Road Traffic Regulation By-Laws, which prohibits digging on the appellant‟s roads and thoroughfares without permission from the City Engineer. Apart from the fact that this contention was made only in the appellant‟s reply, it falls foul of the principle that applicable law may not be used to limit the very act authorised under s 22. [22] As to the complaint, by the appellant, that in executing the works the respondent failed to comply with applicable laws, standards and procedures in executing the works, the correct procedure would have been for the appellant to seek a court order compelling the respondent to comply with such laws. [23] In summary, the application was misconceived in that it was based upon an erroneous interpretation of the Act, namely that the consent of a public authority was required before a licensee could take the action envisaged by s 22. In addition, no case was made out for a review of the decision in terms of PAJA. Although a public authority would be entitled to challenge the manner in which a licensee takes the action contemplated in s 22, which does not comply with the „applicable law‟, that was not the challenge raised in this case [24] On the question of costs, there is no reason to fear that an award of costs against the appellant might have a chilling effect on constitutional litigation. Accordingly the usual rules as to costs must apply. [25] Consequently, the appeal is dismissed with costs, including the costs of two counsel. ____________ N Dambuza Acting Judge of Appeal APPEARANCES: For Appellant: AJ Dickson SC (with him HS Gani) Instructed by: Matthew Francis Inc., Pietermaritzburg Rossouw Attorneys, Bloemfontein For Respondent: DN Unterhalter SC (with him J Wilson) Instructed by: Roestof & Kruse Attorneys, Pretoria Symington & De Kok, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 01 October 2014 STATUS Immediate 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. MSUNDUZI MUNICIPALITY V DARK FIBRE AFRICA (RF) (PTY) LIMITED (20119/14) [2013] ZASCA 165 (01 October 2014) Today the Supreme Court of Appeal handed down judgment confirming an order of the Kwazulu Natal High Court, Piermaritzburg in which an application brought by the Msunduzi Municipality to interdict Dark Fibre Africa (DFA) from proceeding with installation of an underground electronic communications cable network in some parts of Pietermaritzburg. The Municipality had contended that DFA was obliged to obtain its permission to commence with construction and that it (DFA) was obliged to consent to the municipality’s terms and conditions of construction. Its case was that distinction had to be drawn between private and state organ landowners in that to exercise their rights under s 22 of the Electronic Communications Act (ECA) licensees under that Act had to obtain permission from landowners in respect where exercise of the rights related to land held by state organs; whereas such permission is not required in respect of land held by private entities. In dismissing the appeal the SCA held that licensees under the Electronic Communication Act (ECA) do not require permission from a local authority to exercise their rights under s 22 of the ECA. This is so when licensees seek to exercise their rights under both privately owned land and land owned by State organs. Licensees are, however obliged to comply with applicable law when implementing decisions taken in terms of s 22. But in this case the municipality had not made out any case that DFA had failed to comply with laws, practices and procedure applicable in the construction underway. The case brought by the municipality had been directed at DFA’s decision to commence construction. The municipality had also contended that the decision by DFA to commence construction should be reviewed and set aside as it did not comply with the requirement of legality and was procedurally unfair, unreasonable and unlawful. The court held that there was no evidence to support the contention by the municipality’s challenge based on legality, procedural unfairness, unreasonableness and unlawfulness. It was, in fact the municipality that had repeatedly refused to cooperate with DFA for approval of the plan of construction, including agreement on conditions on which construction would proceed. ---END---

1254

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT CASE NO: 207/07 Reportable In the matter between: BASTIAN FINANCIAL SERVICES (PTY) LTD Appellant and GENERAL HENDRIK SCHOEMAN PRIMARY SCHOOL Respondent Coram: Harms ADP, Streicher, Heher & Van Heerden JJA et Hurt AJA Heard: 9 May 2008 Delivered: 30 May 2008 Summary: Contract – public school – liability of school for contractual damages – whether s 60(1) of Schools Act 84 of 1996 renders the State liable for claims for contractual damages against a public school Neutral citation: Bastian Financial Services v General Hendrik Schoeman Primary School (207/2007) [2008] ZSCA 70 (30 May 2008) VAN HEERDEN JA: Introduction [1] A public school leased photocopier equipment from a supplier for a specified period. The school then failed to pay the instalments due under the written lease agreement. The supplier cancelled the agreement and sued the school in the magistrate’s court, claiming (inter alia) payment of the total rentals which would have been payable had the agreement run its prescribed course. Provided that the supplier can prove its case satisfactorily, is the public school liable to the supplier in this regard? In the ordinary course, one would have thought so. The school, however, thought otherwise, and the relevant magistrate’s court, as well as the Pretoria High Court, agreed with it. The issue which must be decided in the present appeal is whether the magistrate’s court and the court below were correct in that conclusion. [2] During 2002, the appellant, Bastian Financial Services (Pty) Ltd (BFS), instituted action in the Brits Magistrate’s Court against the respondent, the General Hendrik Schoeman Primary School (the School), claiming relief arising from the cancellation of a lease agreement. The School opposed the action, denying that it was in breach of any of the terms of the agreement and pleading repudiation of the agreement by BFS. The School also raised certain special pleas to the claim. The special plea relevant to this appeal is based on the provisions of s 60(1) of the Schools Act 84 of 1996 (the Act), which section imposes liability on the State for damage or loss caused ‘as a result of any act or omission in connection with any educational activity conducted by a public school’, for which the school would otherwise have been liable. The School pleaded that BFS had sued the wrong party. It claimed that the School was indemnified against the contractual claim, which it contended had to be instituted against the Member of the Executive Council for Education of the North West Province (the MEC) as the provincial representative of the State. This special plea was upheld by the magistrate, whose decision was confirmed on appeal by the court a quo (per Preller J, Engelbrecht AJ concurring). The present appeal comes before us with leave granted by that court. Factual background [3] The written agreement, in terms of which BFS leased certain photocopier equipment to the School for a period of five years, was concluded during September 1999. It is common cause that the equipment was rented by the School in connection with ‘educational activities’ conducted by it. As indicated above, BFS cancelled the agreement and, relying on the express provisions thereof, claimed the following relief: • confirmation of its cancellation of the agreement; • return of the equipment to BFS; • payment of the sum of R461 318,33 plus VAT, being the aggregate value of the rentals which would have been payable had that agreement continued until the expiry of the rental period; • interest on the latter amount at the agreed rate; • costs on the attorney and client scale. [4] Before the magistrate, only the special pleas were argued, with no viva voce evidence being presented by either side. Statutory framework [5] With regard to the School’s special plea based on s 60(1), BFS presented a twofold argument: first, it contended that its claim was not one for ‘damage or loss’, as contemplated by s 60(1); rather, it was one for specific performance in terms of the contract. Second, BFS contended that in any event, on a proper interpretation of s 60(1), it applies only to claims arising in delict and not to claims for contractual damages. [6] I shall first consider the argument based on the interpretation of s 60(1). In this regard, the court a quo concluded that the ordinary grammatical meaning of the words ‘damage or loss caused as a result of any act or omission in connection with any educational activity’ includes claims for damages arising from both contract and delict. [7] The issues presently under discussion arose in Technofin Leasing & Finance (Pty) Limited v Framesby High School & Another.1 It appears that neither counsel nor the High Court was aware of that decision prior to the date of judgment – the only reference to the decision that appears in the record is in the High Court’s judgment granting leave to appeal to this court. In the Framesby matter – incidentally also involving the lease of photocopier machines to a public school – the parties, by way of a stated case, required the court to interpret s 60 of the Act so as to determine which of the school or the relevant MEC was liable to the plaintiff for breach of contract, if such breach could be proved. In his judgment, Pickering J considered similar arguments to the ones advanced before us and 1 2005 (6) SA 87 (SE). concluded ‘that there is no reason to limit the State's liability in terms of s 60 so as to exclude damage or loss caused contractually’.2 [8] Before the most recent amendment to s 60 (in terms of the Education Laws Amendment Act 31 of 1997, which came into operation on 31 December 2007 and thus does not apply to the present matter),3 the section provided: ‘(1) The State is liable for any damage or loss caused as a result of any act or omission in connection with any educational activity conducted by a public school and for which such public school would have been liable but for the provisions of this section. (2) The provisions of the State Liability Act, 1957 (Act No. 20 of 1957), apply to any claim under subsection (1). (3) Any claim for damage or loss contemplated in subsection (1) must be instituted against the Member of the Executive Council concerned. (4) Despite the provisions of subsection (1), the State is not liable for any damage or loss caused as a result of any act or omission in connection with any enterprise or business operated under the authority of a public school for purposes of supplementing the resources of the school as contemplated in section 36, including the offering of practical educational activities relating to that enterprise or business. (5) Any legal proceedings against a public school for any damage or loss contemplated in subsection (4), or in respect of any act or omission relating to its contractual responsibility as employer as contemplated in section 20(10), may only be 2 At 95E. Cf also Strauss v MEC for Education, Western Cape Province 2007 (4) SA 127 (C) paras 25- 28. 3 The effect of the amendment is that the words ‘educational activity’ in s 60(1) have been replaced with the words ‘school activity’, this latter expression being defined in the Act to mean ‘any official educational, cultural, recreational or social activity of the school within or outside the school premises’(see s 60(1)(a) of the Act, as amended, read with the definition of ‘school activity’ inserted in s 1 of the Act by s 4(c) of Act 31 of 2007). A new para (b) has been inserted into s 60(1), providing that, if the school activity in question is covered by an insurance policy taken out by the school, the liability of the State is limited to the damage or loss not covered by the policy. instituted after written notice of the intention to institute proceedings against the school has been given to the Head of Department for his or her information.’ [9] Other provisions of the Act which are relevant to this appeal are s 15, certain subsections of ss 16, 20, 21 and 34, s 36 (prior to amendment of this section in 2001)4 and s 58A(4): • Section 15, under the heading ‘Status of public schools’, provides that every public school is a juristic person, with legal capacity to perform its functions in terms of the Act. • Section 16 deals with ‘Governance and professional management of public schools’ and provides that the governance of every public school is vested in its governing body, which ‘may perform only such functions and obligations and exercise only such rights as prescribed by the Act’ (subsec (1)). A governing body stands in a position of trust towards the school (subsec (2)), while the ‘professional management’ of a public school must be undertaken by the principal under the authority of the Head of Department (subsec (3)). • Section 20 deals with ‘Functions of all governing bodies’ and provides, in sub- sec (4), that, subject to the Act and certain other provisions, ‘a public school may establish posts for educators and employ educators additional to the establishment determined by the Member of the Executive Council in terms of section 3(1) of the Educators’ Employment Act, 1994.’ • Subsection (5) permits a public school to ‘establish posts for non-educators and employ non-educators additional to the establishment determined in terms of the Public Service Act, 1994 (Proclamation No. 103 of 1994).’ 4 Section 36 was amended by s 5 of the Education Laws Amendment Act 57 of 2001, in terms of which two new subsections (subsecs (2) and (3)) were added to s 36. The amending Act came into operation on 5 December 2001, ie after the lease agreement was entered into by BFS and the School. • Subsection (10) provides that, ‘(d)espite section 60, the State is not liable for any act or omission by the public school relating to its contractual liability as the employer in respect of staff employed in terms of subsections (4) and (5).’ • Section 21, dealing with ‘Allocated functions of governing bodies’, provides (in subsec (1)) that a governing body may apply to the Head of Department in writing to be allocated certain functions, including the purchasing of textbooks, educational materials and equipment for the school and the payment for services to the school (paragraphs (c) and (d) of subsec (1)). • The Head of Department may refuse an application made by the governing body in terms of subsec (1) only if the governing body concerned does not have the capacity to perform such function effectively (subsec (2)); or may approve such application unconditionally or subject to conditions (subsec (3)). The decision of the Head of Department must be conveyed in writing to the governing body concerned, giving reasons (subsec (4)), whereupon any person aggrieved by this decision may appeal to the Member of the Executive Council (subsec (5)). • In terms of s 21(6), ‘the Member of the Executive Council may, by notice in the Provincial Gazette, determine that some governing bodies may exercise one or more functions without making an application contemplated in subsection (1), if – (a) he or she is satisfied that the governing bodies concerned have the capacity to perform such function effectively; and (b) there is a reasonable and equitable basis for doing so.’5 • Section 34 places an obligation on the State to ‘fund public schools from public revenue on an equitable basis in order to ensure the proper exercise of the rights of learners to education and the redress of past inequalities in education provision.’ 5 In the Framesby case, the MEC concerned had allocated certain functions to school’s governing body in terms of a notice published in the Provincial Gazette. The functions thus allocated to the governing body included those listed in paras (c) and (d) of s 21(1), as set out above. • In terms of s 36, the governing body of a public school ‘must take all reasonable steps to supplement the resources supplied by the State in order to improve the quality of education provided by the school to all learners at the school’. • Finally, s 58A regulates ‘Alienation of assets of public school’ and provides, in subsec (4) thereof, that ‘(t)he assets of a public school may not be attached as a result of any legal action taken against the school.’6 [10] For the sake of completeness, mention should also be made of the Preamble to the Act, the relevant portion of which provides that – ‘WHEREAS this country requires a new national system for schools which will . . . promote their7 acceptance of responsibility for the organisation, governance and funding of schools in partnership with the State . . . .’. Interpretation of section 60(1) of the Act [11] BFS contended, inter alia, that the inclusion of the words ‘any act or omission in connection with’ in s 60(1) indicated an intention on the part of the legislature to limit the circumstances under which the State would be held liable for damage or loss, to delictual claims against a public school. Moreover, so counsel for BFS submitted, the wording of s 60(1) (in particular, the reference to ‘act or omission’) has a particular ‘delictual flavour’ in that, although this term is not used exclusively in the delictual sphere, this is the area of law where it is most often to be found. 6 Section 58A was inserted into the Act by s 6 of the Education Laws Amendment Act 24 of 2005, which came into operation on 26 January 2006, ie also after the date of conclusion of the lease agreement. Because s 58A(4) relates to execution proceedings against the school, however, it would apply to any such proceedings instituted after the commencement of the amending Act on 26 January 2006. 7 This would seem to refer to ‘all learners, parents and educators’, a phrase which, with the insertion of the word ‘and’, occurs immediately before the quoted sentence in the Preamble commencing with the word ‘promote’. [12] A further argument advanced by counsel for BFS was to the effect that, in terms of the Act, public schools have been given a high degree of autonomy in conducting their own affairs, through the medium of their respective governing bodies in which the governance of public schools is vested. The corollary of the freedom to enter into contracts conferred on the governing bodies of public schools by the Act (in particular ss 20 and 21 thereof), so it was contended, is that such schools must be held accountable under contracts entered into on their behalf by their governing bodies. This accountability would include liability to the other party to such a contract for both specific performance and damages for breach thereof. [13] Counsel for the school countered these submissions by pointing to the broad wording of s 60(1) and the fact that the section does not make any express reference to delictual liability, the State’s liability being expressed in the most general language. So too, the term ‘act or omission’ contained in s 60(1) is not defined or expressly limited in any way. Thus, argued counsel, when given their ordinary grammatical meaning, these words include any step of any nature or any obligation required to be fulfilled. Interpreted in this way, the words must include within their ambit any breach of any term of a contract requiring the school to take certain steps or to fulfil certain obligations and, likewise, any failure on the part of the school to take such a step or to fulfil such an obligation in terms of the contract. [14] In advancing these arguments, counsel for the school relied on the following dictum of Van Zyl J in Strauss v MEC for Education:8 8 Supra n 2 para 28. ‘In this regard, s 60(1) of the Act has been described as an “umbrella provision” directed at establishing State liability in the circumstances referred to in such section. See Louw en ’n Ander v LUR vir Onderwys en Kultuur, Vrystaat, en ’n Ander 2005 (6) SA 78 (O) ([2006] 4 All SA 282) in para [13] at 85B-C (SA) (per Cillié J): “Artikel 60(1) is ’n sambreelbepaling wat daarop gerig is om aanspreeklikheid by die Staat te vestig in die omstandighede waarna in die artikel verwys word. Opvoeding in ’n openbare skool is in die eerste instansie ’n Staatsverantwoordelikheid. Daarom maak dit sin dat die Wetgewer die Staat verantwoordelikheid wil laat aanvaar vir skade of verlies wat veroorsaak word as gevolg van ’n daad of versuim wat voortspruit uit ’n opvoedkundige aktiwiteit by ’n openbare skool.” See also the Technofin case [supra n 1] at 92I-93C (SA), where Pickering J observed that s 60 “is couched in the broadest of terms and the State’s liability is expressed in the most general language”. Indeed, in the “wide language” of the section there was nothing to indicate that it was restricted to delictual liability.’9 [15] The court below concluded that the ordinary grammatical meaning of the words ‘damage or loss caused as a result of any act or omission’ in s 60(1) includes claims for damages arising from both contract and delict. As I have already stated, 10 this was also the conclusion reached by Pickering J in Framesby:11 ‘There is, therefore, in my view, nothing in the wide language of s 60 itself which indicates that it was the intention of the Legislature to limit the liability referred to therein to delictual liability only.’ 9 See also Strauss paras 24-25. 10 See para 7 above. 11 Supra n 1 at 93C. [16] In Manyasha v Minister of Law and Order,12 this Court reiterated the so-called ‘golden rule’ of statutory interpretation13 in the following terms: ‘It is trite that the primary rule in the construction of statutory provisions is to ascertain the intention of the Legislature . . . One seeks to achieve this, in the first instance, by giving the words of the provision under consideration the ordinary grammatical meaning which their context dictates, unless to do so would lead to an absurdity so glaring that the [Legislature] could not have contemplated it’. [17] It is, however, also a well-established rule of construction that words used in a statute must be interpreted in the light of their context, and that, in this regard, the ‘context’ – ‘[I]s not limited to the language of the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted. Often of more importance is the matter of the statute, its apparent scope and purpose, and, within limits, its background . . . the legitimate field of interpretation should not be restricted as a result of an excessive peering at the language to be interpreted without sufficient attention to the contextual scene.’14 [18] This dictum from Jaga’s case has been quoted with approval by the Constitutional Court in, inter alia, Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & Others, 15 that court remarking further – with reference to Thoroughbred Breeders’ Association v Price Waterhouse16 – 12 1999 (2) SA 179 (SCA) at 185B-C. 13 See, eg, LM du Plessis ‘Statute Law and Interpretation’ in 25(1) Lawsa (reissue, 2001) para 302 p 282- 283, para 309 p 290-291 and the other authorities there cited. 14 See Jaga v Dönges NO & Another; Bhana v Dönges NO & Another 1950 (4) SA 653 (A) at 662G-H and 664H (from the dissenting judgment of Schreiner JA, described by Du Plessis op cit para 310 p 297- 298 as ‘the judge’s seminal exposition of an interpretive modus operandi honouring the exigencies of both language and context’, and as ‘probably one of the most frequently relied on minority judgments in the history of South African case law’). 15 2004 (4) SA 490 (CC) para 89. 16 2001 (4) SA 551 (SCA) para 12 of the concurring judgment by Marais JA, Farlam AJA and Brand AJA (at 600 E-H). that ‘the emerging trend in statutory construction is to have regard to the context in which the words occur, even where the words to be construed are clear and unambiguous.’17 The relevant passage from the Thoroughbred Breeders’ Association case reads: ‘The days are long past when blinkered peering at an isolated provision in a statute was thought to be the only legitimate technique in interpreting it if it seemed on the face of it to have a readily discernable meaning. As was said in University of Cape Town v Cape Bar Council and Another 1986 (4) SA 903 (A) at 941D-E: “I am of the opinion that the words of s 3(2)(d) of the Act [the Admission of Advocates Act 74 of 1964], clear and unambiguous as they may appear on the face thereof, should be read in the light of the subject-matter with which they are concerned, and that it is only when that is done that one can arrive at the true intention of the Legislature.” ’ [19] It has also long been recognised in our case law that the aim of statutory interpretation is to give effect to the object or purpose of the legislation in question. Thus, in Standard Bank Investment Corporation Ltd v Competition Commission & Others; Liberty Life Association of Africa Ltd v Competition Commission & Others, 18 Schutz JA, writing for the majority of this Court, stated that:– ‘Our Courts have, over many years, striven to give effect to the policy or object or purpose of legislation. This is reflected in a passage from the judgment of Innes CJ in Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 543. But the passage also reflects that it is not the function of a court to do violence to the language of a statute and impose its view of what the policy or object of a measure should be.’ 17 Bato Star Fishing para 90. See further Du Plessis op cit para 310 p 298. 18 2000 (2) SA 797 (SCA) para 16. The learned judge referred19 to Public Carriers Association and Others v Toll Road Concessionaries (Pty) Ltd and Others20 as illustrative of the proposition that ‘our law is an enthusiastic supporter of “purposive construction” in the sense stated by Smalberger JA’ in that case as follows:21 ‘The primary rule in the construction of statutory provisions is to ascertain the intention of the Legislature. It is now well-established that one seeks to achieve this, in the first instance, by giving the words of the enactment under consideration their ordinary grammatical meaning, unless to do so would lead to an absurdity so glaring that the Legislature could not have contemplated it . . . Subject to this proviso, no problem would normally arise where the words in question are only susceptible to one meaning: effect must be given to such meaning. In the present instance the words [which fell to be interpreted by the court] are not linguistically limited to a single ordinary grammatical meaning. They are, in their context, on a literal interpretation, capable of bearing the different meanings ascribed to them by the applicants, on the one hand, and the respondents, on the other. Both interpretations being linguistically feasible, the question is how to resolve the resultant ambiguity. As there would not seem to be any presumptions or other recognised aids to interpretation which can assist to resolve the ambiguity, it is in my view appropriate to have regard to the purpose of [the statutory provision in question] in order to determine the Legislature’s intention. . . . . . . . Mindful of the fact that the primary aim of statutory interpretation is to arrive at the intention of the Legislature, the purpose of a statutory provision can provide a reliable pointer to such intention where there is ambiguity . . . . Be that as it may, it must be accepted that the literal interpretation principle is firmly entrenched in our law and I do not seek to challenge it. But where its application results in ambiguity and one seeks to determine which of more than one meaning was intended 19 At para 21. See also paras 19, 20 and 22. 20 1990 (1) SA 925 (A). 21 At 942I-944A. by the Legislature, one may in my view properly have regard to the purpose of the provision under consideration to achieve such objective.’22 [20] At first glance, the wording of s 60(1) is indeed sufficiently broad and general to include within its ambit liability for both delictual and contractual damages, as argued by the School. On the other hand, it is equally capable of being interpreted so as to apply only to claims in delict against a public school, rendering the State liable for only such claims to the exclusion of the public school in question, as argued by BFS. Thus, in the words of Smalberger JA in Public Carriers Association,23 ‘the words . . . are not linguistically limited to a single ordinary grammatical meaning.’ One therefore has to have regard to the context24 in which these words are used in the Act, seen against the background of the purpose of this legislation. [21] Counsel for both parties accepted that s 60(1) does not exempt a public school from liability to render specific performance of contractual obligations lawfully25 undertaken by the school’s governing body on its behalf. Any claim for specific performance by the other party to the contact would thus have to be instituted against the public school concerned, and not against the MEC. Counsel also accepted that a claim for the return of goods at the instance of the supplier of such goods to a public school, in terms of a contract entered into with the school, would have to be instituted 22 See further on the purposive approach to statutory interpretation (‘purposivism’), Du Plessis op cit para 304 p 285, para 311 p 300-301, para 349 p 388-389, para 353 p 393-395 and the other authorities there cited. 23 Supra n 20 at 943B, as quoted in the preceding paragraph. 24 The ‘context’ bearing the broad meaning ascribed to it by Schreiner JA in Jaga’s case, supra n 14 at 662 G-H, as quoted in para 17 above. 25 Viz, with the written permission of the Head of Department given in terms of s 21 of the Act, in circumstances in which such written permission is required: see para 9 above. against the school itself and not against the MEC. In my view, both these propositions are correct.26 Even the broad and general wording of s 60(1) cannot legitimately be interpreted to render the State liable for specific performance of contractual obligations lawfully undertaken by a public school through the medium of its governing body. [22] The public school itself, and not the State, is therefore liable for the fulfilment of a public school’s contractual obligations – the other party to the contract cannot, as it were, rely on some sort of ‘warranty’ by the State that the school will perform its obligations under contracts which have been lawfully concluded. This being so, it is difficult to understand why the Legislature would have intended s 60(1) of the Act to have the effect of imposing upon the State a ‘warranty’, vis à vis the other party to a contract with a public school, to pay contractual damages to such other contracting party should the school breach its contractual obligations. [23] As pointed out by counsel for BFS, the Act envisages the creation of a ‘partnership’ between the State, on the one hand, and the ‘learners, parents and educators’ of a public school, on the other, all the ‘partners’ taking responsibility for the organisation, governance and funding of the school.27 The scheme of the Act is such that the ‘learners, parents and educators’ of a public school are represented by its governing body, the elected membership of which includes representatives of all such categories.28 In giving effect to the idea of a ‘partnership’, the Act confers on public schools, through their governing bodies, a considerable degree of 26 See, in this regard, the Framesby case, supra n 1 at 94H-95C. 27 See the Preamble to the Act, quoted in para 10 above. 28 See s 23 of the Act, in particular s 23(2). autonomy in the governance of the school’s affairs.29 Section 60(1) of the Act exempts the school from delictual liability arising from ‘any educational activity conducted by it’,30 and so protects both the school and the victims of any such delict from the potentially dire consequences of a delictual claim. To my mind, this is the intended reach of s 60(1): it would be contrary to the purpose and scheme of the Act as a whole to interpret the section in a manner so as to shift to the State liability for contracts lawfully entered into by the school simply because the school breaches its contract and the other party seeks, not specific performance of the contract, but rather damages for such breach. It is perhaps important to note that, with effect from 26 January 2006, the risk of essential school equipment such as textbooks, classroom furniture, teaching materials, sporting equipment and the like being attached and sold in execution of the school’s judgment debts no longer exists.31 [24] One last aspect must be mentioned. Section 20(10)32 of the Act exempts a public school from liability for ‘any act or omission by the public school relating to its contractual liability as the employer in respect of’ additional educators or non-educators employed by the school governing body itself in terms of ss 20(4) and (5) of the Act. In LUR vir 29 The structure and reach of the Act in this regard is explained in some detail by Bertelsman AJ in Die Ferdinand Postma Hoërskool v Die Stadsraad van Potchefstroom and Others [1999] 3 All SA 623 (T) at 629j-633d. 30 With the exception of liability for loss or damage flowing from an enterprise or business operated under the autonomy of the school for purposes of supplementing the resources of the school as contemplated in s 36: see s 60(4). In terms of s 36, the governing body of a public school is in fact obliged to take all reasonable steps to supplement the school’s resources in order to improve the quality of education provided by the school to its learners. 31 See s 58A of the Act, inserted by s 6 of the Education Laws Amendment Act 24 of 2005 (date of operation 26 January 2006). The wording of s 58A is quoted in para 9 above. Cf the Framesby case, supra n 1 at 93I-J. 32 The wording of which appears in para 9 above. Onderwys en Kultuur, Vrystaat v Louw en ’n Ander,33 this court held that s 20(10) does not exclude the liability of the State for delictual damage or loss caused by the negligent act or omission of an educator or non-educator employed by the governing body of a public school under ss 20(4) or (5). In this regard, Streicher JA stated that: ‘Die aanspreeklikheid van die Staat word uitgesluit ten opsigte van ’n handeling of ’n late wat voortspruit uit die openbare skool se “kontraktuele verantwoordelikheid as werkgewer teenoor die personeel aangestel ingevolge subarts (4) en (5)”. In hierdie geval het die personeellid se handeling of late moontlik voortgespruit uit haar kontraktuele verantwoordelikheid teenoor die skool maar het duidelik nie voortgespruit uit die kontraktuele verantwoordelikheid van die skool teenoor haar soos vereis deur die artikel nie.’34 [25] In the Framesby case,35 Pickering J accepted the submission by counsel for the plaintiff to the effect that, should s 60(1) exclude the State’s liability for contractual obligations of a public school, ‘it would have been unnecessary for the Legislature to have promulgated s 20(10) and, in particular, to have referred therein to s 60 in the terms it did.’36 Needless to say, counsel for the School in the present appeal relied on this dictum. [26] It is indeed so that, if s 60(1) of the Act is interpreted – as in my view it must be – to apply only to delictual claims, s 20(10) is, at least to a large extent, rendered superfluous. And this would, of course, go against the common law ‘presumption’ that a statute does not contain superfluous 33 2006 (1) SA 193 (SCA). 34 Para 13. 35 Supra n 1 at 95D-E. 36 See also the Strauss case, supra n 2 para 21 and the discussion of the Louw case by P J Visser in 2006 (69) THRHR 523. provisions and that a meaning must be given to every word thereof.37 As pointed out by this court, however:38 ‘[T]he rule is not an absolute one. Tautology is not uncommon in legislation . . . And the rule must not be applied to create differences of meaning where such differences were not intended by the lawgiver.’ [27] It could well be that s 20(10) was enacted to make it quite clear that the State is not liable for any labour-related claim, contractual or otherwise, brought against a public school by an educator or non-educator employed by its governing body in terms of ss 20(4) and (5). This was in fact one of the submissions made by counsel for BFS and appears to be a sound one. In any event, in the context of the Act as a whole, ‘its apparent scope and purpose’,39 I do not think that the inclusion of s 20(10) in the Act detracts in any way from my conclusion that s 60(1) covers only claims in delict against a public school and does not include within its ambit contractual claims against the school. In the light of this conclusion, it is not necessary to engage with the submission by BFS that its claim was for specific performance of the lease agreement, rather than for ‘damage or loss’, as contemplated in s 60(1). [28] It follows that the special plea raised by the School in this regard should have been dismissed and that, accordingly, this appeal must succeed. 37 See, for example, Commissioner for Inland Revenue v Golden Dumps (Pty) Ltd 1993 (4) SA 110 (A) at 116 F-117A. See further, Du Plessis op cit para 330 and G E Devenish Interpretation of Statutes (1992) p211 and the other authorities cited by these authors. 38 In Commissioner for Inland Revenue v Shell Southern Africa Pension Fund 1984 (1) SA 672 (A) at 678D-F. 39 See Jaga’s case, supra n 14 at 662G-H. Order [29] In the result, the following order is made: 1. The appeal is upheld with costs. 2. The order of the court below is set aside and replaced with the following: ‘2.1 The appeal is upheld with costs. 2.2 The order of the magistrate’s court dated 18 April 2005 is set aside and replaced with the following: “The defendant’s special pleas are dismissed with costs.” ’ B J VAN HEERDEN Judge of Appeal Concur: HARMS JA STREICHER JA HEHER JA HURT AJA: [30] I have read the judgment of Van Heerden JA, but find myself in respectful disagreement with her interpretation of s 60(1) of the South African Schools Act 84 of 1996 ('the Act'). [31] There are two crisp questions which require to be considered in order to decide this appeal. The first is whether the appellant's claim against the School is a claim for ‘damage or loss’ within the meaning of that expression in s 60(1). The appellant's contention is that, since the claim is based directly on a contractual term, it is, effectively, a claim for specific performance of that term (which takes effect on the fulfilment of a condition referred to in the contract) and not a claim for 'damage or loss'. The second is whether s 60(1) is intended to cover claims for damage or loss arising from contract or whether it is restricted to claims in delict. [32] Van Heerden JA has summarized the contents of the lex commissoria (clause 9) of the contract in her judgment.40 I think it would be of assistance if I were to quote the pertinent portions of the clause. They read as follows: ‘9. If [the] User defaults in the punctual payment of any monies as it (sic) falls due in terms of this Agreement; or fails to comply with any of the terms and conditions of or its obligations under this Agreement; . . . or abandons the equipment; . . . or breaches any warranty given in terms of this Agreement; or does or allows to be done, anything that might prejudice BFS's rights under this Agreement; or the breach of any one of the agreements41 as constituted shall be deemed, at BFS's election, to be a breach of any or all agreements effected in terms of this Agreement, then and upon the occurrence of any of these events BFS may elect without prejudice to any of its rights to: 40 Para 3. 9.1 claim immediate payment of all amounts which would have been payable in terms of this Agreement until expiry of the rental period stated in the Equipment Schedule, whether such amounts are then due for payment or not, or 9.2 immediately terminate this Agreement without prior notice, take possession of the equipment, retain all amounts paid by the User and claim all outstanding Rentals, all legal costs on the attorney and own client scale and, as agreed, pre-estimated liquidated damages,42 the aggregate value of the Rentals which would have been payable had this Agreement continued until expiry of the Rental period stated in the Equipment Schedule. 9.3 In addition BFS shall be entitled to claim from the User the amount of any Value Added Tax ("VAT") payable in respect of such damages. 9.4 If the goods are returned to or repossessed by BFS, BFS shall be entitled to dispose of same in such manner and on such terms and conditions as it may in its sole discretion determine.’ [33] There is a provision (clause 9.5) relating to interest in the contract annexed to the particulars of claim which is not clear, but the reference to it in the particulars43 reads as follows: 'The Defendant would pay the Plaintiff arrear interest on any amount, including liquidated damages, due by the Defendant to the Plaintiff and such arrear interest would be calculated from due date of payment or, in the case of damages from the date of accrual of Plaintiff's right to claim, to date of receipt of payment by the [plaintiff].’ [34] The contract period was five years commencing 1 September 1999 and the School defaulted after the first month. The claim is therefore for repossession of the rented equipment and 59 months' rental plus VAT. 41 There were six items leased to the school, with one 'master agreement' covering all of them. 42 I have italicized all of the references to 'damages' in this clause for reasons which should become apparent shortly. 43 Para 4.9. There is no averment in the particulars of claim as to a formal notice of cancellation of the agreement to the School. It appears, though, that the plaintiff relied on its right to terminate the agreement immediately and without notice in clause 9.2. This seems to follow from the fact that there is no separate claim for arrear instalments of rental up to the date of cancellation and the prayer for interest is on the full amount of R461 318.33 from the date of the first default, 1 October 2000, calculated at the rate of ‘prime plus 4%’ to the date of payment. [35] There can be no doubt that these contractual stipulations are 'penalty stipulations' within the meaning of the Conventional Penalties Act, 15 of 1962. Accordingly, a court asked to adjudicate the appellant's claims in this case (other, of course, than the claims for return of the leased equipment), would be justified in requiring evidence to satisfy itself that the penalty was not out of proportion to the prejudice suffered by the appellant as a result of the School's default.44 Such a procedure would not be possible in a simple claim for specific performance of a contract. In these circumstances, I consider that the contention that the claim is purely for specific performance is a semantic attempt to avoid an obvious conclusion. I may say that, if the claim had been framed on the basis that there was a cancellation on a specified date and that, at that date, a specified amount was owed by the School in the form of arrear instalments, that portion of the claim may well have been properly described as a claim for performance of a contractual obligation, but the issue does not arise here and no more need be said in that connection. As it stands, the whole 44 Smit v Bester 1977 (4) SA 937(A) at 942-943. claim is one for 'damage or loss' arising out of the School's omission to pay the instalments when due. [36] Does s 60(1) of the Act include, within its scope, claims for contractual damages? The relevant portion of the preamble to the Act states that: ‘WHEREAS this country requires a new national system for schools which will . . . promote . . . acceptance of responsibility for the organisation, governance and funding of schools in partnership with the State . . . .’ [37] Pursuant to this stated intention, in s 16(1) of the Act the Department of Education delegated the governance and management of public schools to their governing bodies. Section 36(1) imposed a duty on the governing body of each school to: ‘ . . . take all reasonable measures within its means to supplement the resources supplied by the State in order to improve the quality of education provided by the school to all learners at the school.’ [38] Subsections 37(1) to (3) provide for the establishment of a school fund into which the governing body is required to deposit all money received in the form, inter alia, of school fees, voluntary contributions and donations. Subsection (6) provides that: ‘The school fund, all proceeds thereof and any other assets of the public school must be used only for – (a) educational purposes, at or in connection with such school; (b) educational purposes, at or in connection with another public school, by agreement with such other public school and with the consent of the Head of Department; (c) the performance of the functions of the governing body; or (d) another educational purpose agreed between the governing body and the Head of Department.’ [39] The governing body is required to prepare a budget ahead of the commencement of each school year and present it to the parent body for approval.45 This budget is used as the basis for setting the fees for the coming year and the parent body is required, specifically and separately, to approve the proposed fees.46 It is against this procedural background that the governing body, in consultation with the general parent body, computes the expenditure for the coming year and fixes the fees which will have to be levied to meet it. [40] Looked at from this perspective, the purpose behind s 60(1) becomes plain. It is highly unlikely (if it is conceivable at all) that a school budget would contain a contingency provision for loss or damage arising out of an act or omission which had not, at the time of framing the budget, been foreseen. It can be predicted, therefore, that a claim of this type, if successful, would give rise to a shortfall in the budgeted funds. Nor could such a claim be satisfied by payment out of a school fund, since it could hardly be described as a payment 'for educational purposes' as prescribed in s 37(6)(a) of the Act. In the light of these considerations, it seems to me that the purpose behind s 60(1) is that the MEC will step into the shoes of a school in order to accept liability for claims for loss or damage arising from acts or omissions not budgeted for. Is there any reason why the legislator would have intended this to happen only in cases where the 'act or omission' is negligent, giving rise to delictual liability, as opposed to a breach attracting liability under a contract? There is none that I can think 45 Section 38. of. Nor, in my view, does a consideration of the Act as a whole give any indication of such an intention. [41] The argument presented on behalf of the appellant placed heavy emphasis on what was referred to as the 'delictual flavour' of the expression 'act or omission'. Although the expression is, understandably, regularly encountered in relation to claims in delict, it is by no means uncommon in the contractual context. The legislator has used it in this context in a number of statutes, such as ss 1 and 2 of the Conventional Penalties Act, s 4(4) of the National Credit Act 34 of 2005, s 12(5) of the Alienation of Land Act 68 of 1981 and s 5(2) of the Property Time-Sharing Control Act 75 of 1983. The expression is used in s 20(10) of the Act itself. In these circumstances it seems to me that little weight can be attributed, in construing s 60(1), to the fact that the legislature has used an expression which is regularly encountered in the delictual context, since that expression is by no means exclusive to that context. [42] The crucial provision which indicates that both delictual and contractual liability are contemplated in s 60(1) is to be found in s 20(10), which reads: ‘Despite section 60, the State is not liable for any act or omission by the public school relating to its contractual liability as the employer in respect of staff employed in terms of subsections (4) and (5).’47 [43] I cannot accept that this is a simple case of legislative tautology. The words ‘despite section 60’ cannot be ignored and, in my view, the only 46 Section 39. 47 Staff employed by the governing body in addition to the staff allocated by the Department of Education. sensible import which can be given to them is that the particular form of contractual liability arising from a school's capacity as an employer cannot be enforced against the State. The inevitable corollary must be that the State is otherwise liable in terms of s 60(1), in appropriate circumstances, for loss or damage arising from an act or omission relating to contractual obligations other than those provided for in s 20(10).48 [44] It follows that I take the view that the appellant's claim should have been brought against the MEC and not the School and that the magistrate in the court of first instance was correct in upholding the special plea on this basis. N V HURT Acting Judge of Appeal 48 This was the specific finding of Pickering J in the case of Technofin Leasing & Finance (Pty) Ltd v Framesby High School 2005 (6) SA 87 (SE). I agree with the reasoning reflected in that judgment.

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: Friday 30 May 2008 Status: Immediate 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 Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School The Supreme Court of Appeal (SCA) today upheld an appeal by Bastian Financial Services (Pty) Ltd (BFS) against a decision of the Pretoria High Court which held that the General Hendrik Schoeman Primary School (the School) was not liable to it for damages for breach of a contract allegedly entered into between them. The School had leased photocopier equipment from BFS for a period of five years and failed to pay the instalments due under the lease agreement. BFS cancelled that agreement and sued the School, claiming return of the equipment and payment of the total rentals which would have been payable had the agreement run its course. The School opposed the action, denying that it was in breach of the contract and maintaining that it was BFS that had breached the contract. The School also raised a special plea to the effect that BFS had sued the wrong party. Its case was that, in terms of section 60(1) of the Schools Act 84 of 1996, the State was liable for claims for both delictual and contractual damages arising from acts or omissions in connection with any educational activity conducted by a public school. The School contended that it was therefore indemnified against BFS’ contractual claim, which should have been instituted against the MEC for Education of the North West Province. Both the magistrate’s court and the High Court agreed with the School’s interpretation of section 60(1) and upheld the special plea. On appeal to the SCA, the majority of this Court (four judges concurring, one judge dissenting) pointed out that a public school itself, and not the State, is liable for the performance of the school’s contractual obligations – the other party to the contract cannot rely on some sort of ‘warranty’ by the State that the school will perform its obligations under contracts which have been lawfully entered into. The SCA held that it would be contrary to the purpose and scheme of the Schools Act as a whole to interpret section 60(1) in a manner so as to shift to the State liability for damages flowing from the breach of a contract lawfully entered into by a public school. Section 60(1) must be interpreted to apply only to delictual claims and the special plea raised by the School should have been dismissed. For this reason, the appeal succeeded. ends ……….

182

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 926/2016 In the matter between: LUDWIG WILHELM DIENER N.O. Appellant and THE MINISTER OF JUSTICE First Respondent MASTER OF THE HIGH COURT, PRETORIA Second Respondent CLOETE MURRAY N.O. Third Respondent WINIFRED FRANCES HARMS N.O. Fourth Respondent CHRISTIAAN FREDERIK DE WET N.O. Fifth Respondent FIRSTRAND BANK LTD Sixth Respondent SOUTH AFRICAN RESTRUCTURING AND INSOLVENCY ASSOCIATION (SARIPA) Amicus Curiae THE BANKING ASSOCIATION OF SOUTH AFRICA (BASA) Amicus Curiae INDEPENDENT BUSINESS RESCUE ASSOCIATION OF SOUTH AFRICA (IBRASA) Amicus Curiae TURNAROUND MANAGEMENT ASSOCIATION - SOUTHERN AFRICA NPC (TMA-SA) Amicus Curiae Neutral citation: Diener N.O. v Minister of Justice (926/2016) [2017] ZASCA 180 (1 December 2017) Coram: Navsa ADP and Bosielo and Majiedt JJA and Plasket and Schippers AJJA Heard: 13 November 2017 Delivered: 1 December 2017 Summary: Companies Act 71 of 2008 – business rescue – whether, when business rescue converted to liquidation, business rescue practitioner’s claim for remuneration and expenses enjoys a ‘super-preference’ over all creditors, secured or unsecured – whether, when business rescue proceedings converted to liquidation proceedings, date of liquidation is date of commencement of business rescue proceedings or date liquidation application filed – whether business rescue practitioner’s claim for remuneration and expenses must be proved in terms of s 44 of the Insolvency Act 24 of 1936. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Dewrance AJ sitting as court of first instance): The appeal is dismissed. JUDGMENT ___________________________________________________________________ Plasket AJA (Navsa ADP, Bosielo and Majiedt JJA and Schippers AJA concurring) [1] The concept of business rescue was introduced into South African corporate law and governance by chapter 6 of the Companies Act 71 of 2008 (the 2008 Act). It replaced the system of judicial management provided for by chapter XV of the Companies Act 61 of 1973 (the 1973 Act), it having been widely acknowledged that judicial management did not succeed as a means of nursing back to health companies that, for one or other reason, were in financial distress.1 Section 7(k) of the 2008 Act provides that one of its purposes is to ‘provide for the efficient rescue and recovery of financially distressed companies, in a manner that balances the rights and interests of all relevant stakeholders’. [2] The term ‘business rescue’ is defined in s 128(1)(b) to mean: ‘. . . proceedings to facilitate the rehabilitation of a company that is financially distressed by providing for – (i) the temporary supervision of the company, and of the management of its affairs, business and property; 1 See Farouk H I Cassim, Maleka Femida Cassim, Rehana Cassim, Richard Jooste, Joanne Shev and Jacqueline Yeats The Law of Business Structures at 458. The authors describe judicial management as ‘a dismal failure’. (ii) a temporary moratorium on the rights of claimants against the company or in respect of property in its possession; and (iii) the development and implementation, if approved, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities, and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis or, if it is not possible for the company to so continue in existence, results in a better return for the company's creditors or shareholders than would result from the immediate liquidation of the company.’ Central to this process is the business rescue practitioner (BRP). This functionary is defined in s 128(1)(d) to mean ‘a person appointed, or two or more persons appointed jointly, in terms of this Chapter to oversee a company during business rescue proceedings’. [3] This appeal, in a nut-shell, concerns the claim for remuneration and expenses of a BRP when business rescue has failed and been converted into a liquidation. I shall, in due course, define the discrete issues that we are required to decide. [4] It is necessary at the outset briefly to identify the parties. The appellant, Mr Ludwig Diener (Diener), was the BRP appointed to oversee the business rescue of J D Bester Labour Brokers CC (J D Bester). He applied to the Gauteng Division of the High Court, Pretoria, for an order reviewing and setting aside the first and final liquidation, distribution and contribution account in respect of J D Bester in liquidation. The first and second respondents – the Minister of Justice and the Master of the High Court, Pretoria – took no part in the proceedings, both in the court below and in this court. The third respondent, Mr Cloete Murray (Murray), is one of the joint liquidators of J D Bester. He opposed the relief sought in the High Court and also opposes the appeal. His co-liquidators, the fourth respondent, Ms Winifred Harms, and the fifth respondent, Mr Christiaan De Wet, took no part in the proceedings in the court below and take no part in this appeal. An interested party that was not cited as a respondent in the court below, FirstRand Bank Limited, is the sixth respondent in this appeal. It was a secured creditor of J D Bester. [5] Because of the importance of the issues that arise for decision in this appeal, various parties applied for admission as amici curiae. They are the Banking Association of South Africa (BASA), the Independent Business Rescue Association of South Africa (IBRASA), the South African Restructuring and Insolvency Association (SARIPA) and the Turnaround Management Association – Southern Africa NPC (TMA-SA). The amici curiae filed heads of argument and presented oral argument. I record the court’s gratitude to the amici curiae and, indeed, the appellant and respondents as well, for their most helpful heads of argument and oral submissions. Background [6] On 13 June 2012, the members of J D Bester passed a resolution placing it voluntarily in business rescue, in terms of s 129(1) of the 2008 Act.2 On the same day, J D Bester wrote to the Companies and Intellectual Property Commission requesting that Diener be appointed as BRP, and completed and filed the necessary form giving notice of the commencement of business rescue proceedings. On 20 June 2012, Diener was appointed as BRP to J D Bester. [7] On 14 June 2012, after the commencement of business rescue but before the appointment of Diener, a firm of attorneys, Cawood Attorneys, was instructed by J D Bester to launch an urgent application against FirstRand Bank, a secured creditor, to stay the sale in execution of J D Bester’ s immovable property, its only asset of any value. An order to this effect was granted on 14 June 2012. [8] Cawood Attorneys later submitted its account for this work to Diener. He stated in the founding affidavit that these expenses to J D Bester were incurred with his ‘knowledge and consent and after the commencement of the business rescue proceedings’. From this, he concluded that these expenses ‘represent expenses in business rescue as defined in Section 143 of the new Companies Act, or at the very least, these services and expenses represent unsecured post commencement finance as defined in Section 135 of the new Companies Act’. He claimed that the account of Cawood Attorneys ‘only became due after my appointment . . . and after the Close Corporation has already been placed under supervision’. As a result, he claimed that these expenses were expenses in the business rescue proceedings. 2 Section 66(A1) of the Close Corporation Act 69 of 1984 makes chapter 6 of the 2008 Act applicable to close corporations. [9] During August 2012, Diener decided that J D Bester could not be rescued. He instructed Cawood Attorneys to bring an application in terms of s 141(2)(a) of the 2008 Act, to convert the business rescue proceedings into liquidation proceedings. On 27 August 2012, an order was issued by Kubushi J in the Gauteng Division of the High Court, Pretoria, which stated that ‘the business rescue proceedings with regard to the respondent [J D Bester] is terminated and that the respondent be placed under liquidation in the hands of the Master in terms of section 141(2)(a)(ii)’ and that ‘the costs be costs in the liquidation’.3 Murray, Harms and De Wet were duly appointed by the Master as joint liquidators of J D Bester. [10] In the founding affidavit, Diener stated that ‘the accounts of Cawood Attorneys for the services provided to the Close Corporation and me after the commencement of business rescue proceedings were provided to the jointly appointed liquidators for the Close Corporation, together with my account’. [11] The joint liquidators could not agree on how the fees and expenses of Diener and of Cawood Attorneys should be dealt with. Murray was of the view that Diener had failed to prove a claim in terms of s 44 of the Insolvency Act 24 of 1936 and that Cawood Attorneys was an unsecured creditor who, ultimately, was required to make a contribution in terms of s 106 of the Insolvency Act. Harms and De Wet took a contrary view and the issue was referred to the Master for his decision. [12] The Master upheld the position adopted by Murray in a letter dated 12 December 2013. Diener, through Cawood Attorneys, made representations to the Master, dated 15 July 2014, in which he objected to the liquidation, distribution and contribution account that had been finalised on the basis of the Master’ s decision in favour of Murray. The Master, by letter dated 4 February 2015, informed Diener that the objection had not succeeded, stating that he confirmed the liquidation, distribution 3 Section 141(2)(a) provides: ‘If, at any time during business rescue proceedings, the business rescue practitioner concludes that – (a) there is no reasonable prospect for the company to be rescued, the practitioner must – (i) so inform the court, the company, and all affected persons in the prescribed manner; and (ii) apply to the court for an order discontinuing the business rescue proceedings and placing the company into liquidation.’ and contribution account ‘since the liquidators have successfully complied with my pre-confirmation requirements’. [13] By notice of motion dated 28 April 2015, Diener launched an application in the Gauteng Division of the High Court, Pretoria, in terms of s 407(4) of the 1973 Act against the first to fifth respondents in which he sought orders: ‘1 That the decision of the Second Respondent to accept the First and Final Liquidation, Distribution and Contribution Account be reviewed and set aside; 2 That the Honourable Court provides direction regarding the manner in which the First and Final Liquidation, Distribution and Contribution Account should provide for: 2.1 the cost of a business Rescue Practitioner as engaged in lawful business rescue proceedings; 2.2 the cost of service providers who provided services to a lawfully appointed business rescue practitioner in finalising business rescue proceedings; 2.3 the cost of service providers who provided services to [the] Close Corporation after the commencement of the business rescue proceedings. 3 In the alternative to prayer 2 above, that the First and Final Liquidation, Distribution and Contribution Account for J D Bester Labour Brokers CC (in liquidation) be amended to make provision for the remuneration and expenses of the Applicant in the business rescue proceedings of J D Bester Labour Brokers CC, which include the expense of Cawood Attorneys for services rendered to the Applicant and J D Bester Labour Brokers CC in the business rescue proceedings, to be payable in order of preference after the costs in liquidation and before the claims of any secured or unsecured creditors. 4 Costs of this application against any party opposing the application on an attorney and client cost scale.’ [14] The matter was heard by Dewrance AJ who dismissed the application with costs. On application by Diener, Dewrance AJ granted leave to appeal to this court. The issues [15] The issues that we are required to consider in relation to Diener are, in the order in which they will be dealt with: (a) the order of preference of the BRP’s claim for remuneration and expenses on the liquidation of J D Bester; (b) a determination of the date of liquidation, when business rescue proceedings are converted into liquidation proceedings; and (c) whether the BRP is required to prove his or her claim in terms of s 44 of the Insolvency Act, and the effect of Diener not having proved his claim in this case. In addition, two issues in relation to the claims for fees of Cawood Attorneys have been raised, namely (a) whether its fees in respect of the urgent application of 14 June 2002, referred to in paragraph 7 above, were to be treated as expenses in the business rescue in terms of s 143 of the 2008 Act, or post- commencement finance in terms of s 135, or, as they were dealt with, as a claim by a concurrent creditor; and (b) whether its fees in respect of the application to convert the business rescue proceedings into liquidation proceedings were costs in the liquidation or were to be treated, as they were, as a claim by a concurrent creditor. Applicable statutory provisions [16] The determination of the issues that I have identified involves an exercise in statutory interpretation as they concern, in one way or another, ascribing meaning to the provisions of chapter 6 of the 2008 Act and the relevant sections of the Insolvency Act. [17] It is necessary to say something of that process of interpretation. In Natal Joint Municipal Pension Fund v Endumeni Municipality4 Wallis JA dealt with the approach to be adopted generally when meaning must be attributed to a written document: ‘Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation; in a contractual context it is to make a contract 4 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA); [2012] ZASCA 13 para 18 for the parties other than the one they in fact made. The “inevitable point of departure is the language of the provision itself”, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.’ [18] In Panamo Properties (Pty) Ltd & another v Nel & others NNO,5 a case, like this one, concerning the interpretation of the business rescue provisions of chapter 6 of the 2008 Act, Wallis JA commenced his judgment by speaking of the commendable goals of chapter 6 being hampered ‘because the statutory provisions governing business rescue are not always clearly drafted’.6 He then proceeded to say that in these circumstances, a court ‘must consider whether there is a sensible interpretation that can be given to the relevant provisions that will avoid anomalies’ and that this involves the application of two further principles of interpretation: endeavouring to ‘give a meaning to every word and every section in the statute’ and avoiding construing provisions as having no meaning; and reconciling sections of a statute that appear to be in conflict if that is possible.7 [19] In addition, s 5 of the 2008 Act also provides guidance on how its provisions are to be interpreted, particularly in relation to other legislation. The section states: (1) This Act must be interpreted and applied in a manner that gives effect to the purposes set out in section 7. (2) To the extent appropriate, a court interpreting or applying this Act may consider foreign company law. (3) . . . (4) If there is an inconsistency between any provision of this Act and a provision of any other national legislation- (a) the provisions of both Acts apply concurrently, to the extent that it is possible to apply and comply with one of the inconsistent provisions without contravening the second; and (b) to the extent that it is impossible to apply or comply with one of the inconsistent provisions without contravening the second- (i) any applicable provisions of the- (aa) Auditing Profession Act; 5 Panamo Properties (Pty) Ltd & another v Nel & others NNO 2015 (5) SA 63 (SCA); [2015] ZASCA 76; African Banking Corporation of Botswana Ltd v Kariba Furniture Manufacturers (Pty) Ltd & others 2015 (5) SA 192 (SCA); [2015] ZASCA 69 para 43. 6 Para 1. 7 Para 27. (bb) Labour Relations Act, 1995 (Act 66 of 1995); (cc) Promotion of Access to Information Act, 2000 (Act 2 of 2000); (dd) Promotion of Administrative Justice Act, 2000 (Act 3 of 2000); (ee) Public Finance Management Act, 1999 (Act 1 of 1999); (ff) Financial Markets Act, 2012; (gg) Banks Act; (hh) Local Government: Municipal Finance Management Act, 2003 (Act 56 of 2003); or (ii) Section 8 of the National Payment System Act, 1998 (Act 78 of 1998). prevail in the case of an inconsistency involving any of them, except to the extent provided otherwise in sections 30(8) or 49(4); or (ii) the provisions of this Act prevail in any other case, except to the extent provided otherwise in subsection (5) or section 118(4). (5) If there is a conflict between a provision of Chapter 8 and a provision of the Public Service Act, 1994 (Proclamation 103 of 1994), the provisions of that Act prevail. (6) . . . ’ [20] I turn now to the scheme of chapter 6. Not only does it prescribe the process of business rescue and its consequences, but it also deals with the financing of a company under business rescue, the remuneration of a BRP and his or her claims for that remuneration and expenses. [21] Chapter 6 creates two ways in which business rescue may begin. First, the board of directors of a company may pass a resolution ‘that the company voluntarily begin business rescue proceedings’ provided the board has ‘reasonable grounds to believe’ that two circumstances exist – that the company is financially distressed and that ‘there appears to be a reasonable prospect of rescuing the company.8 [22] The company is then required to file its resolution with the Companies and Intellectual Property Commission (the Commission), and publish a notice of the resolution, its effective date and a ‘sworn statement of the facts relevant to the grounds on which the board resolution was founded’.9 8 Section 129(1). 9 Section 129(3). [23] Section 130(1) allows for objections to the board’s resolution to be made by an affected person – a shareholder, creditor, a registered trade union representing the company’s employees or an employee or his or her representative10 – after the adoption of the resolution but before the adoption of a business plan. An objection takes the form of an application to a court to set aside the resolution,11 the setting aside of the appointment of the BRP12 or an order requiring the BRP to provide security.13 [24] The second way in which business rescue begins is by means of a court order. In terms of s 131(1), an affected person ‘may apply to a court at any time for an order placing the company under supervision and commencing business rescue proceedings’. The court may grant the relief sought if it is satisfied that the company is financially distressed, or it has ‘failed to pay over any amount in terms of an obligation under or in terms of a public regulation, or contract, with respect to employment-related matters’, or it is ‘otherwise just and equitable to do so for financial reasons, and there are reasonable prospects for rescuing the company’.14 [25] If a court makes an order placing a company in business rescue, it may appoint a BRP, who has been nominated by the applicant, on an interim basis, subject to the appointment being ratified by ‘the holders of a majority of the independent creditors’ voting interests at the first meeting of creditors, as contemplated by section 147’.15 [26] In terms of s 132, business rescue commences either when the company files its resolution, when an affected person applies to a court or when ‘a court makes an order placing the company under supervision during the course of liquidation proceedings, or proceedings to enforce a security interest, as contemplated by section 131(7)’.16 10 Section 128(1)(a). 11 Section 130(1(a). 12 Section 130(1)(b). 13 Section 130(1)(c). 14 Section 131(4). 15 Section 131(5). 16 Section 132(1). [27] Business rescue proceedings end when a court has either set aside the resolution or order that commenced business rescue or converts the proceedings into liquidation proceedings;17 the BRP has filed with the Commission a notice terminating the business rescue proceedings;18 or a business plan has either been proposed and rejected and no affected person has endeavoured to extend the business rescue proceedings, or the business plan has been adopted and the BRP has filed a notice of ‘substantial implementation of the plan’.19 [28] Business recue is not an open-ended process. Its very rationale is that it must end, either when its aim has been attained or when the realisation arises that rescue is not attainable. To this end, s 132(3) provides that if business rescue proceedings have not ended within three months of commencement or a longer period sanctioned by a court, the BRP must prepare a progress report which he or she must update monthly until the end of the business rescue proceedings, and deliver the report and each update to each affected person and to either the court (if the proceedings were the subject of a court order) or the Commission. [29] The effect of business rescue is that, subject to certain exceptions, a general moratorium on legal proceedings against the company comes into effect20 and the property interests of the company are protected:21 for instance, the company may only dispose of or agree to dispose of property in the ordinary course of its business; in a bona fide arm’s length transaction for a fair value approved in advance and in writing by the BRP or in ‘a transaction contemplated within, and undertaken as part of the implementation of, a business rescue plan that has been approved in terms of section 152’.22 [30] Section 135 deals with post-commencement finance, which includes the remuneration and expenses of the BRP. It provides: 17 Section 132(2)(a). 18 Section 132(2)(b). 19 Section 132(2)(c). 20 Section 133. 21 Section 134. 22 Section 134(1)(a). ‘(1) To the extent that any remuneration, reimbursement for expenses or other amount of money relating to employment becomes due and payable by a company to an employee during the company's business rescue proceedings, but is not paid to the employee- (a) the money is regarded to be post-commencement financing; and (b) will be paid in the order of preference set out in subsection (3)(a). (2) During its business rescue proceedings, the company may obtain financing other than as contemplated in subsection (1), and any such financing- (a) may be secured to the lender by utilising any asset of the company to the extent that it is not otherwise encumbered; and (b) will be paid in the order of preference set out in subsection (3)(b). (3) After payment of the practitioner's remuneration and expenses referred to in section 143, and other claims arising out of the costs of the business rescue proceedings, all claims contemplated- (a) in subsection (1) will be treated equally, but will have preference over- (i) all claims contemplated in subsection (2), irrespective of whether or not they are secured; and (ii) all unsecured claims against the company; or (b) in subsection (2) will have preference in the order in which they were incurred over all unsecured claims against the company. (4) If business rescue proceedings are superseded by a liquidation order, the preference conferred in terms of this section will remain in force, except to the extent of any claims arising out of the costs of liquidation.’ [31] Chapter 6 regulates closely the appointment, qualifications, removal and remuneration of the BRP. Section 138 prescribes the qualifications of a BRP. He or she must be a ‘member in good standing of a legal, accounting or business management profession accredited by the Commission’;23 be licensed by the Commission;24 may not be a person who has been placed under probation (for delinquency as a director) by a court in terms of s 162(7) of the 2008 Act;25 would not be disqualified from acting as a director of a company;26 does not have a conflict of 23 Section 138(1)(a). 24 Section 138(1)(b). 25 Section 138(1)(c). 26 Section 138(1)(d). interest in relation to the company under business rescue;27 and is not related to a person involved in the company.28 [32] A BRP may be removed by a court either in terms of s 130, pursuant to an objection to a business rescue resolution, or because of his or her incompetence or failure to perform his or her duties;29 failure to exercise a proper degree of care in the performance of business rescue functions;30 involvement in ‘illegal acts or conduct’;31 no longer meeting the qualifications for the office;32 having a conflict of interest or lacking independence;33 or on account of being ‘incapacitated and unable to perform the functions’ of the office, and being ‘unlikely to regain that capacity within a reasonable time’. 34 [33] Section 140 prescribes the powers, and limitations on the powers, of a BRP during business rescue. He or she:35 ‘(a) has full management control of the company in substitution for its board and pre- existing management; (b) may delegate any power or function of the practitioner to a person who was part of the board or pre-existing management of the company; (c) may- (i) remove from office any person who forms part of the pre-existing management of the company; or (ii) appoint a person as part of the management of a company, whether to fill a vacancy or not, subject to subsection (2); and (d) is responsible to- (i) develop a business rescue plan to be considered by affected persons, in accordance with Part D of this Chapter; and (ii) implement any business rescue plan that has been adopted in accordance with Part D of this Chapter.’ 27 Section 138(1)(e). 28 Section 138(1)(f). 29 Section 139(2)(a). 30 Section 139(2)(b). 31 Section 139(2)(c). 32 Section 139(2)(d). 33 Section 139(2)(e). 34 Section 139(2)(f). 35 Section 140(1). [34] In terms of s 140(2), the BRP may not, except with the approval of a court, appoint any person to the management of the company or as an advisor to himself or herself or to the company who has a relationship with the company that would lead a reasonable person to infer a lack of integrity, impartiality or objectivity on that person’s part, or a person who is related to such a person. [35] Section 140(3) sets out the responsibilities of the BRP. It provides: ‘During a company's business rescue proceedings, the practitioner- (a) is an officer of the court, and must report to the court in accordance with any applicable rules of, or orders made by, the court; (b) has the responsibilities, duties and liabilities of a director of the company, as set out in sections 75 to 77; and (c) other than as contemplated in paragraph (b)- (i) is not liable for any act or omission in good faith in the course of the exercise of the powers and performance of the functions of practitioner; but (ii) may be held liable in accordance with any relevant law for the consequences of any act or omission amounting to gross negligence in the exercise of the powers and performance of the functions of practitioner.’ In terms of s 140(4), if business rescue is converted to liquidation proceedings, the BRP who oversaw the business rescue process is ineligible to be appointed as liquidator of the company. [36] Section 143 deals with the remuneration of a BRP. It states: ‘(1) The practitioner is entitled to charge an amount to the company for the remuneration and expenses of the practitioner in accordance with the tariff prescribed in terms of subsection (6). (2) The practitioner may propose an agreement with the company providing for further remuneration, additional to that contemplated in subsection (1), to be calculated on the basis of a contingency related to- (a) the adoption of a business rescue plan at all, or within a particular time, or the inclusion of any particular matter within such a plan; or (b) the attainment of any particular result or combination of results relating to the business rescue proceedings. (3) Subject to subsection (4), an agreement contemplated in subsection (2) is final and binding on the company if it is approved by- (a) the holders of a majority of the creditors' voting interests, as determined in accordance with section 145 (4) to (6), present and voting at a meeting called for the purpose of considering the proposed agreement; and (b) the holders of a majority of the voting rights attached to any shares of the company that entitle the shareholder to a portion of the residual value of the company on winding-up, present and voting at a meeting called for the purpose of considering the proposed agreement. (4) A creditor or shareholder who voted against a proposal contemplated in this section may apply to a court within 10 business days after the date of voting on that proposal, for an order setting aside the agreement on the grounds that- (a) the agreement is not just and equitable; or (b) the remuneration provided for in the agreement is unreasonable having regard to the financial circumstances of the company. (5) To the extent that the practitioner's remuneration and expenses are not fully paid, the practitioner's claim for those amounts will rank in priority before the claims of all other secured and unsecured creditors. (6) The Minister may make regulations prescribing a tariff of fees and expenses for the purpose of subsection (1).’ Does a BRP enjoy a ‘super-preference’ on the liquidation of a company? [37] It was argued on behalf of Diener that, in relation to his remuneration and expenses, he enjoyed, after the costs of the liquidation, a ‘super-preference’ over all other creditors, whether secured or not. The term ‘super-preference’ appears to originate in Henochsberg in relation to the ‘preference’ (if such it be) created by s 143(5) of the 2008 Act.36 (I shall revert to this description below.) This argument was not supported by either of the respondents or any of the amici curiae. [38] It was argued that the claim for remuneration by a BRP is not a concurrent claim but a special class of claim created by s 135 of the 2008 Act, that it ‘enjoys a special and novel preference’ and that it grants the BRP ‘security over all assets, even above securities existing when the practitioner takes office’.37 Indeed, it was submitted further on Diener’s behalf that ‘the position created [by the 2008 Act] for the remuneration and expenses of the practitioner is novel, and places the 36 P A Delport (ed) Henochsberg on the Companies Act 71 of 2008 (Vol 1) at 500. 37 The appellant’s heads of argument, para 13. practitioner in a position more favourable than the best position that can be occupied by a secured creditor’.38 [39] Diener’s argument is based on the provisions of s 135(4) and s 143(5) of the 2008 Act which, he says, are clear: in particular, s 143(5) states that a BRP’s claim for remuneration and expenses ‘will rank in priority before the claims of all other secured and unsecured creditors’. The effect, it is conceded by Diener, is that new and significant inroads are made into the security that is held by secured creditors. [40] In determining the correctness of this argument, the starting point is the context and purpose of chapter 6. It is apparent, when regard is had to the central provisions of chapter 6, as I have done above, that it is intended to create an efficient, regulated and effective mechanism to facilitate the rescue of companies in financial distress – as long as they are capable of rescue – in a way that balances the rights and interests of the stakeholders.39 [41] Although the chapter makes provision for business rescue failing in some instances, and hence allows for conversion of business rescue proceedings into liquidation proceedings,40 its overwhelming focus is on business rescue and the mechanics of business rescue, rather than on liquidation. [42] The two sections upon which Diener’s argument is largely based are cases in point. Section 135 concerns itself with post-commencement finance and it is in this context, i.e. while business rescue proceedings are in place, that it creates a set of preferences for the payment by the company of certain of its unpaid debts. It does so as part of the regulation of the affairs of the financially distressed company. It is only s 135(4) that is concerned with the consequences of a failed business rescue, retaining the preferences created in respect of post-commencement finance on liquidation, subject only to the costs of liquidation. This section, to the limited extent that it has to do with liquidation, says nothing of the ‘super-preference’ contended for 38 The appellant’s heads of argument, para 16.6. 39 FirstRand Bank Limited v K J Foods CC 2017 (5) SA 40 (SCA); [2017] ZASCA 50 para 75; Oakdene Square Properties (Pty) Ltd & others v Farm Bothasfontein (Kyalami) (Pty) Ltd & others 2013 (4) SA 539 (SCA); [2013] ZASCA 68 para 29; African Banking Corporation of Botswana Ltd v Kariba Furniture Manufacturers (Pty) Ltd & others (note 5) para 42. 40 Section 132(2)(a)(ii) and s 141 (2)(a)(ii). over secured assets. To the contrary, it creates in favour of those claims listed in the section, a preference over unsecured claims.41 [43] Section 143 is also not concerned with liquidation. Instead, it regulates the BRP’s right to remuneration during business rescue proceedings: it concerns the tariff in terms of which BRP’s are remunerated; the additional contingency-based remuneration that the BRP may negotiate, and safeguards in that respect; and the BRP’s claim for unpaid remuneration, which ranks ‘in priority before the claims of all other secured and unsecured creditors’. The reference to secured and unsecured creditors in the section must, in my view, be understood to be a reference back to s 135: to those persons who have, or have been deemed to have, provided the company with post-commencement finance, both secured and unsecured, and not to the company’s pre-business rescue creditors. Simply put, the preference operates within this limited context. Henochsberg’s commentary, referred to in paragraph 37 above, seen in proper perspective is consonant with that conclusion.42 [44] From the sections of chapter 6 that deal with security, it is apparent that security is treated in the same way as it is in the law more generally. There is, in other words, no indication that, in business rescue proceedings, security is to be diluted or undermined in any way. For instance, s 134(3) provides that if a company wishes, during business rescue proceedings, to dispose of property that is held as security by another person, it may only do so with that person’s prior consent, unless the proceeds of the disposal ‘would be sufficient to fully discharge the indebtedness protected by that person’s security’; and then the company must pay the person promptly up to the company’s indebtedness to him or her, or provide satisfactory security for that amount. This is consistent with what was held in Energydrive Systems (Pty) Ltd v Tin Can Man (Pty) Ltd & others,43 namely that the ‘purpose and 41 Section 135(3). 42 Henochsberg (note 36) stated with reference to s 143(5): ‘The purpose of this provision is not entirely clear. It seems unrealistic and impractical to expect a successful business rescue plan to be implemented in circumstances where there are insufficient funds to pay the business rescue practitioner’s fees; however, should this be the case the amount of the practitioner’s remuneration and expenses that remain unpaid will be paid as a “super-preference” in priority to all the secured and unsecured claims against the company.’ 43 Energydrive Systems (Pty) Ltd v Tin Can Man (Pty) Ltd & others 2017 (3) SA 539 (GJ) para 18. context’ of business rescue ‘are not aimed at the destruction of the rights of a secured creditor’. [45] This leads me to the place of the preference created by s 135(4) in the broader scheme of the Insolvency Act. Section 135(4) contains a strong indication when it provides that the claims that it deals with rank after the costs of sequestration. [46] Section 96 of the Insolvency Act provides that the first call on the free residue of an insolvent estate – that ‘portion of the estate which is not subject to any right of preference by reason of any special mortgage, legal hypothec, pledge or right of retention’44 – is in respect of funeral expenses and death bed expenses of the insolvent and his or her family. This is followed, in s 97, by the costs of sequestration. Section 97(1) and (2) states: ‘(1) Thereafter any balance of the free residue shall be applied in defraying the costs of the sequestration of the estate in question with the exception of the costs mentioned in subsection (1) of section eighty-nine. (2) The costs of the sequestration shall rank according to the following order of priority- (a) the sheriff's charges incurred since the sequestration; (b) fees payable to the Master in connection with the sequestration; (c) the following costs which shall rank pari passu and abate in equal proportions if necessary, that is to say: the taxed costs of sequestration (as defined in subsection (3), the fee mentioned in section 16(5), the remuneration of the curator bonis and of the trustee and all other costs of administration and liquidation including such costs incurred by the trustee in giving security for his proper administration of the estate as the Master considers reasonable, in so far as they are not payable by a particular creditor in terms of section 89 (1), any expenses incurred by the Master or by a presiding officer in terms of section 53(2) and the salary or wages of any person who was engaged by the curator bonis or the trustee in connection with the administration of the insolvent estate.’ [47] The argument that the BRP’s claim for remuneration takes preference over secured claims against the company (other than those in respect of post- commencement finance) also flounders on the wording of s 95 of the Insolvency Act. It provides that the proceeds of property which is secured shall, after deductions in 44 Insolvency Act, s 2. respect of the costs of maintaining, conserving and realising the property,45 be ‘applied in satisfying the claims secured by the said property, in their order of preference’. It cannot, in my view, be said, without doing unjustifiable violence to the language of s 95, that the payment of remuneration to a BRP from the proceeds of property secured in favour of someone else amounts to applying the proceeds of the property to the satisfaction of a claim secured by that property. [48] The argument advanced on behalf of Diener leads to other anomalies as well. For instance, if, after business rescue proceedings were converted to liquidation proceedings, there was no free residue in an insolvent estate to meet the costs of liquidation, the argument that has been advanced about the ‘super-preference’ would mean that as a matter of fact, and in conflict with s 97 of the Insolvency Act and s 135(4) of the 2008 Act, the BRP would be paid his or her remuneration out of realised secured property, while the costs of liquidation would not be. In this example, the effect of the ‘super-preference’ contended for is that the claim for remuneration of the BRP would, in fact, rank ahead of the costs of liquidation. That result could not have been intended. [49] For these reasons, I conclude that s 135(4) and s 143(5), whether taken individually or in tandem, do not create the ‘super-preference’ contended for on behalf of Diener. Section 135(4) provides to the BRP, after the conversion of business rescue proceedings into liquidation proceedings, no more than a preference in respect of his or her remuneration to claim against the free residue after the costs of liquidation but before claims of employees for post-commencement wages, of those who have provided other post-commencement finance, whether those claims were secured or not, and of any other unsecured creditors. [50] The first question we were required to answer thus must be answered against Diener. The effective date of liquidation 45 Insolvency Act s 89(1). [51] It was argued by Diener that the effective date of the liquidation of J D Bester was 13 June 2012, the date on which it filed its resolution to commence business rescue proceedings. On this basis, it is argued that everything done after that date by the BRP is part of the costs of liquidation. [52] The argument advanced is flawed for three reasons. First, it fails to draw a distinction, as the 2008 Act does, between business rescue proceedings and liquidation proceedings. Section 132(1) of the 2008 Act provides that business rescue commences, inter alia, when the director’s resolution is filed and s 132(2)(a) provides that business rescue ends, inter alia, when a court converts business rescue proceedings into liquidation proceedings. In the context of this case, the 2008 Act clearly envisages an end to business rescue proceedings and a commencement of liquidation proceedings. [53] Secondly, the 2008 Act, by creating in s 135(4), the preference on liquidation for post-commencement finance, including the BRP’s remuneration, and ranking these claims after the costs of liquidation, drew a clear distinction between the costs of business rescue and the costs of liquidation. [54] Thirdly, irrespective of whether the 1973 Act or the 2008 Act applied to the liquidation of J D Bester, the effective date of the liquidation would be the same. In terms of item 9 of Schedule 5 of the 2008 Act, despite the repeal of the 1973 Act, chapter XIV of that Act continued to apply to the ‘winding-up and liquidation of companies under this Act, as if that Act had not been repealed’. This is made subject , inter alia, to item 9(2) which provides that ‘[d]espite subitem (1), sections 343, 344, 346 and 348 to 353 do not apply to the winding-up of a solvent company. . .’. The effect of items 9(1) and 9(2) is that the relevant provisions of the 1973 Act are preserved and apply to the winding-up of commercially insolvent companies, while the 2008 Act applies directly to the winding-up of commercially solvent companies.46 [55] In all likelihood, J D Bester was commercially insolvent, so the 1973 Act applied. If this is so, s 348 of that Act states that a winding-up of a company ‘shall be 46 Boschpoort Ondernemings (Pty) Ltd v ABSA Bank Ltd 2014 (2) SA 518 (SCA); [2013] ZASCA 173 paras 22-23. deemed to commence at the time of the presentation to the Court of the application for the winding-up’. If J D Bester was commercially solvent, which seems unlikely, the 2008 Act applied. In these circumstances, s 81(4)(a) provides that a winding-up of a company commences when ‘an application has been made to the court in terms of subsection 1(a) or (b)’. [56] In either event, the effective date of the liquidation is 1 August 2012, the day, according to the bill of costs of Cawood Attorneys, that the liquidation application was filed. Was Diener required to prove a claim? [57] Section 44(1), (3) and (4) of the Insolvency Act provides: ‘(1) Any person or the representative of any person who has a liquidated claim against an insolvent estate, the cause of which arose before the sequestration of that estate, may, at any time before the final distribution of that estate in terms of section one hundred and thirteen, but subject to the provisions of section one hundred and four, prove that claim in the manner hereinafter provided: Provided that no claim shall be proved against an estate after the expiration of a period of three months as from the conclusion of the second meeting of creditors of the estate, except with leave of the Court or the Master, and on payment of such sum to cover the cost or any part thereof, occasioned by the late proof of the claim, as the Court or Master may direct. (2) . . . (3) A claim made against an insolvent estate shall be proved at a meeting of the creditors of that estate to the satisfaction of the officer presiding at that meeting, who shall admit or reject the claim: Provided that the rejection of a claim shall not debar the claimant from proving that claim at a subsequent meeting of creditors or from establishing his claim by an action at law, but subject to the provisions of section seventy-five: and provided further that if a creditor has twenty-four or more hours before the time advertised for the commencement of a meeting of creditors submitted to the officer who is to preside at that meeting the affidavit and other documents mentioned in subsection (4), he shall be deemed to have tendered proof of his claim at that meeting. (4) Every such claim shall be proved by affidavit in a form corresponding substantially with Form C or D in the First Schedule to this Act. That affidavit may be made by the creditor or by any person fully cognizant of the claim, who shall set forth in the affidavit the facts upon which his knowledge of the claim is based and the nature and particulars of the claim, whether it was acquired by cession after the institution of the proceedings by which the estate was sequestrated, and if the creditor holds security therefor, the nature and particulars of that security and in the case of security other than movable property which he has realized in terms of section eighty-three, the amount at which he values the security. The said affidavit or a copy thereof and any documents submitted in support of the claim shall be delivered at the office of the officer who is to preside at the meeting of creditors not later than twenty-four hours before the advertised time of the meeting at which the creditor concerned intends to prove the claim, failing which the claim shall not be admitted to proof at that meeting, unless the presiding officer is of opinion that through no fault of the creditor he has been unable to deliver such evidences of his claim within the prescribed period: Provided that if a creditor has proved an incorrect claim, he may, with the consent in writing of the Master given after consultation with the trustee and on such conditions as the Master may think fit to impose correct his claim or submit a fresh correct claim.’ [58] It is common cause that Diener never proved a claim in terms of s 44 for his remuneration and expenses as BRP. It was argued on his behalf that he was not required to prove a claim and that his position as BRP was similar to that of a liquidator, who is usually not required to prove a claim. [59] The general rule, however, is that ‘a creditor who wishes to share in the distribution of the assets in an insolvent estate must prove his claim against it at any meeting of creditors therein to the satisfaction of the officer presiding at such meeting’.47 [60] The authors of Mars draw a clear distinction between those who are required to prove claims in terms of s 44 and those who are not required to do so. They say:48 ‘Creditors of the estate as discussed in this chapter are limited to creditors for pre- sequestration debts. Persons who render services in connection with sequestration proceedings or the administration of the estate, have to submit an account which is payable as part of the costs of administration. The latter are generally not deemed to be ‘creditors’ in terms of the Act.’ 47 Eberhard Bertelsmann, Roger G Evans, Adam Harris, Michelle Kelly-Lowe, Anneli Loubser, Melanie Roestoff, Alistair Smith, Leonie Stander and Lee Steyn Mars: The Law of Insolvency in South Africa (9 ed) para 18.1. (hereafter referred to as Mars.) 48 Mars para 17.1. [61] Those who render services in connection with the sequestration proceedings and the administration of the insolvent estate are identified in s 97. They are the sheriff, the Master, a debtor who has voluntarily surrendered his or her estate, a creditor who has applied for the sequestration of an estate, a curator bonis, a trustee, persons employed by a curator bonis or a trustee to administer an insolvent estate and a presiding officer. A BRP is not included in this list. He or she could not be included because of the distinction between business rescue proceedings and liquidation proceedings. [62] In the result, Diener, in his capacity as BRP, was a creditor of J D Bester and, in respect of his remuneration and expenses, he was required to prove his claim in terms of s 44 of the Insolvency Act. The fees and disbursements of Cawood Attorneys [63] A complaint was made by Diener on behalf of Cawood Attorneys that its fees and disbursements in respect of the urgent application to interdict the sale in execution, on the one hand, and its fees and disbursements in respect of the application to convert the business rescue proceedings into liquidation proceedings, on the other, ought to have been treated differently by the liquidators: either as expenses in the business rescue proceedings or as post-commencement finance, rather than as a concurrent claim, in the first instance, or as costs in the liquidation, rather than as a concurrent claim, in the second instance. Cawood Attorneys proved these claims. It is not a party to these proceedings and Diener has no standing to litigate on its behalf. The issues raised on its behalf are consequently not properly before us, and do not require our attention. Costs and the order [64] This matter has significant implications for business rescue proceedings and BRPs. For that reason, the matter was postponed so that amici curiae representing the views of as many stakeholders as possible could join the proceedings. Because of the importance of the issues that are dealt with in this judgment, the matter was, in reality, a test case. It was of considerable importance that the issues raised in this case were clarified. For that reason, we have decided that no order as to costs should be made. [65] The appeal is dismissed. _____________________ C M Plasket Acting Judge of Appeal APPEARANCES For the appellant: J L Van der Merwe SC (with him L K Van der Merwe) Instructed by: Cawood Attorneys, Pretoria McIntyre van der Post, Bloemfontein For 3rd Respondent: K W Lüderitz SC (with him J Vorster) Instructed by: Tintingers Inc, Pretoria Symington & De Kock, Bloemfontein For 6th Respondent: J E Smit Instructed by: Werksmans Attorneys, Sandton Symington & De Kock, Bloemfontein For Amici Curiae: South African Restructuring and Insolvency Association (SARIPA): A Subel SC (with him B Gilbert) Instructed by: Norton Rose Fulbright South Africa Inc, Sandton Honey Attorneys, Bloemfontein The Banking Association of South Africa (BASA): A Bham SC Instructed by: Edward Nathan Sonnenbergs, Sandton Webbers Attorneys, Bloemfontein Independent Business Rescue Association of South Africa (IBRASA): J P Vorster SC (with him J Herschenson) Instructed by: Couzyn Hertzog & Horak Inc, Pretoria Spangenberg, Zietsman & Bloem, Bloemfontein Turnaround Management Association – Southern Africa (TMSA-SA): X Stylianou Instructed by: Hogan Lovells (South Africa) Inc, Sandton McIntyre Van der Post, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 1 December 2017 STATUS Immediate Diener v Minister of Justice & others (926/2016) _____________________________________________________________________ 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. The Supreme Court of Appeal (the SCA) today dismissed an appeal against a judgment that had held that the a business rescue practitioner (BRP) generally enjoyed no special preference above secured creditors in relation to his remuneration and expenses when business rescue proceedings were converted into liquidation proceedings. Mr Ludwig Diener had been appointed as BRP to a close corporation. He was unable to formulate a business plan and applied for the business rescue proceedings to be converted into liquidation proceedings. The application was granted. The liquidators took the view that he enjoyed no preference over the close corporation’s one secured creditor and that the BRP’s remuneration and expenses were to be paid from the free residue of the insolvent estate. They also took the view that Mr Diener was required to prove his claim in terms of s 44 of the Insolvency Act 24 of 1936, which he had not done. Mr Diener applied unsuccessfully to the High Court to review and set aside the Master of the High Court’s decision to accept the first and final liquidation, distribution and contribution account in respect of the insolvent close corporation. The SCA was required to decide three issues. The first was whether a BRP enjoyed a special preference on the liquidation of a corporation when business rescue had failed. On an interpretation of the applicable provisions of chapter 6 of the Companies Act 71 of 2008, it held that a BRP’s claim for remuneration ranked after the costs of liquidation but before those of post-commencement claims for wages by employees and secured and unsecured post- commencement finance, and was payable from the free residue of the insolvent estate. Secondly, it had been argued that the effective date of liquidation had been the date on which business rescue proceedings commenced. The SCA held that this argument was not correct. Business rescue ended when the application to convert business rescue proceedings into liquidation proceedings was granted. Both the 1973 Companies Act and the 2008 Companies Act specified that the effective date of liquidation was the date on which an application for liquidation was filed. Thirdly, the SCA held that as a BRP was not one of the persons identified in s 97 of the Insolvency Act as persons who were exempted from proving claims, the general rule applied that any creditor who wishes to share in the distribution of an insolvent estate is required to prove his or her claim. ends

13

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 200/2016 In the matter between: CATHERINE CLARIS CILLIERS NO FIRST APPELLANT CATHERINE CLARIS CILLIERS SECOND APPELLANT DELIA DU TOIT NO THIRD APPELLANT and EDWARD ELLIS FIRST RESPONDENT LISA ELLIS SECOND RESPONDENT Neutral citation: Cilliers & others v Ellis & another (200/2016) [2017] ZASCA 13 (17 March 2017) Coram: Ponnan, Willis and Zondi JJA and Fourie and Nicholls AJJA Heard: 7 March 2017 Delivered: 17 March 2017 Summary: Appeal : non-appealability of order : appellants not having locus standi to pursue the appeal : appeal dismissed. ________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Blommaert AJ sitting as court of first instance): The appeal is dismissed with costs, which costs are to be borne, jointly and severally, by the deceased estates of Mr J R Cilliers and Mrs C C Cilliers. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Fourie AJA (Ponnan, Willis and Zondi JJA and Nicholls AJA concurring): [1] In this appeal the appellants were confronted with two significant obstacles, namely whether: (a) the order appealed against is appealable; and (b) they have the necessary locus standi to pursue the appeal. [2] The appeal, with the leave of the court a quo, is against the following order made by Blommaert AJ in the Western Cape Division of the High Court, Cape Town: ‘79.1 Plaintiffs succeeds (sic) on the merits for such relief as he (sic) can prove. (subject to paragraph 78 above).’ Paragraph 78 of the judgment reads thus: ‘The issue of the remedies sought by plaintiff and the possible bar thereto as a result of plaintiff’s earlier election of restitution in the urgent application, is also left over for later determination as belonging in my view more appropriately to the quantum issue.’ [3] Prior to the hearing of the appeal this court directed the parties, if the appeal were to be persisted in, to address the following issue: ‘Can it be said that the above order is final in effect or definitive of the rights of the parties or that it disposes of any portion of the relief claimed and is thus appealable? Even if the order is indeed appealable, given that the proceedings are unterminated in the court a quo, will entertaining an appeal at this stage not conduce (or at least potentially conduce) to a proliferation of piecemeal appeals?’ The appellants persisted in the appeal and the parties filed supplementary heads of argument in response to address the query. [4] In order to understand the context in which the order was made, it is necessary to briefly summarise the history of the litigation between the parties: It commenced with the sale of a timber dwelling (the property) situated in Knysna, to the respondents, Mr and Mrs Ellis. The property was co-owned by Mr and Mrs Cilliers, but the former had passed away prior to the sale of the property. Mrs Cilliers and a local attorney, one Ms Delia du Toit (Du Toit), had been appointed as the co- executors of the estate of the late Mr Cilliers. Mrs Cilliers signed the deed of sale in her personal and representative capacity, while Du Toit signed the agreement of purchase and sale in her representative capacity. The respondents duly paid the agreed purchase price of R1.6 million and the property was registered in their joint names on 24 January 2011. [5] Soon after taking occupation of the property, the respondents embarked upon extensive renovations during the course of which they allegedly discovered that the property suffered from material latent defects, which had not been disclosed to them. In fact, they contended that these defects had knowingly been concealed and that the sellers (in particular Mrs Cilliers) had fraudulently failed to apprise them of the defects. Therefore the respondents, after seeking legal and other expert advice, launched urgent proceedings as applicants in the court a quo seeking the following relief: (a) That the sale of the property be cancelled. (b) That, upon the restoration of the property, the purchase price of R1.6 million be repaid to the respondents. [6] The respondents cited Mrs Cilliers in her representative and personal capacity as the first and second respondent respectively. In her answering affidavit in opposition to the application, Mrs Cilliers, inter alia, raised a defence of non-joinder, by virtue of the respondents’ failure to join Du Toit, the co-executrix of the estate of the late Mr Cilliers, as a party to the application. However, in their replying affidavit the respondents attached a letter from Du Toit in which she consented to her joinder, whilst indicating that she would not oppose the application and that she abided the decision of the court. [7] The application was initially heard by Louw J, who referred the matter to trial and ordered the filing of further pleadings. The respondents (as plaintiffs) filed a declaration to which Mrs Cilliers in her personal and representative capacity filed a plea. Du Toit, who was cited as the third defendant in the declaration, did not defend the action, filed no plea and, in accordance with her earlier indication, abided the decision of the court a quo. [8] In their declaration the respondents did not (as originally in their application) limit the relief sought to the cancellation of the sale and restoration of the property and the purchase price, but rather applied a blunderbuss approach claiming the following: ‘A. Cancellation of the agreement; and/or B. Damages in the amount of R472 573,58 [representing transfer costs, building costs, expert reports and legal fees, rental for alternative accommodation and garden services]; and/or C. Restitution by the parties, respectively, of the property and of the purchase price; alternatively D. Reduction of the purchase price in the amount of R1 472 573,58 [representing R1 million payable for the structural correction of the house on the property and the aforesaid amount of R472 573,58] or in such amount as the court may determine.’ [9] In her plea, Mrs Cilliers (in her representative and personal capacity), inter alia, raised the defence that the respondents, having initially in their notice of motion elected to cancel the sale agreement and to claim restitution, were legally bound by the election and precluded from seeking alternative relief consequent upon the enforcement of the agreement. Differently put, it was contended that the respondents were legally precluded from approbating and reprobating. [10] In the event, the matter proceeded to trial before Blommaert AJ. On the first day of the hearing, during the opening address, counsel for Mrs Cilliers recorded that the respondents should at that stage indicate whether they persisted with the alternative relief sought in their declaration, and, if so, a point of law should be argued as to whether the respondents could change their election or whether they were bound by their initial election and could only claim cancellation of the agreement and restitution. The trial judge shared this view as appears from his following comment: ‘. . . but I think we do need to know whether it is restitution or whether it is a reduction in purchase price or damages or whatever you want to.’ [11] Counsel for the respondents did not then respond to the trial judge’s request, but during the morning of the second day of the trial he informed the court that he had taken instructions from the respondents and would ‘during the course of this morning . . . put on record what it is that we’re going for’. Counsel, however, did not honour this undertaking and the trial was, unfortunately, allowed to continue for another five days without any clarity being provided as to what specific relief was sought by the respondents. I should add that, during her cross-examination, the second respondent conceded that, by virtue of the extensive renovations done to the property, the respondents were no longer in a position to restore the property. She confirmed that this was a deliberate choice that they had made. [12] A further unfortunate development in the trial was referred to by the trial judge at para 27 of the judgment, as follows: ‘Fairly late in the proceedings, the parties sought an order separating the issues of merit of the dispute from the quantum. This request was granted by myself.’ There is no such order in the record of appeal, nor could we find any reference in the transcript of the proceedings indicating that any separation order was made in terms of Uniform rule 33(4). We have, however, been informed by counsel for the parties, both of whom appeared at the trial, that such an order was made, albeit in an informal manner. [13] In Absa Bank Ltd v Bernert 2011 (3) SA 74 (SCA); [2010] ZASCA 36 para 21, this court stressed the importance of the proper application of rule 33(4) by a trial court, as follows: ‘It is imperative at the start of a trial that there should be clarity on the questions that the court is being called upon to answer. Where issues are to be separated Rule 33(4) requires the court to make an order to that effect. If for no reason but to clarify matters for itself a court that is asked to separate issues must necessarily apply its mind to whether it is indeed convenient that they be separated, and if so, the questions to be determined must be expressed in its order with clarity and precision.’ In Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA) para 3, this court sounded a warning that: ‘. . . where the trial court is satisfied that it is proper to make such an order – and, in all cases, it must be so satisfied before it does so – it is the duty of that court to ensure that the issues to be tried are clearly circumscribed in its order so as to avoid confusion.’ [14] In the present matter there was no attempt by the trial judge to circumscribe or at least identify the issues relating to the ‘merits’ and this failure no doubt contributed to the unclear order that was made at the conclusion of the hearing. As recorded above, the court a quo concluded that the respondents succeeded on the merits ‘for such relief as he [they] can prove’. By incorporating paragraph 78 of the judgment in the order, the trial judge made it clear that the relief (if any) to which the respondents may be entitled, would only be determined at the subsequent hearing of ‘the quantum issue’. I should add that the failure of the respondents to indicate what specific relief they would be seeking no doubt contributed to this order being made. Appealability of the order [15] It is trite that, generally speaking, a judgment or order is susceptible to appeal if it has three attributes, namely: ‘[T]he decision must be final in effect and not susceptible of alteration by the court of first instance; second, it must be definitive of the rights of the parties; and it must have the effect of disposing of at least a substantial portion of the relief claimed in the main proceedings.’1 [16] As emphasised in Makaleng, these three attributes are not necessarily exhaustive. Even where a decision does not bear all the attributes of a final order it may nevertheless be appealable if some other worthy considerations are evident, including that the appeal would lead to a just and reasonable prompt solution of the 1 Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at 532I-533B. See also Jacobs & others v Baumann NO & others 2009 (5) SA 432 (SCA); [2009] ZASCA 43 para 9; International Trade Administration Commission v Scaw South Africa (Pty) Ltd 2012 (4) SA 618 (CC); [2010] ZACC 6 para 49; South African Broadcasting Corporation Society Ltd & others v Democratic Alliance & others 2016 (2) SA 522 (SCA); [2015] ZASCA 156 para 63-65 and FirstRand Bank Limited t/a First National Bank v Makaleng [2016] ZASCA 169 para 15. real issues between the parties.2 Furthermore, the interests of justice may be a paramount consideration in deciding whether a judgment is appealable.3 [17] It is immediately apparent that the order of the court a quo does not possess any of the attributes articulated in Zweni. It is not final in effect, as the final word as to the relief to which the respondents may be entitled, has not yet been spoken. Such relief, if any, will, according to the order, only be determined at the subsequent quantum hearing. This means that the order declaring that the respondents are successful on the merits, is susceptible to alteration by the trial court. The order is also not definitive of the rights of the parties as it does not grant any conclusive and distinct relief. Apart from this, the order does not finally dispose of any relief claimed by the respondents. [18] A further consideration to be borne in mind, is that the proceedings in the court below are unterminated. Therefore, the question arises whether the entertaining of an appeal at this stage would not offend against the jurisprudence of this court, that the piecemeal appellate disposal of the issues in litigation should be avoided – particularly where, as in this matter, the order of the court a quo does not dispose of even a portion of the relief claimed.4 What has to be stressed is that the factual findings of the court a quo in its judgment did not, in themselves, dispose of any relief claimed by the respondents, but were, as held in Searle at 301F-G, ‘merely steps along the way towards the final conclusion and consequent order’. They do not at this stage of the litigation have any final effect. [19] It follows that, if this court were to entertain the appeal at this stage, it would not be able to finally dispose of the issues relating to the merits. Therefore, when the court a quo finally determines the merits of the matter, either party may again be entitled to appeal. As was held in Searle at 302C, that would be squarely in conflict with the basic approach which generally shuns piecemeal appeals. 2 See Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A) at 10F-11C. 3 Philani-Ma-Afrika & others v Mailula & others 2010 (2) SA 573 (SCA); [2009] ZASCA 115 para 20 and Nova Property Group Holdings Ltd & others v Cobbett & another 2016 (4) SA 317 (SCA); [2016] ZASCA 63 para 8. 4 See Guardian National Insurance Company Ltd v Searle NO 1999 (3) SA 296 (SCA) at 301B-E. [20] In these circumstances, the order of the court a quo lacks the attributes of an appealable order and, in any event, an appeal would not lead to a final determination of any of the real issues between the parties. Nor has it been demonstrated that the interests of justice demand that the order be considered to be appealable. Standing of the Appellants [21] Mrs Cilliers in her representative and personal capacity and Du Toit in her representative capacity, sought and were granted leave to appeal the order of the court a quo, as the first, second and third appellants, respectively. [22] As recorded above, Du Toit had abided the judgment of the court a quo and one is perplexed by the fact that she was granted leave to appeal the order. The decision of Du Toit to abide the judgment clearly constituted a peremption of the appeal. In Hlatshwayo v Mare and Deas 1912 AD 242 at 253, Solomon JA put it as follows: ‘. . . under our law, by acquiescence in a judgment the right to appeal from it is perempted. And when once the appeal has been perempted, there is an end of the matter; there is no going back from that position.’ In regard to the question what is meant by a party acquiescing in a judgment, the learned judge of appeal added the following at 253: ‘In my opinion the effect of the authorities on this subject is to show that when once a party to an action has done an act from which the only reasonable inference that can be drawn by the other party is that he accepts and abides by the judgment, and so intimates that he has no intention of challenging it, he is taken to have acquiesced in it.’5 [23] The conduct of Du Toit in abiding the judgment of the court a quo; not filing a plea and not participating in the trial, constitutes clear evidence of acquiescence resulting insofar as she is concerned in a peremption of the appeal against the order. It follows that Du Toit as the co-executrix in the estate of the late Mr Cilliers, had no locus standi to participate in this appeal as the third appellant. 5 See too Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A) at 600A; Natal Rugby Union v Gould 1999 (1) SA 432 (SCA) at 443E-G and Fick v Walter & another 2005 (1) SA 475 (C) at 480- 482. [24] The matter has been further complicated by the unfortunate passing of Mrs Cilliers after the conclusion of the trial, but before the hearing of the appeal. On 11 January 2017 notice was given in terms of Uniform rule 15 that Mrs Cilliers in her personal capacity as the second appellant was substituted in the appeal by the executrix of her deceased estate. However, there has been no substitution of Mrs Cilliers in her representative capacity as the first appellant. As stated by the authors D E van Loggerenberg and E Bertelsmann Erasmus: Superior Court Practice 2 ed vol 2 at D1-200, where an executor dies, the legal interest in the suit passes, not to his or her estate, but to his or her successor in office as executor. See also Chapman v Rock 1915 EDL 33 at 35. Therefore, the estate of the late Mr Cilliers is not represented in the appeal, as Du Toit has no locus standi and her co-executrix, Mrs Cilliers, has passed away with no substitution of her successor in office (if any) having taken place. [25] This is not the end of the sad tale. As recorded above, notice of the substitution of Mrs Cilliers in her personal capacity as the second appellant by the executrix of her deceased estate, was given in terms of rule 15. In so doing, the first proviso to rule 15(2) was overlooked, which states that, save with the leave of the court granted on such terms as to it may seem meet, no such notice shall be given after the commencement of the hearing of any opposed matter. The leave of the court a quo, or the leave of this court, was not sought prior to the filing of this notice in terms of rule 15. One can imagine that in the adjudication of an application of this nature matters such as the solvency of the relevant deceased estate, the provision of security and the possible adjournment of the proceedings may be relevant. Be that as it may, absent an application to court for the substitution of the executrix of the deceased estate of Mrs Cilliers, the purported substitution is irregular and the executrix has no locus standi to participate in this appeal. It follows therefore that there is simply no appellant herein with the necessary locus standi to pursue the appeal. Conclusion [26] For all the above reasons there is no proper appeal before this court. The appeal accordingly falls to be dismissed. [27] With regard to costs, the first to third appellants persisted with the appeal without heeding the timely warning of this court that the order may not have been appealable. In addition, no consideration was given to the absence of legal standing to participate in the appeal. The respondents have been put to the expense of opposing an abortive appeal. In the circumstances, the appellants, or more accurately the estates of Mr and Mrs Cilliers, are to bear the costs of the appeal. [28] In the result the following order is made: The appeal is dismissed with costs, which costs are to be borne, jointly and severally, by the deceased estates of Mr J R Cilliers and Mrs C C Cilliers. _____________________ P B Fourie Acting Judge of Appeal APPEARANCES: For the Appellants: T A L L Potgieter SC Instructed by: Pieter Swanepoel Attorneys c/o Heyns & Partners Inc., Cape Town McIntyre & Van Der Post Attorneys, Bloemfontein For the Respondent: A Knoetze Instructed by: C & A Friedlander Attorneys, Cape Town Symington & De Kok, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 17 March 2017 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Cilliers & others v Ellis & another (200/2016) [2017] ZASCA 13 (17 March 2017) MEDIA STATEMENT The Supreme Court of Appeal today dismissed an appeal against the order of the Western Cape Division of the High Court, Cape Town, on the basis that the order was not appealable, in that it was not final in effect or definitive of the rights of the parties, nor did it dispose of any of the relief claimed in the proceedings. The SCA further held that the appellants did not have the necessary standing to pursue the appeal. --- ends ---

2322

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 191/08 In the matter between: EDCON LTD APPELLANT v B PILLEMER NO FIRST RESPONDENT COMMISSION FOR CONCILIATION SECOND RESPONDENT MEDIATION & ARBITRATION P C REDDY THIRD RESPONDENT Neutral citation: Edcon v Pillemer (191/2008) [2009] ZASCA 135 (5 October 2009). Coram: Mpati P, Heher, Mlambo, Maya JJA and Tshiqi AJA Heard: 4 September 2009 Delivered: 5 October 2009 Summary: Labour Law – Labour Relations Act 66 of 1995 – Commission for Conciliation Mediation and Arbitration – Review of arbitration award – Constitutional standard of reasonableness applicable. Labour Law – fairness of dismissal – destruction of relationship of trust – evidence showing destruction necessary. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Labour Appeal Court, (Sangoni AJA with Wallis JA and Tlaletsi AJA concurring sitting as court of appeal). The following order is made: The appeal is dismissed with costs including the costs consequent upon the employment of two counsel. ________________________________________________________________ JUDGMENT ________________________________________________________________ MLAMBO JA (MPATI P, HEHER, MAYA JJA, TSHIQI AJA CONCURRING) [1] The appellant (Edcon) had dismissed the third respondent (Reddy) for misconduct. Contending that her dismissal was unfair Reddy referred a dispute to the second respondent, the Commission for Conciliation Mediation and Arbitration (CCMA) for resolution through conciliation and, failing that, through arbitration. The CCMA appointed the first respondent (Pillemer) to arbitrate the dispute after conciliation failed to resolve it. Having conducted the arbitration proceedings Pillemer made an award in which she concluded that Reddy’s dismissal was substantively unfair and ordered Edcon to reinstate her but without arrear salary. [2] Unhappy with the award Edcon launched review proceedings in the Labour Court (LC) in terms of s 1451 of the Labour Relations Act 66 of 1995 (LRA) with a view to setting it aside. The LC (Pillay J) declined to set the award aside. Undaunted, Edcon appealed to the Labour Appeal Court (LAC), with that court’s leave, but that effort again came unstuck when the LAC dismissed the appeal, concluding that the award was unassailable. The judgment of the LAC has been reported – Edcon Ltd v Pillemer NO & others (2008) 29 ILJ 614 (LAC). Edcon’s appeal is before us with special leave of this court. [3] For appropriate appreciation of the matter, it is prudent to traverse its factual background in some detail. Reddy was the beneficial user of a company vehicle, a Toyota Corolla (the Corolla), courtesy of Edcon’s car scheme policy (the policy). In June 2003 the Corolla was involved in a collision with another vehicle whilst driven by Reddy’s son, Andre. Reddy was not in the Corolla at the time. In terms of the policy Reddy was obliged, amongst others, to report the accident to Edcon, the South African Police Service and the relevant insurance company within 24 hours and not carry out repairs to the Corolla without the approval of the insurance company. Reddy did none of the above, arranging, instead, with her husband to repair the Corolla at his panel beating shop at own cost. As fate would have it, a combination of factors led to Edcon getting to know of the collision some six months later. This was when Reddy, who was unhappy with the Corolla’s performance, took it to a Toyota dealer for a check up. On inspection the service personnel discovered collision damage which had 1 Section 145 provides: ‘Review of arbitration awards (1) Any party to a dispute who alleges a defect in any arbitration proceedings under the auspices of the Commission may apply to the Labour Court for an order setting aside the arbitration award – (a) . . . (b) . . . (2) A defect referred to in subsection (1), means – (a) that the commissioner – (i) committed misconduct in relation to the duties of the commissioner as an arbitrator; (ii) committed a gross irregularity in the conduct of the arbitration proceedings; or (iii) exceeded the commissioner’s powers; or (b) that an award has been improperly obtained. (3) . . . (4) . . .’ apparently not been repaired properly. When the service personnel appraised Reddy of this fact she approached her manager, Mr Clive Dwyer, with a request to authorise payment for the required repairs. She did not, however, disclose to Dwyer that the Corolla had been in a collision. He discovered this when he contacted the service personnel. [4] On being confronted by Dwyer, Reddy initially denied that the Corolla had been involved in a collision but later admitted the occurrence, stating that the collision had occurred whilst she was driving it at a time when she was still employed by a company that had later merged with Edcon. Dwyer referred the matter to Mr Sayendiran Danny Naidoo, a security manager employed by Edcon, for investigation. When Naidoo spoke to Reddy, she repeated her lie that she was the driver when the collision took place, stating that a minibus taxi had crashed into her. She did tell Naidoo, though, that she had given the Corolla to her husband to repair at his panel beating shop. Naidoo recommended Reddy’s suspension on full pay pending finalisation of his investigation. At Naidoo’s request for a further statement Reddy changed her version, this time stating that the collision had occurred whilst Andre was driving, but that she was a passenger. Her final statement was when she came clean and told the truth with an offer to repay the costs associated with the required repairs. Andre had also, in the mean time, made a statement to Naidoo confirming that he was driving the Corolla and that he was alone when the collision occurred. It is common cause that in terms of the policy Andre was entitled to drive the Corolla as he was in possession of a valid driver’s licence. [5] In due course Edcon convened a disciplinary enquiry to look into the matter, chaired by Ms Yasmeen Ismail, an employee. The charge levelled against Reddy was: ‘failure to be honest and act with integrity in that you committed an act, which has affected the trust relationship between the company and the employee in that on 8 June 2003 to 8 October 2003: You failed to report an accident of a company vehicle . . . which your son was driving on the day of the accident (8 June 2003) and this resulted in a breach of trust between yourself and the company’. Reddy pleaded guilty to the charge at the commencement of the enquiry, stating that her ignorance of the policy rule that Andre was entitled to drive the Corolla had driven her to be deceitful as an attempt to protect him. She was found guilty and dismissed from her employment. [6] Ms Ismail’s decision to dismiss Reddy appears to have been motivated by her view that Reddy had behaved without integrity and honesty, values regarded highly by Edcon. In this regard Ms Ismail regarded Reddy’s unblemished record and character as not sufficiently mitigatory of her conduct. Reddy appealed her dismissal and the resultant appeal hearing was chaired by Mr Loyiso Maponya, another employee. Reddy’s grounds of appeal were: ‘Penalty too harsh – in that it is respectfully submitted that although serious offences generally warrant dismissal, the nature of the offence in this instance had not completely destroyed the trust relationship between the accused and the employer. Inconsistency of Disciplinary Penalty – Historical inconsistency – in that the employer has not dismissed an employee guilty of a similar offence (uncontested) viz. an auditor by the name of Patience had acted dishonestly by failing to report an accident and had eventually told the truth. The accused wishes the following to be considered – That she has dedicated most part of her working life to the company and is two years away from retirement age. She accepts full responsibility for all the necessary and reasonable costs of repairing the company vehicle and therefore the company will incur no loss. She is diabetic and hypertensive and the sequence of events have been stressful, seeing that she always provided a loyal service to the company.’ [7] Regarding the case of another employee (Patience Mtsweni) who had apparently behaved in similar fashion to Reddy, Maponya remarked: ‘In examination of the evidence before me it appears that Ms Reddy had established a prima facie case of similarities that existed between her case and that of Ms Mtsweni. I have noted the following salient similarities: Both of them were involved in an act of dishonesty by failing to report the accident as per the company car policy and disciplinary procedures. In both cases it was their kids who caused an accident with the company car. Both of them was their first offence and it also appears that their line managers commended both of them as good and hard working employees. Both of them had undertaken to pay the cost for the repair of the company vehicle. The company did not dispute the above allegations of inconsistency, the only objection the company had with this issue was the issue regarding the amount that Ms Reddy had undertaken to pay towards repair costs of the vehicle.’ Maponya, however, upheld the sanction of dismissal, concluding that: ‘In evaluating the nature and the role played by Ms Reddy in the commission of the above misconduct, it is clear that it resulted in a negative impact on the trust relationship. When Ms Reddy was confronted about the accident she lied throughout the investigation, with the aim to hide the true facts of what really happened to the company car. It is trite law that an act of dishonesty undermines the trust relationship and therefore may justify dismissal. Ms Reddy has been remorseful for her actions, however in the above case the gravity of her offence does not justify a deviation from the prescribed penalty.’ This turn of events prompted Reddy to initiate the CCMA proceedings referred to earlier. [8] When Pillemer became seized with the arbitration, she identified the fairness or otherwise of the sanction of dismissal as the issue requiring determination. Analysing the evidence Pillemer remarked that Reddy’s failure to report the collision in itself was not misconduct that warranted dismissal, but that the issue was whether her lack of candour thereafter destroyed the trust relationship, justifying her dismissal. Pillemer also determined, referring to s 1382 2 Section 138(1) provides: ‘The commissioner may conduct the arbitration in a manner that the commissioner considers appropriate in order to determine the dispute fairly and quickly, but must deal with the substantial merits of the dispute with the minimum of legal formalities.’ of the LRA, that as arbitrator she was entitled to have regard to certain correspondence from Dwyer and one Val Barnes, also a manager employed by Edcon, who had at some stage worked with Reddy. Both had not testified in the arbitration but their views, captured in the correspondence, were a disavowal of a breakdown in the trust relationship. [9] Pillemer found that no direct evidence had been led by Edcon to show that the trust relationship had been destroyed by Reddy’s misconduct and lack of candour. She further found that for a decision to dismiss a person with Reddy’s track record of 43 years unblemished employment with Edcon and related companies, the misconduct committed had to be gross and evidence was necessary to show that the trust relationship had in fact been destroyed. She went on to find that Reddy’s long and unblemished track record militated against a decision to dismiss her under the circumstances. She also found that the views expressed by Barnes and Dwyer were an indication that dismissal in those circumstances was not an inevitable result. She consequently concluded that Edcon had failed to prove that dismissal was a fair sanction. [10] Before us counsel for Edcon, Mr Redding SC, essentially argued that the award issued by Pillemer was defective, rendering it liable to be set aside. This argument was premised on three bases: (1) that Pillemer failed to appreciate the extent of Reddy’s dishonesty in the context of Edcon’s own rules. He argued that this failure by Pillemer prevented her from appreciating the justification for Edcon’s decision to dismiss Reddy; (2) that Pillemer’s admission of hearsay evidence without proper consideration of the provisions of s 3(1)(c) of the Law of Evidence Amendment Act 45 of 1998 rendered her award defective; and (3) that Pillemer’s finding that the appellant had led no evidence regarding the alleged destruction of the trust relationship was erroneous. [11] This being a review of an award of a CCMA commissioner, it is worthwhile to revisit the jurisprudence that has developed around CCMA arbitration awards. The standard employed in the review of awards issued by CCMA commissioners is an area that has occupied the minds of judges of the LC and LAC since the inception of the labour dispensation ushered in by the LRA. Until the LAC’s decision in Carephone (Pty) Ltd v Marcus NO & others (1998) 19 ILJ 1425 (LAC), the standard of review applicable to CCMA awards was far from certain in view of the divergence of views among LC judges at the time about the applicability of s 145 and s 158(1)(g)3 of the LRA in the review of CCMA arbitration awards.4 The LAC in Carephone found that the administrative justice provisions in the Constitution5 were integral to the functions of CCMA commissioners when arbitrating disputes. The court, having concluded that substantive rationality was required of ‘administrative decision makers’, formulated the standard of review applicable to CCMA awards as follows: ‘Many formulations have been suggested for this kind of substantive rationality required of administrative decision makers, such as “reasonableness”, “rationality”, “proportionality”, and the like . . . It seems to me that one will never be able to formulate a more specific test other than, in one way or another, asking the question: is there a rational objective basis justifying the connection made by the administrative decision maker between the material properly available to him and the conclusion he or she eventually arrived at?’6 [12] The controversy regarding the reviewability of CCMA awards did not go away, however, as a divergence of views began to emerge again from the LAC 3 The section provides: ‘The Labour Court may – (g) subject to s 145, review the performance or purported performance of any function provided for in this Act on any grounds that are permissible in law.’ 4 Some judges of the LC had favoured reviewing CCMA awards under s 158(1)(g) having branded s 145 as too restrictive and unconstitutional and as such inconsistent with the administrative justice dictates of the Constitution of the Republic of South Africa, Act 108 of 1996. Another view favoured by some LC judges was that only s 145 was applicable in the review of CCMA awards. In Carephone the LAC settled that controversy by concluding that s 145 and 158 had specific functions but that only s 145 was applicable in the review of CCMA awards. 5 Constitution of the Republic of South Africa Act 108 of 1996. 6 At para 37. regarding the ambit of the Carephone standard. One view was that the standard of review of a CCMA award was whether an award was justifiable in relation to the reasons given for it. See Mzeku & others v Vokswagen SA (Pty) Ltd & others (2001) 22 ILJ 1575 (LAC); [2001] 8 BLLR 857 (LAC) at para 60; Adcock Ingram Critical Care v CCMA & others (2001) 22 ILJ 1799 (LAC); [2001] 9 BLLR 979 (LAC) at para 22; Waverley Blankets Ltd v CCMA & others (2003) 24 ILJ 388 (LAC); [2003] 3 BLLR 236 (LAC) at para 41; Branford v Metrorail Services (Durban) & others (2003) 24 ILJ 2269 (LAC); [2004] 3 BLLR 199 (LAC) at para 20. The other, broader view, was whether the award was justifiable not only in relation to the reasons given for it, but also taking account of the material placed before the commissioner. See Toyota SA Motors (Pty) Ltd v Radebe & others [2000] 21 ILJ 340 (LAC) at para 53; Shoprite Checkers (Pty) Ltd v Ramdaw NO & others (2001) 22 ILJ 1603 (LAC); [2001] 9 BLLR 1011 (LAC) at para 101. [13] The uncertainty created had the consequence that the review of CCMA awards continued to clog the rolls of our Labour specialist courts. It was therefore inevitable that the Constitutional Court would at some stage be drawn into the debate. This eventually occurred in the matter of Sidumo & another v Rustenburg Platinum Mines Ltd & others (2007) 28 ILJ 2405 (CC). That matter had its origin in the dismissal of the appellant (Sidumo) who had then obtained an award in the CCMA reversing his dismissal on the basis that it was too harsh. A review of the award failed in the LC and an appeal to the LAC also failed. See Rustenburg Platinum Mines Ltd v CCMA & others [2004] 1 BLLR 34 (LAC). This is one of those decisions emanating from the LAC in which the so-called broad standard of review was favoured.7 [14] That decision came on appeal to this court. See Rustenburg Platinum Mines Ltd (Rustenburg Section) v Commission for Conciliation, Mediation and 7 The LAC had reasoned that the reasons of the commissioner which were attacked in the LC review could not on their own sustain the award but that there were other reasons which were not challenged in the review which rendered the award unassailable on appeal. Arbitration 2007 (1) SA 576 (SCA); [2006] 11 BLLR 1021 (SCA); (2006) 27 ILJ 2076 (SCA). The appeal succeeded in this court and part of the reasoning is found in paras 29 and 30 to the following effect: ‘[29] For what both Carephone and PAJA required the LAC to do was to consider whether the commissioner’s decision to reinstate Sidumo was “rationally connected” to the information before him and to the reasons he gave for it. “Rational connection” requires, as Froneman DJP explained in Carephone (para [37]), in a passage this Court approved and applied in the light of PAJA, that there must be a rational objective basis justifying the connection the commissioner made between the material before him and the conclusion he reached. [30] The LAC did not apply this test. Nor did it refer to Carephone, or indeed to PAJA. Instead it asked whether considerations existed, which the commissioner had taken into account, that were “capable of sustaining” his finding. In effect, the LAC asked whether there was material on record that could support the view that, despite his errors, the commissioner had nevertheless “got it right”. In so approaching the matter, the LAC treated the mine’s challenge to the decision as an appeal. In my respectful view, this was incorrect. The question on review is not whether the record reveals relevant considerations that are capable of justifying the outcome. That test applies when a court hears an appeal: then the enquiry is whether the record contains material showing that the decision – notwithstanding any errors of reasoning – was correct. This is because in an appeal, the only determination is whether the decision is right or wrong.’ [15] When the matter was eventually heard in the Constitutional Court, that court exhaustively considered the jurisprudence regarding administrative review in general and specifically in relation to CCMA awards as well as the impact of the Constitution. The court reasoned the matter for present purposes as follows: ‘[106] The Carephone test, which was substantive and involved greater scrutiny than the rationality test set out in Pharmaceutical Manufacturers, was formulated on the basis of the wording of the administrative justice provisions of the Constitution at the time, more particularly, that an award must be justifiable in relation to the reasons given for it. Section 33(1) of the Constitution presently states that everyone has the right to administrative action that is lawful, reasonable and procedurally fair. The reasonableness standard should now suffuse section 145 of the LRA. [107] The reasonableness standard was dealt with in Bato Star. In the context of section 6(2)(h) of PAJA, O’Regan J said the following: “[A]n administrative decision will be reviewable if, in Lord Cooke’s words, it is one that a reasonable decision-maker could not reach.” [108] This Court recognized that scrutiny of a decision based on reasonableness introduced a substantive ingredient into review proceedings. In judging a decision for reasonableness, it is often impossible to separate the merits from scrutiny. However, the distinction between appeals and reviews continues to be significant. [109] Review for reasonableness, as explained by Professor Hoexter, does threaten the distinction between review and appeal. The Labour Court in reviewing the awards of commissioners inevitably deals with the merits of the matter. This does tend to blur the distinction between appeal and review. She points out that it does so in the limited sense that it necessarily entails scrutiny of the merits of administrative decisions. She states that the danger lies, not in careful scrutiny, but in “judicial overzealousness in setting aside administrative decisions that do not coincide with the judge’s own opinions”. This Court in Bato Star recognized that danger. A judge’s task is to ensure that the decisions taken by administrative agencies fall within the bounds of reasonableness as required by the Constitution. [110] To summarise, Carephone held that s 145 of the LRA was suffused by the then constitutional standard that the outcome of an administrative decision should be justifiable in relation to the reasons given for it. The better approach is that s 145 is now suffused by the constitutional standard of reasonableness. That standard is the one explained in Bato Star: Is the decision reached by the commissioner one that a reasonable decision-maker could not reach? Applying it will give effect not only to the constitutional right to fair labour practices, but also to the right to administrative action which is lawful, reasonable and procedurally fair.’ And further ‘[119] To my mind, having regard to the reasoning of the commissioner, based on the material before him, it cannot be said that his conclusion was one that a reasonable decision-maker could not reach. This is one of those cases where the decision-makers acting reasonably may reach different conclusions. The LRA has given that decision- making power to a commissioner.’ Reduced to its bare essentials, the standard of review articulated by the Constitutional Court is whether the award is one that a reasonable decision maker could arrive at considering the material placed before him. [16] It is therefore the reasonableness of the award that becomes the focal point of the enquiry and in determining this one focuses not only on the conclusion arrived at but also on the material that was before the commissioner when making the award. It is remarkable that the constitutional standard of ‘reasonableness’ propounded by the Constitutional Court in Sidumo is conceptually no different to what the LAC said in Carephone. The only difference is in the semantics – the LAC had preferred ‘justifiability’ whilst the Constitutional Court has preferred the term ‘reasonableness’. [17] With this treatise of the law regarding the standard of review applicable to CCMA awards I return to the facts. The thrust of Edcon’s case is that Pillemer had ample material before her showing that the trust relationship between it and Reddy had been destroyed by Reddy’s misconduct and lack of candour. This, it was submitted, showed that the decision to dismiss her was justified. The determinant issue in the appeal must therefore be whether the trust relationship between Edcon and Reddy had been shown in the arbitration to have been destroyed. This calls for an examination of Pillemer’s reasons for her conclusion and the material that was available to her in arriving at it. [18] As already stated, Pillemer concluded that Edcon had failed to show that the trust relationship had been destroyed by Reddy’s deceitful conduct. Both the LC and LAC upheld this conclusion. Naidoo was Edcon’s sole witness in the arbitration and Reddy testified in support of her own case. The records of the disciplinary enquiry and appeal hearing, as well as all statements collated by Naidoo during the investigation, were also before Pillemer as well as the correspondence from Barnes and Dwyer. [19] It is to Naidoo’s testimony, as Edcon’s sole witness in the arbitration, as well as the documentary evidence referred to above, that one must look to see if indeed there was evidence showing that Reddy’s conduct had destroyed the trust relationship between her and Edcon. Naidoo’s testimony in the arbitration was mainly to recount the investigative history of the matter. He also testified that Edcon was intolerant towards dishonesty and that employees were generally dismissed if they committed dishonest acts. This, he said, was one of Edcon’s core values. As already mentioned Naidoo was the investigator of Reddy’s misconduct and fielded some of her lies. It was at his recommendation, as investigator, that Reddy was suspended and eventually disciplined. What becomes immediately apparent is that Naidoo’s evidence did not, and could not, deal with the impact of Reddy’s conduct on the trust relationship. Neither did Naidoo testify that Reddy’s conduct had destroyed the trust relationship. This was the domain of those managers to whom Reddy reported. They are the persons who could shed light on the issue. None testified. [20] Edcon’s policy regarding the misconduct at issue here was also before Pillemer. But that document is just that – a policy – and is no evidence of the consequences of misconduct based on it. On its own it evinces Reddy’s failure to comply with its dictates. It cannot be correct that mere production thereof would suffice to justify a decision to dismiss. The gravaman of Edcon’s case against Reddy was that her conduct breached the trust relationship. Someone in management and who had dealings with Reddy in the employment setup, as already alluded to, was required to tell Pillemer in what respects Reddy’s conduct breached the trust relationship. All we know is that Reddy was employed as a quality control auditor; no evidence was adduced to identify the nature and scope of her duties, her place in the hierarchy, the importance of trust in the position that she held or in the performance of her work, or the adverse effects, either direct or indirect, on Edcon’s operations because of her retention, eg because of precedent or example to others. In De Beers Consolidated Mines Ltd v CCMA & others (2000) 21 ILJ 1051 (LAC) at paras [17] to [27] Conradie JA considered the relationship between an employee’s dishonesty and continued employment, and the bearing of such factors as long service, which Pillemer also considered. In the present context he said (at para [23]): ‘The seriousness of dishonesty – ie whether it can be stigmatized as gross or not – depends not only, or even mainly, on the act of dishonesty itself but on the way it impacts on the employer’s business’. But to get here evidence showing adverse impact, if any, on the ‘business’ is critical. [21] It also cannot be correct as submitted by Mr Redding, that Ismail and Maponya, who were the internal disciplinary enquiry and appeal chairpersons respectively, provided the management view regarding the damaged trust relationship. It needs hardly be stated that their role in those proceedings was not as witnesses. They were there to ensure that a fair conclusion was reached by Edcon regarding Reddy’s fate. In fact Ismail did not make a positive finding in this regard save to state that Reddy had not conducted herself with the integrity and honesty expected by Edcon, whilst Maponya did state that her conduct had had an impact on the trust relationship. Maponya, as a matter of fact, had no evidence suggesting a breakdown in the trust relationship and one can only surmise that he relied on his opinion as an employee in making this finding. The surprising feature regarding the findings by Ismail, and especially Maponya, is that Barnes had testified in the disciplinary enquiry and stated that she could still work with Reddy. She was not challenged by Naidoo. [22] Pillemer was entitled and in fact expected, in the scheme of things, to explore if there was evidence by Edcon and/or on record before her showing that dismissal was the appropriate sanction under the circumstances. This was because Edcon’s decision was underpinned by its view that the trust relationship had been destroyed. She could find no evidence suggestive of the alleged breakdown and specifically mentioned this as one of her reasons for concluding that Reddy’s dismissal was inappropriate. A reading of the award further reveals that in addition to this finding Pillemer also found that in the context of that matter Reddy’s long and unblemished track record was also an important consideration in determining the appropriateness of her dismissal. [23] It is inevitable that courts, in determining the reasonableness of an award, have to make a value judgment as to whether a commissioner’s conclusion is rationally connected to his/her reasons taking account of the material before him/her. That this is the correct approach has been stated on a number of occasions by the LAC,8 this court in the Sidumo matter9 as well as the Constitutional Court in the same matter10. In my view, Pillemer’s finding that 8 Carephone supra in para 36: ‘In determining whether administrative action is justifiable in terms of the reasons given for it, value judgments will have to be made which will, almost inevitably, involve the consideration of the “merits” of the matter in some way or another. As long as the judge determining this issue is aware that he or she enters the merits not in order to substitute his or her own opinion on the correctness thereof, but to determine whether the outcome is rationally justifiable, the process will be in order.’ 9 Rustenburg Platinum Mines Ltd (Rustenburg Section) supra in para 31: ‘In a review, the question is not whether the decision is capable of being justified (or, as the LAC thought, whether it is not so incorrect as to make intervention doubtful), but whether the decision-maker properly exercised the powers entrusted to him or her. The focus is on the process, and on the way in which the decision-maker came to the challenged conclusion. This is not to lose sight of the fact that the line between review and appeal is notoriously difficult to draw. This is partly because process-related scrutiny can never blind itself to the substantive merits of the outcome. Indeed, under PAJA the merits to some extent always intrude, since the court must examine the connection between the decision and the reasons the decision-maker gives for it, and determine whether the connection is rational. That task can never be performed without taking some account of the substantive merits of the decision.’ 10 At para 109 Edcon had led no evidence showing the alleged breakdown in the trust relationship is beyond reproach. In the absence of evidence showing the damage Edcon asserts in its trust relationship with Reddy, the decision to dismiss her was correctly found to be unfair. She cannot be faulted on any basis and her conclusion is clearly rationally connected to the reasons she gave, based on the material available to her. She did not stray from what was expected of her in the execution of her duties as a CCMA arbitrator. The challenge, therefore, to Pillemer’s award on this basis is without merit. I have no hesitation in concluding that the award issued by her is properly compliant with the constitutional standard of reasonableness propounded in Sidumo. This conclusion on its own is, in my view, dispositive of the appeal. I find it unnecessary therefore, in view of this conclusion, to consider the other interesting point regarding the admissibility of hearsay evidence, raised on behalf of Edcon. [24] The appeal is dismissed with costs including the costs consequent upon the employment of two counsel. _________________ D MLAMBO JUDGE OF APPEAL APPEARANCES: COUNSEL FOR APPELLANTS: A I S Redding SC INSTRUCTED BY: Deneys Reitz Inc, Durban CORRESPONDENT: Lovius Block, Bloemfontein COUNSEL FOR RESPONDENT: C G Marnewick SC; U Madhoo INSTRUCTED BY: Naidoo & Company, Durban CORRESPONDENT: Mpobole & Ismail, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 5 October 2009 Status: Immediate 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. EDCON LTD v B PILLEMER NO & OTHERS The Supreme Court of Appeal (SCA) today dismissed an appeal by Edcon Ltd against a judgment of the Labour Appeal Court which had also dismissed Edcon’s appeal to it against a judgment of the Labour Court. Edcon had applied to the Labour Court to review and set aside an award of the first respondent (Pillemer), made under the auspices of the Commission for Conciliation Mediation and Arbitration (CCMA). Pillemer had reversed Edcon’s decision dismissing the third respondent (Reddy) and reinstated her, without back pay. Edcon’s review application to the Labour Court and the appeals to the Labour Appeal Court and the SCA were premised on Edcon’s view that Pillemer’s award was defective and therefore liable to be set aside. Pillemer had found that Edcon had failed to prove that certain conduct by Reddy had breached the trust relationship existing between them as employer and employee. Edcon had based its decision to dismiss Reddy on the alleged breach in the trust relationship. The SCA held that Pillemer had been correct in exploring whether Edcon had led evidence to show the breached trust relationship alleged by it. The SCA further found that the Pillemer was correct in finding that Edcon had led no evidence to show the breach. In the final analysis the SCA concluded that the award issued by Pillemer was unassailable and was fully complaint with the constitutional standard of reasonableness applicable to CCMA awards as articulated in by the Constitutional Court in Sidumo & another v Rustenburg Platinum Mines Ltd & others (2007) 28 ILJ 2405 (CC).

1219

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case no: 164/07 In the matter between: JOINT STOCK COMPANY VARVARINSKOYE Appellant and ABSA BANK LIMITED First Respondent LIEBENBERG DAWID RYK VAN DER MERWE NO Second Respondent LIEZEL MAGRIETHA PONT NO Third Respondent THEODOR WILHELM VAN DEN HEEVER NO Fourth Respondent ENVER MOHAMED MOTALA NO Fifth Respondent METALLURGICAL DESIGN & MANAGEMENT (PTY) LTD Sixth Respondent _________________________________________________________________________ Coram: Howie P, Navsa, Ponnan, Maya et Cachalia JJA Date of hearing: 26 February 2008 Date of delivery: 28 March 2008 Summary: Appropriation by bank of money held in client’s account ─ account used for specific purpose of funding the establishment of a mine and processing facilities by other parties ─ bank’s client having no legal interest in the money appropriated ─ held that appellant proved an entitlement to the money appropriated ─ bank ordered to repay the money. Neutral citation: Joint Stock v Absa Bank Ltd (164/07) [2008] ZASCA 35 (28 March 2008) __________________________________________________________________________ NAVSA JA NAVSA JA: [1] On 10 December 2005 the first respondent, Absa Bank Limited, a company conducting business as a registered commercial bank, appropriated an amount of R28 244 780.591 standing to the credit of an account held at its Sandton Business Centre branch by its client, Metallurgical Design and Management (Pty) Ltd ─ the sixth respondent, which has its registered office in Parktown, Johannesburg. I shall for the sake of convenience refer to the first respondent as Absa and the account in question as account 1313. [2] The appellant, a company incorporated according to the laws of the Republic of Kazakhstan, with its registered office in Varvarinka, in the Province of Kostanay Oblast, in that country, laid claim to the money appropriated by Absa. It applied to the Johannesburg High Court for an order in the following terms: ‘1. Declaring that the rights to the monies which stood to the credit of the Absa account at the time of [Absa’s] purported appropriation thereof, vests in the Applicant; 2. Ordering [Absa] to pay the Applicant a sum of money equal to the sum purportedly appropriated, together with mora interest at the rate of 15.5% per annum from the date of purported appropriation, alternatively the date of demand.’ [3] In this appeal we are called upon to decide whether the Johannesburg High Court (Willis J) was correct in dismissing the application. The present appeal is before us with the leave of that court. The Background [4] The appellant is a company associated with the European Minerals Corporation (EMC), which has offices in Hampshire, England. EMC is a mineral exploration and development company which holds interests in mineral projects in Kazakhstan. EMC is listed on both the Toronto and London Stock Exchanges. 1 The amount left in credit in that account was R80.59 after Absa Bank Limited passed a debit of R28 244 700 on the basis that the account holder was indebted to it in a sum far exceeding the latter amount. The basis of the appropriation and the challenge to it is dealt with in later paragraphs. The appellant seeks an order for payment of the entire credit amount in that account before the appropriation. See, in particular, para 19 below. [5] EMC’s key asset is the Varvarinskoye gold-copper deposit located in Northern Kazakhstan, held through subsidiary companies, namely the appellant, Althames Holdings Limited and Three K Exploration and Mining Limited. The establishment of a gold and copper mine and processing facilities at the site is known as the Varvarinskoye Project (the VP). EMC decided that the appellant would be responsible for the VP and would establish the mine and processing facilities. [6] South Africa was the country to which the appellant looked to appoint a project engineer and lead contractor for the VP for the purpose of supplying, on a design-build and turnkey basis, a complete and functional mineral plant for the production of gold ore and gold and copper concentrate. The company it chose was MDM Ferroman (Pty) Ltd, to which I shall refer as MDM. [7] The sixth respondent and MDM are associated companies with common directors ─ bar one. [8] On 28 September 2005, three months after MDM commenced work on the VP, the appellant and MDM concluded a written contract. In terms of the contract MDM was the lead contractor and had the right to appoint subcontractors. The contract price was US$ 55 744 623. The contract incorporated ‘The General Conditions’ published by the Federation Internationale des Ingenieurs-Conseils. The contract is made up of a number of constituent parts and is voluminous and complex. [9] Design and manufacturing work on the VP continued. The finance for the project was raised by the appellant through EMC and associated companies. Furthermore, the appellant entered into a debt facility, guaranteed by EMC, with Investec Bank Limited, Investec Bank (UK) Limited and Nedbank Limited as lenders. No drawdown on the loan facility took place because of MDM’s demise, which will be dealt with in due course. [10] The appellant was concerned, before MDM was appointed as lead contractor, about MDM’s reputation of repeated failures to pay subcontractors money it had received from previous employers in terms of construction or engineering contracts. The appellant had an interest in ensuring that subcontractors would be paid, to enable delivery of plant and equipment within schedule and thus to keep the VP on track. A safeguard was therefore built into the contract to address this concern. This was done by the insertion of a sub-clause in the contract. [11] The relevant sub-clause is 14.4, which provides: ‘Schedule of Payments The Schedule of Payments will reflect a maximum payment entitlement for the Contractor from time to time which is commensurate with the cashflow forecast/drawdown profile set out in the Facility Agreement, irrespective of any acceleration in the programmed progress of the Works which the Contractor may achieve. For the avoidance of doubt any additional sums which may become payable to the Contractor pursuant to the terms of the Contract shall not be subject to such maximum payment entitlement. Notwithstanding any other provision of Sub-Clause 14, each Statement shall certify the amount of each interim payment which is due to be paid by the Contractor to each Subcontractor and the Employer may deposit such amounts into an account to be maintained with ABSA Bank or, by agreement with the Contractor, Investec Bank (the “Subcontractor Account”). Signatures from both the Contractor and Investec Bank Limited (“the Subcontractor Account Bank”) will be required to make any payments from the Subcontractor Account. Sums may only be withdrawn from the Subcontractor Account if the Contractor makes a request in writing to the Subcontractor Account Bank and the Subcontractor Account Bank has received a copy of an invoice from the relevant Subcontractor detailing the amount of such payment, the account into which the amount should be paid and an irrevocable instruction from the Contractor to make such payment to the Subcontractor’s account.’ [12] Sub-clause 14.4 instituted a mechanism to ensure that payment was made conditional upon certain formalities being met in order to ensure delivery of the plant and equipment on schedule. It is undisputed that sub-clause 14.4 is a clause common to construction and engineering contracts. In practice, the procedure adopted to give effect to this sub-clause was as follows: (i) MDM would submit a request for an interim draw to the appellant, which included amounts due to subcontractors and attached the invoices from them; (ii) the appellant would endorse MDM’s own claim for remuneration as well as the subcontractors’ invoices as ‘approved’, ensure that sufficient funds had been transferred to account 1313 to cover the proposed payments, and send copies of the approved invoices to Investec Bank and MDM; (iii) cheques drawn in favour of MDM and the subcontractors would then be drawn against account 1313 and jointly signed by MDM and an authorised signatory employed by Investec Bank, the latter in its capacity as administrator of the debt facility having the right to refuse payment if it was not satisfied that the proposed payment fell within the scope of the VP contract. [13] The appellant had from the outset intended to open an account with Investec Bank dedicated to payment of the accounts of MDM’s subcontractors, but there had been a delay in this regard. In the interim, the appellant decided to use account 1313, held by the sixth respondent, to pay to both MDM and its subcontractors the money earned in respect of the VP. [14] Account 1313 had been opened by the sixth respondent approximately three years before the VP contract was concluded. When money destined for the subcontractors and MDM was first deposited by the appellant into account 1313, the account had a nil balance ─ prior to this the account had been dormant for a considerable period. Only money due to the subcontractors and money earned by MDM were deposited into this account. No money was paid out other than in accordance with sub-clause 14.4. [15] Before account 1313 was utilised by the appellant, the VP contract was supplied to Absa. Absa knew about the process referred to in sub-clause 14.4. On 7 June 2005, in a letter addressed to EMC, Absa confirmed the arrangement in relation to the authorised signatories. [16] It is necessary to record that MDM, the sixth respondent and various other associated companies held a number of banking accounts with Absa. On 23 May 2005, the directors of the sixth respondent executed a document in terms of which they agreed that any credit balance on any of the sixth respondent’s accounts may at any time, in the discretion of Absa, be set-off against any money owed by the sixth respondent to Absa. [17] By late November 2005 MDM was experiencing financial difficulties and the relationship between the appellant and MDM had become strained. It is not contested that during this period MDM failed to release cheques due to subcontractors and that, despite there being sufficient funds in account 1313, cheques were dishonoured. [18] On 1 December 2005 the sixth respondent, MDM and two other companies entered into a deed of cross-suretyship, whereby they bound themselves, jointly and severally, as sureties and co-principal debtors in favour of Absa for payment, on demand, of any sum or sums of money which any of them may owe Absa from whatever cause arising. [19] The sixth respondent was the holder of another account with Absa, to which I shall refer as account 7348. On 10 December 2005 account 7348 was overdrawn, with a debit balance of R60 150 608.36. The agreed limits of the overdraft facility of R17 million granted to MDM and the sixth respondent had thus been exceeded. On 10 December 2005, relying on the written agreements referred to in para 16 above and on the deed of cross-suretyship referred to in the preceding paragraph, Absa purported to apply set-off in relation to the money held in account 1313 and reduced the credit amount in that account to R80.59. As pointed out above, immediately before this was done, the credit balance in account 1313 had been R28 244 780.59. At that time two other MDM accounts reflected credit balances of R5 269 574.12 and R7 789 006.64 respectively. On 11 December 2005 those two balances were reduced to R74.12 and R6.64 respectively. The debit balance on account 7348 was thus reduced to R18 847 408.36 but still exceeded the credit limit of R17 million. [20] On 31 January 2006 the appellant, following the procedure set out therein, cancelled the VP contract. [21] On 1 February 2006 MDM was placed in provisional liquidation by order of the Pretoria High Court. On 17 February 2006 the second, third, fourth and fifth respondents were appointed as joint provisional liquidators by the Master of the High Court. The provisional liquidation order was subsequently made final. I record that the sixth respondent has also been placed in liquidation, but for present purposes that occurrence is irrelevant. This is particularly so because neither the sixth respondent nor its liquidators have ever laid claim to any of the money appropriated by Absa. [22] The appellant claimed that the money in account 1313 rightly ‘belonged’ to it and that consequently Absa was not entitled to apply set-off against the funds in the account, as none of its debtors referred to in preceding paragraphs had any entitlement to or interest therein. The appellant demanded that Absa return the money which it had appropriated. The appellant’s demand was rejected, leading to the application, the dismissal of which ultimately gave rise to this appeal. [23] Summarising the appellant’s case, account 1313 was utilised to warehouse money destined for MDM and its subcontractors, until formalities were complied with entitling either or both to withdrawals of money. At the time that the money was appropriated by Absa, there was no money due to MDM and the subcontractors were the only persons who had any claim to what was in the account. The money appropriated had been deposited for the very specific purpose of meeting subcontractor claims. Subsequent to the appropriation by Absa, in order to keep the VP going, the appellant had found approximately R28 million from its own resources to pay subcontractors their due. No subcontractor now had any further claim to any of the money that had formerly been held in account 1313. Absa knew of the source and purpose of the deposits and could not have been under any illusion that the sixth respondent had any rightful interest in or claim to the money that had been appropriated.2 The money therefore rightfully ‘belonged’ to the appellant. [24] Absa’s case, on the other hand, is that money deposited into a bank account of a client becomes the property of the bank, and only the sixth respondent (the account holder) had any right to contest the appropriation which, in the circumstances of the documentation executed by its debtors, referred to earlier, it was unable to do ─ Absa, it will be recalled, relied on set- off to justify the appropriation. A third party, such as the appellant, had ‘no right whatsoever’ to the money which stood to the credit of the sixth respondent’s account. In addition, there was no contractual nexus between the appellant and the subcontractors and the appellant’s interest in account 1313 ceased the moment it discharged its obligation to the lead contractor, MDM, by ‘paying’ the money into that account. 2 In this regard what is said by Mr Francois van der Colff, Absa’s regional credit manager at its Sandton Business Centre branch in the answering affidavit on behalf of Absa is significant: ‘From about May 2005 until the beginning of December 2005, Dr Gideon Van Rhyn (‘Van Rhyn’) and Mr Marius Ittmann (“Ittmann”), respectively a business banker and a senior analyst in the employ of the First Respondent, dealt with MDM and the Sixth Respondent on a direct basis to manage the relationship between the First Respondent and these customers. During this time, MDM and the Sixth Respondent would furnish Van Rhyn and/or Ittmann with information, particularly financial information, regarding the business affairs of the two companies. They were updated by representatives of MDM and the Sixth Respondent regarding the companies’ business activities, including MDM’s Varvarinskoye project in Kazakhstan. Included in the information provided by MDM were copies of contracts entered into between MDM and the Applicant.’ [25] The provisional liquidators filed an affidavit for the ‘assistance’ of the court, providing information and stating that they would abide any decision of the court. MDM does not appear to be in possession of any meaningful or tangible assets. Mr Gordon McCrae, one of the directors and major shareholders of MDM, informed the liquidators that amounts due to MDM were included in the money appropriated by Absa. On that basis the liquidators did not discount that MDM might have retained an interest in part of the amount appropriated. However, neither Mr McCrae nor the liquidators specified or itemised such interest. Mr McCrae also disputed the appellant’s right to cancel the VP contract. The liquidators, however, have themselves not adopted a position in relation to the cancellation of the contract. [26] In argument before us counsel for Absa tentatively suggested that as the termination of the VP contract did not appear to have been accepted by MDM the consequence is that all the entitlements to the money appropriated could not be finally decided. This submission has to be seen against Absa’s answering affidavit in which it states clearly and concisely that it does not dispute the termination of the VP contract by the appellant. Even now, more than two years later, the liquidators have not taken any steps contesting the appellant’s cancellation of the VP contract, nor is there any indication that there is likely to be any such action. There has as yet been no specific claim asserted on behalf of MDM (in liquidation) to any part of the money appropriated. [27] In the appellant’s replying affidavits it took great care to repeat that all the funds deposited into account 1313 were used only to pay subcontractors and MDM, and for no other purpose. An affidavit filed by the appellant’s attorney refers to bank statements and other documentation and contains an exhaustive analysis of entries into and withdrawals from account 1313 and demonstrates that, at the time of the appropriation, the only debits unaccounted for were sundry bank and foreign exchange charges (neither of which is in issue). It was submitted that, in the light of the accounting exercise conducted by the appellant’s attorney, no interest on the part of persons other than subcontractors (who had already been paid from another source) could be proved. The court below [28] Willis J appreciated that he was dealing with a ‘quasi-vindicatory’ claim. He considered that it was in dispute that the funds in account 1313 were, as a matter of objective fact, the funds of the appellant and further that Absa knew that this was the case. On that basis, he dismissed the application with costs, including the costs of two counsel and the costs previously reserved (in relation to a postponement to enable the appellant to finalise its replying affidavit). Willis J ‘emphasised’ that he was in no way determining the actual merits of the case and that there was nothing to prevent the appellant from proceeding against Absa by way of an action. Application to lead further evidence on appeal [29] The appellant sought to introduce documentation emanating from Absa, including internal memoranda, in order to demonstrate that the bank had knowledge of the source and ownership of the funds. It also sought to introduce transcripts of parts of the evidence presented at an enquiry in terms of sections 417 and 418 of the Companies Act 61 of 1973 into the affairs of the sixth respondent (in liquidation), to the same effect. [30] In my view, this application must fail. I shall, in due course, set out the reasons for the refusal of the application. Thus, in deciding the issues in this appeal, I will therefore only have regard to the record in the court below. Conclusions [31] It is not correct, as contended for on behalf of Absa, that it is a universal and inflexible rule that only an account holder may assert a claim to money held in its account with a bank. Nor does the proposition that money deposited in an account becomes the property of a bank, necessarily militate against a legitimate claim by another party. [32] In McEwen NO v Hansa 1968 (1) SA 465 (A), a mortgage bond debtor made monthly payments into a savings account with the Allied Building Society in the name and under the control of Mr Mortimer. It was clear that, save for very limited purposes, there was never any intention that Mr Mortimer would acquire any rights whatever in relation to the monies deposited into the account. When Mr Mortimer was sequestrated the question arose whether the amount standing to the credit of the account formed part of Mr Mortimer’s insolvent estate. In that case, as in the present, it was submitted that only the account holder had the exclusive right to claim money therein. That submission was rightly rejected. [33] In McEwen this Court accepted the basic proposition that when the money was deposited with the Building Society it passed into ownership of the latter.3 The issue before it was properly identified as follows: Who had the right to claim the credit balance in the savings account? In that case this Court considered the account holder to be the agent of the mortgage debtor. Of importance is the following dictum: ‘Under circumstances such as these, this Court should not, in my opinion, allow the apparent, as distinct from legal, absolute right of control vested in the agent prior to his insolvency to withdraw monies from the account to transcend the realities of the situation so as to permit the insolvent’s creditors to reap the benefit of that which was in truth never legally vested in the insolvent himself.’4 The funds in an account may also ‘belong’ to someone other than the account holder or, for that matter the bank or institution holding the money. [34] In Dantex Investment Holdings (Pty) Ltd v National Explosives (Pty) Ltd (in liquidation) 1990 (1) SA 736 (AD), the appellant and respondent had, prior to the latter’s liquidation, entered into a factoring agreement in terms of which the respondent, as cedent, would offer claims against its debtors for sale to the appellant, as cessionary. It was agreed that the cedent would attend to the collection, on due date, of every debt relative to a ceded claim and deposit all monies into a banking account nominated by the cessionary. The latter did not nominate an account and the monies collected were paid into the banking account of the cedent, which then made an equivalent payment to the cessionary. Some time later, the cedent ceased paying over to the cessionary the amounts it collected from the debtors. The funds were retained and used in the continuing operations of the cedent. In the local division an order was sought directing the cedent company (in liquidation) to pay over to the cessionary the amounts collected from the debtors. The local division refused to grant the order, holding that the cessionary had no real right in relation to the funds in the bank 3 See also S v Kearney 1964 (2) SA 495 (AD) and S v Kotze 1965 (1) SA 118 AD. 4 At 472D-E. account, but only a personal right which did not entitle it to anything more than to prove a concurrent claim. [35] On appeal (in Dantex) this Court held that the local division had been correct in concluding that the question was whether the cessionary had a better claim to the funds collected and that the question had to be formulated in this way for the reason that the bank was undoubtedly the owner of funds in the bank account. The court considered that in McEwen, the account had been opened and operated on the mortgagor’s behalf by the insolvent as agent, but that in the case before it the account was a general one and that there was therefore no question of the funds being ‘earmarked funds’ in respect of which a quasi- vindicatory claim was competent. It was only if the cessionary was the owner of the money or had some other real right that it would not be obliged to queue in the concursus creditorum as regard payment of its claim. The following dictum is significant: ‘If there had been an agreement between Dantex, the Standard Bank and Natex, that moneys deposited in this account in respect of debts ceded to Dantex could only be withdrawn by Dantex that would, of course, alter the position. That is not the case here. There is no evidence to suggest that the Bank agreed to hold the funds in respect of those cheques as agent for Dantex. Had Dantex nominated a bank account as provided for in the agreement, and had the cheques in question been paid into that account, the position might have been different.’5 [36] In the present case the basis on which Absa claimed the right to appropriate was set- off, in relation to money owed to it by its debtors, including the sixth respondent and MDM ─ nothing more. It is clear that Absa was aware, from the outset, of the purpose of account 1313. It knew of the source and very specific purpose of the funds and that the sixth respondent had no involvement or interest in the money. The sixth respondent, the bank and the appellant in effect agreed that the funds could only be withdrawn after compliance with a prescribed procedure which did not involve control of any kind by the sixth respondent. The sixth respondent and the bank merely acted as the appellant’s agents to warehouse the money in account 1313 for the specified purpose. In these circumstances there can be no question of set-off against money in account 1313, to which money none of Absa’s relevant debtors could legitimately lay claim. 5 At 749H-750A. [37] A relationship between banker and client is based on contract. It involves a debtor and creditor relationship in terms of which the banker becomes owner of money deposited on the client’s account subject to its obligation to its client to pay cheques drawn on it.6 In the South African cases cited above the bank was not a disputant, was uninterested and stood back whilst others claimed ‘ownership’ of money in an account. In the present case the bank’s knowledge of the source and purpose of the funds in account 1313 is of course directly relevant to its asserted right to effect set-off, which it claimed by virtue of a contract entered into with the account holder, its client. Furthermore, its knowledge is highly relevant in relation to the appellant’s claim that the bank and the account holder had agreed to warehouse the money in account 1313 and that there was thus no entitlement to the money on the part of either. [38] If we accept, as we must, that in this case the bank had knowledge of the source and purpose of the funds, then it is not necessary to consider other theoretical hypotheses, such as what the position might have been had the bank not possessed such knowledge. For, as stated in McEwen: ‘However, as the Building Society is not a party to the present proceedings, I express no view in relation to their possible knowledge and pause only to record that, on the papers before the Court, the aforementioned intention, as deposed to by the respondent, Allison, and Mortimer, is not in any way denied by the Building Society.’7 Similarly, in Dantex the following appears at 749I-J: ‘There is no evidence to suggest that the bank agreed to hold the funds in respect of those cheques as agent for Dantex.’ Nor, it seems to me, would it be advisable, to lay down any abstract general principle of law based on such a speculative hypothesis, in the absence of a proper alternative factual matrix and I accordingly refrain from doing so. This is particularly so, since we were referred to no South African authority dealing with the bank’s assertion of its right to ownership as against claims by persons other than the account holder and where it was held that in those circumstances the bank’s knowledge of contractual arrangements between its account holder and other parties was irrelevant. In any event, for present purposes, that situation is entirely irrelevant. 6 See F R Malan and J T Pretorius assisted by S F du Toit Malan on Bills of Exchange, Cheques and Promissory Notes 4 ed (2002) p 335. 7 Page 469B-C. [39] In the present case, as stated in para 36 above, the bank and the account holder had agreed that the funds could be withdrawn only upon a particular procedure being followed which did not involve any control by the account holder. As pointed out earlier it has been clearly proved that the account holder and the bank had agreed to act as the appellant’s agent to warehouse the money in account 1313. I am disinclined to decide this matter other than on the basis of the facts of the present case, namely, that the bank had the knowledge referred to above, which was directly relevant in relation to the claim and defence in the present dispute. [40] The appropriation in question was effected by a bookkeeping entry. There was no suggestion that the funds appropriated by Absa, wherever presently held, could not be traced as the funds emanating from account 1313, or that there was some other impediment in this regard. It was not the basis of Absa’s defence, for example, that the money appropriated could not be followed to where it was presently held on the basis that it was not the same coinage, and therefore could not be recovered in the manner sought by the appellant. [41] In Nissan South Africa (Pty) Ltd v Marnitz NO and Others (Stand 186 Aeroport (Pty) Ltd Intervening) 2005 (1) SA 441 (SCA), Streicher JA, in dealing with the perplexing question of the appropriate remedy available to a person laying claim to money wrongfully transferred from its own bank account to another over which it had no control, and considering an earlier decision by this court,8 said the following: ‘This Court was aware that its decision may not be strictly according to Roman-Dutch law but stated that Roman- Dutch law was a living system adaptable to modern conditions. As a result of the fact that ownership in specific coins no longer exists where resort is made to the modern system of banking and paying by cheque or kindred process, this Court came to regard money as being stolen even where it is not corporeal cash but is represented by a credit entry in books of account.’9 [42] In the Nissan case this court took into account that it was common cause that, if it concluded that the liquidators in that case were not entitled to the contested funds, the appellant was entitled to payment thereof and made an order accordingly. In the present case the parties were agreed that, if we find that no person other than the appellant had any 8 The case referred to was S v Graham 1975 (3) SA 569 (A) where the question arose whether an accused was guilty of the theft of a cheque of R37 153.88 or of the theft of that amount and the court was dealing with the principle of Roman-Dutch law that only corporeal things were capable of being stolen. 9 Para 24. interest or claim to the money appropriated by Absa, the appellant was entitled to the relief sought. I can see no reason why, in the present case, for the reasons stated in the Nissan case and considering the conclusions arrived at in the preceding paragraphs, a similar result should not follow. [43] It is now necessary to set out the reasons for refusing the application by the appellant for leave to adduce further evidence on appeal. The appellant sought to have the application to adduce further evidence decided conditional upon the appeal (on the present record) being dismissed. This is notionally difficult to appreciate. Even though Willis J described his judgment as not finally settling the dispute between the parties, it certainly cannot be contended that his was not a final judgment susceptible to an appeal. A decision by this court on the correctness of the decision of Willis J would in itself be final. It is conceptually not tenable first to consider the correctness of that final decision and then to decide whether or not to introduce the new evidence. After such a decision a court is functus officio. An appellant wishing to re-open its case must therefore make an election before the appeal hearing whether to apply for re-opening. If that is refused the appeal proceeds. If it is granted there has to be remittal and the appeal will fall away. [44] It has been suggested that the appellant was prompted to apply to adduce evidence on appeal because of the finding of the court below that it could not, on the available facts, arrive at a conclusion in relation to the ‘ownership’ of the funds and the knowledge of the bank in relation thereto. In my view, this suggestion is without merit. It is clear from what is set out in the appellant’s founding affidavit, supplemented by the uncontested evidence contained in its replying affidavit, that Absa was fully aware of and party to the arrangements to use account 1313 for the VP. It is abundantly clear from those affidavits that, on Absa’s own documentation, referred to by the deponents, Absa knew of the source of the funds and of the arrangements concerning payment to MDM and subcontractors. The evidence sought to be introduced at this stage, in effect, will achieve nothing more than enhancing an already established case. [45] Furthermore, even taking into account the stressed circumstances under which the appellant launched proceedings in the Johannesburg High Court, it nevertheless had at its disposal the means provided by the rules of court10 to compel the production of the bank statements and documents which it now seeks to introduce. That evidence was in existence at the time that the application was first brought. The evidence in relation to the enquiry in terms of the provisions of the Companies Act referred to earlier, cannot fully be appreciated until and unless it is considered in the context of all the relevant evidence adduced at the enquiry, which has not been proffered. [46] For all these reasons the application for leave to adduce further evidence must be refused. [47] There is one further issue requiring attention. Willis J, in dismissing the appellant’s application with costs, included an order that the costs were to include the costs previously reserved in relation to an opposed application by the appellant for a postponement in order to finalise its replying affidavit. It is uncontested that the appellant had, prior to the postponement being argued, tendered to pay the costs of the postponement on an unopposed scale, which tender was refused. In all the circumstances there appears to be no justification for Absa to have adopted such a stance. The order in relation to the reserved costs should therefore be altered. 10 See inter alia Uniform rule 35(13). [48] The following order is made: 1. The application for leave to adduce further evidence is dismissed with costs, including the costs of two counsel. 2. The appeal succeeds with costs including the costs of two counsel. 3. The order of the court below is set aside and substituted as follows: ‘(i) It is declared that the rights to the monies which stood to the credit of the ABSA account (account number 40-5616-1313) on 9 December 2005, vest in the Applicant; (ii) The First Respondent is ordered to pay the Applicant the sum of R28 244 780.59, together with mora interest at the rate of 15,5% per annum from 10 December 2005. (iii) The First Respondent is ordered to pay the costs of the application, including the costs of two Counsel. (iv) The Applicant is ordered to pay the costs related to the postponement granted on 12 September 2006, in terms of the tender on its behalf, on the unopposed scale and the respondent is ordered to pay the costs occasioned by opposition.’ _________________ M S NAVSA JUDGE OF APPEAL CONCUR: HOWIE P PONNAN JA MAYA JA CACHALIA JA: [49] I have read the judgment of my colleague Navsa JA and agree with the order he proposes. I come to the same result but via another route. The essential difference is that I consider the bank’s knowledge of account 1313’s intended purpose to be irrelevant to its claimed entitlement to set-off the money that was held in that account. [50] The facts have carefully been set out in the main judgment. They need not be repeated. That the bank owned the funds that had been deposited in account 1313 is undoubtedly so. But it is well-established that ownership of the money held in an account does not, of itself, preclude the assertion of rights of other parties to the money. This is because the solitary act by someone who opens a separate bank account in the name of another and deposits money in that account does not confer any special title on the person named as the account holder.11 Thus, where an agent opens a separate account on behalf of a principal and deposits money into that account, the agent, or anyone claiming title through him or her has no vested right in the money.12 And it follows, logically, that if the account holder has no title to the money so deposited, so too does the bank not have. The fact that the bank owns the money does not detract from this conclusion. Where, as in this case, there is a dispute between the parties regarding their entitlement to funds that have been deposited in a separate bank account, the intention of the parties to the agreement must be determined. And McEwen, I think, makes clear that the intention with which the bank holds the money is irrelevant to the determination of this question,13 unless it is a party to the agreement. [51] The only question, therefore, that is relevant in this appeal is whether the terms of the agreement between the appellant and MDM, particularly clause 14.4 thereof, conferred any title on the sixth respondent to the funds, which the appellant had deposited into account 1313. Absa asserts that because payments by the appellant into the account were made to discharge its obligations to MDM, the appellant no longer had a proprietary interest in the money. And, so it says, the fact that the money may have been paid for a certain purpose, namely to pay sub-contractors, does not detract from this. [52] I do not agree with Absa’s submission. The purpose of clause 14.4 and the use of account 1313 are discussed at paragraphs [10]-[14] of the main judgment. It is plain that the account was held in the name of the sixth respondent solely to warehouse the money pending the appellant’s authorisation for payment to be effected to the subcontractors. The sixth respondent had no involvement in the agreement or the VP and therefore had no personal claim to the money in the 1313 account. Until authorisation for payment to the subcontractors was forthcoming from the appellant, MDM had no claim to the money either. And in respect of the money that was appropriated it is common cause that the appellant had not authorised 11 Vereins-Und Westbank AG v Veren Investments 2002 (4) SA 421 (SCA) para 14. 12 McEwan (supra) para 32; Dantex (supra) 34 at 749I-50B. 13 At 469A-C; Barnard Jacobs Mellet Securities (Pty) Ltd v Matuson 2005 CLR 1 (W) para 26. MDM to make payments to the sub-contractors. MDM therefore had no personal claim to the money before this. Neither did the sixth respondent, which was no more than the nominated account holder for the VP project. [53] Properly construed the agreement between the appellant and MDM required the money, which the appellant had deposited into account 1313, to be held in trust and to be dealt with only according to its instructions. Whether Absa was aware of the arrangement ought not to have any bearing on the matter. For the same reason I would hold that it was unreasonable, in the circumstances, for the appellant to apply to adduce further evidence to demonstrate that Absa was indeed aware. ___________________ A CACHALIA JUDGE OF APPEAL

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 March 2008 Status: Immediate 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 On 28 March 2008 the Supreme Court of Appeal, in the case of Joint Stock Company Varvarinskoye v Absa Bank Ltd and others upheld an appeal against a judgment of the Johannesburg High Court, in terms of which it dismissed an application by the appellant for an order that the bank pay it an amount of R28 244 780.59 that had stood to the credit of an account held by a client of the bank. The bank had appropriated that amount, asserting a right to set-off that amount against amounts owing to it by the account holder. The appellant had been charged with the responsibility for establishing a mine and processing facilities in Kazakhstan. Its case was that it had agreed with the bank and the account holder that the account in question be used exclusively for payment of amounts owing to the main contractor and sub-contractors who had been contracted to establish the mine and processing facilities and that the bank had therefore wrongfully appropriated money it knew did not belong to its client. The Johannesburg High Court held that it was in dispute that the funds in the account were as a matter of objective fact the funds of the appellant and that the bank knew of this. It consequently dismissed the application. This court held that the bank was aware from the outset of the source and purpose of the funds in the account and that it had agreed that funds could only be withdrawn upon a particular procedure being followed and that the account holder had no interest in or control over the funds. This court held that in these circumstances that the bank could not rely on set-off to justify the appropriation of the funds in question. The appeal was upheld with costs including the costs of two counsel and the order of the Johannesburg High Court below was substituted to the effect that the bank pay the appellant the sum of R28 244 780.59 together with mora interest at the rate of 15.5 per cent per annum from 10 December 2005. In a separate concurring judgment, Cachalia JA agreed with the result but held that the bank’s knowledge was immaterial. --ends--

3889

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 828/2021 In the matter between: VAN WYK VAN HEERDEN ATTORNEYS APPELLANT and STEPHEN MALCOLM GORE NO FIRST RESPONDENT SELBY MUSAWENKOSI NTSIBANDE NO SECOND RESPONDENT Neutral citation: Van Wyk Van Heerden Attorneys v Gore NO and Another (828/2021) [2022] ZASCA 128 (30 September 2022) Coram: VAN DER MERWE, MAKGOKA and GORVEN JJA and GOOSEN and MASIPA AJJA Heard: 13 September 2022 Delivered: 30 September 2022 Summary: Insolvency – deposit into attorney’s account – application to set aside under s 26(1)(b) of Insolvency Act 34 of 1926 – test whether attorney benefits or not – if so, onus to show solvency on attorney. __________________________________________________________________ ORDER ______________________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Magona AJ, sitting as court of first instance): To the extent set out in paragraph 2 hereof, the appeal is upheld with costs, including costs of two counsel. Paragraphs 2 and 3 of the order of the high court are set aside and substituted with the following: ‘2 It is declared that the following payments made by Brandstock Exchange (Pty) Ltd to the respondent: 2.1 On 23 February 2018 in the sum of R75 000; 2.2 On 30 April 2018 in the sum of R200 000; are dispositions without value as contemplated by s 26(1)(b) of the Insolvency Act 24 of 1936 read with s 340 of the Companies Act 61 of 1973 and they are set aside. The respondent is ordered to pay to the applicants the sum of R275 000.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Gorven JA (Van der Merwe and Makgoka JJA and Goosen and Masipa AJJA concurring) [1] This appeal concerns the application of the provisions of s 26(1)(b) of the Insolvency Act 24 of 1936 (the Act) to trust accounts of attorneys.1 Three deposits were made into the trust account of the appellant, a firm of attorneys (the attorneys). Two were made on 23 February 2018 and one on 30 April 2018. The first two were of R1 250 000 and R75 000 respectively and the third of R200 000. All three were made from the account of Brandstock Exchange (Pty) Ltd (Brandstock). The sole director of Brandstock was one Bruce Robert Philp (Philp). Brandstock was provisionally wound up on 3 July 2018 and finally wound up on 20 August 2018. The deposits excited the attention of the respondents who are the liquidators of Brandstock (the liquidators). They applied to have them set aside under s 26(1)(b) of the Act. Their contention was that the deposits into the trust account amounted to dispositions to the attorneys. [2] The application was brought in the Western Cape Division of the High Court, Cape Town (the high court). It found favour with Magona AJ, who declared the deposits to have been dispositions to the attorneys and set them aside. Pursuant to that declaration, the attorneys were ordered to pay R1 525 000 to the liquidators, 1 I shall refer to ‘attorney’ or ‘attorneys’ as a matter of convenience and consistency. As regards the trust accounts of attorneys, as will be seen, the Legal Practice Act 28 of 2014 (the LPA) refers mostly to the general term ‘trust account practices’. These used to be the sole domain of attorneys but the LPA now allows certain legal practitioners functioning as advocates to operate trust accounts. along with interest and costs. The high court dismissed an application by the attorneys for leave to appeal. The appeal is before us with the leave of this Court. [3] The relevant parts of s 26(1)(b) of the Act read: ‘Every disposition of property not made for value may be set aside by the court if such disposition was made by an insolvent – . . . (b) within two years of the sequestration of his estate, and the person claiming under or benefited by the disposition is unable to prove that, immediately after the disposition was made, the assets of the insolvent exceeded his liabilities’. It is clear that the deposits took place less than two years prior to the winding up of Brandstock. This would bring them within the ambit of s 26(1)(b). [4] The elements required to set aside a disposition under s 26(1)(b) are therefore: a) A disposition; b) by an insolvent; c) not made for value; d) within two years of liquidation; and e) the person claiming under or benefited by the disposition is unable to prove that, immediately after the disposition was made, the assets of the insolvent exceeded his liabilities. [5] It is necessary to sketch the plain, unvarnished,2 material facts of the application. At the time of the deposits, the attorneys acted for Philp and another entity controlled by him, BRP Livestock CC (BRP). The attorneys neither 2 In the papers and heads of argument, the liquidators sought to make out a case that the transaction described below was a sham one. Certain inferences were drawn and remarks made by the high court concerning the conduct of the attorneys. I mention these later. These were expressly disavowed in argument before us, correctly in my view. represented, nor even knew of the existence of, Brandstock. BRP was provisionally liquidated on 3 November 2017 and finally wound up on 8 March 2018 by an order of court. At the time the three deposits were made, Philp was confronting a sequestration application. [6] The insolvency proceedings against Philp and BRP were pursued by an acknowledged creditor, the Utexx Trust (Utexx). The attorneys were involved in negotiations for a person well-disposed to Philp to purchase its claims against BRP and Philp. Philp indicated to the attorneys that a certain Muir would be the purchaser. The attorneys were requested to draft a cession and sale agreement to that effect. [7] On 13 February 2018, the attorneys transmitted the first draft to attorneys representing Utexx. They had been informed that Muir had not decided which of his corporate entities would purchase the claims and were to leave the identity of the purchaser blank. The purchase price was R1.25 million. Utexx’s attorneys sent back an amended draft. This reflected (incorrectly, but the attorneys did not notice it) that the attorneys represented the purchaser. Utexx also required payment to be made from the trust account of the attorneys. [8] On 23 February, the attorneys informed Utexx that the purchase price of R1.25 million had been deposited into their trust account. The agreement was signed by both parties on 26 February. It is unclear from the affidavit of the attorneys at what point they realised that the purchaser was one Sandra Pratt (Pratt) rather than Muir. They explained: ‘On 23 February 2018, I advised [Utexx’s attorney] that the purchaser was in Johannesburg and would only be able to sign the Agreement on 24 February 2018 and provide me with a copy of it by 26 February 2018. I pause to mention that, at this point in time, I was still under the impression that Muir would be purchasing the claim of [Utexx]. On 21 February 2018, I transmitted an e-mail to Philp again requesting him to complete the details of the purchaser. On 23 February 2018, I addressed a letter to Philp requesting the aforesaid payment upon which Philp responded by confirming in writing that the purchaser disclosed in the Agreement had made payment of the purchase consideration and attached the proof of payment to his aforesaid letter. It was only upon receipt of the signed Agreement from Philp that I noticed that Muir was not the purchaser but instead Sandra Pratt’s details were included as the purchaser.’ [9] After seeing the signed agreement, the attorneys sought clarification from Philp. According to them, ‘he indicated that Pratt was his aunt and that she had offered to purchase the claim from [Utexx] and to then allow him some additional time to repay the indebtedness of BRP to her.’ What is clear is that Philp misled, or at best for him failed to tell, the attorneys that the funds deposited into their trust account came from Brandstock. On the contrary, he informed them that the funds were those of the purchaser. The attorneys transferred the R1.25 million purchase price to Utexx on 27 February. It is accepted by the liquidators that the attorneys were entirely unaware of the existence or involvement of Brandstock at this time. [10] The other two amounts of R75 000, deposited on 23 February, and of R200 000, deposited on 30 April, were used by the attorneys to settle their fees, counsel’s fees and further disbursements. These all related to the attorneys’ representation of Philp and BRP. [11] It is against this factual backdrop that the claims by the liquidators against the attorneys under s 26(1)(b) fall to be considered. [12] In support of their contention that the deposits amounted to impeachable dispositions to the attorneys, the liquidators relied on a line of cases. These cases have held that, when attorneys operate on their trust accounts, they do so as principals and not as agents.3 They submitted that this demonstrated that the dispositions were made to the attorneys as envisaged under s 26(1)(b). [13] On the other hand, the attorneys called in aid a dictum of this Court concerning a deposit into the trust account of an attorney who acted for the nominated payee.4 In that matter, this Court held that ‘the disposition was to Iprolog [the payee on whose behalf it was received] and occurred . . . when the money was paid into the attorney’s trust account’.5 They further relied on a series of cases where trustees or liquidators of insolvent estates sought unsuccessfully to contend that amounts deposited in bank accounts were dispositions to the banks.6 [14] I shall deal more fully with both sets of contentions with reference to the cases relied on. Before doing so, however, it is worth rehearsing some of the legal principles concerning the position of bank accounts in general and trust bank accounts of attorneys in particular. General banking principles are clear that the bank owns the money deposited into accounts held with it. A debtor-creditor relationship is established as was explained by Holmes JA in S v Kearney:7 ‘[I]t has long been judicially recognised in this country that the relationship between bank and customer is one of debtor and creditor. When a customer deposits money it becomes that of the bank, subject to the bank's obligation to honour cheques validly drawn by the customer . . .’. 3 See eg De Villiers NO v Kaplan 1960 (4) SA 476 (C) (Kaplan); Wypkema v Lubbe [2007] ZASCA 36; 2007 (5) SA 138 (SCA); [2007] 4 All SA 1224 (SCA) (Wypkema); and Capricorn Beach Home Owners Association v H. E. S. Potgieter t/a Nilands and Another [2013] ZASCA 116; 2014 (1) SA 46 (SCA) (Capricorn). 4 M and Another v Murray and Others [2020] ZASCA 86; 2020 (6) SA 55 (SCA) (Iprolog). 5 Ibid para 31. 6 See eg Zamzar Trading (Pty) Ltd (in Liquidation) v Standard Bank of SA Ltd 2001 (2) SA 508 (W) (Zamzar); Reynolds and Others NNO v Mercantile Bank Ltd [2004] ZASCA 137; 2004 (5) SA 220 (SCA) (Reynolds); and the English law case of Bank of Ireland v Hollicourt (Contracts) Ltd [2001] All ER 289 (CA) (Hollicourt). 7 S v Kearney 1964 (2) SA 495 (A) at 502H–503A. Under the banker-customer relationship, the bank is indebted to the customer. The bank owns the money but is obliged to comply with instructions of the account holder concerning a positive balance in the account. Account holders thus have the power of disposal over the credit balance of funds held by the bank on their behalf. [15] This holds no less true of trust bank accounts held by attorneys. Money deposited into attorneys’ trust accounts gives rise to the same relationship with the bank as with any account holder. The bank owns the money, but becomes obliged to give effect to instructions by the attorney holding the account. It is indebted to the attorney and to no other party. No one else is entitled to instruct the bank on how to deal with it. [16] At the same time, the credit balance in trust accounts is held by the attorney on behalf of particular clients. A similar debtor-creditor relationship obtains between the attorney and the client. The attorney is obliged to give effect to instructions of clients concerning the credit balance held for them. But vis-a-vis the bank, the attorney has the power of disposal over credit balances in the trust account. This is at least partly why our courts have held that, when attorneys deal with funds in a trust account, they generally do so as principals and not as agents. [17] Section 86(2) of the Legal Practice Act 28 of 2014 (the LPA) applies to attorneys: ‘Every trust account practice must keep a trust account at a bank with which the Fund has made an arrangement as provided for in section 63(1)(g) and must deposit therein, as soon as possible after receipt thereof, money held by such practice on behalf of any person.’ Trust accounts of attorneys held with banks have, for a considerable time, enjoyed special characteristics. Chief among these is that reflected in s 88(1) of the LPA, which provides: ‘(a) Subject to paragraph (b), an amount standing to the credit of any trust account of any trust account practice- (i) does not form part of the assets of the trust account practice or of any attorney, partner or member thereof or of any advocate referred to in section 34(2)(b); and (ii) may not be attached by the creditor of any such trust account practice, attorney, partner or member or advocate. (b) Any excess remaining after all claims of persons whose money has, or should have been deposited or invested in a trust account referred to in paragraph (a), and all claims in respect of interest on money so invested, are deemed to form part of the assets of the trust account practice concerned.’ This echoes similar provisions in prior legislation governing attorneys’ trust accounts.8 It can be seen that these provisions circumscribe the rights of attorneys and their creditors in relation to trust accounts. [18] The rights of banks are similarly curtailed by s 91 of the LPA, the relevant part of which reads: ‘. . . a bank at which a trust account practice keeps its trust account, or any separate account forming part of a trust account, does not, in respect of any liability of the trust account practice to that bank 8 Section 33(3) of Act 23 of 1934, as substituted by sec. 17 of Act 18 of 1956, provides: ‘No amount standing to the credit of such trust account in the bank shall form part of the assets of the attorney, notary or conveyancer concerned and no such amount shall be liable to attachment at the instance of any creditor of such attorney, notary or conveyancer: Provided that any excess remaining after payment of the claims of all persons whose moneys have, or should have, been deposited in such trust account, shall be deemed to form part of the assets of such attorney, notary or conveyancer.’ And s 78(7) of the Attorneys Act 53 of 1979, the immediate predecessor to the LPA, reads: ‘No amount standing to the credit of any practitioner's trust account shall be regarded as forming part of the assets of the practitioner, or may be attached on behalf of any creditor of such practitioner: Provided that any excess remaining after payment of all claims of persons whose money has, or should have, been deposited or invested in such trust account, and all claims in respect of interest on money so invested, shall be deemed to form part of the assets of such practitioner.’ not being a liability arising out of, or in connection with, any such account, have or obtain any recourse or right, whether by way of set-off, counter-claim, charge or otherwise, against money standing to the credit of that account.’ [19] With that in mind, I turn to the cases called in aid by the parties. The first, relied on by the liquidators was Kaplan,9 where it was held: ‘Sec. 33(3) of Act 23 of 1934, as amended, while providing that an amount standing to the credit of an attorney's trust account shall not form part of the assets of such attorney, left unimpaired the right of the attorney to direct the bank at which the trust account is kept to dispose of the amount standing to the credit of that trust account in a manner as directed by him . . . Indeed as between himself and the bank, unaware of the fact that he was acting in conflict with his trust obligations, he could direct the bank to pay the amount standing to the credit of his trust account to his personal creditors or to himself.’10 This is a straightforward application of banking principles as applied to trust accounts. It simply explains that banks must give effect to instructions of an account holder. [20] In Kaplan, an attorney, Katz, had made payments of his personal gambling debts from his trust account. His trustees sued his gambling creditor, the respondent. The latter excepted to the particulars of claim on the basis that, because the credit balance in the trust account was not an asset belonging to Katz, the payments were not dispositions of Katz’s property. The exception was upheld by the court of first instance. Reversing this finding on appeal, Van Winsen J held: ‘In effect, therefore, even although the amount in the trust account was not, while it was still in such account, an asset belonging to Katz, he had a right of disposal over such amount which right empowered him to deal with it in such a way as to make it, or an amount equivalent thereto, part 9 Kaplan fn 3. 10 Ibid at 478H-479B. of his assets . . . In the case where he directed the money to be paid to his trust creditors he would be released from his obligations to them. Where he directed the payment of the excess in the account to his personal creditors or to himself his estate would thereby be benefited.’11 Here one sees operating the two sets of relationships governing a trust account: that of the attorney with the bank and that of the attorney with the client. Katz had a right of disposal with the bank. But he also had an obligation to the clients on whose behalf he held the moneys in the trust account. He breached the latter obligation by abusing his right of disposal of the funds held for them for his own benefit. The element of benefit is central to the reasoning in the judgment that these were dispositions by Katz. [21] That approach has been endorsed by this Court on more than one occasion and can be considered settled law. In Wypkema,12 a summons for provisional sentence had been sued out against an attorney on the basis of a dishonoured cheque drawn on his trust account. A bank had undertaken to grant a loan to the attorney’s client on registration of a mortgage bond over an immovable property he was purchasing. The appellant agreed to advance a loan to the client as bridging finance. Before the loan money was advanced, the attorney furnished the appellant with a cheque in the amount of the loan plus its fee. The cheque, drawn on the attorney’s trust account, was dishonoured by non-payment when presented, and returned marked ‘effects not cleared’. The court a quo refused provisional sentence against the attorney, holding that the cheque had been furnished by the attorney as agent for the client rather than as principal. This Court disagreed and granted provisional sentence against the attorney. After referring to Kaplan, it held: 11 Ibid at 479B-E. 12 Wykema fn 3. ‘The Court a quo failed to have regard to these basic principles and consequently erred in its conclusion. When an attorney draws a cheque on his trust account, he exercises his right to dispose of the amount standing to the credit of that account and does so as principal and not in a representative capacity.’13 [22] The principle was further illustrated in Capricorn.14 An attorney had transferred funds from his trust account to the Capricorn Beach Home Owners Association (the HOA) in error. He had intended to transfer them to his client, the Capricorn Beach Joint Venture (the JV). The JV owed the HOA money. Instead of repaying the attorney, the HOA claimed to have set off the money received by it against the debt of the JV on the basis that the attorney had acted as the agent of the JV in making the transfer. This Court upheld the attorney’s claim against the HOA under the condictio indebiti with reference to the above principles: ‘First, it is at odds with the judgment of this court in Wypkema v Lubbe 2007 (5) SA 138 (SCA) para 7. That case held that, when an attorney draws a cheque on his trust account, he exercises his right to dispose of the amounts standing to the credit of that account and does so as principal and not in a representative capacity. In my view that puts paid to the submission that the first respondent, a duly admitted attorney, notary and conveyancer, was acting as an agent when, through his bookkeeper, he made the erroneous transfer of money to the appellant. It is true that in this case we are not concerned with the drawing of a trust cheque but in principle it makes no difference that the payment was made in the modern way by electronic transfer. The account from which the erroneous payment was drawn was a trust account controlled by the first respondent. Therefore the principle laid down in Wypkema applies.’15 [23] From the above examples, it is clear that attorneys operate on their trust accounts as principals and not as agents. This is because they, and only they, can 13 Ibid para 7. 14 Capricorn fn 3. 15 Ibid para 16. instruct a bank to dispose of amounts to the credit in that bank account since clients have no legal relationship with the bank concerning that account. When attorneys operate on a trust bank account in accordance with their instructions, however, they may function at two levels. In the first place, because only they have the right to dispose of funds to the credit in that account pursuant to the banker-customer relationship, they do so as principal. In the second place, however, if they give effect to a mandate from the client in whose name the moneys are held in trust, they do so as agent. What is relevant for present purposes, however, is that the power to operate a trust account does not determine whether a deposit into that account amounts to a disposition to the attorney. The contention of the liquidators to this effect must therefore be rejected. [24] The matter of Iprolog16 was invoked by the attorneys as authority for the contention that a deposit into an attorney’s trust account amounted to a disposition to the payee to whom the attorney was instructed to make payment of those funds. It involved a claim by trustees of the insolvent estate of a husband who had obtained a divorce order shortly before being sequestrated. The trustees alleged collusive dealings between the husband and wife.17 The funds were used to enable an entity called Iprolog to purchase an immovable property. On 23 June 2009, the husband transferred R3 500 000 of that amount into an attorney's trust account for the credit of Iprolog. The issue was framed by this Court as follows: ‘It brooks no debate that the payments made by Mr M[…] to Mrs M[…] constitute “dispositions” within the meaning of the Insolvency Act. As I have already stated, there were two of those. The first was for R3 500 000 into an attorney’s trust account for the credit of Iprolog on 23 June 2009 and used towards the purchase of property in Iprolog’s name. The second payment was made 16 Footnote 4. 17 The cause of action implicated s 31 of the Insolvency Act as well as ss 29 and 26(1)(b). shortly after the divorce decree was finalised. It was submitted that despite the payment date for the R3 500 000 being June 2009, the money only accrued to Mrs M[…] on 26 August 2009, after the decree of divorce was granted and the property had been transferred into Iprolog’s name. Thus, it was said that Mrs M[…] was only “paid” after the divorce order was granted, and “in terms” thereof. This submission has merely to be stated, to be rejected. It was contrived to bring the disposition within the ambit of the exclusionary provisions of the definition of “disposition” in s 2 of the Insolvency Act referred to above. As I have said, the disposition was to Iprolog and occurred on 23 June 2009 when the money was paid into the attorney’s trust account. That Iprolog was only free to use it later is irrelevant. The exclusionary provisions of s 2 did not apply to this payment, and it was accordingly susceptible to being set aside in terms of one or other of the three sections of the Insolvency Act referred to above.’18 As was made plain, the deposit was to a trust account for the credit of Iprolog. Thus, the attorney was mandated by Iprolog to receive the payment as its agent. That distinguishes the present deposit which was to the trust account of the attorneys who did not receive them on behalf of Utexx but were instructed to pay them on. A different enquiry must determine to whom an impeachable disposition under s 26(1)(b) has been made in this matter. [25] Matters concerning banks may shed some light on the essential enquiry to be made. In Zamzar,19 Goldblatt J was confronted with an exception to particulars of claim brought by liquidators of Zamzar Trading (Pty) Ltd (Zamzar) against the respondent bank (the bank). The claim was that Zamzar and one Sferopoulos conspired in a fraudulent scheme. Pursuant to that scheme, Zamzar opened a current account with the bank. VAT repayments were made into the account and, on instruction from Zamzar that it had an obligation to Sferopoulos, the bank debited 18 Footnote 15 paras 30-31. 19 Zamzar fn 6. the account in favour of Sferopoulos. The liquidation of Zamzar ensued and the liquidators sought to recover these amounts from the bank. There was no suggestion that the bank was in any way aware of the fraudulent dealings. In upholding the exception, the court said: ‘Should plaintiff's cause of action be valid it would mean a commercial bank would in respect of each customer and each transaction have to ascertain where the customer's funds came from and the reason therefore and why such funds were being paid to a named payee. Thus the bank would only be permitted to safely execute its client's mandate if it could be satisfied it was not tainted in any way. The whole scenario envisaged by the plaintiff is, in my view, repugnant to logic and law as it would create a situation where a principal could visit liability on his agent for performing precisely the mandate which it had given to its agent.’20 This reasoning strikes me as unassailable and equally applicable to an attorney who is merely instructed to make a payment. [26] In Reynolds,21 Mercantile Bank (Mercantile) did not have outlets in certain areas and, for the convenience of its clients, opened bank accounts in those areas with Standard Bank (Standard). As such, it became a client of Standard. Clients of Mercantile in those areas could deposit cheques into accounts of Mercantile with Standard without having to go to a branch of Mercantile. Within two years of being liquidated, Duchini (Pty) Ltd deposited two cheques made out to Mercantile into one of its accounts with Standard. That account with Standard was credited accordingly. On the instructions of one of the directors of Duchini, the amounts of the deposits were credited by Mercantile to accounts held by that director with Mercantile. This reduced the indebtedness of that director to Mercantile. Duchini was not indebted to 20 Ibid at 515B-C. 21 Reynolds fn 6. Mercantile at the time. The liquidators of Duchini sued Mercantile, seeking to set the payments aside under s 26(1) of the Act. This Court held: ‘Indeed a disposition without value which is liable to be set aside is one in which the person who benefited by the disposition runs the risk of having such disposition being set aside in certain specified situations. It is manifest that [Mercantile] benefited from the dispositions. First, as previously stated, it obtained the benefit of a credit to its account with the Standard Bank which it could immediately use. Secondly, it was thereafter able to reduce the debt which was owed to it by [the director in question] Makrides by the amounts of the two deposits making use of the transfer of the credit to its account at the Standard Bank.’22 Standard was not held to have benefited despite having become the owner of the moneys collected from Duchini’s bank. This accords with the position of the bank in Zamzar. Not so in the case of Mercantile. This Court held that the effect was that ‘Duchini paid Makrides’ debt to the defendant.’23 In arriving at that conclusion, this Court highlighted the need for the recipient to benefit from the disposition. [27] This approach finds echo in English and Australian law. In the English case of Hollicourt,24 the liquidators of Hollicourt (Contracts) Ltd (Hollicourt) sought to recover payments by the Bank of Ireland (the bank) to third parties from the account of Hollicourt. The claim of the liquidators was based on s 127 of the Insolvency Act, 1986 which provided: ‘In a winding up by the court, any disposition of the company’s property, and any transfer of shares, or alteration in the status of the company’s members, made after the commencement of the winding up is, unless the court otherwise orders, void.’25 The court of first instance had accepted the contention of the liquidators that the bank was obliged to effectively repay the total amount of the payments in question. 22 Ibid para 8. 23 Ibid para 11. 24 Hollicourt fn 6. 25 Ibid para 3. On appeal, the bank made submissions on what was termed the ‘double disposition point’: ‘This point turns on the identity of the relevant dispositions at which s 127 is aimed. The section refers to “any” disposition of the company’s property. It is common ground that, where a company pays a creditor by cheque drawn on an account in credit between the date of a petition and the winding-up order, there is a disposition of the company’s property in favour of the creditor falling within s 127. But it is contended that the judge was not required by principle nor by authority to hold (and he was wrong in holding) that there was another relevant disposition of the company’s property in favour of the bank when the Bank debited the Company’s account with the sum paid to the creditor and that that disposition was avoided by s 127, so as to render the Bank liable to restore the Company’s account to its pre-disposition condition.’26 This submission went home, causing Mummery LJ to hold: ‘In our judgment the policy promoted by s 127 is not aimed at imposing on a bank restitutionary liability to a company in respect of the payments made by cheques in favour of the creditors, in addition to the unquestioned liability of the payees of the cheques.’27 [28] In this, he found support in other English law matters as well as in Australian law. He referred with approval to the Australian matter of Re Mel Bower’s Macquarie Electrical Centre Pty Ltd (in liq),28 where Street CJ said: ‘[The] paying by a bank of the company’s cheque, presented by a stranger, does not involve the bank in a disposition of the property of the company so as to disentitle the bank to debit the amount of the cheque to the company’s account. The word “disposition” connotes in my view both a disponor and a disponee. The section operates to render the disposition void so far as concerns the disponee. It does not operate to affect the agencies interposing between the company, as disponor, and the recipient of the property, as disponee . . . The intermediary functions fulfilled by the bank in respect of paying cheques drawn by a company in favour of and presented on behalf of a third party do not implicate the bank in the consequences of the statutory avoidance prescribed by s. 227. 26 Ibid para 19(1) at 293h-j. Emphases in the original. 27 Ibid para 23 at 294j. 28 Re Mel Bower’s Macquarie Electrical Centre Pty Ltd (in liq) [1974] 1 NSWLR 245. . . . I consider that the legislative intention . . . is such as to require an investigation of what happened to the property, that is to say, what was the disposition, and then to enable the liquidator to recover it upon the basis that the disposition was void. It is recovery from the disponee that forms the basic legislative purpose of s. 227.’29 Mummery LJ also approved a dictum of McPherson J in the matter of Re Loteka Pty Ltd (in liq):30 ‘The amount standing to the credit of the customer’s account is simply diminished thus reducing pro tanto the indebtedness of the bank to the customer. It is the payee of the cheque that receives the benefit of the proceeds of the cheque. All that happens between customer and banker is an adjustment of entries in the statement recording the accounts between them . . . ’31 [29] After having dealt with two further English law matters, Mummery LJ concluded: ‘In summary, our conclusion, in the light of these authorities, is that section 127 only invalidates the dispositions by the Company of its property to the payees of the cheques. It enables the Company to recover the amounts disposed of, but only from the payees. It does not enable the Company to recover the amounts from the Bank, which has only acted in accordance with its instructions as the Company’s agent to make payments to the payees out of the Company’s bank account. As to the intermediate steps in the process of payment through the Bank, there is no relevant disposition of the Company’s property to which the section applies.’32 It will be seen that Mummery LJ and the Australian courts invoked the purposive approach to legislative interpretation in ascribing meaning to the word ‘disposition’. As has been seen, their findings largely accord with those set out above in the Kaplan, Reynolds and Zamzar matters. 29 Ibid at 258. 30 Re Loteka Pty Ltd (in liq) (1989) 7 ACLC 998. 31 Ibid at 1004. 32 Hollicourt para 31 at 297. [30] The approach in our law to what constitutes an impeachable disposition is a matter of interpretation. It is now trite that, when it comes to interpretation: ‘A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document . . . The “inevitable point of departure is the language of the provision itself”, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.’33 [31] As to language, it will be recalled s 26(1)(b) provides in its relevant parts: ‘Every disposition of property not made for value may be set aside by the court if such disposition was made by an insolvent – . . . (b) within two years of the sequestration of his estate, and the person claiming under or benefited by the disposition is unable to prove that, immediately after the disposition was made, the assets of the insolvent exceeded his liabilities’. On a grammatical level, the position is clearer than that of s 127 of the English Insolvency Act. The phrase ‘benefited by the disposition’ is absent from s 127 of that Act. In arriving at the conclusion that impeachable dispositions were not made to those bankers because they were not benefited by them, the English and Australian courts were obliged to resort to a purposive interpretation of the section. In contrast, in our law the clear language of the provision includes a pertinent reference to benefit. [32] At the heart of s 26(1)(b) is the requirement that the party to whom the disposition was made is put to the proof that ‘immediately after the disposition was made, the assets of the insolvent exceeded his liabilities’. The person on whom that obligation rests is only one who ‘benefited by the disposition’. The construction of 33 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18. the section does not allow for liability to attach to one who did not benefit by it. The plain language requires the disponee to have benefited. [33] This is buttressed by a sensible and businesslike approach. As Goldblatt J held in Zamzar, to hold a party liable who simply acted as an intermediary and gave effect to instructions by the client but did not benefit from the disposition gives rise to an absurd and unbusinesslike outcome. In that regard, an attorney would generally have the same lack of knowledge of the source of the funds deposited as would a bank. Where they on-pay those funds to a third party as instructed by their client, they also function purely as intermediaries. [34] And the purposive approach articulated so clearly in Hollicourt lends further strength to this interpretation. This applies no less in our law since s 26(1)(b) is clearly aimed at only the person who benefits from (or claims under) the disposition. It is also not envisaged that there is a ‘double disposition’ where successive persons both become subject to the section. Where attorneys give effect to pay the third party nominated by their clients without themselves benefiting, it can be said that they simply function as conduits. This situation must be distinguished from that in Kaplan. There Katz did not give effect to instructions from clients when he appropriated moneys held on their behalf to pay his gambling debts. As a result of his having utilised those funds for his personal purposes, his estate was thereby benefited.34 34 See Kaplan at 497E. [35] Finally and decisively, this Court held in Reynolds that, ‘a disposition without value which is liable to be set aside is one in which the person who benefited by the disposition runs the risk of having such disposition being set aside in certain specified situations’.35 This forms part of the ratio of that judgment and, unless we are convinced that it is clearly wrong, binds us in this matter. On the contrary, that position accords with the above reasoning and interpretation. [36] This then is the relevant touchstone for liability under s 26(1)(b). In our law, the clear language of the provision requiring benefit fortifies the purposive approach to interpretation in the unitary interpretative exercise. This is consistent with the context of banking law and that relating to the operation of trust accounts of attorneys. It all points to the need for the person to whom the disposition is made for the purpose of s 26(1)(b) to have benefited from it. [37] This brings into sharp focus the essential enquiry in the present matter. The attorneys were unaware of the source of the deposits into their account. A client had instructed them to pay the R1.25 million to Utexx as the purchase price under the agreement. They complied with that mandate. Moneys of whose origin they were unaware were deposited into their trust account as was the case with the bank in Zamzar. They paid them to Utexx as instructed by their client, Philp. They testified without challenge that it was ‘common cause that [the attorneys] did not receive any benefit or retain any portion of the purchase consideration.’ [38] Who then benefited from the disposition? During argument, the parties were ad idem that Utexx benefited by the deposit of R1.25 million which was thus hit by 35 Reynolds para 8. My emphasis. the provisions of s 26(1)(b). This must be correct. Utexx received moneys of Brandstock without Brandstock receiving value since it was not party to the transaction. In turn, Utexx benefited by that amount since its claim for the purchase price under the agreement was satisfied. [39] As regards the deposit of R1.25 million, the attorneys acted in accordance with the instruction of their client. As was said of the bank in Zamzar: ‘If the defendant was authorised to make the payments, then it was authorised and entitled to debit plaintiff's account with the moneys paid and was merely a conduit or 'neutral payment functionary' through which a disposition was made to Sferopoulos by the plaintiff itself.’36 In giving effect to their mandate, therefore, the attorneys acted as a conduit in the onward transmission to Utexx and for its benefit. The disposition of Brandstock was one to Utexx. Since the attorneys did not benefit, they did not attract the onus to show the solvency of Brandstock immediately after the deposit was made. The deposit into their account was not a disposition to the attorneys and was thus not impeachable under s 26(1)(b). [40] What, then, of the deposits of R75 000 and R200 000? They were not paid on to a third party. On the other hand, they were dealt with in accordance with the principles governing trust accounts. Unlike in Kaplan, there was no breach of mandate by the attorneys. Attorneys are entitled to account to their clients for fees and disbursements and to then appropriate moneys held in trust for that purpose. This is what was done by the attorneys. This does not, however, necessarily render them immune to the machinery of s 26(1)(b). The same enquiry governs the outcome of these two deposits. Who benefited from those deposits? 36 Zamzar at 515I. [41] The attorneys made them part of their assets when they appropriated them to settle their fees and pay disbursements incurred on behalf of their clients. As such, they clearly benefited from the deposit of those two amounts. This despite their not having breached the principles governing the operation of the trust account. As between the attorneys, BRP and Philp, the application of these funds to settle fees and disbursements was lawful and appropriate. If BRP or Philp had deposited these amounts, they would have received value for them. But the deposit was made by Brandstock, which did not receive value. When applied to amounts due by BRP and Philp, these two deposits became dispositions which fall within the provisions of s 26(1)(b). Before us the attorneys only argued faintly to the contrary. [42] As regards those two dispositions, then, the onus rested on the attorneys to prove that, at the relevant times, the assets of Brandstock exceeded its liabilities. This is clearly a full onus and not a mere duty to adduce evidence. If unable to discharge the onus, the section provides that the disposition is void and must be set aside. [43] Because the deposits were made on different dates, the onus operates for each such date. It was candidly conceded in argument that, as regards the R200 000 deposited on 30 April 2018, the attorneys could not discharge the onus. This concession was well made. At that time, the liabilities of Brandstock clearly exceeded its assets. This was clear from the claim of one Louw, the creditor at whose instance Brandstock was liquidated. That claim arose during April 2018. [44] The attorneys submitted, however, that the position on 23 February 2018 was different. Both parties accepted that Brandstock had cash of R102 308 in its account after 23 February 2018. The liquidators testified as follows concerning that date in the founding papers: ‘Brandstock had no assets. . . Brandstock was indebted to Brodie Farming (Pty) Ltd at the date of the disposition, in the amount of R1 052 055.84 which indebtedness arose on 19 February 2018. This was responded to by the attorneys as follows: ‘I deny that Brandstock was factually insolvent on 23 February 2018 . . . Brandstock had livestock in its possession and had enough assets including its claims against BRP, Philp and Pratt and cash reserves which exceeded its liabilities which according to the Applicants were in any event only 1 (one) creditor being Brodie Farming (Pty) Ltd. This Honourable Court is reminded of the fact that Brodie Farming (Pty) Ltd is not an approved creditor of Brandstock and full legal arguments will be presented at the hearing of this application in this regard.’ None of these averments carries much evidential weight. Possession of cattle does not equate to ownership. One does not know what the financial relationships between Brandstock, BRP, Philp and Pratt were at the time. The fact that Brodie Farming had not proved a claim in the estate of Brandstock does not negate the existence of the claim testified to by the liquidators. There are any number of reasons why creditors refrain from proving claims in an insolvent estate. At least one is that the creditor might be required to contribute to the costs of the administration of the insolvent company instead of receiving payment of the whole or a portion of their claim. [45] Before us the attorneys conceded that these averments did not amount to positive evidence that, on 23 February 2018, the assets of Brandstock exceeded its liabilities. They amounted to little more than surmise. They agreed that the best evidence of the state of affairs of a company is to produce and prove books of account showing the assets and liabilities of a company. Although they were not in possession of such books, the machinery of the Uniform Rules of Court was available to the attorneys to require discovery of any such books by the liquidators. I do not believe that what was asserted by the attorneys gave rise to a factual dispute. But, if it did so, since the attorneys bore the onus and did not request that any such dispute be resolved by way of oral evidence or trial, it must be resolved in favour of the liquidators. This all means that the attorneys failed to discharge the requisite onus under s 26(1)(b). It follows that these two dispositions, totalling R275 000, were correctly set aside by the high court, albeit for different reasons. [46] Since the attorneys have succeeded before us in setting aside the order for repayment of R1.25 million, they are entitled to the costs of the appeal. The liquidators conceded that, in view of the complexity of the matter and the importance of the issues, the costs of two counsel would be warranted. I view that as a correct concession. As to costs in the high court, the liquidators were obliged to go to court to obtain payment of the R275 000 and were thus entitled to costs of the application. The costs order in the high court must therefore stand. [47] It remains to mention a matter of grave concern which, if not corrected, could have serious adverse ramifications for the attorneys. In the judgment on both the application and the application for leave to appeal, the learned acting judge made strongly deprecatory comments and drew adverse inferences concerning the conduct of the attorneys. Counsel representing the liquidators made it plain before us that the papers did not support any such adverse remarks or inferences. I agree. There is nothing in the record which in any way warrants an adverse comment or inference of improper conduct on the part of the attorneys. It is important that this Court makes it clear that it dissociates itself from those undeserved criticisms. [48] In the result: To the extent set out in paragraph 2 hereof, the appeal is upheld with costs, including costs of two counsel. Paragraphs 2 and 3 of the order of the high court are set aside and substituted with the following: ‘2 It is declared that the following payments made by Brandstock Exchange (Pty) Ltd to the respondent: 2.1 On 23 February 2018 in the sum of R75 000; 2.2 On 30 April 2018 in the sum of R200 000; are dispositions without value as contemplated by s 26(1) of the Insolvency Act 24 of 1936 read with s 340 of the Companies Act 71 of 1973 and they are set aside. The respondent is ordered to pay to the applicants the sum of R275 000.’ ____________________ T R GORVEN JUDGE OF APPEAL Appearances For appellant: R G Goodman SC (with A Brink) Instructed by: Van Wyk Van Heerden Attorneys, Paarl Lovius Block, Bloemfontein For respondent: G W Woodland SC Instructed by: Oosthuizen & Company, Cape Town Claude Reid Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 September 2022 Status: Immediate 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. Van Wyk Van Heerden Attorneys v Gore NO and Another Today the Supreme Court of Appeal upheld an appeal from the Western Cape Division of the High Court, Cape Town (per Magona AJ). Three deposits had been made into the trust account of the appellants (the attorneys). One Bruce Philp and a close corporation under his control, BRP Livestock CC, were indebted to the Utexx Trust (Utexx). At the instance of Utexx, BRP had been liquidated and Philp was facing a sequestration application. In order to discharge the debt of BRP and save Philp from sequestration, Philp arranged for a relative to purchase the claims of Utexx against BRP and Philp. Utexx insisted that payment should emanate from the trust account of the attorneys. The deposits came from the account of Brandstock Exchange (Pty) Ltd (Brandstock), a company in which Philp was the sole director. The attorneys were unaware of the existence of Brandstock which was also not indebted to Utexx. Soon after the deposits were made, Brandstock was liquidated. The first deposit had been on-paid by the attorneys to Utexx pursuant to the agreement for the sale of its claims. The second and third deposits had been utilised to pay the fees of an advocate and the fees and other disbursements of the attorneys for work done for BRP and Philp. The liquidators sought to recover the deposits into the trust account of the attorneys on the basis of s 26(1)(b) of the Insolvency Act 24 of 1936 as being dispositions without value of Brandstock to the attorneys. The contention of the liquidators was that all three of the dispositions had been made to the attorneys and they were recoverable from them. The high court upheld the claim of the liquidators and ordered the attorneys to pay back the aggregate of the three deposits. The Supreme Court of Appeal held that, in order for those dispositions to be set aside, the person in question had to have benefited from the disposition. Since the attorneys did not benefit from the first deposit, having simply given effect to their client’s instruction to on-pay them to Utexx, it did not fall within the purview of s 26(1)(b) and the amount deposited into the trust account could not be recovered from them. However, regarding the second and third deposits, the attorneys had benefited by utilising them to settle amount due to them by Philp and BRP. That meant that the attorneys attracted an onus under the section to show that, at the time the dispositions were made, the assets of Brandstock exceeded its liabilities. Since they had not proved that to be the case, the Supreme Court of Appeal upheld the appeal in respect of the first deposit and dismissed it as regards the second and third deposits.

3474

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 955/2019 In the matter between: MADIBENG LOCAL MUNICIPALITY Appellant and PUBLIC INVESTMENT CORPORATION LTD Respondent Neutral citation: Madibeng Local Municipality v Public Investment Corporation Ltd (955/2019) [2020] ZASCA 157 (30 November 2020) Coram: Ponnan, Saldulker and Plasket JJA and Ledwaba and Weiner AJJA Heard: 19 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 30 November 2020. Summary: Claims for payments of debts – quantum admitted or deemed to be admitted on the pleadings – Prescription Act 68 of 1969 – s 11(b) – the Public Investment Corporation Ltd not 'the State' for purposes of the running of prescription – 15 year prescription period not applicable – s 14 – partial payments of debts and request for balance owing amounting to tacit acknowledgments of liability interrupting prescription – mora interest – running from date on which debts due. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Sardiwalla J sitting as court of first instance): 1 Save to the extent set out in paragraph 2, the appeal is dismissed with costs, including the costs of two counsel. The costs in relation to the preparation, perusal and copying of the record are limited to ten percent of the costs incurred in these tasks. 2 Paragraph 2 of the order of the court below is amended to read: ‘The defendant is ordered to pay the plaintiff the sum of R162 639 962.00 together with interest thereon at the rate of 10% per annum with effect from 30 June 2003 in the case of certificate BR25 and with effect from 30 November 2003 in the case of certificates BR20 and BR26.’ 3 The Registrar is requested to deliver a copy of this judgment to the administrator of the Madibeng Local Municipality, the MEC for Cooperative Governance and Traditional Affairs of the North West Province and the Minister of Cooperative Governance and Traditional Affairs in the national government. JUDGMENT Plasket JA (Ponnan and Saldulker JJA and Ledwaba and Weiner AJJA concurring) [1] This appeal has a long and unfortunate history. This is the second foray by the appellant, the Madibeng Local Municipality (Madibeng), to this court in relation to the same proceedings, instituted against it by the Public Investment Corporation Ltd (the PIC) to recover three debts of substantial proportions. In the previous appeal, Madibeng was unsuccessful in its attack on a finding, on a separated issue, that the debts were unenforceable for want of the consent of the Administrator of the Transvaal to the borrower, its predecessor in title, the Brits Transitional Local Council (Brits).1 Madibeng now appeals against the order of Sardiwalla J in the Gauteng Division of the High Court, Pretoria dismissing a special plea of prescription and granting judgment in favour of the PIC in the amount of R162 639 962, plus interest. It does so with his leave. Background2 [2] During the late 1980s and early 1990s, Brits raised a number of short-term loans from a variety of institutions. It planned to invest the borrowed funds in the hope that the returns would outperform the cost of the loans. The profits could then be used for future capital projects. [3] Matters did not turn out as planned. By 1993, Brits found itself in financial trouble. Urgent remedial action was required to deal with the looming fiscal crisis as well as a breakdown in accountable administration in Brits’ treasury. [4] To address the fiscal problem, it became necessary to re-schedule a number of loans, as the loans were of a short-term nature while the underlying investments matured at later dates. Brits borrowed a large amount of money from the PIC in order to pay its existing short-term loans. On 11 January 1994, in order to repay the loans it had taken from the PIC, Brits issued to the PIC a series of zero coupon stock certificates – essentially promissory notes. It also pledged a number of insurance policies to the PIC. [5] When Madibeng, which by now had succeeded Brits, failed to repay the loans when they fell due, the PIC first exercised its rights in terms of the pledged policies. They were insufficient to cover the full extent of Madibeng’s indebtedness. The PIC then proceeded to institute proceedings against Madibeng on the strength of the zero coupon stock certificates. 1 See Madibeng Local Municipality v Public Investment Corporation Ltd [2018] ZASCA 93; 2018 (6) SA 55 (SCA). I shall refer to this judgment as Madibeng (1). 2 I have based the factual background closely on what was set out in Madibeng (1) paras 2-6. [6] Three zero coupon stock certificates are in issue in this case. The first, BR 25, is in respect of a loan of R29 306 987.70. It had a face value on maturity of R93 million. The second, BR20, is in respect of a loan of R10 219 836.60. It had a face value on maturity of R37 million. The third, BR26, is in respect of a loan of R26 072 786.40. It had a face value on maturity of R87 million. [7] Madibeng pleaded that when Bits made the loans, it required the prior authorization of the Administrator of the former province of the Transvaal, in terms of s 52 of the Local Government Ordinance 17 of 1939 of the Transvaal. It also pleaded that the PIC’s claims against it had been extinguished by prescription. The first issue was separated and was decided against Madibeng. In the first appeal, this court upheld the finding of the court below. It concluded:3 ‘The point can be disposed of easily. The facts establish that the loans that Brits raised were for the purpose of paying back other loans. They are loans contemplated by s 52(1)(a). In terms of s 52(2), such loans do not require the prior written approval of the Administrator. There is, accordingly, no merit in the point. This means that in respect of the separated issue, Jansen J arrived at the correct conclusion.’ All that then remained for determination was the special plea that the PIC’s claims against Madibeng had prescribed, the merits and the PIC’s claim for mora interest. [8] It appears from the judgment of the court below that Sardiwalla J laboured under the misapprehension that he was only required to decide the special plea. As a result, his order was restricted to a dismissal of the special plea. The PIC’s attorneys wrote to him to remind him that there had been no separation of issues and that all of the outstanding issues had been dealt with in the trial. He recalled his order and replaced it with an order dismissing the special plea and declaring that the PIC had ‘proved its claim of R162 639 962.00 together with interest thereon at the rate of 10% per annum with effect from 30 June 2003’. It is that order that is appealed against. The pleadings [9] The uniform rules provide that every pleading is required to contain ‘a clear and concise statement of the material facts upon which the pleader relies for his claim, 3 Madibeng (1) para 23. defence or answer to any pleading . . . with sufficient particularity to enable the opposite party to reply thereto’.4 They also provide that when a party denies an allegation of fact, he or she ‘shall not do so evasively, but shall answer the point of substance’.5 [10] Rule 22 of the uniform rules deals with the plea. Rule 22(2) provides that a defendant ‘shall in his plea either admit or deny or confess and avoid all the material facts alleged in the combined summons or declaration or state which of the said facts are not admitted and to what extent, and shall clearly and concisely state all material facts upon which he relies’. Eksteen JA, in FPS Ltd v Trident Construction (Pty) Ltd,6 held that rule 22(2) required a defendant in his or her plea to ‘give a fair and clear answer to every point of substance raised by a plaintiff in his declaration or particulars of claim, by frankly admitting or explicitly denying every material matter alleged against him’. [11] Rule 22(3) provides that ‘[e]very allegation of fact in the combined summons or declaration which is not stated in the plea to be denied or to be admitted, shall be deemed to be admitted’ and that any explanation or qualification of a denial that is necessary must also be stated in the plea. Davis AJA, in Gordon v Tarnow,7 held that the effect of an admission, whether express or, as in that case, deemed, is that it renders it ‘unnecessary for the other party to adduce evidence to prove the admitted fact, and incompetent for the party making it to adduce evidence to contradict it’. [12] I turn now to the pleadings themselves in respect of both the debts alleged to be due and the interest that is claimed on them. Each of the claims was pleaded in precisely the same way in the particulars of claim but answered in progressively more cryptic terms in the plea. In paragraphs 4.1 and 4.2 of the amended particulars of claim, the PIC pleaded that BR25 fell due for payment on 30 June 2003 and that Madibeng failed to make full payment, but paid R10 million on 1 July 2003. The outstanding amount due was thus R83 million. These facts were expressly admitted 4 Rule 18(4). 5 Rule 18(5). 6 FPS Ltd v Trident Construction (Pty) Ltd 1989 (3) SA 537 (A) at 542B. 7 Gordon v Tarnow 1947 (3) SA 525 (A) at 531. by Madibeng in its plea but it pleaded that the claim had been extinguished by prescription. Then, in paragraph 4.3 of the particulars of claim, the PIC pleaded that Madibeng subsequently made a number of further payments, both before and after the service of the summons. Madibeng expressly admitted the allegations made in paragraph 4.3 of the particulars of claim. It pleaded, however, that it ‘was not in law obliged to make the payments due to the fact that the issuing of the zero coupon stock certificates was not authorized by law’. [13] In paragraphs 5.1 and 5.2 of the particulars of claim, the PIC pleaded that when BR20 fell due on 30 November 2003, Madibeng failed to pay with the result that, on that day, payment to it of R37 million was due. In paragraph 5.3, the PIC pleaded that while Madibeng had not paid the debt in full, it made partial payments on a number of occasions, both before and after the service of the summons. Madibeng pleaded to paragraph 5.1 to 5.3 as follows: ’13 The defendant admits that it did not make payment to the plaintiff. The defendant denies that it is indebted to the plaintiff in the amount of R37 000 000.00 referred to in paragraph 5.2. Insofar as the amount of R37 000 000.00 became due on 30 November 2003, the plaintiff’s claim in relation to that amount has been extinguished by prescription as stated in the special plea.’ [14] In paragraph 6.1 and 6.2 of the particulars of claim, the PIC pleaded that when BR26 fell due on 30 November 2003, Madibeng failed to pay, and that the payment of R87 million was due on that date. It pleaded in paragraph 6.3 that Madibeng made partial payments both before and after the service of the summons. Madibeng’s plea was the following: ’16 The defendant admits that it did not pay the plaintiff the amount of R87 000 000.00 when it allegedly became due on 30 November 2003. Insofar as the aforesaid amount became due on 30 November 2003, the plaintiff’s claim in relation to that amount has been extinguished by prescription.’ [15] In paragraphs 7, 8 and 9 of the particulars of claim, the PIC quantified the three claims. This was an arithmetical exercise of deducting what had been paid from the amounts due on the face of the zero coupon bonds. As a result, it claimed R65 086 208.30 in respect of BR25, R28 993 449.70 in respect of BR20 and R68 560 304.24 in respect of BR26. In response to paragraph 7 Madibeng denied that it was indebted to the PIC ‘in the amount claimed’ and it then set out in great detail its defence of lack of authority. In respect of paragraphs 8 and 9 of the particulars of claim, it simply said that the ‘contents of these paragraphs are denied’, but one must infer that the bald denial of liability was also premised on the alleged lack of authority. [16] In respect of all three debts, the PIC pleaded its claims to interest in precisely the same terms. It pleaded that interest on the amount claimed in each instance ‘began to run at the mora rate of 15.5% per annum from midnight’ on the due date ‘to and including payment thereof’ but that the PIC had waived its entitlement to interest of 15.5 percent and had ‘charged interest at the reduced rate of 10% per annum’. Madibeng never pleaded to these allegations at all. [17] The effect of Madibeng’s plea is that, in respect of BR25, BR20 and BR26, it either admitted or is deemed to have admitted that the debts were due on 30 June 2003, 30 November 2003 and 30 November 2003 respectively, as well as the amounts due on those dates, subject to the defences of lack of authority and prescription. It also admitted or is deemed to have admitted that it paid the amounts listed in the particulars of claim towards the reduction of its debts, and that it did so on the dates specified. The only basis for its denial of the quantum of the claims is the alleged lack of authority, a defence that has been found to be without merit. In respect of interest, the facts alleged by the PIC are deemed to have been admitted. The issues [18] Three issues arise for determination. They are whether the PIC’s claims have prescribed; if not, whether it has made out a case on the merits for the amounts claimed; and whether it is entitled to interest from the date the debts were due. I shall deal with these issues in that order. Prescription [19] Two points were raised by the PIC to Madibeng’s special plea of prescription. They are that the prescription period in this instance is 15 years and not three years, and the second is that the running of prescription was interrupted by a number of admissions of liability by Madibeng. [20] As a general rule, prescription begins to run when a debt is due.8 Section 11 of the Prescription Act 68 of 1969 provides for periods of prescription in respect of different types of debts. It states: ‘The periods of prescription of debts shall be the following: (a) thirty years in respect of- (i) any debt secured by mortgage bond; (ii) any judgment debt; (iii) any debt in respect of any taxation imposed or levied by or under any law; (iv) any debt owed to the State in respect of any share of the profits, royalties or any similar consideration payable in respect of the right to mine minerals or other substances; (b) fifteen years in respect of any debt owed to the State and arising out of an advance or loan of money or a sale or lease of land by the State to the debtor, unless a longer period applies in respect of the debt in question in terms of paragraph (a); (c) six years in respect of a debt arising from a bill of exchange or other negotiable instrument or from a notarial contract, unless a longer period applies in respect of the debt in question in terms of paragraph (a) or (b); (d) save where an Act of Parliament provides otherwise, three years in respect of any other debt.’ [21] The most usual way in which the running of prescription is interrupted is by the service on a debtor of a legal process, such as a summons, in which payment of the debt is claimed.9 There are, however, other ways in which prescription may be interrupted. Section 14 of the Act provides one such way. It states: ‘(1) The running of prescription shall be interrupted by an express or tacit acknowledgement of liability by the debtor. (2) If the running of prescription is interrupted as contemplated in subsection (1), prescription shall commence to run afresh from the day on which the interruption takes place or, if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt from the date upon which the debt again becomes due.’ 8 Prescription Act 68 of 1969, s 12(1). 9 Prescription Act, s 15(1). [22] It is common cause that the debts in this case fell due on 30 June 2003, 30 November 2003 and 30 November 2003 respectively. It is also common cause that the summons was served on Madibeng on 3 March 2010. I shall first consider whether the prescription period is, as the PIC pleaded in the alternative in its replication, 15 years, rather than three years. I shall then consider whether the running of prescription was interrupted from time to time by admissions of liability. [23] Section 11(b) of the Act provides for a prescription period of 15 years in respect of any debt owed to the State and arising out of an advance or loan of money. This provision can only avail the PIC if it is ‘the State’ for purposes of the Act. This issue was dealt with by this court in Holeni v Land and Agricultural Development Bank of South Africa.10 The Land and Agricultural Development Bank of South Africa (the bank) is an organ of state as defined in s 239 of the Constitution. It had extended two loans to Holeni, who, it claimed had fallen in arrears, thus accelerating payment of the full amounts. It issued summons for the recovery of the debts more than three years after they were due. A special plea of prescription was taken. The bank contended, however, that s 11(b) of the Act applied, with the result that the debts were only extinguished by prescription 15 years after they fell due. The case raised squarely the question of what was meant by the term ‘the State’ in s 11(b). [24] Navsa JA observed that the term ‘the State’ does not have one settled meaning; that its precise meaning in any given case depends on the context; and that courts ‘have consistently refused to accord it any inherent characteristics and have relied, in any particular case, on practical considerations to determine its scope’.11 He rejected the argument that, for purposes of the Act, an organ of state was ‘the State’. Instead, he held:12 ‘The benefit for the State provided by s 11(b) came about because it was thought that the treasury should be protected. To my mind, contextually, the plain meaning of “the State” as it appears in s 11(b) of the Act is that of a juristic person, capable of suing in its own name for 10 Holeni v Land and Agricultural Development Bank of South Africa [2009] ZASCA 9; 2009 (4) SA 437 (SCA). 11 Para 11. 12 Para 19. what is due to the treasury. It is being referred to in its incarnation as government, going about government business and recovering moneys due to treasury.’ In other words, in the Act, ‘the State’ means ‘the State as government’.13 [25] Navsa JA found that the Land and Agricultural Development Bank Act 15 of 2002 – the current statute regulating the functioning of an institution that is over 100 years old – made it clear that the bank was ‘a separate juristic person acting in its own name and right, distinct from, although not entirely independent of, government’.14 [26] The PIC is an organ of state created by the Public Investment Corporation Act 23 of 2004. It is a company that is wholly owned by the government15 and operates as a financial service provider in respect of government funds.16 It, like the Land and Agricultural Development Bank, is distinct from the government. It was held in The Isibaya Fund v Visser and Another,17 on the basis of these characteristics, that a fund established by the PIC was not ‘the State’ for purposes of s 11(b). That same conclusion must follow in relation to the PIC itself. Section 11(b) of the Act does not apply to debts due to it. Instead, in terms of s 11(d) of the Act, the usual three-year prescription period applies. The special plea will be determined on that basis. [27] I turn now to s 14 of the Act. The policy that underpins the rules of prescription relate to the value of certainty. If claims are not pursued with reasonable expedition, doubt as to their validity may arise, and will inevitably intensify with the passage of time. Creditors are thus afforded periods of time thought to be appropriate to the nature of different types of debts within which to pursue their claims, failing which they will lose their right to do so. But, if a debtor acknowledges liability for a debt, there is no uncertainty, and a creditor would be safe to negotiate and even give time to the debtor to pay, without, as Lord Hoffman put it in Bradford & Bingley PLC v Rashid,18 ‘being distracted by the sound of time's winged chariot behind him’. Furthermore, he said, it was also unconscionable for a debtor who does not dispute his or her indebtedness 13 Para 22. 14 Para 38. 15 Section 3. Interestingly, the term ‘the State’ is defined in s 1 of the Act as ‘the National Government of the Republic’. 16 Section 4. 17 The Isibaya Fund v Visser and Another [2015] ZASCA 183 paras 10-11. 18 Bradford & Bingley PLC v Rashid [2006] UKHL 37. to ask for time to pay and then use that indulgence to assert that the debt has prescribed.19 [28] In Cape Town Municipality v Allie NO20 Marais AJ identified what he described as five self-evident aspects of s 14. He said:21 ‘Firstly, I do not think the acknowledgment of liability need amount to a fresh undertaking to discharge the debt. "I admit I owe you R100" is manifestly an acknowledgment of a liability to pay R100 but it is not a fresh or new undertaking to pay it . . . Secondly, full weight must be given to the Legislature's use of the word "tacit" in s 14(1) of the Act. In other words, one must have regard not only to the debtor's words, but also to his conduct, in one's quest for an acknowledgment of liability. That, in turn, opens the door to various possibilities. One may have a case in which the act of the debtor which is said to be an acknowledgment of liability, is plain and unambiguous. His prior conduct would then be academic. On the other hand, one may have a case where the particular act or conduct which is said to be an acknowledgment of liability is not as plain and unambiguous. In that event, I see no reason why it should be regarded in vacuo and without taking into account the conduct of the debtor which preceded it. If the preceding conduct throws light upon the interpretation which should be accorded to the later act or conduct which is said to be an acknowledgment of liability, it would be wrong to insist upon the later act or conduct being viewed in isolation. In the end, of course, one must also be able to say when the acknowledgment of liability was made, for otherwise it would not be possible to say from what day prescription commenced to run afresh . . . Thirdly, the test is objective. What did the debtor's conduct convey outwardly? I think that this must be so because the concept of a tacit acknowledgment of liability is irreconcilable with the debtor being permitted to negate or nullify the impression which his outward conduct conveyed, by claiming ex post facto to have had a subjective intent which is at odds with his outward conduct . . . Fourthly, while silence or mere passivity on the part of the debtor will not ordinarily amount to an acknowledgment of liability, this will not always be so. If the circumstances create 19 Para 3. See too Cape Town Municipality v Allie NO 1981 (2) SA 1 (C) at 5G-H; Murray and Roberts Construction (Cape) (Pty) Ltd v Upington Municipality 1984 (1) SA 571 (A) at 578F-579B: KLD Residential CC v Empire Earth Investments 17 (Pty) Ltd [2017] ZASCA 98; 2017 (6) SA 55 (SCA) paras 13-17; Investec Bank Ltd v Erf 436 Elandspoort (Pty) Ltd and Others [2020] ZASCA 104 paras 27-28. 20 Note 19. 21 At 7B-8G. See too Agnew v Union and South West Africa Insurance Company Ltd 1977 (1) SA 617 (A) at 622H-623C; Petzer v Radford (Pty) Ltd 1953 (4) SA 314 (N) at 317H-318B; Benson and Another v Walters and Others 1984 (1) SA73 (A) at 86H-87B; Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd 1995 (4) SA 510 (C) at 556E-557D. a duty to speak and the debtor remains silent, I think that a tacit acknowledgment of liability may rightly be said to arise . . . Fifthly, the acknowledgement must not be of a liability which existed in the past, but of a liability which still subsists.’ This statement of the meaning and import of s 14 was cited with approval by this court fairly recently in Investec Bank Ltd v Erf 436 Elandspoort (Pty) Ltd and Others.22 [29] It is clear from the evidence of Mr Leonardo Smith, who holds the position of general manager of fixed income at the PIC, as well as from the documents that form part of the record, that Madibeng’s liability has never been denied, but, on the contrary, has been openly and repeatedly acknowledged not only to the PIC but to other relevant government bodies. As early as 15 May 2003, even before the first debt was due, Madibeng expressly admitted owing the money when the municipal manager wrote to the PIC to request an extension of time for the repayments. He said that Madibeng was unable to pay but was seeking the assistance of the national and provincial government to meet its obligations. He concluded the letter by saying that ‘you must please not see our request as a ploy to shirk Madibeng’s liability, but rather as a serious action to find a solution for the whole matter’. What is more, in addition to Madibeng having made five payments in respect of BR25 between when it fell due and the issue of the summons, it also made three payments after the summons had been served on it. It did the same in relation to BR20 and BR26. [30] This attitude, both before the debts were due and after the summons had been served, is consistent with Smith’s evidence that, on an annual basis, Madibeng approached the PIC for a balance on each loan so that it could reflect them as liabilities in its annual financial statements. He referred to various other documents in which Madibeng acknowledged its liability and he concluded that ‘I do not recall one that disputes it’. What is more, counsel for Madibeng could not point us to any such document. I shall return to the requests for balances below, but first it is necessary to say something of the partial payments of the debts that are alleged in the particulars of claim and either admitted or deemed to be admitted by Madibeng in its plea. 22 Note 19. [31] Smith confirmed, first in respect of BR25, that the payments of those amounts indeed represented partial payments of the debt. The first payment, of R10 million, was made on 1 July 2003 from the proceeds of the ceded policies that liquidated other debts in full. With reference to all three debts, he said that when Madibeng made one globular payment to the PIC, it allocated that payment pro rata ‘to the three outstanding loans’. (That appears to have been the case in respect of payments made on 1 August 2007 and 30 November 2008.) [32] BR25 was the first debt to fall due – on 30 June 2003. That was about six weeks after the municipal manager’s assurance that Madibeng would not try to avoid its obligations to pay. On the following day, an amount of R10 million was paid. Thereafter, amounts were paid on 30 June 2006, 2 April 2007, 1 August 2007, 30 November 2007 and 22 February 2008. [33] BR20 fell due on 30 November 2003. Madibeng made payments towards the reduction of this debt on 28 September 2006, 1 August 2007 and 30 November 2007. BR26 also fell due on 30 November 2003. The first payment thereafter towards the reduction of this debt was made on 29 December 2006. That was followed by payments on 1 August 2007, 30 November 2007 and 22 February 2008. [34] I turn now to the requests for balances. The first is dated 17 August 2004, an earlier request of 25 June 2004 having, apparently, gone unanswered. Madibeng requested the PIC to ‘PLEASE SUPPLY MY COUNCIL WITH BALANCE CERTIFICATES FOR THE FOLLOWING LOANS AND INVESTMENTS’ as at 30 June 2004. The loans listed were loan numbers 20, 25 and 26 and the letter said that the information was required for the compilation of Madibeng’s financial statements for the 2003/2004 financial year. A few days later, the PIC gave the requested information in respect of BR20, BR25 and BR26. A similar process occurred in following years – on 20 June 2005 and 29 June 2006, for instance – where requests in identical terms to that of 2004 were made to the PIC. For present purposes, it is unnecessary to consider any more requests for balances. Suffice it to say, that there are indications in the documents that every year, Madibeng reflected the loans as liabilities in favour of the PIC in its annual financial statements. [35] Regard must be had to the context within which the payments listed above were made. That context includes the statement by Madibeng’s municipal manager shortly before the debts fell due that Madibeng acknowledged its liability and would not shirk from its obligations, and that it was experiencing difficulties in paying the debts in full. It also includes the fact that Madibeng has never disputed that it owed the PIC in respect of the loans and that the payments it made were made over a number of years both before and after the service of summons. Viewed within that context, the payments made prior to the service of summons amount to a series of unequivocal tacit acknowledgements of liability by Madibeng to the PIC. Those payments had the effect of interrupting the running of prescription. The annual requests for balances were also unequivocal tacit acknowledgements of liability and similarly had the effect of interrupting the running of prescription. [36] In respect of BR25 and BR20, the first payment was made within three years of the debt falling due and the payments that followed were within three years of the preceding payments. The last payment before the service of the summons was effected within three years of that event. In other words, the payments on their own had the effect of successfully interrupting the running of prescription in respect of BR25 and BR20. [37] In the case of BR26, however, the first payment, after the debt fell due on 30 November 2003, was effected on 29 December 2006, more than three years after the former date. On 17 August 2004, however, Madibeng acknowledged liability when it requested a balance in respect of, inter alia, BR26. That had the effect of interrupting the running of prescription on that day. The first payment was made within three years of 17 August 2004. Thereafter, every other payment was effected within a three year period of the preceding payment and the summons was served within three years of the last payment, made on 22 February 2008. [38] The effect is that the special plea of prescription was correctly dismissed by the court below. I turn now to whether the PIC has established its claims. The merits [39] The pleadings are sufficient for the determination of the merits. Once the two technical defences failed, there simply was no defence on the merits of the claims. The allegations of the PIC were either admitted or deemed to have been admitted with the result that it was unnecessary for the PIC to adduce evidence to prove facts that were not in dispute.23 [40] The plea to the first claim, BR25, is a good illustration, it being the claim to which the fullest plea was made. In the particulars of claim, the PIC alleged that Madibeng had failed to pay the debt when it fell due, save for one payment of R10 million on 1 July 2003, and that as a result R83 million was due. Secondly, it alleged that eight further payments were made by Madibeng, reducing the amount due still further. Madibeng, in its plea, admitted that R83 million was due but pleaded that claim had been extinguished by prescription. It admitted the eight payments but pleaded that it was ‘not in law obliged to make the payments due to the fact that the issuing of the zero coupon stock certificates was not authorised by law’. There was thus no dispute, once the authority and the prescription points failed, that the amounts claimed were due and payable by Madibeng. Those amounts were quantified in paragraphs 7, 8 and 9 of the particulars of claim and the only basis for Madibeng’s denial of liability to pay the amounts set out in those paragraphs was the defence of lack of authority. [41] In the result, the court below correctly found in favour of the PIC on the merits of its claims. It did not, however, formulate its order correctly. As these were claims sounding in money and, as I have shown, no defence to them has been established by Madibeng, the court ought to have ordered Madibeng to pay the PIC the amount claimed. This aspect of its order will be corrected below. I turn now to the question of interest. Interest [42] In its particulars of claim, the PIC claimed mora interest from the date the debts were due. The court below ordered Madibeng to pay interest on all three debts from 30 June 2003 to the date of payment. This order is incorrect because while BR25 fell 23 Gordon v Tarnow (note 7) at 531. due on that date, BR20 and BR26 only fell due on 30 November 2003. If we accept the PIC’s entitlement to mora interest, we shall have to interfere with the order of the court below to a limited extent. [43] The PIC’s entitlement to mora interest has been assailed by Madibeng, despite it not having pleaded at all to those paragraphs of the particulars of claim dealing with interest. That interest was claimed at a rate of 10 percent per annum, it having been decided by the PIC to waive its rights to higher rates of interest as a gesture of goodwill. [44] Mora interest is ‘a species of damages’24 which does not have to be proved in the usual way, it being presumed that ‘a party who has been deprived of the use of his capital for a period of time has suffered loss’.25 The liability to pay mora interest was described by Fagan JA in Union Government v Jackson and Others26 as a ‘consequential or ancillary obligation’ that attaches automatically to the principal obligation to pay by operation of law. In these circumstances, he continued, the court ‘does not weigh the pros and cons in order to exercise an equitable judgment as to whether, and to what extent, the interest bearing potentialities of money are to be taken into account in computing its award’; instead, the ‘only issue is whether the legal liability exists or not’ and ‘if it does, the rest is merely a matter of mathematical calculation: the legal rate of interest on a definite sum from a definite date until date of payment’. [45] A debtor’s obligation to pay mora interest arises either when a time for the performance of a monetary obligation has been stipulated in a contract and has passed, or, where no time for performance has been stipulated, when a demand for payment has been made and has not been met. As Ponnan JA explained in Crookes Brothers Limited v Regional Land Claims Commission for the Province of Mpumalanga and Others,27 in such circumstances, a creditor ‘is entitled to be compensated by an award of interest for the loss or damage that he has suffered as a result of not having 24 Davehill (Pty) Ltd and Others v Community Development Board 1988 (1) SA 290 (A) at 298I. 25 Thoroughbred Breeders’ Association v Price Waterhouse 2001 (4) SA 551 (A) para 85. 26 Union Government v Jackson and Others 1956 (2) SA 398 (A) at 411G-H. 27 Crookes Brothers Limited v Regional Land Claims Commission for the Province of Mpumalanga and Others [2012] ZASCA 128; 2013 (2) SA 259 (SCA) para 14. received his money on due date’. The rationale for mora interest was explained more fully by this court in Bellairs v Hodnett and Another28 as follows: ‘It may be accepted that the award of interest to a creditor, where his debtor is in mora in regard to the payment of a monetary obligation under a contract, is, in the absence of a contractual obligation to pay interest, based upon the principle that the creditor is entitled to be compensated for the loss or damage that he has suffered as a result of not receiving his money on due date (Becker v Stusser, 1910 CPD 289 at p. 294). This loss is assessed on the basis of allowing interest on the capital sum owing over the period of mora (see Koch v Panovka, 1933 NPD 776). Admittedly, it is pointed out by Steyn, Mora Debitoris, p. 86, that there were differences of opinion among the writers on Roman-Dutch law on the question as to whether mora interest was lucrative, punitive or compensatory; and that, since interest is payable without the creditor having to prove that he has suffered loss and even where the debtor can show that the creditor would not have used the capital sum owing, this question has not lost its significance. Nevertheless, as emphasized by CENTLIVRES, C.J., in Linton v Corser, 1952 (3) SA 685 (AD) at p. 695, interest is today the "lifeblood of finance" and under modern conditions a debtor who is tardy in the due payment of a monetary obligation will almost invariably deprive his creditor of the productive use of the money and thereby cause him loss. It is for this loss that the award of mora interest seeks to compensate the creditor.’ [46] In this matter, BR25, BR20 and BR26 stipulated a due date for payment by Madibeng – 30 June 2003 in the case of the former and 30 November 2003 in the case of the last two. A right to be paid mora interest arose by operation of law on those dates when Madibeng failed to pay, and continues to run until payment in full is made. The rate of interest is 10 percent per annum, rather than the higher rates of interest that were waived by the PIC as a gesture of goodwill. This being so, it is necessary to amend the order of the court below to reflect the correct commencement dates for the running of mora interest in respect of BR20 and BR26. The conduct of the parties [47] It is necessary to say something of the conduct of Madibeng in this entire matter and of the legal representatives of both Madibeng and the PIC in relation to the record. 28 Bellairs v Hodnett and Another 1978 (1) SA 1109 (A) at 1145D-G. Madibeng [48] In Madibeng (1), I had occasion to criticize Madibeng’s conduct of the matter. I said: ‘[29] In turning to consider the propriety of Jansen J’s costs order it is, unfortunately, necessary to say something about the way in which Madibeng conducted its case. It took the money on offer from the PIC in order to avert a crisis of Madibeng’s own making. It agreed to a means of repayment. When its debts fell due, it made certain payments. Then, after it had reneged and summons was issued against it, it raised the unenforceability of the loans as a defence. [30] The conduct of Madibeng was beyond the pale. As an organ of state, it is required to act ethically, and has failed dismally to do so in this matter. Litigation, said Harms DP in Cadac (Pty) Ltd v Weber-Stephen Products Co & others, “is not a game”; organs of state should act as role models of propriety; and they may not behave in an unconscionable manner.’ [49] My admonition, which was rather gentle given Madibeng’s unconscionable conduct, appears to have fallen on deaf ears. Despite the PIC’s best efforts to warn Madibeng that it remained beyond the pale in defending the claims against it in the trial, and, later, that its appeal was once again frivolous, it has persisted. It would have been plain that the prescription point had absolutely no prospect of succeeding in the light of the payments that Madibeng admitted having made and the other admissions of liability, spread over a number of years. With the exception of BR26, which required one piece of evidence in addition to the admitted payments, the prescription point was dead in the water on the pleadings alone. [50] When that is seen in the context I outlined above, particularly the statement of the municipal manager that Madibeng acknowledged that it owed the money and would not avoid its obligations to pay what it owed, Madibeng’s defence in the trial and its subsequent appeal are inexplicable and all the more reprehensible. It conducted both proceedings in the knowledge that it had no defence on the merits and that its remaining technical defence could not succeed. [51] Madibeng, an organ of local government, has reached that extreme point of disfunction that has brought about the intervention of the provincial government in placing it under administration. Yet it has spent what must be large amounts of public funds to pursue an ethically bankrupt and unwinnable case. Counsel for Madibeng was unable to point to any document in which Madibeng disputed that it owed the money or, indeed, that it disputed the amount that it owed. But before the court below, its counsel cross-examined the PIC’s witness at length about a supposed defence that was never pleaded, and closed its case without calling a single witness. I venture to suggest that it probably was unable to find anyone who was prepared to say on oath that Madibeng did not owe the money or disputed the amounts claimed. [52] I would have been minded to order Madibeng to once again pay costs on an attorney and client scale, in respect of this appeal, which I consider to have been a frivolous appeal. The only reason I have not done so is because the PIC has not asked for such an order. I intend to request the Registrar to deliver a copy of this judgment to the administrator of Madibeng, the MEC for Traditional Affairs and Local Government in the North West Province and the Minister of Cooperative Governance and Traditional Affairs in the national government. The record [53] The record in this appeal comprises nine volumes that run to 1 371 pages. Most of the record was irrelevant for the determination of the appeal. [54] Rule 8(8)(a) of this court’s rules provides that whenever an appeal ‘is likely to hinge exclusively on a specific issue or issues of law and/or fact the appellant shall, within 10 days of the noting of the appeal, request the respondent’s counsel to submit such issue or issues to the Court, failing which the respondent shall within 10 days thereafter make a similar request to the appellant’. The parties are, in terms of rule 8(8)(b), required to agree on this issue or furnish their reasons for not doing so. If an agreement is reached, rule 8(8)(e) provides that ‘only those parts of the record of the proceedings in the court a quo as may be agreed upon shall be contained in the record lodged with the registrar’. [55] The issues for determination in this appeal were limited and narrow. They could, to a large extent, be determined with reference to the pleadings alone. In these circumstances, the parties should have agreed to a truncated record. Instead of doing so, and thus limiting the record to what was relevant, a long record containing many irrelevant documents was placed before us. The parties simply agreed, without, it would appear, proper consideration, that the seven volumes that comprised the record before us in Madibeng (1), plus a further two volumes generated subsequently, would be the record before us this time. I can see no reason why the successful party should be allowed the costs of the full record. In my view, about 90 percent of what was placed before us was not necessary or relevant. I shall make an order to that effect below. The order [56] I make the following order: 1 Save to the extent set out in paragraph 2, the appeal is dismissed with costs, including the costs of two counsel. The costs in relation to the preparation, perusal and copying of the record are limited to ten percent of the costs incurred in these tasks. 2 Paragraph 2 of the order of the court below is amended to read: ‘The defendant is ordered to pay the plaintiff the sum of R162 639 962.00 together with interest thereon at the rate of 10% per annum with effect from 30 June 2003 in the case of certificate BR25 and with effect from 30 November 2003 in the case of certificates BR20 and BR26.’ 3 The Registrar is requested to deliver a copy of this judgment to the administrator of the Madibeng Local Municipality, the MEC for Cooperative Governance and Traditional Affairs of the North West Province and the Minister of Cooperative Governance and Traditional Affairs in the national government. _____________________ C Plasket Judge of Appeal APPEARANCES For the appellant: K Tsatsawane SC and X Mofokeng Instructed by: Gildenhuys Malatji Inc, Pretoria Honey Attorneys, Bloemfontein For the respondent: P L Mokoena SC and P Khoza Instructed by: Werksmans Attorneys, Johannesburg Symington De Kok Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 30 November 2020 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Madibeng Local Municipality v Public Investment Corporation Ltd (955/2019) [2020] ZASCA 157 (30 November 2020) MEDIA STATEMENT The Supreme Court of Appeal (SCA) today dismissed the appeal of the Madibeng Local Municipality (Madibeng) against the Public Investment Corporation Ltd (the PIC). During the 1980s and 1990s, the Brits Municipality (Brits), Madibeng’s predecessor, had borrowed large amounts of money from various institutions with a view to investing these amounts in the hope that the returns would outperform the costs of the loans, and the surplus could then be used to fund capital projects. The markets did not perform as Brits had hoped, with the result that I faced a serious fiscal crisis when its debts were to fall due. To deal with this problem it borrowed money from the PIC to pay its short-term debts. It did so against a number of zero coupon stock certificates – essentially promissory notes. One of the three certificates that are relevant in this case fell due for payment on 30 June 2003, while the other two fell due on 30 November 2003. On those dates, they had a face value of R93 million, R37 million and R87 million. Madibeng failed to pay on the due dates, but made a number of partial payments over a period of time in respect of all three debts. It was only in 2010, however, that the PIC issued summons to recover payment of the debts. Madibeng raised two defences. The first was that it had not been properly authorised to make the loans. That defence had been dealt with by the high court and by the SCA, and found to be without merit. The second defence, which was the subject of this appeal, was that the PIC’s claim had prescribed. The high court found that the debts had not prescribed and that Madibeng was liable to the PIC in the amount it had claimed. The SCA upheld the high court’s order. It held that the claim had not prescribed because a number of partial payments by Madibeng had amounted to tacit acknowledgements of liability which had interrupted the running of prescription. It held that once Madibeng’s special defences had been dismissed, it had no defence on the merits. It accordingly dismissed Madibeng’s appeal but amended the order of the court below to order Madibeng to pay the PIC the sum of R162 639 962, together with interest running from the dates on which the debts had fallen due. As Madibeng had never disputed owing money to the PIC, the quantum of its indebtedness or the partial payments that it had made, the SCA was critical of Madibeng’s conduct in defending the claim against it, and then appealing, when it knew that it had no prospect of succeeding.

2198

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case no: 128 / 08 BANTRY CONSTRUCTION SERVICES (PTY) LTD Appellant and RAYDIN INVESTMENTS (PTY) LTD Respondent ___________________________________________________________________ Neutral citation: Bantry Construction Services v Raydin Investments (128/08) [2009] ZASCA 10 (17 March 2009) CORAM: HARMS DP, BRAND, PONNAN, SNYDERS and MHLANTLA JJA HEARD: 26 FEBRUARY 2009 DELIVERED: 17 March 2009 SUMMARY:  Arbitration  –  application  for  award  to  be  made  order  of  court  ­ failure to counter­apply to review award – consequences thereof. ___________________________________________________________________ ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: The Johannesburg High Court, Witwatersrand Local  Division (Goldstein J sitting as court of first instance). The appeal is dismissed with costs. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ PONNAN  JA  (Harms DP, Brand, Snyders and Mhlantla JJA concurring): [1] During  March  2004,  the  first  respondent,  Raydin  Investments  (Pty)  Ltd ('Raydin'),  entered  into  a  written  principal  building  agreement  with  the  appellant, Bantry Construction Services (Pty) Ltd ('Bantry'), in terms whereof it employed the latter to erect a new factory and offices for it on premises situated in Linbro Park, Johannesburg. [2] After completion of the work and the issuance of the architect's final certificate dated 7 December 2004, cracks developed in the plaster work and floor toppings of the new buildings. During August 2005, Raydin wrote to Bantry, formally informing it of  the  existence  of  the  cracks  and  notifying  it  that  an  independent  contractor  had been secured who had expressed the opinion ' ... that the majority of the cracks are related to poor construction'. The response from Bantry was that ' ... it is quite normal for  new  buildings  to  experience  shrinkage  and  settlement  cracks'.  Bantry's  letter continued ' ... we do not accept the allegations of "poor construction" '. The battle lines thus came to be drawn between the parties, rendering applicable Clause 40.0 of the agreement, headed ‘Settlement of Disagreements and Disputes’. To the extent here relevant, this clause provides: '40.1 Should there be any disagreement between the employer or his agents on the one hand and the contractor on the other arising out of or concerning this agreement, the contractor may request the  principal  agent  to  determine  such  disagreement  by  a  written  decision  to  both  parties.    On submission of such a request a disagreement in respect of the the issues detailed therein shall be deemed to exist 40.2 The principal agent shall give a decision specifically in terms of 40.1 to the employer and the contractor within ten (10) working days of receipt of such a request. Such decision shall be final and binding on the parties unless either party disputes the same in terms of 40.3 40.3 Where there is no principal agent or should the principal agent fail to give a written decision within ten (10) working days or either party disputes the decision in terms of 40.2 by notice to the other and the principal agent within ten (10) working days of receipt thereof a dispute shall be deemed to exist 40.4 A dispute shall be submitted to: 40.4.1 Arbitration in terms of 40.6 or, where the parties so agree, to mediation in terms of 40.5 … 40.6 Where the dispute is submitted to arbitration: 40.6.1 The arbitration shall be conducted according to the rules stated in the schedule 40.6.2 The arbitrator shall be the person appointed by the parties in the schedule or within ten (10) working days of the date of submission of the dispute to arbitration. Where the  parties  make  no  such  appointment  the  arbitrator  shall  be  appointed  by  the [Chairman of the Association of Arbitrators] 40.6.3 The  arbitrator  shall  have  the  power  to  open  or  revise  any  certificate,  opinion, decision,  requisition  or  notice  relating  to  such  dispute  as  if  no  such  certificate, opinion, decision, requisition or notice had been issued or given 40.6.4 The parties, unless otherwise agreed, shall request the arbitrator to give a reasoned award …' [3] A  disagreement  thus  having  arisen  in  respect  of  the  work  performed  by Bantry, it was first referred by the parties to the principal agent, the architect of the building project, Roger Davies, on 6 December 2005. On 8 December 2005, Davies recommended  that  Bantry  agree  that  the  cracks  were  unacceptable  and  that  it undertake remedial work. He added somewhat prophetically: 'we further request the parties reach resolution and avoid unnecessary litigation'. Bantry, however, through Michael Wagner, its attorney of record, disputed the principal  agent's findings and formally declared a dispute to exist. The parties accordingly agreed that the dispute be referred to arbitration. Victor Booth, an engineer, who was cited as the second respondent in the court below but who took no part in the proceedings either in the court below  or in  this  court,  was  duly  appointed  arbitrator by  the  Chairman  of  the Association  of  Arbitrators.  On  18  April  2006,  the  arbitrator  convened  what  was termed  the  first  preliminary  meeting  with  the  parties.  At  this  meeting  the  parties agreed,  as  emerges  from  the  arbitrator's  award,  that  the  summary  rules  of  the Association would be applicable to their arbitration. [4] On  19  May  2006,  Raydin  filed its  Statement  of  Claim  and  on  1  June  2006 Bantry filed its Statement of Defence. A second preliminary meeting was held on 7 July  2006  and,  a  week  later,  the  arbitrator  despatched  to  the  parties  a  minute recording inter alia the following: 'It  was  agreed  that  following  this  inspection  and  my  having  taken  full  cognisance  of  the  experts' comments,  as  previously  written,  I  would  then  be  able  to  use  my  own  knowledge  and  technical expertise to decide upon the matter without the expense of a formal hearing. It was agreed that there would be no right of appeal on my award. Evidence, per se, will not be led at the in loco inspection beyond what is already embodied in the existing written reports. However, if, after the in loco inspection, the parties' respective experts wish to add  anything further  to their  previous  written  statements  and/or  to  confirm  anything that may  have been said on site and to lead such statements as additional evidence, I will allow 5 working days for a further such written submission from each. The  time  limits  for  the  award  protocol  will  follow  the  recommendations  in  the  "Rules"  of  the Association  of  Arbitrators.  Viz.  my  award  will  be  published  within  20  working  days  after  the  last evidence was received.' [5] On  27  July  2006,  an  in  loco  inspection  was  held.  Thereafter  the  arbitrator sought and obtained a report from the project engineer. He also requested certain drawings. On 6 September 2006 the arbitrator received the requested drawings and on 14 September 2006 he wrote to both attorneys: ‘I have not yet had the opportunity to look at the documents as the delay has put many other items on my  day  agenda  and  I  have  been  out  of  town  a  great  deal.  I  am  sure  that  copies  of  what  I  have received will be made available to all concerned. In the interests of the fairness of the procedure I believe that I should wait for all to be in possession of these same documents before I proceed. ' Thereafter  correspondence  was  exchanged  regarding  the  quality  of  some  of  the drawings.  On  28 November  2006,  the  arbitrator  despatched  a  letter to the  parties stating 'I have some questions to be answered if we are to resolve this before 06­12­ 2006 after which I am away for four weeks'. [6] In  the  meanwhile,  during  December  2006,  certain  remedial  work  was undertaken  at  the  premises.  Thereafter  and  in  response  to  a  request  from  the arbitrator, the architect submitted a report in which he opined that 'the cause of the cracks and defects were not as a result of the absence of detail . . ., but as a direct result of the failure by the contractor to carry out the construction in a proper manner and the improper use of materials and defective materials in the construction'. The architect added: 'The photographs taken when repairs were effected clearly illustrate defective construction relating to the brickwork and plastering. Any reasonable contractor would agree that it is poor common brickwork when over a small area plaster thickness vary from 15mm to 40mm and brickwork joints vary from 6mm to 50mm. My concern is that the Contractor made no effort to investigate the problems when first highlighted.... we note that it is neither a large nor a complicated building.' [7] That report elicited the following response from Bantry's attorney: 'We are of the view that [the architect's] response, seen as a whole, does not provide any evidence, aside from speculation on his part, that the cracks were due to latent defects for which our client is liable.' On 8 January 2007, the arbitrator wrote 'I'm sure that we would all like to bring this to a conclusion and await the info previously requested'.  In correspondence addressed to  the  arbitrator  dated  16 February 2007,  Raydin's  attorney,  Alec  Drobis,  wrote:  'I trust that you are now in possession of what you have called for in order to render your decision'. On 19 March 2007, Drobis once again enquired when the arbitrator would be in a position to let them have his determination. On 28 March 2007, the arbitrator  requested  Raydin  to  fully  and  formally  quantify  the  claim.  In  response Raydin filed a damages affidavit on 8 May 2007.  Two days later, Wagener wrote to the arbitrator suggesting that he make his award in the following two stages: first, whether Bantry was liable at all and, if so, for which cracks. Once an award of that nature was made, so the e­mail continued, Bantry would be in a position to provide its reasoned estimate of the cost of repairing the defects set out in the award. [8] On 31 May 2007, the arbitrator, in an e­mail to both parties, stated: 'I AM SURE THAT BOTH PARTIES NOW WANT CLOSURE ASAP. I  WOULD  LIKE  THE  OPPORTUNITY  TO  NOW  VIEW  THE  REMEDIAL  WORK  AND  BE  FULLY INFORMED AS TO EXACTLY WHAT WORK WAS DONE AND WHERE. PLEASE ADVISE WHO I CAN MEET AT THE PREMISES WITH TIME AND DATE. MAYBE THE APPROPRIATE PERSON COULD CONTACT ME DIRECTLY TO ARRANGE THIS. I WILL THEN HAVE A 21 WORKING DAYS TO DELIBERATE AND PRESENT MY AWARD.' With reference to that e­mail, the arbitrator wrote on 4 June 2007: 'I  HAVE  NOT  RECEIVED  THE  PARTIES'  CONFIRMATION  AS  REQUESTED.  HOWEVER  MR MIDGIN  [the  Chief  Executive  Officer  of  Raydin]  RANG  ME  ON  01­06­2007  AND  SAID  THAT  HE WOULD SHOW THE REMEDIAL WORK TO ME. DOES [BANTRY] WISH TO BE REPRESENTED AT THE ASSESSMENT? PLEASE ADVISE  ASAP  SO THAT  I  CAN  ARRANGE  A TIME  AND  DATE  TO MEET  MR MIDGIN ETC'. [9] Wagener responded that his client did indeed wish to be represented at the inspection  and  furnished  the  arbitrator  with  the  contact  details  of  a  certain  Bob Wagener. He furthermore drew attention to his earlier e­mail (which had apparently gone unanswered) that had suggested that the arbitrator's award should be made in two stages. He then proceeded to articulate what he described as three concerns that had been raised by his client. Those were: '1 The inordinate length of time it has taken to obtain an Award. The fact that you appear to be communicating directly with Mr Midgin.  My client would like the assurance from you that there are no current or prior dealings between you and Mr Midgin. Your  expressed  desire  to  view  the  remedial  work  already  carried  out  appears  to  be  an indication that you have already decided that my client is liable for the cracks.' [10] The next morning, the arbitrator apologised for the oversight in not replying to the  e­mail  in  question.  He  recorded  that  he  had  noted  the  suggestion  that  the arbitration award be made in two stages.  Some 40 minutes later he replied to the three concerns thus: '1 The inordinate length of time it has taken to obtain an Award; IT IS MY RECOLLECTION THAT THE TIME FRAME HAS, GENERALLY, NOT BEEN DETERMINED BY ME BUT BY THE LONG RESPONSE TIMES OF THE PARTIES TO VARIOUS ISSUES. THE HISTORICAL CHAIN OF CORRESPONDENCE SHOULD BEAR TESTIMONY TO THAT. The fact that you appear to be communicating directly with Mr Midgin. My client would like the assurance from you that there are no current or prior dealings between you and Mr Midgin. I  HAVE  HAD  ONE  BRIEF  PHONE  CONVERSATION  FROM  MR.  MIDGIN  WHEREIN  HE REQUESTED THAT HE COULD BE THE PERSON TO SHOW THE REMEDIAL WORK TO ME. I IMMEDIATELY  SENT  AN  EMAIL  TO  THE  PARTIES  ADVISING  THEM  OF  THIS  REQUEST  AND CONFIRMATION OF A REPRESENTATIVE FROM THE OTHER SIDE. I  WILL  BE  CONTACTING  BOTH  MR.  MIDGIN  AND  MR.  BOB  WAGENER  EARLY  NEXT  WEEK. PLEASE LET ME HAVE MR. WAGENER'S EMAIL ADDRESS SO THAT, AS I HAVE DONE IN THE PAST, I CAN COPY EVERBODY WITH THE COMMUNICATIONS. IT IS UNFORTUNATE THAT MR. MIDGIN'S PHONE CALL TO ME IS BEING CONSTRUED IN A SINISTER LIGHT. I DID ASSUME THAT HE HAD HIS ATTORNEY'S PERMISSION TO DO THIS AND THAT IT HAD BEEN CLEARED WITH YOURSELVES IN AN ATTEMPT TO NOW SPEED THINGS ALONG. I HAVE NEVER MET MR. MIDGIN, HAVE NO KNOWLEDGE OF HIM AND I HAVE NEVER SPOKEN TO HIM BEFORE IN MY LIFE. Your  expressed  desire  to  view  the  remedial  work  already  carried  out  appears  to  be  an indication that you have already decided that my client is liable for the cracks. SURELY,  MY  WISH  TO  SEE THE  REPAIR WORK  SHOULD  BE  CONSIDERED  AS  A  NORMAL ACTIVITY  IN  THE  WHOLE  CHAIN  OF  EVENTS  AND  NOT  DOING  SO  WOULD  PROBABLY ATTRACT  CRITICISM.  I  CAN  ASSURE  YOU  THAT  I  HAVE  NOT  MADE  ANY  DECISION  ON LIABILTY  AND,  AFTER  MUCH  ELAPSED  TIME,  I  WILL  REFAMILIARISE  MYSELF  WITH  ALL ASPECTS OF THE DISPUTE BEFORE MAKING ANY DETERMINATION.' That afternoon, Wagener wrote in an e­mail to the arbitrator: 'Having gone through our records we note that you have conducted an inspection in loco on 27 July 2006. Kindly  provide  us  with  a  report  on  that  visit  as  well  as  a  fresh  report  on  your proposed 2nd visit to the site'. That elicited the following response: 'Arbitrators don't write  reports.  They  consider  the  evidence  and,  using  their  expertise,  when  given permission to do so (as is the case here), and a judgment, make a reasoned award.' [11] On 8 June 2007, Wagener wrote to the arbitrator: 'I regret to inform you that your reply to my e­mail of 7 June 2007 is in conflict with both Rule 31.1.4 of the  Rules  for  the  Conduct  of  Arbitrations  promulgated  by  the  Association  of  Arbitrators  (Southern Africa) as well as the common law. Insofar as you have exceeded the time limit contained in s 23 of the Arbitration Act for making your award by a substantial margin, the arbitration has lapsed.' In response, on 13 June 2007, the arbitrator wrote to the parties: 'Rules for the conduct of arbitrations Rule 31.1.4 states that, "the arbitrator shall record his observations ……….. in such a manner as he may decide and such record ……….. shall form part of the proceedings of the arbitration". This is not to be construed as him having to supply a "report" to the parties. Arbitrations Act No. 42 (1965) Clause 13 (1) "the  appointment  of  an  arbitrator  ………..  shall  not  be  capable  of  being  terminated  except  by  the consent of all the parties." Should the claimant also wish to dispense with my services then this clause may be invoked. Clause 13 (2)(a) Upon application the court may set aside my appointment "on good cause shown". However, due to the protracted series of events caused by the parties' own delays in providing certain documents etc. the court would probably not consider this to be "on good cause shown". Furthermore,  I  refer  you  to  clause  40.2  of  the  "Rules"  which  requires  any  objection  to  be  lodged promptly or the right to object will be considered as waived. There are many aspects of this arbitration which tacitly fall into this category. Clause 23 My e­mail to the parties dated 31 st May, 2007 is relevant. Both parties have communicated freely for many months until the 6 th  June 2007 and tacitly accepted the content of my e­mail dated 31 st  May, 2007 which stated that I would deliver my award 21 days after my final inspection, once that had been arranged. I refer you to M. Wagener's email dated 4 th June and Drobis's e­mail dated 6 th June. The inspection is now delayed due to the respondent's recent dissatisfaction and this issue must be resolved before I can continue. Both parties to now advise me to continue or otherwise.' [12] The arbitrator's letter prompted the following missive from Wagener: 'We regret to record that our client is dissatisfied with your conduct of the arbitration on a number of grounds including your failure to provide us with an account of your findings with regard to the first inspection carried out by you. We  record  further  that,  to  date,  you  have  not  responded  to  our  request  to  have  the  proceedings decided in two stages, i.e. liability and quantum. We are of the respectful view that the provisions of section 23 of the Arbitration Act are peremptory and override the rules to which you refer in your letter. In the circumstances, our client maintains its position that the arbitration has lapsed and can only be revived by the court on good cause shown. Our client will oppose any such application to the court.' [13] Unbowed, the arbitrator asserted: 'AD PARA 2 I reiterate my e­mail response to you of 07­06­2007 that Arbitrators do not write reports but that their observations at an in loco inspection will be taken into account in the award. AD PARA 3 I did respond to this in my other e­mail dated 07­06­2007 and advised you that "your suggestion is noted". AD PARA 4 Both  parties  agreed,  voluntarily,  to  enter  into  the  arbitration  procedure  and  to  be  governed  by  the rules and that the summary rules will apply. I REITERATE THAT THE AMOUNT OF ELAPSED TIME HAS BEEN CAUSED BY THE PARTIES TO THE DISPUTE AND ONCE AGAIN REFER YOU TO RULE 40.2 WHEREBY ANY PARTY WAIVES ITS RIGHT TO ANY OBJECTION ON PROVISIONS IF NOT DONE SO PROMPTLY. I  WILL  NOW  BE  AWAY  UNTIL  2 ND  JULY  2007  AT  WHICH  TIME  I  WILL  DETERMINE  THE EARLIEST  MUTUALLY  ACCEPTABLE  TIME  AND  DATE  FOR  MY  INSPECTION  OF  THE REMEDIAL  WORK.  DUE  TO  THE  DELAY  IN  THE  PROCEEDINGS  OF  THE  PAST  10  DAYS CAUSED  BY  THE  RESPONDENT'S  RECALCITRANCE  TO  PROCEED  AND  THE  OBJECTIONS THERETO, WHICH I HAVE HAD TO DEAL WITH, I WILL THEN CONTINUE WITH OR WITHOUT THE RESPONDENT'S ATTENDANCE. BOTH PARTIES ARE HEREBY GIVEN DUE NOTICE OF THIS.' [14] On 19 June 2007, Wagener wrote to Dobris that neither he nor the arbitrator had dealt with the provisions of s 23 of the Arbitration Act, which were, according to him,  peremptory.    He  reiterated  that  the  arbitration  had  lapsed,  which  required  a formal application to court for it to be revived. He concluded 'Our client will not be taking  further  part in  the  arbitration  and  you  proceed  at  your  own  risk'.  On  6  July 2007,  the  arbitrator  visited  the  premises  to  examine  the  remedial  work.  That effectively being the last piece of evidence considered by him in the conduct of the arbitration,  the  arbitrator  then  handed  down  his  award  20  days  later  on  3  August 2007. He found for Raydin and ordered Bantry to pay damages in the sum of R124 900, plus 50% of the arbitration costs, plus VAT, plus interest from 3 August 2007. [15] As  the  award  remained  unsatisfied,  Raydin  approached  the  High  Court (Johannesburg) for the arbitrator's award to be made an order of court in terms of s 31(1) of the Arbitration Act. 1  Bantry opposed the relief sought. It filed an affidavit of some  six  pages  in  answer.  Much  of  what  was  contained  in  Raydin's  founding affidavit was not responded to, much less challenged or disputed. Instead, Bantry contented itself with a recital of the correspondence exchanged during the arbitration process. [16] The gist of its opposition is to be found in the following four brief paragraphs under  the  heading  ‘Gross  Irregularities  or  Misconduct  on behalf of  the  [Arbitrator]’ (my numbering): '(i). The  second  respondent  failed  to  provide  the  parties  with  information  regarding  his observations during inspections in loco on 27 July 2006 and 6 July 2007. (ii). He  committed  a  gross  irregularity in  that  he  failed  to  identify  the  cracks  for  which  the  first respondent  was  liable  and  secondly  to  give  the  first  respondent  an  opportunity  to  tender evidence on the reasonable cost of repairing such cracks. (iii). He continued with the arbitration after it had lapsed. (iv). He was not empowered to make the arbitrary financial adjustments contained in his award. Rather he was required to identify the cracks and to apportion liability on a rational basis.' The affidavit then concludes: 'In the premises it is respectfully submitted that the application to have the award made an order of court should be set aside with costs.' [17] In  its  replying  affidavit,  Raydin  took  issue  with  Bantry's  failure  to  launch  a counter­application  to  review  and  set  aside  the  arbitrator's  award.  Only  then  did Bantry  file  a  counter­application  that  the  award  of  the  arbitrator  be  set  aside, 1 Act 42 of 1965. supported  by  a  three  page  affidavit  described  as  ‘an  affidavit  in  support  of  [an] application  for  condonation’.  With  reference  to  the  final  paragraph  of  its  earlier answering  affidavit,  the  later  affidavit  states:  'It  would  have  been  clear  that  .  .  . [Bantry] was in fact applying to have the award of [the arbitrator] set aside and not the "application" '. It continued 'All the grounds on which [Bantry] relies to set aside the  [arbitrator's]  award  are  set  out  in  my  answering  affidavit.'  Bantry  accordingly submitted that the 'answering affidavit is in the form of a counter­application'. [18] Goldstein J granted the relief sought in the main application. In his judgment he made no reference whatsoever to the counter­application or the condonation that was  sought  by  Bantry  in  respect  of  its  failure  to  timeously  launch  the  counter­ application. [19] I have set out the factual matrix in greater detail than is absolutely necessary because it illustrates, the extent to which Bantry’s case appeared to shift with the passage  of  time.  Moreover,  as  is  readily  apparent,  the  four  principal  contentions advanced in  opposition in  the  court  below, of  which only  the  first  and  fourth  were pressed on appeal, amounted to no more than conclusions that were devoid of any factual foundation. [20] I will nonetheless very briefly consider each of the two contentions advanced before us on behalf of Bantry. As set out in its heads of argument, they are: (a) ‘The arbitrator refused to make known to the parties the evidence obtained at the  two  inspections  in  loco  prior  to  his  award.  This  evidence  relates  to  what  was seen by the arbitrator and what was said by the experts nominated by the parties who accompanied him on his inspection’: There is nothing in the arbitrator’s award to suggest that he did in fact rely on any relevant  information  secured  during  the  inspections,  as  opposed  to  information gleaned from other sources such as the reports that had been furnished to him by the parties. That much is made plain by the arbitrator in the introductory comments of his award where he states: ‘It is my duty to present my award based on the written and oral evidence provided by the parties and their representatives … It must also be recorded that it was agreed that I could use my own technical expertise in arriving at  my  conclusions  and  my  award’.  After  all,  it  was  for  Bantry  to  show  that  the arbitrator  had  seen  something  at  the  inspection  that  he  had  relied  upon  in determining the dispute between the parties. That it had failed to do. (b) ‘In assessing the quantum of the claim he acted on caprice and failed to apply his mind to the facts’: No  evidence  whatsoever  has  been  adduced  in  support  of  the  contention  that  the arbitrator  had  acted  capriciously.  Quite  the  contrary,  Mr  Wagener  conceded  quite candidly that the award was a properly reasoned one. Instead we were asked to infer capriciousness by virtue of the following: Raydin had submitted a damages affidavit alleging  that  the  fair  and  reasonable  cost  of  repairing  the  cracks  was  R149 900. From that figure the arbitrator had deducted and then added back certain amounts. In so doing, so the argument went, the arbitrator had exceeded his mandate and had acted arbitrarily. But that could hardly be so. In his award the arbitrator stated: ‘I find the rates quoted for the repair work [R149 900] not to be unreasonable’. Quite clearly that determination fell within his mandate and, were he to have ended there, there would  have  been  no  cause  for  complaint.  That  being  so,  as  the  subsequent deduction and adding back operated to benefit rather than prejudice Bantry, it could hardly ­ from its perspective – be labelled capricious. [21] The legal principles applicable to an enquiry of this kind were recently set out by  Harms  JA  on  behalf  of  this  court. 2  It  is  not  necessary  to  recapitulate  those principles.  Suffice  it  to  state  that  once  again  a  litigant  has  fundamentally misconceived the nature of its relief. The parties here had waived the right to have their dispute re­litigated or reconsidered. Given the nature of Bantry’s opposition, it was  for  it  to  challenge  the  award  by  invoking  the  statutory  review  provisions  of  s 33(1) of the Act. It ill­behoved Bantry to adopt the passive attitude that it did. It ought instead to have taken the initiative and applied to court to have the award set aside within six weeks of the publication of the award or alternatively to have launched a proper  counter­application  for  such  an  order. 3 Had  that  been  done  then  the arbitrator could have entered the fray and defended himself against the allegations levelled by  Bantry, instead  of it falling  to  Raydin  to  do  so  on  his  behalf  –  a  most invidious position for any litigant. [22] It follows that the learned Judge in the court below cannot be faulted and in the result the appeal must fail. It is accordingly dismissed with costs. 2  Telcordia  Technologies  Inc  v  Telkom  Ltd  2007  (3)  SA  266  (SCA);  see  also  Lufuno  Mphaphuli  & Associates (Pty) Ltd v Andrews and Another 2008 (2) SA 448 (SCA). 3 Butler & Finsen Arbitration in South Africa: Law and Practice para 7.10. ____________________ V M  PONNAN JUDGE OF APPEAL APPEARANCES: For Appellant: Wagener (Attorney) Instructed by: Bowman Gilfillan Attorneys Cape Town Matsepe Inc Bloemfontein For Respondent: A Kemack Instructed by: Drobis & Associates Sandton Naudes Attorneys Bloemfontein

REPUBLIC OF SOUTH AFRICA SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 17 March 2009 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Bantry Construction Services v Raydin Investments (128 /08) [2009] ZASCA 10 (17 March 2009) Media Statement Today the Supreme Court of Appeal ('SCA') dismissed an appeal by Bantry Construction Services (Pty) Ltd ('Bantry') against a judgment of the Johannesburg High Court (per Goldstein J). During March 2004, Bantry had entered into a principal building agreement with Raydin Investments (Pty) Ltd ('Raydin') in terms whereof it was employed by the latter to erect a new factory and offices for it on premises situated in Linbro Park Johannesburg. After completion of the work and the issuance of the architect's final certificate, cracks developed in the plaster work and floor toppings of the new buildings. Raydin alleged that the cracks were related to poor construction. That was disputed by Bantry. The matter was accordingly referred to arbitration. Victor Booth, an engineer, cited as the second respondent in the court below, but who took no part in the proceedings, was appointed arbitrator by the chairperson of the Association of Arbitrators in terms of Clause 40 of the Agreement. In his award the arbitrator found for Raydin and ordered Bantry to pay damages in the sum of R124 900.00 plus 50% of the arbitration costs plus VAT, plus interest. As the award remained unsatisfied, Raydin approached the High Court, (Johannesburg) for the arbitrator's award to be made an order of court in terms of Section 31(1) of the Arbitration Act. Bantry opposed the application. The SCA held that Bantry had fundamentally misconceived the nature of its relief. According to the SCA, it ill-behoved Bantry to adopt the passive attitude that it did. It ought instead to have taken the initiative and applied to court to have the award set aside within six weeks of the publication of the award or alternatively to have launched a proper counter-application for such an order. Given the fact that Bantry alleged irregularities on the part of the arbitrator during the course of the arbitration proceedings, it was for it to have invoked the statutory review provisions of Section 33(1) of the Act. Had that been done, according to the SCA, then the arbitrator could have entered the fray and defended himself against the allegations levelled by Bantry, instead of it falling to Raydin to do so on his behalf. The SCA accordingly held that Goldstein J could not be faulted and in the result the appeal was dismissed. --- ends ---

3568

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 432/2020 In the matter between: AADIEL ESSOP APPELLANT and THE STATE RESPONDENT Neutral citation: Essop v State (Case No. 432/2020) [2021] ZASCA 66 (1 June 2021) Coram: DAMBUZA and DLODLO JJA and GOOSEN AJA Heard: 12 May 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email. It has been published on the website of the Supreme Court of Appeal and released to SAFLII. The date and time for hand-down is deemed to be 10h00 on 1 June 2021. Summary: Criminal law – Sentence – High court on appeal erroneously stating that s 51 (3) of the Criminal Law Amendment Act 105 of 1997 applied – misdirection requiring re – consideration of trial court’s approach to sentence – trial court not exercising discretion – on re – consideration of sentence finding that period of imprisonment appropriate – appeal dismissed. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Kollapen J sitting as court of first instance): The appeal is dismissed. The sentence imposed by the trial court is confirmed. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Dlodlo JA (Dambuza JA concurring): [1] The appellant was convicted in the Regional Court for the Division of Gauteng (the trial court) of 45 counts of contravening the provisions of section 24B (1) (a) of the Films and Publications Act 1 (the Publications Act). The State alleged that the appellant had unlawfully possessed film, game or publication containing depictions, descriptions or scenes of child pornography or which advocated, advertised, encouraged, or promoted child pornography or sexual exploitation of children. The 46th count on which the appellant was convicted was kidnapping of a minor. The appellant pleaded guilty to all these charges. His legal representative read and handed in a statement signed by the appellant in terms of s 112 (2) of the Criminal Procedure Act2 (the Criminal Procedure Act). The regional court magistrate (the Magistrate) considered all counts together for the purposes of sentencing and sentenced the appellant to 10 years imprisonment. The Magistrate granted the appellant leave to appeal. On 17 December 2019, the Gauteng Division of the High Court, Pretoria (high court) dismissed the appellant’s appeal and confirmed the sentence imposed by the Magistrate. The appellant unsuccessfully applied for leave to appeal before the high court. However, he was granted special leave to appeal by this court. 1 The Films and Publications Act 65 of 1996. 2 The Criminal Procedure Act 51 of 1977. [2] The State led no evidence. The State accepted the appellant’s plea of guilty upon the facts set out in his plea. Therein the appellant stated that on 22 June 2014 he visited the Lenasia shopping mall. En route to his residence, as he drove in the direction of Johannesburg South, he noticed the complainant at an intersection. He stopped at the traffic light and the complainant knocked on his car’s window. She asked for a lift to the nearby squatter camp. He allowed her to get into his car. [3] According to the appellant, in the car, the complainant signalled to him her preparedness to do him a favour in exchange for the lift. The appellant understood her as offering him masturbation or oral sex. He told her that he would take her to his place of residence where he would give her food and she would take a bath. She agreed. On arrival at the appellant’s home, she was offered a shower and clean clothing. She accepted the offer and indeed after a shower the appellant gave her clothing belonging to his daughter to put on. She was given food to eat. The complainant offered to do the appellant a favour in exchange for what he had done for her, to which the appellant responded that he was not interested in having sexual contact with her; instead, he asked to take some photographs of her. He reached for his camera and proceeded to take photographs of the complainant. Whilst taking photographs of her he asked her to remove some of her clothing and then took photographs of parts of her body that were exposed. Thereafter, he took her back to her home and had to drive in the direction of Lenasia where he had originally picked her up. [4] It was at the Grasmere tollgate that the appellant was stopped by the police who confronted him about the presence of the complainant in his motor vehicle. The appellant kept quiet and the complainant told the police that he had taken photographs of her when she was naked. The police searched the appellant’s motor vehicle and found the camera that he had used in order to take the photographs. The police also found in the vehicle a cellphone belonging to the appellant that he had also used to take photographs of the complainant. These images were inspected by the police who thought that they were of a child pornographic nature. The appellant admitted that the images referred to in the 45 counts fully described in Schedule 1 of the charge sheet were all stored in his cellular phone and camera. He unreservedly admitted that the images constituted child pornography for purposes of the Act as they showed bodies or parts of bodies of children younger than the age of 18 years in circumstances that amounted to sexual exploitation. He also admitted that the complainant was a female child of 13 years of age when the offences were committed. [5] In dismissing the appeal against sentence the high court said that the appellant was convicted and sentenced to undergo 15 years imprisonment. It then referred to the provisions of s 51 (3) of the Criminal Law Amendment Act3 (the Minimum Sentence Act), apparently, having formed the view that the sentencing regime provided for therein was applicable in this case. This was incorrect. The sentence appealed against was 10 years imprisonment which the Magistrate had imposed. This misdirection on the part of the high court enjoined this court to re-consider the sentence imposed by the Magistrate. [6] However, the judgment of the Magistrate too had its shortcomings. Although, in passing sentence, the Magistrate referred to the appellant’s personal circumstances, the mitigating evidence led on his behalf, the prevalence of sexual exploitation of young children in this country and the fact that the appellant had kidnapped the complainant, it was apparent the judgment on sentence that the Magistrate considered himself bound to impose the sentence imposed by the court in Director of Public Prosecutions North Gauteng v Alberts4. This approach was incorrect. It is trite that in our legal system trial courts enjoy a wide discretion in determining sentence in every case. Although guidance from past decisions of higher courts engenders consistency, the primary principle is that sentencing is a prerogative of a trial court. In this regard trial courts exercise a wide discretion in determining individualised punishment based on the personal circumstances of each offender, the gravity of the crime committed and public interest.5 Therefore the magistrate’s erred in so far as he considered himself bound by a sentence imposed in 3 The Criminal Law Amendment Act 105 of 1997. 4 Director of Public Prosecutions North Gauteng v Alberts [2016] ZAGPPHC 495; 2016 (2) SACR 419 (GP) (30 June 2016). 5 S v Zinn 1969 2 SA 537 (A) 540G–H. Alberts. As a result of that error this court is enjoined to consider the issue of sentence afresh. [7] Child pornography is a highly pervasive, noxious conduct that has been ravaging communities in this and many other countries around the world. In this country this conduct is criminalised under both the Publications Act and the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007. The prohibition of child pornography in both pieces of legislation demonstrates the seriousness with which the legislature views the conduct. It is apparent from its inclusion in the Sexual Offences Act that the offence is considered as part of the sexual offences scourge that is destroying the fabric of South African communities. [8] Although the appellant was not charged under the Sexual Offences and Related Matters Act, ss 19 and 20 of that Act are relevant as they give insight to the seriousness with which the Legislature considers child pornography. Section 19 prohibits the exposure or display of images of child pornography, or the causing of such exposure and display and s 20 prohibits the use of children for creation of child pornography. [9] In addition, s 28(1)(d) of the Constitution entrenches the right of children protection from maltreatment, neglect, abuse and degradation.6 In De Reuck v Director of Public Prosecutions, Witwatersrand Local Division7 the Constitutional Court deprecated child pornography in these words: ‘In determining the importance of s 27 (1) of the [Publications] Act, it is necessary to examine its objective as a whole. The purpose of the legislation is to curb child pornography, which is seen as an evil in all democratic societies. Child pornography is universally condemned for good reason. It strikes at the dignity of children, it is harmful to children who are used its production , and it is potentially harmful because of the attitude to child sex that it fosters and the use to which it can be put in grooming children to engage in sexual conduct’. 6 Section 28 of the Constitution of the Republic of South Africa 1996. 7 De Reuck v Director of Public Prosecutions, Witwatersrand Local Division 2004(1) SA 406 CC [10] It is particularly distressing that the complainant in this case was only 12 years old at the time of the commission of the offences. The appellant exploited her obviously distressed background for his personal gratification. I have explained in paragraph 8 above that these offences are considered to fall under the rubric of sexual offences. It was submitted on behalf of the appellant that his conduct was less reprehensible than that of the appellant in Alberts to which the magistrate referred when passing sentence. In this case the extent of the appellant’s blameworthiness was less than in Alberts, so it was argued. This submission was premised on Mr Albert’s 144 pornographic transgressions compared to the appellant’s 45. However, this argument ignored the fact that the appellant was both the creator and the consumer of pornographic material, a fact which would not have been lost to the magistrate. [11] The Magistrate was of the view that although the appellant was a first offender his criminal conduct took off with a very serious offence. He correctly considered the graphic nature of some of the photographs, particularly the explicit exposure of the complainant’s private parts, to be aggravating. [12] It will be recalled that, apart from the 45 convictions under the Publications Act, the appellant was also convicted of kidnapping, the 46th count. Kidnaping alone is a serious offence which if punished separately could easily attract a sentence of up to seven years imprisonment. [13] In mitigation of sentence the appellant called a clinical psychologist Ms Hurn and his ex-wife. The appellant did not himself testify in mitigating of sentence. The State led the evidence of two probation officers. Before us, an argument was presented that the appropriate sentence was one of correctional supervision which had been recommended by the probation officer(s). [14] The trite basic principle in this regard is that a court is not bound by a recommendation in a pre-sentence report. Imposition of sentence is a judicial function. In performing this function the court takes account all recognised sentencing considerations which include the offender’s personal circumstances, the seriousness of the crime committed and the well-being of the society. Psychologists and/or psychiatrists are mostly concerned with diagnosis and rehabilitation of the individual concerned. [15] This Court has cautioned against attaching undue weight to the well-being of the offender at the expense of the other aims of sentencing, warning that to do so distorts sentencing process and will in all likelihood result in a misdirection.8 Whilst the offender’s personal circumstances are of importance, the natural indignation of interested persons and community must find expression and recognition in the sentences imposed by the courts. [16] The offences of which the appellant was convicted resulted from the same incident. In my assessment, for the kidnapping of the complainant and the possession of pornographic material relating to her in the circumstances set out above I would still have imposed a sentence of 10 years imprisonment. [17] Accordingly the following order is made. The appeal is dismissed. The sentence imposed by the trial court is confirmed. ___________________ DLODLO D V JUDGE OF APPEAL 8 S v Lister 1993 (2) SACR 228 (A). Goosen AJA [18] I have had the benefit of reading the judgment of my brother Dlodlo JA. I am, however, unable to agree with the outcome. In my view the appeal should succeed in part, inasmuch as the effective sentence ought to be reduced. Whilst I agree with the approach that my brother has adopted, I consider it necessary to elucidate a few aspects regarding the high court’s judgment on appeal as well as that of the trial court. [19] My brother has summarized the facts in his judgment. It will therefore only be necessary to highlight those aspects of the evidence relevant to the sentence which I would propose as outcome of this appeal. [20] This matter comes before this court pursuant to an order granted in terms of s 17 (2) of the Superior Courts Act, 10 of 2013. The judgment on appeal is accordingly that of the high court (per Maumela and Kollapen JJ). As is noted by Dlodlo JA, the high court misdirected itself in regard to the sentence that had been imposed by the trial court and in relation to the law applicable to such sentence. [21] The high court correctly outlined the limited jurisdiction of an appellate court when it deals with a sentence imposed by the trial court. The high court cited the well-known passage from the judgment of this court in S v De Jager 1965 (2) SA (A) at p 629 where it was held: ‘It would not appear to be sufficiently recognized that a Court of appeal does not have a general discretion to ameliorate the sentences of trials Courts. The matter is governed by principle. It is the trial Court which has the discretion, and a Court of appeal cannot interfere unless the discretion was not judicially exercised, that is to say unless the sentence is vitiated by irregularity or misdirection or is so severe that no reasonable court could have imposed it. In this latter regard an accepted test is whether the sentence induces a sense of shock that is to say if there is a striking disparity between the sentence passed and that which the Court of appeal would have imposed. It should therefore be recognized that appellate jurisdiction to interfere with punishment is not discretionary but, on the contrary, very limited.’ [22] What the court a quo was required to consider was whether the trial court had exercised its discretion properly and whether the sentence imposed by it was vitiated by misdirection of fact or law. Again, the court a quo was alive to this, as indicated by its reference to S v Pillay 1977 (4) SA 531 (A) at p 535E-F, where Trollip JA said, ‘Now the word “misdirection” in the present context simply means and error committed by the Court in determining or applying the facts for assessing the appropriate sentence. As the essential enquiry is an appeal against sentence, however, is not whether the sentence was right or wrong, but whether the Court in imposing sentence exercised its discretion properly and judicially, a mere misdirection is not by itself sufficient to entitle the Appeal Court to interfere with the sentence; it must be of such a nature, degree, or seriousness that it shows, directly or inferentially, that the Court did not exercise its discretion at all or exercised it improperly or unreasonably. Such misdirection is usually and conveniently termed one that vitiates the court’s decision on sentence.’9 [23] The high court, however, failed to deal with the trial court’s sentence in these terms. Had the court a quo approached its consideration of the trial court’s sentence mindful that it was required to determine whether the trial court had exercised its discretion regarding sentence, it would undoubtedly have noted that the trial court had not exercised a discretion at all. [24] This much appears from the trial court’s judgment where the following is recorded: ‘I was referred to the case of Director of Public Prosecutions, North Gauteng, that is the Director of Public Prosecutions is the appellant and the matter was sitting in North Gauteng and Gerhardus Johannes Alberts, that is the respondent. Case number A835/2014.10 This case also involves phonographic (sic) material involving children. Both cases, the offence is one, namely pornographic material involving children. SAM Bakwa J (sic), that is Honourable Judge Bakwa imposed a sentence of 10 years imprisonment. The defence has attacked this decision in argument. We have what we call in our law the [indistinct] and the precedent. The [indistinct] is binding. That is that of a high court is binding to the lower courts. This is a decision 9 See also Mpofu v Minister for Justice and Constitutional Development and Others [2013] ZACC 15; 2013 (2) SACR 407 (CC). 10 Director of Public Prosecutions North Gauteng v Alberts [2016] ZAGPPHC 495; 2016 (2) SACR 419 (GP). of this division according to the precedent system it is binding on this court as a lower court. It is only where that decision or that case is distinguishable to this one. But as I have already indicated that the two cases are not distinguishable because both involve pornographic material involving children. In terms section [. . .] and therefore the case has been followed and applied.’ [25] When regard is had to the judgment in the Alberts matter it is all the more apparent that the trial court did not exercise a discretion. That matter involved an appeal by the prosecuting authority against a sentence of an effective five year sentence imposed for 144 counts of possession of child pornography. The sentence imposed by the trial court was one of five years for each of two sets of convictions. The sentences were ordered to be served concurrently. On appeal it was held that the sentence was, given the gravity of the matter, unduly lenient. The court accordingly altered the sentence by overturning the order that they run concurrently, thereby imposing an effective sentence of ten years imprisonment. The facts disclosed that the images involved were of a particularly gross nature, involving the depiction of scenes of sexual assault, rape and sexual violence in which the victims were very young children. The facts also disclosed that Alberts had not only accessed the material via the internet, he had gone to the extent of placing orders for particular type of images. [26] In the light of the obvious misdirections by both the court a quo and the trial court, this court is at large to consider an appropriate sentence. The majority judgment, having carefully considered the nature and seriousness of the offences for which the appellant has been convicted concludes that a sentence of ten years’ direct imprisonment is appropriate. [27] I take a different view. I am in full agreement with Dlodlo JA’s characterization of the serious nature of the offences and the need for the sentence to properly reflect the just abhorrence of such conduct. Two aspects of this matter manifest aggravating features which warrant due recognition in the sentence. The first is that the appellant kidnapped the child and while she was under his power took her to his home where he took the photographs of her. The second feature is related. It is that, upon the admitted facts, he created pornographic images. This act of creating the pornographic images clearly entailed a physical interaction with the child victim. It is not hard to conceive of the trauma that must have been visited upon the child. [28] The appellant was not charged with the offence of manufacturing or producing pornographic material. He was also not charged with an offence in terms of s 20 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007. Section 20 (1) provides as follows: ‘(1) A person (“A”) who unlawfully and intentionally uses a child complainant (“B”), with or without the consent of B, whether for financial or other reward, favour or compensation to B or to a third person (“C”) or not— (a) for purposes of creating, making or producing; (b) by creating, making or producing; or (c) in any manner assisting to create, make or produce, any image, publication, depiction, description or sequence in any manner whatsoever of child pornography, is guilty of the offence of using a child for child pornography.’ [29] The offence created by this section seeks to address the egregiously harmful effects of exploitation of children for the purposes of producing pornographic material. As stated by the Constitutional Court in De Reuck v Director of Public Prosecutions (Witwatersrand Local Division) and Others 2003 (12) BCLR 1333 (CC) at para 61: ‘Child pornography is universally condemned for good reason. It strikes at the dignity of children, it is harmful to children who are used in its production, and it is potentially harmful because of the attitude to child sex that it fosters and the use to which it can be put in grooming children to engage in sexual conduct.’ [30] This Court, in Du Toit v The Magistrate and Others [2016] 2 All SA 328 (SCA) at para 14, held that: ‘A child compromised by a pornographer’s camera has to go through life knowing that the image is probably circulating within the mass distribution network for child pornography. Because the child’s actions are reduced to a recorded image, the pornography may haunt him or her long after the original recording. Citing a wealth of evidence, the Ferber court found that the distribution of child pornography abused children by creating a permanent record of the child’s participation. This record, in turn permitted the harm to the child to be exacerbated each time the material was circulated and led to the creation of distribution networks that fostered further exploitation. (US v Mathews 209 F3d 338 (4th Cir 2000)). De Reuck (para 64) emphasised that: ‘The psychological harm to the child who was photographed is exacerbated if he or she knows that the photograph continues to circulate among viewers who use it to derive sexual satisfaction.’ It follows that the distribution network for child pornography must be closed if the production of material which requires the sexual exploitation of children is to be effectively controlled (New York v Ferber). [31] The appellant was perhaps fortunate not to be charged with an offence under s 20 (1) (b) of Act 32 of 2007. A conviction for the offence of using a child for child pornography as contemplated by s 20 (1), carries with it a prescribed minimum sentence of 10 years imprisonment in terms of s 51 of Act 105 of 1997 read with Part III of Schedule 2 to that Act. While the appellant is not to be punished for a crime for which he was not convicted, the circumstances under which he came to be in possession of child pornography which he had produced, are seriously aggravating of the offence of possession. [32] This, coupled with the fact that he kidnapped the child, places the offences within the category of serious offences which, in my view, warrant direct imprisonment. I am accordingly in agreement with Dlodlo JA that a sentence of correctional supervision, as was proposed at trial, is not an appropriate sentence in the circumstances. It is to be observed that the offence of kidnapping, where it is carried out by a person in possession of a firearm, also carries a minimum sentence in terms of s 51. In such case the prescribed sentence is one of at least five years’ imprisonment. Again, it must be noted that the appellant is not liable to be sentenced on that basis. Nevertheless, the sentences mentioned above give some guide as to what may be considered to be appropriate sentences. [33] The determination of what constitutes an appropriate sentence, however, requires consideration of the peculiar personal circumstances of the appellant. It also requires due consideration of the objects of sentencing and a careful weighing of the interests of society. The purpose of this exercise is to arrive at a sentence which is proportionate and which is fair and just. [34] The trial court observed that the appellant is a well-educated professional man who was, at the time of the commission of the offences, married and gainfully employed. These are not factors which, to my mind, are persuasive as mitigatory factors. They are, rather, neutral inasmuch as one might rightfully expect well educated individuals to be more conscious of the seriously harmful effects of child pornography on children in particular and the society in general. One factor which does provide some mitigation is the fact that he was diagnosed as suffering a paraphilic disorder. This suggests a mental disorder which manifests as an obsessive interest in sexual gratification by observation. I am prepared to accept, on the evidence presented at trial, that the disorder gives rise to the obsession and that it is not merely a description of the obsession. For present purposes it is to be observed that the evidence presented by Ms. Hearne, the psychologist, discounts paedophilia as the underlying pathology. According to the evidence there exists a prospect of rehabilitation. [35] It was argued that the appellant had not placed before the trial court facts which suggested remorse on his part. For this reason, little regard could be had to the prospects of rehabilitation in the absence of a genuine expression of remorse (see S v Matyityi 11). It is worth noting that there are troubling features in respect of the appellant’s attitude to the crimes he committed. In his plea explanation he portrayed the child as sexually suggestive. This portrayal of the child as being prepared to engage in sexual activity and the perpetrator as being ‘induced’ into the criminal conduct, perpetuates a narrative of victim-blaming which, all too often, underlies attempts to ameliorate the true nature of the violation at the heart of sexual and related offences. [36] The absence of an expression of remorse is indeed a factor which militates against finding that there is a prospect that the offender will be rehabilitated during a relatively short period of imprisonment. Nevertheless, the object of imprisonment for a determinate 11 S v Matyityi [2010] ZASCA 127; [2011] 2 All SA 424 (SCA); 2011 (2) SA 40 (SCA) at para 13. period is premised upon an acceptance of the inherent value of the rehabilitative effect of imprisonment. The imposition of a period of imprisonment proceeds from the premise that the sentenced prisoner is likely, after serving the period of imprisonment, to be capable of re-integration into society. Whether that indeed occurs or whether it may occur prior to the completion of the imposed sentence, is a matter which falls within the remit of the authority charged with managing the system of incarceration as legislated. Where it is not possible to conclude that the likelihood of rapid rehabilitation is high, the sentencing court will nevertheless proceed on the basis that an appropriate period of imprisonment is likely to bring about a measure of rehabilitation which will allow for the re-integration of the offender into the community. If that were not so the very foundation of our penal system would be called into question. It must therefore be accepted that the appellant can be appropriately rehabilitated. [37] This brings me to two final aspects which require consideration. The first concerns the format of an appropriate sentence. The trial court proceeded on the basis that it was appropriate to impose a composite or undifferentiated sentence for all of the 45 counts for which the appellant was convicted. The majority proceeds upon a similar basis. In my view the offences for which the appellant has been convicted require the imposition of separate sentences. I accept that in respect of counts 1 to 44 (the possession of forty- four images depicting child pornography) it is appropriate to consider these as one for purposes of sentence. However, in respect of the kidnapping charge a separate sentence ought to be imposed. It is an offence of a wholly different character. Although it was the basis upon which the further offences came to be committed, it requires the imposition of a separate sentence in light of the general principle that a court ought to impose separate and distinct sentences for distinct crimes. [38] The second aspect which deserves emphasis concerns the objects of sentencing. As noted earlier the imposition of a determinate sentence proceeds upon the contemplation that the sentenced prisoner will in due course be re-integrated into society. It should therefore be determined with this in mind. A sentence also seeks to deter further criminal conduct. The deterrent purpose is directed broadly at the society by signaling what may likely follow upon the commission of an offence. The deterrent purpose is, however, also directed at the offender. It is to meet this latter objective that a sentencing court is empowered to suspend the implementation of a sentence and to impose conditions upon which such suspension operates. These mechanisms allow the sentencing court to construct a sentence which seeks to meet all of the sentencing objectives while also maintaining a principled commitment to what is fair and just and proportionate. [39] I do not consider the sentence imposed by the trial court to be fair and proportionate. I would accordingly uphold the appeal and sentence the appellant to a differentiated sentence for counts 1 to 44 and count 45 respectively. I would also suspend a portion of the total effective sentence in order to provide for a longer term deterrent effect operative against the appellant, and to facilitate the achievement of the rehabilitation and re-integration of the appellant into society. [40] In the result I would order as follows: 1. The appeal is upheld in part as reflected in the order below. 2. The sentence imposed by the trial court is set aside and is replaced with the following: ‘1. In respect of counts 1 to 44 the accused is sentenced to 7 years’ imprisonment. 2. In respect of count 45 the accused is sentenced to 5 years imprisonment. 3. It is ordered that 2 years of the sentence on count 45 is to be served concurrently with the sentence on counts 1 to 44. 4. It is further ordered that 3 years of the sentence on counts 1 to 44 is suspended for a period of 5 years on condition that the accused is not convicted of an offence in terms of the Films and Publications Act 65 of 1996 and / or the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007, within the period of suspension.’ _____________________ GOOSEN G. ACTING JUDGE OF APPEAL APPEARANCES: For the Appellant: P Du Plessis Instructed by: BDK Attorneys, Johannesburg Honey Attorneys, Bloemfontein For the Respondent: PW Coetzer Instructed by: Director of Public Prosecution, Pretoria Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 1 June 2021 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Essop v State (Case No. 432/2020) [2021] ZASCA 66 (1 June 2021) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal from the Gauteng Division of the High Court, Pretoria (high court) against the sentence imposed by the Regional Court for the Division of Gauteng (the trial court). The SCA confirmed the sentence imposed by the regional court. The appellant was convicted in the trial court of 45 counts of contravening the provisions of section 24B (1) (a) of the Films and Publications Act 1 (the Publications Act) after pleading guilty to all charges against him. The 46th count on which the appellant was convicted was kidnapping of a minor. On appeal to the high court, the appellant’s appeal was dismissed, and the sentence imposed by the Magistrate was confirmed. One special leave to appeal granted by the SCA, the appellant argued in mitigation of the sentence imposed. The majority, Dlodlo JA (Dambuza JA concurring) found that the approach adopted by the trial court was incorrect as it considered itself bound to impose the sentence imposed by the court in Director of Public Prosecutions North Gauteng v Alberts2 and reminded the trial court that enjoys a wide discretion in determining sentence in every case as sentencing is a prerogative of a trial court. With this in mind and mindful of the fact that child pornography is a highly pervasive, noxious conduct that has been ravaging communities in this and many other countries around the world, the majority found that the 1 The Films and Publications Act 65 of 1996. 2 Director of Public Prosecutions North Gauteng v Alberts [2016] ZAGPPHC 495; 2016 (2) SACR 419 (GP) (30 June 2016). offences of which the appellant was convicted resulted from the same incident and the circumstances set out a sentence of 10 years imprisonment would still have been imposed. Goosen AJA, writing the minority judgment stated that the appeal should succeed in part, inasmuch as the effective sentence ought to be reduced. Goosen AJA expressed the view that the high court did not adequately consider whether the trial court had exercised its discretion properly and whether the sentence imposed by it was vitiated by misdirection of fact or law, stating that had it done so it would undoubtedly have noted that the trial court had not exercised a discretion at all. Due the misdirections by both high court and the trial court, Goosen AJA was of the view that the SCA was at liberty to consider an appropriate sentence and in so doing found that the sentence imposed by the trial court was not fair and proportionate and therefor accordingly uphold the appeal and sentence the appellant to a differentiated sentence for counts 1 to 44 and count 45 respectively. ~~~~ends~~~~

2969

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 35/2014 In the matter between: PANAMO PROPERTIES (PTY) LTD FIRST APPELLANT LIEBENBERG DAWID RYK VAN DER MERWE NO SECOND APPELLANT and JAN HENDRIK NEL NO FIRST RESPONDENT CHARMAINE NEL NO SECOND RESPONDENT (in their capacities as trustees of the JAN NEL TRUST IT 660/86) THE COMPANY AND INTELLECTUAL PROPERTY COMMISSION OF THE RSA THIRD RESPONDENT TREVOR PAYNE FOURTH RESPONDENT PINK PARROT INVESTMENTS (PTY) LTD FIFTH RESPONDENT FIRSTRAND BANK LIMITED SIXTH RESPONDENT Neutral Citation: Panamo Properties (Pty) Ltd v Nel and Another NNO (35/2014) 2015 ZASCA 76 (27 May 2015) Coram: NAVSA ADP, MAJIEDT, WALLIS and ZONDI JJA and DAMBUZA AJA Heard: 14 May 2015 Delivered: 27 May 2015 Summary: Business rescue proceedings – resolution by company in terms of s 129(1) of Companies Act 71 of 2008 – non-compliance by company with further requirements of ss 129(3) and (4) of the Act – effect – s 129(5) of the Act – non-compliance does not automatically result in the business rescue being terminated – such non-compliance a ground for bringing an application to court to set aside the resolution in terms of s 130(1)(a)(iii) of the Act – a court will only set aside such resolution if it is otherwise just and equitable to do so in terms of s 130(5) of the Act – the business rescue terminates in terms of s 132(2)(a)(i) of the Act once an order setting aside the resolution has been granted. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Khumalo J, sitting as court of first instance): The appeal is upheld with costs. Paragraphs 2 and 3 of the order of the court below are set aside and replaced by the following: ‗The application is dismissed.‘ Paragraph 4 of the order of the court below is renumbered as paragraph 3. The order granted on the counter application is set aside. JUDGMENT Wallis JA (Navsa ADP, Majiedt and Zondi JJA and Dambuza AJA concurring) [1] Business rescue proceedings under the Companies Act 71 of 2008 (the Act) are intended to ‗provide for the efficient rescue and recovery of financially distressed companies, in a manner that balances the rights and interests of all relevant stakeholders‘.1 They contemplate the temporary supervision of the company and its business by a business rescue practitioner. During business rescue there is a temporary moratorium on 1 Section 7(2)(k) of the Act. the rights of claimants against the company and its affairs are restructured through the development of a business rescue plan aimed at it continuing in operation on a solvent basis, or if that is unattainable, leading to a better result for the company‘s creditors and shareholders than would otherwise be the case.2 These commendable goals are unfortunately being hampered because the statutory provisions governing business rescue are not always clearly drafted. Consequently they have given rise to confusion as to their meaning and provided ample scope for litigious parties to exploit inconsistencies and advance technical arguments aimed at stultifying the business rescue process or securing advantages not contemplated by its broad purpose. This is such a case. [2] The Jan Nel Trust (the Trust) is the sole shareholder of the first appellant, Panamo Properties (Pty) Ltd (Panamo). Its trustees, Mr and Mrs Nel, who are also the directors of Panamo, represent it in these proceedings. Panamo is a property-owning company owning a large property in Roodepoort. Mr and Mrs Nel‘s home is situated on a portion of the property, and the balance is let to various commercial tenants. The property was mortgaged in favour of Firstrand Bank Ltd, but Panamo fell into arrears and judgment was taken against it for amounts totalling some R3.3 million, plus interest and costs. The hypothecated property was declared executable. [3] In order to prevent a sale of the property and afford the Nels time to resolve Panamo‘s financial problems, the Trust resolved on 19 August 2011 to place Panamo in business rescue. A little over two years later, in September 2013, the Trust sought an order declaring that the original 2 See the definition of ‗business rescue‘ in s 128(b) of the Act. resolution to place Panamo in business rescue had lapsed and consequently that the entire business rescue process was a nullity. That was after the appointment of a business rescue practitioner, (Mr van der Merwe the second appellant); the adoption of a business rescue plan; and the sale of the property pursuant to that plan. It is undisputed that the sole purpose behind the application was to prevent the sale of the property and to prolong Mr and Mrs Nel‘s occupation of their home. [4] In advancing its case the Trust relied on its failure – and hence the failure of the Nels as the moving spirits behind both the Trust and Panamo – to comply with various requirements prescribed by ss 129(3) and (4) of the Act. In some instances the non-compliance lay in doing things after the expiry of the prescribed statutory period for them to be done. In others it consisted of straightforward non-compliance with the statutory injunction. The argument on behalf of the Trust was that s 129(5)(a) of the Act stipulates that the consequences of such non- compliance are that the resolution to begin business rescue lapses and is a nullity, and hence the entire process of business rescue in relation to Panamo had been a fruitless exercise as the underpinning for it fell away in October 2011. Khumalo J upheld these contentions and issued a declaratory order that the resolution to commence business rescue had lapsed and was a nullity, and a further order that the appointment of Mr van der Merwe as business rescue practitioner in respect of Panamo was void. The appeal is with her leave. [5] In reaching that conclusion, Khumalo J expressed her frustration at the straitjacket that she thought s 129(5)(a) imposed upon her. She quite correctly regarded the approach of the Trust as opportunistic. She said that the Nels had ‗strung along‘ the other parties to the business rescue process and delayed bringing the application until, for selfish reasons, they realised that there was no other way in which to prevent the transfer of the property to the purchaser. Her conclusion was that the Nels ‗have acted to the company‘s detriment with a disastrous outcome‘. I agree and would go further to describe their conduct as a stratagem involving a wholly undesirable exploitation of legal technicalities for their own advantage. However, if Khumalo J‘s construction of s 129(5) is correct, that situation was unavoidable. The issue in this appeal is whether she was correct. [6] The counter argument advanced by Mr van der Merwe, on his own behalf and on behalf of Panamo, is that s 129(5)(a) does not have this drastic effect. It must, so he contended, be read in the light of the provisions of s 130 of the Act, which deal with the circumstances in which a court may be asked to set aside a resolution to place a company under business rescue. According to the argument, those provisions limit both the time within which a resolution to place a company under business rescue may be challenged and, if such an application is brought timeously, the parties who may bring such an application. Lastly he submitted that an application would only succeed if the court thought it just and equitable to set aside the resolution and bring the business rescue process to an end. [7] In this case the Trust had not purported to bring an application in terms of s 130(1). The time for bringing such an application had passed before the Trust sought to challenge the validity of the resolution, and its locus standi to bring such an application was doubtful. Furthermore, it would not have been just and equitable in the light of the facts relating to the business rescue proceedings for a court to have granted such an order Those facts included the numerous attempts by the Nels to stultify those proceedings and the considerable financial prejudice, both actual and contingent, to Mr van der Merwe and potentially to creditors, that would ensue from terminating the business rescue. Accordingly he submitted that the application should have been dismissed. [8] A resolution of these issues requires a consideration of the relevant provisions of ss 129 and 130 of the Act. But first it is necessary to place them in their proper setting in the Act. Business rescue is a process aimed at avoiding the liquidation of a company if it is feasible to do so. There are two routes through which a company may enter business rescue, namely, by way of a resolution of its board of directors (s 129(1)) or by way of a court order (s 131(1)). We are concerned with the former. [9] Under s 129(1) the board of a company may resolve to begin business rescue proceedings if it has reasonable grounds for believing that the company is financially distressed3 and there appears to be a reasonable prospect of rescuing the company. Such a resolution may not be adopted if liquidation proceedings have been initiated against the company.4 Once a resolution is taken it only becomes effective when it is filed with the Companies and Intellectual Property Commission, Republic of South Africa (CIPCSA). 3 Defined in s 128(f) in the following terms: ‗―financially distressed‖, in reference to a particular company at any particular time, means that— (i) it appears to be reasonably unlikely that the company will be able to pay all of its debts as they become due and payable within the immediately ensuing six months; or (ii) it appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months;‘ 4 Section 129(2)(a). [10] After the resolution has been filed with CIPCSA the company is obliged to take certain steps. They are set out in ss 129(3) and (4) of the Act.5 It is common cause that in this case there was a degree of non- compliance with these provisions. Thus, the statutory notice sent to creditors of Panamo was not accompanied by a sworn statement of the facts relevant to the grounds on which the board resolution was founded; Mr van der Merwe was not appointed within the prescribed time period; and, the notice of his appointment was not published to all affected parties. These are the shortcomings on which the Nels based their application. [11] Before examining s 129(5), on which the court below based its judgment, it is worth noting that s 130 expressly deals with objections to a company resolution to begin business rescue. Its provisions relevant to this case read as follows: ‗(1) Subject to subsection (2), at any time after the adoption of a resolution in terms of section 129, until the adoption of a business rescue plan in terms of section 152, an affected person may apply to a court for an order— (a) setting aside the resolution, on the grounds that— (i) there is no reasonable basis for believing that the company is financially distressed; 5 These provide as follows: ‗(3) Within five business days after a company has adopted and filed a resolution, as contemplated in subsection (1), or such longer time as the Commission, on application by the company, may allow, the company must— (a) publish a notice of the resolution, and its effective date, in the prescribed manner to every affected person, including with the notice a sworn statement of the facts relevant to the grounds on which the board resolution was founded; and (b) appoint a business rescue practitioner who satisfies the requirements of section 138, and who has consented in writing to accept the appointment. (4) After appointing a practitioner as required by subsection (3)(b), a company must— (a) file a notice of the appointment of a practitioner within two business days after making the appointment; and (b) publish a copy of the notice of appointment to each affected person within five business days after the notice was filed.‘ (ii) there is no reasonable prospect for rescuing the company; or (iii) the company has failed to satisfy the procedural requirements set out in section 129; … (2) An affected person who, as a director of a company, voted in favour of a resolution contemplated in section 129 may not apply to a court in terms of— (a) subsection (1)(a) to set aside that resolution; or (b) … unless that person satisfies the court that the person, in supporting the resolution, acted in good faith on the basis of information that has subsequently been found to be false or misleading.‘ [12] Some aspects of this section are worth highlighting. Firstly, it provides in s 130(1) for three grounds upon which an application to set aside the resolution may be brought. The first two are that the grounds for passing such a resolution set out in s 129(1) are absent, and the third is that the procedural requirements of s 129 have not been observed. In other words, the first two bases for challenging a resolution mirror the grounds for passing the resolution set out in s 129(1), and the third raises the issue of non-compliance with the obligations imposed on the company by s 129 consequent upon passing the resolution and filing it with CIPCSA. That seems sensible. If the grounds for passing such a resolution are not present then it is appropriate to have a mechanism for setting it aside. If the procedural requirements to be followed once a resolution has been passed and filed with CIPCSA are not followed, that may indicate that there is no genuine intention to follow the process through to a successful conclusion and it is appropriate for there to be a mechanism to set it aside. [13] Secondly, the time for bringing such an application is restricted. An application to set aside the resolution may be brought at any time after the date of adoption of the resolution but, once a business rescue plan has been adopted, the time for challenging a resolution is past. Whatever flaws may have been present before that time become of purely historical importance thereafter. [14] Thirdly, some people are excluded from the ranks of those who are entitled to bring a challenge to a resolution and seek to have it set aside. A director of the company who voted in favour of such a resolution is precluded from bringing such an application, unless they can show that in doing so they acted in good faith on information furnished to them that was false or misleading. In other words there is no room for a director simply to have a change of heart in the light of altered circumstances. A director who opposed the resolution is not so restricted, whether they bring the application as a shareholder or as a creditor. No doubt that is why the resolution can be challenged at any time after it is first passed, even if it has not yet been filed with CIPCSA. A dissentient director may immediately challenge the resolution and argue that there is no reasonable ground for believing that the company is financially distressed or, if it is, that there is no reasonable prospect of rescuing it. In addition the section clearly contemplates that such a director, or any other affected person, may bring such an application on the basis that there has been non- compliance with the procedural requirements of s 129. That fact immediately indicates that the lapsing and nullity arising from such non- compliance may be less than absolute. [15] These points are pertinent because the application by the Trust, directed at setting aside the resolution, sidestepped two of these constraints. First, it was brought after the adoption of the business rescue plan, which would not be permissible in an application under s 130. Second, in substance, if not form, Mr and Mrs Nel, the persons who, as the directors of Panamo, passed the resolution to place it under business rescue, brought the application. They would not have been entitled to bring an application under s 130 and it is an open question whether s 130(2) would permit them to do so by making the Trust the applicant rather than themselves.6 However, if they were permitted to do so, that would clearly be contrary to the underlying purpose of s 130(2), which is that those responsible for placing the company in business rescue should not be entitled to challenge that decision merely because they have changed their minds, much less because it suits their private interests to do so. Assuming that they could nonetheless bring an application, this is undoubtedly a factor that would have weighed heavily with a court faced with such an application, in considering what was just and equitable under s 130(5)(a)(ii). [16] The Trust argued that it was not obliged to follow the route of an application to court under s 130(1)(a)(iii), because such a challenge was unnecessary in the light of s 129(5)(a), which reads as follows: ‗(5) If a company fails to comply with any provision of subsection (3) or (4)— (a) its resolution to begin business rescue proceedings and place the company under supervision lapses and is a nullity …‘ It contended that the effect of its non-compliance with the provisions of sub-sections (3) and (4) of s 129 was that the resolution commencing business rescue in relation to Panamo lapsed and became a nullity, 6 The problem is not confined to trusts. If the only shareholder of a company was itself a company, which appointed its own shareholders and directors as the directors of the subsidiary, it would seem contrary to the purpose of s 130(2) to permit the company, represented by the same individuals, to bring an application to set the resolution aside. thereby bringing the business rescue proceedings to an end. This was so irrespective of the fact that the non-compliance flowed from the Trust‘s own failures to comply with these requirements and without any need to invoke the provisions of s 130. [17] Arguments such as those raised in this case have featured in a number of decisions of the various divisions of the High Court. The first of these appears to be Advanced Technologies and Engineering Company (Pty) Ltd v Aeronautique et Technologies Embarquées SAS,7 where Fabricius J concluded that: ‗It is clear from the relevant sections contained in chapter 6 that a substantial degree of urgency is envisaged once a company has decided to adopt the resolution beginning rescue proceedings. The purpose of s 129(5) is very plain and blunt. There can be no argument that substantial compliance can ever be sufficient in the given context. If there is non-compliance with s 129(3) or (4) the relevant resolution lapses and is a nullity. There is no other way out, and no question of any condonation or argument pertaining to ''substantial compliance‖.‘ Although he did not say so expressly, the learned judge appears to have been of the view that an inevitable consequence of the resolution having lapsed would be that the business rescue process would terminate. [18] This approach has been followed in several other cases including the present one. It has not, however, been universally accepted. In Ex 7 Advanced Technologies and Engineering Company (Pty) Ltd v Aeronautique et Technologies Embarquées SAS (GNP case no 72522/11). The decision was followed in Madodza (Pty) Ltd (in business rescue) v ABSA Bank Ltd (GNP Case 38906/12), Homez Trailers and Bodies (Pty) Ltd (under supervision) v Standard Bank of South Africa Ltd (GNP case no 35201/2013) and ABSA Bank Ltd v Ikageng Construction (Pty) Ltd (GNP Case no 61235/2014). In Newton Global Trading (Pty) Ltd v Corte [2014] ZAGPPHC 628 para 12 it was held that the nullity dates back to the date of the original resolution and could not be remedied by a further resolution. Parte Van den Steen NO,8 Rautenbach AJ held that Fabricius J was dealing only with non-compliance with time limits in regard to the appointment of a business rescue practitioner and not to other aspects of sub-sections (3) and (4). He accordingly held that, where there had been substantial compliance with those provisions, s 129(5) did not operate to nullify the resolution. In ABSA Bank v Caine NO9 Daffue J pointed out that Fabricius J had not given consideration to the provisions of s 130(1)(a)(iii) and that his construction led to anomalies as between s 129 and s 130. [19] The observation by Daffue J is undoubtedly correct. It finds an echo in the following passage from Henochsberg, where the author identified the very type of problem that has arisen in the present case:10 ‗The practical consequences of the resolution that ―lapses and is a nullity‖ are uncertain … From the wording of the section it would appear that the resolution lapses and becomes a nullity automatically, without any intervention from outside parties. From a practical perspective this could create a number of problems, especially if this has been done intentionally by the company in order to gain the protection of Chapter 6 for a brief period of time, only to exit the procedure due to the resolution lapsing and becoming a nullity at a later date. This could also have unintended consequences where non-compliance with the notice and publication requirements have been minor and unintentional … It is not clear whether non- compliance in such circumstances means that the business rescue process lapses and 8 Ex Parte Van den Steen NO (Credit Suisse Group AG Intervening) 2014 (6) SA 29 (GJ). Also MAN Financial Services SA (Pty) Ltd v Blouwater Boerdery CC (GNP case no 72522/2012). 9 ABSA Bank Ltd v Caine NO, In Re: Absa Bank Ltd v Caine NO [2014] ZAFSHC 46 paras 24 to 26. To similar effect was Vincemus Investments (Pty) Ltd v Louhen Carriers CC 2013 JDR 0881 (GNP), when the proceedings were adjourned, but on the adjourned date the approach in Advanced Technologies was followed. See Vincemus Investments (Pty) Ltd v Louhen Carriers CC (GNP case no 16550/2013 dated 5 November 2013). 10 Piet Delport and Quintus Vorster (authors) with other contributors Henochsberg on the Companies Act 71 of 2008 (looseleaf, Issue 9) at 461. becomes a nullity, even if the business rescue plan has already been adopted and is in the process of being implemented.‘ As regards the relationship between s 129(5)(a) and s 130(1)(a)(iii) the author comments11 that: ‗It is difficult to align the apparent automatic lapsing of a business rescue resolution under the provisions of s 129(5) with this provision [ie with s 130(1)(a)(iii)]‘. [20] The approach of Fabricius J appears to leave no room for the operation of s 130(1)(a)(iii). There is no point in bringing an application to set aside a resolution on the grounds of non-compliance with the procedural requirements of s 129 if that resolution has already lapsed and been rendered a nullity and the process of business rescue has, as a result, come to an end. In order to address this problem counsel submitted that s 129(5)(a) deals with non-compliance with the requirements of ss 129(3) and (4), while s 130(1)(a)(iii) operates in respect of non-compliance with other procedural requirements in s 129. [21] I do not accept this argument for the simple reason that I do not think that the expression ‗procedural requirements‘ in s 130(1)(a)(iii) extends to any matter beyond the steps set out in ss 129(3) and (4). The phrase ‗procedural requirements‘ must refer to obligations of an administrative or procedural nature imposed upon the company. The steps that have to be taken under ss 129(3) and (4) fall naturally in this category. But counsel submitted that it extended to the need in terms of s 129(1) for a resolution of the board of the company to commence business rescue as well as to the filing of the resolution with CIPCSA in 11 Henochsberg, supra, at 462(4). terms of s 129(2) that is a prerequisite for the resolution to take effect and business rescue to commence. [22] Counsel derived support for the first submission from D H Brothers,12 where a resolution to commence business rescue was passed without the board of directors being properly constituted. The court said that this amounted to a failure to comply with the procedural requirements of s 129(1) of the Act. In my view that was incorrect. The consequence of the board not having been properly constituted, (which was not what occurred in the present case), would be that the resolution was not a resolution of the board of directors. As such it was a nullity and ineffective for the purpose of commencing business rescue proceedings. Equally, in the absence of such a resolution, there was nothing to set aside in terms of s 130(1)(a)(iii). The court in D H Brothers could and should have made a declaration to that effect, but in doing so it would not have been acting in terms of s 130(1)(a)(iii). [23] The passing of a resolution to commence business rescue cannot readily be described as a procedural requirement. It is merely the substantive means by which the company may take that step. The board is under no obligation at all to take such a resolution, although, if it is financially distressed, it may be obliged to inform shareholders and creditors of the reasons for not doing so (s 129(7)). It cannot then be described as a ‗requirement‘, much less a procedural requirement. The other suggestion by counsel, that filing the resolution with CIPCSA is a procedural requirement non-compliance with which may support an application in terms of s 130(1)(a)(iii), suffers from a similar flaw. If the 12 DH Brothers Industries (Pty) Ltd v Gribnitz NO 2014 (1) SA 103 (KZP) para 16. board passes a resolution, but it is not filed with CIPCSA, then business rescue does not commence and the resolution is ineffective for any purpose. No point would be served in setting it aside. [24] There are no other procedural requirements in s 129 in relation to which a circumscribed s 130(1)(a)(iii) could operate and none were suggested to us. The obvious and sensible meaning of the expression ‗procedural requirements‘ in s 130(1)(a)(iii) is that it refers to the procedural requirements in ss 129(3) and (4). But, if the resolution lapses and becomes a nullity in consequence of such non-compliance, and this brings an end to the business rescue process, as has been held in the High Court judgments mentioned above, no purpose would be served by a provision that empowered a court to set it aside. [25] The language of s 129(5)(a) at first reading may suggest that there is an absolute and immediate nullity of the resolution if there is non- compliance with the requirements of ss 129(3) and (4). How then is a court to deal with the anomaly that such a reading appears to create? In my view the problem falls to be solved by having regard to certain basic principles of statutory interpretation. [26] In Endumeni13 I ventured to summarise the current approach to statutory interpretation in the following way: ‗Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. 13 Natal Joint Municipal Pension Fund v Endumeni Municipality [2013] ZASCA 13; 2012 (4) SA 593 (SCA); [2012] 2All SA 262 9SCA0 para [18]. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective, not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation; in a contractual context it is to make a contract for the parties other than the one they in fact made. The ―inevitable point of departure is the language of the provision itself‖, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.‘ [27] When a problem such as the present one arises the court must consider whether there is a sensible interpretation that can be given to the relevant provisions that will avoid anomalies. In doing so certain well- established principles of construction apply. The first is that the court will endeavour to give a meaning to every word and every section in the statute and not lightly construe any provision as having no practical effect.14 The second and most relevant for present purposes is that if the provisions of the statute that appear to conflict with one another are capable of being reconciled then they should be reconciled.15 Is it then possible to reconcile s 129(5)(a) and s 130(1)(a)(iii)? In my view it is possible without doing damage to the language used by the legislature. 14 Attorney-General, Transvaal v Additional Magistrate for Johannesburg 1924 AD 421 at 436; Commissioner for Inland Revenue v Shell Southern Africa Pension Fund 1984 (1) SA 672 (A) at 678C - F 15 Minister of Interior v Estate Roos 1956 (2) SA 266 (A) at 271B-C; Amalgamated Packaging Industries Ltd v Hutt 1975 (4) SA 943 (A) at 949H. [28] It is helpful to start with what the Act says about the termination of business rescue proceedings. The relevant provision for present purposes is s 132(2)(a)(i), which provides that business rescue proceedings end when the court sets aside the resolution that commenced those proceedings. In other words, when a court grants an order in terms of s 130(5)(a) of the Act, the effect of that order is not merely to set the resolution aside, but to terminate the business rescue proceedings. A fortiori it follows that until that has occurred, even if the business rescue resolution has lapsed and become a nullity in terms of s 129(5)(a), the business rescue commenced by that resolution has not terminated.16 Business rescue will only be terminated when the court sets the resolution aside. The assumption underpinning the various high court judgments to the effect that the lapsing of the resolution terminates the business rescue process is inconsistent with the specific provisions of the Act. None of those judgments referred to s 132(2)(a)(i). [29] Once it is appreciated that the fact that non-compliance with the procedural requirements of s 129(3) and (4) might cause the resolution to lapse and become a nullity, but does not terminate the business rescue, the legislative scheme of these sections becomes clear. The company may initiate business rescue by way of a resolution of its board of directors that is filed with CIPCSA. The resolution, and the process of business rescue that it commenced, may be challenged at any time after the resolution was passed and before a business rescue plan is adopted on the grounds that the preconditions for the passing of such resolution are not 16 The distinction between the resolution having lapsed and the business rescue proceedings having ended appears to be recognised in s 129(6), although that section may itself give rise to some practical difficulties that do not arise here and can be left for another occasion. present.17 If there is non-compliance with the procedures to be followed once business rescue commences, the resolution lapses and becomes a nullity and is liable to be set aside under s 130(1)(a)(iii). In all cases the court must be approached for the resolution to be set aside and business rescue to terminate. That avoids the absurdity that would otherwise arise of trivial non-compliance with a time period, eg the appointment of the business rescue practitioner one day late as a result of the failure by CIPCSA to licence the practitioner timeously in terms of s 138(2) of the Act, bringing about the termination of the business rescue, but genuine issues of whether the company is in financial distress or capable of being rescued having to be determined by the court. There is no rational reason for such a distinction. [30] The reason for wanting consistency, in all instances where the question of setting aside a resolution to commence business rescue arises, is apparent from s 130(5)(a) of the Act. That section deals with the circumstances in which the court may set aside a resolution and reads as follows: ‗(5) When considering an application in terms of subsection (1) (a) to set aside the company‘s resolution, the court may— (a) set aside the resolution— (i) on any grounds set out in subsection (1); or (ii) if, having regard to all of the evidence, the court considers that it is otherwise just and equitable to do so.‘ [31] It has been suggested that the effect of the inclusion of sub-para (ii) in this section is to introduce a fourth ground for setting aside a resolution 17 The language of ss 130(1)(a)(i) and (ii) suggests that the time when the preconditions are not present is when the application is brought, but I refrain from deciding that point as it is unnecessary to do so. to commence business rescue in addition to those set out in s 130(1)(a).18 I do not think that is correct. This appears to me to be yet another case in a long line, commencing with Barlin,19 in which the legislation uses the disjunctive word ‗or‘, where the provisions are to be read conjunctively and the word ‗and‘ would have been more appropriate.20 Where to give the word ‗or‘ a disjunctive meaning would lead to inconsistency between the two subsections it is appropriate to read it conjunctively as if it were ‗and‘. This has the effect of reconciling s 130(1)(a) and s 130(5)(a) and limiting the grounds upon which an application to set aside a resolution can be brought, whilst conferring on the court in all instances a discretion, to be exercised on the grounds of justice and equity in the light of all the evidence, as to whether the resolution should be set aside. [32] Insofar as it may be suggested that the use of the word ‗otherwise‘ in s 130(5)(a)(ii) points in favour of this furnishing a separate substantive ground for setting aside the resolution I do not agree. In my view the word is used in this context to convey that, over and above establishing one or more of the grounds set out in s 130(1)(a), the court needs to be satisfied that in the light of all the facts it is just and equitable to set the resolution aside and terminate the business rescue. It is not being used in contradistinction to the statutory grounds, but as additional thereto. This is consistent with the meaning ‗with regard to other points‘ given in the Oxford English Dictionary.21 18 DH Brothers Industries (Pty) Ltd v Gribnitz NO supra para 18. 19 Barlin v Licencing Court for the Cape 1924 AD 472 at 478. 20 Ngcobo v Salimba CC; Ngcobo v Van Rensburg 1999 (2) SA 1057 (SCA) para 11; SATAWU v Garvas 2013 (1) SA 83 (CC) para 143; S v Sengama 2013 (2) SACR 377 (SCA). 21 OED 2nd ed, (1989) Vol X at 985, sv ‗otherwise‘ (meaning 3). [33] So construed the different sections are not only harmonious but also sensible and practical in their application. Under s 129 the company initiates the business rescue process and takes the procedural steps that must be followed. Under s 130 an affected person, excluding, save in special circumstances, a director who voted in favour of the resolution, may, during the period from the date of the resolution until the date of acceptance of a business rescue plan, apply to set the resolution aside either on substantive or procedural grounds. Such an application is made to court and the applicant must not only establish the statutory grounds, but also satisfy the court that it is just and equitable that the resolution be set aside. If the court grants such an order that brings the business rescue to an end. [34] One further point in favour of this approach is that it largely precludes litigants, whether shareholders and directors of the company or creditors, from exploiting technical issues in order to subvert the business rescue process or turn it to their own advantage. Once it is recognised that the resolution may be set aside and the business rescue terminated if that is just and equitable, the scope for raising technical grounds to avoid business rescue will be markedly restricted even if it does not vanish altogether. That result is consistent with the injunction in s 5 of the Act that its provisions be interpreted in such a manner as to give effect to the purposes set out in s 7, one of which, as I said at the outset, is to provide for the efficient rescue and recovery of financially distressed companies in a manner that balances the rights and interests of all relevant stakeholders. [35] For those reasons I am of the opinion that the high court erred in its approach and should have dismissed the application. Accordingly the following order is made: The appeal is upheld with costs. Paragraphs 2 and 3 of the order of the court below are set aside and replaced by the following: ‗The application is dismissed.‘ Paragraph 4 of the order of the court below is renumbered as paragraph 3. The order granted on the counter application is set aside. M J D WALLIS JUDGE OF APPEAL Appearances For appellants: B M Gilbert Instructed by: Hogan-Lovells South Africa incorporated as Routledge Modise Inc, Sandton. Lovius Block, Bloemfontein For respondent: J Vorster Instructed by: Magda Kets Inc, Pretoria; Du Plooy Attorneys, Bloemfontein.

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 27 May 2015 Status: Immediate 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. Panamo Properties (Pty ) ltd v Nel and another NNO The Supreme Court of Appeal has today handed down a judgment in which it clarifies certain controversial provisions of the Companies Act 71 of 2008 (the Act) dealing with business rescue proceedings. In a number of cases heard in the various divisions of the high court it has been held that where a company is placed in business rescue pursuant to a resolution of its board of directors, but thereafter fails to comply with the procedural requirements in s 129 of the Act, the effect is to cause the business rescue proceedings to terminate. The reason for this was said to flow from the provisions of s 129(5) of the Act, which provide that such non-compliance with procedural formality results in the resolution placing the company under business rescue lapsing and becoming a nullity. Panamo Property’s sole shareholder was a trust the trustees of which were Mr and Mrs Nel. They were also the directors of the company who took the resolution to commence business rescue. That was intended to avoid the company’s property being sold pursuant to a judgment against it by a financial institution. The Nels co-operated with the process of business rescue as they hoped to find alternative sources of finance to discharge the company’s debt. A business rescue plan was duly approved, but no further funds were forthcoming and the business rescue practitioner sold the property in accordance with the business rescue plan. When it was about to be transferred to the purchaser the present proceedings were brought by the trust. It alleged that it had not complied with the procedural requirements laid down in s 129 of the Act and as a result the entire business rescue process was a nullity. That argument had been upheld in the high court. The SCA pointed out in a unanimous judgment that the termination of business rescue proceedings is specifically dealt with in s 132(2) of the Act. That provision does not say that the lapsing of the initiating resolution will cause the business rescue to terminate. Instead it says in s 132(2)(a)(i) that business rescue is terminated when the court sets the initiating resolution aside. This focuses on the provisions of s 130 of the Act, which provide for an affected party to apply to court for the initiating resolution to be set aside in certain circumstances, including non-compliance with the procedural requirements of s 129. In addition the court will only grant an order setting aside the initiating resolution if it is satisfied on a consideration of all the circumstances that it is just and equitable to do so. The court pointed out that this approach to the construction of the relevant sections would prevent business rescue proceedings from being stultified by creditors or those who stand behind the company, in the form of its shareholders and directors, on the basis of technical arguments that undercut the basic purpose of business rescue.

3033

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 20567/2014 In the matter between: THE NATIONAL TREASURY FIRST APPELLANT OR TAMBO DISTRICT MUNICIPALITY SECOND APPELLANT and PUMLANI KUBUKELI RESPONDENT Neutral citation: The National Treasury v Kubukeli (20567/2014) [2015] ZASCA 141 (30 September 2015). Coram: Mpati P, Mhlantla, Majiedt and Saldulker JJA and Van der Merwe AJA Heard: 4 September 2015 Delivered: 30 September 2015 Summary: Constitutional law ─ rational decision-making under the rule of law ─ investigation by the first appellant of the financial management and internal control of the second appellant and recommendations in respect of improvements thereto without participation of the respondent ─ founded on reason and not arbitrary. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Eastern Cape Local Division of the High Court, Mthatha (Nhlangulela ADJP sitting as court of first instance): 1 The appeal is upheld. 2 There is no order as to costs of the appeal. 3 The order of the court a quo is set aside and replaced with the following: „The application is dismissed.‟ ______________________________________________________________ JUDGMENT ______________________________________________________________ Van der Merwe AJA (Mpati P, Mhlantla, Majiedt and Saldulker JJA concurring): [1] On 18 January 2013 the Daily Dispatch, an Eastern Cape newspaper, carried an article containing allegations of financial irregularities in respect of the hiring of motor vehicles by the executive mayor of the second appellant, the OR Tambo District Municipality (the municipality). The material allegations in the newspaper article were that within a period of two months from approximately 4 October 2012 to 5 December 2012, the office of the executive mayor hired luxury motor vehicles from Avis at an expense of approximately R500 000 and that whilst so hired, two of these vehicles were involved in accidents, resulting in liability for the municipality in the amount of R 224 827.70. [2] In the light hereof, the council of the municipality resolved on 30 April 2013 to request the first appellant, the National Treasury, to conduct an in- depth forensic investigation into these allegations within 30 days. The municipal manager conveyed this request to the National Treasury by letter dated 3 May 2013. [3] In response to the request, the National Treasury mandated a team of investigators (the Treasury team) to conduct the in-depth investigation within the period 6 May 2013 to 7 June 2013. On 10 May 2013 the Treasury team provided the municipal manager and the speaker of the municipality with its investigation plan. In terms of the investigation plan it was envisaged that interviews would be conducted on 15, 16 and 17 May 2013. It was agreed that the municipal manager and the speaker would write to the executive mayor and the staff in his office to notify them of the investigation and to request them to make themselves available for interviews. The office of the executive mayor is headed by a director, Mr A M Ncube. [4] The respondent, Mr Pumlani Kubukeli, is employed by the municipality in the office of the executive mayor, as the latter‟s bodyguard. The issue in this appeal is whether Mr Kubukeli was denied a right to make representations to the Treasury team. The issue arose in the following manner. [5] On 14 May 2013 the municipal manager wrote to Mr Ncube informing him of the investigation by the National Treasury and requesting him to ensure his availability and that of all key officials in the office of the executive mayor, including the political advisor of the executive mayor and Mr Kubukeli, for interviews which were scheduled for 16 May 2013. Mr Ncube handed the letter to the political advisor of the executive mayor on 15 May 2013. The speaker also had, on the previous day, given written notice of the investigation to the executive mayor and had requested him to co-operate and avail himself and all the officials who were expected to attend, for the interviews. [6] The political advisor responded on behalf of the executive mayor by way of a memorandum dated 15 May 2013. He complained that the office of the executive mayor had not been informed of the council resolution to request the investigation which, he said, „. . . may at times infringe, or border on infringing on basic rights‟ of the executive mayor and all individuals who work in his office. He stated that the executive mayor had instructed him to initiate a process to gather information on the subject and that the process would commence with a meeting of all staff of the office of the executive mayor on 27 May 2013. He also stated that the surprise visit by the National Treasury was premature and interfered with this process. He concluded that the notice of the investigation by the National Treasury was inadequate for the executive mayor and the officials sought to be interviewed to prepare their submissions. The political advisor requested that the investigation be rescheduled to 1 July 2013. It was thus made clear in the memorandum that the executive mayor and the officials in his office would not participate in the investigation on 15 to 17 May 2013. This was conveyed verbally to Mr Ncube by the political advisor on the morning of 16 May 2013. It must be said, however, that Mr Ncube availed himself and was interviewed by the Treasury team. [7] The Treasury team nevertheless continued with the investigation and compiled a report dated 31 May 2013. Only the executive summary thereof formed part of the record before us. The report recorded that the methodology of the investigation was mainly to interview the administrative officials of the municipality and the relevant service providers. It also stated that due to the stance taken by the political advisor in his memorandum of 15 May 2013 and the resultant unavailability of the executive mayor as well as certain officials, the Treasury team „. . . could not obtain information for clarification of certain findings‟. [8] In respect of corporate governance issues, the Treasury team reported that it viewed the current situation in the municipality to be in contravention of the fiduciary responsibilities of the accounting officer, the municipal manager, as there was no administrative accountability by the office of the executive mayor to the office of the municipal manager. The Treasury team found that financial management governance was not adhered to within the office of the executive mayor. It concluded that the municipality contravened s 63(1) and (2) of the Local Government: Municipal Finance Management Act 50 of 2003 (MFMA) in that vehicles were not properly maintained, accounted for and safeguarded. [9] In respect of Mr Kubukeli, the report contained the following: „7.14.2 We also observed that when the VIP Protector of the Executive Mayor, Mr Kubukeli, was the driver of the hired vehicles the cost for a period of about 5 months was R573 073.34. 7.14.3 We observed that during the period under our investigation the hired vehicle cost of 2 months, when Mr Kubukeli was the registered driver the cost amounted to R575 797,25. 7.14.4 It was established that the vehicle hiring costs of the Office of the Executive Mayor escalated significantly since Mr Kubukeli was reflected as the driver of the hired vehicles, according to the Avis reports as the overall hiring for 7 months were over a million. . . . 7.15.1 It is our conclusion that the cost for the damage to all the rented vehicles should be recovered from Mr Kubukeli as he was found to have been grossly negligent based on the Avis report. . . . 7.16.4 Mr Kubukeli failed to account for an amount of R8 000 paid to him as cash advance payment for fuel usage during the period under investigation.‟ [10] The Treasury team made the following recommendations: „9.1 The Municipal Manager should implement proper systems of control over the financial resources, and safeguarding of assets by the officials within the Office of the Executive Mayor. 9.2 The Municipal Manager should institute a disciplinary process against all officials that have been found in breach of the Legislation governing the Municipality, policies and processes. 9.3 All losses incurred due to the negligence of the officials should be recovered from the officials concerned by the Municipal Manager. 9.4 The Municipality needs to provide for the contingent liability emanating from the damage of the third party vehicle (Mrs Madiba) involved in the accident with Mr Kubukeli on 7 October 2012. 9.5 The Municipality should comply with its own policy and procedures in relation to the disposal of the redundant assets. 9.6 The Council should investigate the conduct of the Executive Mayor and should any breach of the Code of Conduct be established then discipline the Executive Mayor, failing which; 9.7 It is further recommended that, the Member of the Executive Council (“MEC”) for Local Government should invoke section 106 of the Municipal Systems Act.‟ This section in essence provides that if there is reason to believe that non- performance by or maladministration of a municipality occurred or is occurring, the MEC must request information in respect thereof from the municipality or designate a person or persons to investigate the matter. [11] The report was presented to the council of the municipality at an „in committee‟ meeting on 7 June 2013. At this meeting the council merely noted the report. At a special meeting held on 14 June 2013, the council adopted the report and its recommendations. It mandated the municipal manager to implement the recommendations in respect of the disciplinary proceedings within 30 days. It also appointed a special committee to investigate the conduct of the executive mayor in terms of recommendation 9.6 of the National Treasury report. [12] Mr Kubukeli maintained that he received no notice whatsoever of the request of the Treasury team to avail himself for an interview. He said that he only became aware of the investigation when the report of the Treasury team was presented to the council. There is a dispute of fact on the question whether Mr Kubukeli attended any of the relevant meetings of the council. However, it is not necessary to attempt to resolve this dispute, as counsel for both the National Treasury and the municipality were content to argue the appeal on the basis that Mr Kubukeli did not receive notice of the request for an interview. [13] On 12 June 2013 Mr Kubukeli launched an application in the Eastern Cape Local Division of the High Court, Mthatha. He did not challenge any decision of the National Treasury or the municipality. He sought an order; (a) that the investigations conducted by the Treasury team against him without his participation, „. . . be declared unlawful, unprocedural and unconstitutional‟ and (b) that the report of the Treasury team be declared unlawful and unconstitutional and accordingly set aside as a nullity. Despite opposition by the National Treasury and the municipality, the court a quo (Nhlangulela ADJP) granted the relief claimed. The court a quo reasoned that the investigation and the report of the National Treasury constituted administrative action within the meaning of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and had to be set aside on review on the ground that Mr Kubukeli had been denied the right to make representations in circumstances where the report had impacted adversely on Mr Kubukeli‟s „right . . . to his reputation and employment‟. It granted leave to appeal to this court. [14] The founding affidavit of Mr Kubukeli was not a model of clarity. It contained several passages in which reliance was placed on an alleged infringement of his right to just and fair administrative action. But on a reading of the founding affidavit, it must be accepted that he also relied on an alleged breach of the rule of law. In the replying affidavit Mr Kubukeli specifically disavowed any reliance on PAJA and stated that his application is founded on the provisions of s 1(c) of the Constitution, which provide that the rule of law is a founding value of our democracy. This was confirmed before us by counsel for Mr Kubukeli, who argued that the Treasury team could not have complied with the notion of rationality without affording Mr Kubukeli an opportunity to be heard. In view hereof the court a quo misconceived the nature of the enquiry and erred in finding for Mr Kubukeli on the basis of procedural unfairness in terms of PAJA. I should add that it was in any event inappropriate to set aside the investigation that had been completed and resulted in the report. [15] In Pharmaceutical Manufacturers Association of SA & another: In Re Ex Parte President of the Republic of South Africa & others 2000 (2) SA 674 (CC) para 85 Chaskalson P said the following: „It is a requirement of the rule of law that the exercise of public power by the Executive and other functionaries should not be arbitrary. Decisions must be rationally related to the purpose for which the power was given, otherwise they are in effect arbitrary and inconsistent with this requirement. It follows that in order to pass constitutional scrutiny the exercise of public power by the Executive and other functionaries must, at least, comply with this requirement. If it does not, it falls short of the standards demanded by our Constitution for such action.‟ (Footnote omitted.) See also Masetlha v President of the Republic of South Africa & another 2008 (1) SA 566 (CC) para 80-81. [16] There is no general duty on decision-makers to consult interested parties for a decision to be rational under the rule of law. See Minister of Home Affairs & others v Scalabrini Centre & others 2013 (6) SA 421 (SCA) para 67 and 72. But there are circumstances in which rational decision- making requires consultation with interested parties. The cases of Albutt v Centre for the Study of Violence and Reconciliation & others 2010 (3) SA 293 (CC) and Scalabrini provide instances hereof. [17] In Albutt, the President announced a special dispensation for applicants for pardon who claimed that they were convicted of offences that were politically motivated. What was in issue there was whether the decision to exclude the victims of these crimes from participating in the special dispensation process, was irrational. Ngcobo CJ confirmed that under the rule of law the test to be applied was whether the President‟s decision to undertake the process without affording the victims the opportunity to be heard, was rationally related to the achievement of the objectives of the process. If not, the decision could not pass constitutional muster. The court held that the objectives of the special dispensation process were nation- building and national reconciliation. It found that the participation of victims was crucial and fundamental to these twin objectives. The court therefore concluded that it could not be said that the exclusion of the victims from the special dispensation process for pardon was rationally related to the achievement of its objectives. In addition, the court held that in his address announcing the special dispensation, the President recognised that victim participation was the only rational means to contribute towards national reconciliation and national unity. Subsequent disregard of victim participation without any explanation, so the court held, was therefore irrational. [18] In Scalabrini, the director-general of the Department of Home Affairs took a decision to close a refugee reception office in Cape Town. The purpose of the office was to receive, process and determine applications for asylum. The decision was challenged on review as irrational for want of consultation with interested parties. After quoting the aforesaid paragraph in Pharmaceutical Manufacturers, Nugent JA described the nature of the enquiry in the following terms: „But an enquiry into rationality can be a slippery path that might easily take one inadvertently into assessing whether the decision was one the court considers to be reasonable. As appears from the passage above, rationality entails that the decision is founded upon reason ─ in contradistinction to one that is arbitrary ─ which is different to whether it was reasonably made. All that is required is a rational connection between the power being exercised and the decision, and a finding of objective irrationality will be rare.‟ (Footnote omitted.) [19] The director-general was pertinently aware that there were a number of organisations, including the Scalabrini Centre, with experience and special expertise in dealing with asylum seekers in Cape Town. A representative of the director-general had acknowledged the necessity for consultation with these organisations and had specifically undertaken to consult with them on any proposal to close the Cape Town office. Against this background, the court was driven to infer that the director-general‟s failure to hear what those organisations might have to say before deciding to close the Cape Town office, was not founded on reason and was arbitrary. [20] The judgment in Du Preez & another v Truth and Reconciliation Commission 1997 (3) SA 204 (A), to which we were referred by counsel for Mr Kubukeli and upon which the court below relied, stands in contrast to these decisions. The Truth and Reconciliation Commission (TRC) and its committees were established by the Promotion of National Unity and Reconciliation Act 34 of 1995. Section 30(2) of this Act provided that if during any investigation by or any hearing before the TRC or any of its committees, any person is implicated in a manner which may be to his or her detriment or the TRC or the committee contemplates making a decision which may be to the detriment of a person who has been so implicated, such person shall be afforded an opportunity to submit representations or to give evidence at the hearing before the TRC or the committee. For present purposes it suffices to deal with the case of the first appellant in Du Preez. The first appellant in fact did receive written notification that he would be implicated in evidence before the TRC‟s committee on human rights violations. However, the first appellant received the notice on Saturday, 13 April 1996, in respect of a hearing that would commence on Monday, 15 April 1996. The notice made reference to extremely serious allegations against the first appellant, but did so in very scant and vague terms. The question was whether the notice to the first appellant was reasonable and timeous and contained sufficient particulars to enable him to know what the case was all about. Corbett CJ found the answer to the question in the common law principle of natural justice, encapsulated in the maxim audi alteram partem. It was not in dispute that this principle was applicable in the circumstances of the case. The court found that in the circumstances the notice was neither reasonable nor timeous nor contained sufficient particularity. Du Preez therefore dealt with a fundamentally different issue, namely the content of an established right to be heard. [21] The English case of Re Pergamon Press Ltd [1970] 3 All ER 535 (CA), referred to in Du Preez, is to the same effect. There the inspectors appointed to conduct an investigation into the affairs of a company recognised the right of the directors of the company to a fair opportunity to be heard, but the directors wanted more. They sought access to transcripts of evidence and other documents and claimed the right to cross-examine witnesses. There too, the issue was the content of the admitted right of the directors to be heard and on this issue the court found for the inspectors. [22] Section 216 of the Constitution provides that national legislation must establish a national treasury. The National Treasury was accordingly established by s 5 of the Public Finance Management Act 1 of 1999. Section 2 of the MFMA provides that the object of the MFMA is to secure sound and sustainable management of the fiscal and financial affairs of municipalities and municipal entities. It seeks to achieve this object by establishing norms and standards and other requirements for, inter alia, ensuring transparency, accountability and appropriate lines of responsibility in the fiscal and financial affairs of municipalities and municipal entities and the management of their revenues, expenditures, assets and liabilities and the handling of their financial dealings. [23] In terms of s 5(1) of the MFMA the functions of the National Treasury include the promotion of the objects of the MFMA as stated in s 2 thereof. Section 5(2)(d) of the MFMA provides that in order to fulfil its functions, the National Treasury has the power to investigate any system of financial management and internal control in any municipality and to recommend improvements thereto. This is the power that the National Treasury exercised through the Treasury team. Thus, the question is whether on the particular facts of this case, the conducting of the investigation and the making of recommendations to the municipality without the participation of Mr Kubukeli, were rationally related to the purpose for which the power in s 5(2)(d) of the MFMA was given. [24] As I have said, the National Treasury exercised the public power to investigate any system of financial management and internal control of the municipality and to recommend improvements, with the object of securing sound and sustainable management of the fiscal and financial affairs of the municipality. The purpose for which the power was given was not to investigate the conduct of any particular person and to make final findings in respect thereof. What a particular person did or did not do, was incidental to the object of the power. It follows that the request that Mr Kubukeli and others attend interviews, did not constitute recognition of a right to be heard, but was intended to assist the National Treasury to achieve its purpose. The Treasury team was in no way to blame for the absence of that assistance. [25] Viewed objectively, the purpose for which the power was given, was achieved. The main import of the investigation and the report was to identify shortcomings in the financial management and internal control of the municipality and to recommend improvements thereto. Unlike the decisions in Albutt and Scalabrini, the National Treasury made no final or binding decision. The municipality was under no obligation to accept any of the recommendations. [26] Although some loose language may have been used in this regard, it is clear in the context of the report, that what was said in respect of Mr Kubukeli (and other officials) was in the nature of prima facie findings. These findings are clearly not binding on Mr Kubukeli and could be challenged in any subsequent proceedings. Paragraph 7.16.4 of the report must be seen in this light, namely that in the absence of an explanation by Mr Kubukeli the Treasury team found no record of account for the amount of R8 000 advanced to Mr Kubukeli. Most importantly, objectively it was beyond doubt that if the recommendations in respect of disciplinary proceedings or recovery of losses were to be implemented, the implementation would take place in terms of processes that would afford Mr Kubukeli a full opportunity to present his case. [27] I therefore conclude that the investigation, report and recommendations of the National Treasury without the participation of Mr Kubukeli, were founded on reason and were not arbitrary or irrational. It follows that the appeal must succeed. [28] Mr Kubukeli sought to assert what he bona fide perceived to be a constitutional right against organs of State. His litigation was neither frivolous nor vexatious. For the reasons set out in Biowatch Trust v Registrar, Genetic Resources & others 2009 (6) SA 232 para 23, the general rule in these circumstances is that if the private party loses, each party should bear its own costs. I can find no reason to depart from the general rule in this matter, both in respect of the costs of appeal and in the court below. [29] In the result the following order is issued: 1 The appeal is upheld. 2 There is no order as to costs of the appeal. 3 The order of the court a quo is set aside and replaced with the following: „The application is dismissed.‟ _______________________ C H G VAN DER MERWE ACTING JUDGE OF APPEAL APPEARANCES: For 1st Appellant: B R Tokota SC Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein For 2nd Appellant: V Notshe SC (with him L L Sambudla) Instructed by: Dayimani Sakhele Inc, Mthatha Eugene Attorney, Bloemfontein For Respondent: S Budlender Instructed by: Mvuzo Notyesi Inc, Mthatha Bokwa Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 September 2015 Status: Immediate THE NATIONAL TREASURY v KUBUKELI 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 1. On 18 January 2013 the Daily Despatch newspaper carried an article containing allegations of financial irregularities in the office of the executive mayor of the second appellant, the OR Tambo District Municipality (the municipality). In the light hereof, the council of the municipality requested the first appellant, the National Treasury, to conduct a forensic investigation into these allegations. The National Treasury mandated a team of investigators (the Treasury team) to conduct the investigation. The executive mayor was notified of the investigation and requested to make himself and the staff in his office available for interviews by the Treasury team. The respondent, Mr Kubukeli, is employed by the municipality in the office of the executive mayor, as the latter’s bodyguard. The political advisor of the executive mayor responded to the request on his behalf. He made it clear that the executive mayor and his staff would not participate in the investigation. 2. The Treasury team nevertheless continued with the investigation. It compiled a report containing recommendations to the municipality. The recommendations dealt mainly with improvements to the financial management and internal control of the municipality. The recommendations, however, included that disciplinary proceedings be instituted against Mr Kubukeli and that losses suffered by the municipality be recovered from him. 3. Mr Kubukeli maintained that he received no notice of the request for an interview. The National Treasury and the municipality accepted this assertion for purposes of argument. Mr Kubukeli launched an application in the Eastern Cape Local Division of the High Court, Mthatha in which he sought an order that the investigation of the Treasury team and its report be declared unlawful and unconstitutional and be set aside. The high court granted the order sought, but granted leave to appeal to the Supreme Court of Appeal (SCA). 4. Today the SCA upheld the appeal. The SCA held that the high court misconceived the nature of the enquiry and erred in granting the relief claimed by Mr Kubukeli. The enquiry was whether under the rule of law the conducting of the investigation and the making of recommendations to the municipality without the participation of Mr Kubukeli, were rationally related to the purpose for which these powers were given to the National Treasury. The SCA held that the investigation, report and recommendations of the National Treasury without the participation of Mr Kubukeli, were founded on reason and were not arbitrary or irrational. --ends--

1513

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT CASE NO: 300/07 CHARTAPROPS 16 (PTY) LTD First Appellant ADVANCED CLEANING SERVICES CC Second Appellant and MICHELLE SILBERMAN Respondent Neutral citation: Chartaprops 16 v Silberman (300/07) [2008] ZASCA 115 (25 September 2008) Coram: SCOTT, NUGENT, PONNAN and MAYA JJA and LEACH AJA Heard: 14 MAY 2008 Delivered: 25 SEPTEMBER 2008 Summary: Delict – hazard in shopping mall – liability for acts of independent contractor. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: High Court, Johannesburg (Boruchowitz J sitting as court of first instance) In the result: The appeal of the first appellant is upheld with costs. The appeal of the second appellant is dismissed with costs. The order of the court below is set aside and the following is substituted in its stead: ‘(a) The claim against the first defendant is dismissed with costs. (b) It is declared that the second defendant is liable to the plaintiff for such damages as might be agreed upon or proved in consequence of the event that is the subject of this claim. (c) The second defendant is ordered to pay the plaintiff’s costs.’ ________________________________________________________________ J U D G M E N T ________________________________________________________________ NUGENT JA [1] The respondent in this appeal – Mrs Silberman – visited a shopping mall in Johannesburg. In one of the passageways of the mall was a pool of slippery substance – what the substance was has not been established – that had been spilt on the floor. Oblivious to its presence Mrs Silberman slipped on the substance and was injured. The shopping mall was owned by and under the control of the first appellant – Chartaprops – which had contracted with the second appellant – Advanced Cleaning – to keep the floors of the shopping mall clean. Mrs Silberman sued both appellants in the High Court at Johannesburg for the recovery of her damages. The action was tried by Boruchuwitz J who held both appellants jointly and severally liable (the amount of the damages has yet to be determined) but granted them leave to appeal to this court. [2] Precisely how the substance came to be on the floor has not been established. It is possible that it was spilt by one of the cleaners but it might just as well have been spilt by a member of the public. The complaint against the appellants is not that they – or those for whose conduct they are legally responsible – created the hazard. The complaint is that they or their employees negligently omitted to detect and remove the hazard and that the respondents are liable for the consequences of the omission. [3] Advanced Cleaning had a system in place for cleaning the floors the details of which are not important. It is sufficient to say that every part of the floor should ordinarily have been passed over by one or other of the cleaners in the employ of Advanced Cleaning at intervals of no more than five minutes. I think it is clear that the system, if it was adhered to, was adequate to keep the floors in a reasonably safe condition. It is also not disputed that Chartaprops itself kept a regular check on the contractor’s performance. Its centre manager consulted each morning with the cleaning supervisor and personally inspected the floors of the shopping mall daily to ensure that they had been properly cleaned. If he encountered litter or a spillage he would arrange for its immediate removal. [4] But even the best systems sometimes fail. The learned judge in the court below found that the spillage had been on the floor for thirty minutes or more at the time it was encountered by Mrs Silberman. He said that that was ‘a sufficiently lengthy period so as to constitute a hazard to members of the public and to the plaintiff in particular’, that ‘the employees of [Advanced Cleaning] failed to take reasonable steps to detect and remove [the hazard]’, and that the cleaning system was accordingly ‘not sufficiently adequate to detect and remove spillages with reasonable promptitude.’ On that basis he concluded that Advanced Cleaning was negligent and was liable to Mrs Silberman for her damages and that Chartaprops was vicariously liable for the negligence of Advanced Cleaning. [5] The factual finding by the court below that the substance had been on the floor for thirty minutes or more at the time the incident occurred – a finding upon which the further conclusions was built – was placed in issue before us but I see no proper grounds to disturb that factual finding. The real questions that arise in this appeal relate rather to the consequences of that finding. [6] The liability of Chartaprops was held to have arisen vicariously for what was said to be negligence on the part of Advanced Cleaning and in that respect I think the court below was incorrect. Where liability arises vicariously it is because the defendant and the wrongdoer stand in a particular relationship to one another. Various explanations have been offered for the existence of the rule that creates liability merely on account of the existence of that relationship – usefully collected by Hartmut Wicke in his thesis entitled Vicarious Liability in Modern South African Law.1 While none provides a completely satisfactory explanation for the existence of the rule it is nonetheless firmly embedded in our law. It is also well established that the relationships to which the rule applies do not include the relationship with an independent contractor. That appears from the decision of this court in Colonial Mutual Life Assurance Society Ltd v MacDonald,2 which has been consistently followed, accurately reflected in the headnote as follows: ‘A principal is liable for the acts of his agent where the agent is a servant but not where the agent is a contractor, sub-contractor or the servant of a contractor or sub-contractor.’ 1 Thesis presented in partial fulfillment of the requirements for a Master of Law degree at the University of Stellenbosch under the supervision of Professor M M Loubser in February 1997. 2 1931 AD 412. [7] A defendant might nonetheless be liable for harm that arises from negligent conduct on the part of an independent contractor but where that occurs the liability does not arise vicariously. It arises instead from the breach of the defendant’s own duty (I use that term to mean the obligation that arises when the reasonable possibility of injury ought to be foreseen in accordance with the classic test for negligence articulated in Kruger v Coetzee3). It will arise where that duty that is cast upon the defendant to take steps to guard against harm is one that is capable of being discharged only if the steps that are required to guard against the harm are actually taken. The duty that is cast upon a defendant in those circumstances has been described (in the context of English law) as a duty that is not capable of being delegated: ‘the performance of the duties, but not the responsibility for that performance, can be delegated to another’.4 Or as it has been expressed on another occasion it is “a duty not merely to take care, but a duty to provide that care is taken” so that if care is not taken the duty is breached’.5 [8] One such case was Tarry v Ashton,6 in which a lamp that the defendant had employed an independent contractor to repair was not securely fastened to the wall of the defendant’s house and fell on a passer-by. Finding the defendant to be liable Lord Blackman said the following: ‘But it was the defendant’s duty to make the lamp reasonably safe, the contractor failed to do that; and the defendant, having the duty, has trusted fulfillment of that duty to another who has not done it. Therefore the defendant has not done his duty, and he is liable to the plaintiff for the consequences.’ Another was Hardaker v Idle District Council,7 in which Lindley LJ described the nature of the duty that was cast upon the council as follows: 3 1966 (2) SA 428 (A) 430E-H. 4 Salmond and Heuston on the Law of Torts 19th ed at 544-5, cited with approval by this court in Langley Fox Building Partnership (Pty) Ltd v De Valence 1991 (1) SA 1 (A) 8F-H. 5 Clerk and Lindsell on Torts 19 ed para 6-53, citing Langton J in The Pass of Ballater [1942] p 112 at 117. 6 1876 1 QBD 314 at 319. 7 1896 1 QBD 335 at 340. ‘But the council cannot, by employing a contractor, get rid of their own duty to other people, whatever that duty may be. If their contractor performs their duty for them, it is performed by them through him, and they are not responsible for anything more. They are not responsible for his negligence in other respects, as they would be if he were their servant. Such negligence is sometimes called casual or collateral negligence. If, on the other hand, their contractor fails to do what it is their duty to do or get done, their duty is not performed, and they are responsible accordingly.’ [9] That a duty that is cast upon a defendant might be such that it is discharged only if reasonable precautions to avoid the harm are actually taken – and that the defendant who appoints another to take those steps fails to do will be liable for the failure – was held by this court in Dukes v Marthinusen8 to be consistent with principles of our law of delictual liability. In that case the defendant employed an independent contractor to demolish certain buildings. In a claim for damages arising from the negligent performance of the work Stratford ACJ said the following after considering various cases in this country and in England including the statements of Lord Blackman and Lindley LJ that I have referred to: ‘The English law on the subject as I have stated it to be is in complete accord with our own, both systems rest the rule as to the liability of an employer for any damage caused by work he authorises another to do upon the law of negligence. … It follows from the law as I have stated it to be that the first and crucial question in this case is to ascertain on the facts of the case whether there was a duty on the employer who authorised the demolition of these buildings to take precautions to protect the public using the highway from possible injury. If there was such duty it could not be delegated and the employment of an independent contractor is an irrelevant consideration.’9 [10] In Langley Fox Building Partnership (Pty) Ltd v De Valence10 this court once more affirmed that the employer of an independent contractor might become liable in that way, though it was careful to emphasise that Stratford ACJ 8 1937 AD 12 at 18. 9 At p 23. 10 1991 (1) SA 1 (A). did not purport to say that ‘there might be liability as an invariable rule whenever the work entails danger to the public’. Goldstone AJA said in that case that ‘the correct approach to the liability of an employer for the negligence of an independent contractor is to apply the fundamental rule that obliges a person to exercise that degree of care which the circumstances demand’. [11] Langley Fox was another case in which the defendant employed an independent contractor to do work on its behalf. The majority held that the defendant should have realized that the work was inherently dangerous and was under a duty to take reasonable steps to guard against the danger. I think it is clear from the following passage that the majority considered that duty to require the defendant to ensure that adequate precautions were taken (and it held the defendant liable because they were not taken): ‘Whether such precautions were to be taken by the [defendant] or the contractor, as between them, is a matter depending on their contract. As far as the duty to the public in general and the [plaintiff] in particular is concerned it matters not. That duty rested upon the {defendant}.’11 [12] What emerges from those cases is that the basis upon which liability arises for the conduct of an independent contractor is no more than an application of ordinary principles of delictual liability. The liability of the employer rests upon his or her own failure to take reasonable steps to guard against the harm. And as Holmes JA emphasized in Kruger v Coetzee,12 when articulating the classic test for negligence: ‘what steps would be reasonable must always depend upon the circumstances of the particular case’. In some cases it will be reasonable to expect the defendant only to take reasonable precautions to prevent the harm. But in other cases it will be reasonable to expect the defendant to ensure that those precautions are taken (whether by himself or herself or by someone else). It is where that higher standard is called for that the duty of the 11 At p 14. 12 1966 (2) SA 428 (A) 430E-H. defendant is said to be ‘non-delegable’ and is discharged only if the precautions are indeed taken. [13] The following passage from the decision of the High Court of Australia in Burnie Port Authority v General Jones (Pty) Ltd13 seems to me to reflect the approach that our law also takes to the matter: ‘It has long been recognized that there are certain categories of case in which a duty to take reasonable care to avoid a foreseeable risk of injury to another will not be discharged merely by the employment of a qualified and ostensibly competent independent contractor. In those categories of case, the nature of the relationship of proximity gives rise to a duty of care of a special and "more stringent" kind, namely a "duty to ensure that reasonable care is taken" (See Kondis v State Transport Authority (1984) 154 CLR 672 at 686.). Put differently, the requirement of reasonable care in those categories of case extends to seeing that care is taken. One of the classic statements of the scope of such a duty of care remains that of Lord Blackburn in Hughes v Percival (1883) 8 App Case 443 at 446.): "that duty went as far as to require (the defendant) to see that reasonable skill and care were exercised in those operations … If such a duty was cast upon the defendant he could not get rid of responsibility by delegating the performance of it to a third person. He was at liberty to employ such a third person to fulfil the duty which the law cast on himself ... but the defendant still remained subject to that duty, and liable for the consequences if it was not fulfilled."’ After referring to various categories of case in which a duty of that kind was said to have arisen in cases before the courts in that country the court went on to say the following: ‘In most, though conceivably not all, of such categories of case, the common "element in the relationship between the parties which generates (the) special responsibility or duty to see that care is taken" is that "the person on whom (the duty) is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised" (Kondis v State Transport Authority (1984) 154 CLR at 13 (1994) 179 CLR 520 at 550. 687; see, also, Stevens v Brodribb Sawmilling Co. Pty. Ltd (1986) 160 CLR at 31, 44- 46.) … Viewed from the perspective of the person to whom the duty is owed, the relationship of proximity giving rise to the non-delegable duty of care in such cases is marked by special dependence or vulnerability on the part of that person (The Commonwealth b. Introvigne (1982) 150 CLR 258 at 271 per Mason J).’ [14] There will no doubt be cases – particularly where special skill is required for precautions to be taken – where no more is required of a reasonable person but to appoint a competent person to guard against the harm. As Van Wyk J said in Rhodes Fruit Farms Ltd v Cape Town City Council,14 in a passage that was cited with approval in Langley Fox: ‘It is the duty of the employer to take such precautions as a reasonable person would take in the circumstances. I do not, however, consider Dukes’ case as an authority for the proposition that the employment of a skilled independent contractor, where the extent of the danger and the reasonably practical measures to minimise it can only be determined by such skilled person, cannot in any circumstances constitute a discharge of the employer’s aforesaid duty. … There may well be situations in which a reasonable person would rely solely on an independent skilled contractor to take all reasonable precautions to eliminate or minimize damage to another, and in such circumstances it could not be said that he was negligent if such contractor fails to act reasonably. In my opinion, therefore, the duty to take care where the work undertaken is per se dangerous could in some cases be discharged by delegating its performance to an expert.’ But there are other cases, as I hope that I have made clear, in which a reasonable person in the position of the defendant is expected to ensure that reasonable precautions are taken to avoid harm. The defendant is free in those cases to appoint someone else to take those precautions but that by itself will not discharge the defendant’s duty. As pointed out in the passages from Langley Fox and Kruger v Coetzee to which I referred earlier that the standard of care that is required of the defendant will be determined by the circumstances of the particular case. 14 1968 (3) SA 514 (C) at 519. [15] But negligence alone is not sufficient to give rise to liability for an omission: the omission must be wrongful as well. In Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd15 Brand JA pointed out that ‘[w]hen we say that a particular omission…is “wrongful”, we mean that public or legal policy considerations require that such conduct, if negligent, is actionable; that legal liability for the resulting damages should follow. Conversely, when we say that negligent conduct…consisting of an omission is not wrongful, we intend to convey that public or legal policy considerations determine that there should be no liability; that the potential defendant should not be subjected to a claim for damages, his or her negligence notwithstanding. In such event, the question of fault does not even arise. The defendant enjoys immunity against liability for such conduct, whether negligent or not.’ [16] It can be taken to be settled that an action lies against a shopkeeper for negligently omitting to clear hazards from the shop floor16 and I think that applies as much to a person in control of a shopping mall in respect of the floors that are under its control. Indeed, that was admitted by Chartaprops in its plea. Moreover a reasonable person in control of a shopping mall would clearly foresee that spillages might occur in the passages and cause harm if they are permitted to remain, and would take reasonable steps to guard against harm occurring (Kruger v Coetzee).17 While acknowledging its duty to take reasonable steps to avoid the harm it was argued on behalf of Chartaprops that it was a sufficient discharge of that duty that it appointed an apparently competent cleaning service to keep the floors of the mall clean and checked on its performance from time to time. I do not think that is correct. [17] There can be no exhaustive test for determining when a person is expected not merely to take reasonable precautions against harm but instead to ensure that such precautions are taken for as Goldstone AJA emphasised in 15 2006 (3) SA 138 (SCA) para 12. 16 Alberts v Engelbrecht 1961 (2) SA 644 (T); Probst v Pick ‘n Pay Retailers (Pty) Ltd [1998] 2 All SA 186 (W); Monteoli v Woolworths (Pty) Ltd 2000 (4) SA 735 (W); Brauns v Shoprite Checkers (Pty) Ltd 2004 (6) SA 211 (E). 17 Cited above. Langley Fox that is necessarily bound up with the particular facts. But the High Court of Australia in Burnie Port Authority identified one feature that was common to the cases in which that higher duty has been held to exist, which is that the relationship between the plaintiff and the defendant was ‘marked by special dependence or vulnerability on the part of [the defendant]’. The court went on to say that a person is in such a relationship of ‘special dependence or vulnerability’ when he or she ‘is specially vulnerable to danger if reasonable precautions are not taken in relation to what is done on the premises. He or she is specially dependent upon the person in control of the premises to ensure that such reasonable precautions are in fact taken. Commonly, he or she will have neither the right nor the opportunity to exercise control over, or even to have foreknowledge of, what is done or allowed by the other party within the premises.’18 [18] In a case like this one the parties stand in such relationship to one another and in my view it indeed calls for the higher standard of care that I have referred to. A person who invites the public to frequent a shopping mall will be expected by members of the public to have ensured that the floors of the premises are reasonably safe and will expect to look to that person if they are not. They are not ordinarily able to make their own assessment of the performance of the cleaners who might have been appointed to the task and, unlike the person in control of the premises they are also not ordinarily able to determine where the fault for any failure of the cleaning system lies and who is responsible for that occurring. In short, they are entirely reliant upon the person in control of the premises to ensure that reasonable precautions are taken to keep the floor safe. It seems to me in the circumstances that it is reasonable to expect that a person in control of a shopping mall to ensure that reasonable precautions are taken to keep the floors safe and is liable if those precautions are not taken by a person who he or she has appointed to do so. That is how the duty was described in 18 At p 551. comparable circumstances in Probst v Pick ‘n Pay Retailers (Pty) Ltd,19 consistent with other decisions,20 and I respectfully agree. The precautions that should reasonably be taken were described by Stegman J in Probst v Pick ‘n Pay Retailers (Pty) Ltd (in relation to a shop floor but I think it applies as much in this case) to be ‘not so onerous as to require that every spillage must be discovered and cleaned up as soon as it occurs. Nevertheless, it does require a system which will ensure that spillages are not allowed to create potential hazards for any material length of time, and that they will be discovered, and the floor made safe, with reasonable promptitude.’21 The learned judge should not be thought to have said that it is enough to have an adequate system in place: I think it is implicit in what he said that the system must be adhered to. [19] The evidence establishes in this case that the spillage was on the floor for thirty minutes or more at a time that pedestrians could be expected in the mall and I agree with the learned judge in the court below that that was excessive. Whether the fault lay in the system itself (as found by the court below) or whether it lay instead in the failure of employees to adhere to the system, is not material. In either event Chartaprops failed to ensure that reasonable precautions were taken and is liable for the consequent damages. Although the court below found Chartaprops to be liable on other grounds the finding that it is liable must nevertheless stand. The appeal against that order must accordingly be dismissed. [20] The question that remains is whether Advanced Cleaning is also liable. The learned judge in the court below found that the negligence of Advanced Cleaning lay in the inadequacy of its cleaning system. The only basis upon which 19 [1998] 2 All SA 186 (W) at 200g. 20 Turner v Arding & Hobbs, Ltd [1949] All ER 911 (KB) at 912E; Alberts v Engelbrecht (1961) 2 SA 644 (T) at 646D; City of Salisbury v King 1970 (2) 528 (RAD); Jones v Maceys of Salisbury (Pvt) Ltd 1982 (2) 139 (ZHC) at 141H. 21 Stegmann J in Probst v Pick ‘n Pay Retailers (Pty) Ltd [1998] 2 All SA 186 (W) at p 200, in which the leading cases in this country and abroad are considered. the system was said to be inadequate was that the spillage remained on the floor for an excessive time but that reasoning seems to me to be faulty. I do not think criticism can be directed at the system. It seems to me that what occurred in this case is that the system was not adhered to by its employees. But once more I do not think that it is material whether the omission that caused the harm is attributed to Advanced Cleaning or to its employees. If the omission was that of its employees Advanced Cleaning cannot be held vicariously liable unless the employee is himself or herself liable. And in my view liability does not arise from the omission, whether the omission was that of Advanced Cleaning or its employees. [21] For in our law a person is generally not obliged to act so as to prevent harm to others even though it might be reasonable for him or her to have done so. In order for liability to arise the omission must be not only negligent but also wrongful. And as pointed out in the passage from Two Oceans Aquarium that I referred to earlier an omission is wrongful only where the law recognises that an action should lie (that the person concerned had a legal duty not to be negligent). [22] A person who contracts to clean a floor that is used by members of the public – whether under a contract of employment or some other form of contract – is no doubt bound to his or her employer to fulfill those contractual obligations. But it does not follow that he or she is liable to third parties if he or she omits to do so, even if the omission meets the ordinary test for negligence as it was articulated in Kruger v Coetzee. There are indeed cases in which it has been held that the assumption of contractual obligations gives rise to a legal duty to third parties to perform those obligations without negligence. In Blore v Standard General Insurance Co Ltd,22 for example, it was held on exception that a garage that failed to detect a defect in a motor vehicle, in breach of its contractual undertaking to the owner, was liable for damage caused to a third party by the 22 1972 (2) SA 89 (O). defect.23 In Compass Motors Industries (Pty) Ltd v Callguard (Pty) Ltd24 Van Zyl J expressed the opinion – his opinion was obiter and I express no view on its correctness – that a security firm that had contracted to guard premises had a legal duty to third parties to guard vehicles lawfully parked on the premises. But those cases and others like them do no more than demonstrate that the assumption of contractual obligations is capable of giving rise to delictual liability. Whether it does so in a particular case is a matter that will be determined by legal and public policy. For as Brand JA said in Two Oceans,25 when a court is asked to accept that an omission is wrongful in the absence of precedent it is being asked to extend delictual liability to a situation where none existed before and in that event ‘[t]he crucial question…is whether there are any considerations of public or legal policy which require that extension’.26 [23] The learned judge in the court below did not pertinently consider whether Advanced Cleaning (or its employees) were under a legal duty towards members of the public not to be negligent and appears to have assumed that their conduct was actionable. In that respect I think it erred. [24] I am not aware of any precedent that that has pertinently considered and settled that question in the present context. And in Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd27 Grosskopf AJA pointed out that 23 In a commentary on that decision Professor Boberg takes issue with its reasoning but he adds that a proper rationale for imposing liability in that case was that the garage would have known that the vehicle would be introduced onto the road in reliance upon proper performance of the contract: P.Q.R. Boberg ‘Liability for Omissions – The Case of the Defective Motor-Car’ (1972) 89 SALJ 207. 24 1990 (2) SA 520 (W). 25 Cited above. 26 There are numerous other cases in this court to the same effect. For example, Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A) 498G-499A; Knop v Johannesburg City Council 1995 (2) SA 1 (A) 26I-27I; Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 13; Gouda Boerdery BK v Transnet 2005 (5) SA 490 (SCA) para 12; Local Transitional Council of Delmas v Boshoff 2005 (5) SA 514 (SCA) para 19; Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) paras 14, 15, 16 and 28. 27 1985 (1) SA 475 (A) 500D. our law adopts a conservative approach to the extension of Aquilian liability. I do not think there are any considerations of legal or public policy that call for an extension of liability to a cleaner who is contracted to keep the floors of a shopping mall clean. The same considerations that cast upon the person in control of the shopping mall a duty to ensure that precautions are taken to keep the floors safe seem to me to militate against an action lying against the cleaner. For it is to that person rather than the cleaner that the public rely upon to keep the floor safe. They are protected by the liability of the person in control of the premises if the cleaner who has been deputed to perform that function negligently fails to do so and I see nothing that calls for an action to lie against the cleaner as well. As to the incidence of liability between that person and the cleaner that is capable of being regulated by the terms of their contract, whether the cleaner be an employee or an independent contractor, and requires no intervention by the law. Indeed, I think it would be most unjust if the law were to require as a condition for taking up a mop and a bucket in return for a wage that the cleaner should assume legal responsibility for the safety of the floors. I see no distinction when the person who wields the mop is not an employee but an independent contractor. That the independent contractor is a commercial concern seems to me a distinction only of degree. No doubt an action lies against the cleaner for damages caused by positive conduct but that is another matter. [25] In my view no legal duty was owed towards the public by Advanced Cleaning or its employees to take reasonable steps to keep the floors safe and any omission to do so on their part is not actionable. In those circumstances Advanced Cleaning should not have been held liable for the damages, whether directly for any omission on its part, or vicariously for any omission of its employees. I think the appeal by Advanced Cleaning should accordingly succeed. [26] I would dismiss the appeal by Chartaprops, allow the appeal by Advanced Cleaning, and alter the order of the court below accordingly. __________________ R.W. NUGENT JUDGE OF APPEAL PONNAN JA (SCOTT and MAYA JJA and LEACH AJA concurring): PONNAN JA [27] I have read the judgment of Nugent JA with which I respectfully am unable to agree. The salient facts, which for the most part are either common cause or undisputed, are set out in the judgment of my learned Colleague. [28] The general rule in our law is that a principal is not liable for the wrongs committed by an independent contractor or its employees. But, as Glanville Williams put it: ‘One of the most disturbing features of the law of tort in recent years is the way in which the courts have extended, seemingly without any reference to considerations of policy, the liability for independent contractors’.28 Prominent among the cases that sowed the seeds of the large extension that has since taken place was Dalton v Angus29 and the oft-quoted remark that ‘a person causing something to be done, the doing of which casts on him a duty, cannot escape from the responsibility attaching on him of seeing that duty performed by delegating it to a contractor’. As has been correctly observed, this dictum if literally applied, would create vicarious responsibility for any and every act of negligence performed by an independent contractor in the course of doing the work and would efface the whole distinction between employee and independent contractor.30 28 Glanville Williams ‘Liability for Independent Contractors’ (1956) Cambridge Law Journal p 180. 29 (1881) 6 App. Cas. 740 at 829. 30 Williams p 181. [29] When a principal will indeed be liable for the negligence of an independent contractor has been the subject of continuing debate in foreign jurisdictions. A legacy of that debate in the terminology of English Law is the concept of non- delegable duty. A more accurate description of what is at play is captured by the alternative name for a non-delegable duty, namely, a ‘personal duty’.31 A duty of this nature involves what has been described as ‘a special responsibility or duty to see that care is taken’.32 Such a duty enables a plaintiff to outflank the general principle that a defendant is not vicariously responsible for the negligence of an independent contractor where the causative agent of the negligence relied on was not an employee of the defendant but an independent contractor. [30] From a practical standpoint, according to Fleming ‘its most perplexing feature is the apparent absence of any coherent theory to explain when, and why, a particular duty should be so classified’ and ‘whether the resulting uncertainty and complexity of the law is matched by any corresponding advantages’.33 That complexity and uncertainty may well be compounded in our law, for, as Scott JA observed in McIntosh v Premier, KwaZulu-Natal:34 ‘But the word “duty”, and sometimes even the expression “legal duty” [in the context of the second leg of the test for negligence as formulated by Holmes JA in Kruger v Coetzee],35 must not be confused with the concept of ”legal duty” in the context of wrongfulness which, . . . is distinct from the issue of negligence. . . . The use of the expression “duty of care” is similarly a source of confusion. In English law “duty of care” is used to denote both what in South African law would be the second leg of the inquiry into negligence and legal duty in the context of wrongfulness. As Brand JA observed in the Trustees, Two Oceans Aquarium Trust case, at 144F, “duty of care” in English law “straddles both elements of wrongfulness and negligence” ’. (See also Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA.36) 31 John Murphy ‘The Liability Bases of Common Law Non-Delegable Duties – A Reply to Christian Witting’ (2007) 30(1) UNSW Law Journal 86 p 98. 32 Kondis v State Transport Authority (1984) 154 CLR 672 at 687. 33 John G Fleming The Law of Torts 9 ed (1998) p 434. 34 (632/2007) [2008] ZASCA 62 (29 May 2008) para 12. 35 1966 (2) SA 428 (A) at 430 E-F. 36 2006 (1) SA 461 (SCA) para 14. [31] Indeed it has been said that the classification of a duty as non-delegable in the circumstances of particular cases rests on little more than assertion.37 According to Kirby J, ‘The law governing non-delegable duties of care has been described as a "mess", comprising "a random group of cases" giving rise to a basis of liability that is "remarkably under-theorised". The instances in which a non-delegable duty has been upheld have been variously labelled "an inexplicable rag-bag of cases" comprising an erroneous feature of the "über-tort of negligence" and an "embarrassing coda" to judicial and scholarly writings on the scope of vicarious liability for wrongs done by others. Judges have been taken to task for their reluctance, or incapacity, to express a clear theory to account for the nature and ambit of non-delegable duties of care. The whole field has been assailed as one involving serious defects, containing numerous "aberrations" that have plunged this area of the law of tort into "juridical darkness" and "conceptual uncertainty". Courts of high authority have been accused of coming to the right result for the wrong reasons; or the wrong result despite adopting the right reasons’.38 [32] Kondis v State Transport Authority (1984) 154 CLR 672, identified some of the principal categories of case in which the duty to take reasonable care under the ordinary law of negligence is non-delegable: namely - adjoining owners of land in relation to work threatening support or common walls; master and servant in relation to a safe system of work; hospital and patient; school authority and pupil.39 (See also Saayman v Visser.40) [33] One further category of case to which Kondis alluded was that of invitor and invitee. However, certainly in Australia, it must now be taken as settled that in relation to a person in the position of an invitee, the duty of an invitor is no 37 Kondis p 684. 38 Leichhardt Municipal Council v Montgomery (2007) 230 CLR 22 at 37. 39 See also Australian Safeway Stores Proprietary Limited v Zaluzna (1987) 61 ALJR 180 p 184, Clerk & Lindsell on Torts 19 ed (2006) 6-57 – 6-67. 40 411/2007) [2008] ZASCA 71 (30 May 2008) para 19. more and no less than the ordinary duty to take reasonable care. For, as it was put in Voli v Inglewood Shire Council and Another,41 ‘But, even without the aid of a statue such as now exists in England, the trend of judicial authority has been to treat the liability of an occupier for mishaps upon his premises as governed by a duty of care arising from the general principles of the law of negligence. The special rules concerning invitees, licensees and others are ultimately subservient to those general principles. Instead of first looking at the capacity in which the plaintiff comes upon the premises, and putting him into a category by which his rights are measured, the tendency now is to look at all the circumstances of the case, including the activities of the occupier upon, or in respect of, the premises, and to measure his liability against the conduct that would be expected of a reasonably careful man in such circumstances. . . . . It seems better to appreciate that the ultimate question is one of fact and governed by general rules, than to create new categories and distinctions.’ [34] According to John Murphy, '[i]f we consider various classic examples of a non-delegable duty – such as the duty owed by an employer to his employees…, by a health authority to hospital patients… or by an education authority to school children… – we can see in each case the presence of especial vulnerability. Employees in the workplace, patients in hospital beds and children at single-teacher schools all have in common the fact that they find themselves in an environment the safety of which is controlled by some other person in whom they are required to place some measure of trust and reliance. Even if we turn to the various non-classic, but equally well established, categories of non-delegable duty – that is, where the defendant was in control of an abnormally dangerous person, or an abnormally dangerous thing… – we can again see the presence of either abnormal risk or heightened vulnerability’. But as Murphy is himself quick to point out ‘it must be conceded at the outset that any explanatory account of the kind or kinds of liability attached to non-delegable duties based on the existing case law requires an exercise in selectivity. This is because the judges are as divided in their views as academics’.42 41 (1962-1963) 110 CLR 74 at 89. 42 Murphy p 94. [35] Some cases have been explained as turning on strict liability whilst others, as a form of vicarious liability. As to the former, Kirby J noted, ‘It is sufficient to notice that decisions of this Court after Kondis, … point out the many difficulties that lie behind adopting principles cast in terms of non-delegable duties. Not least of these difficulties is that a non-delegable duty is a form of strict liability and Burnie Port Authority43 … shows the disfavour with which strict liability is now viewed.'44 Strict liability, I may add, is viewed with similar disfavour by our courts (see Wagener v Pharmacare Ltd; Cuttings v Pharmacare Ltd 2003 (4) SA 285 (SCA)). Vicarious liability as a postulate is equally untenable for it flies in the face of the general principle that a person is not liable for an accident occurring without his own fault or that of his servants in the course of their employment. Little wonder then that Fleming would describe those cases as a disguised form of vicarious liability under the fictitious guise of non-delegable duties.45 To once again borrow from Glanville Williams, ‘[w]e need some sensible reason why, in any particular case, he should be liable where the injury occurs without his fault but through the fault of an independent contractor employed by him. No reason is furnished in the judgments under discussion. Instead, we are merely treated to the logical fraud of the “nondelegable duty” ’.46 [36] Many of the statements explaining the nature and consequences of a non- delegable duty, have been criticized on the ground that they offer no criteria distinguishing those duties which are non-delegable from those which are not.47 But apart from true instances of strict liability particularly where the duty is a statutory one, the distinction between delegable and non-delegable duties does not, it seems, really amount to more than the adoption of convenient headings for those cases in which defendants have been held not liable for the negligence of independent contractors and cases in which they have. However, the explanation 43 Burnie Port Authority v General Jones Pty. Limited (1992-1994) 179 CLR 520. 44 Leichhardt Municipal Council p 75. 45 Christian Witting ‘Breach of the Non-Delegable Duty: Defending Limited Strict Liability in Tort’ (2006) 29(3) UNSW Law Journal p 33 at 42 and 47, Williams p 185, Fleming p 434, Burnie Port p 75. 46 Williams p 198. 47 Williams p 183-4. given for the non-delegable relationship has been very general – no more than the existence of 'some element' that 'makes it appropriate' to impose on the defendant a duty to ensure that the safety of the person and property of others is observed – a duty not discharged merely by securing a competent contractor.48 The truth, according to Glanville Williams, ‘seems to be that the cases are decided on no rational grounds, but depend merely on whether a judge is attracted by the language of nondelegable duty’.49 [37] It would be fair to say that there has been great expansion in recent years of the use of independent contractors, and out-sourcing in the place of employees. It is unlikely that vicarious liability for servants would ever have developed if servants as a class had been capable of paying damages and costs. The historical rationale for imputing liability to a master, namely that they had deeper pockets hardly applies, I daresay, to most modern contractors, who may in fact be wealthier than their principals. Where both principal and independent contractor are large firms or covered by insurance the incidence of liability may not matter much. But where the principal is an individual without insurance, the imposition of liability upon him may cause grave hardship. From the point of view of a plaintiff, the only case in which the liability of a principal is advantageous is where the independent contractor is unable to pay damages. Whether indeed this situation is sufficiently frequent to warrant provision being made for it must be open to doubt, particularly when it adds so greatly to the difficulty of the law.50 Courts have to be pragmatic and realistic, and have to take into account the wider implications of their findings on matters such as these (Tsogo Sun Holdings (Pty) Ltd v Qing-He Shan 2006 (6) SA 537 (SCA) para 10). [38] It must be accepted that the content of the ordinary common law duty is to exercise reasonable care (and skill) or to take reasonable steps to avoid risk of harm to a person to whom the duty is owed. The degree or standard of care 48 Leichhardt Municipal Council p 63. 49 Williams p 186. 50 Williams p 195. required varies with the risk involved. It follows that those who engage in inherently dangerous operations must take precautions not required of persons engaged in routine activities. This involves no departure from the standard of reasonable care for it predicates that the reasonable person will take more stringent precautions to avoid the risk of injury arising from dangerous operations.51 The concept of personal duty departs from the basic principles of liability in negligence by substituting for the duty to take reasonable care a more stringent duty - a duty to ensure that reasonable care is taken. [39] Traditionally, non-delegable duties have been held to apply in instances where; first, the defendant's enterprise carries with it a substantial risk and secondly, the defendant assumed a particular responsibility towards the claimant. Neither of which in my view is present in this case. As already stated, our ‘ordinary’ law of negligence does take proper account of the presence of abnormally high risks and especial vulnerabilities. Thus where those features are found to be present our law expects greater vigilance from a defendant to prevent the risk of harm from materialising, for that according to our law is what a reasonable person in the position of the defendant would do. In the nature of a coherent legal doctrine, the response of our law in those circumstances should not be to impose strict liability or to resort to a disguised form of vicarious liability but rather to insist on a higher standard of care. It follows that the correct approach to the liability of a principal for the negligence of an independent contractor is to apply the fundamental rule of our law that obliges a person to exercise that degree of care that the circumstances demand. In Cape Town Municipality v Paine,52 Innes CJ said: ‘The question whether, in any given situation, a reasonable man would have foreseen the likelihood of harm and governed his conduct accordingly, is one to be decided in each case upon a consideration of all the circumstances. Once it is clear that the danger would have been foreseen and guarded against by the diligens paterfamilias, the duty to take care is established, and it only remains to ascertain whether it has been 51 Kondis p 679. 52 1923 AD 207 at 217. discharged. Now, the English Courts have adopted certain hard and fast rules governing enquiries into the existence of the duty and the standard of care required in particular cases. Speaking generally, these rules are based upon considerations which, under our practice, also would be properly taken into account as affecting the judgment of a reasonable man; and the cases which embody them are of great assistance and instruction. But, as pointed out in Transvaal and Rhodesian Estates Ltd v Golding 1917 AD 18 and Farmer v Robinson Gold Mining Co 1917 AD 501, there is an advantage in adhering to the general principle of the Aquilian law and in determining the existence or non-existence of culpa by applying the test of a reasonable man’s judgment to the facts of each case. The larger latitude allowed in such an enquiry is to be preferred to restriction within the more rigid limits of the English rules. It must be noted, however, ─ and the above remarks are subject to that proviso – that mere omission did not under the lex aquilia constitute culpa; it only did so when connected with prior conduct.’ [40] There is an obvious difference between committing work to a contractor to be executed from which, if properly done, no injurious consequences can arise, as happened in this case (the first category), and handing over to him work to be done from which mischievous consequences will arise unless preventive measures are adopted (the second category). In this regard Colman AJ stated in Crawhall v Minister of Transport:53 ‘Nor, in my judgment, is the occupier of premises liable for the consequences of the negligent conduct on those premises of an independent contractor whom he has engaged to do work thereon, if the negligent act or omission was not one which was authorised by or known to the occupier or one which could reasonably have been foreseen, provided that the work which the independent contractor was engaged to do was not pregnant with danger to persons expected to be on the property. But if work has to be done on premises to which the public have access, and that work can reasonably be expected to cause damage unless proper precautions are taken, the duty of the occupier to see that those precautions are taken and that the premises are safe persists, whether he does the work himself or through his own servants or delegates it to an independent contractor. That seems to me to be the effect of the judgment of Stratford, ACJ, in Dukes v Marthinusen, 1937 AD 12, and ...’. 53 1963 (3) SA 614 (T) at 617 F-H. [41] That distinction emerges as well from the decision of Minister of Posts and Telegraphs v Jo’burg Consolidated Investment Co., Ltd 1918 TPD 253, which held (at p 260): ‘where an act which is carried out with proper precautions will ordinarily speaking not cause danger, the doctrine of the independent contractor applies’. Whilst it may be just to hold the party authorising the work in the first category of case exempt from liability for injury resulting from negligence which he had no reason to anticipate, there may well be, on the other hand, good ground for holding him liable for injury caused by an act certain to be attended with injurious consequences if such consequences are not in fact prevented. That it seems to me, as I have attempted to demonstrate, is consistent with our ‘ordinary’ law of negligence. In the second category, if liability is to attach to the principal it would be in consequence of his/her negligence in failing to take preventative measures to prevent the risk of harm from materialising that a reasonable person in those circumstances would have taken, rather than in accordance with a proposition framed in terms of a non-delegable duty. That proposition according to Hayne J, on examination, not only has ‘no sound doctrinal foundation’ but ‘cannot stand with the restatement of the [Australian] common law of negligence …’.54 [42] More recently Langley Fox Building Partnership (Pty) Ltd v De Valence55 acknowledged the general rule of no liability of a principal for the civil wrongs of an independent contractor except where the principal was personally at fault. The test for negligence in a case such as this, consonant with the classic test for culpa laid down in Kruger v Coetzee,56 was set out by Goldstone AJA as follows: ‘(a) would a reasonable man have foreseen the risk of danger in consequence of the work he employed the contractor to perform? If so, (b) would a reasonable man have taken steps to guard against the danger? If so, (c) were such steps duly taken in the case in question?’ 54Leichhardt p 70. 55 1991 (1) SA 1 (A). 56 Above n 34. [43] In determining the answer to the second enquiry into negligence, Goldstone AJA emphasized the following, albeit by no means exhaustive list of factors: ‘[t]he nature of the danger; the context in which the danger may arise; the degree of expertise available to the employer and the independent contractor respectively; and the means available to the employer to avert the danger.’ Applying this test of negligence to the facts, Goldstone AJA held that it was foreseeable to a reasonable person in the position of Langley Fox that the workmen erecting the ceiling would require some form of construction to raise it above the level of the sidewalk, as an obstruction of such a nature would necessarily constitute a source of serious potential danger to pedestrians using the sidewalk. Accordingly, ‘[T]o place it there, and no more, was an inherently dangerous act.’57 [44] It is not easy to see why an exception should be specifically carved out allowing a person injured to recover from a principal in addition to the normal rights that the person enjoys against the independent contractor posited as the effective cause of the wrong. In particular, it is difficult to see why the general policy of the law that the economic cost of the wrong should be borne by the legal entity immediately responsible for it, should not be enforced in this case. Furthermore, to shift the economic cost of negligent acts and omissions from Advanced Cleaning, the independent contractor with primary responsibility, to Chartaprops, because of the legal fiction of non-delegability, appears to me to be undesirable. [45] There are few operations entrusted to an independent contractor by a principal that are not capable, if due precautions are not observed, of being sources of danger to others. If a principal were to be held liable for that reason alone the distinction between ‘employee’ and ‘independent contractor’ will all but 57 At 12I. disappear from our law. This plainly is not the type of case where it can be said that Chartaprops negligently selected an independent contractor or that it so interfered with the work that damage results or that it authorised or ratified the wrongful act. The matter thus falls to be decided on the basis that the damage complained of was caused solely by the wrongful act or omission of the independent contractor, Advanced Cleaning or its employee. [46] Chartaprops did not merely content itself with contracting Advanced Cleaning to perform the cleaning services in the shopping mall. It did more. Its centre manager consulted with the cleaning supervisor each morning and personally inspected the floors of the shopping mall on a regular basis to ensure that it had been properly cleaned. If any spillage or litter was observed, he ensured its immediate removal. That being so it seems to me that Chartaprops did all that a reasonable person could do towards seeing that the floors of the shopping mall were safe. Where, as here, the duty is to take care that the premises are safe I cannot see how it can be discharged better than by the employment of a competent contractor. That was done by Chartaprops in this case, who had no means of knowing that the work of Advanced Cleaning was defective. Chartaprops, as a matter of fact, had taken the care which was incumbent on it to make the premises reasonably safe. [47] Neither the terms of Advanced Cleaning’s engagement, nor the terms of its contract with Chartaprops, can operate to discharge it from a legal duty to persons who are strangers to those contracts. Nor can they directly determine what it must do to satisfy its duty to such persons. That duty is cast upon it by law, not because it made a contract, but because it entered upon the work. Nevertheless its contract with the building owner is not an irrelevant circumstance, for it determines the task entered upon. [48] Chartaprops was obliged to take no more than reasonable steps to guard against foreseeable harm to the public. In this regard, it is well to recall the words of Scott JA in Pretoria City Council v De Jager:58 ‘Whether in any particular case the steps actually taken are to be regarded as reasonable or not depends upon a consideration of all the facts and circumstances of the case. It follows that merely because the harm which was foreseeable did eventuate does not mean that the steps taken were necessarily unreasonable. Ultimately the inquiry involves a value judgement.’ Applying that test I am satisfied that the High Court erred in holding Chartaprops liable. Its finding in relation to Advanced Cleaning, however, cannot be faulted. [49] As to costs. In my view no warrant exists for a departure from the general rule that costs should follow the result in this case. [50] In the result: The appeal of the first appellant is upheld with costs. The appeal of the second appellant is dismissed with costs. The order of the court below is set aside and the following is substituted in its stead: ‘(a) The claim against the first defendant is dismissed with costs. (b) It is declared that the second defendant is liable to the plaintiff for such damages as might be agreed upon or proved in consequence of the event that is the subject of this claim. (c) The second defendant is ordered to pay the plaintiff’s costs.’ _________________ V M PONNAN JUDGE OF APPEAL 58 1997 (2) SA 46 (A) at 55H-56C. APPEARANCES: COUNSEL FOR 1st APPELLANT E J FERREIRA COUNSEL FOR 2ND APPELLANT C ACKER INSTRUCTED BY (1st Appellant) LINDSAY, KELLER & PARTNERS ROSEBANK (2nd Appellant) EVERINGHAM, ROGERS & PARTNERS JOHANNESBURG CORRESPONDENTS (Both Appellants) WEBBERS BLOEMFONTEIN COUNSEL FOR RESPONDENT G NEL INSTRUCTED BY TAITZ & SKIKNE JOHANNESBURG CORRESPONDENTS LOVIUS BLOCK BLOEMFONTEIN

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 25 September 2008 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. CHARTAPROPS 16 v SILBERMAN Case No : (300/07) [2008] ZASCA 115 (25 September 2008) Media Statement Today the majority of the Supreme Court of Appeal (SCA) upheld an appeal by Chartaprops 16 (Pty) Ltd (Chartaprops) which carries on business as the Killarney Shopping Mall (the Mall) in Johannesburg and dismissed an appeal by Advanced Cleaning Services (CC) (Advanced Cleaning) with whom the former had contracted to provide cleaning services at the Mall. What gave rise to the appeal was an action instituted by Ms Michelle Silberman, a conference tele- marketer, who slipped on a gel-like substance and fell in the pedestrian passage on the upper level of the Mall during the course of the afternoon of 14 December 2000. In consequence of the fall, she sustained fractures to both elbows, as well as certain abrasions and soft tissue injuries. She accordingly sued both Chartaprops and Advanced Cleaning in the Johannesburg High Court. The issues of liability and quantum were separated and the trial proceeded solely on the former. The High Court held both Chartaprops and Advanced Cleaning jointly and severally liable to her for such damages as may in due course be agreed upon or proved. On appeal, the majority of the SCA re-affirmed the general principle in our law that a principal is not liable for the wrongs committed by an independent contractor or its employees. As Chartaprops was obliged to take no more than reasonable steps to guard against foreseeable harm to the public, which it had done by engaging a competent contractor, it could not be held liable to Ms Silberman. Insofar as Advanced Cleaning was concerned, the damage complained of was caused solely as a result of the defective performance by one of its employees of the work entrusted to it. The majority accordingly held that the finding by the High Court that Advanced Cleaning was liable, could accordingly not be faulted and its appeal thus had to fail. The minority judgment held that the duty cast upon Chartaprops in this case was not capable of being delegated to Advanced Cleaning. It accordingly held that it would have dismissed the appeal by Chartaprops and upheld the appeal by Advanced Cleaning. --- ends ---

195

non-electoral

2018

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 131/17 In the matter between: NOMZAMO WINIFRED ZANYIWE MADIKIZELA MANDELA APPELLANT and THE EXECUTORS ESTATE LATE NELSON ROLIHLAHLA MANDELA FIRST RESPONDENT THE REGISTRAR OF DEEDS, MTHATHA SECOND RESPONDENT MINISTER OF LAND AFFIARS FOR THE REPUBLIC OF SOUTH AFRICA THIRD RESPONDENT THE PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA FOURTH RESPONDENT THE NELSON MANDELA FAMILY TRUST FIFTH RESPONDENT THE MASTER OF THE HIGH COURT, SOUTH GAUTENG SIXTH RESPONDENT GRACA MACHEL SEVENTH REPONDENT EBOTWE TRIBAL AUTHORITY EIGHT RESPONDENT ZWELIDUMILE MBANDE NINTH RESPONDENT Neutral citation: Mandela v The Executors, Estate Late Nelson Rolihlahla Mandela & others (131/17) [2017] ZASCA02 (19 January 2018) Coram: Shongwe AP and Swain and Mathopo JJA and Mokgohloa and Rogers AJJA Heard: 16 November 2017 Delivered: 19 January 2018 Summary: Administrative law – common law review – unreasonable delay – assumption of prospects of success on merits – outweighed by potential for severe resultant prejudice – refusal of condonation – whether court justified in mulcting appellant with costs. ORDER ________________________________________________________________ On appeal from: The Eastern Cape Local Division, Mthatha (Makgoba JP and Van der Merwe and Teffo JJ sitting as court of first instance): 1 The appeal against the costs order granted by the court a quo against the appellant in favour of the third respondent is upheld. 2 The costs order granted by the court a quo against the appellant in favour of the third respondent is set aside and substituted with the following: ‘As regards costs between the appellant and the third respondent, each party should bear its own costs’. 3 The appeal against the dismissal of the review application is dismissed. 4 The appellant is ordered to pay the first respondent’s costs including costs of two counsel. JUDGMENT ________________________________________________________________ Shongwe AP (Swain and Mathopo JJA and Mokgohloa and Rogers AJJA concurring) [1] This appeal, with special leave of this court, raises the question whether the court a quo was correct to dismiss the appellant’s review application with costs on the basis that she delayed unreasonably in launching the application and that the delay should not be condoned. It also raises the question of the relevance of the Biowatch case on costs, where a litigant is unsuccessful against the State. (Biowatch Trust v Registrar, Genetic Resources & others 2009 (6) SA 232 (CC)). [2] On 16 November 1997, the third respondent, the Minister of Land Affairs for the Republic of South Africa (the Minister), took a decision to donate ‘Lot, Kwa-Madiba (portion of A.A. No. 20 called QUNU) situated in the Administrative District of Umtata Province of the Eastern Cape’, in extent 96, 8959 hectares (the property), to Mr Nelson Rolihlahla Mandela (Mr Mandela), the late former President of the Republic of South Africa. This donation took place after a final decree of divorce had been granted on 19 March 1996 in respect of a civil marriage that existed between the late Mr Mandela and Mrs Nomzamo Winifred Madikizela Mandela, the appellant. On 5 December 2013 Mr Mandela passed on and left a will in which he bequeathed the property to the Nelson Rolihlahla Mandela Family Trust (the Trust) in the following terms: ‘I bequeath the Qunu Property and the movable assets of my estate in or on it at the time of my death, to THE NRM FAMILY TRUST. It is my wish that the trustees of THE NRM FAMILY TRUST administer the Qunu Property for the benefit of the MANDELA family and my third wife and her two children, MALENGANE MACHEL and JOSINA MACHEL. The Qunu Property should be used by my family in perpetuity in order to preserve the unity of the MANDELA family.’ The ‘third wife’ in the above clause is a reference to Ms Graca Machel whom Mr Mandela married on 18 July 1998. She was cited as the seventh respondent. [3] On 14 October 2014 the appellant instituted review proceedings in which she sought an order declaring the Minister’s decision of 16 November 1997 to donate the property as null and void; alternatively, reviewing and setting aside that decision and ancillary relief. She also sought an order declaring as invalid the legacy set out in clause 4.5.3 of the will of the late Mr Mandela in respect of the property in question. [4] The review application was heard by the Eastern Cape Local Division of the High Court, Mthatha (Makgoba JP and Van der Merwe and Teffo JJ) and dismissed with costs including the costs of two counsel. The subsequent application for leave to appeal was also dismissed with costs. Aggrieved by this decision, the appellant applied to this court for special leave to appeal, which was granted on 20 January 2017. [5] The first respondent, the executors of the estate late NR Mandela (the executors) and the Minister oppose the appeal (I shall hereafter refer to the executors and the Minister as ‘the respondents’). The other respondents abide the decision of this court. The court a quo dismissed the review application mainly on the basis that there was an unreasonable delay which resulted in severe prejudice to the respondents. It did not extensively deal with the merits of the review but made reference thereto when considering whether to condone the appellant’s unreasonable delay in launching the review proceedings and whether the appellant had reasonable prospects of success on the merits. It concluded that almost 17 years had gone by without the appellant doing anything to claim or assert her rights. The delay was therefore inordinate with no acceptable explanation as to why she took so long to assert her rights. [6] The appellant contended that she was not aware of the donation made by the Minister to Mr Mandela and only became aware of it during August 2014 after obtaining a copy of Mr Mandela’s will. Until then, so she says, she did not know that Mr Mandela was the registered owner of the property or that he thought himself entitled to dispose of it. She also contended that the respondents did not dispute that she lacked knowledge of the donation. She further contended that she is the rightful holder of the right to occupy the property, or at least, the small portion initially allocated to her by the acting paramount chief Daliguba Joyi, in consultation with the local community. This, she contended, took place around 1989 and 1990, while Mr Mandela was incarcerated on Robben Island. She claims the property on the basis that she is entitled to the property by virtue of the fact that her customary marriage to Mr Mandela was not dissolved, notwithstanding the fact that their civil marriage had been dissolved by the issue of a final decree of divorce. Thus she personally acquired the property in accordance with the custom of the Abathembu clan, to which both she and Mr Mandela belonged. She contended that until and unless her late husband claimed his lobola back, the customary marriage remained extant. [7] A brief factual background, which is not disputed, is that Mr and Mrs Mandela were married in terms of customary law in 1958. Subsequently on 14 June 1958 they concluded a civil marriage out of community of property. In 1964 Mr Mandela was convicted and sentenced to life imprisonment and eventually released in February 1990. He built a home in Qunu (on the property), between 1993 and 1995. At this stage the Qunu property was only about nine hectares in extent. On 13 April 1992 Mr Mandela publicly declared that his marriage had broken down irretrievably and subsequently instituted divorce proceedings. As stated earlier a final decree of divorce was granted on 19 March 1996. The appellant contested the divorce and filed a counterclaim. It is not clear from the evidence what happened to the counterclaim. The final order of divorce is silent regarding the proprietary rights of the parties. [8] It must be made clear from the outset that the administrative action and the impugned decision must be adjudicated in terms of the common law and not in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The impugned decision was taken in 1997, long before the coming into effect of PAJA. In Associated Institutions Pension Fund & others v Van Zyl & others 2005 (2) SA 302 (SCA) para 46, it was held that since PAJA only came into operation on 30 November 2000, after the impugned decision in that case was taken, the validity of the defence of unreasonable delay had to be considered with reference to common law principles. Indeed, counsel for the appellant correctly conceded that the provisions of PAJA were not applicable to the present dispute. In Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism & others 2004 (4) SA 490 (CC); 2004 (7) BCLR (CC) in para 22 the Constitutional Court remarked that ‘the extent to which the common law remains relevant to administrative review will have to be developed on a case-by-case basis as the courts interpret and apply the provisions of PAJA and the Constitution.’ (See also Pharmaceutical Manufacturers Association of South Africa & another: In re Ex parte President of the Republic of SA & others 2000 (2) SA 674 (CC); (2000) (3) BCLR 241)). [9] In Van Zyl para 46-47, it was pointed out that it is desirable and in the public interest that finality be reached within a reasonable time, in respect of judicial and administrative decisions and litigation in general. It was a long- standing rule that courts have the power, as part of their inherent jurisdiction to regulate their own proceedings, to refuse a review application if the aggrieved party has been guilty of unreasonable delay in initiating the proceedings. The rationale for the long-standing rule is twofold: First, the failure to bring a review within a reasonable time may cause prejudice to the respondent. Second, there is a public interest element in the finality of administrative decisions and the exercise of administrative functions. The application of the rule requires consideration of two questions. Namely, was there an unreasonable delay? If so, should the delay in all the circumstances be condoned? [10] In Van Zyl para 48, it was stated that the reasonableness or unreasonableness of a delay is dependent on the facts and circumstances of each case. It is a matter of a factual enquiry upon which a value judgment is called for in the light of all the relevant circumstances, including any explanation that is offered for the delay. It is an investigation into the facts of the matter in order to determine whether, in all the circumstances of the case, the delay was reasonable. In Gqwetha v Transkei Development Corporation Ltd & others 2006 (2) SA 603 (SCA) para 24, it was pointed out that a material fact to be taken into account in making that value judgment was the nature of the challenged decision, as not all decisions have the same potential for prejudice, which may result from their being set aside. It was emphasised in Van Zyl that although this involved the exercise of a value judgment, it was not to be equated with the judicial discretion involved in the next question if it arose, namely, whether a delay which has been found to be unreasonable should be condoned. [11] I turn to consider whether the court a quo correctly concluded that the appellant had unduly and unreasonably delayed in launching the application for review. The court a quo having referred to the evidence of the appellant, which was not disputed by the respondents, that she only became aware of the challenged decision when she became aware of the contents of the will in August 2014, phrased the question to be answered as follows, ‘when a reasonable person in the shoes of Mrs Mandela would have acquired knowledge of the Minister’s decision?’ [12] In Van Zyl para 51 the learned Judge observed that: ‘In my view there is indeed a duty on the applicants not to take an indifferent attitude but rather to take all reasonable steps available to them to investigate the reviewability of administrative decisions adversely affecting them as soon as they are aware of the decision. Whether the applicants in a particular case have taken all reasonable steps available to them in compliance with this duty, will depend on the facts and circumstances of each case’. (Emphasis added.) (See also Drennan Maud and Partners v Pennington Town Board 1998 (3) SA 200 (SCA)). [13] The present case may be regarded as distinguishable from this passage because here there was no unreasonable delay from the date on which the appellant claims to have learnt of the impugned decision. In my view, however, the same principle applies where there are circumstances which should have alerted an applicant to the existence of a decision adverse to her rights. Reasonable vigilance of one’s rights is required. The failure to investigate such circumstances has the same potential to prejudice other parties as a failure to act promptly after learning of the adverse decision [14] The court a quo decided that a reasonable person in the position of the appellant would have regarded recognition of her rights to the property as a critical issue in the divorce proceedings. Such a reasonable person would have asserted the rights to the property during the divorce proceedings and would accordingly have uncovered the steps taken to donate the land to Mr Mandela. However, as correctly pointed out by the appellant the decision to dispose of the property to Mr Mandela was only taken in November 1997, and the civil divorce took place in 1996. Nevertheless, the appellant’s conduct is not consistent with that of a reasonable person who would have taken steps to establish the outcome of her counterclaim and the fate of her claim to the property. [15] In addition, the court a quo pointed out that the house on the property was built during the period from 1993 to 1995 and the statement by the appellant that she contributed to this was disingenuous as no proof of the contribution she made was produced. The respondents point out that the property on which the house was located was greatly increased in size. On 5 January 1996 Chief Mtirara wrote a letter to the magistrate in Mthatha stating that the extension of the original site of Mr Mandela from nine hectares to approximately 101.5 hectares carried the approval of the relevant tribal authority. In addition, the executors point out that the allotment of the property to Mr Mandela was done publicly where King Dalindyebo and other local chiefs were present representing the Ebotwe Tribal Authority. In response Mr Mandela donated a sum of R150 000 to the residents of Qunu to be used for a community project. This is borne out in a letter dated 10 November 1997 from Sangoni Incorporated, the attorneys who represented Mr Mandela. [16] It appears that after his divorce Mr Mandela conducted himself as the owner of the house, without any recognition of any rights of the appellant. In addition, the property was vastly extended and improved from the resources of Mr Mandela. At some stage after the Qunu property was registered in Mr Mandela’s name on 24 February 1998, extensive building was done to construct a much larger home than the one built during 1993-1995. Precisely when this occurred is unclear but the executors included in their answering papers a resolution by the NRM Family Trust dated 7 October 2002 in terms of which the trust resolved to enter into a building contract to the value of R4 548 600 for the construction of a residence on Qunu. This, in my view, should have raised the appellant’s eyebrows as regards the land itself. She could hardly have thought, after the divorce, that Mr Mandela would erect a mansion for her benefit. Indeed, the uncontested evidence is that even at the time of the divorce Mr Mandela and the appellant had not spoken for several years. The executors raised the same issues in order to show that there was an unreasonable delay and that a reasonable person in the shoes of the appellant would have reacted swiftly to assert her alleged right to the property. I therefor agree with the court a quo that there was an unreasonable delay by the appellant in instituting the review proceedings. (See Gqwetha para 49 and Khumalo & another v MEC for Education, KwaZulu-Natal [2013] ZACC 49; 2014 (5) SA 579 (CC) para 48). [17] I turn to consider whether the court a quo in the exercise of its discretion correctly concluded that the unreasonable delay should not be condoned, with the result that the application for review could not be entertained. Of primary concern in this inquiry is the inherent potential for resultant prejudice to the heirs of Mr Mandela if the challenged decision is set aside. In Gqwetha para 23 the majority judgment remarked that: ‘[P]roof of actual prejudice to the respondent is not a precondition for refusing to entertain review proceedings by reason of undue delay, although the extent to which prejudice has been shown is a relevant consideration that might even be decisive where the delay has been relatively slight’. (See also Wolgroeiers Afslaers v Munisipaliteit van Kaapstad 1998 (1) SA 13 (A) at 38H-42D at 42C). [18] In Gqwetha paras 33-35, it was pointed out that whether the delay should be condoned cannot be evaluated in a vacuum, but only relative to the challenged decision and particularly with the potential for prejudice in mind. The prospect of setting aside the decision, ie the merits of the case, was not a material consideration in the absence of an evaluation of what the consequences of setting aside the decision were likely to be. The prospect (or lack of it) of a meaningful consequence to the setting aside of an administrative decision, rather than merely the prospect of the administrative decision being set aside, might be a relevant consideration to take into account. [19] The appellant’s challenge to the lawfulness of the decision of the Minister to donate the property to Mr Mandela and the subsequent transfer and registration of the property into Mr Mandela’s name, was based upon the allegation that a formal resolution by the community of Qunu, was not obtained in respect of the donation of the land to Mr Mandela, as required in terms of s 3 of the Upgrading of Land Tenure Rights Act 112 of 1991. It was also alleged that the disposal of the property by the Minister was made without complying with the provisions of the Interim Protection of Informal Land Rights Act 31 of 1996, which required that the informal rights holders consent to the disposal, before being stripped of their informal rights. [20] The Minister however denied these assertions, contending that he had at his disposal information and documents which formed part of the Record of Decision, including an internal memorandum from the officials in the Minister’s office, a resolution from the Ebotwe Tribal Authority authorising the registration of the deed of grant in respect of the property, and copies of the Permission to Occupy (PTO) allotment in favour of Mr Mandela dated 5 January 1995 or 1996. Although some of the copies of documents referred to are illegible, we were told that these are the best copies available. This is the sort of thing which can happen where a claimant lets the grass grow under her feet. Counsel for the Minister was at pains to explain the status of the PTO and suggested that these were issued by the Department of Local Government and Land Tenure in terms of a Proclamation. The submissions were difficult to follow. Neither side properly addressed the legislative regime under which the PTO was purportedly issued. The PTO itself refers to s 3(k) of a Transkeian Proclamation 10 of 1966 which is not readily available to us and which neither side furnished to the court. After the hearing the Minister’s counsel provided to the court a copy of Location Regulations: Unsurveyed Districts: Transkeian Territories, No 26 of 1936. How these bear on the matter is not self-evident. [21] In support of her customary law claim to the property, the appellant says she believed that she was still married to Mr Mandela in terms of customary law even after the dissolution of their civil marriage. She contended that Mr Mandela also believed and lived in accordance with the Abathembu custom. However, notwithstanding the advice from her mother-in-law that she was entitled to have her own house, she never asserted her right to have her own house, to the exclusion of Ms Machel. She alleged that she visited the property even after the final decree had been granted but at no stage did she protest that Ms Machel was not entitled to occupy what she claims to be her house. She gave no particulars as to how often and under what circumstances she visited the Qunu property. The executors’ evidence indicates that in the main it was used by Mr Mandela and his third wife, Ms Machel. [22] If Mr Mandela lived strictly in accordance with the Abathembu customs, he would have claimed his lobola back in order to bring the customary marriage to a final end. But, apparently he did not, because he believed that the marriage bond between himself and the appellant had been finally put asunder by the decree of divorce. Of significance in this regard is what Mr Mandela himself said in para 22 of his unsigned affidavit in opposing an application for the postponement of the divorce proceedings: ‘[I]t is correct that it is customary among the Tembus for a person in my position to have regard to our customs and traditions. I have respected them in the past and will continue to do so now and in future. However I know of no custom or tradition that deals with the dissolution of a civil marriage by the courts’. (Emphasis added.) It is therefore clear that Mr Mandela regarded the decree of divorce as being determinative of any rights flowing from the marriage concluded between the appellant and himself. That he did not claim the return of his lobola, is a clear indication that he regarded the marriage as at an end, in terms of customary law. In any event, there is very little evidence to prove that the custom of claiming the lobola back was followed by the wider Abathembu clan. [23] There are conflicting opinions between the experts called by both parties as to the effect upon a customary marriage of a decree of divorce. One opinion confirms the existence of the custom that the customary marriage remains extant even after the dissolution of the civil marriage (Prof R B Mqeke for the appellant). The other, Prof D S Koyana for the executors, opines that courts have expressed themselves clearly (and perhaps somewhat harshly) against the inclination to import customary marriage rules into civil rites marriages, which is offensive precisely because the (unpurified) customary marriage pre-1998 was not recognised as a valid marriage. [24] In the result the court a quo concluded that the appellant’s prospects of showing that the customary marriage remained in existence appeared to be tenuous. As regards the appellant’s claim to the property in reliance upon her status as the second customary wife of the late Mr Mandela, the court a quo concluded that the appellant’s prospects of showing that the original site and the extended site were allocated to her in her personal capacity, were not strong. The court a quo also found that in the absence of a right to the property, the appellant may not achieve anything meaningful in reviewing and setting aside the decision of the Minister. The court a quo therefor refused to grant an order declaring as null and void, the decision by the Minister to donate the property to Mr Mandela. The court a quo then dismissed the review application on the basis that the unreasonable delay of the appellant should not be condoned, regard being had to the nature and strength of the merits of the application, as well as the prospects of the appellant achieving anything meaningful, by setting aside the decision of the Minister. [25] It should be noted that with regard to the issue of whether the appellant would achieve anything meaningful by setting aside the decision of the Minister, although Counsel for the appellant accepted that the appellant and her children would be entitled to use the property in terms of the provisions of Mr Mandela's will, as set out above, Counsel stated that the meaningful result for the appellant if her claim to the property was upheld, would be that she would then be entitled to exclude Ms Machel from using the property. For reasons which will become apparent, I find it unnecessary to determine whether the court a quo was correct or not, in the conclusions it reached on the merits of the appellant’s claim. [26] I turn to the issue of the potential for resultant prejudice if the decision of the Minister is set aside, which is inextricably connected to the finding of unreasonable delay. As stated in Liberty Life Association of Africa v Kachelhoffer NO & others 2001 SA 1094 (C) at 1114; ‘The enquiry into whether prejudice is present or not entails comparing the present position of the other parties involved with what it would have been had proceedings been instituted within a reasonable time. Prejudice will be considered to be present if because of the delay the recollections of parties or the person whose decision is being reviewed have paled; persons who have to depose to affidavits or testify are no longer available; and where documentary or other forms of evidence are no longer available.’ [27] In this case Mr Mandela is not available to put his side of the story which compromises the principle of audi alteram partem. Although the appellant had a number of witnesses in support of her version as to how the Qunu property was allocated to her by the tribal leaders, the weight of this evidence might have been diminished if Mr Mandela himself had been alive to give his version. All the evidence and the conduct of Mr Mandela indicate that he genuinely believed that the Qunu property was his to the exclusion of the appellant. The original modest dwelling constructed on the property over the period 1993-1995 was built at a time when he and the appellant were separated from each other and hardly talking. The mansion was erected after they were divorced and was used by himself and his new wife. The appellant must have been aware of such improvements and adopted a supine attitude towards her alleged claim. She provided no acceptable evidence that she contributed financially to the improvements on the property. Mr Mandela allowed the property to be donated to himself and to be registered in his name. He disposed of it by will. Absent any dishonest and unworthy intentions to the late Mr Mandela, one is bound to conclude that there is some important part of the story which the court did not hear because the review was only instituted after Mr Mandela’s death. [28] I agree with the submission by the respondents that a reasonable person in the position of the appellant would have asserted a right to ownership of the property before the death of Mr Mandela. To wait until after his death is extremely prejudicial to his estate and heirs because his version of events is not available. Part of the prejudice lies in the very fact that, because the appellant’s claim was only asserted after Mr Mandela died, the evidence in her favour may now seem to be stronger than it would have been had Mr Mandela’s counter- version been before the court. [29] Another relevant consideration is that if Mr Mandela had been aware of this claim in good time, he most probably would have devolved his estate differently. He bequeathed substantial sums to the children, grandchildren and great-grandchildren from his marriage with the appellant. If he had known that the appellant laid claim to the Qunu property for herself and for the benefit of the children from her marriage to Mr Mandela, he may well not have made these bequests or may have bequeathed more modest amounts. He may have taken steps to exclude her as a beneficiary of family trusts on the basis that the value of the Qunu property would be sufficient for her and the descendants from that marriage. [30] Be that as it may, I am prepared to assume, without deciding, that on the evidence before the court the appellant’s case on the merits has good prospects of success and that a meaningful result for the appellant would be achieved by setting aside the decision of the Minister. These assumed prospects of success are however not sufficient to swing the balance in her favour when it comes to the discretion as to whether to overlook the delay, when due regard is had to the potential for severe resultant prejudice if the decision of the Minister is set aside. [31] It must be made clear that the decision to dismiss the appeal is exclusively based on the excessive undue delay coupled with the potential for severe resultant prejudice to be suffered by the respondents, and the lack of an acceptable explanation for the unreasonable delay. The following warrants mentioning: It should be noted that although customary law marriages were not recognised in South African law until 1998, s 2 of the Recognition of Customary Marriages Act 120 of 1998 provides that a marriage which is a valid marriage at customary law and existed at the commencement of this Act is for all purposes recognised as a marriage. This narration is to clarify the fact that the appellant’s customary law right and constitutional right to property were not simply ignored by this court. Even if the appellant were to succeed in asserting her customary law claim to the property, she would not be entitled to the whole property measuring (96, 9856) hectares simply because her right of possession, customarily, would have been limited to the small portion allegedly allotted to her by the King and the local community in her capacity as the second wife to the late Mr Mandela. If the appellant’s case was confined to the small portion of the entire property without conflating it with the larger portion which was donated by the Minister in 1997, perhaps her case would have been adjudicated differently. [32] I now turn to deal with the question of costs. On the face of it the case sought to be made by the appellant does not appear to be of a constitutional nature. However, on analysis I think in essence she was challenging the legality of a decision of the Minister to donate what she alleged to be her property to Mr Mandela. The litigation thus implicated the constitutional principle of legality as well as her rights to property (s 25 of the Constitution). See Harrielall v University of KwaZulu-Natal (CCT100/17) [2017] ZACC 38 (31 October 2017) paras 17-18. It is settled law that unsuccessful litigants who approach the court, in good faith, to assert constitutional rights, should not be discouraged to do so for fear of having costs awarded against them. (See Biowatch para 21 and Affordable Medicines Trust & others v Minister of Health & others 2006 (3) SA 247 (CC) para 138). [33] If the appellant’s delay justified a conclusion that the institution of the review proceedings was frivolous or vexatious or manifestly inappropriate, this may have justified a departure from Biowatch. However, the fact that a delay is found by the court to be objectively unreasonable does not mean that the litigation is frivolous or vexatious in the sense contemplated in the Constitutional Court jurisprudence. The court a quo did not find that the appellant’s institution of the proceedings was frivolous or vexatious; she was ordered to pay costs on the sole basis that no constitutional issues were decided in the light of the finding on delay. I do not think that this in itself warrants a departure from Biowatch nor am I persuaded that the appellant’s institution of the proceedings was vexatious or frivolous or manifestly inappropriate. [34] In this regard the court a quo thus misdirected itself by ordering the appellant to pay the costs as against the Minister. The appeal must succeed on the costs issue against the Minister, I am of the view that each party should bear its own costs. However, as regards the first respondent and the appellant these are private persons in their private capacities, therefore the Biowatch principles should not be applicable (cf Turnbull-Jackson v Hibiscus Court Municipality & others [2014] ZACC 24; 2014 (6) SA 592 (CC) para 99). [35] On the basis that the appellant instituted the review proceedings after 17 years without an acceptable explanation, the common law rule that review proceedings should be initiated without undue delay has been violated. I am accordingly satisfied that the court a quo in the exercise of its discretion correctly concluded that this unreasonable delay should not be condoned. The appeal on the merits must accordingly fail. [36] For the above reasons, I make the following order. 1 The appeal against the costs order granted by the court a quo against the appellant in favour of the third respondent is upheld. 2 The costs order granted by the court a quo against the appellant in favour of the third respondent is set aside and substituted with the following: ‘As regards costs between the appellant and the third respondent, each party should bear its own costs’. 3 The appeal against the dismissal of the review application is dismissed. 4 The appellant is ordered to pay the first respondent’s costs including costs of two counsel. _______________________ J B Z Shongwe Acting President of the Supreme Court of Appeal Appearances For the Appellant: K Pillay SC (with her M Sello and M Lekoane) Instructed by: Mvuzo Notyesi Incorporated, Mthatha Christo Dippenaar Attorneys, Bloemfontein For the first Respondent: V Maleka SC (with him T Ngcukaitobi) Instructed by: Messrs Ledwaba Mazwai, Pretoria Kramer Wiehman Joubert, Bloemfontein For the 3rd and 4th Respondent: V Notshe SC (with him M Pangio) Instructed by: The State Attorney, Bloemfontein For the 8th and 9th Respondent: S C Makangoa Instructed by: Messrs Makangela Mtungani Incorporated, Mthatha Moroka Attorneys, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 19 January 2018 STATUS Immediate 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. Mandela v The Executors, Estate Late Nelson Rolihlahla Mandela & others (131/17) [2017] ZASCA 02 (19January 2018) Today the Supreme Court of Appeal (SCA) upheld an appeal against the costs order granted by the Eastern Cape Local Division, Mthatha and dismissed the appeal regarding the review application in a matter involving the late Mr Nelson Rolihlahla Mandela (Mr Mandela) and Mrs Nomzamo Winifred Madikizela Mandela, the appellant. The primary issues on appeal were whether the court a quo was correct to dismiss the appellant’s review application with costs on the basis that she unreasonably delayed to launch an application, and whether that delay should be condoned. A further issue was whether the court was justified to mulct the appellant with costs given the nature of the litigation. The facts of the matter were: On 16 November 1997, the third respondent, the Minister of Land Affairs for the Republic of South Africa (the Minister), took a decision to donate property to Mr Mandela. Mr Mandela later bequeathed that property to the Nelson Rolihlahla Mandela Family Trust (the Trust) to administer for the benefit of the Mandela family, his third wife, Ms Graca Machel, and her two children. On 14 October 2014 the appellant instituted review proceedings in which she sought an order declaring the Minister’s decision to donate the property null and void; alternatively, reviewing and setting aside that decision and ancillary relief. The court a quo dismissed the review application mainly on the basis that there was an unreasonable delay which resulted in severe prejudice to the respondents. Relying on the principles set in Associated Institutions Pension Fund & others v Van Zyl & others 2005 (2) SA 302 (SCA), the SCA adjudicated the Minister’s administrative action in terms of the common law and not the Promotion of Administrative Justice Act 3 of 2000 (PAJA). In line with these principles, the SCA held that in respect of judicial and administrative decisions and litigation in general, it is desirable and in the public interest that finality be reached within a reasonable time. It affirmed the long-standing rule that courts have the power, as part of their inherent jurisdiction, to regulate their own proceedings. This enables them to refuse a review application if the aggrieved party is guilty of unreasonable delay in initiating the proceedings. In view of the facts, the SCA agreed with the court a quo that there was an unreasonable delay by the appellant to institute the review proceedings. In respect of the application to have the delay condoned, the SCA held that a reasonable person in the position of the appellant would have asserted a right to ownership of the property before Mr Mandela’s death. It found that the appellant’s delay was prejudicial to Mr Mandela’s estate and heirs because his version of events was not available. It thus refused the application for condonation. Regarding the issue of costs, the SCA found that the litigation implicated the constitutional principle of legality as well as the appellant’s rights to property. Consequently, it applied the principles laid in Biowatch Trust v Registrar, Genetic Resources & others 2009 (6) SA 232 (CC) and concluded that the appeal must succeed on the costs issue against the Minister and ordered that each party pay its own costs. However, as regards the first respondent and the appellant, it held that these are private persons acting in their private capacities. In this respect, it held that the Biowatch principles are not applicable and the appellant is ordered to pay the first respondent’s costs including costs of two counsel.

3998

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 286/2022 In the matter between: CLOSE-UP MINING (PTY) LTD FIRST APPELLANT WILLEM PIETER TENNER SECOND APPELLANT CLOSE-UP MACHINERY AND PLANT HIRE (PTY) LTD THIRD APPELLANT and THE ARBITRATOR, JUDGE PHILLIP BORUCHOWITZ FIRST RESPONDENT LUTZKIE GROUP OF COMPANIES (PTY) LTD SECOND RESPONDENT Neutral citation: Close-Up Mining (Pty) Ltd and Others v The Arbitrator, Judge Phillip Boruchowitz and Another (286/2022) [2023] ZASCA 43 (31 March 2023) Coram: VAN DER MERWE, MOCUMIE, MEYER and MATOJANE JJA and UNTERHALTER AJA Heard: 7 March 2023 Delivered: 31 March 2023 Summary: Arbitration – grounds of review – arbitrator enjoyed no discretionary competence to decide a dispute not contained in the pleadings – Arbitration Foundation of Southern Africa (AFSA) rules applicable – gross irregularity not shown. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Raulinga J, sitting as the court of first instance): The appeal is dismissed with costs, including the costs of two counsel, where so employed. The second respondent is ordered to pay the costs of volumes 4-12 of the record. JUDGMENT Unterhalter AJA (Van der Merwe, Mocumie, Meyer and Matojane JJA concurring): Introduction [1] The second respondent, Lutzkie Group of Companies (Pty) Ltd (the Lutzkie Group), brought arbitral proceedings against the appellants, Close-Up Mining (Pty) Ltd, Willem Pieter Tenner and Close-Up Machinery and Plant Hire (Pty) Ltd, respectively (collectively, Close-Up Mining). The arbitrator, appointed by the parties, was the first respondent, retired Judge Phillip Boruchowitz (the Arbitrator). The dispute submitted to arbitration concerned two agreements, styled Binding Term Sheet 1 and 2. Having heard the matter, the Arbitrator made an award on 18 November 2020. [2] In the award, the Arbitrator declined to consider a defence raised by Close-Up Mining to the effect that the Lutzkie Group had repudiated the agreements. The Arbitrator found that the defence had not been pleaded, and hence fell outside his jurisdiction. Close-Up Mining considered the Arbitrator to have fallen into error. Consequently, Close-Up Mining brought review proceedings in the Gauteng Division of the High Court, Pretoria (the high court), seeking to set aside the Arbitrator’s award in terms of s 33(1) of the Arbitration Act 42 of 1965 (Arbitration Act). [3] Its challenge was initially widely cast. In a supplementary founding affidavit, filed before the hearing in the high court, the grounds upon which Close-Up Mining sought to set aside the award were considerably pruned. In essence, Close-Up Mining contended that the Arbitrator had excluded from consideration its defence of repudiation on the basis that the defence had not been pleaded. The Arbitrator, said Close-Up Mining, had failed to recognise that he enjoyed a discretion to entertain the defence, even though it was not pleaded. The Arbitrator thereby misconceived the nature of the enquiry before him, and his associated duties, and thus committed a gross irregularity in terms of s 33(1)(b) of the Arbitration Act. In addition, Close-Up Mining complained that the Arbitrator had ‘made’ Mr Tenner a party to Binding Term Sheet 1, when he was not a party to this agreement. By so doing, claimed Close-Up Mining, the Arbitrator had exceeded his powers and committed a gross irregularity. [4] The review came before Raulinga J. The Arbitrator abided the decision of the court. The high court found that the disputes raised in the arbitration proceedings are those raised on the pleadings. And since the repudiation defence had not been raised on the pleadings, the Arbitrator had correctly decided that he lacked the jurisdiction to entertain the defence. The review was accordingly dismissed with costs, including the costs of two counsel. With the leave of the high court, Close-Up Mining appeals to this Court. Pleading and jurisdiction ground of review [5] I turn, first, to the principal issue raised in the appeal: is an arbitrator precluded from deciding a defence that was not pleaded? [6] The Arbitrator considered this to be so, and consequently determined that his competence was thus limited. The dispute referred to arbitration is framed by the pleadings. If a defence is not pleaded, he reasoned, the Arbitrator does not enjoy the competence to decide that matter. This reasoning, Close-Up Mining contended, is mistaken. [7] The matter before us proceeded on the basis that the question to be determined is whether a party to arbitration proceedings that has failed to plead an issue may nevertheless seek to have the arbitrator decide this issue. It was thus somewhat unexpected that counsel for Close-Up Mining commenced his oral submissions with the contention that the pleadings in the arbitration could be understood to have raised the defence of repudiation. We do not need to engage this interpretative exercise. Close-Up Mining confined their challenge to the grounds set out in their supplementary founding affidavit. There, Close-Up Mining relied upon the proposition that the Arbitrator had come to the erroneous conclusion that he lacked jurisdiction to decide a matter not pleaded. That proposition has as its starting premise that Close-Up Mining did not plead the defence of repudiation. The contention that the opposite is true is at odds with the grounds upon which Close-Up Mining formulated their case to set aside the award. We decline to entertain a new case on appeal addressed before us in oral argument. [8] Proceeding then, on the basis that Close-Up Mining did not plead the Lutzkie Group’s repudiation of the agreements, Close-Up Mining did however raise the question of repudiation in its heads of argument before the Arbitrator. This, Close-Up Mining argued, rendered the principle in Shill v Milner,1 of application. There, the Appellate Division recognised that a court enjoys a discretion to give some latitude to a litigant to raise issues at the trial that were not explicitly pleaded, where to do so gives rise to no prejudice, and where all the facts have been placed before the trial court. Just as the Shill v Milner discretion is enjoyed by a trial court, so too, Close-Up Mining contended, an arbitrator is invested with the same competence. The Arbitrator however failed to recognise this competence, and hence committed a gross irregularity. [9] What then of the Arbitrator’s holding, affirmed by the high court, that he enjoyed no jurisdiction to decide matters that were not pleaded? As an invariable statement of the competence of an arbitrator, it is a proposition that cannot stand. [10] It is well understood that parties may agree the matters to be referred to arbitration, and enjoy considerable autonomy in doing so.2 It is the arbitration agreement of the parties, taken together with acceptance by the parties of the conditions on which the arbitrator accepts appointment, that determine the jurisdiction of the arbitrator as to the matters referred to arbitration. [11] Under the principle of party autonomy, there is no reason why parties cannot agree to confer upon an arbitrator the competence to decide matters that have not been pleaded, under a discretionary competence, the content of which is akin to the discretion recognised in Shill v Milner. It is important, however, to recognise the source of such a competence in arbitration proceedings. It does not derive, as with the courts, from an inherent power to protect and regulate 1 Shill v Milner 1937 AD 101 (A) at 105. 2 Lufuno Mphaphuli and Associates (Pty) Ltd v Andrews and Another [2009] ZACC 6; 2009 (6) BCLR 527 (CC); 2009 (4) SA 529 (CC) para 219; Telcordia Technologies Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA); [2007] 2 All SA 243 (SCA); 2007 (5) BCLR 503 (SCA) para 4. their own process.3 It is to be found, rather, in the arbitration agreement of the parties. If the parties agree to confer upon the arbitrator a discretionary competence to decide a matter that has not been pleaded, but one that crystalises outside of the pleadings, there is no reason why the parties’ agreement should not be honoured. [12] It follows that there is no rule of law that an arbitrator cannot enjoy jurisdiction to decide matters not set out in the pleadings. What competence the arbitrator enjoys depends upon what is contained in the arbitration agreement. This holding is an application of the principle of party autonomy. It is also consistent with the Arbitration Act. An arbitration agreement is defined in the Arbitration Act to mean a written agreement providing for the reference to arbitration of any existing dispute or any future dispute relating to a matter specified in the agreement. That is expansive language, and it would include a dispute that arises in the course of arbitration proceedings that the arbitrator is given a discretion to entertain. The only two matters that the Arbitration Act specifically excludes from a reference to arbitration are these: any matrimonial cause or any matter relating to status.4 Plainly, like any other agreement, a provision contrary to public policy or the Constitution would also not be enforceable. But there is no suggestion that confining an arbitrator’s competence to the matters pleaded is a requirement of the Constitution or of public policy. On the contrary, our courts have recognised the value that attaches to party autonomy in the use of arbitration to resolve disputes.5 3 Section 173 of the Constitution. 4 Section 2 of the Arbitration Act. 5 See Telcordia Technologies Inc para 4 as well as authorities cited therein. [13] The holding in Hos+Med6 is entirely consistent with the position that I have taken. In Hos+Med, this Court affirmed that the only source of an arbitrator’s power is the arbitration agreement. The assumption by the appeal tribunal, in that case, of a power to decide a matter outside of the pleadings, on the strength of Shill v Milner, was held by this Court to be incompetent because the submission to arbitration expressly limited the issues to the matters pleaded. Significantly, this holding says nothing as to whether parties can agree to submit issues to arbitration that are not pleaded. Hos+Med simply found that the parties did not do so. [14] I am fortified in my opinion by the unreported decision of this Court in Holford.7 There, the arbitration agreement accorded the arbitrator ‘such powers as are allowed by law to a High Court of the Republic of South Africa to ensure the just, expeditious, economical and final determination of the dispute’. This Court found that since a court would have been entitled to apply the principles set out in Shill v Milner, the arbitrator was likewise entitled to do so. [15] In sum, the competence of an arbitrator to decide matters is determined by the arbitration agreement. The arbitration agreement may confine the submission to the issues that have been pleaded. But there is no rule of law that requires the parties to confine their agreement in this way. The arbitration agreement can therefore confer a competence upon an arbitrator to decide matters upon an exercise of a discretion of the kind recognised in Shill v Milner. All depends upon what the parties have agreed, and the proper interpretation of their agreement. 6 Hos+Med Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing and Consulting (Pty) Ltd and Others [2007] ZASCA 163; [2008] 2 All SA 132 (SCA); 2008 (2) SA 608 (SCA) paras 30-31. 7 Holford v Carleo Enterprises (Pty) Ltd and Others [2014] ZASCA 195 (SCA) para 9. [16] I turn next to this question: did the arbitration agreement concluded between the parties in fact confer a discretionary competence upon the Arbitrator to entertain the defence of repudiation, raised by Close-Up Mining in its heads of argument? [17] Close-Up Mining contended that the arbitration agreement did so. The Lutzkie Group resisted this contention. [18] I should clarify that we are here concerned to determine what competence the Arbitrator in fact enjoyed in terms of the arbitration agreement. We are not called upon to decide how the Arbitrator should have exercised such competence, if he had it to exercise. [19] The arbitration agreement is terse. It reads as follows: ‘Save to the extent to the contrary provided for in this Term Sheet, any dispute arising out of or in connection with this Term Sheet shall be decided by arbitration to be held in Sandton and shall be dealt with by AFSA (the Arbitration Foundation of South Africa).’ [20] The following interpretation of the arbitration agreement was common ground between the parties. We should understand the reference in the arbitration agreement to the Arbitration Foundation of South Africa (AFSA) to be a reference to the AFSA commercial rules for domestic arbitration applicable at the time (the AFSA rules). [21] Close-Up Mining relied upon article 11.1 of the AFSA rules. That rule reads as follows: ‘The arbitrator shall have the widest discretion and powers allowed by law to ensure the just, expeditious, economical, and final determination of all the disputes raised in the proceedings, including the matter of costs.’ [22] Counsel for Close-Up Mining emphasised three features of article 11.1. First, it conferred the widest discretion and powers allowed by law. That would include the kind of discretion recognised in Shill v Miller. Second, article 11.1 references the disputes raised in the proceedings. It does not refer to disputes raised in the pleadings. And the proceedings must connote the arbitration proceedings. Disputes raised in evidence or argument are disputes raised in the proceedings. Third, the provisions of article 11.2 that set out specific powers do not detract from the amplitude of the general power conferred in article 11.1. This is precisely what article 11.2 says. It reads as follows: ‘[w]ithout detracting from the generality of the aforegoing [ie article 11.1], the arbitrator shall have the following powers: . . .’. Article 11.2’s tabulation of specific powers, including powers concerning pleadings, does not diminish the scope of the power conferred in article 11.1. [23] Close-Up Mining argued that the wide terms in which the power conferred by article 11.1 is cast must include a discretionary competence of the kind recognised in Shill v Milner. Whether this is so, requires us to interpret the arbitration agreement. The arbitration agreement, the parties have agreed, must be taken to include the AFSA rules. Like any agreement, we interpret the agreement, and hence the AFSA rules, according to the now well understood triad of text, context, and purpose.8 [24] True enough, article 11.1 is widely cast. It confers ‘the widest discretion and powers allowed by law’ for a particular purpose. That is, ‘to ensure the just, expeditious, economical, and final determination of all the disputes raised in the proceedings, including the question of costs’. However, if a dispute is not raised in the proceedings, then the powers conferred upon the arbitrator cannot be of 8 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25. application, no matter their breadth, because the power is conferred to determine a dispute raised in the proceedings. [25] Thus, for the arbitrator to exercise the wide discretion and powers conferred by article 11.1, a dispute must have been raised in the proceedings. The question is then this: when can it be said that a dispute has been raised in the proceedings? A dispute is raised in the proceedings, under the AFSA rules, by following these rules. A party must make a written request for arbitration. The request must, inter alia, set out a statement that an award, in accordance with the claims, would fall within the terms of the arbitration agreement (article 4.2.3); a statement setting out the locus standi of each party, the nature of the dispute, all the material facts, the contentions relied upon by the claimant and the relief claimed (article 4.2.4). Provision is then made for the response of the defendant. That response includes a statement as to whether the defendant disputes the arbitration agreement and that it is still operative (article 6.1.4); whether the defendant disputes that the claim falls within the terms of the arbitration agreement (article 6.1.4); and, if not, by delivering a statement of defence, setting out the material facts and contentions relied upon by the defendant, indicating which of the claimant’s facts and contentions are disputed, and what relief is claimed (article 6.1.5.1). The defendant may deliver a counter-claim (article 6.1.5.2), and the claimant, a statement of defence to the counter-claim (article 6.4). [26] Once a dispute has been raised on the pleadings, the arbitrator is invested with further powers granted under article 11 in respect of the pleadings. Those powers include the competence to permit of the amendment of any pleading (article 11.2.13); the competence to make any ruling or give any direction he considers necessary or advisable for the just, expeditious, economical and final determination of all the disputes raised in the pleadings (article 11.2.5); and an arbitrator may also require a party to amend its pleadings so that they are not evasive, and to strike out averments in pleadings that are embarrassingly vague, scandalous, vexatious or irrelevant (article 11.2.22). [27] The AFSA rules define the term ‘pleading’ as follows. A pleading ‘includes documents comprising a Request for Arbitration, a statement of defence, a counter-claim and a statement of defence to a counterclaim’. The pleadings thus form steps in the proceedings by recourse to which disputes are raised. The pleadings, however, do not exhaust the ways in which disputes may be raised in the proceedings. [28] Article 11.2 provides examples of other types of disputes that may be raised in the proceedings in respect of which the arbitrator enjoys powers. The arbitrator may decide disputes as to the admissibility of evidence, any matter of onus, the production or preservation of property, the joinder of parties in the arbitration proceedings, and the furnishing of security for costs. [29] It follows that under the AFSA rules, disputes may be raised in the proceedings, outside of the pleadings, that the arbitrator is empowered to decide. The pleadings form part of the proceedings, but the proceedings are wider than the pleadings. [30] If that is so, then should we not conclude that the arbitrator has a discretionary power to permit a dispute raised outside of the pleadings to be treated as a dispute raised in the proceedings? Three reasons incline against that conclusion. [31] The first is conceptual. One cannot confuse the power of the arbitrator with the subject matter over which the arbitrator exercises this power. Article 11.1 is a general description of the arbitrator’s powers. Over what subject matter are those powers exercised? As I have said, the answer is the disputes raised in the proceedings in terms of the AFSA rules. Article 11.1 does not allow the arbitrator the discretionary power to decide that a dispute has been raised in the proceedings. It is for the parties to raise the dispute in terms of the AFSA rules. If they do so, the power conferred upon the arbitrator is to decide this dispute. [32] Second, the AFSA rules set out a detailed procedure by which the parties raise disputes by way of pleadings. As I have recognised, the pleadings are not the only way in which the parties may raise disputes in the proceedings. But a reading of the AFSA rules, taken as a whole, reflects that the exchange of pleadings is the procedure that is to be followed by the parties to define their primary substantive disputes. Why else specify in such detail what the request for arbitration and the statement of defence must contain, and the permission that must be sought of the arbitrator to amend the pleadings. There are then disputes that the AFSA rules permit the parties to raise as a consequence of the primary disputes that have been pleaded. Discovery, joinder, separation of issues: to identify a few examples. These disputes also require resolution. They may be raised by the parties in the course of the arbitration proceedings. But, these disputes arise from, and are parasitic upon, the primary pleaded disputes. I shall call these ‘dependent disputes’. [33] Dependent disputes may be raised by the parties in the proceedings, but their hallmark is to facilitate the determination of the primary disputes. The dependent disputes do not constitute the decision by the arbitrator of the primary disputes that have been pleaded. The AFSA rules therefore do not contemplate that a party to the arbitration may raise a substantive dispute outside of the pleadings, and that such dispute may be adjudicated by the arbitrator if he decides, on a discretionary basis, to do so. That would subvert a central feature of the AFSA rules. [34] The AFSA rules require the parties to raise their substantive disputes in the pleadings. If the pleadings fail to reflect the dispute adequately, then an amendment of the pleadings must be sought, and it is for the arbitrator to decide whether to permit the amendment. These rules are antithetical to the discretionary Shill v Milner power that Close-Up Mining would attribute to the Arbitrator. [35] Third, the discretionary power for which Close-Up Mining contends is an incident of the inherent power of the courts. While the principle of party autonomy permits parties to include such a discretionary power in their arbitration agreement (as I have found), it is an unusual provision to find in an arbitration agreement. Courts enjoy inherent power because they have a constitutional duty to secure justice. That extends beyond the interests of litigants. Arbitrators have no such power. It is the parties’ agreement that determines what dispute must be decided and the powers conferred upon an arbitrator to do so. What makes the discretionary power of the type recognised in Shill v Milner unusual in an arbitration agreement is that it rests upon a paradox of party autonomy. The parties would confer the discretionary power contended for by Close-Up Mining to permit the arbitrator to extend the reach of his own jurisdiction, something that is ordinarily for the parties to determine. The parties may do so, but an arbitration agreement should ordinarily make it plain that that is what the parties intended. The AFSA rules do no such thing. Their cumulative provisions point to the opposite conclusion – that no such discretionary power was conferred upon the Arbitrator. [36] For these reasons, I find that the AFSA rules do not confer a discretionary power upon the Arbitrator to decide whether to adjudicate the defence of repudiation. If the AFSA rules recognise no such power, then it is common ground that the arbitration agreement does not do so. Consequently, the Arbitrator made no error when he declined to entertain the defence of repudiation. And hence, Close-Up Mining has failed to establish that the Arbitrator committed a gross irregularity. The appeal on this ground must consequently fail. The parties to the transaction ground of review [37] The second ground of appeal relied upon by Close-Up Mining is this. The Lutzkie Group averred in their statement of claim that Mr Tenner was a party to Transaction 1 of Term Sheet 1. Counsel for the Lutzkie Group had, in his opening address in the arbitration, made it plain that the purchase price in respect of Transaction 1 was payable by the Lutzkie Group to Close-Up Mining. This, it was contended, was a recognition by the Lutzkie Group that Mr Tenner was not a party to Transaction 1. Yet, the Arbitrator, in his award, having identified the merx of the sale to include Mr Tenner’s shares in Close-Up Mining, made Mr Tenner a party to the transaction, when he was not, as counsel for the Lutzkie Group had acknowledged. By so doing, the Arbitrator, Close-Up Mining contended, exceeded his powers and committed a gross irregularity. [38] The opening address of counsel for the Lutzkie Group amounted to no withdrawal of the claim, so as to alter the dispute the Arbitrator was required to decide. That dispute included a claim by the Lutzkie Group for the following relief: that Mr Tenner be directed to do all such things and sign all such documents as may be necessary to effect transfer of his shares in Close-Up Mining, and of his right, interest, benefits and claims of whatsoever nature. That relief was pursued by the Lutzkie Group in the arbitration proceedings by seeking the specific performance of Transaction 1. The Arbitrator was required to decide upon the relief sought. He did so, and granted the relief. That Close- Up Mining considers the Arbitrator to have been in error, because Mr Tenner was not a party to Transaction 1, is of no account. The Arbitrator decided a live dispute concerning the remedy of specific performance. By so doing, he committed no gross irregularity. [39] Accordingly, this second ground of appeal must also fail. Costs [40] Close-Up Mining has not prevailed in the appeal. They must therefore bear the costs of that outcome, including the costs of two counsel, where so employed. That conclusion is subject to one rider. The Lutzkie Group insisted that the record must include the transcript of the arbitration proceedings. This was no small inclusion, amounting to nine volumes (some 1 500 pages). That insistence was entirely unwarranted. The first three volumes of the record were all that was required to ventilate and decide the appeal. [41] Where records contain unnecessary documentation or have not been properly prepared in other respects, this Court has limited the costs of preparation, perusal and copying that those responsible for preparing the record would have otherwise been entitled to claim.9 This is particularly so where the record is voluminous. There is no reason why this principle should not be extended to require that a party responsible for the unnecessary inclusion of documents in the record should be rendered liable for the costs occasioned thereby. Accordingly, the costs occasioned by the inclusion of the record of the arbitration proceedings must be borne by the Lutzkie Group. 9 Siyangena Technologies (Pty) Ltd v PRASA and Others [2022] ZASCA 149; [2023] 1 All SA 74 (SCA); 2023 (2) SA 51 (SCA) para 50 and case cited therein. [42] In the result, the appeal fails, and the following order is made: The appeal is dismissed with costs, including the costs of two counsel, where so employed. The second respondent is ordered to pay the costs of volumes 4-12 of the record. __________________________ D N UNTERHALTER ACTING JUDGE OF APPEAL Appearances For the appellants: B H Swart SC Instructed by: Alice Swanepoel Attorneys, Pretoria Symington De Kok Attorneys, Bloemfontein For the respondents: J J Brett SC Instructed by: Gothe Attorneys, Pretoria McIntyre Van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 March 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Close-Up Mining (Pty) Ltd and Others v The Arbitrator, Judge Phillip Boruchowitz and Another (286/2022) [2023] ZASCA 43 (31 March 2023) Today, the Supreme Court of Appeal (SCA) dismissed an appeal against the decision of the Gauteng Division of the High Court, Pretoria (the high court). The appeal was dismissed with costs, including the costs of two counsel, where so employed. The SCA further ordered the second respondent to pay the costs of volumes 4-12 of the record. The facts of the matter were as follows. The second respondent, Lutzkie Group of Companies (Pty) Ltd (the Lutzkie Group), brought arbitral proceedings against the appellants, Close-Up Mining (Pty) Ltd, Willem Pieter Tenner and Close-Up Machinery and Plant Hire (Pty) Ltd, respectively (collectively, Close-Up Mining). The arbitrator, appointed by the parties, was the first respondent, retired Judge Phillip Boruchowitz (the Arbitrator). The dispute submitted to arbitration concerned two agreements. In the award, the Arbitrator declined to consider a defence raised by Close-Up Mining to the effect that the Lutzkie Group had repudiated the agreements. The Arbitrator found that the defence had not been pleaded, and hence fell outside his jurisdiction. Close-Up Mining considered the Arbitrator to have fallen into error. Consequently, Close-Up Mining brought review proceedings in the high court. The high court found that the disputes raised in the arbitration proceedings were those raised on the pleadings. And since the repudiation defence had not been raised on the pleadings, the Arbitrator had correctly decided that he lacked the jurisdiction to entertain the defence. The question to be determined in the appeal was whether a party to arbitration proceedings that had failed to plead an issue may nevertheless seek to have the arbitrator decide that issue. The SCA found that the competence of an arbitrator to decide matters was determined by the arbitration agreement. The arbitration agreement may confine the submission to the issues that have been pleaded. But there was no rule of law that required the parties to confine their agreement in this way. The arbitration agreement can therefore confer a competence upon an arbitrator to decide matters upon an exercise of a discretion of the kind recognised in Shill v Milner 1937 AD 101 (A). All depended upon what the parties had agreed, and the proper interpretation of their agreement. The SCA turned next to the question of whether the arbitration agreement concluded between the parties in fact conferred a discretionary competence upon the Arbitrator to entertain the defence of repudiation, raised by Close-Up Mining in its heads of argument. The arbitration agreement, the parties had agreed, was taken to include the Arbitration Foundation of Southern Africa (AFSA) rules. In this regard, the SCA found that the AFSA rules did not confer a discretionary power upon the Arbitrator to decide whether to adjudicate the defence of repudiation. If the AFSA rules recognised no such power, then it was common ground that the arbitration agreement did not do so. Consequently, the Arbitrator made no error when he declined to entertain the defence of repudiation. And hence, Close- Up Mining had failed to establish that the Arbitrator committed a gross irregularity. The SCA held that the appeal on this ground consequently had to fail. Notably, the SCA held further that the costs occasioned by the inclusion of the record of the arbitration proceedings, amounting to nine volumes (some 1 500 pages), had to be borne by the Lutzkie Group. This was because a party responsible for the unnecessary inclusion of documents in the record should be rendered liable for the costs occasioned thereby. ~~~~ends~~~~

2706

non-electoral

2012

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case No: 276/2011 In the matter between MOKALA BELEGGINGS (PTY) LTD FIRST APPELLANT WILLEM HENDRIK STEYN SNYMAN SECOND APPELLANT and MINISTER OF RURAL DEVELOPMENT AND LAND REFORM FIRST RESPONDENT THE DIRECTOR-GENERAL OF THE DEPARTMENT OF LAND AFFAIRS SECOND RESPONDENT THE CHIEF LAND CLAIMS COMMISSIONER THIRD RESPONDENT THE REGIONAL LAND CLAIMS COMMISSIONER: GAUTENG AND NORTH WEST PROVINCE FOURTH RESPONDENT THE DEPUTY DIRECTOR: FINANCE, DEPARTMENT OF LAND AFFAIRS FIFTH RESPONDENT THE MINISTER OF FINANCE SIXTH RESPONDENT THE REGISTRAR OF DEEDS SEVENTH RESPONDENT MAHLANGU ATTORNEYS EIGHTH RESPONDENT BAROLONG BA GA MARIBA COMMUNITY NINTH RESPONDENT Neutral citation: Mokala Beleggings (Pty) Ltd & another v Minister of Rural Development and Land Reform and others (276/11) [2012] ZASCA 21 (23 March 2012) Coram: MPATI P, NAVSA, SNYDERS, MAJIEDT and WALLIS JJA Heard: 27 FEBRUARY 2012 Delivered: 23 MARCH 2012 Summary: Mora interest – interpretation of clauses in contract affecting mora interest – mora ex re and mora ex persona. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Land Claims Court (Randburg) (Mia AJ, sitting as court of first instance): 1. The appeal is upheld. 2. The first to fourth respondents are ordered jointly and severally to pay the costs of the appeal. 3. The order of the court below is set aside and substituted with the following: ‘(a) The first to fourth respondents are ordered to pay interest to the first applicant at the rate of 15.5 per cent per annum on the amount of R1 450 000 (one million four hundred and fifty thousand rand) from 28 November 2009 until 30 June 2010 and on the further amount of R1 450 000 (one million four hundred and fifty thousand rand) from 8 December 2009 until 12 July 2010; (b) The first to fourth respondents are ordered to pay interest to the second applicant at the rate of 15.5 per cent per annum on the amount of R1 475 000 (one million four hundred and seventy five thousand rand) from 8 December 2009 until 23 June 2010 and on the further amount of R1 475 000 (one million four hundred and seventy five thousand rand) from 28 November 2009 until 2 July 2010. (c) The first to fourth respondents are ordered jointly and severally to pay the costs of the application.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ MAJIEDT JA (MPATI P, NAVSA, SNYDERS and WALLIS JJA concurring): [1] ‘Interest is the life-blood of finance’ said Centlivres CJ six decades ago in Linton v Corser.1 The learned Chief Justice made this observation in the course of finding that there is no reason to draw a distinction between contractual interest and mora interest. This appeal concerns the latter and the crisp issue is whether a purchaser who deliberately delays effecting the transfer of property and payment of the purchase price can be held liable for mora interest. The appellants, as unsuccessful applicants for, inter alia, an order awarding them mora interest in the Land Claims Court, Randburg (the LCC) before Mia AJ sitting as court of first instance, are before us with leave of this court. 1 Linton v Corser 1952 (3) SA 685 (A) at 695G-H. [2] The appellants were the registered owners of fixed property on which the Snyman family farmed. The property was the subject of a land claim which the appellants conceded. They subsequently agreed to sell the property to the State. Two agreements of sale were drawn up as the property consisted of two separate pieces of land and each appellant owned one of these. I shall revert presently to the salient terms of the agreements which were signed by the purchaser on 29 January 2009. The State, as purchaser, was to appoint the conveyancers in terms of the agreements, which is contrary to usual practice. The eighth respondent, a firm of attorneys and conveyancers, was duly appointed in this regard. The agreements provided that transfer was to be effected to the land claimants, namely the Barolong ba ga Mariba community, the ninth respondent (the community), although the National Department of Land Affairs (the department) was stipulated as purchaser, but nothing turns on this. Of importance is that the agreements provided that ‘the transferring attorney undertakes to effect the transfer of the [properties] in the name of the purchaser within 2 (two) months from the date of signature of [the] agreement by all parties concerned’.2 [3] It was common cause on the papers that the conveyancers were ready to lodge papers in order to effect the transfer during the middle of June 2009. They were instructed, however, by their client, the department, to delay lodgement, first until 1 July 2009, then to October 2009 and eventually indefinitely. The reason given for this instruction was that the department had no funds in its budget to pay the purchase price. This, too, became common cause. These delays caused the appellants to dispatch, by registered post, written letters of demand, which I will discuss in more detail shortly. [4] When the letters of demand proved fruitless an urgent application was launched in the LCC for various orders, including a claim for mora interest. The urgent application elicited a positive response from the department 2 Clause 5.2 of the agreements. inasmuch as payment of 50 per cent of the purchase price was made to the first appellant on 30 June 2010 and the balance on 13 July 2010 and to the second appellant on 23 June 2010 and 2 July 2010 respectively.3 Registration of the transfer of the properties was also effected. But the department opposed the claims for mora interest and for a punitive costs order against it. The LCC declined to grant mora interest and made the normal costs order. In the result the claim for mora interest forms the sole subject of this appeal. [5] The appellants’ case for mora interest was based firstly, on mora ex re in reliance on clause 5.2 of the contracts and secondly, on mora ex persona by virtue of the written letters of demand. Shortly before the hearing of the matter in the court below, the appellants gave notice of an amendment of their Notice of Motion in terms whereof it relied on mora ex re as the main cause and in the alternative on mora ex persona. It was common cause in the LCC that the State was in mora regarding the performance of its obligations before the application was brought. However, it resisted the claim for mora interest on the ground that it was not obliged in law to pay interest. The LCC decided the matter on the basis that the agreement did not make provision for the payment of interest; that payment of the purchase price depended on the registration and transfer of the property and that the appellants (as applicants) failed to show when registration was effected and when payment was received in order to calculate a date from which interest should run. Mora ex re: clause 5.2 of the agreements [6] It is well established that ‘mora’ simply means default or delay and that it finds application when the consequences of a failure to perform a contractual obligation within the agreed time are determined.4 Where a contract fixes the time (either expressly or tacitly, but with certainty as to when 3 The agreements made provision for payment of 50 per cent of the purchase price within 30 days after the date of signature of the agreement and for payment of the balance thereof within 10 working days of the date of registration of transfer. 4 Scoin Trading (Pty) Ltd v Bernstein NO 2011 (2) SA 118 (SCA) para 11. it will arrive) for performance, mora ex re flows from the contract itself and there is no need for a demand to place the debtor in mora.5 The award of interest to a creditor where the debtor is in mora in respect of the payment of a monetary obligation in terms of an agreement is, in the absence of a contractual obligation to pay interest, based upon the principle that the creditor is entitled to be compensated for his loss arising from the fact that he was not paid on the due date.6 The loss is calculated on the basis of allowing interest on the capital sum owing over the mora period.7 [7] As stated, the appellants rely on clause 5.2, set out above, for mora ex re. In its judgment the LCC came to the startling conclusion that clause 5.2 is to be regarded as pro non scripto, since the Registrar of Deeds, and not the department’s conveyancers, is responsible for effecting the registration of transfer of the property. This is a material misdirection.8 What was required of the LCC was to interpret the clause, not to summarily dismiss it in the fashion that it did. While the provision is, on the face of it, plain and unambiguous, it is fraught with difficulties. The conveyancers, represented by the department, furnished an undertaking to have the registration of transfer effected within two months of the date of signature of the agreements. This was a tall order. But the clause cannot be interpreted as fixing a date for transfer because the actual date of transfer is always dependent on various events extraneous to the conveyancer, as it happened in this case. A subdivision and consolidation of the two properties sold by the different legal entities (the appellants) had to be effected. In order to obviate further delays, the first appellant agreed to an amendment of its sale agreement by altering the description of the property, thereby eliminating the need for a subdivision and consolidation. An addendum to that sale agreement was consequently entered into on 15 May 2009. A further cause for delay in the registration of the transfer was that the clearance certificate in respect of one of the properties had been lost and a 5 Ibid. 6 Bellairs v Hodnett and another 1978 (1) SA 1109 (A) at 1145D-E. 7 Bellairs at 1145E-F; J van Zijl Steyn, Mora Debitoris volgens die Hedendaagse Romeins- Hollandse Reg, pp 84 – 85. 8 Counsel for the department conceded this point during argument. new one had to be obtained from the municipality. Thus the date on which the conveyancers were first ready to lodge transfer documents was the week following on 11 June 2009. These examples illustrate that clause 5.2 could not and did not establish mora ex re. That being the case, one is constrained to consider the breach provisions in the sale agreements and the written notices, as I do next. Mora ex persona: the written notices [8] Where a contract does not contain an express or tacit stipulation with regard to the date when performance is due, a demand is needed to place the debtor in mora, ie mora ex persona.9 In Linton v Corser, supra, the court held the purchaser liable for mora interest (it was a case of mora ex persona) for delaying the signing of the transfer documents and the delivery of the necessary guarantees. Mora in the present matter concerned a delay in the payment of the purchase price as a result of the department’s delay in having the registration of transfer effected by its conveyancers. As stated, the fact of and the reason for the delay was common cause. The delay was deliberate, due to the department’s financial constraints and resultant inability to pay the purchase price. Of course our law does not require fault on the part of a debtor for a contractual damages claim. All that is required is proof that the debtor is in mora.10 [9] The sale agreements contained a breach provision. Clause 14.1 made provision for the prejudiced party to notify the defaulting party to rectify the default, whereafter the former would have the right, in the event of a continued default for 14 days after receipt of the notice, to claim specific performance or to cancel the agreement or to refer the matter to the LCC for adjudication. Clause 15.1 set out the parties’ chosen domicilia; in the case of the purchaser it is stipulated as ‘care of the Chief Land Claims Commissioner 9 Scoin Trading (Pty) Ltd v Bernstein NO, para 12. 10 Scoin Trading (Pty) Ltd v Bernstein NO, para 20. (ie the third respondent), Department of Land Affairs, 184 Jacob Maré Street, Pretoria’. Clause 15.3 provided that all notices required in terms of the agreements were to be in writing and were to be delivered either by hand or sent by pre-paid registered post. It also contained a deeming provision to the effect that notices by registered post would be considered as having been received by the addressee 14 days after it was posted, unless the contrary is proved. [10] The appellants, through their attorneys, caused letters of demand to be sent by registered post. Both letters, although bearing different dates, namely 21 October 2009 in respect of the first appellant, and 28 October 2009 in respect of the second appellant, were dispatched on 30 October 2009. They were both addressed to ‘Barolong ba ga Mariba, c/o The Chief Land Claims Commissioner, Department of Land Affairs, Private Bag X03, Pretoria’, and copied to the Deputy Director of Finance at the same address and also to the department’s conveyancers. As stated, the letters were sent by registered post, but in the case of the copy to the conveyancers, they were transmitted by telefax. The department took issue firstly with the fact that the letters had been addressed to the community and not to the department (as the purchaser stipulated in the agreements) and secondly with the postal address which was not the address stipulated in clause 15.1 set out above. [11] The department’s case on the issues raised in respect of these notices was pleaded in a rather disingenuous fashion. It did not allege that it had not received the notices. The answer to the alleged dispatch of the notices was instead a bare denial that the notices had been sent as alleged. The fact that they had been addressed to the community, instead of the department, was also raised. But counsel for the department was driven to concede that the contents of the notices themselves were plain and unambiguous, namely to put the department on terms regarding the registration of transfer. He correctly conceded that if the department had indeed received the notices, it could not have harboured any doubt as to what was required of it. The department has not raised a real and bona fide factual dispute in its answer. It contented itself with an evasive answer to which it is bound.11 [12] The failure to state positively that the department did not receive the letters may have been contrived, since the letters were in fact sent to its postal address and copied to the Deputy Director of Finance in the office of the Chief Land Claims Commissioner and to the department’s conveyancers. Clause 4.6 of the agreements designated the Deputy Director of Finance as the official responsible for making payment of the purchase price. The inference is compelling that receipt of the letters could not be denied in view of this fact. [13] In De Beer NO v North-Central Local Council and South-Central Local Council and Others (Umhlatuzana Civic Association Intervening)12 the Constitutional Court had to consider the adequacy of notices sent by pre-paid registered post by a municipal council to a defaulting ratepayer prior to the institution of court proceedings, in terms of s 105 of the Durban Extended Powers Consolidated Ordinance 18 of 1976 (N). The court found13 that ‘[t]here is no evidence of any significant unreliability of the post office nor of any indication that delivery of notices sent by registered post is hampered by an unacceptable degree of post office inefficiency. The notice provisions that require posting are reasonably capable of bringing the hearing to the attention of the person affected’. [14] The appellants have consequently established that the letters of demand had been received and that the department had been properly placed in mora. There was no quarrel with the appellant’s contention that, in the 11 Wightman t/a JW Construction v Headfour (Pty) Ltd and another 2008 (3) SA 371 (SCA) para 13. 12 De Beer NO v North-Central Local Council and South-Central Local Council and Others (Umhlatuzana Civic Association Intervening) 2002 (1) SA 429 (CC). 13 De Beer para 20. circumstances, mora interest should commence running 28 days after the date of dispatch of the letters by pre-paid registered post, ie as from 28 November 2009.14 [15] It was common cause that the appellants had suffered loss as a result of the delay. The appellants’ farming enterprise was the main source of income for the Snyman family. They had sold all their cattle during April 2009 in anticipation of the transfer of the properties to the State, which they had to vacate within 48 hours of the registration. The appellants were plainly dependent on payment of the purchase price to re-establish their farming business or to establish other enterprises from which to derive income. The financial prejudice and loss flowing from the State’s prevarication is self- evident. [16] Lastly, there is a disturbing aspect which must be addressed. In the founding affidavit on behalf of the appellants, the deponent relayed advice that she had received that the department was on record as stating that it only pays out monies due in respect of agreements entered into (in respect of land claims), when ordered to do so by a court of law. This damning accusation was left unanswered by the department. It is troubling that a State department can adopt such an attitude, which is to be strongly deprecated. It may well be that the department is under severe strain to meet the financial (and, it seems, the administrative) demands imposed by the land reform process. The restitution of land under the Restitution of Land Rights Act 22 of 1994, is not only a constitutional imperative but a highly emotive issue as well. Considerable circumspection, diligence and sensitivity are required on the part of all concerned, including departmental officials. Agreements to purchase land for restoration to dispossessed communities should be honoured in accordance with the terms agreed upon, lest the already demanding challenges of the process are further exacerbated. 14 Calculated on the basis of 14 days’ notice in terms of clause 14.1 added to the 14 days of the deeming provision in clause 15.3, set out above. [17] The appeal must therefore succeed. The matter was not of sufficient complexity to warrant the employment of two counsel. It is hardly surprising that in the court below and in the preparation of heads of argument for this court the appellants, who now seek the costs of two counsel, utilised the services of one counsel only. The following order is made: 1. The appeal is upheld. 2. The first to fourth respondents are ordered jointly and severally to pay the costs of the appeal. 3. The order of the court below is set aside and substituted with the following: ‘(a) The first to fourth respondents are ordered to pay interest to the first applicant at the rate of 15.5 per cent per annum on the amount of R1 450 000 (one million four hundred and fifty thousand rand) from 28 November 2009 until 30 June 2010 and on the further amount of R1 450 000 (one million four hundred and fifty thousand rand) from 8 December 2009 until 12 July 2010; b. The first to fourth respondents are ordered to pay interest to the second applicant at the rate of 15.5 per cent per annum on the amount of R1 475 000 (one million four hundred and seventy five thousand rand) from 28 November 2009 until 23 June 2010 and on the further amount of R1 475 000 (one million four hundred and seventy five thousand rand) from 8 December 2009 until 2 July 2010. c. The first to fourth respondents are ordered jointly and severally to pay the costs of the application.’ ___________ S A MAJIEDT JUDGE OF APPEAL APPEARANCES: Counsel for appellants : H S HAVENGA SC (with him OSCHMAN I) Instructed by : Lourens Attorneys c/o Pieter Moolman Attorneys, Bryanston Symington & de Kok, Bloemfontein Counsel for respondents : P NONYANE Instructed by : The State Attorney, Pretoria The State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF APPEAL 23 March 2011 STATUS: Immediate MOKALA BELEGGINGS (PTY) LTD & ANOTHER V MINISTER OF RURAL DEVELOPMENT AND LAND REFORM AND OTHERS (276/11) 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 The Supreme Court of Appeal (the SCA) today upheld an appeal from the Land Claims Court which had dismissed the appellants’ claim for mora interest. The appellants had sold their properties to the Department of Rural Development and Land Reform for restoration to the Barolong ba ga Mariba community, who had successfully lodged a restitution claim in respect of the property. It became common cause that the Department had instructed its conveyancers to delay the registration of the transfer of the properties due to the Department’s inability to pay the purchase price, as it had no funds on its budget. The SCA held that the appellants, as sellers, were entitled to mora interest on the purchase price to compensate them for their damages suffered as a consequence of the delay in payment of the purchase price. The SCA also deprecated the apparent practice by the Department to delay payment of monies due in instances of land restitution claims. -- ends --

4062

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 717/2021 In the matter between: IZAK FREDERICK SPANGENBERG First Appellant MARIA CORNELIA VAN DER WESTHUIZEN Second Appellant CHRISTINA ALETTA W LA COCK Third Appellant and FRANKEL ENGELBRECHT NO First Respondent GERTRUIDA SPANGENBERG Second Respondent Neutral citation: Spangenberg and Others v Engelbrecht NO and Another (Case no 717/21) [2023] ZASCA 100 (14 June 2023) Coram: PETSE AP, MBATHA, MATOJANE and WEINER JJA and MALI AJA Heard: 22 March 2023 Delivered: 14 June 2023 Summary: Will – interpretation – context – terms clear and unambiguous – appeal dismissed. _____________________________________________________________ ORDER _____________________________________________________________ On appeal from: Northern Cape Division of the High Court, Kimberley (Lever J sitting as a court of first instance): 1 The appeal is dismissed with costs. 2 The costs are to be paid jointly and severally by the appellants, the one paying the others to be absolved. _____________________________________________________________ JUDGMENT _____________________________________________________________ Weiner JA (Petse AP, Mbatha and Matojane JJA and Mali AJA concurring): ‘Death is not the end. There remains the litigation over the estate.’1 Introduction [1] This appeal emanates from a dispute between the appellants, Izak Frederick Spangenberg (Mr Spangenberg), Maria Cornelia Van Der Westhuizen (Ms van der Westhuizen) and Christina Aletta W La Cock (Ms La Cock), and the respondents. The appellants are the children of Hendrik Hermias Spangenberg (the deceased). The first respondent, Mr Engelbrecht NO, is cited in his capacity as executor of the estate of the deceased (the executor). The second respondent, Gertruida Spangenberg (Mrs Spangenberg) is the widow of the deceased, and the step-mother of the 1 Ambrose Pierce. appellants. The dispute concerns the interpretation of the deceased’s last will and testament (the Will). [2] The deceased executed his Will in July 1992. He died on 15 January 2010. The Master of the High Court accepted it as his last will and testament. In the Will, the clause which is relevant to the litigation reads as follows: ‘1. ‘I give and bequeath my entire estate as follows: - A… B. To my daughters Maria Cornelia Van der Westhuizen and Christina Aletta Spangenberg2…the following: (i) My plots 243 and 741 subject to the right of habitatio in favour of my spouse3 until her death or remarriage whichever may occur first.’4 [3] Several court applications followed the death of the deceased, including one reviewing the decision of the Master to appoint Mr Engelbrecht as executor. As matters presently stand, although some legal proceedings are still pending, the executor’s power to bring the application for the declaratory order was not challenged. The dispute [4] The dispute between the appellants and respondents centred around the interpretation of clause B(i) of the Will. The executor held the view that, in granting the right of habitatio over both plot 243 and 741 (the two plots) to 2 The third appellant is now Christina Aletta W La Cock. 3 The second respondent herein, Gertruida Spangenberg. 4 English translation of the clause which in Afrikaans reads – ‘B(i) my persele 243 en 741 Olyvenhoutsdrift, distrik Keimoes, onderheweg aan die reg van habitatio (woonreg) ten gunste van my eggenote, GETRUIDA SPANGENBERG tot by haar dood of hertroue, watter geval ookal eerste mag plaasvind.’ Mrs Spangenberg, she was entitled to all the benefits concomitant therewith, including the right to receive all rentals for properties situated on the two plots. [5] The appellants, on the other hand, contended that it could not have been the deceased’s intention to grant Mrs Spangenberg a habitatio over plot 741, as he and the appellants had informally agreed to divide plot 741 into three portions with each sibling being allocated a specific portion. The deceased paid for the construction of the homes on plot 741 for Ms van der Westhuizen and Ms La Cock. Mr Spangenberg developed some flatlets on his portion of plot 741, from which he collected rentals. Accordingly, the appellants asserted that a habitatio would be inconsistent with this agreement. [6] The appellants sought to rely upon extrinsic evidence for the interpretation of the clause. They submitted that the right of habitatio was defined in clause 4 of the ante-nuptial contract (ANC) concluded between the deceased and Mrs Spangenberg in 1985. It provided that Mrs Spangenberg would have the right of habitatio over plot 243, until her death.5 Therefore, the argument went, it was not necessary for the deceased to repeat such definition and intention in the Will. Initially the appellants argued that clause 5 Clause 4 of the ante-nuptial contract reads as follows: ‘Dat voormelde HENDRICK HERMIAS SPANGENBERG aan voormelde CHRISTINA GETRUIDA IMMELMAN ‘n bewoningsreg oor perseel 243, gedeelte van perseel 452, Olyvenhoutsdrift nedersetting Afdeling Kenhardt verleen vanaf datum van die afsterwe van gesegde HENDRICK HERMIAS SPANGENBERG tot die sterftedatum van gesegde CHRISTINA GETRUIDA IMMELMAN, mits dat die huwelik tussen die partye nog van krag was onmiddellik voor die afsterwe van gesegde HENDRICK HERMIAS SPANGENBERG.’ The English translation is: That the aforementioned HENDRICK HERMIAS SPANGENBERG grants to the aforementioned CHRISTINA GETRUIDA IMMELMAN a right of occupancy over lot 243, part of lot 452, Olyvenhoutsdrift settlement [township] Division Kenhardt from the date of the death of said HENDRICK HERMIAS SPANGENBERG until the date of death of said CHRISTINA GETRUIDA IMMELMAN, provided that the marriage between the parties was still in force immediately before the death of said HENDRICK HERMIAS SPANGENBERG (own translation)... . 4 of the ANC should be incorporated into the Will by reference. This argument was abandoned by the appellants in this Court. [7] After failing to obtain a satisfactory response from the appellants, regarding the payments of rentals from the properties on plot 741, to the executor on behalf of Mrs Spangenberg, and having obtained an interdict in this regard for the retention of such funds, the executor launched the application for declaratory relief. Lever J, in the Northern Cape Division of the High Court, Kimberley (the high court) granted the following order, in favour of the executor against the appellants: ‘1. It is declared that the right of habitatio granted to the Second Respondent in terms of clause B(i) of the last will and testament of the late Hendrick Hermias Spangenberg extend over the immovable properties described as Plot 243 and 741, Olyvenhoutsdrift, district Keimoes, until her death or re-marriage, whichever may occur first. 2. It is declared that the right of habitatio, referred to in paragraph 1 above, includes the rights and entitlement of the Second Respondent to lease and sub-lease the said properties and the rental proceeds generated from the lease of all buildings situated on the properties referred to in paragraph 1 above, for the duration of the right of habitatio. 3. It is declared that, for the duration of the right of habitatio, no other person can occupy the properties referred to in paragraph 1 above, without the consent of the First Respondent. 2. [sic] The costs of this application are to be borne by the Third, Fourth and Fifth Respondents jointly and severally on the ordinary party and party scale, the one paying the others to be absolved.’ [8] This appeal is with the leave of the high court. The respondents contended that clause B(i) of the Will is clear – Mrs Spangenberg has the right of habitatio over both plots. This is the ordinary and natural meaning of the clause. There was no ambiguity in the provisions of the clause and, in such circumstances, it was not permissible to incorporate the extrinsic evidence referred to by the appellants, to determine the meaning of clause 4 of the deceased's Will. Freedom of testation [9] Generally, it is accepted that testators have the freedom to dispose of their assets in a manner they deem fit, except insofar as the law places restrictions on this freedom. The Constitutional Court has accepted that freedom of testation ‘is fundamental to testate succession’6 and that it forms part of s 25(1) of the Constitution,7 in that it protects a person’s right to dispose of his or her assets, upon death, as he or she wishes. [10] This Court, in Harvey NO and Others v Crawford NO and Others8 referred to this this principle as follows: ‘The right of ownership permits an owner to do with her thing as she pleases, provided that it is permitted by the law. The right to dispose of the thing is central to the concept of ownership and is a deeply entrenched principle of our common law. Disposing of one’s property by means of executing a will or trust deed are manifestations of the right of ownership. The same holds true under the Constitution.’9[Emphasis added.] [11] The principle of freedom of testation has been held to warrant constitutional refuge through the right to privacy, coupled with the right to 6 Moosa N.O. v Minister of Justice [2018] ZACC 19; 2018 (5) SA 13 (CC) para 18. 7 Section 25(1) provides ‘no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.’ 8 Harvey NO and Others v Crawford NO and Others [2019] ZASCA 147; 2019 (2) SA 153 (SCA) (overruled by the Constitutional Court in King N.O. and Others v De Jager and Others but not in relation to these general principles). 9 Ibid para 56. dignity, in terms of ss 14 and 10 of the Constitution, respectively.10 As stated by Jafta J in King N O and Others v De Jager and Others;11 ‘It cannot be gainsaid that private testamentary bequests (when juxtaposed to public trusts) relate to our most intimate personal relationships and can very well be based on irrational and erratic decisions which are located in the domain of the “most intimate core of privacy”. It is, therefore, apposite for the right to privacy to play an active role in determining whether judicial interference can enter the perimeter of private testamentary bequests. This, in turn, buttresses the point that when courts intervene in private testamentary bequests of this nature there ought to be a lower level of judicial scrutiny.’12 Principles of Interpretation [12] The ‘golden rule’ for the interpretation of Wills and the inherent limitation (that it should not contravene the law), was, as far back as 1914, described in Robertson v Robertson thus:13 ‘The golden rule for the interpretation of testaments is to ascertain the wishes of the testator from the language used. And when these wishes are ascertained, the court is bound to give effect to them, unless we are prevented by some rule or law from doing so.’14 [Emphasis added.] [13] Corbett J, in Aubrey Smith v Hofmeyer NO,15 referred to ‘the armchair approach’ in dealing with the interpretation of a will. He stated that: ‘Generally speaking, in applying and construing a will, the Court's function is to seek, and to give effect to, the wishes of the testator as expressed in the will. This does not mean that 10 Section 14 provides that: ‘Everyone has the right to privacy, which includes the right not to have…(c) their possessions seized;’ Section 10 provides that: ‘everyone has inherent dignity and the right to have their dignity respected and protected’. BOE Trust Ltd N.O. (in their capacities as co-trustees of the Jean Pierre De Villiers Trust 5208/2006) [2012] ZASCA 147; 2013 (3) SA 236 (SCA) para 27. 11 King N.O. and Others v De Jager and Others [2021] ZACC 4; 2021 (4) SA 1 (CC). 12 King supra at para 144; Minister of Education v Syfrets Trust Ltd 2006 (4) SA 205 (C); Curators, Emma Smith Educational Fund v University of KwaZulu Natal 2010 (6) SA 518 (SCA) para 46. 13 Robertson v Robertson 1914 AD 503. 14 Ibid at 507. 15 Aubrey Smith v Hofmeyer NO 1973 (1) SA 655 (C) (Aubrey Smith). the Court is wholly confined to the written record. The words of the will must be applied to the external facts and, in this process of application, evidence of an extrinsic nature is admissible to identify the subject or object of a disposition. Evidence is not admissible, however, where its object is to contradict, add to or alter the clearly expressed intention of the testator as reflected in the words of the will. ... in construing a will the object is not to ascertain what the testator meant to do but his intention as expressed in the will. On the other hand, in addition to receiving evidence applying the words of the will to the external facts, the Court is also entitled to be informed of, and to have regard to, all material facts and circumstances known to the testator when he made it. As it has been put, the Court places itself in the testator's armchair. Nevertheless, the primary enquiry still is to ascertain, against the background of these material facts and circumstances, the intention of the testator from the language used by him in his will’16 [Emphasis added.] [14] In Aubrey Smith,17 Corbett J presciently, espoused the interpretative principles referred to in Natal Joint Municipal Pension Fund v Endumeni Municipality,18 the seminal case, on interpretation of documents, where Wallis JA stated that: ‘Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. … The inevitable point of departure is the language of the provision itself, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.’[Emphasis added.] 16 Aubrey Smith supra at 657 E-658C. 17 Aubrey Smith supra footnote 16. 18 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18. [15] Although Endumeni did not deal with the interpretation of a will, the ‘golden rule’ and the ‘armchair approach’ can now be seen in the light of the principles enunciated in Endumeni. In his article published in the Potchefstroom Electronic Law Journal (PELJ),19 Justice Wallis opined that: ‘There are areas of interpretation that are untouched by the contents of this paper, which has concentrated on contracts and statutes, rather than other areas of law. Perhaps the most obvious omission is the fertile field of the construction of wills and the extent to which the Endumeni approach to interpretation can be adapted to that situation. That is a particular omission, given that in articulating his golden rule Lord Wensleydale specifically said that it applied to “wills and, indeed statutes and all written instruments”. Wills are of course unilateral documents, but so are statutes, patent specifications and judgments, yet they all demand a broadly similar approach.’ [16] Justice Wallis, in the PELJ article, referred to Raubenheimer v Raubenheimer,20 which dealt with whether an implied term could be incorporated into a will. Surprisingly, there was no specific reference to Endumeni in Raubenheimer. Leach JA,21 however, held that a court is ‘guided by the same principles as those applied when implying tacit terms into a contract – it applies the well – known ‘bystander test’ in the light of the express terms of the will and the relevant surrounding circumstances and considers whether it is a term ‘so self-evident as to go without saying.’22 Leach JA went on to adopt the ‘golden rule’ in his interpretation of the will. He held that: ‘In interpreting a will, a court must if at all possible give effect to the wishes of the testator. The cardinal rule is that “no matter how clumsily worded a will might be, a will should be 19 Wallis ‘Interpretation Before and After Natal Joint Municipal Pension Fund v Endumeni Municipality’ 2012 4 SA 593 (SCA) 2019 PER / PELJ 22. 20 Raubenheimer v Raubenheimer [2012] ZASCA 97; 2012 (5) SA 290 (SCA). 21 With Mpati P, Nugent, Cachalia and Wallis JJA concurring. 22 Raubenheimer para 21. so construed as to ascertain from the language used therein the true intention of the testator in order that his wishes can be carried out.”’23 [17] In Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & Others,24 the Constitutional Court held that ‘the emerging trend’ in interpretation of documents is ‘to have regard to the context in which the words occur, even where the words to be construed are clear and unambiguous.’25 The appellants latched onto this principle, in contending that, in interpreting the clause in the Will, even if there is no ambiguity, the surrounding circumstances and background facts will establish that the intention of the testator was not as it appears in clause B(i). They referred to the following chronology of events, in this regard: a. The ANC was concluded on the 29th March 1985; b. In 1991 the deceased and his son, Mr Spangenberg, entered into an agreement in respect of erf 741. The deceased and the appellants informally agreed to divide erf 741 into three portions with each sibling being allocated a specific portion; c. The deceased executed his Will in 1992; d. Plot 741 was at that stage undeveloped. In 1996 the deceased paid for and erected a house for Ms van der Westhuizen on her portion of erf 741. She has lived on that property from 1996 to date; e. In 1996 Mr Spangenberg began to reside on his portion of erf 741 and developed a number of flats thereon. From 1996 to date, he has seen to the upkeep of the units that he caused to be erected and has collected the income generated by those units; 23 Raubenheimer supra para 23. 24 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & Others [2004] ZACC 15; 2004 (4) SA 490 (CC) para 89. 25 Ibid para 90. f. In 1998 the deceased erected and paid for the house for Ms La Cock on her portion of erf 741. She has lived in that house from that date until the date of the application; g. In 2009 the deceased requested Mr Spangenberg to erect a storage facility for himself on erf 741 in order to enable him to remove his plant and equipment from erf 243 which he did; and h. The deceased passed away on the 15 January 2010. [18] In KPMG Chartered Accountants (SA) v Securefin Ltd,26 this Court held that ‘…to the extent that evidence may be admissible to contextualise the document (since “context is everything”) to establish its factual matrix or purpose or for purposes of identification, ‘one must use it as conservatively as possible’ …The time has arrived for us to accept that there is no merit in trying to distinguish between ‘background circumstances’ and ‘surrounding circumstances’. The distinction is artificial and, in addition, both terms are vague and confusing. Consequently, everything tends to be admitted. The terms ‘context’ or ‘factual matrix’ ought to suffice.’27 [19] The appellants contended that, having regard to the chronology of events, outlined in para 17 above, the language of the clause and the use of the term habitatio did not demonstrate an intention to bequeath the undeveloped property (as erf 741 was at the time of the execution of the Will) to Mrs Spangenberg. If the deceased had intended to afford Mrs Spangenberg any right in respect of erf 741, he would have used the word usufruct as opposed to habitatio in order to provide for her maintenance. 26 KPMG Chartered Accountants (SA) v Securefin Ltd 2009 (4) SA 399 (SCA). 27 KPMG para 39. [20] The distinction sought to be drawn by the appellants is not understood. A person who has a usufruct has the right to occupy a property which belongs to someone else. It grants the right to a person to make use of another person’s property, enjoying the fruits (profits and other advantages of ownership) for a limited period of time whilst ensuring that the property itself is preserved. The holder of a habitatio has the lifelong right to live on the property or to let the property out, but without the right to enjoy the fruits (profits or other advantages of ownership). It allows the holder of such right to live in the house of another without detriment to the substance of the relevant property.28 The holder of such right may sublet.29 She may also let the right of habitatio.30 [21] There is no reason why a usufruct would have been a more appropriate right to bequeath as the appellants would have it. Mrs Spangenberg in exercising her rights of habitatio is entitled to all the benefits that right bestows upon her. Her maintenance was to be catered for from the rentals of the properties on the two plots, as a right of habitatio grants her. [22] The appellants also argued that as the residences were situated on two different pieces of land, a right of habitatio can only be applicable to one piece of land, that is the one on which the matrimonial residence was situated. They relied on Endumeni31 in submitting that having regard to the context surrounding the execution of the Will, the habitatio could only apply to plot 243, as set out in the ANC. They contended that the Will was indeed ambiguous and ‘uncertain in application from collateral circumstances’. They 28 Hendricks v Hendricks [2015] ZASCA 165; 2016 (1) SA 511 (SCA) at 514F. 29 LAWSA, 2nd Edition, vol 24 para 605. 30 Arend v Estate Nakiba 1927 CPD 8 at 10. 31 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 para 18. relied further on the ‘bystander test’ and submitted that the court should take into cognisance the relevant surrounding circumstances in determining that the term of the will ‘is so self-evident as to go without saying’.32 [23] This, however, is not the position in the present case. There is no ambiguity. The appellants claim that, if this Court took cognisance of the surrounding circumstances or factual matrix referred to in the chronology of events, it would find that it ‘goes without saying’, that the deceased did not intend to grant a right of habitatio over plot 741 to Mrs Spangenberg. This argument would require this Court to ignore the clear wording of the Will, seen in the light of the circumstances prevailing at the time of its execution. [24] It is trite that when a patent or latent ambiguity appears from a written document, including a will, a court would be entitled to consider extrinsic evidence in order to evaluate, interpret and make a finding on a clause in a document. This Court in Engelbrecht v Senwes Ltd33 held: ‘The intention of the parties is ascertained from the language used read in its contextual setting and in the light of admissible evidence. There are three classes of admissible evidence. Evidence of background facts is always admissible. These facts, matters probably present in the mind of the parties when they contracted, are part of the context and explain the ‘genesis of the transaction’ or its ‘factual matrix’. Its aim is to put the Court ‘in the armchair of the author(s)’ of the document. Evidence of ‘surrounding circumstances’ is admissible only if a contextual interpretation fails to clear up an ambiguity or uncertainty. Evidence of what passed between the parties during the negotiations that preceded the 32 Mulaudzi v Old Mutual Life Assurance Company (South Africa) Limited [2017] ZASCA 88; 2017 (6) SA 90 (SCA) para 26. 33 Engelbrecht v Senwes Ltd 2007 (3) SA 29 (SCA). conclusion of the agreement is admissible only in the case where evidence of the surrounding circumstances does not provide ‘sufficient certainty’.34[Emphasis added.] [25] Mrs Spangenberg did not oppose the appeal, not by choice but due to a lack of funds. This Court required assistance and Mr H van Zyl of the local Society of Advocates, to whom we owe a great debt of gratitude, was appointed as the amicus curiae for the hearing. He contended that if the intent of the testator can be ascertained from the language used, there is no reason to further consider the further requisites as set out in Endumeni,35 because the interpretation of the will is based only on the subjective intention of the testator as can be ascertained from the words used by the testator. It is only, so the argument went, in cases of ambiguity that the principles in Endumeni would become applicable. [26] Endumeni is a general exposition on the interpretation of documents. It does not exclude a will. Whether one adopts the ‘golden rule’, the ‘armchair approach’ or the unitary approach, in the interpretation of a will, a court must ascertain the wishes of the testator from the language used. In endeavouring to ascertain these wishes, the will must be read in the light of the circumstances prevailing at the time of its execution.36 [27] There is no ambiguity in the words used in the Will. Thus, relying on the contextual interpretation of the words in the Will, there is no place for the introduction of the 'surrounding circumstances’ relied upon by the appellants. What the appellants seek to do is use the wording of the clause in the ANC to 34Ibid paras 6-7 (footnotes ommitted), referred to with approval by the Constitutional Court in Eke v Parsons 2016 (3) SA 37 (CC) para 30. 35 Endumeni para 18. 36Aubrey Smith supra; Strauss v Strauss and Others [2023] ZAGPJHC 377 paras 30-31. create an ambiguity in the Will and thus introduce extrinsic evidence of surrounding circumstances. The ambiguity does not emanate from the Will itself. It has been contrived through the reference to external documentation. [28] What is evident from the chronology of events referred to by the appellants is that the deceased was at all times fully aware of the activity surrounding the development of plot 741. He executed his Will after the agreement between him and the appellants that each would be allocated a portion of plot 741. He paid for the construction of his daughters’ residences and was aware of all the developments on the plot. But, he still saw fit not to change his Will, which provides for the habitatio to apply to both plots. Mrs Spangenberg is and will probably be in need of maintenance for a number of years. This averment was not denied by the appellants in the application. It is therefore probable that the inclusion of plot 741 by the deceased, was in order to see to the financial well-being and maintenance of Mrs Spangenberg, as found by the high court. [29] The contention of the appellants was that the interpretation relied upon by the respondents, means that they will be evicted from their homes. But this is not necessarily so. They will have to come to an agreement with the respondents in regard to the rentals payable. On their own version, the houses were, in the main, built by the deceased and essentially at the cost of the deceased. [30] Accordingly, the appeal must fail. The issue that remains is that of costs. The appellants submitted that the costs should be borne by the estate but there seems to be no rationale for this. Mrs Spangenberg also has an interest in the estate and there is no reason why she should be prejudiced by the appellants’ ill-fated application and appeal. [31] Accordingly, the following order is made: 1 The appeal is dismissed with costs. 2 The costs are to be paid jointly and severally by the appellants, the one paying the others to be absolved. ________________________ S E WEINER JUDGE OF APPEAL Appearances For appellants: B Knoetze SC (with Boonzaier) Instructed by: Honey Attorneys, Bloemfontein For respondents: H van Zyl (heads of argument prepared by H E De La Rey) Instructed by: Kramer Weihmann Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 14 June 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Spangenberg and Others v Engelbrecht NO and Another (717/21) [2023] ZASCA 100 (14 June 2023) Today the Supreme Court of Appeal (SCA) dismissed an appeal against the judgment of the Northern Cape Division of the High Court, Kimberley (Lever J sitting as a court of first instance). The dispute concerned the interpretation of the deceased’s last will and testament. It emanates from a dispute between the appellants – the children of deceased, and the respondents – the executor of the deceased estate (Mr. Engelbrecht) and the widow of the deceased, who is also the step-mother of the appellants. The deceased executed his Will in July 1992, He died on 15 January 2010. Clause 2B(i) of the Will, which is the clause in issue, provided for the bequest of two plots (plot 423 and 741) to his daughters, subject to a right of habitatio over the plots, in favour of his wife, the second respondent. The appellants argued that prior to his death, they and the deceased had informally agreed to subdivide one of the plots (plot 741) amongst the three of them, and that their homes and other flatlets had been constructed thereon. The first appellant received rentals from the flatlets. They also referred to the fact that in the ANC concluded between the deceased and the second respondent, in 1985, the habitatio was granted only in respect of one of the plots on which the matrimonial residence was situated (plot 423). The appellants argued that these surrounding circumstances should be taken into account in interpreting the Will and that, based on the context, the deceased could only have intended to grant the habitatio over plot 423. In arriving at the decision to dismiss the appeal, the Court addressed the principle of freedom of testation which states that testators have the freedom to dispose of their property in any manner they deem fit, unless the law places restrictions thereon. The SCA considered the context in which the Will was to be interpreted. The deceased executed his Will after the agreement between him and the appellant had been concluded. The rentals from plot 741 were to be utilised as maintenance for his widow. His intention in the Will was clear and unambiguous. Utilising either the ‘golden rule’, or ‘the armchair approach’, or the ‘unitary approach’ as set out in Endumeni, to interpret the Will, there was no place to admit extrinsic evidence to contradict the clear words of the Will. The SCA therefore dismissed the appeal with costs (to be paid jointly and severally by the appellants, the one paying the others to be absolved).

3943

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 513/2021 In the matter between: MEMBER OF THE EXECUTIVE COUNCIL FOR HEALTH EASTERN CAPE APPELLANT and N H obo A RESPONDENT Neutral citation: MEC for Health, Eastern Cape v N H obo A (513/2021) [2022] ZASCA 181 (15 December 2022) Coram: DAMBUZA ADP, MOCUMIE and CARELSE JJA and CHETTY and SALIE-HLOPHE AJJA Heard: 15 November 2022 Delivered: 15 December 2022 Summary: Extinctive prescription – s 12(3) of the Prescription Act 68 of 1969 – inquiry as to what constitutes knowledge of sufficient facts giving rise to a claim against a hospital – whether the claimant only acquired such knowledge upon consulting with a legal practitioner. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Eastern Cape Division of the High Court, Bhisho (Mjali J sitting as court of first instance): The appeal is dismissed. There is no order as to costs. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Chetty AJA (Dambuza ADP, Mocumie and Carelse JJA and Salie-Hlophe AJA concurring) [1] On 9 April 2018 the respondent, N H, instituted an action in the Eastern Cape Division of the High Court, Bhisho (high court) against the appellant, the Member of the Executive Council for Health, Eastern Cape. The action was brought in her personal capacity and as the mother and natural guardian of ‘A’, a boy born on 11 May 2012 at the St Barnabas Hospital, Libode, Eastern Cape. The respondent, in her representative capacity, sued the appellant for an amount of R29 106 761.00 for damages, alleging that as a result of the negligence of the hospital staff, her minor child now suffers from cerebral palsy. Included in the amount was the respondent’s claim, in her personal capacity, of R500 000.00 for emotional shock, trauma, pain and suffering. [2] On receipt of the summons, the appellant filed a special plea contending that the respondent’s claim, in her personal capacity, had prescribed in that she had failed to timeously comply with the provisions of section 3(2) of the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 (the Act). The appellant pleaded that the respondent instituted the action on 12 April 2018 having given notice of her intention to do so on 20 February 2018. The appellant contended that the respondent ought to have instituted her action within six months of 18 May 2012, the date when the cause of action arose.1 Put differently, the appellant contended that the respondent instituted her action more than five years from the date when she ought to have given notice in terms of s 3(2). In the result, it was contended that the respondent’s claim in her personal capacity, had prescribed. [3] In response thereto, the respondent applied for condonation for non-compliance in terms of s 3(4)(a) of the Act. The appellant opposed the application contending that the respondent failed to satisfy the requirement of s 3(4)(b)(i) of the Act as her ‘debt’ had become extinguished by prescription. The high court determined the special plea separately, dismissing it with costs. The matter comes before this Court with leave of the high court. In this Court the appeal was not opposed, with the respondent electing to abide the decision of this Court. [4] The issue for determination is the date from when prescription began to run against the respondent’s personal claim for emotional shock. The starting point is the provisions of s 12 of the Prescription Act 68 of 1969 (Prescription Act) which provides that prescription begins to run when a debt becomes due. Section 12(3) states that a ‘debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care’. [5] The answer as to when the debt became due requires a two-pronged inquiry. The first is when the respondent acquired the relevant knowledge, or could have acquired the relevant knowledge, by exercising reasonable care regarding the identity of the debtor. Secondly, what are the facts that the respondent was required to know before prescription could commence. In carrying out this inquiry, the high court determined the matter on the basis of the affidavits before it. No oral evidence was led in the interlocutory application. 1 The appellant’s case as to the date when it alleged prescription began to run vacillated between the date of birth of the minor child (11 May 2012) and the date when the respondent and the baby were discharged from hospital (18 May 2012). Nothing turns on the difference between the two dates. [6] On the basis of facts which were common cause, the high court found that on 10 May 2012 the respondent was admitted to St Barnabas Hospital and after a ‘complicated labour’, she gave birth to her baby. At the time of her delivery, the respondent was not informed by the doctors or the nursing staff at the hospital, who were responsible for her care and that of her new born baby, that there were any complications during the delivery that could impact adversely on the health of her baby. The respondent remained in hospital for a week after the delivery, during which time her baby was kept in the nursery. She recalled that her baby did not cry at the time of birth. It is not clear from the papers what significance attaches to this fact. Clearly, on the basis of the respondent’s affidavit, she was unaware of the significance (if any) of this fact, nor does the appellant seek to explain this phenomenon. Moreover, the appellant has not shown how this could have constituted the basis for the respondent having knowledge of ‘the identity of the debtor’, or that it constituted a ‘relevant fact’ for the purposes of s 12(3). It bears noting that the respondent had a limited school education and could hardly be expected to be au fait with medical symptoms reflective of any pediatric abnormality. [7] A medical report dated 20 September 2018 prepared by Dr Mugerwa- Sekawabe, a specialist obstetrician and gynaecologist, who reviewed the respondent’s medical records from the hospital and consulted with her, notes that while the new born baby was not placed on oxygen or drips, the baby ‘looked floppy and dull’. The appellant did not seek to explain whether this feature was brought to the attention of the respondent by the doctors or nurses at the time, or what it’s significance could be in respect of her appreciating the ‘facts giving rise to the debt’. [8] The medical report of Dr Mugerwa-Sekawabe indicates that the respondent has never had the minor child assessed by a paediatrician. There is no evidence of the child’s physical or mental development shortly after birth and prior to reaching the age of six years. The only insight into the minor child’s condition is gleaned from the respondent’s founding affidavit where she stated: ‘. . . I accepted that A’s abnormality was due to an unanticipated and unavoidable event at the time of his birth. I am a lay person in respect of legal matters and medical issues. I accepted that the staff at the hospital where I was treated at the time knew what they were doing and acted appropriately.’ Elsewhere in her founding affidavit the respondent stated that as a layperson, with little or no knowledge of legal or medical issues, she ‘did not believe that the hospital staff had anything to do with the outcome of [my] baby. I accepted it as an unavoidable fact following a complicated labour’. This version of the respondent was not gainsaid by the appellant, nor was the appellant able to refute this version with reference to anything contained in the hospital records, which were in its custody. The high court found that the respondent, in the circumstances, resigned herself into believing that her child’s ‘abnormality was unavoidable and that there was nothing untoward by those who cared for her during the delivery’. [9] On the respondent’s version, she met a lady in January 2018 in Libode, Eastern Cape, who ‘also had a baby with cerebral palsy’. The appellant contended that on the basis of this averment, the respondent was aware at the time when she met the unknown lady in Libode, that her own child was disabled and had cerebral palsy. It is uncertain whether by this stage the respondent had any appreciation of what cerebral palsy was, or the possible causes thereof. What is apparent from the pleadings is that after exchanging her experiences with the lady, the respondent was advised to contact Nonxuba Attorneys with a view to claiming damages arising out of the alleged negligent treatment her baby received, resulting in her baby having cerebral palsy. [10] Soon thereafter the respondent arranged a consultation with her attorneys. On 1 February 2018, at the consultation, the respondent explained the history of her pregnancy and delivery. After the consultation, the attorney informed the respondent that she was of the view that the hospital staff were negligent in not rendering proper care to the respondent and her baby, resulting in the baby sustaining brain damage, leading to cerebral palsy. The respondent instructed the attorney to institute a claim on her behalf against the hospital. [11] According to the respondent, she became aware for the first time that her child’s cerebral palsy was due to the negligence of the staff at St Barnabas Hospital after consulting with her attorney on 1 February 2018. On this basis, she contended that 1 February 2018 was the effective date for the purposes of s 3(3)(a), the date when she had knowledge of the identity of the organ of state as the debtor, and the facts giving rise to the debt. Accordingly, the respondent’s attorney gave notice on 20 February 2018 to the appellant in terms of s 3 of the Act of the respondent’s intention to institute a claim for damages.2 [12] The high court’s finding that the respondent was illiterate and a layperson is not challenged by the appellant. The high court concluded that the respondent’s admission that she had a difficult labour, that her child did not cry at birth and that she remained in hospital for a week after the birth, did not ‘on its own imply knowledge of the facts giving rise to the claim’. The respondent, at no stage prior to consulting with her attorney, entertained the possibility that the hospital staff were negligent, thereby forming a basis for a claim against the appellant. [13] In determining that the respondent first became aware on 1 February 2018 that she had a claim for damages against the appellant, the high court reasoned that ‘[U]ntil there are reasonable grounds for suspecting fault so as to cause the plaintiff to seek further advice, the claimant cannot be said to have knowledge of the facts from which the debt arise[s]’. It is in this respect that the appellant contends that the high court erred, presumably by reference to the word ‘fault’. [14] The appellant relies on the finding in Mtokonya v Minister of Police3 (Mtokonya) that what is required to satisfy the requirement in s 12(3) of the Prescription Act is knowledge of the bare facts from which the debt arises. Knowledge of wrongfulness and causation are irrelevant.4 In particular, counsel for the appellant contended that prescription began to run against the respondent at the time of the birth of her child. As a result, the respondent was obliged to give notice in terms of s 3(1) of Act 40 of 2002 not later than six months from the date of the birth of her child. [15] The appellant relied on the following paragraphs in Mtokonya in support of its argument: ‘[37] The question that arises is whether knowledge that the conduct of the debtor is wrongful and actionable is knowledge of a fact. This is important because the knowledge that section 2 The respondent’s attorney initially gave notice in terms of s 3 of the Act to the incorrect organ of state. That defective notice was subsequently rectified, and condonation was sought in that regard. The high court’s order granting condonation for the defective notice is not challenged on appeal to this Court. 3 Mtokonya v Minister of Police [2017] ZACC 33; 2018 (5) SA 22 (CC). 4 Ibid para 36: ‘Section 12(3) does not require the creditor to have knowledge of any right to sue the debtor nor does it require him or her to have knowledge of legal conclusions that may be drawn from “the facts from which the debt arises”.’ 12(3) requires a creditor to have is “knowledge of facts from which the debt arises”. It refers to the “facts from which the debt arises”. It does not require knowledge of legal opinions or legal conclusions or the availability in law of a remedy. . . . [67] The second judgment accepts that knowledge whether the conduct of the police against the applicant was wrongful and actionable is not knowledge of a fact but of a legal conclusion. This means that the applicant’s lack of knowledge related to something that fell outside the exception provided for in the second part of section 12(3). The first part requires lack of knowledge of the identity of the debtor. The second part requires lack of knowledge of “the facts from which the debt arises”.’ [16] In light of the above findings, the appellant contends that the respondent had knowledge of the identity of the debtor (being St Barnabas Hospital, and by implication the Department of Health, Eastern Cape) as well as the ‘facts’ from which the debt arose at the time when she and her baby were discharged from the hospital. There is nothing in the pleadings to indicate that the nurses or doctors at the hospital informed the respondent of any complications at birth or any abnormalities which they had found during the post delivery period, and more particularly, the significance thereof to the health of her child. These could hardly constitute what this Court in MEC for Health, Western Cape v M C5 described as the ‘minimum essential facts that the plaintiff must prove in order to succeed with the claim’, alternatively referred to as the ‘primary facts’.6 [17] In circumstances similar to the present matter, in Links v Department of Health, Northern Province7 (Links) the plaintiff injured his thumb and went to hospital where he was treated with a plaster cast. The cast was applied too tight, resulting in the amputation of his thumb, eventually leading to the permanent loss of the use of his left hand. The plaintiff decided to sue the hospital. When his claim was eventually lodged, it was met with a plea that the claim had prescribed as he should have instituted his claim within three years from when his thumb was amputated. The plaintiff contended that prescription could not have commenced at the time when his thumb was 5 MEC for Health, Western Cape v MC [2020] ZASCA 165. 6 Ibid para 8. 7 Links v Department of Health, Northern Province [2016] ZACC 10; 2016 (5) BCLR 656 (CC). amputated, as he was unaware of the facts from which his claim ultimately arose, or that the earlier negligence led to the loss of the use of his hand. He had no access to his hospital records and the hospital personnel did not explain to him the cause of his condition. [18] The Court considered the facts from which the debt arose, which the plaintiff was required to know before the debt could be said to be due, and for prescription to start running. The plaintiff in Links had no idea what caused the loss of the use of his left hand at the time of his discharge from hospital. His explanation was simply that he had ‘been brought up to believe that medical doctors and personnel know what they are doing’.8 Similarly, the respondent in the present matter says she had no reason to believe that the hospital staff had anything to do with the ‘outcome of her baby’, which she considered ‘an unavoidable’ consequence of a complicated labour.9 In Links the Court said: ‘. . . To require knowledge of causative negligence for the test in s 12(3) to be satisfied would set the bar too high. However, in cases of this type, involving professional negligence, the party relying on prescription must at least show that the plaintiff was in possession of sufficient facts to cause them on reasonable grounds to think that the injuries were due to the fault of the medical staff. Until there are reasonable grounds for suspecting fault so as to cause the plaintiff to seek further advice, the claimant cannot be said to have knowledge of the facts from which the debt arises.’10 [19] The appellant bears the onus to prove that the respondent’s claim had prescribed11 by 9 April 2018, the date when the summons was served. On that score, the appellant must show that the respondent had knowledge of the relevant facts on or before 8 April 2015, because the applicable period of prescription in respect of the respondent’s personal claim is three years. [20] A material fact which the appellant is required to prove in order to succeed is that the respondent had knowledge of what caused the condition of her baby, as at 8 Ibid para 41. 9 See in this regard Minister of Finance and Others v Gore NO [2006] ZASCA 98; [2007] 1 All SA 309 (SCA) para 18: ‘Mere opinion or supposition is not enough: there must be a justified, true belief. Belief on its own, is insufficient.’ 10 Links, para 42. 11 Ibid para 24. the time of her delivery or discharge from hospital, being 18 May 2012. There is nothing on the record to indicate that this is so. Only after consulting with her attorney did she become aware of the basis for a potential claim. It is only at that stage that she acquired the knowledge that the hospital staff were the cause of her child’s condition, and that the appellant was therefore the debtor. [21] In my view, the appellant has not discharged the onus of showing that the respondent knew, or ought to have reasonably suspected, on an objective assessment of the facts,12 that she received negligent treatment at the hospital, and that the disability suffered by her minor child was the result of that negligence. It cannot be said that the respondent had knowledge of the facts that would have led her to think that the medical staff at St Barnabas Hospital were negligent, and that her child had cerebral palsy as a result.13 [22] I am not persuaded by the argument of the appellant’s counsel that the Constitutional Court has set a different standard of proof in Mtokonya compared to that in Links or Loni v Member of the Executive Council, Department of Health, Eastern Cape (Bhisho).14 In Loni the applicant suffered a gunshot wound requiring medical treatment at a provincial hospital. At the time of his discharge he was able to ascertain that the wound was not fully healed and thereafter visited a clinic where he obtained further treatment. After enduring pain in his leg for several years, he developed a limp, eventually leading to his disability. On obtaining an independent medical opinion, he was informed that his disability was attributable to the manner in which his injury was handled by the staff at the hospital. His claim against the hospital was met with a plea that the claim had prescribed. The full court found that he had all the necessary facts at his disposal, sufficient for him to act. 12 Loni v Member of the Executive Council, Department of Health, Eastern Cape (Bhisho) [2018] ZACC 2; 2018 (3) 335 (CC) (Loni) para 32. 13 Truter and Another v Deysel 2006 (4) SA 168 (SCA) para 16: ‘In a delictual claim, the requirements of fault and unlawfulness do not constitute factual ingredients of the cause of action, but are legal conclusions to be drawn from the facts: “A cause of action means the combination of facts that are material for the plaintiff to prove in order to succeed with his action. Such facts must enable a court to arrive at certain legal conclusions regarding unlawfulness and fault, the constituent elements of a delictual cause of action being a combination of factual and legal conclusions, namely a causative act, harm, unlawfulness and culpability or fault”.’ 14 Footnote 13. [23] The Constitutional Court in Loni distinguished the position from Links where the plaintiff had no knowledge of the causative link between the breaches by the hospital and the harm suffered. At para 23 the Court stated: ‘In Links this court found that in order for a party to successfully rely on a prescription claim in terms of s 12(3) of the Prescription Act, he or she must first prove “what the facts are that the applicant is required to know before prescription could commence running” and secondly, that “the applicant had knowledge of those facts” . . . This Court opined that it would be setting the bar too high to require knowledge of causative negligence. In answer to this issue, this Court held that in cases involving professional negligence, the facts from which the debt arises are those facts which would cause a plaintiff, on reasonable grounds, to suspect that there was fault on the part of the medical staff and that caused him or her to “seek further advice”.’ [24] The interpretation contended for by the appellant would require us to hold that a party with no knowledge of medicine, no access to her hospital records, limited schooling and resident in a rural area of the country, would be expected to have knowledge of sufficient facts to institute an action for damages within the prescribed periods. A proper reading of Mtokonya does not support such a conclusion as indicated by the Court at para 45: ‘Knowledge that the conduct of the debtor is wrongful and actionable is knowledge of a legal conclusion and is not knowledge of a fact. The second judgment accepts that this is so. Therefore, such knowledge falls outside the phrase “knowledge of facts from which the debt arises” in section 12(3). The facts from which a debt arises are the facts of the incident or transaction in question which, if proved, would mean that in law the debtor is liable to the creditor.’ (own emphasis) Knowledge of a complicated labour that preceded the birth of a child who did not cry, does not meet this test. [25] The high court properly applied the criteria in Links to the facts before it and correctly concluded that the respondent’s personal claim for damages had not prescribed at the time when summons was served. This Court in WK Construction (Pty) Ltd v Moores Rowland and Others15 confirmed the position set out in Links as the ‘clear position in our law’.16 15 WK Construction (Pty) Ltd v Moores Rowland and Others [2022] ZASCA 44; [2022] 2 All SA 751 (SCA). 16 Ibid para 37. [26] In the result, the following order is made: The appeal is dismissed. There is no order as to costs. ________________________ M R CHETTY ACTING JUDGE OF APPEAL APPEARANCES For appellant: V Notshe SC and H Cassim Instructed by: Zilwa Attorneys State Attorney, Bloemfontein For respondent: No appearance

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 15 December 2022 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal MEC for Health, Eastern Cape v N H obo A (513/2021) [2022] ZASCA 181 (15 December 2022) Today, the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal by the Member of the Executive Council for Health, Eastern Cape against the decision of the Eastern Cape Division of the High Court, Bhisho (high court). The respondent is the mother of a minor child born in May 2012 with cerebral palsy. She instituted a claim for damages on behalf of her child and herself more than five years after the birth of her child. At the time of the child’s birth, the respondent had no reason to suspect that the hospital staff may have done anything to cause the child to be born with cerebral palsy. The claim of prescription was raised by the appellant in respect of the respondent’s personal claim for trauma arising from her child’s cerebral palsy. The high court dismissed the plea of prescription, finding that the respondent could not have had knowledge of the necessary facts at the time to have instituted a claim against the appellant, thereby interrupting the running of prescription. The matter came before the SCA with leave of the high court. The facts revealed that the respondent endured a difficult labour, after which her child was born. Neither the medical or nursing staff at the hospital informed the respondent of any problems associated with the delivery of her child. She left the hospital after a week, without any knowledge that her child was born with cerebral palsy. It was only five years later, in January 2018, when she met another woman who similarly gave birth to a child with cerebral palsy, which led the respondent to seek legal advice. After consulting with an attorney and being advised that the condition of her child was probably due to the treatment the child received at the time of birth, did the respondent institute an action for damages against the hospital. The respondent’s personal claim had to be instituted within three years of acquiring knowledge of the facts from which the debt arose in terms of section 12(3) of the Prescription Act 68 of 1969. As she had only acquired this knowledge after consulting with her attorney, the respondent contended that prescription should have commenced to run from that date. On appeal, the SCA held that it was only at the stage when the respondent consulted with her attorney that she acquired the knowledge that the hospital staff were the cause of her child’s condition, and that the appellant was therefore the ‘debtor’ for the purposes of the Prescription Act. The Court held that the appellant had not discharged the onus of showing that the respondent knew, or ought to have reasonably suspected, that she received negligent treatment at the hospital, and that the disability suffered by her minor child was the result of that negligence. On that basis it could not be said that the respondent had knowledge of the facts that would have led her to think that the medical staff at the hospital were negligent, and that her child had cerebral palsy as a result. Accordingly, the SCA dismissed the appeal. ~~~~ends~~~~

1567

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case number: 179/08 In the matter between: STEPHANUS CORNELIUS VAN AARDT APPELLANT v THE STATE RESPONDENT Neutral citation: S C van Aardt v The State (179/2008) [2008] ZASCA 169 (2 December 2008) Coram: Mpati P, Combrinck JA et Kgomo AJA Heard: 5 November 2008 Delivered: 2 December 2008 Summary: Murder – vicious and sustained assault on deceased – appellant solely responsible for injuries causing death – state not required to prove which particular blow caused the death or what weapon (or means) used – once murder proved unnecessary to establish effect of accused intentionally preventing deceased obtaining medical assistance – conviction confirmed. Sentence – no misdirection – 12 years imprisonment on lenient side. ORDER On appeal from: the Grahamstown High Court, Eastern Cape Provincial Division (Pickering J, with Kroon and Dambuza JJ sitting as full court from judgment of Froneman J). (1) The appeal against both conviction and sentence is dismissed. JUDGMENT KGOMO (MPATI P, COMBRINCK JA concurring) [1] The appellant, a 49 year old farmer of Somerset East, was convicted by Froneman J sitting at the Grahamstown High Court of the murder of the deceased, Elliot Magabane, a 15 year old youth and was sentenced to 12 years imprisonment. The appeal to the full court of the Eastern Cape Division (Pickering J, Kroon and Dambuza JJ concurring) against both the conviction and sentence was unsuccessful. It is with the special leave of this court that the appeal serves before us. [2] The state alleged that on 28 February 2006 the appellant assaulted the deceased on his farm, Clairvoux, in consequence of which he died of his injuries during the night of 1/2 March 2006. The indictment also specifies that after the assault the appellant unlawfully and with the intent to kill the deceased failed to obtain medical treatment for him which failure resulted in his death, alternatively accelerated his death. The state further alleged that the cumulative effect of the assault and the deprivation of medical treatment constituted the crime of murder. [3] The appellant pleaded not guilty to murder but guilty to assault common. In disclosing the basis of his defence in terms of s 115 of the Criminal Procedure Act, 51 of 1977, he stated in his written plea- explanation that he assaulted the deceased because he suspected him of having stolen about R350.00 from his vehicle. He slapped him several times in the face with an open hand and hit him several times with a plain stick (without a knob) on his body. All the strokes were aimed at the deceased’s buttocks but some were deflected to other parts of the body as the deceased parried the blows or wiggled about. At worst, he says, this assault caused the following injuries: swelling and bruising to the face, left ear, left arm, buttocks, back, back of his legs and possibly on his sides. [4] The appellant accordingly denied that the deceased died as a consequence of the assault and the resultant injuries. He further denied that a legal duty reposed on him to seek any medical intervention for the deceased. [5] The facts relating to this case are briefly as follows. The appellant conducts a dairy business from a part of his farm. On 28 February 2006 he parked his bakkie next to his office which adjoins the milk parlour. While performing some administrative functions one Karel, a milker (who did not testify) apparently saw the deceased, a visitor to the farm, standing next to the appellant’s bakkie from which the money went missing. He reported what he allegedly observed to his co-workers Kwekwe Mzizi, Tsitsikama Mbambani, Frank Koert and Mzwandile Yantolo all of whom were engaged in cow-milking and who all testified. [6] Kwekwe testified that the appellant, waiving an empty wallet and armed with a 1 metre long stick, 5cm in diameter, initially demanded the missing money from him. He protested his innocence and conveyed to the appellant what Karel had reported to them. When Karel was confronted he pointed out the deceased. The appellant, who was extremely agitated, accosted the deceased with this accusation. The deceased also protested his innocence but was manhandled and slapped with open hands by the appellant next to the milk parlour. The deceased led the appellant to a feeding trough and extricated a few coins from the animal fodder. This incensed the appellant even more. He partially strangled the deceased by squeezing the deceased’s shirt around his neck, threw him to the ground, pinned him down with his knee on the deceased’s chest and pummelled him with clenched fists in the face and sides. [7] It was common cause that the deceased was lodging with Frank Koert on the appellant’s farm just across the road from the milk parlour. Kwekwe saw the appellant and deceased heading for and entering Koert’s house. The appellant was armed with a stick. From the confines of Koert’s house came some thuds akin to a person being repeatedly bumped against a wall. These thuds were accompanied by the deceased’s cries and the appellant swearing at him. Because he was busy milking a cow that was unable to move to the milk shed Kwekwe did not notice victim and culprit emerge from Koert’s house. Once outside, however, he saw the appellant holding the deceased by the shoulder and shoving him about as a result of which the deceased fell. The appellant launched a vicious and sustained assault with a stick on the deceased who lay in a foetal position. Kwekwe took fright and reported his observations to the other milkers in the shed. All of them were too scared to intervene. [8] Kwekwe left to perform another chore in one of the paddocks. He witnessed from that vantage point the appellant dragging the deceased in the vicinity of the entrance to the shed. He dumped the deceased in a puddle there and stamped on him with booted feet on his chest area and head. The appellant swore at the deceased and ordered him off his farm or he would beat him to death. The appellant thereafter entered the shed. The deceased crawled with difficulty for about six metres and used baled hay as support to heave himself to his feet. [9] The appellant instructed his employees not to move or accommodate the deceased. After the milking when Kwekwe kraaled the cattle he saw the deceased still slumped against the bales of hay. [10] Yantolo corroborated Kwekwe’s account that he heard the deceased cry in Koert’s house and the appellant demanding that he produce the money. He later noticed the deceased seated in the puddle and being prodded with a stick by the appellant and told to get up and leave his farm. The deceased managed to get to his feet and staggered for about three metres before slumping to the ground. He got up again and unsteadily staggered up to the electrical pylons where he collapsed once more. It was common cause or not in dispute that this is where the appellant’s employees found the deceased after work, also where Koert and Mehlo later covered him with a duvet cover and from where the appellant removed him the following day. [11] Tsitsikama witnessed the appellant grabbing the deceased by the clothes and forcing him out of the shed. Due to the droning of the milk machines he was unable to hear what took place outside. However when he later went to feed the calves after the milking he saw the appellant lashing out indiscriminately with a stick at the deceased who was sprawled on his back. The deceased, unable to stand up, crawled to the haystack against which he leaned. The appellant struck the deceased one blow to the head with a spade which floored him. He did not see the appellant stamp on the deceased. May I point out at this early stage that the defence vehemently criticized Tsitsikama’s evidence relative to the attack with the spade on the basis that he was the sole witness on this aspect. There is no warrant for excluding credible evidence on this ground only. In S v Sefatsa and Others 1988 (1) SA 868 (A) at 890G this court held: ‘The fallacy in the argument for the accused is that it presupposes that either or both of the witnesses must be untruthful or unreliable simply because their observations did not coincide. Such an approach to the evidence is unsound.’ The trial court therefore correctly rejected the argument. [12] Mandla Mehlo, the deceased’s friend, was staying at Koert’s house where the deceased had visited him. He corroborates part of Kwekwe’s version on how the deceased was manhandled and stamped upon at the puddle, struck with a stick and how the deceased wobbled and collapsed close to the electrical pylons. He accompanied Koert when the latter covered the deceased with a duvet cover later in the evening. [13] Vuyisile Mabomba, the tractor driver, noticed the assault from a distance while he was busy balancing cattle feed compound with a mixer. The deceased landed on the ground from the assault. The appellant helped him to his feet and walked with him in the direction of Koert’s house. The following morning at around 05h00 he saw the appellant’s bakkie at Koert’s house. He later noticed that the deceased’s face was swollen and he could not speak. The appellant poured water over the deceased which evoked a feeble lifting of the head. The next day the appellant told Mabomba that he was in deep trouble and that they (the workers) must take care of the farm if something untoward should happen to him. [14] Frank Koert stays a short distance from the milk parlour and hosted the deceased through the latter’s friend Mehlo. He was present when the appellant reported his money stolen and when Karel pointed out the deceased as the suspect. He paid no attention to what transpired thereafter as he focussed on milking the cows. When he next looked around he realised that the appellant had left the shed. He did not witness the assault on the deceased but learned from his co-workers who he accompanied after work to the electrical pylons where they pointed out the now immobile deceased. Those present were Karel, Goodman, Tsitsikama, Mehlo, Kwekwe and one Bungu. At that stage the workers had already knocked off duty and dusk was settling in. [15] The deceased’s body was swollen and he was unable to speak. Koert tried in vain to make him sit up. The workers left the deceased lying at that point because they were scared of defying the appellant’s earlier injunction not to help or house him. Later that evening, under cover of darkness, Koert and Mehlo returned to the deceased who was still lying at the same spot and covered him with a duvet cover. It is convenient at this stage to deal with the contention by the defence that the workers could have removed the deceased or rendered assistance in the absence of the appellant. This argument ignores the fact that by virtue of the employer-employee relationship the appellant exercised inherent authority over them. They had also just witnessed him mete out a severe beating on the deceased. In addition most were mere children with their ages ranging between 15 and 18 except Bungu and Yantolo who were 30 and 58 years, respectively. [16] Early in the morning following the assault the appellant called Koert away from his milking chores to the latter’s house where he found the deceased lying on the back of the appellant’s bakkie. On the appellant’s instructions he offloaded the deceased, who at 15 years was of slight build and weighed only 46kg, and laid him down on a bed. Koert suggested that he (Koert) notify the deceased’s parents concerning their child’s condition but the appellant forbade him and told him that when the deceased became well enough he could walk home. When the deceased’s condition deteriorated Koert approached the appellant again for permission to summon the deceased’s parents to fetch him. The appellant informed him that he did not want an ambulance or the police on his farm. [17] The deceased was barely conscious. That morning he had managed to swallow two pills that the appellant had supplied. The deceased also managed to eat a small piece of bread and drank some milk fed to him by Koert. He could not talk and was groaning continually. Koert placed him on the stoep to give him some air. He was unable to sit and Koert supported him. The appellant returned that afternoon and poured cold water over the deceased and into his ear. The deceased shook his head. The appellant and Koert tried to feed the deceased with more tablets but were unsuccessful because the deceased was unable to swallow them, not even when desolved in water. Notwithstanding all this the appellant assured Koert that the deceased would recover. Later during the evening the appellant called at Koert’s house with a torch which he shone into the pupils of the deceased’s eyes. [18] The morning following the events described in para 17 (above) the appellant repeated the torch-pupil experiment and exclaimed (in Afrikaans): “O Gods!” The deceased was dead. The appellant left but returned after a while. He told Koert to tell the police when they arrived that the body of the deceased was discovered next to the road. That is also what Koert told Inspector Mayekiso who investigated the death. He also reported to him that the deceased’s assailants were unknown. The inspector left with Mehlo and promptly returned and intimated to Koert that he had discovered the truth, whereupon Koert spilled the beans. [19] Dr George William Groves, a general medical practitioner for over 30 years, conducted the medico-legal post-mortem examination on the body of the deceased on 7 March 2006 and compiled a report. He also testified for the state. His recorded findings, which are not in dispute, are as follows. The deceased sustained fractures of the left 2nd, 3rd, 4th and 6th ribs and of the right 5th and 6th ribs and the hemithorax appeared sunken. He suffered pulmonary congestion bases of both lungs; contusion of the angle of the right mandible; subaponeurotic and subperiostical haematoma; contusion of the right occipital lobe with intracerebral haematoma; contusion over the left cerebellum; contusion over an eye; contusion of apex of the heart; contusion of the mesentery and contusion of the liver. The cause of death is recorded as: ‘Cerebral injury secondary to multiple blunt trauma’. [20] Dr Groves, elaborating on his post-mortem findings, testified that the fracture of the deceased’s ribs could not have been caused by a single clench-fist blow or a single kick and that he thought ‘die waarskynlikste, meer waarskynlike meganisme sou wees as daar ‘n swaar gewig op daardie borskas geplaas is’ and that ‘[h]y was vir my baie swaar beseer’. [21] Dr Groves explained that to cause the brain injury sustained by the deceased the latter was subjected to a great amount of force (‘’n kwaai mate van geweld’). In particular regard being had to the injury to the cerebellum he would have expected the deceased to have lost consciousness instantly and it would have been surprising and very exceptional had the deceased been able to walk (the measured distance of 73 metres) after the infliction of that injury. [22] The appellant’s version of the event is that when he discovered that his money was stolen from his bakkie he suspected Kwekwe, who he had sent to the bakkie earlier to fetch the keys, but Karel blamed the deceased. The deceased disclaimed any knowledge of the money. He grabbed him by the scruff of the neck and slapped him a few times. The deceased screamed and produced R7 in coins from a feeding trough. The deceased was unco-operative, so he struck him with a stick as alluded to in his plea- explanation. The deceased took him to Koert’s house to point out the money but led him on a wild goose chase. He denied any suggestion that he may have banged the deceased’s head against the wall of Koert’s house. [23] The appellant says he pushed the deceased through the gate which caused the deceased to fall into a puddle. He ordered the deceased off his farm. The deceased got up and trotted off limping, due to the effects of the lashing he gave him with a stick on his buttocks, back and legs. At that stage the workers were through with the milking and were cleaning up. The appellant busied himself at the dairy for about 15 minutes and got into his bakkie and drove towards his residence. When he was opposite Koert’s house he saw the deceased in the company of two people (he is unsure whether they were men or women). He again screamed at the deceased to leave his farm. [24] The appellant says the following morning when he was on his way to inspect the irrigation pivots on his land he noticed the deceased lying next to the electrical pylons already referred to. There was a duvet cover next to him. His body was swollen and he appeared to be unconscious. He reckoned that the deceased must have been attacked by some unknown assailants after he (the appellant) had chased him away from his farm. He took the deceased to Koert’s home because he had established that he had put him up. He surmised that they were related. As he was not the cause of the deceased’s condition he was not prepared to assume responsibility for his care or transportation to a hospital or become involved with the police, because he had chastised the deceased the previous day. [25] From this point the appellant’s version corresponds substantially with Koert’s account and bears no repetition. He says when he saw the deceased for the third time that day he appeared to be unconscious. He enquired from his doctor-friend in Bethulie how he could determine whether the deceased was not shamming. He applied the proposed methods and elicited the responses testified to by Koert. On discovering the next day that the deceased had died he telephoned an acquaintance, detective Botha, and reported that the deceased ‘het pak gekry’ and was dead. On Botha’s advice he telephoned the aforesaid Inspector Mayekiso. [26] The appellant denied striking the deceased with a blunt object or a spade on the head as testified and pointed out to the police by Tsitsikama. He also denied that he refused permission to Koert to notify the deceased’s parents of his serious condition. He states that the death of the deceased was the furthest thing on his mind and did not foresee it. [27] Dr Keely, a neurosurgeon for over 36 years, testified as a defence witness. His opinion is based on the post-mortem report compiled by Dr Groves and the photos of the body of the deceased, more particularly those of the brain used by Dr Groves. Part of Dr Keely’s evidence-in- chief went as follows: ‘Now can you give the Court an indication of the seriousness of these injuries to the brain? --- These injuries would eventually have become fatal. And can you give the Court an indication of the mechanism whereby such injuries could have been caused? You have noticed that there are no skull fractures. --- I have noticed that M’Lord. And you have noticed that at the post-mortem the doctor described bleeding, extra cranial under the skin. --- Yes M’Lord, the mechanism of this injury would have been first of all a contact type of force applied to the back of the head. It would have been of extreme magnitude, the inter cerebellum haematoma is not described, the injuries are very extensive in that it involves the occipital lobes, the cerebellum which would be, which is the point of impact, there is contusion of the right frontal lobe which is a contra [coup] lesion, there, with such obvious very severe macroscopic injury there would have been as well defuse less obvious microscopic injury involving mainly the fibre tracts of the brain causing a defuse axonal injury. Unusual in this type of injury is the contusion of the cerebellum, the cerebellum lies deep in the skull at the back of the head protected by a thick layer of muscle at the back of the neck, and it is an unusual injury, seen more often at autopsy than in clinical practice. Doctor after having received these injuries what would the effect of that have been on the individual who received these injuries, his level of consciousness, that sort of thing? --- He would have been rendered immediately unconscious and would have remained so. Doctor is there any possibility that the individual with this sort of injuries to his brain would have been able after having been injured to walk any distance? --- No M’Lord. Can you be quite certain about that? --- I am M’Lord’ [28] Dr Keely was adamant that after having sustained these injuries the deceased would not have been able to get to his feet under his own steam and walk any distance, least of all 73 metres. He opined that the brain injuries were fatal but if there had been immediate medical intervention the most optimistic diagnoses would have been that the deceased would have survived in a permanent vegetative state. Dr Keely’s dogmatic insistence that the deceased’s brain injury must have caused him to fall immediately into unconciousness upon receiving the heavy blow and that he would not have been able to swallow tablets is inconsistent with the objective facts. The deceased unquestionably walked a distance of at least 73 metres after receiving the blow; he swallowed two tablets; ate a piece of bread and drank some milk the following morning. This calls into serious question the reliability of his opinion. The more acceptable explanation is that of Dr Groves that for the deceased to have done these things was surprising and exceptional. [29] Pickering J gives an accurate summary of the approach adopted by the trial court in these terms: ‘In his judgment Froneman J found that the State had failed to prove beyond reasonable doubt that the appellant had had the intent to kill deceased at the time of his assault upon him. He found further, however, that the State had proved beyond reasonable doubt that the appellant had caused all the injuries to the deceased referred to in the post-mortem report and that, despite the appellant having appreciated the risk that the deceased could die in consequence of those injuries, had deliberately chosen not to obtain medical assistance for him because he feared that the matter would be reported to the police, notwithstanding that there was, in the circumstances, a legal duty on him to secure such medical assistance. The appellant therefore had the requisite intent in the form of dolus eventualis to kill the deceased. He was accordingly convicted of murder.’ Having examined the evidence in some detail Pickering J stated that Froneman J was correct in his finding that the appellant caused the injuries to the deceased in consequence of which he died and that ‘having regard to the deceased’s obviously severely injured state and his unsatisfactory physical responses to the stimuli applied by the appellant, I am of the view that the appellant must have foreseen, and by necessary implication did in fact foresee that there was a reasonable possibility that the deceased might die if not medically treated’. [30] The immediate question that falls for determination is: who caused the fatal injury to the deceased’s brain? The defence suggested that the deceased could have been attacked by strangers or by the appellant’s employees during the hiatus that the appellant saw the deceased with two people and the employees converging after work at the electrical pylons where the mortally wounded deceased was lying. Unfortunately no time- lapse is discernable from the evidence for this period. However, having regard to the evidence of the eyewitnesses and that of the appellant himself the time-span could not have been inordinate. It must have been a matter of minutes rather than hours. [31] The appellant’s counsel placed the state-witnesses’ evidence under a microscope and, as Pickering J for the full court stated, he subjected it ‘to trenchant criticism’. The trial court, Froneman J, was alive to the contradictions and conflicts in the state-witnesses’ evidence and dealt fully with them and accepted their evidence as credible. In respect of the evidence of Kwekwe and Tsitsikama the learned judge’s main reservation was that they exaggerated their evidence. I find it unnecessary to rehash the incongruous points in the respective witnesses’ evidence because I am, in the first place, not persuaded that Froneman J erred in his credibility findings. Secondly, it is not sufficiently appreciated by the defence that the witnesses were not always in each others presence as the events unfolded and they therefore occupied different vantage points. For example the tractor driver was mixing the animal feed elsewhere; one of the milkers milked one of the cows that could not walk outside the shed, others were milking the cows in the shed; another heard the commotion in Koert’s house when he went to fetch a pair of pliers at the appellant’s residence; another watched a different stage of the assault when he went to feed the calves and yet another when he kraaled the cattle. [32] It follows that the witnesses could not necessarily corroborate each other on all points. They merely recounted what they observed at a particular stage. What is essential is that there is no suggestion that they were not present on the farm and observed some assault. In fact the evidence emanating from the appellant as well suggests that he interacted with his workers in the ordinary course of them performing their duties. A factor that also counts in favour of the veracity of the witnesses’ evidence is that the appellant admits a measure of assault on the deceased albeit that he has minimized his assault to a mere whipping. [33] The appellant’s testimony that he saw the deceased with two strangers is fanciful. These imaginary people were fabricated to create the impression that the deceased was not fatally wounded when he was evicted from the farm and that those strangers could have harmed him. The problem with this piece of evidence is that whereas the strangers’ existence is broached in the plea-explanation none of the witnesses was confronted with it under cross-examination. (President of RSA v SA Rugby Football Union 2000 (1) SA 1(CC) at 36J-38A, paras 61-65). A further reason why the appellant could not have seen the deceased with two strangers is that several witnesses testified that they saw the deceased stagger away from the appellant and collapse at the electrical pylons. This evidence, which the trial court correctly accepted, leads to the irresistible conclusion that when the deceased collapsed at the electrical pylons the fatal brain injury had already been inflicted. This eliminates the probability of any strangers assaulting the deceased or causing his death. The trial judge’s rejection of the appellant’s evidence on this aspect cannot be faulted. [34] The conduct of the appellant after the assault speaks volumes. He ordered his workers not to house the deceased. It could not have escaped him that the deceased was seriously injured because he says the deceased seemed unconscious and yet he was indifferent to his plight. The appellant’s early morning trip to the electrical pylons had as its objective, I suggest, to check whether the deceased was gone or had been removed. It was an act of heartlessness not to transport the deceased, badly hurt as he was, to a nearby hospital but to Koert’s home. This was done to keep the assault a secret. Koert’s two pleas to send for the deceased’s parents were rebuffed. If the appellant had merely chastised the deceased he would not have played doctor and would have summoned an ambulance or the police at the latest on the morning that he took the deceased to Koert’s home. The appellant also influenced Koert to lie to the police and to say the deceased’s body was found next to the road. This is the conduct of a person who knew that he had committed a serious crime and had to account for his deeds. [35] The following are the proved facts. When the appellant accosted the deceased for the first time the deceased seemed to have been in good health. He was certainly unscathed. There is direct testimony from eyewitnesses that the appellant in full view of these witnesses slapped the deceased, pummelled him with clenched fists, attempted to strangle him, assaulted him with a stick, kicked and trampled him with booted feet. The deceased was constantly in the presence of the appellant from the time that he first grabbed him until he ordered him from the farm. The deceased was not assaulted by anyone else but the appellant until he collapsed, mortally wounded, at the electrical pylons. There can be no doubt that the appellant inflicted all the injuries described hereinbefore and consequently caused the deceased’s death. [36] What remains is to determine whether the appellant is guilty of culpable homicide or murder with the direct form of intent or dolus eventualis. The appellant’s counsel urged us to find that the appellant was guilty of assault alternatively culpable homicide if he was the one who caused the deceased’s death. The thrust of his argument is that no evidence was produced to show which specific blow was fatal or what instrument was used to that end. This argument has no merit. [37] The principle to determine what form of intent to murder an accused should be convicted of or whether only culpable homicide has been proved was expressed in these terms by Holmes JA in S v Sigwahla 1967 (4) SA 566(A) at 570B-E: ‘1. The expression ‘intention to kill’ does not, in law, necessarily require that the accused should have applied his will to compassing the death of the deceased. It is sufficient if the accused subjectively foresaw the possibility of his act causing death and was reckless of such result. This form of intention is known as dolus eventualis, as distinct from dolus directus. 2. The fact that objectively the accused ought reasonably have foreseen such possibility is not sufficient. The distinction must be observed between what actually went on in the mind of the accused and what would have gone on in the mind of a bonus paterfamilias in the position of the accused. In other words, the distinction between subjective foresight and objective foreseeability must not become blurred. The factum probandum is dolus, not culpa. These two different concepts never coincide. 3. Subjective foresight, like any other factual issue, may be proved by inference. To constitute proof beyond reasonable doubt the inference must be the only one which can reasonably be drawn. It cannot be so drawn if there is a reasonable possibility that subjectively the accused did not foresee, even if he ought reasonably to have done so, and even if he probably did do so.’ [38] The medical evidence does not redound to the benefit of the appellant but, on the contrary, is against him. Both Drs Groves and Keely were of the view that the deceased was struck a colossal blow to the head which led to the deceased’s death. Tsitsikama testified that the appellant struck the deceased one blow on the head with a spade. Dr Keely conceded that the brain injury was consistent with it having been inflicted with the face of a spade. In saying so I must add that the trial court was fully justified in preferring the evidence of Dr Groves above that of Dr Keely. Dr Keely conceded that the photographs relating to the post- mortem report were unhelpful to him because they did not depict the brain injury adequately or at all and he had to rely on the post-mortem report and the notes of Dr Groves. [39] I am in respectful agreement with the following statement by the Namibian Supreme Court in S v Van Wyk 1992 (1) SACR 147 (Nm) at 161e-h: ‘The State is, from the nature of things, seldom able to offer direct evidence of the accused’s state of mind at the time of assaulting the deceased and must therefore rely on inferences to be drawn from the circumstances of the assault (including its nature and duration), the nature of any weapons used and the nature, position and extent of the injuries inflicted. These must in turn be weighed up against any other circumstances (such as the consumption of drugs or alcohol) which may indicate that the accused did not foresee the consequences of his actions. This does not involve any piecemeal assessment or process of reasoning. All the relevant facts which bear on the accused’s state of mind and intention must be cumulatively assessed and a conclusion reached as to whether an inference beyond reasonable doubt can be drawn from these facts that the accused actually considered it a reasonable possibility that the deceased could die from the assault but, reckless as to such fatal possibility, embarked on or persisted with the assault. On the medical evidence the injuries which caused death were the blows to the head. It is not possible to link up particular fist blows or kicks with particular injuries, nor is the trier of fact required to do so. Once it is established that accused No 1 killed the deceased, and it has rightly been so found by the Court a quo, the trier of fact can look at the assault as a whole in order to determine what accused No 1’s intention was. In a case such as the present the trier of fact is not required to enquire into the subjective state of mind of the accused as he inflicted each injury. Neither principle nor common sense requires this.’ (Emphasis added) [40] The deceased was defenceless and never retaliated. On the other hand the appellant was a 49 year old man who was much larger than the deceased and weighed 100 kg. The assault on the deceased was sustained and vicious resulting in the injuries already described. The evidence does not establish that the appellant had the direct intent to cause the death of the deceased, and the state did not contend otherwise. However I am satisfied that the appellant subjectively foresaw the possibility of his conduct causing the death of the deceased and was plainly reckless as to such result ensuing. He is accordingly guilty of murder with dolus eventualis as the form of intent. [41] Froneman J convicted the appellant of murder, dolus eventualis, on the following basis: ‘Afgesien van enige argument oor onregmatigheid dink ek daar bestaan min twyfel dat hy dan sonder om twee keer te dink die oorledene mediese behandeling sou laat verkry het, met ander woorde hy sou die risiko van dood voorsien het en hom glad nie met daardie moontlike gevolg versoen het nie. Die rede waarom hy dit nie in hierdie geval gedoen het nie, was omdat hy aanmelding van die voorval by die polisie gevrees het, en nie omdat hy gedink het daar was geen gevaar dat die oorledene sou sterf as hy nie mediese behandeling ontvang het nie. Hy het gehoop dat die oorledene nie sou sterf nie, maar hy het geweet daar was ‘n risiko dat dit wel kon gebeur. Nieteenstaande die risiko besef het hy doelbewus verkies om nie mediese hulp te verkry nie. In regs terme kom dit neer op subjektiewe versoening met voorsiene gevolge. Die gevolgtrekking is dus onvermydelik dat die Staat bo redelike twyfel bewys het dat ten aansien van die beskuldigde se versuimshandelinge hy die nodige opset in die vorm van dolus eventualis of te wel opset met moontlikheidsbewussyn gehad het om die oorledene te dood.’ [42] The full court agreed with the cited reasoning and confirmed the conviction on that basis. This reasoning was evidently inspired by the Rhodesian Appellate Division decision in S v Chimbamba 1977 (4) SA 803 (RAD) at 808H-809B where MacDonald CJ (Lewis JP and Davies JA concurring): ‘Applying general principles, there can be no doubt at all that the crime of murder is committed if a person in need of assistance is intentionally prevented from obtaining it and in the result dies or dies earlier than he or she would otherwise have done. This, however, is a quite separate and distinct basis of liability from that relied upon in the indictment and no amendment of the indictment was applied for at any stage in the proceedings. It is unthinkable that an accused person should be found guilty of murder on a basis which has never been raised. Liability on this additional basis is in no way dependent upon complicity in the original assault giving rise to the need for assistance and cannot be regarded as being no more than an extension of it or as being embraced within it.’ [43] The Chimbamba dictum explains why the state framed the indictment to satisfy the ingredients missing in that judgment. However, for purposes of this judgment and in view of the finding set out in para 40 (above) it is unnecessary to make a finding on whether the basis on which the trial court convicted the appellant, which was subsequently upheld by the full court, was correct. [44] On sentence: it suffices to state that having regard to the defencelessness of the deceased, his tiny frame, the sustained and viciousness of the assault by a much heavier man than the deceased, the appellant’s denial of medical attention to the deceased and prevention that Koert summon the deceased’s parents to fetch him, his influence that Koert mislead the police and his lack of remorse, I am of the view that a sentence of 12 years imprisonment is on the lenient side. The appeal against both conviction and sentence is dismissed. ________________ F D KGOMO ACTING JUDGE OF APPEAL APPEARANCES: FOR APPELLANT: T N Price ATTORNEYS: Nettelton’s Attorneys Grahamstown Symington & De Kok Bloemfontein FOR RESPONDENT: C R de Klerk SC ATTORNEYS: Director Public Prosecutions Grahamstown Director of Public Prosecutions Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 2 December 2008 Status: Immediate 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. In a judgment delivered today, the Supreme Court of Appeal dismissed the appeal of Mr Stephanus Cornelius van Aardt, a 51 year old diary farmer of Somerset East, on a conviction of murder and a sentence of 12 years imprisonment. The evidence was that Mr van Aardt launched a vicious and sustained attack on the deceased, Mr Eliot Magabane a 15 year old youth, by slapping him, hitting him with clenched fists, kicking and stamping on him with booted feet and hitting him with a spade. The deceased sustained multiple injuries the major ones of which were six broken ribs and brain injuries. He died of brain injuries. In the appeal before the SCA Mr van Aardt’s counsel argued that the evidence adduced by the State does not establish when and where the fatal injury was inflicted and what instrument or means was used to cause the injury. The defence also suggested that it was possible that some strangers attacked the deceased after Mr van Aardt gave the deceased a mere whipping with a stick mainly on his bum. The SCA rejected these arguments and held that the appellant is the only person who assaulted the deceased and accordingly caused all the injuries sustained by him, which injuries caused the death of the deceased. The court stated that once it has been established that the deceased died at the hands of Mr van Aardt it was not necessary to link up particular blows with particular injuries. The court looked at the assault as a whole in order to determine what Van Aardt’s intention was. The court concluded that he was correctly convicted of murder. On the question of sentence the SCA found that having regard to the sustained and viciousness of the assault and Van Aardt’s lack of remorse, if anything, the sentence was on the lenient side.

4090

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 338/2022 In the matter between: GOLDEN CORE TRADE AND INVEST (PTY) LTD APPELLANT and MERAFONG CITY LOCAL MUNICIPALITY FIRST RESPONDENT MINISTER OF WATER AND SANITATION (Originally the Minister of Water Affairs and Forestry) SECOND RESPONDENT Neutral Citation: Golden Core Trade and Invest (Pty) Ltd v Merafong City Local Municipality and Another (338/2022) [2023] ZASCA 126 (29 September 2023) Coram: CARELSE, MEYER, MATOJANE and WEINER JJA and UNTERHALTER AJA Heard: 8 May 2023 Delivered: 29 September 2023 Summary: Administrative law – delay – legality review– reactive challenge – s 8(9) of the Water Services Act 108 of 1977 – whether the high court erred in overlooking the first respondent’s long delay in reviewing the Minister’s decision in terms of s 8(9) of the Water Services Act – whether the Minister’s decision should be enforced – the reactive challenge and review as to whether s 8(9) of the Water Services Act provides the Minister with authority to interfere with the Municipality’s imposition of surcharges in respect of the supply of water for industrial and domestic use. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Strydom J, sitting as a court of first instance): The appeal is upheld with costs, including the costs of two counsel. The judgment of the high court is set aside and replaced with the following: 2.1 The first respondent’s review application is dismissed with costs, including the costs of two counsel. 2.2 It is declared that: 2.2.1 The tariff imposed by the first respondent for the supply of water to the appellant for industrial use, in the period 1 July 2004 until the promulgation and imposition of a new tariff of application to such supply, was unlawful. 2.2.2 The tariff imposed by the first respondent for the supply of water to the appellant for domestic use, in the period 1 July 2004 until the promulgation and imposition of a new tariff of application to such supply, was unlawful. 2.3 The first respondent is ordered to pay the appellant’s costs, including the costs: 2.3.1 in the proceedings of the High Court in 2013 and in 2021 under case number: 23558/2011, including the costs of two counsel; 2.3.2 in the proceedings of the Supreme Court of Appeal under case number: 20265/14 in 2015, including the costs of two counsel; and 2.3.3 in the proceedings of the Constitutional Court under case number: 106/2015 in 2019, including the costs of two counsel. ________________________________________________________________ JUDGMENT ________________________________________________________________ Meyer JA and Unterhalter AJA (Carelse, Matojane and Weiner JJA concurring): Introduction [1] This appeal challenges the judgment and order of the Gauteng Division of the High Court, Pretoria, per Strydom J, delivered on 22 November 2021 (the high court redux). It: (a) dismissed with costs, including those of two counsel, an application for a declarator brought by the appellant, AngloGold Ashanti Limited, substituted by Golden Core Trade and Invest (Pty) Ltd on 1 April 2020 in terms of r 15(2) of the Uniform Rules of Court (AngloGold), against the first respondent, Merafong City Local Municipality (the Municipality); (b) condoned the Municipality’s late filing of its counter-application for the review of a decision of the second respondent, the Minister of Water and Sanitation (the Minister); (c) upheld with costs, including those of two counsel, the Municipality’s counter- application for the review and setting aside of the Minister’s ruling made on 18 July 2005 (the Minister’s decision); and (d) made no order as to costs against the Minister. The appeal is with leave of the high court redux. [2] The Minister’s decision set aside the Municipality’s tariffs imposed upon AngloGold for the supply of water for industrial and domestic use. The questions on appeal are whether the high court redux erred in: (a) overlooking the delay of the Municipality in the initiation of its review of the Minister’s decision taken in terms s 8(9) of the Water Services Act 108 of 1997 (the Act); (b) upholding the Municipality’s review; and in (c) dismissing AngloGold’s application for declaratory relief. Factual background [3] Since 1958, the Tautona, Mponeng, and Savuka mines of AngloGold in Carletonville have produced gold. Rand Water (formerly Rand Water Board)1 has always provided it with potable water in bulk. AngloGold uses water for drilling, rock handling, cooling, transportation, and as a solvent in their metallurgical process. It provides domestic water to four hostels accommodating 10,202 migrant workers and 171 dwellings in the mine village, which are occupied by mine workers and their families. It purchases 502,600 kl of potable water every month, 35% of which is used for industrial and 65% for domestic purposes. Rand Water’s reservoirs, pipes, and other equipment supply its water. AngloGold built and maintained infrastructure for water distribution and sewage treatment facilities. Therefore, it considers itself a water supplier. [4] Parliament passed the Act in December 1997. It recognises the constitutional authority of local government to provide water and sanitation. Municipalities become water services authorities and gradually guarantee that consumers within their jurisdictions have access to water services. The Act makes a distinction between a ‘water services authority’ and a ‘water services provider’ of ‘water services’. Section 1 defines a ‘water services authority’ as ‘any municipality, including a district or rural council as defined in the Local Government Transition Act 209 of 1993, responsible for ensuring access to water services’. A ‘water services provider’ is defined as ‘any person who provides water services to consumers or to another water services institution, but does not include a water services intermediary’. ‘[W]ater services’ means ‘water supply services and sanitation services’. ‘[W]ater supply services’ means ‘the abstraction, conveyance, treatment, and distribution of potable water, water 1 Rand Water is a water board established under Chapter VI (ss 28-50) of the Water Board Statutes (Private) Act 17 of 1950. In terms of s 29 of the Act ‘the primary activity of a water board is to provide water services to other water services institutions within its service area’. intended to be converted to potable water for commercial use but not water or industrial use’. ‘[S]anitation services’ is defined to mean ‘the collection, removal, disposal or purification of human excreta, domestic wastewater, sewage and effluent resulting from the use of water for commercial purposes’. [5] Section 4 mandates that ‘[w]ater services must be provided under the conditions of the water services provider.’2 Section 6(1) stipulates that ‘. . . no person may use water services from a source other than a water services provider nominated by the water services authority having jurisdiction in the area in question, without the approval of that water services authority.’3 Section 7(1) 2 Section 4 reads: ‘4(1) Water services must be provided in terms of conditions set by the water services provider. (2) These conditions must— (a) be accessible to the public; (b) accord with conditions for the provision of water services contained in bylaws made by the water services authority having jurisdiction in the area in question; and (c) provide for- (i) the technical conditions of existing or proposed extensions of supply; (ii) the determination and structure of tariffs; (iii) the conditions for payment; (iv) the circumstances under which water services may be limited or discontinued; (v) procedures for limiting or discontinuing water services; and (vi)measures to promote water conservation and demand management. (3) Procedures for the limitation or discontinuation of water services must— (a) be fair and equitable; (b) provide for reasonable notice of intention to limit or discontinue water services and for an opportunity to make representations, unless— (i) other consumers would be prejudiced; (ii) there is an emergency situation; or (iii) the consumer has interfered with a limited or discontinued service; and (c) not result in a person being denied access to basic water services for nonpayment, where that person proves, to the satisfaction of the relevant water services authority, that he or she is unable to pay for basic services. (4) Every person who uses water services provided by a water services provider does so subject to any applicable condition set by that water services provider. (5) Where one water services institution provides water services to another water services institution, it may not limit or discontinue those services for reasons of nonpayment, unless it has given at least 30 days’ notice in writing of its intention to limit water services or 60 days’ notice in writing of its intention to discontinue those water services to— (a) the other water services institution; (b) the relevant Province; and (c) the Minister.’ 3 Section 6 reads: ‘6. Access to water services through nominated water services provider.— (1) Subject to subsection (2), no person may use water services from a source other than a water services provider nominated by the water services authority having jurisdiction in the area in question, without the approval of that water services authority. provides that ‘. . . no person may obtain water for industrial use from any source other than the distribution system of a water services provider nominated by the water services authority with jurisdiction in the area in question, without the approval of that water services authority.’4 Section 8 prescribes the procedure for the approval by a water services authority of applications submitted in accordance with ss 6 and 7, which may not be denied unreasonably and may be granted with reasonable conditions. A person who has made an application pursuant to ss 6 or 7 may appeal any decision, including any condition imposed by the water services authority in relation to the application, under s 8(4). On appeal, s 8(9) empowers the Minister to ‘confirm, vary, or overturn’ any water services authority decision.5 (2) A person who, at the commencement of this Act, was using water services from a source other than one nominated by the relevant water services authority, may continue to do so— (a) for a period of 60 days after the relevant water services authority has requested the person to apply for approval; and (b) if the person complies with a request in terms of paragraph (a) within the 60 day period, until— (i) the application for approval is granted, after which the conditions of the approval will apply; or (ii) the expiry of a reasonable period determined by the water services authority, if the application for approval is refused.' 4 Section 7 reads: ‘(1) Subject to subsection (3), no person may obtain water for industrial use from any source other than the distribution system of a water services provider nominated by the water services authority having jurisdiction in the area in question, without the approval of that water services authority. (2) Subject to subsection (3), no person may dispose of industrial effluent in any manner other than that approved by the water services provider nominated by the water services authority having jurisdiction in the area in question. (3) A person who, at the commencement of this Act, obtains water for industrial use or disposes of industrial effluent from a source or in a manner requiring the approval of a water services authority under subsection (1) or (2), may continue to do so— (a) for a period of 60 days after the relevant water services authority has requested the person to apply for approval; or (b) if the person complies with a request in terms of paragraph (a) within the 60 day period, until— (i) the application for approval is granted, after which the conditions of the approval will apply; or (ii) the expiry of a reasonable period determined by the water services authority, if the application for approval is refused. (4) No approval given by a water services authority under this section relieves anyone from complying with any other law relating to- (a) the use and conservation of water and water resources; or (b) the disposal of effluent.’ 5 Section 8 reads: ‘(I) A water services authority whose approval is required in terms of section 6 or 7— (a) may not unreasonably withhold the approval; and (b) may give the approval subject to reasonable conditions. (2) A water services authority may require a person seeking approval to provide water services to others on reasonable terms, including terms relating to— (a) payment for the services; and (b) compensation for the cost of reticulation and any other costs incurred in providing the water service. (3) In determining what is reasonable under subsections (I)(a), (1)(b) and (2), a water services authority— [6] In July 2003, the Department of Water Affairs and Forestry accepted the Strategic Framework paper, thereby constituting municipalities as water services authorities. On 11 February 2004, AngloGold and other mines received written notification from the Municipality. It informed them that, as of 1 July 2003, it became a water services authority. It also requested that they apply for approval to be provided with water for industrial use, per s 7 of the Act. [7] On 8 April 2004, AngloGold requested permission from the Municipality to continue purchasing water from Rand Water for its mining and domestic use on the basis of Rand Water’s tariffs and conditions. On 31 May 2004, the Municipality responded in writing. It said that Rand Water may supply water directly to the mines, charge and collect water sales revenue, and manage water quality and other technical issues. It also set significantly higher tariffs than those of Rand Water for water provided to the mines. It approved AngloGold’s water (a) must consider the following factors, to the extent that the water services authority considers them to be relevant: (i) The cost of providing; (ii) the practicability of providing; (iii) the quality of; (iv) the reliability of; (v) the financial, technological and managerial advisability of providing; (vi) the economic and financial efficiency of; and (vii) the socio-economic and conservation benefits that may be achieved by providing the water services in question; and (b) may consider any other relevant factor. (4) A person who has made an application in terms of section 6 or 7 may appeal to the Minister against any decision, including any condition imposed, by that water services authority in respect of the application. (5) An appellant, under subsection (4), must note an appeal by lodging a written notice of appeal with— (a) the Minister; and (b) the person against whose decision the appeal is made, within 21 days of the appellant becoming aware of the decision. (6) A person who has made an application in terms of section 6 or 7 may appeal to the Minister if the water services authority in question fails to take a decision on the application within a reasonable time. (7) An appeal under subsection (6)— (a) must be conducted as if the application had been refused; and (b) must he noted by lodging a written notice of appeal with the Minister and the water services authority in question. (8) A relevant Province may intervene as a party in an appeal under subsection (4) or (6). (9) The Minister may on appeal confirm, vary or overturn any decision of the water services authority concerned. (10) The Minister may prescribe the procedure for conducting an appeal under this section.’ supply application, with effect from 1 July 2004, under these conditions. It concluded by advising AngloGold of its right to a ministerial appeal. [8] On 11 June 2004, AngloGold filed an appeal in terms of s 8(4) appeal with the Minister. Its main complaints were that: (a) the Municipality’s tariff was excessively higher than the equivalent Rand Water tariff (R498 599 per month), while the Municipality was not adding any value to, or assuming any responsibility for any aspect of the water supply; and (b) the Municipality failed to recognise AngloGold’s role as a water services provider or make any attempt, other than requesting information on its mines’ consumption, to understand its economic situation. [9] On 18 July 2005, the Minister upheld the appeal and ruled that the premium established in respect of the water price for industrial usage was unreasonable, because the Municipality provided no value for the services given to AngloGold by Rand Water. She concluded that a surcharge could only be assessed on the share of water used by the mines for domestic purposes and not for industrial ones, ‘[s]ince water for industrial use is not designated as a municipal service in terms of section 1(xxv) of the [Act]’. The Minister overturned ‘the surcharge on water for industrial use’. She also directed AngloGold and Rand Water to negotiate a reasonable tariff for AngloGold’s domestic water use. [10] The Municipality’s attorney provided a detailed legal opinion on 5 September 2005. The Municipality was advised that the Minister could not set rates or interfere with municipal tariff-setting and such interference was void in law. He recommended that the Minister be requested to reverse her decision. The Municipality sent the opinion to the Minister on 31 October 2005. It again brought the opinion to her attention on 3 March 2006, as well as on 24 October 2007. Multiple attempts were made to meet with the Minister. Those she called, in response, were postponed or cancelled at her request and never held. [11] In accordance with the directive of the Minister, the Municipality interacted with the mining houses, including AngloGold. From September 2005 to October 2007, it conducted meetings with them and Rand Water. In the end, no agreement was reached. The Municipality declared a formal dispute with the Minister concerning her decision of 30 March 2006. Section 41(3) of the Constitution stipulates that a state entity involved in an intergovernmental dispute must exhaust all reasonable efforts to resolve it before going to court. Section 40(1) of the Intergovernmental Relations Framework Act 13 of 2005 (the IGRF Act), requires organs of state to attempt to resolve their disputes by cooperation before resorting to legal action. [12] The Municipality continued to enforce the tariffs imposed by it upon AngloGold for the supply of water for industrial and domestic use. AngloGold responded by withholding the contested portion of the tariffs. In September 2007, the Municipality demanded that AngloGold pay the arrears or face measures to curtail water supply to its mining operations. If its water supply had been drastically curtailed, the mining operations would suffer severely. As a result, AngloGold complied with the demand and paid the disputed surcharge and arrears under protest and without prejudice to its legal rights. Litigation background (i) The court of first instance [13] On 19 April 2011, AngloGold initiated motion proceedings in the Gauteng Division of the High Court, Pretoria (the court of first instance). It sought relief that would require the Municipality to comply with the Minister’s decision. AngloGold maintained that the Minister’s decision existed in fact, had legal consequences and the Municipality could not treat it as though it did not exist.6 [14] On 3 August 2011, the Municipality filed its opposition and conditional counter-application. It sought declaratory relief, asserting that: (a) it has exclusive executive authority to set, adopt and implement tariffs for the provision of water services within its area of jurisdiction, including surcharges; and (b) the Act does not give the Minister authority ‘to interfere with a tariff set and implemented’ by it for the provision of water services. Alternatively, it argued that s 8(9) of the Act, which governs ministerial appeals, is unconstitutional and invalid. [15] The court of first instance (Kubushi J) granted AngloGold’s application on 26 February 2014, and dismissed the Municipality’s counter-application. It found that Anglo-Gold legitimately applied to the Municipality under ss 6 and 7 of the Act and that the Minister lawfully exercised her appellate power under s 8. Even if the Minister’s decision was impugnable, the court of first instance said, it remained binding on the Minister until overturned by the court. (ii) The Supreme Court of Appeal [16] This Court upheld the court of first-instance’s decision on appeal.7 It held that: (a) the municipality was required to seek judicial review of the Minister’s decision; (b) it violated the principle of legality by simply ignoring it; (c) its failure to challenge the Minister’s decision in judicial review proceedings, rather than attacking the empowering statutory provision, posed an insurmountable difficulty for it; and (d) a collateral challenge to the validity of an administrative act is a remedy available only to an individual. 6 It relied on Oudekraal Estates (Pty) Ltd v City of Cape Town & Others [2004] ZASCA 48; 2004 (6) SA 222 (SCA) para 40. 7 Merafong City Local Municipality v AngloGold Ashanti Limited [2015] ZASCA 85; 2016 (2) 176 (SCA) (Merafong SCA). (iii) The Constitutional Court [17] In a subsequent appeal to the Constitutional Court,8 the Municipality’s primary argument was that there is a fundamental distinction between administrative decisions that: (a) belong within the scope of powers with which a public official is vested but are merely erroneously taken; and (b) appear to be outside the decision-maker’s authority. It argued that a person or entity subject to a decision in the second category can disregard it until it is enforced against them, at which point it can use the decision’s invalidity as a defence. [18] The majority of the Constitutional Court disagreed with this Court’s position as to who can bring a reactive challenge. Cameron J, writing for the majority, held that the Constitution, logic, and our case law provides insufficient support for a doctrinal limitation as to who can bring a reactive challenge. The Constitutional Court ultimately concluded that this Court erred in holding that a municipality could not raise a reactive challenge. The Constitutional Court nevertheless recognised that the Municipality should either have accepted the Minister’s decision as valid or challenge it in court by way of a review. By deciding not to comply with the Minister’s decision, the Municipality was engaged in self-help. The Constitutional Court remitted the Municipality’s reactive challenge and review to the high court. High court redux proceedings [19] As a result of the Constitutional Court’s remittal order, the record of the Minister’s decision was filed. The Municipality amended its notice of motion in which it sought, inter alia, condonation for the late institution of its reactive challenge and its review and setting aside the Minister’s decision. In the 8 Merafong City Local Municipality v AngloGold Ashanti Limited [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017 (2) SA 211 (CC) (Merafong CC). introductory section of its supplementary affidavit, the Municipality stated unequivocally that its challenge to the Minister’s decision was brought under PAJA and, alternatively, under the principle of legality. Its PAJA review was founded on the grounds that the Minister’s decision was: (a) based on and informed by a material error of law in respect of her functions and authority to intervene in an exclusive municipal competence; and (b) irrational and/or constituted a material error of law, in that she ruled that the Municipality could not levy a surcharge, ignoring the legally competent authority of a Municipality to effect cross-subsidisation across its tax base. The basis for its legality review was that the Minister’s decision interfered with the Municipality’s exclusive constitutional authority, under s 156(1) of the Constitution, to implement municipal property rates, municipal tariffs and levy surcharges. High court redux judgment [20] In a judgment delivered on 22 November 2021,9 the high court redux evaluated the question of delay, including the merits, in the context of a legality review. Regarding the approximately 13-year period of delay, the high court redux distinguished between the initial six-year period - between the date of the Minister’s decision on 18 July 2005 and the filing of the Municipality’s answering affidavit and counter-application in response to AngloGold’s application on 11 August 2011 - and the subsequent seven-year period before the municipality amended its counter-application on 12 July 2017, by adding a prayer for judicial review. It held that the delay in the first period was unreasonable or undue, but not the delay in the second period. [21] The high court redux then considered whether it should exercise its discretion to overlook the delay and entertain the review. In doing so, it examined 9 Merafong City Local Municipality v Golden Core Trade Investments (Pty) Ltd and Another [2021] ZAGPPHC 805 (Merafong HC). the nature of the Minister’s decision, the merits of the legal challenge brought against it, the potential prejudice to affected parties and the repercussions of setting it aside, as well as the Municipality’s conduct. It considered the merits of the legal challenge to be decisive and concluded that the Municipality’s delay in filing the review application should be condoned. [22] The high court redux found that the Minister, in taking the impugned decision, exceeded the limits of the authority vested in her under s 8(9) of the Act, and that her decision must be reviewed and set aside as unlawful and invalid on the basis of the principle of legality. It also found the Minister’s act in making the contested decision, to be unconstitutional and, as such, that it should be deemed null and void in accordance with s 172(1)(a) of the Constitution. Constitutional challenge against s 8(9) of the Act [23] Concerning the municipality’s argument that s 8(9) of the Act is constitutionally invalid, the majority judgment of the Constitutional Court states: ‘I should add that it is also inapposite for this Court to determine Merafong’s constitutional challenge. Merafong avowedly did not persist in this before the SCA. Before us, it did not mention the issue in its written argument, nor did it allude to it in oral argument. When counsel for Merafong was asked about it, he averred simply “it’s alive on the papers”. This Court invited submissions from the Minister, who had not appeared in the High Court and SCA. The Court itself here inquired about the constitutional point. The Minister urged that the point not be decided. But Merafong now seized the opportunity to assert that it could be decided. That is belated opportunism the Court should not countenance. Since Merafong had in effect let the point lie, so far as not even to make written or oral submissions on it, it is not in the interests of justice to allow it to now try to resuscitate it. In any event, counsel for Merafong submitted in oral argument that the constitutional point was “conditional on this Court finding that the Minister’s decision was lawful - that she had jurisdiction in terms of the Act to make the decision”. Since, for the reasons I have set out we relay that very question to the High Court, it follows that, even on Merafong’s approach, the constitutional point should be decided only later.’10 [24] On the court day preceding the further high court hearing, the Municipality included a prayer in its counter-application for a declaration of constitutional invalidity of s 8(9). In the light of its finding that s 8(9) did not empower the Minister to interfere with the Municipality’s authority to determine the tariffs, including surcharges, for AngloGold’s water supply, the high court deemed it superfluous to examine the constitutionality of s 8(9). Nonetheless, the high court made the following observation: ‘I am in agreement with the submission on behalf of AngloGold that if a serious challenge to the constitutionality of an act of Parliament is to be made, then this must be raised pertinently, with full and proper motivation and demonstrating clearly why a declaration of unconstitutionality should be made. The constitutional challenge raised by Merafong was more in the context of a legality challenge aimed against the decision of the Minister which was made in conflict of the Constitution. The burden of an applicant who wants to attack the constitutionality of an Act of Parliament will include satisfying the court that the subsection cannot sensibly be interpreted in a manner consistent with the Constitution but must ineluctably be declared to be unconstitutional. Moreover, a prayer for a declaration of constitutional invalidity of section 8(9) was only inserted before this application was heard by this court.’11 [25] We cannot fault the high court’s position: The Municipality’s last-minute attempt to introduce a claim for a declaration of constitutional invalidity of s 8(9) should not be countenanced, also due to the unambiguous formulation of the Municipality’s cause of action in its supplementary affidavit as a reactive challenge against the Minister’s decision based on the provisions of PAJA alternatively legality.12 10 Merafong CC para 82. 11 Merafong HC para 150. 12 Pursuant to the Constitutional Court’s remittal order, a supplementary affidavit on behalf of the Minister was filed in accordance with that order. Therein it is made clear that she abided the decision of the court. She refrained from entering the controversy regarding condonation and Merafong’s counter-application for review. Submissions were only made on her behalf in the event of the court reaching the constitutional issue. Delay [26] The majority of the Constitutional Court in Merafong CC held that while the Municipality was not precluded from bringing a reactive challenge, the Municipality was required to show that its challenge should be entertained, notwithstanding its delay.13 So too, Merafong CC decided that the Municipality was obliged to institute proceedings to review the Minister’s decision, whether under PAJA or by way of legality review. Whether that review is precluded by reason of the Municipality’s delay is also a threshold question for determination.14 Merafong CC remitted the matter to the high court. The high court redux to which the matter was remitted held that although the Municipality’s explanation for its delay was wanting, the delay should nevertheless be overlooked, and its review entertained. What weighed most strongly with the high court redux was its conclusion that the Municipality’s review had merit, and that the delay in bringing the review should not stand in the way of deciding the review. [27] Whether the high court redux was correct to do so, is the first question before us. The appellant contended that the high court redux was in error, the Municipality submitted it was not. The Municipality, however, raises a preliminary point. It submitted that the high court redux exercised a discretion to decide the review, and overlook the delay. This Court, it contended, cannot interfere with the exercise of that discretion, even if we should consider that the high court redux came to the wrong conclusion, unless we find that the discretion was not properly exercised, and there is no basis to do so. [28] The preliminary point is unavailing. Appellate courts, including the Constitutional Court, many times over, have considered whether the high court 13 Merafong CC para 72. 14 Ibid para 73. reached the correct conclusion on the question of delay.15 That position is entirely principled. Whether a court should entertain a review is a question of jurisdiction. A court is required to find that the delay is not unreasonable or that it may nevertheless be overlooked to permit the review to be decided. That is not the exercise of a discretion requiring special deference by an appellate court. On the contrary, the appellate court must be satisfied that the court’s powers of judicial review can be exercised. Hence, the question of delay is a threshold issue, as to which this court must be satisfied that the high court redux came to the correct conclusion. It is to this issue that we now turn. [29] The Municipality, following the decision of Merafong CC, amended its conditional counter-application and sought to review and set aside the Minister’s decision. It also applied for condonation. It brought a legality review, as also a review under PAJA. There are certain differences in the approach to delay under legality review and in a PAJA review,16 but the two-step test laid down in Khumalo and Another v Member of the Executive Council for Education: KwaZulu Natal (Khumalo)17 was rightly adopted by the high court redux to decide whether to entertain the Municipality’s legality review. The fixed period of 180 days does not apply to a legality review, and so the two-step test is somewhat more favourable to the Municipality. [30] The two-step test requires a court to answer two questions. Is the delay unreasonable or undue? If it is, should the court overlook the delay? The high court redux found the delay of the Municipality to be undue, though the Municipality’s explanation of its delay fell only ‘just short’ of a reasonable 15 See for example Department of Transport & Others v Tasima (Pty) Ltd [2016] ZACC 39; 2017 (1) BCLR 1 (CC); 2017 (2) SA 622 (CC) paras 160 – 171. 16 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd 2019 (4) SA 331 (CC) at paragraphs 46- 17 Khumalo and Another v Member of the Executive Council for Education: KwaZulu Natal [2013] ZACC 49; 2014 (3) BCLR 333 (CC); (2014) 35 ILJ 613 (CC); 2014 (5) SA 579 (CC) paras 49 - 52. explanation. However, other considerations, and, in particular, the merits of the Municipality’s review, led the high court redux to overlook the delay, decide the review, and uphold it. [31] On 18 July 2005, the Minister upheld the appeal that AngloGold had lodged with her. The Municipality brought its review on 12 July 2017, just shy of 13 years later. That is a very long time. It places a burden upon the Municipality to explain its lengthy delay and justify why a court should be moved to exercise its powers of judicial review, when the challenged decision was in place and binding upon the Municipality for so long a period of time. [32] The Municipality divides the period into two. The first period is the six years from the Minister’s decision to the launch of its conditional counter- application brought in August 2011, in response to AngloGold’s application of April 2011 to enforce the Minister’s decision. The counter-application did not seek to review the Minister’s decision. I will refer to this as the first period. The Municipality then defines a second period, after August 2011, until it amended its counter-application on 12 July 2017 to review the Minister’s decision. I will refer to this as the second period. [33] Central to the explanation offered by the Municipality, as to why it did not seek to review the decision of the Minister in the first period, is the reliance it placed upon the advice given to it by its attorney, Mr Nalane. His advice, the Municipality explained, was that the Minister’s decision was invalid, and may be ignored. And hence there was no need to move a court to set the Minister’s decision aside. [34] After the Minister gave her decision on 18 July 2005, Mr Nalane on 8 September 2005 furnished the Municipality with an opinion. He opined that the Minister did not enjoy the power to set aside, review or challenge any tariff set by the Municipality. Mr Nalane recommended to his client that the Municipality engage the Minister because ‘both Merafong and the Minister have misconstrued their positions in law as regards the setting of water tariffs’. Mr Nalane then directed correspondence to the Minister on behalf of the municipality, on 23 September 2005, enclosing the opinion, seeking a meeting, and affirming the position that the Municipality and the Minister had ‘misconstrued their positions in law’. [35] In anticipation of a meeting that was meant to take place with the Minister in February 2006, Mr Nalane composed some introductory remarks. Although the meeting did not take place, the remarks indicate the stance then taken by the Municipality. Mr Nalane concluded that since the position taken by the Minister (that an appeal to the Minister was competent) was wrong in law, the Minister’s letter (that is, her decision) ought to be revoked. And, absent agreement on this, the Minister and the Municipality, as organs of state, ‘. . . . are obliged to seek consensus, before resorting to legal action’. (Our emphasis.). [36] There can be little doubt that Mr Nalane recognized that if the Minister would not agree to revoke her decision, legal action would be required to achieve that result. That is, to set aside the Minister’s decision, which Mr Nalane considered to be invalid because the Minister lacked the power to make it. [37] This was not simply the position of Mr Nalane. It was the position of the Municipality. In a letter from the executive mayor of the Municipality to the Minister, dated 5 April 2006, the following is stated: ‘It has become imperative for us to resolve this matter decisively. As a result we have obtained an opinion to the effect that we have a case to make in court to overturn your decision.’ (Our emphasis.) [38] Although the Municipality sought to resolve its challenge to the validity of the Minister’s decision by way of agreement, and through a process of constitutionally obligatory engagement, absent such resolution, the Municipality understood, full well, that it would have to go to court to overturn the Minister’s decision. And it would have to do so because an administrative decision, once taken, is binding until it is set aside. [39] The Municipality thus laboured under no misapprehension that it could simply ignore the Minister’s decision on the basis that it had obtained a legal opinion that the decision was invalid. The Minister’s decision had to be overturned because, until that was done, the decision was binding. [40] The Municipality made further efforts to meet with the Minister. It declared a dispute with the Minister under the provisions of the Inter-Governmental Relations Framework Act 13 of 2005 (IFRA). No resolution was achieved. And by August or so of 2006, the Municipality could not reasonably have thought that resolution of the dispute with the Minister could be achieved without recourse to the courts. [41] The Municipality did not launch review proceedings. It imposed upon AngloGold the very surcharges on water for industrial and domestic use that the Minister had ruled upon in her decision. The Municipality went further. It threatened that it would cut off AngloGold’s water supply if it did not pay the tariffs that the Municipality had determined. As the judgment in Merifong CC makes plain, this was unconscionable conduct. The Municipality abused its power to exact payment, in the face of an adverse decision of the Minister, which it chose not to review, but rather disobey. And it persisted in this conduct for many years. [42] Of this, the Municipality submits that Mr Nalane’s advice was not to review the decision of the Minister but to ignore it, to the extent of its invalidity. That submission cannot hold. The Municipality’s own correspondence shows that it understood that the Minister’s decision had to be overturned, either by agreement, and if not, by recourse to the courts. [43] In the first period, there is no proper explanation for the failure by the Municipality to review the Minister’s decision. But worse, the Municipality flouted the law, and used coercive means to secure payment by AngloGold of its tariffs for the supply of water. [44] On 19 April 2011, AngloGold brought an application in the high court to enforce the Minister’s decision. The Municipality brought a conditional counter- application on 3 August 2011. The municipality sought a declarator that it has exclusive authority to set, adopt and implement tariffs for the provision of water services. It also sought a declarator that s 8 of the Act did not confer authority on the Minister to interfere with a tariff set and implemented by the Municipality. Alternatively, it sought to strike down as unconstitutional s 8(9) of the Act in terms of which an appeal lies to the Minister. What the Municipality did not do was to bring proceedings to review and set aside the Minister’s decision. [45] What followed, as we have set out above, was a lengthy progress through the courts, ending up in the Constitutional Court, the decision in Merafong CC, and, finally, on 12 July 2017, the municipality amended its notice of motion in its counter-application to review the Minister’s decision. Of this second period, the high court redux took a more benign view of the Municipality’s conduct. It had at least raised the invalidity of the Minister’s decision, and sought relief predicated upon such invalidity. And, the high court redux observed, there remained a minority position in the Constitutional Court that Oudekraal is not authority for the proposition that an invalid administrative act is binding as long as it is not set aside by a competent court. Hence, on this minority view, an administrative action that is ultra vires is void from the outset, and it is not necessary to have a court set aside an action that is a nullity. This minority position, at the very least, according to the high court redux, created uncertainty as to the correct position in our law. Indeed, the minority judgment (per Jafta J) in Merafong CC maintained that an illegal or ultra vires administrative act that is void ab initio, had no legal force, and could not be complied with. [46] True enough the Municipality did in its counter-application, in 2011, raise the invalidity of the Minister’s decision. However, it did not do so out of any acknowledgement that its conduct prior to 2011 was unconscionable. It did so because it wished to oppose the declaratory relief sought by AngloGold. Its failure to review the Minister’s decision was a calculated strategy. In its affidavit in support of the counter-application, the Municipality offers a lengthy account of its efforts to resolve its dispute with the Minister, and its negotiations with the mining houses. What it does not explain is why it considered that it could impose tariffs that were the subject of the Minister’s decision, when that decision had not been set aside. Its case rested on the invalidity of the Minister’s decision. But that does not explain its clear understanding, set out in its correspondence, that it needed to overturn the Minister’s decision. Nor does it claim that this understanding was later dislodged by a newfound adherence to the minority position taken in the Constitutional Court as to the meaning and consequence of Oudekraal. [47] Having chosen not to review the Minister’s decision in 2006, and to impose the tariffs in the first period, we do not consider that the Municipality’s conduct is more susceptible of reasonable explanation in the second period. The Municipality was simply required to defend its position in court. It raised invalidity in its counter-application to do so, without in any way recognising or ackowledging that it had conducted itself, knowingly, by taking the law into its own hands. [48] We find that the delay of the Municipality is unreasonable, and egregiously so. Not simply by reason of the length of the delay, but because the Municipality failed to bring the review, when it clearly understood that it was required to do so. And then resorted to self-help in the face of the Minister’s decision. [49] We turn then to the second question that requires an answer: should the delay have been overlooked, as the high court redux considered it should? [50] The high court redux cited Khumalo18 and Buffalo City19 in support of the proposition that in deciding whether to overlook the delay of the applicant who brings its review out of time, the nature of the impugned decision and the merits of the challenge should be taken into account. That is so. However, the high court redux considered this an invitation to decide the merits of the Municipality’s challenge to the Minister’s decision. It decided that the challenge was good. And, having done so, the high court redux then considered the prejudice to AngloGold, and found, unsurprisingly, given this line of reasoning, that since the Minister’s decision was taken ultra vires, AngloGold had paid the tariffs the Municipality was entitled to levy, and hence suffered no prejudice. 18 Khumalo and Another v Member of the Executive Council for Education: KwaZulu Natal [2013] ZACC 49; 2014 (3) BCLR 333 (CC); (2014) 35 ILJ 613 (CC); 2014 (5) SA 579 (CC) para 57. 19 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Limited [2019] ZACC 15; 2019 (6) BCLR 661 (CC); 2019 (4) SA 331 (CC) para 56. [51] This reasoning is faulty. Whether a delay should be overlooked does not and should not entail a determination of the merits of the review or collateral challenge. The merits of the challenge are to be weighed on the following basis: if the delay is to be overlooked, is there a challenge that warrants the attention of the court. In other words, whether there is a serious question to be decided. To decide the merits assumes the very jurisdiction that is yet to be determined. And more, it inevitably skews the weighing of factors that Khumalo requires. On the approach taken by the high court redux, if the merits of the challenge is decided against the applicant, the question of whether to overlook the delay is redundant. If the merits are good, in the sense that the applicant is entitled to succeed and enjoy a remedy, it is vanishingly difficult then to decide not to overlook the delay, and engage in ex post reasoning of the kind to which the high court redux had recourse: the Minister had no power to interfere with the setting of tariffs by the Municipality, AngloGold was obliged to pay what it did, and hence suffered no prejudice. [52] The proper starting point is to consider the nature of the impugned decision. AngloGold in April 2004 had sought the approval of the Municipality, in terms of s 7 of the Act, to continue obtaining water from Rand Water for its mining operations and associated domestic applications at the tariff set, and under the conditions imposed, by Rand Water. In May 2004, the Municipality wrote to AngloGold. It notified AngloGold that it was the water services authority, in terms of the Act, with jurisdiction over the area in which AngloGold operated certain of its mines. The Municipality appointed Rand Water as a water services provider. The Municipality specified particular tariffs as a condition, in terms of s 7 of the Act, for the supply of water to AngloGold, with effect from 1 July 2004. The Municipality also notified AngloGold of its right to appeal the decision of the Municipality to the Minister. On 11 June 2004, AngloGold did so in terms of s 8(4) of the Act. On 18 July 2005, the Minister decided the appeal, and overturned the decision of the Municipality to impose specified tariffs as a condition of supply. [53] What was the decision of the Municipality that AngloGold appealed to the Minister? It was not the appointment of Rand Water as a water service provider to supply water to AngloGold. That appointment had been sought by AngloGold and was granted. AngloGold had, in addition, sought approval, under s 7, for Rand Water to continue to supply water for its mining operations and associated domestic applications, ‘at the tariff set by, and under the conditions imposed by Rand Water.’ The decision taken by the Municipality was, in terms of s 7, to approve the supply of water with effect from 1 July 2004 by Rand Water, on the specified condition of particular tariff charges. These charges were as follows: ‘water supplied for operational use will be charged at R4.18 per kilolitre’ and ‘water supplied for domestic use will be charged at 3.91 per kilolitre’. The Municipality explained that ‘[t]hese tariff charges must be seen in the context of the overall municipal tariff structure for the supply of water’ the details of which were then set out. [54] The condition imposed by the Municipality as to tariffs was materially higher than those applied by Rand Water. Hence the appeal of AngloGold and its description in its notice of appeal of the tariffs ‘announced’ by the Municipality as ‘excessively higher than the equivalent Rand Water tariff’. Thus, at the heart of the appeal was the decision of the Municipality to impose specific tariffs for the supply of water to AngloGold by Rand Water. [55] Those tariffs, as the decision of the Municipality made clear, were determined by reference to the Municipality’s overall municipal tariff structure. They were tariffs of application in 2004/2005. The affidavits of the parties explain however that after the decision of the Municipality in May of 2004, and the Minister’s decision in the appeal in July of 2005, the Municipality and AngloGold held further negotiations. In addition, the Municipality, in line with its annual budget, adopted revised tariffs for the financial year 2005/2006. These tariffs were reflected in higher tariffs charged to AngloGold for the supply of water. Later, and from July 2007, the Municipality introduced a uniform tariff for all water consumed. The flat rate included surcharges on water for both domestic and industrial use. Since that time, the tariffs have continued to change by way of further decisions of the Municipality, in successive annual budget cycles. [56] What then did the Minister’s decision in the appeal before her overturn? Whatever the reasons for her decision, the Minister’s decision could never do more than that which s 9 of the Act permits. That is, on appeal to ‘confirm, vary or overturn any decision of the water services authority concerned’. (Our emphasis.) The only decision before the Minister on appeal was the decision of the Municipality to impose a condition as to specified tariffs for the supply of water. However, those tariffs were only of application, until replaced by new tariffs imposed by the Municipality. New tariffs were introduced for the 2005/2006 financial year. It follows that when the Minister set aside the specific tariffs that the municipality had decided upon in 2004, her appeal jurisdiction could not and did not extend beyond the life of these tariffs. When the Municipality introduced new tariffs of application in the 2005/2006 financial year, that decision was beyond the reach of the Minister’s appellate decision- making because it was not before her on appeal, and could not have been. [57] There are important consequences which flow from this finding. The belated review of the Municipality would set aside the decision of the Minister. Such an order would do no more than effect the tariffs charged to AngloGold from 1 July 2004 until the new tariffs were imposed by the Municipality in the next financial year. [58] The question that then arises is this: should the delay of the Municipality have been overlooked by the high court redux so as to entertain the review of the Minister’s decision taken in 2005? In our view, there are considerations that count against doing so. [59] First, the decision of the Minister was taken in the distant past. It set aside tariff charges of application to AngloGold for a limited time. The Municipality failed, culpably, to comply with the Minister’s decision. In these circumstances, there is little reason to reward the Municipality for its willingness to flout its duty to comply with the Minister’s decision by, many years later, entertaining its review. All the more so, when the Municipality could have reviewed the Minister’s decision timeously, should have done so, and chose not to. [60] Second, both AngloGold and the Municipality, perhaps by reason of the duration of their dispute, have inflated the significance of the issues at stake, and their consequences. True enough, the reasons that the Minister gave for setting aside the tariffs that the Municipality had decided to impose in 2004 appear to have some far-reaching consequences. The Minister reasoned that the supply of water for industrial use is not a municipal service under the Act, and therefore no surcharge can be levied on water for industrial use. She also said of the tariff for water supplied for domestic use that AngloGold and Rand Water should negotiate a reasonable tariff. The Minister is not a court of law. Her reasons are not precedent. What matters is what decision she took. That was restricted to setting aside specific tariffs of application for a limited time. When the Municipality imposed the next set of tariffs, in the 2005/2006 budget cycle, AngloGold was at liberty to appeal them. And the Municipality was at liberty to persuade the Minister of the errors of her reasoning. [61] Third, there is little question that the review and reactive challenge that the Municipality would pursue raise important questions of law. What powers did the Minister enjoy under s 8 of the Act to decide the appeal before her, and did her decision fall within these powers? How is the regulatory scheme set out in ss 4, 6, 7 and 8 of the Act to be reconciled with the power of the Municipality deriving from s 229 of the Constitution to impose surcharges on fees for services? More generally, how does the regulatory scheme of the Act, at issue in this case, fit into the constitutional framework that recognises a municipality’s right to govern, subject to national and provincial legislation, as provided for in the Constitution. (s 151(3) of the Constitution)? And if s 8 of the Act should be found to trespass upon the municipality’s right to impose a surcharge beyond what the Constitution permits, what of the Municipality’s challenge to the validity of s 8(9) of the Act? [62] Did these questions warrant the attention of the high court redux? They are, without doubt serious questions. And in the right case, they should be considered by a court. But is this such a case? We think not. True enough, the dispute between AngloGold and the Municipality endured beyond the period in which the Minister’s decision was of application. But that does not alter the scope of the order sought by the Municipality’s review: to set aside the Minister’s decision of 18 July 2005. That decision had no ongoing effect, as we have explained, after the imposition of the 2005/2006 tariffs. There is no warrant to decide important legal questions to resolve a long expired ministerial decision. That is so, moreover, since the Minister was not called upon to exercise her appellate power in the dispute between the parties since 2005. [63] This consideration is bolstered by the following. The constitutional challenge brought by the Municipality to s 8(9) of the Act was in essence abandoned before the Constitutional Court, and then revived, shortly before the matter was heard before the high court redux. The challenge is not properly formulated and justified on the papers, as the high court redux correctly found. It has figured as an afterthought, and at other stages of the litigation only notionally kept alive. And yet if the legal questions to which we have referred are to be engaged, it would be important that the constitutional challenge is properly formulated and justified, in the event that the issue of the constitutional validity of s 8(9) of the Act is reached. [64] Nor do we apprehend that there is prejudice to the Municipality. The effect of the Minister’s decision has long expired. The tariffs for the water that was supplied to AngloGold were paid to the Municipality, under protest. If the Minister’s decision is not reviewed and set aside, the Municipality will remain liable for the consequences of the Minister’s decision in setting aside the tariffs that were of application from 1 July 2004 for a short period of time. That has been the status quo for 19 years. Whatever liability attaches to the Municipality is a deserved consequence of its deliberate failure to adhere to the law. We see insufficient basis now to disturb the status quo. Finality must prevail. And the correct order that the high court redux should have made was to refuse to entertain the Municipality’s review, and dismiss it.20 [65] We conclude that the high court redux was incorrect to overlook the delay of the Municipality in bringing its review. That delay was both unreasonable and should not have been overlooked. The review therefore must be dismissed. [66] What then of the Municipality’s reactive challenge? This challenge, as Merafong CC has made clear, is also subject to a regime that must consider the question of delay. However, the reactive challenge of the Municipality was 20 Khumalo and Another v Member of the Executive Council for Education: Kwa-Zulu Natal [2013] ZACC 49; 2014 (3) BCLR 333 (CC); (2014) 35 ILJ 613 (CC); 2014 (5) SA 579 (CC) para 44, Associated Institutions Pension Fund and Others v van Zyl and Others [2004] ZASCA 78; [2004] 4 All SA 133 (SCA); 2005(2) SA 302 SCA. offered as a defence to the relief sought by AngloGold. Whether the Municipality is put to its defence, and, if it is, whether the Municipality’s defence should be entertained are the issues to which we now turn. AngloGold’s relief and the Municipality’s reactive challenge [67] In April 2011, Anglogold launched proceedings in the high court to compel the Municipality to comply with the Minister’s decision. This application prompted the Municipality to bring its reactive challenge in the form of a conditional counter-application for declaratory relief. The declarator it sought was that the Municipality enjoyed exclusive authority to set, adopt and implement tariffs for the provision of water services in its jurisdiction; and that the Minister did not have the power to interfere with a tariff set and implemented by it. [68] The court of first instance that first heard the matter granted AngloGold’s application and dismissed the Municipality’s counter-application. This court sustained that order on appeal. As we have recounted, when the matter went on appeal to the Constitutional Court, Merafong CC decided the question of whether the Municipality could raise its reactive challenge, but did not decide the merits of the appeal. Rather, it set aside the orders of the court of first instance and of this court, and remitted the matter back to the high court to determine the lawfulness of the Minister’s decision. The high court redux, having upheld the Municipality’s review, logically, dismissed the declaratory relief that AngloGold had sought. Plainly, if the Minister’s decision had to be set aside, as the high court redux held, then AngloGold could not enforce such a decision. [69] We however have come to a different conclusion. The Municipality’s review cannot be entertained. We must then decide whether AngloGold was entitled to the relief it sought in 2011. That relief was widely framed, as follows: ‘1. declaring that the municipality may not levy surcharge on water for industrial and domestic use; 2. for the municipality to comply with the minister’s ruling of 18 July 2005, the municipality may not levy surcharge on water for industrial use; 3. interdicting the municipality from charging water for industrial use at a price greater than the unit cost of water charged by Rand Water. 4. interdicting and restraining the municipality from charging more than the unit cost of water charged by Rand Water pending an agreement being reached as a reasonable tariff for domestic use. 5. for the municipality to commence negotiations with AngloGold within 21 days of the order; 6. granting leave to AngloGold to approach the court on these papers duly supplemented in the event of no agreement being reached on domestic water, within 90 days from the date of the order for further direction. 7. alternatively reviewing and setting aside in terms of PAJA and/or principle of legality the decisions of the municipality made on 31 May 2004 together with the resolution to amend the tariff of charges. 8. the municipality to pay costs.’ The relief granted by the high court was as follows: ‘a. the first respondent must comply with the minister’s ruling of 18 July 2005, in that: (i) the first respondent may not levy surcharge on water for industrial use; (ii) the first respondent may not levy surcharge on water for domestic use pending an agreement being reached by the first respondent, the applicant and the second respondent for a reasonable tariff; and (iii) the first respondent must commence negotiations with the applicant and the second respondent within 21 days of the order. b. The applicant is granted leave to approach the court on these papers duly supplemented in the event of no agreement being reached on domestic water, within 90 days from the date of the order for further direction. c. The first respondent must pay costs of litigation in the main application including costs of two counsel. d. The first respondent’s conditional counter application is dismissed with costs which costs shall include costs of two counsel.’ [70] Before us, AngloGold submitted that what it had sought before the high court in 2011 was relief to compel the Municipality to comply with the Minister’s decision. The relief it now seeks from this court is formulated as follows: ‘1 The appeal is upheld with costs, including the costs of two counsel. The judgment of the court a quo is set aside and replaced with the following: 2.1. Merafong’s review application is dismissed with costs, including the costs of two counsel. 2.2. Merafong is directed forthwith to comply the Minister’s decision of 18 July 2005 as follows: 2.2.1. to render monthly charges to Golden Core for water supplied to it for industrial use at no more than the rate charged by Rand Water to Merafong in respect of water for industrial use, from time to time; 2.2.2. to render monthly charges to Golden Core for water supplied to it for domestic use at no more than rate charged by Rand Water to Merafong in respect of water for domestic use, from time to time. 2.3. It is declared that the current rates promulgated and/or imposed by Merafong relating to its supply of water to Golden Core for both domestic and industrial use, shall not be enforceable against Golden Core. 2.4. Merafong is directed to negotiate with Golden Core to reach agreement on a reasonable tariff for the supply of water for domestic use, after which the agreed tariff will be charged for this water in place of the order in 2.2.2. 2.5. Merafong is directed to credit the account of Golden Core in respect of all tariffs paid to and recovered by Merafong for the supply of water for both domestic and industrial use to AngloGold Ashanti/Golden Core in respect of excess of the rate charged by Rand Water to Merafong in respect of water for domestic and industrial use, from time to time. This will apply from the date of the Minister’s decision on 18 July 2005 to date of this Order. 2.6. Merafong is ordered to pay Golden Core’s costs, including previous costs incurred by AngloGold Shanti Ltd: 2.6.1. in the proceedings of the High Court in 2013 and in 2021 under case number: 23558/2011, including the costs of two counsel; 2.6.2. in the proceedings in the SCA under case number: 20265/14, including the costs of two counsel; and 2.6.3. in the proceedings in the Constitutional Court under case number: 106/2015, including the costs of two counsel.’ [71] AngloGold had sought alternative relief before the high court redux to review and set aside the Municipality’s tariff charges for water in 2004, and in subsequent years, to the extent that it imposed tariffs or surcharges on the supply of water used by AngloGold for industrial and domestic purposes. That relief is not persisted in before us. However, it is relief that the high court redux dismissed on the basis it was brought out of time and would be contrary to the powers of the Municipality to impose and recover tariffs and surcharges of the very kind AngloGold sought to review. [72] The primary issue, then, before us, is whether AngloGold was entitled to relief to enforce the Minister’s decision, and if so, what relief should that have been. Although declaratory relief is not subject to jurisdictional questions of delay that are of application to the exercise by courts of their powers of judicial review, declaratory relief is a discretionary remedy that must be justified to resolve a live issue. In 2011, what was the live issue that subsisted between AngloGold and the Municipality? [73] The Minister’s decision, as we have found, pertained to the imposition upon AngloGold of tariffs for the supply of water for domestic and industrial use from 1 July 2004 on the basis of tariffs of application for the financial year 2004/5 (the supply tariffs). The Municipality took its decision to impose the supply tariffs on 31 May 2004, with effect from 1 July 2004. The Minister’s decision was taken on 18 July 2005. The Minister expressly set aside the surcharge that the Municipality had imposed upon AngloGold for the supply of water for industrial use. The Municipality had exacted payment from AngloGold on the basis of this surcharge. AngloGold was entitled to a declarator that the Municipality must comply with the Minister’s decision. However, the only live issue that remained in 2011, in respect of the supply tariffs, was the excess payment that the Municipality had exacted from AngloGold over the rate Rand Water would have charged AngloGold to supply water for industrial use. That period commenced on 1 July 2004 and extended no further than the promulgation by the Municipality of tariffs for the supply of water of application in the financial year 2005/2006. The effect of setting aside the supply tariff for water for industrial use was that such tariff was not of application. The supply tariffs formed part of the Municipality’s decision of 31 May 2004 to approve the supply of water by Rand Water to AngloGold. The supply tariffs were to commence on 1 July 2004. In so far as the Municipality exacted tariffs for water for industrial use from that date in excess of the charges made by Rand Water, the Minister’s decision rendered such excess unlawful, and AngloGold was entitled to a declarator that the tariff imposed by the Municipality for the supply of water to AngloGold for industrial use, in the period 1 July 2004 until the promulgation and imposition of a new tariff of application to such supply, was unlawful. [74] The position in respect of water supplied for domestic use is somewhat less clear. But a similar conclusion is warranted. The Minister decided that there should be negotiations between AngloGold and Rand Water (she must have meant the Municipality) for a reasonable tariff in respect of water for domestic use. The Minister did not expressly set aside the tariff of application to the supply of water to AngloGold for domestic use. But this is a necessary implication of the negotiations she required. What the Minister required was the negotiation of a reasonable tariff for the supply of water for domestic use, and thus the existing tariff could not remain in place. The Minister’s decision must be interpreted in the light of what she had to say about the imposition of a surcharge absent any value added by the Municipality. At best then for AngloGold, without agreement with the Municipality, the Minister’s decision must be taken, by necessary implication, to have required that the tariff of application to the supply of water for domestic use to be the charge applied by Rand Water over the relevant period. That is the period from 1 July 2004 until the promulgation and application by the Municipality of a new tariff for the supply of water to AngloGold for domestic use. [75] It is certainly the case that, in the aftermath of the Minister’s decision, the parties were, and remain, at odds as to the powers of the Municipality to impose tariffs for the supply of water to AngloGold and the powers of the Minister under the Act to interfere with the exercise by the Municipality of its powers. But the application brought in 2011 was to enforce a decision made in 2005. That decision was of limited scope. It set aside the imposition of a time-bound tariff regime on water supplied to AngloGold for industrial use, and by implication, for domestic use. The Municipality, after 2005, made successive decisions, in its annual budgetary process, to impose revised tariffs for the supply of water. These were not the subject of any appeal to the Minister. As a result, we cannot, and should not make declaratory orders that range beyond what could be said to be a live issue when enforcement was sought in 2011 of the Minister’s decision. [76] Compliance with the Minister’s decision, in 2011, cannot then go beyond the financial year to which the supply tariffs taken on appeal to the Minister were of application. There was no point to be served in 2011 to order negotiations to take place. These had occurred and run aground. All that could be ordered was to declare that the Municipality was entitled to impose tariffs at the rate charged by Rand Water for the supply of water to AngloGold for industrial and domestic use in the period from 1 July 2004 until the coming into force of the tariffs of application to such supply for the financial year 2005/2006. [77] What then of the Municipality’s reactive challenge, put up as a defence to the declaratory relief sought by AngloGold. For the reasons we have traversed above, the Municipality raised its reactive challenge only when AngloGold resorted to the courts to enforce compliance with the Minister’s decision. It did so then, when the Municipality had been under an obligation for some five years either to comply with the Minister’s decision or bring proceedings to review it. The Municipality chose rather to impose tariffs and coerce payment from AngloGold in violation of the Minister’s decision. Once that is so, it cannot be permitted to rely on the same issues it should have raised by way of review, in a reactive challenge to the relief that was sought by AngloGold. The delay in raising these issues, for so long a period of time, until 2011, and its conduct in this period, does not permit of its delay being overlooked. Accordingly, we decline to entertain the reactive challenge. Relief and costs [78] We find therefore that the high court redux should not have entertained the Municipality’s review or reactive challenge. The Municipality’s review must be dismissed. AngloGold had a right to secure compliance with the Minister’s decision. But in 2011, compliance was of limited scope, as we have found, and we intend to make a declarator in conformity with this finding. The other relief sought by AngloGold cannot be granted. The alternative relief sought by AngloGold by way of review does not arise for our consideration because such relief only arises, as set out in its notice of motion, if AngloGold failed to secure declaratory relief. It has not so failed. [79] As to costs, AngloGold has been substantially successful. It has vindicated its claim that it was entitled to enforce the Minister’s decision, albeit on a narrower basis than it had sought. But it had to go to court to secure that relief. Although the high court and this court, when the case was first heard, ruled that the Municipality could not bring a reactive challenge, and in this Merafong CC decided otherwise, nevertheless the essential principle that was vindicated is that the Municipality could not ignore the Minister’s decision, without bringing a review. On this score also, AngloGold has prevailed. The municipality’s review and reactive challenge fall to be dismissed. The order given in Merafong CC was to reserve the question of costs. Since AngloGold has been substantially successful, we have decided that AngloGold is entitled to its costs, including the costs of two counsel, in respect of the original high court proceedings, the original appeal before this Court, the appeal to the Constitutional Court, the proceedings before the high court redux, and the appeal now before this Court. [80] In the result the following order is made: The appeal is upheld with costs, including the costs of two counsel. The judgment of the high court is set aside and replaced with the following: 2.1 The first respondent’s review application is dismissed with costs, including the costs of two counsel. 2.2 It is declared that: 2.2.1 The tariff imposed by the first respondent for the supply of water to the appellant for industrial use, in the period 1 July 2004 until the promulgation and imposition of a new tariff of application to such supply, was unlawful. 2.2.2 The tariff imposed by the first respondent for the supply of water to the appellant for domestic use, in the period 1 July 2004 until the promulgation and imposition of a new tariff of application to such supply, was unlawful. 2.3 The first respondent is ordered to pay the appellant’s costs, including the costs: 2.3.1 in the proceedings of the High Court in 2013 and in 2021 under case number: 23558/2011, including the costs of two counsel; 2.3.2 in the proceedings of the Supreme Court of Appeal under case number: 20265/14 in 2015, including the costs of two counsel; and 2.3.3 in the proceedings of the Constitutional Court under case number: 106/2015 in 2019, including the costs of two counsel. _________________ P MEYER JUDGE OF APPEAL _______________________ D N UNTERHALTER ACTING JUDGE OF APPEAL Appearances For appellant: N G Graves SC (with him I B Currie) Instructed by: Knowles Husain Lindsay Inc, Johannesburg McIntyre van der Post, Bloemfontein For first respondent: A D de Swardt Instructed by: De Swardt Myabo Attorneys, Pretoria Symington de Kok Attorneys, Bloemfontein For second respondent: M C Erasmus SC (with him H A Mpshe) Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 September 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Golden Core Trade And Invest (Pty) Ltd v Merafong City Local Municipality and Another (Case No 338/2022) [2023] ZASCA 126 (29 September 2023) This morning, the Supreme Court of Appeal upheld an appeal brought by Golden Core Trade and Invest (Pty) Ltd (formerly AngloGold Shanti Limited) (AngloGold) against the Merafong City Local Municipality (Merafong). The matter has a long history. In 2004, Merafong imposed tariffs upon AngloGold for the supply of water for industrial and domestic use. AngloGold appealed that decision to the Minister of Water Affairs in terms of s 8(9) of the Water Services Act 108 of 1997. The Minister overturned the decision of Merafong to impose the tariffs. Negotiations between Merafong and AngloGold followed, but did not resolve their dispute. Merafong however insisted upon payment of the tariffs. And threatened to constrain water supplies to AngloGold. AngloGold paid under protest. In 2011, AngloGold brought proceedings to the high court Gauteng to enforce the Minister’s decision. Merafong resisted enforcement on the basis of a conditional counter-application that, by way of a reactive challenge, contended that the Minister lacked the power to interfere with Merafong’s constitutional competence to impose tariffs for the supply of water. AngloGold prevailed in the high court, and thereafter on appeal to the Supreme Court of Appeal. These courts held that Merafong was required to review the Minister’s decision and seek to set it aside. Merafong could not fail to comply with the Minister’s decision because it considered it to be void. The matter proceeded to the Constitutional Court. There, the majority sustained this proposition, but held that Merafong was entitled to raise a reactive challenge as a defence to AngloGold’s enforcement application. The majority of the Constitutional Court also held that both the review that Merafong might then bring and its reactive challenge would require a determination by the high court as to whether Merafong’s delay in bringing these challenges to the validity of the Minister’s decision nevertheless permitted the high court to entertain these challenges. The matter was then remitted to the high court (the high court redux). Merafong then supplemented its papers; it brought its review of the Minister’s decision; it sought condonation for its delay. The high court redux decided as follows: Merafong’s delay in bringing its review was unreasonable but by reason of its merits that delay should be overlooked and the review entertained. The high court found for Merafong in the review and accordingly dismissed AngloGold’s application to enforce the Minister’s decision. On appeal before the Supreme Court of Appeal, this court held that the delay in bringing the review was unreasonable and this delay could not be overlooked. Merafong knew that it was required to bring a review if it wished to contest the Minister’s decision. It had failed to do so; it had chosen not to comply with the Minister’s decision, and exact payment of the tariffs, threatening to reduce AngloGold’s water supply. That conduct was unconscionable. The merits of the review concerned serious questions but that did not overcome the need for finality. The Supreme Court of appeal accordingly declined to entertain the review. It found that AngloGold had made out a case for the enforcement of the Minister’s decision. It held that for the same reasons that counted against Merafong in respect of the review, Merafong’s reactive challenge could not be entertained. The Supreme Court of Appeal found that the decision of the Minister affected tariffs for a limited period of time, dating back to 2005, and that AngloGold was entitled to limited relief in respect of those tariffs. The appeal was upheld, and AngloGold was awarded costs, reflective of the costs incurred in the proceedings before the courts before which this matter had served. ~~~~ends~~~~

502

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No.: 637/2015 In the matter between: ROBERT ANTHONY JOHN HEWITT APPELLANT and THE STATE RESPONDENT Neutral citation: Hewitt v The State (637/2015) [2016] ZASCA 100 (9 June 2016) Coram: Maya DP, Tshiqi and Seriti JJA Heard: 3 May 2016 Delivered: 9 June 2016 Summary: Sentence – appeal against imposition of effective sentence of six years’ imprisonment upon 75 years old offender for rape and indecent assault of young girls - crimes committed three decades ago –– appeal dismissed. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Bam J sitting as court of first instance) The appeal is dismissed. _________________________________________________________________ JUDGMENT __________________________________________________________________ Maya DP (Tshiqi and Seriti JJA concurring): [1] This is an appeal against sentence with the leave of the Gauteng Division of the High Court, Pretoria (Bam J). The appellant, a retired world renowned champion tennis player and instructor, was convicted on two counts of rape of two girls aged about 12 and 13 years (the first and second complainants) and one count of indecent assault of a 17 year old girl (the third complainant). The rape offences were committed in the early 1980s and the offence in relation to count 3 in 1994. It would take the long arm of the law three decades to catch the appellant as he was only convicted in March 2015 at the age of 75 years. He was sentenced to undergo eight years’ imprisonment in respect of each of the rape counts and two years’ imprisonment for indecent assault. The sentences were ordered to run concurrently. Two years of each of the rape sentences were suspended for a period of two years on condition that the appellant pays a collective sum of R100 000 to the Department of Justice and Constitutional Development to be utilised to further the department’s campaign against the abuse of women and children. He was therefore sentenced to undergo an effective period of six years’ imprisonment. [2] The manner in which the offences were committed is set out comprehensively in the judgment of the court a quo and need not be repeated in fine detail. Suffice it to say that the appellant took his chances with the complainants, who were his tennis students, mainly during coaching sessions. He would make lewd comments to the children, peek under their skirts, rub his erect penis against them, fondle their breasts and stick his tongue in their mouths and expose his naked body to them. He wrote love letters to the second complainant whom he also forced to perform oral sex on him and proceeded to rape during a tennis tournament at the Sun City Hotel in Rustenburg. He raped the first complainant at the premises of a tennis club house in Boksburg on an afternoon scheduled for a tennis lesson. Unfortunately when she reported the incident to her mother with whom she had a bad relationship, the latter dismissed it out of hand and that was the end of the matter. [3] The second complainant’s ordeal was fortuitously discovered shortly after the appellant raped her when she disclosed it to her sister, who promptly told their parents that the appellant had kissed her and put his tongue in her mouth. The second complainant then revealed everything and a charge was consequently laid with the police in Johannesburg. The matter was, however, aborted because the Attorney General took the view that the case fell outside his jurisdiction as the alleged offence was committed in the former Republic of Bophuthatswana. The lawyers engaged by the second complainant’s father were also concerned that she would never withstand cross-examination by the appellant’s lawyers if the matter went on trial. [4] The third complainant’s suffering ended after she endured the molestation over a number of years. She finally confided in her mother after the appellant shockingly told her that ‘rape is enjoyable in all cases’ and that if he raped her she should ‘just lie down and enjoy it’. The whole truth tumbled out and her father promptly reported the appellant to the South African Tennis Association. The appellant was then forced to resign from the Eastern Transvaal Tennis Association. But no charge was laid with the police because the lawyer consulted by the third complainant’s family advised that it would be difficult to prove the offence in court as there were no witnesses and it would rest solely on her word. So it was that the appellant evaded justice until 2015. [5] After the appellant’s conviction extensive evidence described in minute detail in the court a quo’s judgment concerning his personal circumstances, especially his failing health and the devastating effect of the trial on his family’s social life, was led. In addition to his advanced age, he is a first offender and a family man married for 50 years. He has two adult children and several grandchildren. He endured a barrage of anonymous hate mail and hostility from members of the public and the media when he attended the trial. He suffers various ailments including osteoarthritis resulting from his many years of sporting activity for which he has had surgery; progressive coronary artery disease for which he receives medication and treatment; peptic ulcer disease and dysfunctional colon for which he is on chronic medication. According to his cardiologist (Dr J du Toit), he needs ‘to be watched carefully’. And in the opinion of his gastroenterologist (Dr J Garisch) he ‘requires access to the required expertise in order to have regular check-ups and adjustments made to his medication and treatment [but] there have been no compelling surgical issues to date’. A synopsis of his physical health prepared by Dr R Barnard was that ‘he has numerous medical conditions that currently contribute to the fragility of his age’ which ‘are fairly well controlled, as long as he regularly attends the follow-ups booked’ with his doctors. [6] In a thorough and carefully reasoned judgment, the court a quo lamented the lengthy delay before the matter was brought to justice, which rendered sentencing even more difficult, and it painstakingly weighed all the above factors and the various sentencing options. The court then concluded that a non-custodial sentence would not serve the interests of justice in the circumstances. But it relented upon application for leave to appeal and took the view that the unusual time lapse and the appellant’s age and health issues could perhaps persuade another court otherwise. [7] The gravamen of the appellant’s submissions in argument before us was that the sentences are startlingly inappropriate. It was contended that the court a quo overemphasized the seriousness of the offences at the expense of the appellant’s personal circumstances having regard to his advanced age and ill health and that he ‘only vaginally penetrated the [rape] complainants once’ and has not repeated the offences. But his counsel grudgingly conceded that a non-custodial sentence (which was initially sought on the basis that the shame and stigma of a rape conviction and being stripped of his sports honours was sufficient punishment for someone of the appellant’s stature as an international sports star)1 would be inappropriate. He 1 He was further suspended from the American Tennis Hall of Fame and became an outcast in the South African tennis community. proposed a sentence of correctional supervision under s 276(1)(i) of the Criminal Procedure Act 51 of 1977.2 [8] It is a trite principle of our law that the imposition of sentence is the prerogative of the trial court.3 An appellate court may not interfere with this discretion merely because it would have imposed a different sentence. In other words, it is not enough to conclude that its own choice of penalty would have been an appropriate penalty. Something more is required; it must conclude that its own choice of penalty is the appropriate penalty and that the penalty chosen by the trial court is not.4 Thus, the appellate court must be satisfied that the trial court committed a misdirection of such a nature, degree and seriousness that shows that it did not exercise its sentencing discretion at all or exercised it improperly or unreasonably when imposing it.5 So, interference is justified only where there exists a ‘striking’ or ‘startling’ or ‘disturbing’ disparity between the trial court’s sentence and that which the appellate court would have imposed. And in such instances the trial court’s discretion is regarded as having been unreasonably exercised.6 [9] It is against this backdrop that the question whether the court a quo exercised its sentencing discretion improperly or unreasonably in the circumstances of this case 2 In terms of which, subject to the provisions of that Act and any other law and of the common law, a person convicted of an offence may be sentenced to imprisonment from which such a person may be placed under correctional supervision in the discretion of the Commissioner of Correctional Services. 3 S v Pieters 1987 (3) SA 717 (A) at 727F-H; S v Sadler 2000 (1) SACR 331 (SCA) at para 8; S v Swart 2000 (2) SACR 566 (SCA) para 21. See also, S v L 1998 (1) SACR 463 (SCA) at 468f ; S v Blank 1995 (1) SACR 62 (A) at 65h-i. 4 Sadler, para10. 5 S v Pillay 1977 (4) SA 531 (A) at 535E-F. 6 S v Snyders 1982 (2) SA 694 (A) at 697D; S v N 1988 (3) SA 450 (A) at465I-J; S v Shikunga 465I-466A; S v Shikunga & another 1997 (2) SACR 470 (NmS) at 486c-f. See also S v M 1976 (3) SA 644 (A) at 649F-650A; S v Pieters 1987 (3) SA 717 (A) at 733E-G; S v Petkar 1988 (3) SA 571 (A) at 574D; 1997 (2) SACR 470 (NmSC) at 486d. See also S v Abt 1975 (3) SA 214 (A); S v Birkenfield 2000 (1) SACR 325 (SCA) para 8; S v M 1976 (3) SA 644 (A) at 649F- 650A; S v Pieters fn 3 at 733E-G. must be determined. Our courts have, in countless cases of this nature, consistently expressed society’s abhorrence of sexual offences, which once earned South Africa the shameful title of being the rape capital of the world,7 and the devastating effect they have on victims and society itself. The courts have aptly described rape as ‘a 7 Interpol named South Africa the ‘rape capital of the world’ in 2012. See D Richard Laws & William O’Donohue (eds) Treatment of sex offenders: Strengths and weaknesses in assessment and intervention (2016) at 327. See also SABC ‘South Africa, world’s rape capital: Interpol’ SABC News website, 19 April 2012 (accessed 7 June 2016). horrifying crime’ and ‘a cruel and selfish act in which the aggressor treats with utter contempt the dignity and feelings of [the] victim’8 and as ‘a very serious offence’ which is ‘a humiliating, degrading and brutal invasion of the privacy, the dignity and the person of the victim’.9 Rape of a child, usually committed by those who believe they can get away with it and often do, is far more horrendous. As was held in S v Jansen,10 it is an appalling and perverse abuse of male power which strikes a blow at the very core of our claim to be a civilised society. It is unsurprising therefore that society demands the imposition of harsh sentences which adequately reflect censure and retribution upon those who commit these monstrous offences and to deter would- be offenders. [10] Be that as it may, however, the sentence must fit the criminal as well as the crime, be fair to society and be blended with a measure of mercy according to the circumstances.11 This, in my view, is precisely the approach adopted by the court a quo when it determined sentence. As indicated above, the court gave due consideration to the appellant’s personal circumstances particularly his advanced age, ill-health and the extraordinary lapse of time between the commission of the offences and the trial. [11] But as the court a quo rightly acknowledged, these mitigating factors must be considered against other relevant factors of the case. Scrupulous care must be taken not to over-emphasise the appellant’s personal circumstances without balancing those considerations properly against the very serious nature of the crimes committed; the 8 N v T 1994 (1) SA 862 (C) at 864G. 9 S v Chapman 1997 (2) SACR 3 (SCA) at 5b. 10 S v Jansen 1999 (2) SACR 368 (C) at 378h-379a. 11 See, for example, Ex parte Minister of Justice (In re R v Berger & another) 1936 AD 334 at 341 in the judgment of Beyers JA referring to ‘oordeelkundige genade en menslikheid’ (ie that a penalty must be accompanied by ‘judicious grace and humanity’); S v Rabie 1975 (4) SA 855 (A). aggravating circumstances and the consequences for the victims and the interests of society.12 There are serious aggravating factors in this matter. The appellant, ironically a father of a young girl himself at the material time, exploited the complainants’ innocence and youth and forced them to submit to his wicked desires. He abused his position of authority and responsibility towards them and also abused the trust that their parents had placed in him when they put their young children in his care. Quite apart from the immediate physical and psychological trauma which the complainants suffered from the offences, there is also the lasting and devastating effect which the offences have had on their lives and their families. [12] The first and second complainants, who are both divorcees, have struggled to maintain intimate relationships with men throughout their adult lives as a direct result of the rapes. According to the second complainant, her parents and sister never recovered from the incident and it has affected her children too as a result of the manner in which she is raising them. The first complainant has suffered severe depression and anxiety and has led what she termed ‘a self-destructive’ life. All three complainants, who were described as promising tennis players in the trial, abandoned their potential tennis careers and told how they cannot bring themselves to even watch tennis to this day because of its link to the offences. This uncontested evidence belies the appellant’s contentions that the complainants were not traumatised as the rapes were neither ‘brutal’ nor ‘callous’ because the second complainant even ‘boasted’ about their kiss and that the first complainant suffered no injuries and had continued her training session with him after she was raped. 12 S v Salzwedel & others 1999 (2) SACR 586 (SCA) paras 12 and 18; S v Combrink 2012 (1) SACR 93 (SCA) pars 22-24; S v Sinden 1995 (2) SACR 704 (A) at 708F-709B. [13] Contrary to the appellant’s contention that the offences were ‘once-off’ and ‘there was no pattern of sexual abuse’, the evidence established a sustained period of grooming of each complainant, which culminated in the offences committed over a period of 14 years. The fact that the second complainant laid a criminal charge with the police did not deter the appellant at all as he proceeded to commit the rape in count 1 a year and a half later and the offence in count 3 fourteen years thereafter. [14] Much was made of the appellant’s standing as a tennis icon who successfully represented his country internationally and the impropriety of imprisoning such an individual because his fall from grace (and the pain of the trial) was, in itself, sufficient punishment as he had ‘already learned his lesson’. But this submission overlooks the basic tenets of our Constitution which decrees equality before the law. Our law knows no class distinctions of offenders of the proposed nature. The appellant’s erstwhile celebrated status does not therefore earn him a special sentence. [15] The appellant’s poor health is certainly a matter which must be considered. And so is his advanced age. However, as the court a quo observed, he does not suffer from a terminal or incapacitating illness as he leads an active life, which includes personally and successfully running a commercial citrus farm, and is even able to drive his employees home daily. It was also not disputed that the medical treatment and care that he requires would be available in prison.13 Regarding his age, whilst courts have considered oldness as a mitigating factor,14 it is certainly not a bar to a sentence of imprisonment.15 13 See in this regard, S v Zinn 1969 (2) SA 537 (A) at 542B-C. 14 See, for example, S v Heller 1971 (2) SA 29 (A) at 55D; S v Munyai & others 1993 (1) SACR 252 (A) at 255g-256a. 15 S v Zinn fn 13; S v Barendse 2010 (2) SACR 616 (ECG) at 619b-620b. [16] When the appellant was finally brought to trial he pleaded not guilty and maintained his innocence even after his conviction. The complainants therefore had to testify in court and relive the trauma of their ordeal in the intense glare of the media and international attention. During mitigation of sentence the appellant still showed no remorse for his vile deeds. The first complainant was referred to as a ‘so-called rape victim’ and castigated severely for ‘thriving from the case and abusing the press which conducted its own parallel trial’ because she spoke publicly about the effect that the rape had on her life. Whilst lack of remorse is not an aggravating circumstance, it would have redounded in the appellant’s favour if he had shown some appreciation of and contrition for the devastation he caused. [17] It is indeed regrettable that it took so long to bring the appellant to justice. But this is not an unusual phenomenon in these types of cases. And despite the obvious difficulties posed by the delays, our courts have ably delivered just decisions.16 I am not satisfied that the sentences imposed by the court a quo are not appropriate and that it exercised its sentencing discretion improperly. In my view, the sentences fit the criminal and the crime and fairly balance the competing interests. Although the element of rehabilitation bears little relevance here because of the appellant’s age, the sentences would still serve the other important purposes of sentence, ie deterrence and retribution. This court therefore has no right to interfere. The appeal is accordingly dismissed. __________________________ M M L MAYA Deputy President of the Supreme Court of Appeal 16 For example, in Van Zijl v Hoogenhout 2005 (2) SA 93 SCA. S v Cornick & another 2007 (2) SACR 115 (SCA); Bothma v Els 2010 (1) SACR 184 (CC); APPEARANCES For the Appellant: Johann Engelbrecht SC (with I. De Beer) Instructed by: A. W JAFFER ATTORNEYS, Pretoria West For the Respondent: Carina Coetzee (with S. Barbaglia) Instructed by: Director of Public Prosecutions, Pretoria Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 9 June 2016 STATUS Immediate 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. Hewitt v S (637/2015) [2016] ZASCA 100 (9 June 2016) The Supreme Court of Appeal (SCA) today handed down judgment in tennis icon Robert Hewitt’s appeal against an effective sentence of six years’ imprisonment. The appellant, Mr Hewitt, a world renowned champion tennis player and instructor, was convicted in the Gauteng Division of the High Court on two counts of the rape of two girls aged 12 and 13 years and one count of the indecent assault of a 17 year old girl. The rape offences were committed in the early 1980s whilst the offence in relation to indecent assault was committed in 1994. The appellant was 75 years old when he was convicted in March 2015. He was sentenced to undergo eight years’ imprisonment in respect of each of the rape counts and two years’ imprisonment for the indecent assault. The sentences were ordered to run concurrently and two years of each of the rape sentences were suspended for a period of two years on condition that he pays a collective sum of R100 000 to the Department of Justice and Constitutional Development to be utilised to further the department’s campaign against the abuse of women and children. He was therefore sentenced to undergo an effective period of six years’ imprisonment. On appeal, with the leave of the high court (Bam J), it was argued on the appellant’s behalf that the sentences were startlingly inappropriate. It was contended that the high court overemphasised the seriousness of the offences at the expense of the appellant’s personal circumstances having regard to his advanced age and ill-health and that he had only raped each of the rape complainants once and had not repeated the offences. Counsel for the appellant argued for an amelioration of the sentence given his personal circumstances. The SCA reiterated that the imposition of sentence is the prerogative of the trial court and that an appellate court may not interfere with the trial court’s discretion on sentence merely because it would have imposed a different sentence. The SCA stated that it is not enough to conclude that its own choice of penalty would have been an appropriate penalty, but that something more is required – an appellate court must conclude that its own choice of penalty is the appropriate penalty and that the penalty chosen by the trial court is not. And that the trial court committed a misdirection of such a nature, degree and seriousness that shows that it did not exercise its sentencing discretion at all or exercised it improperly or unreasonably when imposing it. The SCA could only interfere if there was a ‘striking’ or ‘startling’ or ‘disturbing’ disparity between the trial court’s sentence and that which it would have imposed. The appellant’s interests had to be balanced against the nature of the crime, and the interests of the victims and society. The SCA held that whilst appellant’s poor health is certainly a matter which must be considered as well as his advanced age. That as the court a quo had observed, Mr Hewitt does not suffer from a terminal or incapacitating illness as he leads an active life which includes personally and successfully running a commercial citrus farm and the he is even able to drive his employees home daily; and that it was also not disputed that the medical treatment and care that he requires would be available in prison. The SCA reiterated that whilst advanced age is a mitigating factor, it is not a bar to a sentence of imprisonment. The SCA was not satisfied that the court a quo exercised its sentencing discretion improperly. In its view the sentences fitted the criminal and the crime and fairly balanced the competing interests. The SCA thus concluded that it had no right to interfere in the sentence imposed by the high court. --- ends ---

2881

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 144/2012 Reportable In the matter between: COLLEEN MZINGISI DUMANI Appellant and DESMOND NAIR First Respondent THE MAGISTRATES COMMISSION Second Respondent Neutral citation: Collen Mzingisi Dumani v Desmond Nair & another (144/2012) [2012] ZASCA 196 (30 November 2012) Coram: MPATI P, CLOETE, HEHER, CACHALIA and THERON JJA Heard: 23 November 2012 Delivered 30 November 2012 Summary: Review – Grounds for - Promotion of Administrative Justice Act 3 of 2000 - decision of presiding officer in disciplinary enquiry. Material mistake of fact – misdirection of the presiding officer in evaluating the evidence does not render the decision reviewable on ground of material error of fact. Decision so unreasonable that no reasonable person could have reached it – this ground not established on the evidence. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Eastern Cape High Court, Grahamstown (Pickering and Chetty JJ sitting as court of appeal): The appeal is dismissed with costs. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ THERON JA (MPATI P, CLOETE, HEHER and CACHALIA JJA concurring): [1] This appeal is against the dismissal of an application, in terms of s 6 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), for the review and setting aside of the appellant‟s conviction, at a disciplinary hearing, on three counts of misconduct. [2] The appellant is Mr Collen Mzingisi Dumani (Dumani), a magistrate, currently on suspension, who was appointed as acting head of the Graaff-Reinet Magistrate‟s Court, with effect from 1 November 2008. The first respondent, Mr Desmond Nair (the presiding officer), is the chief magistrate of Pretoria, who presided over an inquiry into misconduct charges brought against Dumani by the second respondent, the Magistrates Commission. [3] On 5 March 2009, the Magistrates Commission charged Dumani with four counts of misconduct in terms of regulation 26(4)(a) of the Regulations for Judicial Officers in the Lower Courts issued under the Magistrates Act 90 of 1993. All the complainants were employed in various capacities at the Graaff- Reinet Magistrates‟ Court where Dumani had been stationed. The first charge related to an incident that occurred during December 2008, when Dumani allegedly stroked the cheek of Ms Salome Hartney (Hartney), who was employed as an administrative clerk at the court. The second charge related to Dumani allegedly stroking the cheek of a security officer, Ms Marilyn Slavers (Slavers), with the back of his hand. In respect of the third charge, it was alleged that Dumani had touched the back of the neck of Ms Regina Karolus (Karolus), a cleaner at the court. The complainant in the final charge was Ms Edwina Ele (Ele), a senior administrative clerk, and it was alleged that Dumani had put his hand between her breasts. [4] During March 2009, the Magistrates Commission appointed the presiding officer to hold a disciplinary enquiry into the misconduct charges. On 19 March 2010, and after hearing evidence, the presiding officer found Dumani guilty of three counts of misconduct and acquitted him on count two relating to the complaint by Slavers. On 24 May 2010, the presiding officer recommended to the Magistrates Commission, in terms of sub-regulation 26(17)(b) of the Regulations, that Dumani be removed from office as a magistrate as contemplated in s 13 of the Magistrates Act. On 14 June 2010, Dumani made written representations to the Magistrates Commission, requesting it to overturn the convictions, not to recommend to Parliament that he be removed from office and not to impose any sanction on him. By letter dated 1 September 2010, Dumani was advised that the Magistrates Commission had resolved to accept the recommendation that he be removed from office on grounds of misconduct in terms of s 13(4)(a)(i) of the Magistrates Act. The Commission informed Dumani that its recommendation had been forwarded to the Minister of Justice and Constitutional Development. [5] Dumani instituted proceedings in the Eastern Cape High Court (Grahamstown) to review and set aside the findings of the presiding officer. The high court (Chetty J, Pickering J concurring) dismissed the application. Dumani now appeals with the leave of this court. The grounds of review relied upon are that: (a) the presiding officer committed a material error of fact (this is dealt with in the judgment of Cloete JA in which I concur); (b) the presiding officer acted arbitrarily; and (c) the presiding officer‟s decision is so unreasonable that no reasonable person could have reached it. [6] The enquiry into the misconduct charges was held in Graaff-Reinet. The complainants and Mrs Rene Viljoen (Viljoen), the court manager, testified on behalf of the Magistrates Commission. Dumani testified in his own defence. The presiding officer called Mr Mzimkulu Walter Claassen (Claassen), a senior clerk at the court, as a witness. [7] Hartney testified that she had, during the first week of December 2008, been requested to go to Dumani‟s office to assist him with his computer. While they were alone and she was sitting in front of the computer, Dumani, who was standing next to her, stroked her cheek with his hand. It was her testimony that she, in response, then requested him not to touch her. According to her, Dumani then apologised. When she had completed her task at the computer, she stood up and he once again touched her cheek. She voiced her displeasure and he again apologised and requested that she not disclose the details of the incident to anyone. The following day she reported the incident to Viljoen, but asked Viljoen not to take the matter further and said that she, Hartney, would only take the matter further if it happened again. [8] Slavers, a security officer at the court, testified that she had, on 16 January 2009, been sitting at the security scanner at the entrance to the court. Dumani, upon returning from lunch, greeted her by name, touched her cheek, proceeded past the security scanner and entered the building. She mentioned it to her colleague but the latter had not observed the incident. Karolus, a cleaner, testified that she had been emptying the waste-paper basket in Dumani‟s office on 29 January 2009, when he inappropriately touched the back of her head, in „soft motions‟. [9] Ele, a senior administrative clerk, testified that she usually worked in the regional court, but when the court was not in session, she assisted in the cash hall or with administration. On a Friday, 30 January 2009, she received a telephone call from Dumani requesting that she come to his office. She asked if she could see him after two o‟clock as it was close to lunch time and he agreed. Thereafter, and shortly before lunch time (one o‟clock) Dumani approached her in the cash hall. After attending to his query, she went towards the door as it was already lunch time, with Dumani following closely behind her. She turned back to fetch her cellular telephone which she had left on her desk, and as she turned Dumani put his hand between her breasts. She entered the cash hall and asked Hartney whether Dumani was „sexually hyperactive‟ and reported to Hartney that he had touched her breasts. Ele then went outside where she met Karolus and Slavers and told them about the incident. It was then that the complainants shared amongst themselves their respective experiences with Dumani. It was also then that the complainants decided to take the matter further. Reports were subsequently made to Viljoen. The complainants were referred to Ms Diane Bertram, a social worker in the Department of Social Services, for counselling, which they underwent. [10] Viljoen, the court manager, confirmed that Hartney had, during December 2008, reported the incident with Dumani to her. Viljoen said that in January 2009, she was advised of the incidents of inappropriate conduct involving Dumani and the other three complainants. She testified in cross- examination that most of the court‟s business was conducted in Afrikaans and certain members of the court staff (who did not include her) had not been in favour of Dumani‟s appointment because he could not speak Afrikaans. [11] Dumani testified in his own defence. He was 58 years old at the time and had, prior to his appointment as magistrate, been in practice as an attorney. He took up his post as acting head of the court in Graaff-Reinet with effect from 1 December 2008 and was to have been on probation for a period of about six months. He denied having inappropriately touched the complainants and said he believed they had concocted these charges against him as they were dissatisfied because a black man had been appointed as head of office over Afrikaans- speaking people and he could not speak Afrikaans. He added it was his strong belief that the motive of the complainants was to undermine transformation. [12] Dumani testified that Hartney had been disrespectful towards him. He said that she had on two occasions reprimanded him for being late for work. On another occasion she had come into his office while he had been dealing with a member of the public sitting there, and demanded that he immediately attend to a particular file that she was carrying. When he refused to do so immediately, she pushed the file against his chest and the contents thereof fell onto the floor. It was his evidence that Karolus only cleaned his office in December and not again, so that he subsequently had to arrange with persons doing community service at the court to clean his office. Dumani denied that he had gone to the cash hall on 30 January 2009. He said he left the court at 12h45 that day. [13] Claassen was called as a witness by the presiding officer. In his evidence- in-chief he said that Dumani had given him certain documents at about 9h00 that morning that needed to be transmitted by telefax. He said that Dumani telephoned him shortly before one o‟ clock on 30 January 2009, and requested that Claassen deliver the documents to Dumani. At the time, Dumani was in his vehicle, parked in the vicinity of the court. Claassen arranged for the newspaper vendor to take the documents to where Dumani was waiting in his vehicle. [14] I turn now to deal with the analysis of the evidence necessitated by the two review grounds with which this judgment is concerned. It was initially contended by Mr Daubermann, who represented Dumani at the enquiry and has since continued to do so, that Claassen was a satisfactory witness and that there were no material inconsistencies or improbabilities in his version. It was further argued that his evidence supported Dumani‟s version. As I have said, in his evidence-in-chief Claassen testified that Dumani had given him the documents to send by telefax at about 9h00 on that morning and he had taken the documents to Dumani shortly before 13h00. During cross-examination the following was put to Claassen: „Now this happened a long time ago, so I want you just to think carefully, because Mr Dumani says that the way it happened was that at about quarter-to-one he called you to come and fetch the documents to fax for him and that he then left his office and met you downstairs and handed the documents to you to fax. In other words he says on his way out he in fact handed the documents to you. Could it have happened that way?‟ Claassen‟s response to this was: „It can happen like that because it is quite a long time ago, but what I can clearly remember is that when he phoned me and requested [me] to bring the documents he was outside, that is when I went out to go and give him the documents‟. This was a dramatic change in Claassen‟s evidence. Whereas he had earlier testified that he had received the documents at 09h00 he was prepared to concede that this could have occurred shortly before 13h00. This raises questions about Claassen‟s recollection of the events and his reliability as a witness. [15] It was also initially contended on behalf of Dumani that Claassen supported Dumani‟s version that the latter was not in the cash hall shortly before 13h00 on 30 January 2009 as alleged by Ele. Claassen‟s evidence in this regard was as follows: „MR DAUBERMANN Did Mr Dumani come into the cash hall at any stage after half- past-twelve that afternoon? MR CLAASSEN As I am saying that I was dealing with clients, but if he came in I did not see him. MR DAUBERMANN Would you have seen him if he had come in? MR CLAASSEN That is correct, because I usually saw him when he comes in.‟ (Emphasis added.) Claassen‟s evidence does not assist either party. It does not establish that Dumani was not in the cash hall shortly before 13h00 and nor does it rule out the possibility that Dumani could have been in the cash hall at that time. It was ultimately submitted on behalf of Dumani that Claassen‟s evidence contained contradictions that made him an unreliable witness; and that accordingly, whilst his evidence did not support Dumani, at best for the Magistrates Commission it did not support its case either. I agree with this approach. Counsel for Dumani conceded, and rightly so, that Claassen‟s evidence on this aspect was neutral. [16] It was argued by counsel for Dumani that the complainants were unreliable witnesses who had contradicted themselves in material respects. The following attacks were directed at their evidence. Hartney was criticised for not reporting the incident to her mother that same night. It was argued that there were a number of contradictions between Karolus‟ evidence and the statement she made to the police, namely, on whether (a) Dumani had been seated or standing when she entered his office, (b) he had touched the back of her head or her neck, and (c) she was bending or standing when he touched her. Karolus was also criticised for not telling her husband about the incident and it was contended that her explanation that she did not tell her husband because he would have said she was responsible for what happened to her, was not credible. It was also contended that there were contradictions between Ele‟s testimony and her statement to the police. The first was in respect of the time of the incident (whether it had occurred before or after one o‟ clock) and secondly, whether Dumani had inserted his hand or only a few fingers between her breasts. [17] I will deal with these criticisms in turn. The fact that Hartney did not tell her mother about the incident on the evening it occurred and only told her mother that the new magistrate was making her feel uncomfortable does not, to my mind, detract from her evidence. Karolus and Ele may have contradicted themselves on the actual incident (back of the head or neck, a few fingers or whole hand) but each incident still relates to inappropriate touching and the differences, in my view, are not material. The discrepancies between the police statements and the oral evidence of the complainants are trifling. [18] The presiding officer, in his judgment, noted that the complainants had been subjected to thorough cross-examination. That observation is amply borne out by the record. He stated that Hartney and Karolus had testified in a „convincing manner‟ while Ele and Hartney had made a good impression on him. He later referred to Ele as an „outstanding witness‟. He concluded that the contradictions, such as there were, were minor and did not adversely affect the complainants‟ credibility. There is no reason to doubt these findings. [19] Counsel for Dumani urged the court to find that it was highly improbable that Dumani would act in the manner suggested by the complainants and face the risk of losing his new-found employment. Counsel suggested that it was improbable that Dumani would have engaged in such bizarre behaviour as alleged by the complainants almost immediately after taking up his position at the court. It was argued that the complainants had conspired to bring false charges against the appellant because they were displeased with his appointment. Viljoen was asked in cross-examination about the reaction of the court staff when they discovered that a black magistrate who could not speak Afrikaans had been appointed as head of the office. She said that the staff were concerned as the majority of people in the Graaff-Reinet area were Afrikaans- speaking. She explained that reports that needed to be compiled in the Children‟s Court and the Domestic Violence section were compiled in Afrikaans and this was within the area of Dumani‟s work. [20] There is no evidence to support the conspiracy theory. Viljoen would have had to have been part of that conspiracy. If she was part of the conspiracy, it is unlikely she would have conceded a motive for it, namely that people were unhappy because Dumani did not speak Afrikaans. Karolus and Slavers, a cleaner and security guard at the court respectively, would not have had much contact with Dumani in the performance of their duties. The fact that he did not speak Afrikaans would not have affected their work environment in any significant manner and could not therefore serve as a credible explanation for their being part of a conspiracy to get rid of him. If the complainants had conspired to bring these charges against Dumani, they would surely have complained of more serious conduct than the stroking of a cheek or touching of the back of the head. Furthermore, it is difficult to imagine that they would receive counselling from a social worker and thereby risk being exposed as liars. It is much more probable that they needed counselling. The common element in the evidence of the three complainants is that Dumani touched them inappropriately. In the absence of a conspiracy, the cumulative effect of their evidence is to render the denial by Dumani less probable. [21] The fact that the conspiracy theory has not been proved does not entitle this court to draw an adverse inference against Dumani. There is, however, one aspect of Dumani‟s evidence that I find improbable. This is that Hartney would have treated him in the manner suggested by him. It is improbable that she, an administrative clerk, would have had the effrontery to treat Dumani, the acting head of the office, with such disrespect and that he would have allowed her to get away with this conduct as he said he did. [22] The enquiry before the presiding officer was whether, on a balance of probabilities, Dumani was guilty of misconduct, bearing in mind that because such conduct amounted to a criminal offence, it is inherently unlikely that anyone, particularly a magistrate, would have indulged in it. The enquiry before this court is not whether the presiding officer was correct in his conclusion that Dumani was guilty on three of the charges. The main enquiry before this court is whether the presiding officer‟s decision is so unreasonable that no reasonable person could have reached it. The further ground of review relied upon by Dumani, namely that the presiding officer acted arbitrarily, is linked to the main enquiry in that the presiding officer would have acted arbitrarily if it were to be found that his finding of guilt on the part of Dumani could not be justified on the acceptable evidence. I am not persuaded that the review grounds relied upon have been established. I am satisfied that a reasonable person in the position of the presiding officer on the evidence disclosed in the record and applying the correct test in law could have reached the conclusion that Dumani was guilty of the three counts of misconduct of which he was convicted. [23] At the hearing of this matter, it was argued on behalf of the Magistrates Commission that the findings and recommendations made by the presiding officer to the Magistrates Commission were only part of a multi-stage decision, and that no attempt had been made to review the decision and recommendation of the Magistrates Commission itself. In view of my finding in para 23 above it is not necessary to deal with this argument that was raised for the first time on appeal. In any event, it is stated in the notice of appeal that Dumani would, on appeal, seek an order, inter alia, reviewing and setting aside the Magistrates Commission‟s decision to support the recommendation that he, Dumani, be removed from office and indeed, such relief was foreshadowed in Dumani‟s founding affidavit (albeit not in the notice of motion). [24] Costs of two counsel were sought on appeal. Counsel for the respondents was unable to advance any convincing reason why such an order should be made. [25] The appeal is dismissed with costs. _______________ L V THERON JUDGE OF APPEAL CLOETE JA (MPATI P, HEHER, CACHALIA AND THERON JJA CONCURRING) [26] The appellant‟s attorney submitted that the presiding officer at the inquiry into the appellant‟s misconduct committed a material misdirection of fact that entitled the high court and entitles this court to „review the convictions and consider the matter afresh‟ in terms of the decision in Pepcor Retirement Fund v Financial Services Board 2003 (6) SA 38 (SCA). The argument requires a consideration of the parameters of material error of fact as a ground of review. I shall deal first with the facts relied on for this part of the argument and then the law. [27] So far as the facts are concerned, the submission was based on the presiding officer‟s reliance on the evidence of Mr Mzimkulu Walter Claassen, a clerk in the employ of the Department of Justice at the Graaff-Reinet Magistrate‟s Court. Claassen‟s evidence related to the fourth count of misconduct but it is evident from the following passage in the presiding officer‟s judgment that he accorded it wider significance: „[W]hat is potent in my assessment is the variance between [the appellant] and Mr Claassen, in their testimonies and in the answers given . . . But Mr Claassen differs to a large extent from [the appellant]. In fact to my mind it made a very big impression on me, the variance between Mr Claassen and [the appellant‟s] testimony . . . It is a weakness in [the appellant‟s] case.‟ The appellant‟s attorney argued that Claassen had conceded under cross- examination that the appellant‟s version, which was put to him, could be correct and that this removed any basis for the findings made by the presiding officer which I have quoted, thus leading to a material error of fact. [28] The high court reasoned: „[Counsel on behalf of the appellant] laid great emphasis on the [presiding officer‟s] treatment of the evidence of Claassen. Seizing upon the use of the word “potent” in the judgment, counsel sought to persuade us that the [appellant‟s] version was rejected on that score alone. There is no merit in this submission. The [presiding officer‟s] use of the word was imprecise and unfortunate but it is obvious from the judgment that upon an appraisal of the totality of the evidence, whatever conflict existed between the [appellant‟s] evidence and that of Claassen, played no meaningful role in the decision arrived at by him.‟ This reasoning cannot be supported. The passage I have quoted from the presiding officer‟s judgment shows that he was considerably influenced by the contradictions found by him to exist between the evidence of Claassen and that of the appellant. [29] I turn to consider the law. Material error of fact was first recognised as a ground of review by this court in Pepcor where the following was said in para 47: „In my view, a material mistake of fact should be a basis upon which a Court can review an administrative decision. If legislation has empowered a functionary to make a decision, in the public interest, the decision should be made on the material facts which should have been available for the decision properly to be made. And if a decision has been made in ignorance of facts material to the decision and which therefore should have been before the functionary, the decision should . . . be reviewable at the suit of, inter alios, the functionary who made it ─ even although the functionary may have been guilty of negligence and even where a person who is not guilty of fraudulent conduct has benefited by the decision. The doctrine of legality which was the basis of the decisions in Fedsure1, Sarfu2 and Pharmaceutical Manufacturers3 requires that the power conferred on a functionary to make decisions in the public interest, should be exercised properly, ie on the basis of the true facts; it should not be confined to cases where the common law would categorise the decision as ultra vires.‟ But the court went on in the immediately succeeding paragraph, paragraph 48, to say: 1 Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council 1999 (1) SA 374 (CC) (1998 (12) BCLR 1458). 2 President of the Republic of South African Rugby Football Union 2000 (1) SA 1 (CC) (1999 (10) BCLR 1059). 3 Pharmaceutical Manufacturers Association of SA: In re Ex Parte President of the Republic of South Africa 2000 (2) SA 674 (CC) (2000 (3) BCLR 241). „Recognition of material mistake of fact as a potential ground of review obviously has its dangers. It should not be permitted to be misused in such a way as to blur, far less eliminate, the fundamental distinction in our law between two distinct forms of relief: appeal and review. For example, where both the power to determine what facts are relevant to the making of a decision, and the power to determine whether or not they exist, has been entrusted to a particular functionary (be it a person or a body of persons), it would not be possible to review and set aside its decision merely because the reviewing Court considers that the functionary was mistaken either in its assessment of what facts were relevant, or in concluding that the facts exist. If it were, there would be no point in preserving the time-honoured and socially necessary separate and distinct forms of relief which the remedies of appeal and review provide.‟ The importance of the qualification contained in the paragraph just quoted was emphasized in the subsequent decision of this court in Government Employees Pension Fund v Buitendag 2007 (4) SA 2 (SCA) para 12. [30] In Chairperson’s Association v Minister of Arts and Culture 2007 (5) SA 236 (SCA) Farlam JA said (in para 48): „In my opinion the legal position as set out in the Pepcor case based as it is on the principle of legality still applies under PAJA, s 6(2)(e)(iii) of which provides that administrative action taken because “irrelevant considerations were taken into account or relevant considerations were not considered” can be set aside on review.‟ Most recently, in Chairman State Tender Board v Digital Voice Processing (Pty) Ltd; Chairman State Tender Board v Sneller Digital (Pty) Ltd 2012 (2) SA 16 (SCA), Plasket AJA said in para 34: „It is now well established in South Africa (and in some other common-law jurisdictions) that a material error of fact is a ground of review‟, and went on to point out that this ground could just as easily be accommodated in s 6(2)(i) of PAJA,4 the catch-all provision that allows for the development of new grounds of review by providing that administrative action may be reviewed and set aside on the basis of it being „otherwise unconstitutional or unlawful‟. [31] In the judgment I have just mentioned Plasket AJA referred to the chapter by Christopher Forsyth and Emma Dring entitled „The Final Frontier: The Emergence of Material Error of Fact as a Ground for Judicial Review‟ in Christopher Forsyth, Mark Elliott, Swati Jhaveri, Michael Ramsden and Anne Scully-Hill (eds) Effective Judicial Review: A Cornerstone of Good Governance (2010) 245. In that chapter the learned authors deal with the orthodox approach to errors of fact in English law, which was similar to our law prior to Pepcor, and go on to consider the extent to which that approach has been developed to permit clear errors of fact to be reviewed. The developments in England and in several common law jurisdictions (Australia, South Africa, New Zealand and Hong Kong) are then briefly examined. For present purposes, it is the view expressed by the authors at p 258 that requires consideration: „It is submitted that, ultimately, the suggestion that the recognition of this new ground for review destroys the distinction between review and appeal rests on a misunderstanding of the nature of an administrative decision. An administrative decision-maker may need to make various findings of law (which he must get right) and he may also need to make findings of fact (which it is submitted he must also get right), but then the decision-maker has to exercise his judgment. This is his realm of autonomy in which he is free to decide as his judgment ordains without any judicial intervention. For so long as the power to review on the ground of error of fact does not intrude into that area of judgment, the distinction between merits and review remains. It needs to be recognised though that the loss of the power to make errors of fact necessarily narrows the area of 4 Promotion of Administrative Justice Act, 3 of 2000. the [sic] in which the decision-maker may decide without any judicial intervention. But this is of course true of every extension of judicial review. In any event, it is submitted that the test laid down in E [v Secretary of State for the Home Department [2004] EWCA Civ 49, [2004] QB1044] largely preserves the decision-maker‟s area of judgement, by requiring that a factual error must be “existing” and “established” (objectively verifiable) before the court will intervene.‟ [32] In none of the jurisdictions surveyed by the authors have the courts gone so far as to hold that findings of fact made by the decision-maker can be attacked on review on the basis that the reviewing court is free, without more, to substitute its own view as to what the findings should have been ─ ie an appeal test. In our law, where the power to make findings of fact is conferred on a particular functionary ─ an „administrator‟ as defined in PAJA ─ the material error of fact ground of review does not entitle a reviewing court to reconsider the matter afresh. This appears, in the context of the particular ground of review being considered, from para 48 of Pepcor, quoted in para 29 above; and in the context of review generally, from the following passage in the judgment of O‟Regan J in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs 2004 (4) SA 490 (CC) para 45: „Although the review functions of the Court now have a substantive as well as a procedural ingredient, the distinction between appeals and reviews continues to be significant. The Court should take care not to usurp the functions of administrative agencies. Its task is to ensure that the decisions taken by administrative agencies fall within the bounds of reasonableness as required by the Constitution.‟ The ground must be confined to the situation, as in the English law as set out in E para 66, to a fact that is established in the sense that it is uncontentious and objectively verifiable. Examples appear from the cases decided in this court to which I have already referred: (a) In Pepcor the Registrar of the Financial Services Board had granted statutory approvals, to effect the „unbundling‟ of the appellant fund, relying on actuarial calculations that the high court categorised as „arbitrary and indefensible‟ and in respect of which no justification was attempted on appeal (paras 4 to 6). The challenge by the appellants that the Registrar‟s decision would have been no different had the correct information been furnished, was rejected by the high court and this finding was confirmed on appeal (para 29). (b) In the Chairperson’s Association case the Minister of Arts and Culture took a decision to approve the change of name of the town Louis Trichardt to Makhado. The Minister was influenced (see para 47) by a memorandum from the Director General that contained an assurance from the Names Council that proper consultation about the name change had occurred, when it plainly had not (para 46). (c) In the Chairman, State Tender Board case the State Tender Board resolved to restrict a company, Sneller Digital (Pty) Ltd, and its directors from doing business with all three spheres of government institutions for a period of ten years. It did so because it concluded that the directors had been appointed after a tender had been submitted by the company, and that the company had accordingly made a fraudulent misrepresentation to it and been guilty of „fronting‟ so as to claim equity ownership points, to which it was not entitled, in order to obtain a tender (para 12). As a matter of objective fact, the directors had been appointed before the tender was submitted. This court concluded (para 36) that had the State Tender Board taken its decision based on the proper facts it could not have concluded that the company and directors had made fraudulent misrepresentations to it; and that this factual error was material because it was the direct cause of the decision to blacklist the company and directors. [33] For these reasons, even if there was a misdirection by the presiding officer in regard to the evidence of Claassen, the convictions would not be reviewable on the ground of material error of fact, nor under the guise of the provisions of s 6(2)(e)(iii) of PAJA viz „because irrelevant considerations were taken into account or relevant considerations were not considered‟. That leaves the following grounds of review relied upon by the appellant, namely that the presiding officer acted arbitrarily (based on s 6(2)(e)(vi) of PAJA) and that the presiding officer‟s decision was so unreasonable that no reasonable person could have reached it (based on ss 6(2)(f)(ii)(cc) and (h) of PAJA). (The alleged misdirection to which I have referred would be relevant, if established, to the latter ground in considering whether, on the facts before the presiding officer as disclosed in the record, no reasonable person could have found the appellant guilty.) These grounds are dealt with in the judgment of my colleague Theron JA in whose judgment I concur. _______________ T D CLOETE JUDGE OF APPEAL Appearances For the Appellant: P Daubermann Instructed by: P Daubermann Attorneys, Grahamstown Symington & De Kok: Bloemfontein For the Second Respondent: SK Hassim SC (with N Gaisa) Instructed by: Netteltons Attorneys, Grahamstown State Attorney: Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 November 2012 Status: Immediate 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. Collen Mzingisi Dumani v Desmond Nair & another Today the Supreme Court of Appeal (SCA) dismissed an appeal by Dumani. The appellant is Mr Collen Mzingisi Dumani (Dumani), a magistrate, currently on suspension, who was appointed as acting head of the Graaff-Reinet Magistrate’s Court, with effect from 1 November 2008. The first respondent, Mr Desmond Nair (the presiding officer), is the chief magistrate of Pretoria, who presided over an inquiry into misconduct charges brought against Dumani by the second respondent, the Magistrates Commission. On 5 March 2009, the Magistrates Commission charged Dumani with four counts of misconduct in terms of sub-regulation 26(4)(a) of the Regulations for Judicial Officers in the Lower Courts issued under the Magistrates Act 90 of 1993. All the complainants were employed in various capacities at the Graaff-Reinet Magistrates’ Court where Dumani had been stationed. The first charge related to an incident that occurred during December 2008, when Dumani allegedly stroked the cheek of Ms Salome Hartney (Hartney), who was employed as an administrative clerk at the court. The second charge related to Dumani allegedly stroking the cheek of a security officer, Ms Marilyn Slavers (Slavers), with the back of his hand. In respect of the third charge, it was alleged that Dumani had touched the back of the neck of Ms Regina Karolus (Karolus), a cleaner at the court. The complainant in the final charge was Ms Edwina Ele (Ele), a senior administrative clerk, and it was alleged that Dumani had put his hand between her breasts. During March 2009, the Magistrates Commission appointed the presiding officer to hold a disciplinary enquiry into the misconduct charges. On 19 March 2010, and after hearing evidence, the presiding officer found Dumani guilty of three counts of misconduct and acquitted him on count two relating to the complainant Slavers. On 24 May 2010, the presiding officer recommended to the Magistrates Commission that Dumani be removed from office as a magistrate. The Magistrates Commission accepted the recommendation that he be removed from office on grounds of misconduct and forwarded its recommendation to the Minister of Justice and Constitutional Development. [Dumani instituted proceedings in the Eastern Cape High Court (Grahamstown) to review and set aside the findings of the presiding officer. The high court (Chetty J, Pickering J concurring) dismissed the application. On appeal, the grounds of review relied upon were that: (a) the presiding officer committed a material misdirection of fact; (b) the presiding officer acted arbitrarily; and (c) the presiding officer’s decision is so unreasonable that no reasonable person could have reached it. The court held that even if there was a misdirection by the presiding officer in regard to the evidence of Claassen, one of the witnesses, the convictions would not be reviewable on the ground of material error of fact, nor under the guise of the provisions of s 6(2)(e)(iii) of PAJA viz ‘because irrelevant considerations were taken into account or relevant considerations were not considered’. The court found that there was no evidence to support the suggestion that the complainants had concocted these charges against him as they were dissatisfied because a black man had been appointed as head of office over Afrikaans-speaking people and he could not speak Afrikaans. The court was not persuaded that the review grounds relied upon have been established. The court found that a reasonable person in the position of the presiding officer on the evidence disclosed in the record and applying the correct test in law could have reached the conclusion that Dumani was guilty of the three counts of misconduct of which he was convicted. For these reasons, the appeal was dismissed.

2922

non-electoral

2015

SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 20215/2014 Not Reportable In the matter between: CORNELIA STRYDOM APPELLANT and THE STATE RESPONDENT Neutral citation: Strydom v The State (20215/14) [2014] ZASCA 29 (23 March 2015). Coram: Lewis, Pillay et Mbha JJA Heard: 12 March 2015 Delivered: 23 March 2015 Summary: Sentence – imprisonment of non-parole period ordered in terms of s 276B(1) of Criminal Procedure Act 51 of 1977 – non-parole order to be made only in exceptional circumstances - court required to afford parties opportunity to address court on making such an order and the period thereof – failure to do so constitutes misdirection. ORDER On appeal from: Gauteng Local Division, Johannesburg (Borchers J sitting as court of first instance) 1 The appeal is upheld. 2 the order of the court below refusing the appellant leave to appeal is set aside and replaced with the following: ‘The appellant is granted special leave to appeal to the Gauteng Local Division, Johannesburg, against the sentence imposed by the Regional Court’; 3 The appellant is directed to deliver her notice of appeal on or before 17 March 2015 based on the findings made in this judgment and containing such further grounds of appeal as may be permitted by the court of appeal. 4 The Director of Public Prosecutions, Gauteng Local Division, is requested to place this appeal on the roll as a matter of urgency on a date to be arranged with the appellant’s counsel. 5 The registrar of this court is requested to make three copies of the record filed in this court available to the appellant’s attorney for use in the appeal to the Gauteng Local Division, Johannesburg, should the Judge President of that division sanction this arrangement. REASONS FOR JUDGMENT Pillay JA (Lewis et Mbha JJA Concurring) [1] The order set out above was made by this court with the agreement of the parties at the hearing of the appeal. The reasons for making the order follow. The appeal is against the order of the Gauteng Local Division, Johannesburg refusing the appellant’s application for leave to appeal to that court against her sentence imposed in the Gauteng Regional Court (Specialised Commercial Crime Court) sitting at Johannesburg. Her conviction was based on 36 charges of fraud involving a benefit to her of R375 816.92. She was consequently sentenced to serve a term of five years’ imprisonment with the proviso that in terms of s 276B of the Criminal Procedure Act 51 of 1977 (CPA) the appellant serve three years of imprisonment before being placed or being considered eligible for parole. [2] The appellant’s application for leave to appeal in terms of s 309B of the CPA to the regional magistrate against sentence was dismissed. She then petitioned the Judge President of the Gauteng Local Division in terms of s 309C of the CPA for such leave. This application was also dismissed whereupon she sought and obtained leave to appeal to this court against the dismissal of the petition. [3] Thus, the issue before this court is whether the application in terms of s 309B of the CPA was correctly dismissed or not. [4] The background to this matter is as follows. The appellant was employed by the City of Johannesburg as a Specialist Pension Administrator. Her duties included paying out expenses incurred for specialised home care by former employees of the municipality who were injured on duty and required such care. During the course of her employment, the appellant became involved in a scam to defraud the municipality. She colluded with one Marlene Horn who would submit false invoices for treatment not in fact administered. The appellant would then arrange payment to Horn in terms of the false invoices. The two of them would then share the spoils of their scheme which occurred between 6 June 2007 and 30 September 2009. She and Horn were charged with 36 counts of fraud. Horn for her part entered into an agreement with the prosecution in terms of s 105A of the CPA and their trials were consequently separated. [5] The appellant pleaded guilty to all the charges and admitted in a written plea submitted in terms of s 112 of the CPA to having committed all the offences referred to in the charge sheet and that she had benefitted to the tune of R375 816.92 from this illegal venture. The necessary elements of fraud were admitted and she was consequently convicted as charged. [6] The appellant admitted to one previous conviction of fraud of her former employer (prior to City of Johannesburg) – having committed that offence in 1998 and in respect of which she was sentenced to correctional supervision. It is unclear whether this included any directives for her to attend any course within the Correctional Services system in order to enhance her rehabilitation. [7] Prior to sentence, two reports – a pre-sentence report and one in respect of the interests of her three children – were prepared by social worker Daleen van Biljon. In the first report, as Van Biljon testified, her investigations disclosed allegations of abuse and financial demands on the appellant by her husband. The alleged abuse entailed physical and mental abuse from the time they got married when she was still in her teens. [8] The appellant relied on these reports to explain that the aforementioned abuse and demands by her husband played a significant role in her committing these crimes. She also relied on the reports in respect of the children’s interest presumably in an attempt to avoid a sentence of direct imprisonment in the light of the age of her young daughter – seven years old - who lives with her. [9] A number of issues in the record and judgment on sentence lay the magistrate open to criticism. I will confine this judgment to only one aspect as it is unnecessary to deal with every aspect that gives rise to concern. [10] In regard to the imposition of the non-parole period, s 276B of the CPA reads as follows: ‘276B Fixing of non-parole-period (1)(a) If a court sentences a person convicted of an offence to imprisonment for a period of two years or longer, the court may as part of the sentence, fix a period during which the person shall not be placed on parole. (b) Such period shall be referred to as the non-parole-period, and may not exceed two thirds of the term of imprisonment imposed or 25 years, whichever is the shorter. (2) If a person who is convicted of two or more offences is sentenced to imprisonment and the court directs that the sentences of imprisonment shall run concurrently, the court shall, subject to subsection (1) (b), fix the non-parole-period in respect of the effective period of imprisonment.’ Though not specifically stated by the magistrate, she clearly imposed the order by invoking s 276B(1)(a). [11] The appellant was not provided with an opportunity of addressing the court when the magistrate invoked s 276B of the CPA in order to fix a period during which she could not be placed on or considered for parole. This is precisely the issue raised by the appellant in this appeal. The appellant contends that she ought to have been afforded an opportunity to address the court prior to the imposition of the non-parole order. It is unnecessary to further discuss this aspect since counsel for the State has very fairly conceded that the magistrate ought to have afforded the appellant an opportunity to address the court on the order prior to making it. The failure to do so constituted a misdirection. It is also noteworthy that the magistrate did not give any reasons for invoking this section in her judgment. [12] It is however necessary to deal with this matter in a little bit more detail despite the concession. In S v Stander1 in which s 276B was invoked without invitation to the parties to address the court on it and where no reason for invoking it was given, it was explained that when considering whether the petition was wrongly refused – and therefore whether there are reasonable prospects of success on appeal – three issues arise. First, whether the magistrate was obliged to give reasons for imposing a non-parole portion of the prison sentence, second, the circumstances under which the court would be entitled to impose a non-parole order as part of the sentence and, third, whether the magistrate was obliged to invite or allow argument before the 1 S v Stander 2012 (1) SACR 537 (SCA) para 3. imposition of a non-parole order. [13] Regarding the first issue, accused persons are always entitled to the reasons for decisions which will affect them. They are entitled to understand why and how such decisions have been arrived at. As Corbett JA said in S v Immelman2, ‘It has been decided in this Court, with reference to the verdict of the Court, that, although there is no provision in the Criminal Procedure Code for the delivery of a judgment when a Judge sits alone or with assessors (when these decisions were given the alternative system of trial by jury still obtained), in practice such a judgment is invariably given and that it is clearly in the interests of justice that it should be given (see R v Majerero and Others 1948 (3) SA 1032 (A); R v Van der Walt 1952 (4) SA 382 (A)). It seems to me that, with regard to the sentence of the Court in cases where the trial Judge enjoys a discretion, a statement of the reasons which move him to impose the sentence which he does also serve the interests of justice. The absence of such reasons may operate unfairly, as against both the accused person and the State.’ [14] The magistrate’s failure to give reasons for invoking s 276B of the CPA leaves one none the wiser as to why she did so. It is not only unfair to both the appellant and the respondent but also to the public. While the statutes do not demand this, it is a salutary practice developed and generally adhered to over a long period of time. In my view the reasons as set out by Corbett JA in Immelman justify strict adherence to the practice of giving reasons for decisions. [15] With regard to the second issue, the circumstances under which such an order could be imposed, Snyders JA, in Stander, recognising the provisions of the Correctional Services Act 111 of 1998 (CSA) as amended, articulated the history 2 S v Immelman 1978 (3) SA 726 (A) at 729C. and the development of the courts’ approach to this aspect of the imposition of a non-parole order. In referring to a number of decisions,3 she concluded that while the legislation empowers the courts to impose such an order when sentencing, it should only do so when the circumstances specifically relevant to parole in addition to any aggravating factors pertaining to the commission of the crime, and where a proper, evidential basis had been laid for a finding that such circumstances exist so as to justify the imposition of such an order.4 This court held that a court should not resort to s 276B of the CPA lightly and rather, as this court has often indicated, allow the officials of the Department of Correctional Services, who are guided by the CSA and the attendant regulations, to make such assessments and decisions as well as the parole board. [16] The third issue is whether a magistrate should allow or invite argument prior to the imposition of a non-parole period. The imposition of such an order has a drastic impact on sentence. In this matter invoking s 276B came as a surprise to both the appellant and the respondent. It was not suggested by the prosecution and, as indicated above, there was no warning that it was being contemplated. Section 276B entails an order which is a determination in the present for the future behavior of the person to be affected thereby. In other words, it is an order that a person does not deserve being released on parole in future. (See: S v Bull; S v Chavulla & others).5 Such an order should only be made in exceptional circumstances which can only be established by investigation and a consideration of salient facts, legal argument and perhaps further evidence upon which such a decision rests. 3 S v Mhlakaza & another 1997 (1) SACR 515 (SCA) at 521d-i; S v Pauls 2011 (2) SACR 417 (ECG); S v Williams; S v Papier 2006 (2) SACR 101 (C); S v Mshumpa & another 2008 (1) SACR 126 (E). 4 See Stander para 20. 5 S v Bull; S v Chavulla & others 2001 (12) SACR 681 (SCA) at 692d-i, 693d-g, and 697a. [17] In another similar case, S v Mthimkulu,6 this court dealt with an order of a parole period imposed in terms of s 276B(2). In this case also there was no invitation to address the court prior to the imposition of the non-parole order. It needs to be noted that this case dealt with what appeared to the trial court to be a peremptory imposition of a non-parole order which this court rejected. The judgment is relevant in as far as it deals with the failure to afford the parties an opportunity to address the court in that regard prior to the imposition of such an order. This court held that a failure to afford the parties the opportunity to address the sentencing court might, depending on the case, well constitute an infringement of such fair-trial rights. In the present case, I am of the view that the failure to do so indeed constitutes a misdirection. On this ground alone there is a reasonable prospect of success on appeal. In the circumstances, leave to appeal against the sentence (as it stands) should have been granted, as there are clearly prospects of success on appeal. [18] The appellant has already served two years and six months’ imprisonment of the sentence. But for the non-parole order, her incarceration would already have been reduced or at least consideration would already have been given to that by the authorities. The prejudice caused by the non-parole order may be reduced if the appeal is successful. This highlights the need for the appeal to be dealt with as soon as possible. The order I propose to hand down ought to expedite it. [19] The following order is made: 1 The appeal is upheld. 2 the order of the court below refusing the appellant leave to appeal is set aside and replaced with the following: 6 S v Mthimkulu 2012 (2) SACR 89 (SCA). ‘The appellant is granted special leave to appeal to the Gauteng Local Division, Johannesburg, against the sentence imposed by the Regional Court’; 3 The appellant is directed to deliver her notice of appeal on or before 17 March 2015 based on the findings made in this judgment and containing such further grounds of appeal as may be permitted by the court of appeal. 4 The Director of Public Prosecutions, Gauteng Local Division, is requested to place this appeal on the roll as a matter of urgency on a date to be arranged with the appellant’s counsel. 5 The registrar of this court is requested to make three copies of the record filed in this court available to the appellant’s attorney for use in the appeal to the Gauteng Local Division, Johannesburg, should the Judge President of that division sanction this arrangement. R PILLAY JUDGE OF APPEAL APPEARANCES: FOR APPELLANT: Mr B Roux S C Instructed by: Jan Ellis Attorneys, c/o Smit & Grové, Johannesburg Kramer Weihmann & Joubert , Bloemfontein FOR RESPONDENT: Mr T Zitha Instructed by: The Director of Public Prosecutions, Johannesburg The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 23 March 2015 Status: Immediate 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. Cornelia Strydom v The State The Supreme Court of Appeal (SCA) today upheld an appeal against the dismissal of an application for leave to appeal in the Gauteng Local Division, Johannesburg. The appellant was convicted of 36 counts of fraud. Taking then as one, the Magistrate sitting in Johannesburg, sentenced her to five years imprisonment. The magistrate invoked s 276B of the Criminal Procedure Act and ordered a non-parole period of three years. The appellant was not afforded an opportunity to address the court on that aspect prior to order being made. An application for leave to appeal against the sentence was dismissed by the magistrate. She petitioned the Gauteng Local Division for leave to appeal and this petition was also dismissed. However, that court granted leave to appeal against such refusal to this court. This court found that the failure to afford such an opportunity to the appellant to address the court on the contemplated non-parole order constituted a misdirection and consequently leave to appeal to this court was accordingly granted.

57

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1098/2015 & 206/2016 In the matter between: SAAMWERK SOUTWERKE (PTY) LTD APPELLANT and MINISTER OF MINERAL RESOURCES FIRST RESPONDENT SA SOUTWERKE (PTY) LTD SECOND RESPONDENT Neutral citation: Saamwerk Soutwerke (Pty) Ltd v Minister of Mineral Resources (1098/2015 & 206/2016) [2017] ZASCA 56 (19 May 2017) Coram: Leach, Theron and Van der Merwe JJA and Fourie and Nicholls AJJA Heard: 14 March 2017 Delivered: 19 May 2017 Summary: Delict: claim for damages consisting of pure economic loss: claim against first respondent based on negligent administrative omissions: omissions not wrongful: claim correctly dismissed: claim against second respondent based on fraud: circumstances justified overturning of trial court‟s findings of credibility: fraud established on balance of probabilities: second respondent declared liable. Practice: test for receiving further evidence on appeal: no reasonably sufficient explanation for failure to present evidence in trial court: proposed evidence disputed on substantial grounds and not weighty or material. Prescription: previous proceedings not a step in the enforcement of payment of the same debt: part of claim for payment of damages arising from continuous wrong prescribed. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from Northern Cape Division of the High Court, Kimberley (Lever AJ sitting as court of first instance): 1 The application to receive further evidence is dismissed with costs, including the costs of two counsel. 2 The appeal in respect of the claim against the first respondent is dismissed with costs, including the costs of two counsel. 3 The appeal in respect of the claim against the second respondent is upheld with costs, including the costs of two counsel. 4 The order of the court a quo is set aside and replaced with the following: „(i) The claim against the first defendant is dismissed with costs, including the costs of two counsel. (ii) It is declared that the second defendant is liable to the plaintiff for payment of such damages as the plaintiff may prove that it suffered as a result of being unable to mine salt at Vrysoutpan during the period 6 September 2008 to 25 June 2011. (iii) The second defendant is directed to pay the plaintiff‟s costs in respect of the claim against it, including the costs of two counsel.‟ ______________________________________________________________ JUDGMENT ______________________________________________________________ Van der Merwe JA (Leach and Theron JJA and Fourie and Nicholls AJJA concurring): [1] „Salt is the only rock directly consumed by man. It corrodes but preserves, desiccates but is wrested from the water. It has fascinated man for thousands of years not only as a substance he prized and was willing to labour to obtain, but also as a generator of poetic and mythic meaning. The contradictions it embodies only intensify its power and its links with experience of the sacred‟ – (M Visser: Much Depends on Dinner: The Extraordinary History and Mythology, Allure and Obsessions, Perils and Taboos, of an Ordinary Meal (1986), New York). The desire to obtain salt is illustrated by this appeal, which concerns the right to mine salt on the property known as Portion 146, a portion of Portion 58 of the farm Kalahari-Wes no 251 (Vrysoutpan). [2] During April 2004, the power to grant this right vested in the regional director of the then Department of Minerals and Energy in Kimberley (the regional director), in terms of s 9(1) of the Minerals Act 50 of 1991 (the Minerals Act). The Minerals Act was repealed by the Mineral and Petroleum Resources Development Act 28 of 2002 (the MPRDA), with effect from 1 May 2004. In terms of s 23(1) of the MPRDA the power to grant this right vested in the first respondent, the Minister of Mineral Resources, previously the Minister of Minerals and Energy (the Minister). Over the years the department responsible for the administration of the Minerals Act and the MPRDA had various names. For convenience I refer to it as the Department. [3] On 7 June 2011, the Minister notarially executed a mining right in terms of s 23(1) of the MPRDA in favour of the appellant, Saamwerk Soutwerke (Pty) Ltd (Saamwerk), to mine salt on Vrysoutpan. On that date, however, the second respondent, SA Soutwerke (Pty) Ltd (SA Soutwerke), had been in possession of Vrysoutpan for many years. SA Soutwerke vacated Vrysoutpan on 25 June 2011. Saamwerk maintained that it had been prevented from mining salt on Vrysoutpan for the period of 1 January 2007 to 25 June 2011 by the unlawful conduct of the Department and SA Soutwerke. It consequently sued the Minister and SA Soutwerke in delict for damages consisting of alleged loss of profit suffered over the said period. The court a quo (Lever AJ in the Northern Cape Division of the High Court, Kimberley) ordered that the issues in respect of the quantum of damages stand over for later determination. At the conclusion of the trial, it dismissed Saamwerk‟s claims. It granted leave to Saamwerk to appeal to this court against the dismissal of the claim against the Minister. This court subsequently granted leave to Saamwerk to appeal against the dismissal of the claim against SA Soutwerke. [4] Saamwerk‟s case was that it had been prevented from mining at Vrysoutpan by SA Soutwerke‟s reliance on a forged mining permit. In respect of the Minister, it relied on the refusal or failure of the Department to issue its mining right by December 2006 and to prevent SA Soutwerke from mining at Vrysoutpan. The central issues in the appeal are whether Saamwerk proved fraud on the part of SA Soutwerke and wrongfulness on the part of the Department. The issues must be considered in light of the following background. Background [5] SA Soutwerke extracted salt from Vrysoutpan for many years. Despite the fact that its authority to do so had lapsed on 27 October 1992, it was only on 3 November 2000 that SA Soutwerke applied to the Department for a mining permit in respect of Vrysoutpan in terms of s 9(1) of the Minerals Act. Since the State was the owner of Vrysoutpan and the holder of the mineral rights in respect thereof, the consent of the Minister in terms of s 9(2) of the Minerals Act was a prerequisite for the issue of the mining permit. The application for consent in terms of s 9(2) was approved on 19 August 2002. The regional director was authorised to sign the written agreement with SA Soutwerke in terms of which the consent would be granted. The agreement had already been signed by the managing director of SA Soutwerke on 7 December 2001. Per letter dated 15 January 2003, the Department informed SA Soutwerke that the mining permit would be issued for a period of five years, subject to compliance by SA Soutwerke with specified requirements. This was repeated by the Department in letters dated 13 June 2003 and 19 November 2003. These requirements were met by 22 December 2003. SA Soutwerke therefore expected that a five year permit would be issued to it. [6] On 28 April 2004 the documentation pertaining to SA Soutwerke‟s application served before the regional director for approval and signature. The regional director did not accept the recommendation that the mining permit be issued for a five year period. He decided to grant it only for a period of one year. The regional director then signed and issued mining permit MP169/2003 which authorised SA Soutwerke to mine salt at Vrysoutpan until 27 April 2005. The regional director also signed the aforesaid agreement that constituted the consent of the Minister in terms of s 9(2) of the Minerals Act (the s 9(2) consent). In addition, he signed a standard covering letter that, inter alia, stated that MP169/2003 and the s 9(2) consent were attached thereto. In terms of the practice of the Department and the contents of the standard covering letter, the original MP169/2003 and s 9(2) consent were to be attached thereto. [7] On 22 August 2005, after the expiry of MP169/2003, Saamwerk lodged an application in terms of s 22 of the MPRDA for a mining right in respect of Vrysoutpan. By letter dated 27 September 2006, the Department notified Saamwerk that its application had been granted on condition that a revised social and labour plan be submitted. A draft of the mining right accompanied the letter. It had to be executed before a notary public. [8] Saamwerk submitted a second revised social and labour plan on 6 December 2006. The Department did not raise any objection to this plan nor did it at any stage prior to the execution of the mining right rely on a deficiency in the plan as a reason for not executing the mining right. It is probable that Saamwerk would have been able to correct any such deficiency expeditiously. Had the mining right been executed within a reasonable time as required by s 6 of the MPRDA, so Saamwerk contended, it would have been able to commence mining on Vrysoutpan by 1 January 2007. [9] By that date, however, a storm had erupted over Vrysoutpan. On 16 August 2006, Duncan & Rothman, SA Soutwerke‟s attorneys in Kimberley, wrote to the Department to object to the execution of a mining right in respect of Vrysoutpan. The attorneys stated that SA Soutwerke was the holder of mining permit MP169/2004, dated 28 April 2004. A copy of MP169/2004 was attached to the letter. In terms thereof, SA Soutwerke was authorised to mine salt at Vrysoutpan for an indefinite period, as it contained no expiry date. This was followed by a letter by Duncan & Rothman to the Department dated 1 September 2006 in which it was contended that SA Soutwerke was the lawful holder of a valid mining permit, to wit MP169/2004. According to SA Soutwerke it held an old order mining right in terms of the transitional provisions of the MPRDA, which remained in force for a period of five years, and the mining right in respect of Vrysoutpan had been erroneously granted to Saamwerk. It demanded that the latter‟s mining right be suspended with immediate effect, failing which legal action would be taken. [10] On 6 December 2006, the regional manager of the Department in Kimberley designated in terms of the MPRDA (then Mr Mndaweni) met with representatives of SA Soutwerke. They discussed the contents of the letter of 1 September 2006. By then Mr Mndaweni had found a copy of MP169/2003 in the mineral laws file of the Department pertaining to SA Soutwerke‟s application. The mineral laws file did not contain a copy of MP169/2004. Mr Mndaweni told the representatives of SA Soutwerke that the Department had no record of MP169/2004 and that MP169/2003 had already expired. He handed a copy of MP169/2003 to them. They, in turn, showed him a copy of MP169/2004. Mr Mndaweni indicated that he thought that MP169/2004 was not authentic. He based that view on discrepancies in respect of the date stamps, the absence of an expiry date and that it was not recorded in the permit register of the Department. The permit register for 2004 ended on number 146/2004. [11] Mr Mndaweni approached the Chief Director of the Department in Pretoria, to have the matter investigated. The Chief Director instructed the Deputy Director of Legal Compliance of the Department, Mr Guthrie, to investigate. On 1 March 2007, Mr Mndaweni provided Mr Guthrie with copies of MP169/2003 and MP169/2004. Mr Guthrie called upon SA Soutwerke to produce the original MP169/2004. SA Soutwerke produced the original at a meeting with Mr Guthrie and Mr Mndaweni on 13 March 2007. Mr Guthrie stated that on face value, MP169/2004 was invalid, for want of an expiry date. SA Soutwerke maintained that MP169/2004 was valid and that the absence of an expiry date meant that the mining permit had been granted in perpetuity. [12] Mr Guthrie completed his investigation and submitted a report to the Chief Director. He advised that MP169/2004 was invalid, that MP169/2003 had expired and that SA Soutwerke had no existing right in respect of Vrysoutpan. [13] On 22 March 2007, however, Saamwerk launched an application under case no 292/07 (case 292/07) in the Northern Cape Division, Kimberley. Saamwerk claimed, in essence, an order: (i) declaring that it was entitled to a mining right in respect of Vrysoutpan; (ii) obliging the Minister to execute the mining right; and (iii) declaring that MP169/2004 was invalid. It also claimed interdictory relief against SA Soutwerke based on (iii) above. SA Soutwerke strenuously defended the application. The Department‟s initial reaction to case 292/07 was inconsistent. It gave notice of intention to defend, then withdrew it, but reinstated it on 15 August 2007. [14] On 5 June 2009 the application was referred for oral evidence. During September 2009 the officials of the Department involved in the matter held a meeting and discussed it. These officials included Mr Mndaweni and Mr Swart, who succeeded him as the regional manager in Kimberley during February 2009. They debated the validity of MP169/2004 and although they held divergent views, they resolved that the Department withdraw its opposition of the application. The Department formally withdrew its opposition of the application on 18 September 2009. When the matter came before the court on 22 September 2009, the judge was dissatisfied that the Department would not participate in the hearing. The Department then re-entered its appearance in the matter, not to oppose the relief sought by Saamwerk, but to assist the court with the investigation of the facts. Both Saamwerk and SA Soutwerke were of the view that this was a good idea. [15] Lacock J heard evidence from 12 to 16 October 2009 and on 10 December 2009 gave judgment in favour of Saamwerk. On 15 December 2009, before the mining right to Saamwerk could be executed, SA Soutwerke filed an application for leave to appeal. This application suspended the order of Lacock J. The parties agreed that pending the appeal no mining would take place at Vrysoutpan. Case 292/07 was eventually decided in favour of Saamwerk in this court on 1 June 2011. The judgment of this court is reported as SA Soutwerke (Pty) Ltd v Saamwerk Soutwerke (Pty) Ltd & others [2011] ZASCA 109; [2011] 4 All SA 168 (SCA). As I have said, the mining right was executed on 7 June 2011. The case against SA Soutwerke [16] It is convenient to firstly deal with Saamwerk‟s case against SA Soutwerke. It is clear from what I have said that, after 27 April 2005, SA Soutwerke had no right to mine salt or to remain on Vrysoutpan. Yet it stopped mining on Vrysoutpan only after judgment was handed down in case 292/07 on 10 December 2009 and vacated Vrysoutpan only on 25 June 2011. Saamwerk restricted its case to allegations that SA Soutwerke was complicit in forging MP169/2004 and relied thereon with the knowledge that it had been forged. An important question in this regard is whether SA Soutwerke ever received MP169/2003. I therefore turn to the evidence relevant to this question. [17] Mr Danie van Zyl testified that he was an accountant employed by SA Soutwerke until 31 May 2004. He was involved in complying with the requirements of the application for the mining permit in respect of Vrysoutpan and was interested in the outcome thereof. During the last month of his employment, he became aware that the mining permit had been granted, but only for a period of one year. He never saw the mining permit, but thought that he was informed of the grant and the duration thereof by either Mr Altus van den Heever, SA Soutwerke‟s attorney in Upington, or Mr Andre Blaauw, the managing director of SA Soutwerke. Mr Van Zyl further testified that after he had left SA Soutwerke he had read an article in the Rapport newspaper about it having a forged mine permit. He consequently telephoned his friend, Mr Piet Prins. Mr Prins was the operational manager of the salt processing plant of the Blaauw group of companies (Blaauw Group) in Upington, to which SA Soutwerke belonged, as well as the overhead manager of the salt mining operations of the group. The article was probably the one that appeared in the Rapport on 21 February 2010. Mr Van Zyl stated that he asked Mr Prins about the article. According to him Mr Prins said that he had told Ms Elizma Fourie (an accountant employed in the Blaauw Group) that there was a mining permit and that when she produced it, it was established that the mining permit was not valid and that Ms Fourie had never applied for it to be converted. [18] Mr Corne Zondagh was employed by SA Soutwerke as the manager of the salt mining operation at Vrysoutpan. He reported to Mr Prins. He testified that although his employment contract was signed on 6 October 2006 and stated that his employment would commence on 9 October 2006, he in fact commenced working at Vrysoutpan during August 2006. He said that shortly thereafter, Mr Jalie du Toit of Saamwerk arrived at Vrysoutpan. Mr Du Toit claimed that SA Soutwerke had no valid mining permit to mine at Vrysoutpan and that Saamwerk was the lawful holder of the right to mine there. It is common cause that Mr Du Toit visited Vrysoutpan on or about 30 August 2006. Mr Zondagh conveyed what had happened to Mr Prins, who said that Mr Zondagh should tell Mr Du Toit to leave Vrysoutpan. Mr Zondagh did so. As a result of this incident, Mr Zondagh asked Mr Prins for the mining permit in respect of Vrysoutpan. Mr Prins subsequently handed a one page document to him at Vrysoutpan. Mr Zondagh identified that document as the first page of MP169/2003. He noticed that according to this document it had already expired during 2005. He asked Mr Prins about this, but Mr Prins said that an application for a new permit had been submitted and that the existing permit remained valid until the finalisation of that application. Mr Zondagh testified that he kept the document in his office at his house at Vrysoutpan. At a later stage his housekeeper, Ms Hester Pienaar, reported to him that the station commander of the police station at Noenieput had taken the document. During 2008 he was given a framed colour version of MP169/2004, for display at Vrysoutpan. This was handed to him by Mr Bertus Louw, the administrative manager of the Blaauw Group. [19] At the time the station commander of the Noenieput police station was Warrant Officer P R de Wet Botha, better known as „Rooies‟. He had been stationed at Noenieput for 33 years. He testified that during 2007 he received an affidavit of a Mr G J Hendriksz, in terms of which a charge of illegal mining at Blaauwpan was laid. A company within the Blaauw Group operated a salt mine at Blaauwpan. Mr Hendriksz was an investigator appointed by Saamwerk. Warrant Officer Botha opened a police docket and drove to Blaauwpan to investigate the complaint laid by Mr Hendriksz. There he met a worker by the name of Mr Stoffel Gooi. He enquired about the mining permit in respect of Blaauwpan. Mr Gooi referred him to Mr Zondagh at Vrysoutpan. He proceeded to Vrysoutpan. [20] In his evidence Warrant Officer Botha gave a clear description of the place that he went to at Vrysoutpan. This was the part of the house of Mr Zondagh that was used as his office. Mr Zondagh was not there, so he spoke to Ms Pienaar, whom he assumed to be Mr Zondagh‟s secretary. He asked for the mining permit. Ms Pienaar told him to wait and shortly thereafter appeared with a one page document which she handed to him. He drove a short distance and stopped to examine the document. It was a mining permit in respect of Vrysoutpan. The expiry date at the foot of the page indicated that the permit had expired during 2005. He said that he was 100% certain hereof. He also identified the document as the first page of MP169/2003. He assumed that the permit also pertained to Blaauwpan. He testified that the document thus constituted evidence of illegal mining at Blaauwpan. He therefore continued with the investigation of the complaint. He testified that but for the document obtained at Vrysoutpan, he would have closed the docket. Instead he arranged for photographs to be taken of the mining operations at Blaauwpan. He took a witness statement from a worker, who confirmed that mining took place at Blaauwpan. He drove to Upington ─ a distance of approximately 170 kilometres from Noenieput ─ and obtained a so-called warning statement from Mr Blaauw. He then took the docket to Colonel Van Wyk of the SAPS in Upington. Colonel Van Wyk instructed him to take the docket to the senior state prosecutor in Upington for decision. He did so, but never saw the docket again, as it mysteriously disappeared whilst at the magistrate‟s court in Upington. [21] I now turn to the evidence adduced in rebuttal. Ms Pienaar confirmed that she worked for Mr Zondagh at his house at Vrysoutpan from 2006 to 2010. She denied the evidence of Warrant Officer Botha and Mr Zondagh that she handed a mining permit to Warrant Officer Botha. She said that nothing of the sort happened. Mr Prins confirmed that Mr Zondagh telephoned him about the visit of Mr Du Toit and that he instructed Mr Zondagh to tell Mr Du Toit to leave Vrysoutpan. Mr Prins accepted that this could have taken place on 30 August 2006. However, Mr Prins flatly denied every other piece of evidence concerning him given by Mr Zondagh. He said that he had never spoken to Mr Zondagh about the mining permit, and simply denied the evidence of Mr Van Zyl in respect of the conversation between them. [22] Ms Roelien Oosthuizen worked in the environmental section of the Department in Kimberley. She testified that during 2004 the practice of the Department was to open two files in respect of an application for a mining permit. One file contained mining authorisations and related documents (the mineral laws file). The other contained the environmental management programme in respect of the envisaged mining and related documentation (the rehabilitation file). In the period before 1 May 2004, Ms Oosthuizen telephonically communicated with Mr Van den Heever and his secretary, Ms Rista Boshoff. This had to do with an undertaking that had to be signed by SA Soutwerke. The undertaking was a prerequisite for the approval of the environmental management programme which, in turn, was a prerequisite for the issue of the mining permit. As a result of arrangements made between the three of them, the original undertaking was posted to the Department. Ms Oosthuizen testified that, after 1 May 2004, she had received enquiries from Ms Boshoff, who indicated that the mining permit had not yet been received. After one of these enquiries Ms Oosthuizen went to the section where the files were kept. She took out the SA Soutwerke mineral laws file. She found a bundle of documents consisting of four pages on top of the documents in the file. In terms of the practice of the Department, she regarded the bundle as copies of the originals that had been sent to SA Soutwerke. The first two pages consisted of a copy of a standard covering letter to an applicant. The other two pages consisted of a copy of a mining permit. The covering letter referred to MP169/2003. Ms Oosthuizen was, however, unable to say what permit was part of the bundle of documents. Ms Oosthuizen testified that she made photostat copies of the four pages. The photostat machine caused a vertical light printed section on each page. She returned the bundle of documents to the mineral laws file. She wrote the words „Attention: Rista‟, as well as the fax number that Ms Boshoff provided, on the first page of the copy of the covering letter, and faxed the four pages to the given fax number. [23] Ms Oosthuizen testified that she thereafter filed the photostat copies that she had made in the rehabilitation file. These documents were subsequently found in the rehabilitation file and introduced in the court a quo, as exhibit C14. The first page of C14 (the covering letter) referred to MP169/2003, but the third page of C14 was a copy of the first page of MP169/2004. Ms Oosthuizen could not explain why only a copy of MP169/2003 was subsequently found on the mineral laws file. She testified that the post register of the Department reflected that a document had been sent by registered post to Duncan & Rothman on 19 May 2004. [24] Ms Boshoff confirmed in evidence that she had contact with Ms Oosthuizen in respect of SA Soutwerke‟s application for a mining permit. In this regard she referred to her contemporaneous file notes. She made notes of various telephonic conversations with the Department up to and including 23 April 2004. The next note was made on 20 May 2004. It read that Ms Boshoff had called Ms Oosthuizen; that according to Ms Oosthuizen the permit had been signed and issued a considerable time ago; and that they had sent it per registered post to the address as on the application for the mining permit.1 The application was sent to the Department under cover of a letter of Duncan & Rothman, but the address on the application was that of SA Soutwerke, Private Bag X6009, Upington. According to a further note, Ms Oosthuizen returned a call on 14 June 2014 and said that the permit had been sent to Duncan & Rothman and that she would fax papers to the attorneys before 13h00 on the same day. On 14 June 2014 Ms Boshoff received a four page faxed document. In accordance with her practice, Ms Boshoff punched a single hole through the top left-hand side of the pages. She handed them to 1 „Volgens haar is die permit al „n geruime tyd terug onderteken en uitgereik. Hulle het dit per geregistreerde pos gestuur na die adres soos op die Aansoek.‟ Mr Van den Heever. Ms Boshoff had no independent recollection of the contents of the faxed pages. [25] Mr Altus van den Heever testified that he practised as an attorney under the name Wessels & Smith in Upington. He acted for the Blaauw Group and SA Soutwerke since 1997. He was involved in the application for the mining permit in respect of Vrysoutpan. Both he and SA Soutwerke were aware thereof that the MPRDA would commence on 1 May 2004. He testified that his client placed considerable pressure on him to procure the permit. During April 2004 he and Ms Boshoff contacted the Department virtually on a daily basis. This contact was mainly with Ms Oosthuizen, as the last outstanding matter was the original undertaking required for the environmental management programme. This was posted to the Department on 23 April 2004. This was also the date of the last contact that his office had with the Department prior to 28 April 2004. [26] Mr Van den Heever said that he had received a telephone call from Ms Oosthuizen on 28 April 2004. She told him that the mining permit had been issued. Mr Van den Heever testified that he had received the fax from Ms Boshoff on 14 June 2004. He confirmed that it had included a copy of MP169/2004, even though he noticed that the covering letter made reference to MP169/2003. He only made a copy of the first two pages of the fax (the covering letter), but later sent that to Duncan & Rothman, with his letter dated 17 June 2004. He drove to the offices of SA Soutwerke and handed the fax to Mr Arrie Bester, the financial manager of the Blaauw Group. Mr Van den Heever did not keep a copy of the fax in his files. He denied the evidence of Mr Van Zyl and said that he had never spoken to him about the mining permit. [27] Mr Van den Heever‟s letter to Duncan & Rothman dated 17 June 2004, to which copies of the first two pages of the fax were attached, stated that after a big struggle2 they had ascertained that the mining permit and the s 9(2) consent had been sent to Duncan & Rothman on 28 April 2004, as appeared 2 „‟n groot gesukkel‟. from the attachment. That the documents were sent to Duncan & Rothman on 28 April 2004 was an assumption not justified by the covering letter. In the letter Duncan & Rothman was requested to urgently provide the original mining permit and s 9(2) consent per docex. Mr Van den Heever testified that in response hereto, he received, per docex, a letter from Duncan & Rothman dated 23 July 2014 as well as the original covering letter and the original MP169/2004. Notably, the s 9(2) consent was not included. He testified that except for the fact that the two pages of the original MP169/2004 were stapled together, they were in pristine condition, with no perforations and no punch holes. He had personally delivered the original covering letter and original MP169/2004 at the offices of SA Soutwerke. A date stamp on the covering letter indicated that the original documents had been received by Duncan & Rothman on 25 May 2004. Mr Van den Heever later received the original MP169/2004 from Mr Louw, for purposes of the examination thereof by Saamwerk‟s expert, which took place on 4 June 2008. [28] A curious feature of the matter is that neither the fax received by Wessels & Smith on 14 June 2004, nor C14, were discovered in case 292/07. Mr Van den Heever testified that after the Minister discovered C14 in the present matter, he recalled that he had handed the fax to Mr Bester. He testified that he then searched for and found it in the files of SA Soutwerke, which led to its discovery in this matter. This document was handed in at the trial as exhibit C10. It corresponded in all respects with C14, except that the foot of each page of C10 reflected a fax machine imprint. These imprints indicated that the four pages had been received on 14 June 2004 at 10h43. [29] Saamwerk presented the evidence of an expert examiner of questioned documents, Mr Hattingh. Initially he only compared copies of MP169/2003 and MP169/2004. Both consisted of two printed pages. The second page of each was identical. Mr Hattingh concluded that they were without doubt copies of the same document. Each contained the signature of the regional director, below the handwritten date 28 April 2004 inserted in the spaces provided for that purpose. The first page of each was a copy of a document that had been printed on an official letterhead of the Department. However, they differed markedly in respect of the positioning of the date stamp in the block provided for that purpose, the positioning of the printing on the letterhead and the form of the printing. Notably, the following was printed at the foot of the first page of MP169/2003: „Tensy hierdie permit opgeskort, ingetrek of opgesê word of verval, is dit geldig vir „n tydperk wat strek vanaf die datum van uitreiking tot . . ..‟ This was followed by a block containing the date stamp „2005-04-27‟. None of this appeared on MP169/2004. [30] Subsequently, on 4 June 2008, Mr Hattingh examined the original of MP169/2004. He observed that the first page thereof was printed with an inkjet printer on what appeared to be an authentic colour lithographic letterhead of the Department. The paper of the letterhead was of a different colour and thickness than the second page. The second page was printed on ordinary printing paper by means of a laser printer. Mr Hattingh observed that the first and second pages had corresponding staple or pin perforations, which indicated that they had at some stage been stapled or pinned together. However, the first page had perforations not corresponding with that on the second page, which indicated that the first page had on at least four occasions been attached to a document that was not the second page of MP169/2004. Also, perforations on the second page that did not appear on the first page, demonstrated that the second page had once been attached to a document other than the first page of MP169/2004. The second page also had two punch holes through it, whereas the first page had none. Application to receive further evidence [31] It is appropriate, at this stage, to consider Saamwerk‟s application to adduce further evidence by Mr Hattingh. The application was filed in this court on 4 February 2016, after leave to appeal against the dismissal of Saamwerk‟s claim against the Minister had been granted on 28 October 2015. [32] The gist of the proposed new evidence of Mr Hattingh is the following. During January 2016 he received C10 and C14 for examination. He observed the vertical light printed portions on each page of C10. This corresponded with the light printed portions on each of the pages of C14. (It will be recalled that Ms Oosthuizen testified that the photostat machine caused such light printed portions on the copies that she made on 14 June 2004.) The vertical light printed portion of the third page of the fax C10 (the first page of the mining permit) differed from that of the other three pages, in respect of both alignment and quality. The vertical light printed portion on the third page was positioned lower and more to the right than on the other pages. In respect of quality, the light printed portion on the third page was less affected than on the other pages. Only the lower part of the third page was affected and even there the printing was clearer than on the other pages. As a result of the misalignment and difference in quality of the light printed portion of the third page of C10, Mr Hattingh‟s opinion is firstly that the third page was not copied together with the other pages thereof. His second opinion is that the pages of C10 were not continuously kept as one unit. This is based on the fact that the third and fourth pages of C10 were stapled one more time than the first and second pages thereof, as well as on indentations on the first and second pages that do not occur on the third and fourth pages. [33] In terms of s 19(b) and (c) of the Superior Courts Act 10 of 2013, this court has the power to receive further evidence or to remit the case to the court a quo for that purpose. Our courts have, however, over many years made clear that in the interest of finality and to avoid tailoring of evidence and prejudice to the other party, this power should be exercised sparingly and only in exceptional circumstances. Whilst holding that it is undesirable to lay down definite rules, the courts have laid down two basic requirements for such an application. First, there must be a reasonable explanation for the failure to present the evidence in time. Secondly, the evidence must be weighty, material and presumably to be believed. In Colman v Dunbar 1933 AD 141 at 162 Wessels CJ said that the evidence „must be such that if adduced it would be practically conclusive, for if not, it would still leave the issue in doubt and the matter would still lack finality‟. See also S v De Jager & another 1965 (2) SA 612 (A) at 613A-F and Rail Commuters Action Group & others v Transnet Ltd t/a Metrorail & others 2005 (2) SA 359 (CC) paras 41-43. Evidence that is disputed on substantial grounds will of course not meet the second requirement. The Minister and SA Soutwerke opposed the application on the basis that it failed to meet both these requirements. [34] I therefore turn to the question whether Saamwerk offered a reasonably sufficient explanation for not adducing this evidence in the court a quo. C10 was discovered by SA Soutwerke on 20 August 2013. The services of Mr Hattingh were readily available to Saamwerk. The notice and summary of his expert evidence was delivered on 23 August 2013. The trial commenced on 26 August 2013, but was postponed five days later when Saamwerk was presenting the evidence of Mr Hendriksz. The trial resumed on 5 May 2014. On that day, SA Soutwerke put its case in respect of the receipt of C10 to Mr Hendriksz. Mr Hattingh testified on 3 November 2014 and Mr Van den Heever from 3 to 6 November 2014. The evidence was concluded on 11 November 2014. Argument was heard during February 2015 and judgment was handed down on 24 April 2015. There was thus ample opportunity for Saamwerk to inspect C10 and to obtain and present the further evidence of Mr Hattingh. Even if one accepts Saamwerk‟s contention that the significance of C10 only became apparent during the evidence of Mr Van den Heever, approximately five months passed before judgment was delivered. During this period Saamwerk could have procured the evidence and applied to re-open its case. That the court file was with the trial judge in chambers during this period, is no excuse. Clearly the attorneys of Saamwerk could have arranged for an inspection of C10. I find that Saamwerk did not provide a reasonably sufficient explanation for the failure to adduce the further evidence in the court a quo. [35] In opposing this application, SA Soutwerke relies on an affidavit and report of its own expert, Mr Landman. In answer to Mr Hattingh‟s first opinion, Mr Landman states that he found microscopic vertical white lines running through the typescript and signatures on all four pages of C14. These thin lines were caused by the photostat machine by which C14 was created. He says that it would have been impossible to reproduce these microscopic lines with such precision. Mr Landman‟s opinion is that this provides conclusive proof that all four pages of C14 were copied on the same machine and therefore in all probability at the same time. In reply Mr Hattingh acknowledged the presence of these thin lines and accepted this conclusion. According to Mr Landman his conclusion is supported by the close similarity in the grain and colour of the four pages of C14. He states that the difference in the quality of the vertical light printed portion of the third page of C14 is too slight to justify any conclusion and that the misalignment thereof could have been caused by a slightly skew placement of the third page on the bed of the photostat machine. Once the four pages are properly aligned with each other, the alignment of the vertical light printed portions materially corresponds. According to SA Soutwerke, C10 was created when C14 was faxed to Wessels & Smith. It is clear that Mr Hattingh‟s opinion that the third page of C10 was not copied together with the other pages thereof, is disputed on substantial grounds and is open to serious question. [36] I fail to see the relevance of Mr Hattingh‟s second opinion. That the third and fourth pages of C10 were stapled once more than the first and second pages thereof, does not appear to have any particular significance. Mr Hattingh‟s second opinion is in any event also disputed by Mr Landman on substantial grounds. He says that because of the number of staple perforations on C10 and the resultant damage to the paper, it is not possible to say with any measure of certainty that the third and fourth pages of C10 have one additional set of staple perforations. He also says that he conclusively found by microscopic investigation that the indentations that Mr Hattingh found on the first and second pages of C10, do indeed occur on the third page thereof. [37] In sum, there is no reasonably acceptable explanation for the failure to present the new evidence in the court a quo and the evidence cannot be said to be weighty, material and to be believed. It follows that the application to receive further evidence must fail. Analysis of the evidence [38] It is trite that an appellate court is reluctant to upset findings of credibility and fact of a trial court. This is so mainly because the trial court had the advantages of seeing and hearing the witnesses and of being steeped in the atmosphere of the trial. The advantages of the trial court must, however, not be overemphasised, because that may render the appellant‟s right of appeal „illusory‟. The findings of the trial court in respect of credibility and fact will thus be disturbed if they are plainly wrong. See R v Dhlumayo & another 1948 (2) SA 677 (A) at 706, Protea Assurance Co Ltd v Casey 1970 (2) SA 643 (A) at 648 D-E and Santam Bpk v Biddulph 2004 (5) SA 586 (SCA) para 5. [39] There is no reason to doubt the evidence of Ms Oosthuizen and Ms Boshoff. The court a quo made no pertinent credibility findings in respect of Mr Prins and Mr Van den Heever. This court is therefore at large to determine the credibility and reliability of their evidence as far as it is possible to do so on record. The evidence of Mr Hattingh was not disputed. [40] However, the court a quo found Mr Zondagh‟s evidence to be of a very poor quality and inherently unreliable. The court a quo preferred the evidence of Ms Pienaar over that of Warrant Officer Botha. It said that Ms Pienaar‟s evidence was more probable and more reliable. The trial court also did not accept the evidence of Mr Van Zyl. It said that Mr Van Zyl‟s evidence as to how he came to know that the mining permit had been granted for a period of a year „was too vague‟ to be given any real evidential weight, and that his evidence in respect of his telephonic conversation with Mr Prins was improbable. [41] It is true that Mr Zondagh confused dates and mixed up the chronology of events. However, it must be kept in mind that he testified during 2014 about events that took place during 2006 and 2007. A reading of his evidence as a whole paints a sufficiently clear picture that the chain of events he described was triggered by the visit of Mr Du Toit to Vrysoutpan. There can be no criticism of the substance, as opposed to the dates and chronology, of his evidence and it is supported by the probabilities. It is probable in the extreme that the visit of Mr Du Toit would have raised the question as to what could or should be done to show that SA Soutwerke was entitled to mine at Vrysoutpan. [42] The trial court criticised Warrant Officer Botha for only mentioning during cross-examination that he had first gone to Blaauwpan before he went to Vrysoutpan. But this is typical of the type of detail that may only emerge during cross-examination. This was moreover not disputed in cross- examination or in evidence. The criticism of Warrant Officer Botha on this issue was wholly unjustified. [43] The court a quo was also troubled by the fact that Warrant Officer Botha simply assumed that the mining permit also pertained to Blaauwpan and performed „a perfunctory investigation‟. It criticised Warrant Officer Botha for not informing the Witdraai police about the mining permit that he had confiscated, after he heard that they were investigating illegal mining at Vrysoutpan. I am prepared to accept that these aspects impacted on the credibility of Warrant Officer Botha. But they mostly relate to peripheral matters and are overwhelmed by the probabilities. These are that Warrant Officer Botha would only continue with his investigation, and drive all the way to Upington with the docket, if he did in fact believe that MP169/2003 pertained also to Blaauwpan and had seen that it had expired. As Warrant Officer Botha said, because of the distances and heat in the Kalahari, no one in his right mind would undertake such an unnecessary journey. There is more than a ring of truth to that statement. [44] To my mind, the decisive consideration is this. Mr Zondagh and Warrant Officer Botha are not highly sophisticated people. Mr Zondagh was a truck driver for the Blaauw Group before he became the manager at Vrysoutpan. It is not difficult to understand that this is why Warrant Officer Botha came to be stationed at Noenieput in the Kalahari for 33 years. Both Mr Zondagh and Warrant Officer Botha bear the hallmark of being the salt of the earth. Both testified that they had the first page of MP169/2003 in their hands. There is no room for honest mistake on their part. Counsel was constrained to argue that both had fabricated their evidence. What is more, on SA Soutwerke‟s case, Mr Zondagh and Warrant Officer Botha must have conspired to put forward this fabricated version. But there was no conceivable reason for them doing so. The undisputed evidence of Warrant Officer Botha was that he did not know Mr Zondagh. Neither had anything to gain or to lose. It is clear that the court a quo had no appreciation of these critical factors. [45] In light of what I have said, the denials of Ms Pienaar and Mr Prins cannot stand. As the court a quo recognised, Ms Pienaar‟s evidence was „not without its flaws‟. She denied the evidence of Warrant Officer Botha with the same firmness that she denied the objectively established facts that a framed copy of MP169/2004 hung on the wall of Mr Zondagh‟s office and that Warrant Officer De Koker of the Witdraai police station visited Vrysoutpan in respect of the mining permit. Apart from accepting that Mr Zondagh called him about the visit of Mr Du Toit and that that could have taken place on 30 August 2006, Mr Prins denied every other piece of evidence of Mr Zondagh and Mr Van Zyl, irrespective of whether the evidence was important or not. He did so in an unconvincing manner. It is apparent that he consciously attempted in evidence to distance himself as far as possible from the events in question. The evidence of Mr Van Zyl in respect of the telephone call to his friend after the newspaper report, cannot be a figment of his imagination. Although, as I have said, the trial court found his evidence on this issue to be improbable, it was to my mind the converse. Not only does it have the inherent ring of truth but is supported by the existence of the newspaper article relating to SA Soutwerke mining without a valid permit. [46] I am therefore satisfied that on the totality of the evidence, Mr Prins cannot be believed. The pedantic evidence of Mr Louw that it is impossible that Mr Zondagh could have been working on Vrysoutpan before the commencement date of his employment contract, is clearly not acceptable. I agree that the evidence of Mr Van Zyl that the mining permit had been issued for a period of a year could, on its own, not carry much weight. In the light of the evidence of Mr Zondagh and Warrant Officer Botha it is, however, not without significance. Although Mr Van den Heever denied that he conveyed this to Mr Van Zyl, Mr Blaauw, one of the persons whom Mr Van Zyl thought could have told him about the permit, did not testify. [47] The evidence of Mr Van den Heever that he received a call from Ms Oosthuizen on 28 April 2004 when she reported that the mining permit had been issued, cannot be accepted. Ms Oosthuizen did not recall such an incident. Mr Van den Heever mentioned it only in cross-examination, when he was asked about the fact that despite the extreme pressure to obtain a mining permit, nothing happened between 23 April 2004 and 20 May 2004. When he first mentioned this, he did so tentatively. He said: „Ek het nie „n nota daarvan nie, maar ek wil dit onthou dat sy vir my geskakel het die 28ste en bevestig het dat die permit uitgereik is.‟ and: „Edele soos wat ek reeds vir u gesê het, ek het nie „n nota daaroor nie, maar ek wil dit hê dat die 28ste inderdaad bevestig is aan my dat die permit uitgereik is.‟ Mr Van den Heever thus conveyed that he seemed to remember or would have it that he received the call. In his later evidence, however, he inexplicably became quite certain about this. The fact is that he meticulously made notes in respect of matters far less important than the good and important news that the mining permit had at long last been issued. The absence of a note in respect of the alleged call from Ms Oosthuizen strongly indicates that it did not take place. If he did receive this call, Mr Van den Heever would have contacted SA Soutwerke without delay and would probably clearly remember doing so. Instead, he first said that he did not report this to his client and later that he would have but did not recall it. The evidence of this call is also inconsistent with Ms Boshoff‟s note of 20 May 2004 as well as Mr Van den Heever‟s own letter of 24 May 2004. In this letter to SA Soutwerke he said: „Ons verwys na bostaande aangeleentheid en het ons op 20 Mei 2004 van die Departement verneem dat die permit reeds uitgereik is en dat dit per geregistreerde pos aan u kantore versend is.‟ [48] Mr Van den Heever was the only witness who said that when the fax had been received on 14 June 2004, it contained a copy of MP169/2004. Mr Bester, to whom he had allegedly handed the fax, did not testify. Mr Van den Heever gave no reason for specifically remembering this after all the years and I find it improbable that he could do so. It will be recalled that Mr Van den Heever did not keep a copy of the fax and only remembered it nine years later, during August 2013. In evidence, Mr Van den Heever was prone to confirm matters in absolute terms which he was in fact unable to verify, such as that SA Soutwerke never received MP169/2003 and that MP169/2004 was not forged. The danger of reconstruction in regard to this part of his evidence is so great that I have no confidence therein. We simply do not know whether copies of MP169/2003 or MP169/2004 were part of the fax received on 14 June 2004. [49] For the same reason, I do not accept the evidence that Mr Van den Heever received the original MP169/2004 in pristine condition. One set of staple perforations and one set of punch holes, both on the second page thereof, could easily have been missed. He did not say to whom he handed the original at SA Soutwerke and could not say whether it had punch holes when he handled it for purposes of examination by Mr Hattingh. Mr Van den Heever‟s evidence does not bar a finding that SA Soutwerke received MP169/2003. That, after all, was the permit that was validly issued; which would according to Ms Oosthuizen have been sent with the s 9(2) consent to the address on the application; and a copy of which was kept on the mineral laws file. All of this, of course, does not mean that Mr Van den Heever was involved in or knew about the creation of MP169/2004. [50] That Mr Prins gave a copy of the first page of MP169/2003 to Mr Zondagh shows that it is more probable than not that SA Soutwerke was in possession of the original. It is not possible or necessary to determine exactly when and how SA Soutwerke received the original of MP169/2003. Once it had been received, the second page thereof must have been used as the second page of the forged MP169/2004. This follows from the evidence of Mr Hattingh. The first and second pages of the original MP169/2004 had been created separately. The second page thereof, which was exactly the same as the copy of the second page of MP169/2003, had been separated from the first page and had been attached to one document which was not the first page of MP169/2004. The evidence of punch holes through only the second page of MP169/2004, is telling. [51] Thus there is no room for an „innocent‟ explanation of MP169/2004 and I need not discuss the hypothetical innocent explanation raised at the trial. I agree with counsel for Saamwerk that the probabilities are overwhelming that SA Soutwerke, with assistance from within the Department, was complicit in forging MP169/2004 and that its reliance on MP169/2004 was fraudulent. It cannot be doubted that this conduct was wrongful and caused Saamwerk to be deprived of the right to mine at Vrysoutpan. Prescription [52] It remains to deal with SA Soutwerke‟s plea of prescription. The summons was served on SA Soutwerke on 6 September 2011. The debt claimed by Saamwerk is based on what should in my view be classified as a continuous wrong committed by SA Soutwerke, in contrast to a single wrongful act. SA Soutwerke continuously caused Saamwerk to be deprived of the right to mine at Vrysoutpan. Such continuous wrong gives rise to a series of debts arising from moment to moment or day to day. See Barnett & others v Minister of Land Affairs & others 2007 (6) SA 313 (SCA) paras 20-21. It was not suggested that the running of prescription had not commenced on 1 January 2007. Therefore, unless the running of prescription was interrupted, that part of the debt that arose prior to 6 September 2008 would have prescribed. [53] Saamwerk contends that the running of prescription was interrupted in terms of s 15 of the Prescription Act 69 of 1969, by the service of the application in case 292/07. This contention raises the question whether case 292/07 could properly be described as a process whereby Saamwerk claimed payment of the same debt that it claimed in the present action. [54] Saamwerk relies on the judgment in Cape Town Municipality & another v Allianz Insurance Co Ltd 1990 (1) SA 311 (C). In Peter Taylor & Associates v Bell Estates (Pty) Ltd & another 2014 (2) SA 312 (SCA) [2013] ZASCA 94, this Court uncritically referred to Allianz. It summarised the facts and issue in Allianz in the following terms (para 8): „That case concerned two consolidated actions, the essential relief claimed by each plaintiff being an order declaring that Allianz was liable to indemnify the plaintiffs in terms of an insurance policy in respect of all loss or damage suffered as a result of two storms. The issue for determination was whether service of a process whereby the creditor claimed a declaratory order that the debtor was liable to indemnify it, rather than a claim for payment of a debt, interrupted the running of prescription. Howie J stated (at 334H-I): “1. It is sufficient for purposes of interrupting prescription if the process to be served is one whereby the proceedings begun thereunder are instituted as a step in the enforcement of a claim for payment of a debt. 2. A creditor prosecutes his claim under that process to final, executable judgment, not only when the process and the judgment constitute the beginning and end of the same action, but also where the process initiates an action, judgment in which finally disposes of some elements of the claim, and where the remaining elements are disposed of in a supplementary action instituted pursuant to and dependent upon that judgment.”‟ [55] Howie J reasoned that further proceedings to exact payment from the defendant pursuant to a declaratory order that the defendant was liable to indemnify the plaintiffs, would cover the elements of the plaintiffs‟ claim other than the issue of liability. The issue of the liability of the defendant to indemnify the plaintiffs would be res judicata when the declaratory order is made. Thus the cause of action in the proceedings for the declaratory order would be the same cause of action upon which the supposed further litigation would be based. The declaratory order establishing liability to indemnify would be inextricably linked to the final executable judgment, notwithstanding that the latter would require separate proceedings. Therefore the actions for the declaratory order were steps in the enforcement of the plaintiffs‟ right to indemnity, that is to get the defendants to implement the indemnity. [56] In my view, Saamwerk‟s case does not fall within the parameters of Allianz. What was claimed in case 292/07 was a declaratory order that Saamwerk was entitled to a mining right in respect of Vrysoutpan, an order obliging the Minister to execute the mining right and a declaratory order that MP169/2004 was invalid, with consequential interdictory relief. Case 292/07 was essentially aimed at obtaining the mining permit. It did not encompass any of the elements of Saamwerk‟s subsequent delictual action, that is, fraudulent and wrongful conduct that caused damages. None of the elements of the delictual cause of action were res judicata as a result of the judgment in case 292/07. The notice of motion in case 292/07 cannot, in my view, be regarded as a step in the enforcement of the delictual claim for payment of damages. I therefore conclude that the plea of partial prescription must succeed. [57] For these reasons I conclude that SA Soutwerke is liable for such damages as Saamwerk may prove that it suffered as a result of being unable to mine salt at Vrysoutpan during the period from 6 September 2008 to 25 June 2011. The case against the Minister [58] It is necessary to state at the outset what Saamwerk‟s case against the Minister was not. It was not that the Department was complicit in forging MP169/2004, despite the fact that this must have happened. This was clearly confirmed by counsel for Saamwerk at the trial during argument on an objection by counsel for the Minister that Saamwerk had deviated from its pleadings in this regard. Departure from the pleaded case on appeal would seriously prejudice the Minister and is impermissible. Complex questions as to the vicarious liability of the Minister for dishonest conduct of an official of the Department were, for instance, not canvassed at all at the trial. [59] The pleaded case against the Minister was that the Department wrongfully, with malicious intent and dishonestly (onregmatig, kwaadwillig, opsetlik en oneerlik), alternatively negligently, refused or failed either to execute Saamwerk‟s mining right by the end of December 2006 or to prevent SA Soutwerke from mining unlawfully at Vrysoutpan. Properly analysed, the conduct of the Department relied upon would constitute nothing other than those two administrative omissions. These omissions (the omissions) are two sides of the same coin and could conveniently be taken together. [60] Saamwerk‟s claim for the compensation of loss of profit is one for pure economic loss. The element of wrongfulness is therefore of particular importance. The principles applicable to wrongfulness in the context of causation of pure economic loss, are well developed. The causation of pure economic loss is not prima facie wrongful. Whether causation of pure economic loss is wrongful, depends on whether considerations of public and legal policy, consistent with the Constitution, require that a delictual claim be afforded. This involves a value judgment based on judicial evaluation of the policy considerations relevant to the particular case. An incorrect administrative act or omission causing pure economic loss is thus not per se wrongful, but dishonest or mala fide administrative conduct will generally be wrongful. See Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para 1, 2, 13 and 32; Minister of Finance & others v Gore NO 2007 (1) SA 111 (SCA) para 82 and 87-88; Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121 (CC) para 37-42; Country Cloud Trading CC v MEC, Department of Infrastructure Development 2015 (1) SA 1 (CC); [2014] ZACC 28 para 21-26. I now turn to the question whether the relevant considerations of public and legal policy in this case require that the Minister be held liable for damages resulting from the omissions. [61] An important consideration of legal policy is that ordinarily public law wrongs attract public law remedies and not private law remedies. See Steenkamp paras 29-30. In the instant matter, Saamwerk had public law remedies at its disposal. It could, for instance, have instituted proceedings to review the refusal to execute the mining right in terms of s 6(2)(g) of the Promotion of Administrative Justice Act 3 of 2000 read with the definition of „decision‟ in s 1 thereof. Importantly, Saamwerk had the public remedies that it actually enforced in case 292/07, namely a declaratory order that it was entitled to the mining right, an order obliging the Minister to execute the mining right, and an order declaring MP169/2004 to be invalid. [62] An important linked consideration is that the law of delict provided Saamwerk with a private law remedy to recover the loss in question. As this judgment finds, SA Soutwerke is liable to make good the loss. It is Saamwerk‟s own doing that caused prescription to extinguish a part of the loss that could be recovered from SA Soutwerke. Thus, there is no pressing consideration of public policy which require that the law be extended to allow a private law remedy to recover the loss from the Minister. [63] The omissions did not involve any dishonesty or bad faith. We have not been referred to any case where an incorrect administrative act or omission was found to be wrongful in the absence of dishonesty or bad faith. In South African Post Office v De Lacy & another 2009 (5) SA 255 (SCA), the incorrect award of a tender was found not to be wrongful as no dishonesty was involved. In Gore the dishonesty involved in the fraudulent award of a tender constituted a decisive consideration on which the finding of wrongfulness was based. I do not say that an incorrect administrative act or omission will never be wrongful in the absence of dishonesty or mala fides. However, dishonesty or mala fides in respect of administrative conduct is a weighty consideration of public policy in favour of a finding of wrongfulness, which consideration is absent in the present matter. [64] Public and legal policy sometimes require that the plaintiff be compensated for pure economic loss only in the event of an intentional wrong. See Media 24 Ltd & others v SA Taxi Securitisation (Pty) Ltd [2011] ZASCA 117; 2011 (5) SA 329 (SCA) para 12; Roux v Hattingh [2012] ZASCA 132; 2012 (6) SA 428 (SCA) para 38-40; Country Cloud paras 39-40. This cued counsel for Saamwerk to argue that the Department took a deliberate decision not to execute the mining right and that fault in the form of intent (dolus), as opposed to negligence (culpa), was present. This is not correct. Fault refers to the legal blameworthiness of wrongful conduct. In delict, fault in the form of intent is present only if the person intended to bring about the particular result that he or she caused. The person‟s will must have been directed at the result caused. There is no basis for finding that the Department intended to cause damages to Saamwerk by delaying the execution of the mining right. At best for Saamwerk, the omissions were negligent, but it is not necessary to determine this distinct and separate issue. [65] In my view the considerations that weigh most heavily against the imposition of liability on the Minister, arise from the particular facts of the matter. As I have said, the omissions occurred during the period from the end of December 2006 to 7 June 2011. Mr Mndaweni became the regional manager of the Department in Kimberley with effect from 1 February 2005. He had no personal knowledge of the issue of a mining permit to SA Soutwerke. He first became aware of MP169/2004 during August 2006. SA Soutwerke threatened the Department with litigation shortly thereafter, in September 2006. Mr Mndaweni met with SA Soutwerke during December 2006 and determined that it was seriously contended that only it had a valid right to mine salt at Vrysoutpan. He approached the Chief Director to have the tricky question of the validity of the competing claims to Vrysoutpan investigated. She instructed Mr Guthrie to conduct the investigation. During or about March 2007 Mr Guthrie concluded that MP169/2004 was invalid and that SA Soutwerke had no right to mine salt at Vrysoutpan. He reported this to the Chief Director. Given the complexities of the matter, it is rightly not contended that the investigation was not concluded expeditiously. However, more or less at the same time, Saamwerk instituted case 292/07, which was opposed by SA Soutwerke. This made Saamwerk‟s mining right and the validity of MP169/2004 the direct subjects of the proceedings in case 292/07. [66] After its initial prevarication, the Department formally withdrew its opposition to Saamwerk‟s application before the hearing of evidence in case 292/07. No doubt the Department‟s initial inconsistent conduct in case 292/07 had no effect on SA Soutwerke‟s opposition. With the approval of Saamwerk, the Department thereafter participated in case 292/07 only to assist the court. From then on the matter remained before the courts only at the instance of SA Soutwerke. The policy of the Department was not to finalise a mining right whilst litigation was pending regarding the validity of that right. It was in my view perfectly in keeping with public and legal policy not to undermine the legal process by determining that which the courts were called upon to decide. [67] In my view, policy and legal considerations do not regard the omissions as unlawful conduct. In the circumstances they do not require the imposition of delictual liability on the Minister. As Saamwerk failed to prove that the omissions were wrongful, its claim against the Minister must fail. [68] In the result the following order is issued: 1 The application to receive further evidence is dismissed with costs, including the costs of two counsel. 2 The appeal in respect of the claim against the first respondent is dismissed with costs, including the costs of two counsel. 3 The appeal in respect of the claim against the second respondent is upheld with costs, including the costs of two counsel. 4 The order of the court a quo is set aside and replaced with the following: „(i) The claim against the first defendant is dismissed with costs, including the costs of two counsel. (ii) It is declared that the second defendant is liable to the plaintiff for payment of such damages as the plaintiff may prove that it suffered as a result of being unable to mine salt at Vrysoutpan during the period 6 September 2008 to 25 June 2011. (iii) The second defendant is directed to pay the plaintiff‟s costs in respect of the claim against it, including the costs of two counsel.‟ __________________ C H G van der Merwe Judge of Appeal Appearances For the Appellant: W R E Duminy SC (with him J C Tredoux) Instructed by: Haarhoffs Inc, Kimberley Honey Attorneys, Bloemfontein For the First Respondent: W Trengove SC (with him H J L Vorster) Instructed by: State Attorney, Kimberley State Attorney, Bloemfontein For the Second Respondent: S J Grobler SC (with him J L Gildenhuys) Instructed by: Wessels & Smith Inc, Upington McIntyre & Van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 19 May 2017 Status: Immediate 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 SAAMWERK SOUTWERKE (PTY) LTD V MINISTER OF MINERAL RESOURCES (1098/2015 & 206/2016) [2017] ZASCA 56 1. On 7 June 2011, the first respondent in this appeal, the Minister of Mineral Resources (the Minister), issued a mining right in terms of s 23(1) of the Mineral and Petroleum Resources Development Act 28 of 2002 in favour of the appellant, Saamwerk Soutwerke (Pty) Ltd (Saamwerk). The mining right authorised Saamwerk to mine salt on the property known as Portion 146, a portion of Portion 58 of the farm Kalahari-Wes no 251 (Vrysoutpan). On that date, however, the second respondent, SA Soutwerke (Pty) Ltd (SA Soutwerke), had been in possession of Vrysoutpan for many years. SA Soutwerke vacated Vrysoutpan on 25 June 2011. 2. In an action instituted in the Northern Cape Division of the High Court, Kimberley, Saamwerk claimed payment of damages from the Minister and SA Soutwerke. Saamwerk maintained that it had been prevented from mining salt at Vrysoutpan from 1 January 2007 to 25 June 2011 by the unlawful conduct of the Minister and of SA Soutwerke. Saamwerk alleged that it had been so prevented by SA Soutwerke’s reliance on a forged mining permit in respect of Vrysoutpan, as well as the Minister’s failure to issue its mining right during December 2006 and to prevent SA Soutwerke from mining at Vrysoutpan after 1 January 2007. 3. The high court ordered that the issues in respect of the quantum of damages stand over for later determination. At the conclusion of the trial, the high court dismissed Saamwerk’s claims. It, however, granted leave to Saamwerk to appeal to the Supreme Court of Appeal (SCA) in respect of the claim against the Minister. The SCA subsequently granted leave to Saamwerk to appeal to it in respect of the claim against SA Soutwerke. The central issues in the appeal before the SCA were whether Saamwerk had proved fraudulent conduct from the part of SA Soutwerke and wrongfulness on the part of the Minister. 4. On 19 May 2017 the SCA dismissed the appeal in respect of the claim against the Minister. The SCA held that the conduct of the Minister’s department (the Department) relied upon, were administrative omissions, and that on a judicial evaluation of the relevant considerations of public and legal policy, the omissions were not wrongful. The SCA held that the principal policy consideration was that during most of the period in question, the validity of the mining permit relied upon by SA Soutwerke was the subject of earlier proceedings instituted in the high court and that the Department could not be criticised for not issuing the mining right to Saamwerk whilst that litigation was pending. 5. The SCA analysed the evidence and concluded that the probabilities are overwhelming that SA Soutwerke, with assistance from within the Department, was complicit in forging the mining permit that SA Soutwerke relied upon and that SA Soutwerke’s reliance on the forged permit was fraudulent. The SCA thus held that save in respect of the period prior to 6 September 2008, which part of Saamwerk’s claim against SA Soutwerke had prescribed, SA Soutwerke was liable to Saamwerk for payment of damages suffered as a result of being unable to mine salt at Vrysoutpan. The quantum of the damages is to be determined by the high court. --ends--

1903

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 183/11 In the matter between: SIBONGAKONKE LORRAINE MBUYISA Appellant and THE STATE Respondent Neutral citation: Mbuyisa v The State (183/11) [2011] ZASCA 146 (26 September 2011) Coram: Cloete, Ponnan and Leach JJA Heard: 26 August 2011 Delivered: 26 September 2011 Summary: Application for leave to appeal ─ applicant having pleaded guilty but seeking to appeal against both conviction and sentence ─ no prospects of success on appeal. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: South Gauteng High Court (Johannesburg) (Lamont J sitting as court of first instance): The appeal is dismissed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ LEACH JA (CLOETE and PONNAN JJA concurring) [1] Arising out of an incident which occurred at Vosloorus on 22 March 2009 the appellant, a woman in her mid-20s, was tried in the regional court on a charge of attempted murder. The state alleged in its charge sheet that she had attempted to kill the complainant by pouring paraffin over him and setting him alight. Following a plea of guilty, the appellant was convicted as charged and sentenced to eight years’ imprisonment, half of which was conditionally suspended for four years. [2] The appellant thereafter sought the assistance of a fresh attorney who, on 10 September 2009, filed an application seeking leave to appeal to the high court against both the appellant’s conviction and sentence. This application was refused by the regional court, and a further petition to the judge president of the South Gauteng High Court under s 309C(2)(a) of the Criminal Procedure Act 51 of 1977 was similarly rejected. Undeterred, the appellant proceeded to apply to the high court for leave to appeal to this court against the refusal of her petition and, on 17 November 2010, was granted such leave, the high court indicating that it felt it may have applied an incorrect test in evaluating the question of her prospects of success. [3] Of course, the issue facing the high court in considering the petition was not whether the appellant’s appeal ought to succeed but, simply, whether there was a reasonable prospect of it doing so. The notion of a reasonable prospect of success on appeal has recently received the attention of this court on a number of occasions and, for present purposes, it suffices to refer to the presently unreported judgment1 in Smith v S [2011] ZASCA 15 para 7 where the following was said: ‘What the test of reasonable prospects of success postulates is a dispassionate decision, based on the facts and the law, that a court of appeal could reasonably arrive at a conclusion different to that of the trial court.2 In order to succeed, therefore, the appellant must convince this court on proper grounds that he has prospects of success on appeal and that those prospects are not remote but have a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success, that the case is arguable on appeal or that the case cannot be categorised as hopeless. There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal.’ [4] I turn to consider the prospects of success on appeal. In regard to the conviction, the matter is unusual as the appellant seeks to impugn her conviction despite having pleaded guilty to the charge, having stated in a written plea explanation under s 112(2) of the Criminal Procedure Act that she had indeed attempted to kill the complainant and having confirmed the correctness of that statement when questioned by the magistrate. [5] The attack upon the conviction is twofold. The first prong of the attack is based on the contents of the appellant’s written plea explanation. In the charge put to the appellant it was alleged that on or about 22 March 2009 at Vosloorus she had ‘wrongfully and intentionally’ attempted to kill the complainant ‘by pouring him with paraffin and setting him alight’. While the grammar of this averment is atrocious, the allegations it contains are clear. To this the appellant tendered a plea of guilty and her attorney read into the record a written statement under s 112(2), signed by the appellant, which read as follows: ‘I am the accused person in this matter and I understand the charge preferred against me by this honourable court to which I plead guilty. I confirm that I committed the said offence on the date and place as per annexure to the charge sheet within the jurisdiction of this court. 1 Delivered on 15 March 2011. 2 S v Mabena & another 2007 (1) SACR 482 (SCA) para 22. I admit that I did unlawfully and intentionally attempt to kill the complainant by pouring him with paraffin and lighting him. I acted without any justification in law. I knew that my actions were against the law and a punishable offence.’ (My emphasis.) [6] When asked by the magistrate if she confirmed the correctness of this statement, the appellant replied in the affirmative and was duly convicted as charged. However, despite all of this it was argued on her behalf that there was a reasonable prospect of another court setting aside her conviction as her written plea explanation had amounted to no more than a regurgitation of the allegations in the charge sheet and was thus lacking in essential details relevant to the facts underlying the charge. In advancing this argument, the appellant’s attorney seized upon the unfortunate phrase ‘pouring him with paraffin’ used in the charge sheet and repeated in the s 112(2) statement as the basis for his contention that there had been merely a regurgitation of the facts alleged in the charge which, in the light of the decisions in S v Mshengu 2009 (2) SACR 316 (SCA) and S v Chetty 2008 (2) SACR 157 (W) in particular, he submitted was impermissible. [7] However, while it is no doubt undesirable for allegations contained in the charge sheet to merely be repeated in a s 112(2) statement, there is no inflexible rule that an accused who uses certain of the phraseology in a charge cannot be convicted. Each case is to be considered in the light of its peculiar facts and circumstances. What s 112(2) requires is a written statement in which the accused sets out the facts upon which he or she admits his guilt. Where these facts do not cover the essential elements of the charge ─ for example in Chetty’s case where on a charge of fraud it was not clear whether the person had been induced to act to his or her prejudice as a result of the accused’s admitted representation ─ a conviction should not follow. Thus in Mshengu’s case, in which the offender’s age was such that he was rebuttably presumed not to be criminally responsible, it was held that a simple regurgitation of the contents of the charge did not establish that he was indeed capable of forming the necessary criminal intent. [8] There are no such difficulties in the present case. The essential gravamen of the charge was that the appellant had attempted to kill the deceased by pouring paraffin over him and then setting him alight. This she clearly admitted in the emphasised section of the statement, even if in doing so she used the same unfortunate phrase that had been used in the charge sheet. But the same import would have been conveyed if, for example, she had said she had ‘doused’ complainant with paraffin or used some similar description. She clearly intended to admit that she was guilty as she had intended to kill the complainant and that she had acted unlawfully and without excuse. Not only did her statement cover the essentials of the charge but it also set out the essential facts upon which she admitted her guilt, namely, that she had poured paraffin over the complainant and set him alight. It is not without significance that the appellant was legally represented at the time, a factor that alleviates the concern expressed in cases such as S v M 1982 (1) SA 240 (N) at 244D-E that an unsophisticated person may plead guilty without fully comprehending what doing so encompassed. [9] I therefore conclude that there is no prospect of the appellant’s first attack upon her conviction succeeding. In order to appreciate the appellant’s second attack, it is necessary to detail what happened during the sentencing stage of proceedings in the trial court. [10] During the course of their arguments on sentence, both the appellant’s attorney and the prosecutor made factual statements in regard to material background facts. In his address, the appellant’s attorney said: ‘Your worship this accused is regretting her actions. According to her the reason why she assaulted the complainant in the manner described in the charge sheet she suspected that the complainant is the one who stole her items and when this complainant was questioned by the accused and the members of the community everything went out of control your worship, the dominant factor being anger and desperation on the part of this accused your worship. The complainant was then assaulted. He was poured with paraffin by this accused (and) set alight by the people who were there. Your worship this accused did not act alone, she was part of a group your worship. The actions by this accused your worship is regrettable. She is not supposed to take the law into her own hands your worship. Even though she did open the case afterwards but she was not supposed to do what she did. It is a terrible mistake, she concedes your worship. She is sorry for what she did.’ [11] In the light of the statement that the complainant had been ‘set alight by the people who were there’ it was argued that the magistrate ought to have appreciated that the appellant may have been incorrectly convicted as she had not set the complainant alight and that, as the regional magistrate ought to have entertained doubt as to her guilt, he should have invoked the provisions of s 113 of the Criminal Procedure Act and entered a plea of not guilty. [12] In S v Olivier 2010 (2) SACR 178 (SCA) this court pointed out that while formalism often takes a back seat during the sentencing stage of criminal proceedings when a court is often merely informed of uncontentious facts such as the accused’s personal circumstances, different considerations apply in so far as the nature and circumstances of the crime are concerned. Majiedt AJA went on to state:3 ‘All too often prosecutors adopt a lackadaisical approach to sentence, permitting ex parte averments to be made willy-nilly in the defence’s submissions from the bar, notwithstanding that it is at variance with the information in the docket. . . . Quite often this is attributable to slothfulness on the part of prosecutors. It is a practice which must be deprecated, since it does not serve the interests of the judicial system.’ [13] In the present case, both sides made themselves guilty of failing to call evidence of the material circumstances under which the offence was committed Nevertheless, there appears not to have been any material dispute between them. In his address the prosecutor stated that there were two others who participated in the assault upon the complainant and confirmed that the appellant had not set the complainant alight in the complainant’s presence. He also gave a few further details which the appellant did not contest. From this it appears to have been common cause that the complainant worked for the appellant as a gardener; that on returning to her home on the day in question the appellant discovered that it had been broken into and certain items, in particular a radio, had been stolen; that the appellant suspected the complainant as being the guilty party and, together with other members of the community, she went to his home; that the complainant was taken back to the appellant’s home and confronted with the theft; that when the complainant denied being responsible, he was assaulted and dragged to a nearby place in the veld where the appellant poured paraffin over him while other persons poured petrol on the lower half of his body; and that the complainant was then set alight, albeit not by the appellant but by another. 3 Para 11. [14] As the appellant was not the person who set the complainant alight, it was argued that she may not have had the necessary intention to kill him but, for example, may have merely wished to extract a confession from him. In the light of her guilty plea and the facts which are common cause, this can safely be rejected. The appellant was clearly one of a crowd who actively participated in dousing the complainant with highly inflammable fluids in order to set him alight. The fact that the hand of another struck the flame that actually did so does not in law exculpate her as she and the complainant’s other attackers were clearly acting with a common purpose. Obviously, for that reason, she pleaded guilty. If it had not been her intent to kill the complainant, she would hardly have said that it was. It is not without significance that at no stage in her petition did the appellant ever offer any exculpatory version or seek to distance herself from the contents of her s 112(2) statement. [15] In my judgment the appellant’s conviction is unassailable and there is no reasonable prospect of an appeal succeeding in that regard. That brings me to the proposed appeal in respect of her sentence. [16] The appellant was in her mid twenties at the time. She was gainfully employed and the single mother of a six year old child. It was argued that the regional magistrate erred in not enquiring into the circumstances of her child and what would happen to the child if the appellant was sentenced to imprisonment. It was also argued that the regional magistrate had misdirected himself by not having considered another form of punishment such as correctional supervision, a compensatory order in favour of the complainant, or some other form of restorative justice. [17] In my view there was no such misdirection. The advantages of both correctional supervision and orders of restorative justice should not be devalued by their use in cases in which such sentences are inappropriate. The barbarity of the attack upon the complainant and the severity of this crime cry out for a salutary sentence, and although the rehabilitation of an offender is always a factor to be borne in mind, the brutal nature of the attack rendered this one of those cases where punishment tends to become to the fore. In the particular circumstances of this case, neither correctional service nor an order of restorative justice would be at all appropriate. And although I accept that it is important for a court to pay regard to the interests of the children of a parent who is to be sentenced for a crime ─ compare S v S (Centre for Child Law as amicus curiae) 2011 (2) SACR 88 (CC) and S v M (Centre for Child Law as amicus curiae) 2008 (3) SA 232 (CC) – it is apparent from this constitutional jurisprudence that where a custodial sentence is called for it should be imposed. [18] In my judgment, this is one of those cases where a lengthy period of imprisonment is demanded. To impose any other type of sentence in a case of such barbaric violence will tend to bring the law into disrepute. Indeed, in my view, the magistrate erred in imposing too light a sentence, something he himself had come to realise by the time of the application for leave to appeal when he stated that he had erred in suspending half the sentence. Even a sentence of eight years’ imprisonment was probably inadequate and, had this case come before this court on appeal rather than by way of an application for leave to appeal should be granted, the appellant would have been in grave danger of having her sentence increased. [19] In these circumstances there does not seem to me to be any reasonable prospect of success on appeal. Indeed these proceedings were ill-advised as, if the appellant were to be granted leave to appeal, she would face the very real prospect of a far heavier sentence being imposed. Be that as it may, the high court’s decision to refuse the appellant’s petition for leave to appeal was correct, and the appeal to this court must fail. [20] The appeal is dismissed. ______________________ L E Leach Judge of Appeal APPEARANCES: For Appellant: E S Classen Instructed by: David H Botha, Du Plessis & Kruger Incorporated Johannesburg Symington & De Kok Bloemfontein For Respondent: M P D Mothibe Instructed by: The Director of Public Prosecutions South Gauteng High Court Johannesburg The Director of Public Prosecutions Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 26 September 2011 Status: Immediate 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 Mbuyisa v The State The appellant was tried in the regional court on a charge of attempted murder. She pleaded guilty to this charge, admitting that she had attempted to kill the complainant by pouring paraffin over him and setting him alight. She was sentenced to eight years’ imprisonment, half of which was conditionally suspended for four years. The appellant then sought leave to appeal to the high court against both her conviction and sentence. She contended that she had not been properly convicted as, despite her plea of guilty and a written plea explanation under s 112(2) of the Criminal Procedure Act, the court should have entertained doubt as to her guilt. She also alleged that the sentence imposed on her was unduly harsh. The appellant’s application for leave to appeal was dismissed in the regional court. The appellant thereafter petitioned the high court for leave to appeal, but such petition was similarly unsuccessful. She proceeded to apply for leave to appeal against the refusal of her petition. That application was successful. The issue before the Supreme Court of Appeal was whether the appellant ought to have been granted leave to appeal to the high court against her conviction and sentence in the regional court. The Supreme Court of Appeal today decided that the appellant had no prospect of success in such an appeal and, indeed, faced the very real prospect of a far heavier sentence being imposed upon her if she were to appeal. The appeal against the dismissal of her petition to the high court was therefore dismissed. ---ends---

2656

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 82/2014 REPORTABLE In the matter between: THE OWNERS OF THE MV SILVER STAR Appellant and HILANE LIMITED Respondent Neutral citation: MV Silver Star: Owners of MV Silver Star v Hilane Ltd (82/2014)[2014] ZASCA 194 (28 November 2014) Coram: PONNAN, WALLIS, PILLAY and ZONDI JJA and GORVEN AJA Heard: 18 NOVEMBER 2014 Delivered: 28 NOVEMBER 2014 Summary: Associated ship arrest – claim on indemnities and a foreign arbitration award – whether an associated ship arrest permissible – proof of association. ORDER On appeal from: Eastern Cape High Court, Port Elizabeth (Eksteen J sitting as court of first instance): The appeal is dismissed with costs, such costs to include the costs of two counsel, where two counsel were employed. JUDGMENT Wallis JA (Ponnan, Pillay and Zondi JJA and Gorven AJA concurring) [1] The respondent, Hilane Ltd (Hilane) was the owner of the Sheng Mu. On 6 July 2011 it concluded a voyage charterparty on the Gencon form with Phiniqia International Shipping LLC (Phiniqia), for the carriage of a cargo of coking coal from Bandar Abbas, Iran to Vizag, India. Arising from that charterparty it has claims against Phiniqia. It has pursued those claims by way of the arrest on 12 August 2013 in Port Elizabeth of the Silver Star as an associated ship in relation to the Sheng Mu, in terms of s 3(6), read with s 3(7), of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). An application by the registered owners of the Silver Star, a Hong Kong company called Action Partner Limited (Action Partner), for the release of the vessel was dismissed by Eksteen J in the Eastern Cape Local Division, Port Elizabeth. Leave to appeal was refused by the high court but granted on petition by this Court. [2] Action Partner raises two legal issues on the basis of which it contends that an associated ship arrest is impermissible in respect of the claims advanced by Hilane. In addition it contends that Hilane has failed on the facts to establish the association on the necessary balance of probabilities.1 This judgment deals with the two legal issues and that of my brother Ponnan JA, with which I agree, with the question of association on the facts. [3] The charterparty concluded between Hilane and Phiniqia provided that it was to be governed by and construed in accordance with English law. It contained the conventional clause providing for the master to sign bills of lading as presented without prejudice to the terms of the charterparty and, in certain circumstances, for the owner‘s agents to sign bills of lading on behalf of owners. These obligations were varied to some degree by the provisions of clauses 38 and 46 of the rider clauses which provided as follows: ‗CLAUSE 38 OWNERS AGREE FOR CHARTERERS TO ISSUE 2ND SET OF BILLS OF LADING IN DUBAI AGAINST CHRS SIMPLE L.O.I. & CHARTERERS UNDERTAKE TO SURRENDER THE FIRST SET OF ORIGINAL BILLS OF LADING ISSUED AT LOADPORT TO OWNERS WITHIN 21 DAYS. IF REQUIRED OWNERS AGREE TO ISSUE BS/L SHOWING LOADPORT ―MIDDLE EAST PORT‖ OR ―PERSIAN GULF PORT‖ OR ―RAS ALKHAIMAH‖ INSTEAD OF ACTUAL LOADPORT ―BANDAR ABBAS‖. CLAUSE 46 CHARTERERS WILL ENDEAVOUR THEIR BEST TO ENSURE THAT ORIGINAL BILLS OF LADING ARE MADE AVAILABLE AT DISPORT ON OR BEFORE VESSEL'S ARRIVAL TO DISCHARGE. HOWEVER IF ORIGINAL BILLS OF LADING ARE NOT AVAILABLE THEN OWNERS/MASTER AGREE 1 Bocimar NV v Kotor Overseas Shipping Ltd 1994 (2) SA 563 (A) at 581B-C. TO DISCHARGE/DELIVER THE CARGO TO RECEIVERS AGAINST CHARTERERS SIMPLE LETTER OF INDEMNITY IN OWNERS STANDARD PANDI CLUB WORDING DULY SIGNED BY CHARTERERS ONLY.‘ [4] As was perhaps to be expected, it was the operation of these clauses that gave rise to the disputes between Hilane and Phiniqia. Tradeline LLC (Tradeline), a company associated with Phiniqia, purchased the coking coal that was to be carried on the Sheng Mu from Golden Waves FZC (Golden Waves). On 17 July 2011 a first set of bills of lading was issued showing Golden Waves as the shipper, the loadport as ‗Persian Gulf Port‘ and the notify parties as Tradeline and Fairway Trading Company (Pty) Ltd of Chennai, India. The following day, Tradeline, on behalf of Phiniqia, indicated that Phiniqia required a second set of bills of lading to be issued in Dubai as agreed under rider clause 38. These were to show the loadport as Ras Al Khaimah in the United Arab Emirates. In addition they were now to identify Tradeline as the shipper and the notify parties as Gupta Coal India Limited and IDBI Bank Limited, both of Nagpur, India. [5] In terms of clause 38 the second set of bills could only be issued against a letter of indemnity (LOI) given to Hilane by Phiniqia. Accordingly Phiniqia executed an LOI in favour of Hilane indemnifying it in respect of any liability, loss, expenses or damage of whatsoever nature that Hilane might sustain by reason of having issued two sets of bills of lading in accordance with Phiniqia's request. The LOI also provided that if the Sheng Mu or any other property belonging to Hilane should be arrested or detained, or such an arrest or detention be threatened, by reason of issuing two sets of bills of lading, Phiniqia undertook to provide immediately on demand such bail or other security as might be required to prevent such arrest or detention or to secure the release of the vessel or such other property and to indemnify Hilane in respect of any loss, damage or expenses, including but not limited to interest and attorneys‘ fees caused by such arrest or detention ‗whether or not the same may be justified‘. [6] Once the second set of bills of lading had been issued and the LOI furnished to Hilane‘s agents, Hilane asked for the cancellation and return of the first set of bills of lading. This it was plainly entitled to do. On 21 July 2011 Tradeline, acting as Phiniqia‘s agents, advised that: ‗We shall in due course send you original first of bs/l and the original c/p duly executed by courier to your office.‘ It did not fulfil this undertaking. This was the first source of problems because Golden Waves remained in possession of the first bill. [7] Shortly before the vessel was due to arrive at Vizag on 27 July 2011, Tradeline indicated to Hilane that the original bills of lading might not be available upon arrival. In accordance with rider clause 46 it requested the owners to provide it with the format of a further LOI for the discharge of the cargo in the absence of the bills of lading. That LOI was furnished and executed on behalf of Phiniqia on 27 July 2011. Its terms were similar to those of the earlier LOI, save that the indemnity was against any liability, loss, damage or expense of whatsoever nature sustained by reason of delivering the cargo in accordance with Phiniqia‘s request without delivery up of the bills of lading. It contained a provision that once the original bills of lading came into Phiniqia‘s possession it would deliver them to Hilane, whereafter its liability under the LOI would cease. [8] Golden Waves remained in possession of the first bill of lading. On 25 August 2011 its agents wrote to Hilane stating that they were the shipper of the cargo and asking for confirmation that it was still being held to Golden Waves‘ order. According to Golden Waves it had not been paid for the coal. Hilane in turn passed this message to Phiniqia, but Golden Waves‘ claims were not resolved. On 8 November 2011 London solicitors acting for Golden Waves sent Hilane a letter of demand for the unpaid price of the coal in an amount slightly in excess of AED 8 million.2 When there was no response to this demand Golden Waves caused the Sheng Mu to be arrested on 5 January 2012 in Napier, New Zealand. Hilane demanded that Phiniqia fulfil its obligations under the two LOIs and reinforced their demand with an order of the High Court in England, but Phiniqia did not respond. Eventually Hilane had to procure a guarantee from its own bankers to secure the release of the Sheng Mu from arrest. [9] In consequence of these events Hilane contended that Phiniqia was obliged to indemnify it against the claim by Golden Waves and for the damages it said that it suffered in consequence of the arrest of the Sheng Mu in New Zealand. It referred a dispute in this regard to arbitration in London in accordance with the provisions of the charterparty and obtained an award in its favour. The relevant terms of that award were as follows: ‗I FIND AND HOLD that Owners [Hilane] are entitled to the relief claimed namely:- (i) An Indemnity in respect of Golden Waves‘ Arbitration Claim should Owners be liable for the same together with an indemnity in respect of costs incurred by 2 AED is an abbreviation for Arab Emirate Dirham. The amount is approximately equivalent to USD 3 million. Owners (and for those which Owners may become liable to Golden Waves) in the Golden Waves Arbitration Claim; (ii) The Arrest Losses; (iii) The Further Losses; (iv) Interest on any such losses, calculated at the rate of 5 per cent per annum compounded with three monthly rests running from the dates such losses were incurred until the date of payment by Charterers. (v) Costs; and (vi) Such further or other relief as may be necessary or appropriate.‘ [10] Hilane now seeks to enforce its claims in an action in rem in South Africa brought against the Silver Star as an associated ship in relation to the Sheng Mu. In formulating its claim it assesses its liability to Golden Waves in an amount of AED 8 279 253.48; the arrest losses as USD 913 456.70; and its claims in respect of further losses and costs, in various lesser sums. In total it claimed judgment for USD 3,8 million together with interest and costs. We were informed from the bar that, although a monetary value has been placed on the Golden Waves claim, no arbitration award has yet been made in favour of Golden Waves although it is anticipated that an award will be made shortly. Leaving aside the merits of these claims, Action Partner contends that Hilane is not entitled in law to invoke the associated ship arrest provisions in order to pursue them against the Silver Star. [11] In order to appreciate the legal points raised by Action Partner it is necessary to look at the statutory framework in relation to maritime claims and associated ships. Section 1 of the Act defines an admiralty action as meaning proceedings for the enforcement of a maritime claim. The material portion for present purposes of the definition of maritime claim in s 1 of the Act reads as follows: ‗―maritime claim‖ means any claim for, arising out of or relating to — (h) the carriage of goods in a ship, or any agreement for or relating to such carriage; (j) any charterparty or the use, hire, employment or operation of a ship, whether such claim arises out of any agreement or otherwise; (aa) any judgment or arbitration award relating to a maritime claim, whether given or made in the Republic or elsewhere; (ff) any contribution, indemnity or damages with regard to or arising out of any claim in respect of any matter mentioned above …‘ [12] The relevant provisions of s 3 of the Act governing the commencement of actions in rem and the ability to pursue a maritime claim by way of an action in rem against an associated ship are the following: ‗(4) Without prejudice to any other remedy that may be available to a claimant or to the rules relating to the joinder of causes of action a maritime claim may be enforced by an action in rem — (a) if the claimant has a maritime lien over the property to be arrested; or (b) if the owner of the property to be arrested would be liable to the claimant in an action in personam in respect of the cause of action concerned. (6) An action in rem, other than an action in respect of a maritime claim referred to in paragraph (d) of the definition of ―maritime claim‖, may be brought by the arrest of an associated ship instead of the ship in respect of which the maritime claim arose. (7) (a) For the purposes of subsection (6) an associated ship means a ship, other than the ship in respect of which the maritime claim arose— (i) owned, at the time when the action is commenced, by the person who was the owner of the ship concerned at the time when the maritime claim arose; or (ii) owned, at the time when the action is commenced, by a person who controlled the company which owned the ship concerned when the maritime claim arose; or; (iii) owned, at the time when the action is commenced, by a company which is controlled by a person who owned the ship concerned, or controlled the company which owned the ship concerned, when the maritime claim arose. (b) For the purposes of paragraph (a)— (i) ships shall be deemed to be owned by the same persons if the majority in number of, or of voting rights in respect of, or the greater part, in value, of, the shares in the ships are owned by the same persons; (ii) a person shall be deemed to control a company if he has power, directly or indirectly, to control the company; (iii) a company includes any other juristic person and any body of persons, irrespective of whether or not any interest therein consists of shares. (c) If at any time a ship was the subject of a charter-party the charterer or subcharterer, as the case may be, shall for the purposes of subsection (6) and this subsection be deemed to be the owner of the ship concerned in respect of any relevant maritime claim for which the charterer or the subcharterer, and not the owner, is alleged to be liable.‘ [13] The background to the introduction of the associated ship arrest provisions was the international trend for ship owners to register all the vessels in a particular fleet in separate companies each owning a single vessel.3 This rendered the recovery of maritime debts more difficult. Although the Arrest Convention of 19524 made provision for the arrest not only of the particular ship in respect of which a maritime claim had arisen, but also the arrest of another ship owned by the same owner as the ship in respect of which the maritime claim had arisen, that was ineffective when the vessels were owned by separate ‗one ship‘ companies. As the principal author of the Act put it to this court in the Berg,5 in order to make liability for a maritime claim or the loss arising from such a claim to fall where it belonged by virtue of common ownership of ships or common control of ship-owning companies, the associated ship provisions were devised and incorporated in the Act. 3 The trend is traced in MJD Wallis The Associated Ship and South African Admiralty Jurisdiction (2010) at 41-43. 4 International Convention Relating to the Arrest of Sea-Going Ships concluded in Brussels on 10 May 1952. 5 Euromarine International of Mauren v The Ship Berg and Others 1986 (2) SA 700 (A) at 712A-B. [14] An associated ship arrest can be sought in the following circumstances. There must be a ship in respect of which a maritime claim has arisen. This is referred to as the ship concerned. Then there must be another ship – the associated ship – that satisfies the requirements of s 3(7)(a) of the Act, in that it is either in the same ownership as the ship concerned, or where both ships are owned by companies, as is ordinarily the case, control of the company owning the ship concerned at the time the claim arose must be the same as control of the company that owns the associated ship at the time of its arrest. [15] This was a perfectly satisfactory structure so long as the maritime claim against the ship concerned was a claim that gave rise to a maritime lien or was a claim that arose against the owner of that ship. However, in many maritime situations, the claims arising in respect of a ship might not fall into either category because they were claims that lay in personam against the charterer of the vessel. For example, in many charterparties, the charterer was responsible for providing bunkers to the vessel, but when bunker suppliers remained unpaid they could not arrest the vessel itself. Nor could they arrest as an associated ship a vessel owned by the charterer, or a company controlled by the charterer, because there was no commonality of ownership or control between the ship concerned and the putative associated ship. [16] The problem was addressed by the deeming provision in s 3(7)(c) of the Act. Under it the charterer or sub-charterer of a vessel who is personally liable in respect of a maritime claim is deemed, for the purposes of association alone, to be the owner of the chartered vessel. It was suggested to us that this provision is extremely wide and might catch within its net any person who had at any time been the charterer of the ship concerned. But that is incorrect. For the purposes of determining whether an association exists the question is who is the owner of the ship concerned at the time the maritime claim arose. That is clear from the language of the various sub-sections of s 3(7)(a). All that the deeming provision does is to place a charterer or sub-charterer of a vessel who incurs, but does not pay, a debt arising from its having been the charterer of the vessel, in the same position as the owner of the vessel would be if the owner incurred the same debt and did not pay it. [17] It was submitted to us that this provision must be narrowly construed in order not to fall foul of the constitutional guarantee against arbitrary deprivation of property.6 However, no narrow reading of the section was proffered. I am conscious of the obligation of courts when construing a statute to do so in a way that promotes the spirit, purport and objects of the Bill of Rights, but in the absence of any suggested alternative reading of s 3(7)(c) of the Act that issue does not arise. Counsel stressed that there was no challenge to the constitutionality of the section. That being so effect must be given to the provisions of the section and they are clear in deeming the charterer against which a maritime claim arises in the course of the charter to be the owner of the vessel. They do this in order to enable an unpaid creditor to pursue recovery of the claim by way of an associated ship arrest if that is possible. [18] The deeming provision places the unpaid creditor in the same situation vis-à-vis a defaulting charterer as it is in respect of a defaulting owner. It follows that any constitutional attack on associated ship arrests 6 Section 25 of the Constitution. in relation to charterers under s 25 of the Constitution must also be an attack on associated ship arrests in relation to owners. In other words it must be an attack on the entire institution of the associated ship. Elsewhere, and in a different capacity, I have expressed the view that such a challenge could be raised but should not succeed.7 As we are not confronted in this case with a constitutional challenge to the institution of the associated ship it is unnecessary for me to address the correctness of those academic views, which, after proper argument on an appropriate occasion, I may have to recant or modify.8 [19] Turning then to the legal issues that were raised in the heads of argument, the first was based on the proposition that the claims being advanced by Hilane against the Silver Star were claims that arose from the arbitration award it obtained against Phiniqia in London. As this was an English award governed by English law, it was submitted that its effect was to extinguish the underlying claims on which the award was based and to replace those claims with a claim based on the award itself. Building on that foundation Action Partner contended that the claim was no longer one that related to the Sheng Mu and accordingly that there was no longer a ‗ship concerned‘ the existence of which is the foundation for an associated ship arrest, because the associated ship is arrested ‗instead of the ship concerned‘. [20] I accept for present purposes, because Hilane did not challenge the proposition, that the starting point for determining whether a ship may be arrested as an associated ship must be the existence of a maritime claim 7 The Associated Ship and South African Admiralty Jurisdiction at 268-281. 8 MSC Gina: Mediterranean Shipping Co SA v Cape Town Iron and Steel Works 2011 (2) SA 547 (KZD) para 19. against or in respect of a particular ship. That appears to follow from the requirement that the associated ship is arrested instead of the ship concerned, and thereafter the action in rem is pursued against it instead of the ship concerned.9 If the maritime claim did not give rise to a maritime lien against a particular vessel, and an in personam claim did not arise ‗in respect of‘ a particular ship, there could be no action in rem against a particular ship because the requirements of s 3(5) of the Act could not be satisfied. In that event there would be no ship concerned and there could be no arrest of an associated ship. [21] It is the next leg of the argument that is problematic. It depends upon the proposition that, because an English arbitration award extinguishes the underlying claim on which the award was based, it is not made in respect of a particular ship and therefore there can be no ship concerned for the purposes of an associated ship arrest. In the first place it is by no means clear to me that an arbitration award of the nature of the present award would in English law be regarded as extinguishing the claim or claims on which the award was based. Both the cases and the leading textbooks express the position rather more cautiously than that. In Russell on Arbitration,10 it is said that: ‗[T]he award itself creates new rights between the parties in most cases superseding their previous rights in relation to the matters referred.‘ Similarly in giving the judgment of the Board in F. J. Bloemen Pty Ltd v Council of the City of Gold Coast,11 Lord Pearson said that the award of an arbitrator cannot be viewed in isolation from the submission under which it was made and referred to the distinction between ‗an award 9 The topic is discussed in The Associated Ship and South African Admiralty Jurisdiction at 153-155. 10 D Sutton and J Gill, Russell on Arbitration (22 ed, 2003) para 6-190. 11 F. J. Bloemen Pty Ltd v Council of the City of Gold Coast 1973 AC 115 at 126. which merely establishes and measures a liability under a contract and so does not create a fresh cause of action and an award of damages which supersedes the liability under the contract and creates a fresh cause of action‘. [22] Those statements do not suggest that the English law governing the effect of an arbitration award inevitably has the absolute consequences for which Action Partner argued. Indeed they are, to the ears of a South African lawyer, redolent of the statements in this Court concerning these matters. Thus in the Yu Long Shan,12 Marais JA described a claim based on an arbitration award as an entirely derivative cause of action. And in Swadif (Pty) Ltd v Dyke NO13 this Court approved the following statement by Fannin J14 of the status of an arbitration award: ‗It does seem to me to be a somewhat artificial view of the position to regard a judgment as, in all circumstances, having the effect of a novation. In some cases, of course, it does have precisely that effect, where, for example, a plaintiff obtains a judgment for cancellation of a contract and for damages. Thus, in this case, had the judgment been one declaring the contract between the parties to have been at an end, with an order that the defendant return the vehicle to the plaintiff and pay the defendant a sum of money, it could quite realistically be said that the judgment wholly replaced and thus novated the contractual rights and liabilities of the parties inter se. But in a case like the present, where the only purpose of the judgment is to enable the plaintiff to enforce certain rights, by means of execution if need be, without in any way affecting other rights arising out of the contract, it seems more realistic to regard the judgment not as novating the former, but as strengthening or reinforcing them. The right of action will have been replaced by a right to execute, but the enforceable right remains the same.‘ 12 MV Yu Long Shan: Drybulk SA v MV Yu Long Shan 1998 (1) SA 646 (SCA) at 653F-H. 13 Swadif (Pty) Ltd v Dyke NO 1978 (1) SA 928 (A) at 942C-E. 14 In Trust Bank of Africa Ltd v Dhooma 1970 (3) SA 304 (N) at 310A-C. [23] Even if the submission by Action Partner were correct I do not think that it would assist it. In F. J. Bloemen Pty Ltd v Council of the City of Gold Coast the Privy Council was faced with a very similar submission that, because an arbitration award had been made in respect of the contractor‘s claims, it could not be said that the amounts due under the award were amounts payable in terms of the contract. This was for the purposes of a clause in the contract that provided for interest to be paid on all money payable to the contractor thereunder. The Board rejected this submission on the basis that the award could not be severed from the underlying submission to arbitration embodied in the contract, and hence the amounts payable under the award could fairly be said to be amounts payable under the contract. It seems to me similarly that where an arbitration award is made in terms of an arbitration clause in a charterparty relating to a particular ship, the award cannot be severed from its source and it remains one in respect of that particular ship. [24] When regard is had to the relevant definitions of maritime claim that are applicable in this case, it merely reinforces that view. Any judgment or arbitration award ‗relating to a maritime claim‘ is itself a maritime claim. In this case the maritime claims that underlie the award arise from a charterparty dispute and any claim for, arising out of or relating to a charterparty is a maritime claim.15 The words ‗for, arising out of or relating to‘ predicate a relationship between the claim and the maritime topic sufficiently intimate to impart to the claim a maritime character of a sort rendering it appropriate for the claim to be adjudicated in accordance with maritime law.16 An arbitration award on such a claim 15 They may also be claims arising in respect of the carriage of goods in a ship or an agreement for such carriage. 16 Peros v Rose 1990 (1) SA 420 (N) at 424F-426A. itself has a sufficient maritime character to render it a maritime claim. Where the underlying maritime claim lies against or in respect of a ship it does not seem an undue use of language to say that the arbitration award in respect of that claim is likewise a claim in respect of the same ship. [25] Some very considerable oddities arise if this is not the case. Take the case of a claim by a charterer for damages arising from a breach of a performance warranty under a charterparty. The claim is a maritime claim against the owner of the vessel. It clearly arises in respect of the chartered vessel. The claim is therefore one that could be pursued by way of an action in rem against that vessel. The effect of Action Partner‘s contention is that, if the charterparty contains an arbitration clause and the dispute is referred to arbitration, the award could not be enforced by an action in rem against the vessel, because it could not be said to be a claim in respect of the vessel. So the result of the charterer complying with its contractual obligations and proceeding to arbitrate would be to forfeit the right to proceed in rem against the vessel. That would be a strange result when the Act says specifically that the award itself is a maritime claim. It has that status even if it is a South African award and enforceable in terms of the Arbitration Act 42 of 1965. [26] The consequence of this argument being upheld would be that no claim on a judgment or arbitration award could be pursued by an action in rem. That would be a very far-reaching result, as it would deprive claimants with a maritime claim arising in respect of a vessel and capable of being pursued by an action in rem of that advantage, after they had fortified their claim with a judgment or arbitration award. It could lead to claimants contending in terms of s 7(1) of the Act that they should not be compelled to pursue arbitration, as they would thereby be deprived of a legitimate juridical advantage. That would be undesirable. [27] Action Partner relied on two English cases, The Beldis17 and The “Bumbesti”18 in support of its contentions. Both cases dealt with arbitration awards made under charterparties. In The Beldis the question was whether a claim under an award was a claim ‗arising out of any agreement made in relation to the use or hire of any ship‘ so as to give the County Court admiralty jurisdiction to deal with it. The Court of Appeal held that it was not, because the action was one upon the award itself and not the charterparty. The court pointed out that all that had to be proved by the claimant was that matters had been submitted to an arbitrator and that an award had been made.19 The claim was one on the award not the charterparty. In arriving at this conclusion the court was influenced by the history of the extension of admiralty jurisdiction in England, commencing with the Admiralty Courts Acts of 1840 and 1861, and held that the definition of the extended claims was undertaken in ‗precise, plain and carefully guarded terms‘.20 [28] The decision in The “Bumbesti” took the matter no further. Once again the contention was that the court had jurisdiction to hear a claim based on an arbitration award under a charterparty because it was a ‗claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship‘. The contention was rejected both as a matter of construction, having regard to the history of this expression in earlier 17 The Beldis [1936] P 51. 18 The “Bumbesti” [1999] 2 Lloyd‘s Rep 481 [Q.B. (Adm. Ct.)]. 19 C/f MV Ivory Tirupati: MV Ivory Tirupati and Another v Badan Urusan Logistik (aka Bulog) 2003 (3) SA 104 (SCA) para 32. 20 Per Scott LJ at 82. legislation, and because the judge held himself bound by the decision in The Beldis. [29] The English cases are by no means unanimous in this regard. Sheen J, the admiralty judge, expressed a contrary view in The St Anna.21 Relying on dicta in both the Court of Appeal and the House of Lords he held that there was no reason not to give the words in the statute their ordinary meaning or to constrain them in the light of the history of similar expressions in earlier statutes. He held that an action on an arbitration award is an action to enforce the contract contained in the contract embodying the submission to arbitration, in that case the charterparty, and therefore the claim was one arising out of an agreement for the use and hire of a ship. He added that he was pleased to reach that result because it enabled the court to do justice ‗in a way which would be denied to it if creditors could not bring proceedings in rem merely because they faithfully honoured their agreement to submit to arbitration a dispute which is clearly within the Admiralty jurisdiction‘.22 That sentiment echoes my own. [30] For two reasons it is unnecessary for me to reconcile this difference of opinion. The first is that the English statutes defining the ambit of admiralty jurisdiction under consideration in those cases, as is still the position in terms of the Senior Courts Act 1981,23 contained no provision corresponding to the express inclusion, as maritime claims under the Act, of claims on judgments and arbitration awards relating to maritime 21 The St Anna [1983] 2 All ER 691 (QBD). 22 At 696h. 23 The relevant provisions appear in Appendix 2 to Nigel Meeson and John A Kimbell Admiralty Jurisdiction and Practice (4 ed, 2011) at 527-529. claims. Those cases were therefore dealing with a different issue. The second is that it is plain that the inclusion of this section in the Act was done deliberately in order to overcome the decision in The Beldis.24 In those circumstances the English cases that Action Partner relied on are unhelpful, even if its contentions as to their effect are correct. [31] At the end of the day the issue is not one as to the effect in English law of an arbitral award, but one as to the proper construction of the relevant provisions of the Act. That is a question to be determined by a conventional process of statutory interpretation in terms of South African law. Foreign law will only enter into the picture if the court needs to determine the nature of a particular claim in order to decide whether it comes within the scope of one of the defined maritime claims. Nor can there be resort to the provisions of s 6 of the Act, because those provisions only apply to fix the law applicable in the adjudication of claims (‗in the exercise of its admiralty jurisdiction‘), after the prior question whether the court has jurisdiction has been resolved. The statutory rules governing the bringing of an action to enforce a maritime claim embody the jurisdictional aspect of the enforcement of maritime claims.25 [32] The first issue thus resolves itself into the question whether, on a proper interpretation of the Act, a claim in respect of an arbitration award relating to a maritime claim is a claim in respect of the ship in respect of which the original maritime claim lay. Any practical person engaged in the maritime world would answer ‗of course it is‘ to that question. Their 24 D J Shaw QC Admiralty Jurisdiction and Practice in South Africa (1987) at 23-24. 25 D C Jackson Enforcement of Maritime Claims (4 ed, 2005) at 1. answer would not change if they were told that under the arbitral law the award extinguished the original claim. That is in my view clearly the correct position and it disposes of Action Partner‘s first argument. Hilane‘s maritime claims under the charterparty arose in respect of the Sheng Mu and Phiniqia, which was liable in respect of those claims, was deemed to be its owner for the purpose of an associated ship arrest. Had no arbitral award existed to fortify Hilane‘s claims it could have arrested an associated ship in relation to the Sheng Mu on the basis that the latter was ‗the ship concerned‘. The fact that it has pursued its claims by way of arbitration does not alter the situation. The award is one in respect of the Sheng Mu, which is the ship concerned for the purpose of an associated ship arrest. [33] The second point is related to the argument about the constitutional implications of construing the deeming provision in s 3(7)(c) too broadly. Action Partner submitted that insofar as the deeming provision operated in respect of claims against Action Partner as charterer, those claims should be limited to ‗only those claims which relate to the core of the charterparty, and should exclude ancillary agreements such as the indemnities‘. This prompted an argument from Hilane that its claims were monetary claims arising not from the two LOIs but from the charterparty itself. I do not think it necessary to resolve this issue, which can more properly be canvassed at the trial, because in my view these claims, even if technically arising in terms of the LOIs, are nonetheless claims against Phiniqia as charterer and relate to the core of the charterparty. [34] This was a voyage charterparty for the carriage of a consignment of coking coal from the port of loading to a port of discharge. It was accordingly a contract of affreightment, that is, a contract for the carriage of goods by sea.26 The central obligations assumed by Hilane as carrier under that contract were therefore to load the cargo, issue bills of lading, carry the cargo and deliver it to the holder of those bills of lading. The problems between Hilane and Golden Waves arose because Phiniqia exercised its right to have a second set of bills of lading issued to replace the original bills, and then did not surrender the original bills. They were compounded when it asked that the cargo be discharged without production of the original bills of lading. [35] In each case Phiniqia was exercising a right that it had under the rider clauses of the charterparty. In return for the exercise of those rights it was obliged to furnish the LOIs. The first LOI dealt with the issue of bills of lading, a central feature of any contract of affreightment. It starts by saying that ‗we, the undersigned, the Charterers‘ request the issue of a second set of bills of lading on altered terms and goes on to say ‗we hereby guarantee as follows‘. Whether or not the LOI constitutes an agreement separate from the charterparty, it was furnished by Phiniqia pursuant to its contractual obligations under the charterparty and in its capacity as charterer of the vessel. [36] The second LOI is in the same category. It arose from the request that the cargo be discharged – the last act by the carrier on completion of the voyage – without production of the original bills of lading. Once again the charterparty required that acting on the request meant that the charterer had to furnish an LOI, and Phiniqia did so. In both instances it 26 Stewart C Boyd CBE QC et al Scrutton on Charterparties and Bills of Lading (21 ed, 2008) articles 1 and 3. The conclusion in Montelindo Compania Naviera SA v Bank of Lisbon and SA Ltd 1969 (2) SA 127 (W) at 137H-138A and 138E-H that a time or voyage chartertparty is a lease is incorrect. was exercising its rights under the charterparty and in return performing its reciprocal obligations under the charterparty. Its liability as charterer cannot be separated from its liability under the LOIs. Hilane‘s claims relate to the core of the charterparty. Accordingly, even on the construction contended for by Action Partner, Hilane‘s claims lay against Phiniqia as charterer. [37] It follows that both legal points raised by Action Partner must fail. Accordingly, and subject to proof of association, an arrest of the Silver Star at the instance of Hilane was permissible. For the reasons set out in the judgment of Ponnan JA, I agree that association was established on the requisite balance of probabilities. I accordingly agree with him that the appeal should be dismissed with costs, such costs to include those consequent upon the employment of two counsel where two counsel were employed. M J D WALLIS JUDGE OF APPEAL Ponnan JA (Wallis, Pillay and Zondi JJA and Gorven AJA concurring) [38] I have had the benefit of considering the judgment of my colleague Wallis JA. I share his views and the conclusions reached by him in regard to the first two issues on appeal. The issue that remains for decision in this appeal, to which I now turn, is whether on the facts the requisite association has been established. [39] It is well settled that Hilane bears the onus of demonstrating that the arrest was justified and this includes proving the alleged association on a balance of probabilities (Cargo Laden and Lately Laden on Board The MV Thalassini AVGI v MV Dimitris 1989 (3) SA 820 (A) at 834F-G; Bocimar NV v Kotor Overseas Shipping Ltd 1994 (2) SA 563 (A) at 581B-E). But, as Wallis observes (at 292): ‗The task of proving the association is complicated by the relative inaccessibility of the key information required to demonstrate the identity of the person or persons who control the two ship-owning companies . . . In the circumstances an applicant for arrest is confronted with the heavy burden of proving a disputed matter on a balance of probabilities on the papers when it has no direct access to the relevant information and may well be confronted with the withholding of information, disingenuousness and downright dishonesty.‘ In view of that difficulty the fact that the response to an allegation that there is an association between two vessels is untruthful, evasive and economical on detail will be a relevant factor in determining whether the applicant has discharged the onus of proof resting on it. [40] The purpose of the Act is to make the loss fall where it belongs by reason of ownership, and in the case of a company, ownership or control of the shares (The Berg at 712A). And, as Marais JA pointed out (albeit in a minority judgment) in MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD 1999 (3) SA 1083 (SCA) (The Heavy Metal) para 4: ‗The way in which this was done was, first, by describing in s 3(7)(a)(i), (ii) and (iii) the circumstances in which ships were to be regarded as associated and, secondly, by enacting certain deeming provisions in s 3(7)(b)(i), (ii) and (iii) which are obviously designed not only to defeat defensive stratagems which shipowners might deliberately deploy to ward off potential arrests of associated ships by disguising their ownership or their control of such ships, but also to allow it to be shown even in a case where no such motive existed where power of control really lay.‘ Those sections require that in relation to both the ship concerned and the associated ship a ‗person‘ must be identified who ‗controls‘ (or controlled) the companies in question. The level of control required is that the person must control the overall destiny of the company (The Kadirga 5 (No 1) J A Chapman & Co Ltd v Kadirga Denizcilik ve Ticaret AS SCOSA C12 (N) at C14E). In his consideration of the concept of control as employed in the Act in The Heavy Metal para 8, Smalberger JA writing for the majority (Nienaber JA and Melunsky AJA concurring) expressed himself thus: ‗The subsection [3(7)(b)(ii)] elaborates upon and refines the concept of control by that person. Control is expressed in terms of power. If the person concerned has power, directly or indirectly, to control the company he/she shall be deemed (―geag . . . word‖) to control the company. ―Power‖ is not circumscribed in the Act. It can be the power to manage the operations of the company or it can be the power to determine its direction and fate. Where these two functions happen to vest in different hands, it is the latter which, in my view, the Legislature had in mind when referring to ―power‖ and hence to ―control‖.‘ According to Wallis (at 187) the process of comparison that follows upon this identification is intended to be a simple one. He adds: ‗The maritime claimant identifies the party who controls the company that owned the ship concerned and identifies the party who controls the company that owns the associated ship that it seeks to arrest. The result of those exercises is then compared. If they correspond, in the sense that the same person or persons control both companies, then the requisite association is established. If they are not the same then the association is not established.‘ [41] It was not in dispute that Phiniqia is owned or controlled by Tradeline, a limited liability company incorporated according to the laws of the United Arab Emirates. The evidence showed that Phiniqia, Tradeline and Stellar Shipping Co LLC were all under the common control of the principal shareholder being a Mr Majid Al Ghurair as part of a group of companies, active in various fields and bearing his name. The crux of the factual dispute therefore related to the ownership or control of the Silver Star. In the founding affidavit dated 14 August 2013 filed in support of the application to set aside the arrest, Mr Norton, Action Partner‘s attorney, appears to have relied principally on information furnished to him by Captain AK Rathee, who was said to be the Chief Executive Officer of Stellar Ocean Transport LLC (Stellar Ocean), which managed all the vessels operated by Stellar Shipping as well as the Silver Star. He annexed to his affidavit Action Partner‘s certificate of incorporation dated 23 June 2009, which reflected Mr Ahamed Mubarak Habeeb as the sole registered shareholder and both him and Mr Mujeebur Rahman Habeeb as its Directors. Mr Norton stated: ‗14. I confirm that I have further been advised by Captain AK Rathee that Mr Habeeb has confirmed to him that he is not a nominee shareholder and holds the shares for his personal account and that Tradeline LLC does not own or control the applicant in any sense.‘ [42] Both Captain Rathee and Mr Habeeb deposed to confirmatory affidavits on behalf of the appellant. Captain Rathee stated: ‗6 Furthermore, I confirm that I am personally aware of the facts relating to the purchase of the mv ―Silver Star‖ by Mr Habeeb as SOT [Stellar Ocean] handled that transaction for him as managers of the vessel. I am, therefore, aware of the fact that Mr Habeeb was offered and accepted Action Partner Limited as a vehicle to own the mv ―Silver Star‖ and that he personally paid the margin for the vessel out of his funds partially held by him and partially held by SOT and that SOT then arranged for him the transfer of the vessel to Action Partner Limited, the balance of the purchase price being funded by the mortgagee bank. I can also confirm that I have personal knowledge of the fact that Mr Habeeb is certainly no nominee and SOT trades the ―Silver Star‖ for the account of Action Partner Limited which I know to be controlled by Mr Habeeb and no one else.‘ Mr Habeeb added: ‗7 … I confirm that: 7.1 I am the sole shareholder of Action Partner Limited, being the owners of the mv ―Silver Star‖; 7.2 I hold those shares for my own account and not as a nominee; 7.3 Tradeline LLC does not own or control Action Partner Limited. I do. . . . I also confirm that by agreement between the applicant and Stellar Ocean Transport LLC, the latter are the technical and commercial managers of the ―Silver Star‖.‘ In other words the only evidence tendered in response to the evidence of association was silent about the business or trading activities of the Silver Star, a matter of considerable importance as later emerged. [43] Mr Cunningham, Hilane‘s attorney of record, who deposed to the answering affidavit on its behalf, demonstrated that this explanation was by no means a complete picture of the relationship between the different companies. He stated: ‗10. I annex hereto … copies of reports compiled by Lloyd`s List Intelligence on Action Partner and the vessel [Silver Star] as well as copies of reports by Sea-Web … both of which are known to be reputable sources of maritime intelligence, on Stellar Shipping Co LLC (―Stellar Shipping‖), Action Partner and Tradeline. 11. It is evident from these reports that: - 11.1. Stellar Shipping is the operator of the vessel; 11.2. Stellar Shipping is a subsidiary of Tradeline; 11.3. Stellar Ocean Transport LLC (―Stellar Ocean‖) is a subsidiary of Tradeline; 11.4. Stellar Ocean is the ship manager and beneficial owner of the vessel; 11.5. the vessel is group owned by Tradeline. 11.6. Habeeb is the vice chairman of Tradeline 12. I attach hereto … a copy of a Bill of Sale dated 7 June 2011 wherein Stellar Shipping purported to sell the vessel to Action Partner for the sum of US$49,800,000.00. 13. In terms of a mortgage agreement entered into between Action Partner, as owner of the vessel and Emirates NDB Bank, as mortgagee, on 18 October 2011 … the actual borrower in terms of the facility agreement dated 6 September 2011, entered into in accordance with the mortgage, was Stellar Shipping. 14. The amount advanced to Stellar Shipping in accordance with the facility (loan) agreement (usually used to pay the purchase price for the vessel in part or in full) was US$40,600, 00.00. The source of the balance of the purchase price of US$9,200,00.00 for the purchase of the vessel is unknown. 15. The Applicant has submitted that as at the date of the arrest, the sole shareholder (and thus beneficial owner of all of the shares) in Action Partner was Habeeb. 16. Habeeb acquired the shares on 8 June 2011 … the day after the signature of the Bill of Sale and delivery of the vessel to Action Partner. 17. If these contentions are to be accepted, Habeeb must have acquired the shareholding by payment of the value of the vessel, given that Stellar Shipping borrowed the funds to pay the majority of the purchase price (some USD50 million). … 19. Moreover, Habeeb is the vice chairman of Tradeline. This is apparent from the SeaWeb report to which I refer hereunder. 20. Given this association, and the fact that Tradeline is a holding company of both Stellar Shipping and Stellar Ocean, and that, indeed, Habeeb is also a ―partner‖ of Phiniqia – which it is common cause is owned and or controlled by Tradeline - and further that Tradeline, again according to SeaWeb is the ―Group Owner‖ of the vessel, it is significant that Habeeb did not disclose his close contact and association with Tradeline and the other entities owned or controlled by the latter. This is more surprising given that the SeaWeb report to which I refer to above expressly states that the vessel is ―group owned‖ by Tradeline. … 25. In addition to the above, I attach hereto … a judgment in Stellar Shipping Co LLC v Hudson Shipping Lines [2010] EWHC 2985 (Comm) dated 18 November 2012, wherein it is recorded, inter alia, that: “The shipping division of Tradeline was spun off as an independent identity and Stellar Shipping Co LLC was incorporated in 1999 to supplement the trading activities with an initial fleet of eight dry bulkers” 26. I also attach hereto . . . company profiles from the Dubai Chamber of Commerce for Tradeline and Stellar Shipping respectively. It is evident from these reports that: 26.1. Habeeb holds a 25% share in Tradeline and is described as a ―Partner‖; 26.2. Majid Saif Ahmad Al Ghurair (―MSA Al Ghurair‖) holds a 51% share in Tradeline and is described as a ―Managing Partner‖; 26.3. Habeeb holds a 19% share in Stellar Shipping and is described as a ―Managing Partner‖; 26.4. MSA Al Ghurair holds a 51% share in Stellar Shipping and is also described as a ―Managing Partner‖. 27. MSA Al Ghurair is the owner and/or controller of the Al Ghurair group of companies, of which, inter alia, Tradeline is a party. 28. In the circumstances, I submit that despite the assertions of Captain AK Rathee (―Rathee‖) in regard to Habeeb`s alleged claim that he is the sole share holder of Action Partner (for his own account) it is clear that the owner of the vessel, Action Partner, and, indeed, Stellar Shipping and Stellar Ocean, are owned and/or controlled by Tradeline and its majority shareholder, MSA Al Ghurair. 29. The Respondent`s claims are therefore enforceable against the mv ―Silver Star‖ as the deemed owner of the mv ―Sheng Mu‖ was Phiniqia which was ultimately owned or controlled by Tradeline at the time the claim arose and which also ultimately owns or controls the mv ―Silver Star‖ as contemplated in subsections 3(6) and (7) of the Act.‘ [44] Ms Pitman, Mr Norton‘s colleague, deposed to the replying affidavit on behalf of the appellant on 16 August 2013. Like Mr Norton, she relied primarily on information furnished to her by Captain Rathee. She stated: ‗19 Also in 2008 Mr Habeeb decided to start his own Ship Management Company, being Stellar Ocean Transport LLC (―SOT‖). The use of the name ―Stellar‖ in the United Arab Emirates is quite popular and, therefore, common and there are numerous companies with ―Stellar‖ as part of their name. In the United Arab Emirates it is necessary for any local company to be sponsored by a local citizen who must own at least 51% of the shares. Consequently, although the company was started and managed by Mr Habeeb it was necessary for a local sponsor to be found who held 51% of the shares in the company. I have been advised that this shareholding is not nominal and that the local citizen must hold such shares for his own account, which is, indeed, what occurred in the case of this company. The sponsor was Mr Ahmad Salam Ahamd Darwish, who is entirely unrelated to the Al- Ghurair family. Consequently, Mr Habeeb took a shareholding of 23% in the company which he managed, which he held until he sold his interest in the company on (date). … In any event Mr Habeeb is, as a shareholder in the group, aware of the fact that Tradelines LLC (―Tradelines‖), Stellar Shipping LLC (―Stellar Shipping‖) and Phiniqia International Shipping LLC (―Phiniqia‖) are and always have been controlled as to 51% of shareholding by Mr Majid Saif Ahmed Al-Ghurair. It is incorrect to characterise Tradelines as a holding company. It is not. Mr Al-Ghurair independently controls all three companies through his 51% shareholding in each. … In or about 2008 Tradelines, Phiniqia and Stellar Shipping were badly affected by the economic downturn. Stellar Shipping then had a number of new-buildings on order from various shipyards. The ―Silver Star‖ was one such vessel on order by Stellar Shipping, her price being around US$50m. Stellar Shipping had arranged a loan of US$40,6m from Emirates NDB Bank, the remaining roughly US$9.5m being payable by it to the yard. It was no longer in a financial position to pay the US$9.5m and offered the vessel to its shareholders Mr Habeeb, who then owned the ―Mega Star‖ through a special purpose vehicle, believed that purchasing a sister vessel would bring economy of management and profitability and decided to purchase the vessel personally. Both vessels were specifically suited for the Indonesian- Indian coal business with their 80,000 DWT cranes and gears. … Indeed, in this particular case, as I have indicated, with regard to paragraph 11.1, Stellar Shipping has nothing whatsoever to do with the vessel. It sold the vessel on to Action Partner Limited and the vessel is commercially managed and, thus, operated by SOT. With regard to paragraph 11.2, Stellar Shipping is not a subsidiary of Tradeline although Mr Al-Ghurair is the 51% shareholder in both companies. … With regard to paragraph 11.6, it is admitted that Mr Habeeb is the Vice Chairman of Tradeline. He was conferred this honour as a minority shareholder in the company and because of his status. This, however, has nothing whatsoever to do with his personal investment in Action Partner Limited in respect of the vessel. The sale referred to in paragraph 12 was not a purported sale but an actual sale, as documented by the Bill of Sale. With regard to paragraph 13, it is very well known that mortgagee banks go to some lengths to ensure that if a group company is taking a loan the main companies of the group stand as guarantors for that loan. Yet the loan documentation does not mention Tradeline, Stellar Shipping or Phiniqia. This in itself is, it is submitted, a telling fact that such companies are not related to Action Partner Limited. Mr Cunningham avers that the actual borrower was Stellar Shipping. That is not the case. The facility Letters were, indeed, concluded between Stellar Shipping and the Bank. However, before the loan was granted Stellar Shipping encountered financial difficulties and could not continue with the transaction. It was at that point that Mr Habeeb agreed to step in and buy the vessel from Stellar Shipping, which he did in terms of the relevant deed of sale. With regard to paragraph 14, the amount was advanced not to Stellar Shipping but to Action Partner Limited. The source of the balance has already been dealt with. … With regard to paragraph 16, there was an administrative delay in the transfer of the shares the day after the sale. In fact, the shares were supposed to have been transferred before the sale. However, nothing turned on this and the shares were subsequently transferred as they were supposed to be.‘ [45] On 21 August 2013 Mr Norton deposed to yet a further affidavit to respond to the obvious difficulties facing Action Partner arising from this material. He attached a draft affidavit by Captain Rathee, in which the latter stated: ‗11 I went through the affidavit and advised that the facts contained therein were correct and could be deposed. The affidavit was subsequently deposed by Ms Pitman and filed. … In re-reading it, there are, indeed, a number of inaccuracies. In the circumstances it is as well that I identify and correct them and also identify which information I provided to ENS as being within my personal knowledge and which was provided to me by Mr Habeeb as only being within his personal knowledge. … The facts contained in paragraph 19 were provided by me and the paragraph is not quite correct in that I meant to refer to the use of the word ―Stellar‖ worldwide, not just in the United Arab Emirates. … Paragraph 20 was provided to me for verification in the form that it was finally deposed and I confirmed it but it is also incorrect in that it is possible to have a citizen of the United Arab Emirates sponsor a company by holding a 51% shareholding for a fee without any active participation, financial or otherwise in respect thereof. In the case of SOT I am personally aware of the fact that Mr Ahmad Salam Ahamd Darwish is such a sponsor and that the company was until 24 September 2012 controlled by Mr Habeeb. … Paragraph 34 is not quite correct in that Mr Habeeb has subsequently reminded me that the owning company of the ―Majestic Star‖ was controlled by his brother, Mr Mujeebur Rahman Habeeb, as sole shareholder, and the vessel was beneficially owned by him, not Mr Habeeb. However, by arrangement with his brother the proceeds from the sale of that vessel were used to part pay the difference between the loan amount provided by the bank and the sale price for the purchase of the mv ―Silver Star‖. … Paragraph 45 is within my personal knowledge in that I am fully aware of the transaction in terms of which Mr Habeeb took the vessel through Action Partner Limited. Tradeline does, however, continue to be a corporate guarantor of the obligations of Stellar Shipping as borrower on the loan but neither are guarantors of the obligations of Action Partner Limited`s performance under the ship`s mortgage. … I am afraid that paragraphs 48 and 49 are incorrect. I understood this paragraph to be making the point that neither Tradeline nor Stellar Shipping were guarantors of Action Partner Limited`s commitment under the ship`s mortgage agreement. Clearly a cursory read of paragraph (b) of the Preamble to the Mortgage at page 117 of the papers makes it clear that Stellar Shipping is the borrower from the bank. I believed that ENS had grasped this point and I believe that I was reading these paragraphs as if this point had been understood and was being confirmed, not the opposite, as I subsequently understand to be the case. In fact, as is clear from the Facility Letter that has been provided to the respondent as a consequence of its request for it, Stellar Shipping remains the borrower and there are, indeed, corporate and personal guarantees in place from Tradelines and the Stellar Shipping shareholders. The guarantees are for the performance of Stellar Shipping, not Action Partner Limited for its commitments in terms of the mortgage agreement. With regard to paragraph 50, this is correct in the sense that the monies were advanced for the purchase of the ―Silver Star‖ by Action Partner Limited. However, it was advanced in terms of a loan to Stellar Shipping. The facts in paragraphs 52, 54, 60 and 61 are within my personal knowledge and are correct. … I now understand from ENS that the fact that Stellar Shipping remains borrower in respect of the loan for the purchaser of the ―Silver Star‖ and that Trade Line and the shareholders of Stellar Shipping have provided guarantees in respect of the loan is to be construed on the documents as a recognition that the only position of Stellar Shipping is that it remains on paper liable to pay the Bank whereas Action Partners Ltd is actually the true payor.‘ [46] No doubt the dispute of fact raised by the affidavits has to be approached in line with what was stated in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C. However, a court will not necessarily be hamstrung in its determination of a matter such as this by a party‘s denial of facts on affidavit, particularly where, as here, there appears to be a wealth of circumstantial and other evidence pointing to association. Mr Norton‘s affidavit had done little to refute the information presented by Mr Cunningham, much of which was in fact undisputed. [47] The Sea-Web report annexed to Mr Cunningham‘s affidavit: (a) describes Stellar Ocean and Stellar Shipping as subsidiaries of Tradeline; (b) describes Tradeline as being the group owner and Stellar Ocean as being the ship manager of the following five vessels, namely the Diamond Star, Emerald Star, Mega Star, Ruby Star and Silver Star; (c) reflects the year of build of the Silver Star as 2011, its shipbuilder as Cosco and its operator as Stellar Shipping; and (d) lists Tradeline`s address as ‗[c]are of Stellar Ocean Transport LLC, Suite 4008, 4th Floor, Al Rigga Business Centre …‘ and its corporate office bearers as: Mr Majid Saif Al Ghurair – Chairman; Mr Ahmed Hussain Lafir – Managing Director; Mr A.M. Habeeb – Vice Chairman; and Mr Raman Madhok – Chief Executive. The Dubai Chamber Company Profile lists Tradeline‘s shareholders and their respective shareholding as follows: Mr Al Ghurair – 51%; Mr AM Habeeb - 25%; and Mr Lafir – 24%. It also reflects the shareholders and their respective shareholding in Stellar Shipping as follows: Mr Al Ghurair – 51%; Mr AM Habeeb – 19%; Mr Lafir – 15% and Ahmed Ahmad Iqbal – 15%. The appellant does not appear to dispute the respective shareholdings of Mr A Ghurair and AM Habeeb in Tradeline and Stellar Shipping. Nor does it dispute that Mr Al Ghurair is the controller of the Al Ghurair group of companies, of which, inter alia, Tradeline is a part. In effect most of this material was undisputed. It showed common control of a group of shipping companies and common operation of the fleet including the Silver Star. [48] It seems that Tradeline`s shipping division was spun off as an independent entity and Stellar Shipping incorporated in 1999. By 2006 it appears that Stellar Shipping was already operating its own fleet and had in fact ordered two new vessels from Cosco (Dalian) Shipyard Co Ltd (Cosco). On 21 October 2010 Cosco wrote to Stellar Shipping with reference to the ship building contract for the construction of the Silver Star dated 6 December 2006. That letter, which was marked for the attention of Captain Rathee, informed Stellar Shipping that it was in default of its contractual obligations and notified it that Cosco was cancelling the contract. Ten days later Mr Lafir wrote to Mr Habeeb on a Tradeline letterhead as follows: ‗We refer to our meeting yesterday in the matter of Vessel M.V. Silver Star. We are thankful to you for your decision to purchase this Vessel and helped us to deal with our problem with Cosco Shipyard. We have discussed this matter with Emirates bank and I am pleased to confirm that in principal the bank, Trade Line LLC and Stellar Shipping Co, (LLC) are agreeable to extend the loan facility to you. However we need your confirmation to following conditions: (1) You will pay full margin money for this Vessel USD 10 Million (Exact amount to be ascertained upon delivery of the Vessel). These funds to be arranged by you with your own independent arrangement. (2) The bank loan facility is extended to you against your share holding in Trade Line LLC, Stellar Shipping Co. (LLC), Phiniqia International Shipping L.L.C and any other Company of Al Ghurair. …‘ [49] Captain Rathee relied on that letter, which he said recorded the terms upon which Mr Habeeb ‗took over the transaction‘ from Stellar Shipping in respect of the Silver Star. However, less than a week later on 6 November 2010, Stellar Ocean instructed the National Bank of Abu Dhabi to transfer USD 5 million to Stellar Shipping. The email address on the Stellar Ocean letterhead bearing that instruction is the same as that of Stellar Shipping. What is more, under the caption ‗payment details‘ Stellar Ocean stated ‗transfer to sister concern‘. That hardly indicated that these were transactions at arm‘s length. A peculiar feature of the events after this letter was written was that Stellar Shipping continued to act as if Mr Habeeb had not taken over the vessel. Thus it negotiated with the bank in regard to the loan to pay the purchase price and there are no official bank documents reflecting the revised arrangement. [49] On 7 June 2011 a Bill of Sale was purportedly signed by Mr Lafir on behalf of Stellar Shipping in respect of the sale of the Silver Star to Action Partner ‗in consideration of the sum of US$ 49,800,000.00 paid to us‘. No evidence was tendered of a payment as reflected in the Bill of Sale. It was apparently signed in the presence of Captain Rathee, who it will be recalled was described in Mr Norton‘s founding affidavit as the CEO of Stellar Ocean. That Bill of Sale reflects Captain Rathee‘s address and the address of Stellar Shipping as the same address given for Stellar Ocean in the Standard Ship Management Agreement (the Shipman) allegedly concluded on 16 May 2011 between Action Partner and Stellar Ocean in respect of the Silver Star for a period of five years commencing on 17 June 2011. Mr Habeeb evidently signed the Shipman on behalf of the appellant and Mr Ihsan Habeeb signed on behalf of Stellar Ocean. One would imagine that there must have been two bills of sale – one from Cosco to Stellar Shipping and a second from the latter to Action Partner. The former has never been produced, nor have we been shown anything to explain on what basis Cosco reversed its decision to cancel the shipbuilding contract. Most importantly, if Action Partner was now the purchaser, why would that not be reflected in the arrangements with Cosco? The inference is that Stellar Shipping remained the purchaser of the vessel from Cosco. [50] Apart from the deed of sale there was little to suggest that Action Partner had purchased the Silver Star as a transaction independent of Stellar Shipping and any suggestion of independence was dealt a heavy blow when the financing of the purchase came to be revealed. It showed that Stellar Shipping, and not Action Partner, borrowed the money to effect the purchase. On 18 October 2011 a First Preferred Ship Mortgage was registered over the Silver Star in favour of Emirates Bank. It recorded that Emirates Bank had made available to Stellar Shipping medium term loan facilities in the amount of USD 40 600 000 and that Action Partner as the owner of the Silver Star had agreed to secure the liability of Stellar Shipping by granting the Bank a first preferred ship mortgage over the vessel. That document recorded Action Partner‘s address for the purposes of notices and the like as ‗4008, Rigga Business Centre‘ and its PO Box address as ‗82692‘. The former is indeed the address for Stellar Ocean and the latter for Stellar Shipping. Notices were to be marked for the attention of ‗Mr Anil Kumar Rathee‘. [51] In terms of a facility amendment letter dated 6 September 2011 addressed to Stellar Shipping, Emirates Bank recorded that the interest on the loan advanced to the latter would be debited quarterly to the ‗[c]all account of M/s Action Partner Limited (0514389287701)‘ and ‗[t]he principal amount … [would] be repaid semi annually by debiting the current account of M/s Action Partner Limited‘. We were not told on what basis Stellar Shipping could agree to repay its debts from Action Partner‘s funds. The inference is that there was a close relationship between them in which Stellar Shipping was the dominant party. The appellant had thus undertaken to repay the loan amount (described in the document as one ‗[t]o part finance purchase of a marine vessel from Cosco‘ – which could only have been the Silver Star) advanced by Emirates Bank to Stellar Shipping plus the interest on that amount. Action Partner‘s obligation in that regard was to endure until 25 March 2020. [52] Moreover the facility amendment letter recorded that Stellar Shipping had irrevocably and unconditionally undertaken the following: ‗- To deposit all charter income of marine vessel – Silver Star in the Call Account No. 0514389287701 of M/s. Action Partner Limited, Hong Kong. - To accelerate the repayment in case the marine vessel name ―Silver Star‖ generates adequate revenues. - To indemnify the Bank against any pollution or environmental liability as may arise in connection with the operation of the marine vessel. - The Bank reserves the right to accelerate the repayment incase the marine vessel generates adequate revenues. … * Authorize to debit your account in case of non-availability of funds in M/s. Action Partner Limited, Hong Kong account.‘ The effect of these provisions was that Action Partner could enjoy no benefit from the trading operations of the Silver Star until the loan was discharged, and under the mortgage it was precluded from selling the vessel. Its ‗ownership‘ was accordingly purely nominal and not beneficial and its commercial operations were for the purpose of discharging Stellar Shipping‘s liability to the bank, a liability for which Mr Habeeb was personally liable. And as conditions precedent for the ‗continued availability of facilities, [Stellar Shipping] agreed to sign, execute and deliver‘ inter alia guarantees from Action Partner, Tradeline, Mr Lafir, Mr Al Ghurair and Mr Habeeb to the satisfaction of the bank. [53] When one examines the response to this powerful array of evidence pointing in the direction of commonality of control one is struck by the evasiveness that permeates it. Captain Rathee, the common thread on the documentary evidence between Stellar Ocean, Stellar Shipping and Action Partner, simply fails to properly explain how the factual inaccuracies and inconsistencies occurred in the latter‘s version. To once again borrow from Marais JA (The Heavy Metal para 21): ‗I do not think that a litigant in motion proceedings who resorts to this kind of response in the face of a powerful circumstantial showing that, on the probabilities, whoever ultimately had the power to control the company which owned the guilty ship also has the power to control the company which owns the ship sought to be arrested as an associated ship can shelter behind the principles laid down in the case of Plascon-Evans Paints Ltd. In a few words, such an approach should not be regarded as giving rise to a genuine dispute of fact.‘ In that, the majority (at 1107J-1108G) were at one with Marais JA. [54] If Stellar Shipping and Action Partner were truly independent entities, as Captain Rathee suggests, there would appear to be no reasonable commercial rationale for the former to agree to sell the vessel to the latter whilst at the same time retaining liability to the bank for the loan and indemnifying it in respect of any pollution or environmental liabilities arising from the operation of the vessel. Moreover, had the vessel been sold pursuant to an arm‘s length transaction, how, it must be asked, could Stellar Shipping undertake to deposit all charter income from the vessel into Action Partner‘s call account or assign the latter‘s rights to revenue generated from the Silver Star to the bank? It thus seems not just highly improbable, but plainly inconceivable, that Stellar Shipping and Action Partner would have acted as they did had the relationship been anything other than one between closely related companies. Action Partner has striven to create the impression that Stellar Ocean Transport has nothing whatsoever to do with Stellar Shipping, which appears manifestly not to be the case. In addition when the Silver Star was arrested, whilst in the process of loading a cargo of manganese ore at Port Elizabeth, she was under a time charter to Oldendorff GmbH & Co KG of Luebeck. That charterparty dated 26 July 2013 describes Stellar Ocean as the owners of the vessel. It thus seems to me that the welter of other evidence adduced, which points ineluctably to commonality of control, must perforce trump Captain Rathee‘s denial (albeit a denial under oath). [55] It follows that the association has been proved on a balance of probabilities. In the result the appeal must fail and it is accordingly dismissed with costs, such costs to include those consequent upon the employment of two counsel where two counsel were employed. _____________ V PONNAN JUDGE OF APPEAL Appearances For appellant: D A Gordon SC (with him S Pudifin-Jones) Instructed by: Edward Nathan Sonnenbergs, Durban Honey Attorneys, Bloemfontein For respondent: M J Fitzgerald SC (with him J D Mackenzie) Instructed by: Bowman Gilfillan, Cape Town Matsepes, Bloemfontein.

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 November 2014 Status: Immediate 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. MV Silver Star: Owners of MV Silver Star v Hilane Ltd The SCA today dismissed an appeal against a decision of the Eastern Cape High Court upholding the arrest of the Silver Star as an associated ship in terms of the Admiralty Jurisdiction Regulation Act 105 of 1983. The plaintiff, Hilane Ltd, had chartered a vessel, the Sheng Mu to a company called Phiniqia for the carriage of coal from Bandar Abbas, Iran to India. A dispute had arisen over the payment of the purchase price of the coal and as a result the Sheng Mu had been arrested in Napier, New Zealand. Phiniqia had failed to secure its release or to meet the claims of the arresting party in relation to the purchase price of the coal, notwithstanding a court order that it do so. As a result Hilane had obtained an arbitration award in London that Phiniqia indemnify it for these claims. Pursuant to that it caused the Silver Star to be arrested in Port Elizabeth as an associated ship in relation to the Sheng Mu. The registered owner of the Silver Star contended that a claim on a London arbitration award does not arise in respect of a particular ship and that claims under letters of indemnity given by a charterer are not claims arising out of a charterparty or an agreement for the use and hire of a ship. The court held that these contentions were incorrect. It also rejected a contention that on the facts the two vessels were not associated ships. Accordingly the appeal was dismissed.

2248

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 187/08 MOMENTUM GROUP LIMITED Appellant and P J M VAN STADEN NO 1ST Respondent NEDBANK LIMITED 2ND Respondent ___________________________________________________________ Neutral citation: Momentum Group Ltd v Van Staden NO & another (187/2008) 60 [2009] ZASCA (29 May 2009) Coram: FARLAM, VAN HEERDEN et MLAMBO JJA, GRIESEL et BOSIELO AJJA Heard: 21 May 2009 Delivered: 29 May 2009 Summary: Cession in securitatem debiti – Payment by debtor to cedent – subsequent claim against debtor by cessionary – whether debtor had knowledge of the cession at time of payment to cedent ___________________________________________________________ ___________________________________________________________ ORDER On appeal from: High Court, Pretoria (Murphy J sitting as court of first instance). The appeal is dismissed with costs. _____________________________________________________ JUDGMENT VAN HEERDEN JA (Farlam and Mlambo JJA, Griesel and Bosielo AJJA concurring) [1] The issue in this appeal is whether, after cession in securitatem debiti of an insurance policy, payment by the debtor (the insurance company) to the cedent (the policyholder) immunises the debtor from a claim by the cessionary under the policy. The answer to this question turns on the debtor’s knowledge of the cession at the time of payment by him or her to the cedent. [2] The first respondent, Mr P J M van Staden, (‘Van Staden’), is the trustee in the insolvent estate of one Mr Retief van Heerden (‘Van Heerden’). Van Heerden’s estate was finally sequestrated on 21 January 2003. Van Staden (in his capacity as trustee) and the second respondent, Nedbank Limited (‘Nedbank’), sued the appellant, Momentum Group Limited (‘Momentum’), in the Pretoria High Court for payment of an amount of R250 000, plus interest, out of the proceeds of an insurance policy issued by Momentum in favour of Van Heerden (‘the policy’). They claimed to be entitled to this amount by virtue of a cession in securitatem debiti by Van Heerden of his rights under the policy to Boland Bank PKS (‘Boland’), Nedbank’s predecessor in title. This claim succeeded with costs in the court below, Murphy J ordering Momentum to pay Van Staden the sum of R250 000 out of the proceeds of the policy, plus interest a tempore morae. With the leave of the court a quo, that judgment now comes before us on appeal. [3] The judgment of the trial court, in which the facts are set out in considerable detail, is reported1 and it is not necessary that they be repeated. For the sake of convenience, however, I will outline the factual background very briefly. [4] On 30 July 1999, Renbes Family Foods CC (‘Renbes’) borrowed a sum of R750 040 from Boland in terms of a written loan agreement. As security for this loan, Van Heerden signed a suretyship in favour of Boland and a deed of cession in terms of which he ceded to Boland all his rights in a fixed deposit in the amount of R250 000 held with Boland ‘and/or any re-investment, renewal or substitution thereof’. The deed of cession expressly limited Van Heerden’s liability thereunder to R250 000. [5] Shortly afterwards, the fixed deposit referred to above was indeed substituted with a so-called ‘redemption policy’, issued by Momentum on 11 August 1999. A Mr Willem de Wet (‘De Wet’) of Absa Brokers and Consultants assisted Van Heerden in applying for the policy and made the arrangements necessary for the release of the fixed deposit of R250 000 1 As Van Staden NO & another v Firstrand Ltd & another 2008 (3) SA 530 (T). by Boland and the payment of this amount into Momentum’s bank account. [6] During the trial, four witnesses testified about the facts and circumstances surrounding the substitution of the investment. They were: Mr Deon Hurter (‘Hurter’), a commercial banker in Boland’s employ, who represented the bank in the negotiations with Renbes and Van Heerden in regard to the loan and securities, a Mr Tinus de Beer (‘De Beer’), a risk manager in the employ of Boland, on behalf of the respondents; and De Wet and a Ms Marietjie de Jager (‘De Jager’), a broker consultant and marketing advisor at Momentum, on behalf of the latter. [7] On 6 August 1999, a letter was written by De Jager to Hurter under a Momentum letterhead containing its recognised commercial logo. The letter was faxed to Hurter on the same day. The accompanying fax cover sheet contains a handwritten inscription made by de Jager in the following terms: ‘Hello Deon Hoop dis vir jou voldoende. Laat weet my asb. sodra die fondse oorgeplaas word. Groete Marietjie de Jager’ [8] The typed letter reads as follows: ‘Boland Bank: Silverton Die Bestuurder Aandag: mnr Deon Hurter Geagte mnr Hurter INSAKE MNR R VAN HEERDEN: MOMENTUM BELEGGING 92079647 Hiermee word bevestig dat bogenoemde polis met onmiddellike effek aan Boland bank gesedeer word. Sodra die fondse na Momentum Lewens se bankrekening oorgeplaas word kan die polis aanvaar word. Die sessie vorm deel van die polis en word onmiddellik met aanvaarding teen Boland Bank aangeteken. U sal derhalwe nie ongesekureer wees tussen die uitbetaling van die fondse en die uitreiking van die kontrak nie. Die kontrak sal egter binne ‘n week na uitreiking van die polis beskikbaar wees. Groete M de Jager Momentum Lewens’ (Emphasis added.) [9] The money was transferred to Momentum’s bank account on 11 August 1999. According to De Beer, he authorised the transfer of the R250 000 from Boland to Momentum because the former had received an assurance from Momentum, in the form of the letter from De Jager set out above, that as soon as the funds were transferred to Momentum, Boland would become the cessionary of the policy, the cession in Boland’s favour would be noted on the policy documents and Boland’s security would be protected. [10] On 12 December 2000, after certain queries were made, Momentum granted an interest-free loan against the policy to Van Heerden in the amount of R267 891. [11] In the meantime, Renbes was liquidated on 28 November 2000 and Boland became entitled to enforce its suretyship against Van Heerden. As the latter was not able to pay the debt, Boland invoked the cession and attempted to collect its security in the amount of R250 000 from Momentum. The latter informed Boland, however, that a loan had been granted against the policy and advised it not to surrender the policy as this would result in a minimal payout, the value of the policy having been greatly reduced by the loan. Boland persisted with its claim, ultimately issuing summons (together with Van Staden) against Momentum in October 2003. Momentum adopted the stance that it was only obliged to pay the plaintiffs the surrender value of the policy (subsequent to deduction of the loan made to Van Heerden) in the amount of R29 690, payment of which it tendered in its plea. [12] The main defences raised by Momentum were, first, that De Jager lacked authority to bind Momentum to any agreement or to make any representation on its behalf and, second, that when making the interest- free loan against the policy to Van Heerden, Momentum (as debtor) had no knowledge of the cession in favour of Boland and acted bona fide. Neither of these defences succeeded in the court below. [13] The legal principles applicable to the present appeal are cogently stated by P M Nienaber2 as follows: ‘Performance by the debtor, more particularly payment, to the cessionary, the new creditor, discharges the debt. It should follow as a corollary that payment to the cedent ought not to release the debtor. Yet it is a well-established rule, based on the palpable need to protect a blameless debtor who rendered performance to the party he or she genuinely believed to be the true creditor, that payment to the cedent absolves or at least releases the debtor, provided that he or she was unaware of the earlier cession or, if aware thereof, that he or she nonetheless acted in good faith in effecting the payment. The debtor’s prior knowledge of the cession, however gained, would 2 Joubert (ed) The Law of South Africa 2ed, vol 2 Part 2 (2003) sv ‘Cession’ para 48. normally exclude good faith and defeat the payment. But it has been said that the debtor will be released from liability if such debtor can show that, notwithstanding his or her prior knowledge of the claim by the cessionary, he or she nevertheless paid the cedent in good faith. . . . The rule is essentially based on the blamelessness of the debtor. It may thus be refined, so it is suggested, to read that the debtor will be deemed to be absolved by performance or any other form of discharge rendered to the cedent if, at the time thereof, he or she genuinely and reasonably believed the cedent to be his or her true creditor. . . . Although notice to the debtor of the cession is not a pre-requisite for cession, it is thus incumbent on the cessionary, in whose interest it is to do so, to inform the debtor of the cession to him or her at the risk, if this is not done, that his or her claim may be pre-empted by the unsuspecting debtor’s performance to the cedent . . . whom he or she genuinely and reasonably identifies as his or her true creditor’. (Emphasis added, footnotes omitted.) [14] Momentum contended that De Jager was a mere broker with no authority to bind Momentum. In her testimony, De Jager described her role as that of a ‘go-between’ between the broker and Momentum: the broker ensured that all the requisite documents were provided by the client, handed this documentation to her and she then sent it through to the Momentum Head Office where all transactions relating to the policy were attended to. [15] It is, however, clear from the terms of the contract between De Jager and Momentum that she was appointed to represent Momentum in the solicitation and maintenance of policies. It was common cause that she had authority to use Momentum letterheads and often did so. [16] I agree with the learned judge that it was eminently reasonable for Boland to have relied upon De Jager’s conduct and representations and to assume that she had the necessary authority, at the very least to accept and record a notification of the existence of the cession of Van Heerden’s policy in Boland’s favour. As in the case of Glofinco v Absa Bank t/a United Bank,3 Boland was entitled to assume that De Jager’s functions encompassed these activities. It could not reasonably have been expected of it to know of any internal limitations on De Jager’s actions4 and, therefore, even if De Jager did not have actual authority to deal with Momentum in the way she did, Momentum is bound by her ostensible authority. [17] As regards the factual question whether Momentum had knowledge of the cession before or at the time of payment of the interest- free loan to the cedent (Van Heerden), the probabilities in this case point overwhelmingly to the conclusion that Momentum did have imputed knowledge of the cession in favour of Boland at the relevant time. This appears clearly from the terms of De Jager’s fax cover sheet and letter to Hurter dated 6 August 1999.5 Murphy J made a fairly strong credibility finding against De Jager6 and there are no grounds to interfere with this finding. Interestingly, appellant’s counsel did not seek to challenge it in argument before us in any way. [18] The knowledge of the cession in favour of Boland to secure Van Heerden’s debt to it was certainly material and important. It cannot be 3 2002 (6) SA 470 (SCA), where this court held (paras 15-16) that the appointment by a bank of a branch manager implied a representation to the outside world to the effect that the branch manager is empowered to represent the bank in the sort of business and transactions that a branch of the bank and its manager would ordinarily conduct. What this ordinary kind of business is, is a factual matter and depends on the evidence before the court. 4 See the Glofinco case paras 17-18. 5 Set out in paragraphs 7 and 8 above. 6 See paras 32 to 34 of the reported judgment, at 539H-540E. gainsaid that, in the ordinary course of business, a reasonable person in the position of De Jager would be expected to impart this knowledge to Momentum, the entity who had delegated to her the control and conduct of its affairs in this regard.7 This being so, Momentum must be said to have had knowledge of the cession in favour of Boland in August 1999, long before it authorised and paid out to Van Heerden the loan against the policy in question. There is nothing in the evidence to indicate that, despite such knowledge, Momentum can nonetheless be said to have acted in good faith in paying out such loan.8 [19] Murphy J proceeded from the premise that the cessionary bears the onus of proving knowledge of the cession on the part of the debtor in a situation such as the present,9 but on the facts of the present case, nothing turns on that and this aspect warrants no further discussion. [20] It follows from the above that Nedbank (Boland’s successor in title), as pledgee of the proceeds of the policy, was entitled to realise its security at the time it sought to do so.10 In the meantime, however, Van Heerden’s estate was sequestrated in January 2003. Van Staden, in his capacity as trustee of the cedent’s (Van Heerden’s) estate is thus ‘the person entitled to recover the proceeds [of the policy] as part of his duty to realise the assets of the estate, but subject to the real right of pledge held by Nedbank who consequently remains fully protected.’11 7 Town Council of Barberton v Ocean Accident and Guarantee Corporation Ltd 1945 TPD 309 at 311, subsequently referred to with approval by this court, see eg Wilkens NO v Voges 1994 (3) SA 130 (A) at 141H. 8 See Brook v Jones 1964 (1) SA 765 (N) at 767E-F. 9 See para 34 of the reported judgment at 540D, read with para 29 at 539C-D. 10 By claiming payment of R250 000 from the proceeds of the policy in February 2001 – see para 11 above. 11Paragraph 42 of the reported judgment of the trial court, at 543B-D. [21] In the result the appeal must fail and it is dismissed with costs. __________________ B J VAN HEERDEN JUDGE OF APPEAL Appearances: For the Appellant: J F Steyn Gerings Attorneys c/o Hendriëtte Muller Pretoria Instructed by: Rossouw & Conradie Inc Bloemfontein For the Respondent: F J Erasmus De Swart Vögel Mahlafonya Pretoria Instructed by Symington & De Kok Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Momentum Group Ltd v Van Staden NO & another (207/08) [2009] ZASCA 60 (29 May 2009) Media Statement Today the Supreme Court of Appeal ('SCA') dismissed an appeal by Momentum Group Limited against a judgment of Murphy J in the Pretoria High Court. Briefly stated, the facts giving rise to the litigation are as follows: in July 1999, Renbes Family Foods CC borrowed R750 000 from Boland Bank PKS. Mr Retief van Heerden stood surety for this loan and signed a deed of cession in which he ceded to Boland all his rights in a fixed deposit of R250 000 held with Boland ‘and/or any re-investment, renewal or substitution thereof’. Van Heerden’s liability under the deed of cession was limited to R250 000. The fixed deposit was substituted with a redemption policy issued by Momentum in August 1999. On 6 August 1999, Ms Marietjie de Jager, a broker consultant and marketing advisor at Momentum, wrote to Mr Deon Hurter, a commercial banker employed by Boland, confirming that the redemption policy ‘met onmiddelike effek aan Boland Bank gesedeer word’ and stating that ‘die sessie vorm deel van die polis en word onmiddelik met aanvaarding teen Boland Bank aangeteken’. On the strength of this letter, Mr Tinus de Beer, a risk manager in Boland’s employ, authorised the transfer of R250 000 (the amount held under Van Heerden’s fixed deposit) from Boland to Momentum. On 12 December 2000, after certain queries were made, Momentum granted an interest-free loan against the policy to Van Heerden in the amount of R267 891. In the meantime, Renbes was liquidated on 28 November 2000 and Boland became entitled to enforce its suretyship against Van Heerden. As Van Heerden was not able to pay the debt, Boland invoked the cession and attempted to collect its security in the amount of R250 000 from Momentum. The latter informed Boland that a loan had been granted against the policy and that the surrender value thereof was only R29 690. Van Heerden’s estate was sequestrated on 21 January 2008, the first respondent (Mr PJM van Staden) being appointed as trustee of the insolvent estate. In his capacity as trustee, Van Staden and the second respondent, Nedbank, Boland’s successor in title, sued Momentum for payment of R250 000, plus interest, out of the proceeds of the policy. The issue on appeal was whether Momentum had knowledge of the cession of the policy in favour of Boland at the time it granted to Van Heerden the interest-free loan against the policy It was contended on behalf of Momentum, first, that De Jager lacked authority to bind it to any agreement or to make any representation on its behalf and, second, that when making the loan against the policy to Van Heerden, it had no knowledge of the cession. Neither of these defences had succeeded in the court below. The Supreme Court of Appeal agreed with Murphy J that De Jager did have authority to represent Momentum, at the very least to accept and record a notification of the existence of the cession of the policy in Boland’s favour. Boland could not reasonably have been expected to know of any internal limitations on De Jager’s actions. The SCA also held that, the knowledge of the cession in favour of Boland being material and important, a reasonable person in De Jager’s position would be expected to impart this knowledge to Momentum, the entity who had delegated to her the control and conduct of its affairs in this regard. Momentum must therefore be said to have had knowledge of the cession in Boland’s favour in August 1999, long before it authorised and paid out to Van Heerden the loan against the policy. There was nothing in the evidence to indicate that, despite this knowledge, Momentum could nevertheless be said to have acted in good faith in paying out the loan to Van Heerden. The appeal was accordingly dismissed with costs. --- ends ---

4016

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 226/2022 In the matter between: THE MINISTER OF POLICE APPELLANT and VUYANI GOODMAN GQAMANE RESPONDENT Neutral Citation: Minister of Police v Gqamane (226/2022) [2023] ZASCA 61 (3 May 2023) Coram: DAMBUZA AP, MOLEMELA and MBATHA and GOOSEN JJA and SIWENDU AJA Heard: 3 March 2023 Delivered: 3 May 2023 Summary: Civil procedure – unlawful arrest and detention – arrest in terms of ss 40(1)(b) and 40 (1)(q) of Criminal Procedure Act 51 of 1977 – assault with intent to commit grievous bodily harm – domestic violence – discretion to arrest – failure to plead – onus – whether issue was fully canvassed at trial – whether arrest lawful. __________________________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Eastern Cape Division of the High Court, Makhanda, (Naidu AJ with Mjali J concurring), sitting as court of appeal: The appeal is upheld with costs. The order of the high court is set aside and replaced with the following order: ‘The appeal is dismissed with costs.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ Siwendu AJA (Dambuza AP, Molemela and Mbatha and Goosen JJA concurring): [1] This appeal involves a discretion to arrest and raises the question whether a court on appeal can mero motu determine the issue based on the evidence led at the trial. Ancillary to this is whether, in an action for damages for unlawful arrest, the plaintiff must discretely plead the failure to exercise the discretion to arrest. [2] The appeal emanates from a decision of the Eastern Cape Division of the High Court, Makhanda (the high court), which upheld an appeal against an order dismissing a claim for damages for unlawful arrest and detention, brought by Mr Gqamane (the respondent) against the Minister of Police (the appellant). The high court found that the trial court had failed to consider whether Warrant Officer Erasmus (W/O Erasmus), the arresting officer in this case, had exercised a discretion to arrest the respondent. It found that the arresting officer failed ‘to reasonably apply his discretion in deciding to arrest the [a]ppellant’ and held that the decision to arrest him was therefore ‘irrational and arbitrary’. The high court held the appellant liable for damages in the sum of R160 000. The appeal is with the special leave of this Court. [3] The respondent was arrested without a warrant shortly after midnight on 17 February 2017, following a police raid on suspects in Kwazakhele Township, Gqeberha. On 7 February 2017, Ms Mini (the complainant), with whom the respondent was in a romantic relationship, lodged a complaint at the Kwazakhele Police Station. She alleged that on 4 or 5 February 2017, the respondent assaulted her when she went to collect her lounge suite from his home. She was admitted at Dora Nginza Hospital (the hospital) for two days and was treated for a broken arm. She alleged that the respondent attacked her by grabbing her from behind, hitting her with his hands several times on the face and kicked her with booted feet on her body. A charge of assault with intent to commit grievous bodily harm was recorded. The case docket was also marked with a special ‘domestic violence’ sticker and assigned to Warrant Officer Gumbi. [4] On 14 February 2017, the case docket was transferred to the New Brighton police station and was assigned to W/O Erasmus. It contained the statement made by the complainant. On 15 February, W/O Erasmus visited the complainant to interview her, but found she had gone back to hospital for further treatment. He attempted to obtain a J88 medical report from the hospital’s liaison office, but the office was closed. [5] The respondent worked part time as a car guard and lived with his then 15- year-old son. The complainant and the respondent lived in proximity, some 20 meters away from each other in what appears to have been disused classrooms at Old Lwandlekazi School in Kwazakhele. At the time of his arrest, the complainant pointed him out to identify him to the arresting officer. He was detained in police cells over the weekend until the Monday when he was taken to New Brighton Magistrates Court. He was released directly from the cells at about 14h00 without a court appearance. [6] In April 2017, the respondent instituted a claim for damages in the Regional Court, Port Elizabeth (the trial court), against the appellant for damages arising from his arrest and detention. He alleged, in his particulars of claim, that: (a) The arrest without a warrant was wrongful and unlawful; (b) There was no reasonable suspicion that he committed a Schedule 1 offence; (c) The arresting officer failed to explain his constitutional rights; and (d) He was detained arbitrarily without just cause. With regards to the detention, he alleged that: ‘11.1 the arresting officers . . . failed to apply their minds, in respect of [his] detention and the circumstances relating thereto; 11.2 there were no reasonable and/or objective grounds justifying [his] subsequent detention; 11.3 . . . none of the Defendant’s employees took any or reasonable steps to release [his] . . .; and 11.4 he was not brought before a court of law, as soon as reasonably possible.’ He claimed an amount of R240 000 plus interest, as damages. [7] The appellant’s defence was that: (a) The victim was a complainant as defined in the Domestic Violence Act 116 of 1998 (the DVA). (b) The assault constituted an incident of domestic violence with an element of violence. (c) The arresting officer was entitled to arrest without a warrant in terms of s 40(1)(q)1 of the Criminal Procedure Act 51 of 1977 (the CPA) read with s 3 of the DVA2. (d) The arresting officer reasonably suspected the respondent of having committed a Schedule 1 offence and as such, he could lawfully arrest the respondent without a warrant in terms of section 40(1)(b) 3of the CPA. [8] Only the respondent and the arresting officer testified at the trial. Even though the appellant bore the onus to prove the lawfulness of the arrest, the respondent was the first to adduce evidence. He denied the assault alleged by Ms Mini. His testimony centred on his request to the arresting officer to be ‘merciful with him’; the request to be taken to court on the same day; the poor over-crowded conditions in the cells; and his concern about his son who he claimed was left without adult care. [9] The evidence by W/O Erasmus was largely confined to those issues raised in the respondent’s evidence. He testified that the seriousness of the offence prompted the decision to arrest and detain the respondent. He feared that given the appellant’s proximity to the complainant’s place of abode, ‘something might happen again’. He confirmed that when he arrested the respondent, certain witness statements were still outstanding, as well as the J88 medical report on 1 Section 40(1)(q) provides: ‘(1) A peace officer may without warrant arrest any person— . . . (q) who is reasonably suspected of having committed an act of domestic violence as contemplated in section (1) of the Domestic Violence Act, 1998 which constitutes an offence in respect of which violence is an element.’ 2 Section 3 states that: ‘(1) A peace officer who attends the scene of an incident of domestic violence, may without a warrant, arrest any respondent who such peace officer reasonably suspects of having committed an act of domestic violence which constitutes an offence in terms of any law.’ 3 Section 40(1)(b) provides: ‘(1) A peace officer may without warrant arrest any person— . . . (b) whom he reasonably suspects of having committed an offence referred to in Schedule 1, other than the offence of escaping from lawful custody.’ which the injuries sustained by the complainant were recorded. He disputed that the respondent’s son was left without adult care. He insisted that special arrangements were made with a neighbour before the arrest to look after him. He was not present in court when the respondent was released. [10] The trial court found that the arrest was lawful in terms of s 40(1)(q), and that it was based upon a reasonable suspicion that the respondent had committed an act of domestic violence as contemplated by s 1 of the DVA4. It found on the probabilities that the respondent was informed of his constitutional rights as he had signed the notice of rights provided to him by the arresting officer. The thrust of the appeal to the high court was directed at the jurisdictional findings under s 40(1)(q). The respondent argued that the fact that the arrest occurred 12 days after the incident, belied the reasons alleged for the arrest. He submitted that there had been no further incidents of domestic violence reported, even though the respondent lived near the complainant. These issues were raised for the first time during the appeal. [11] The high court confirmed the decision by the trial court that the appellant met the jurisdictional requirements to arrest the respondent. It held, however, that the trial court ‘failed to address the issue of discretion at all [and this] failure caused the trial court to reach a decision which, in the result, could not reasonably have been made by a court properly directing itself to all the relevant facts and principles.’ [12] The appeal turns on the narrow question whether the high court was correct to mero motu determine the question of the lawful exercise of a discretion to 4 The DVA provides an expanded definition of domestic violence which includes but is not limited to physical, sexual, emotional, and psychological abuse but includes economic and spiritual abuse, intimidation and harassment, coercive and controlling behaviour amongst others arrest. The respondent contended that a discretion to arrest is inherent to the question of the lawfulness of the arrest. A court on appeal can consider the issue if it was canvassed fully at the trial. The complaint by the appellant is that the issue was not pleaded. Its attention was directed to one case at the trial and thereafter, the respondent impermissibly attempted to canvass a different case on appeal to the high court.5 [13] It is trite that a party is bound by his or her pleadings and ordinarily, he or she will not be allowed to raise a different or fresh case without a due amendment. A court is equally bound by those pleadings and should not pronounce upon any claim or defence not made in the pleadings by the parties.6 A court may relax this rule where the issue involves a question of law which emerges fully from the evidence or is apparent from the papers. This Court, in Minister of Safety and Security v Slabbert,7 held that: ‘There are, however, circumstances in which a party may be allowed to rely on an issue which was not covered by the pleadings. This occurs where the issue in question has been canvassed fully by both sides at the trial.’8 [14] The case pleaded by the respondent centered on whether the arresting officer formed a reasonable suspicion which would entitle W/O Erasmus to arrest him.9 It was premised on a denial that he committed a Schedule 1 offence. The respondent did not place the improper exercise of the discretion to arrest him in issue. He raised the issue in respect of his detention. During cross-examination of 5 Kali v Incorporated General Insurances Ltd 1976 (2) SA 179 (D) at 182A. 6 Jowell v Bramwell-Jones 1998 (1) SA 836 (W) at 898E-J citing from Jacob and Goldrein on Pleadings: Principles and Practice at 8–9. 7 Minister of Safety and Security v Slabbert [2009] ZASCA 163; [2010] 2 All SA 474 (SCA). 8 Ibid para 12. See also Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA); [2014] 3 All SA 395 (SCA) para 15. 9 Imprefed (Pty) Ltd v National Transport Commission 1993 (3) SA 94 (A) at 107C-H. In National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA); [2009] 2 All SA 243 (SCA) this Court explained the nature of civil litigation in our adversarial system. It held that it is for the parties, either in the pleadings or affidavits, which serve the function of both pleadings and evidence, to set out and define the nature of their dispute and it is for the Court to adjudicate upon those issues. the respondent, counsel for the appellant asked why the respondent believed the arrest was unlawful. This might have brought the issue of the exercise of a discretion to arrest to the fore, despite the pleadings. However, the respondent’s counsel objected to the question on the grounds that the respondent was a lay person, and that issue was a question of law. [15] It is not apparent from the high court judgment what aspects of the evidence led by both parties it accepted or rejected and the reasons for that choice. The reason for the conclusion that W/O Erasmus did not exercise his discretion is not discernible. Nowhere did the high court deal with the findings of the trial court that Erasmus was correct in taking into account the seriousness of the offence committed by the respondent. Nor did it discuss the fact that the appellant pleaded justification for the arrest, not only under s 40(1)(b) but also under s 40(1)(q). This would have assisted this Court to decide whether or not the order of the high court is correct.10 Given this, a fuller treatment of the facts is necessary.11 [16] An arrest without a warrant is prima facie wrongful. Consequently, it was incumbent upon the appellant to justify its lawfulness.12 The submission by the respondent that the discretion to arrest is inherent to the determination of the lawfulness or otherwise of the arrest conflates the jurisdictional requirements to carry out a warrantless arrest, with the exercise of a discretion which arises once those jurisdictional facts are established. It also ignores the incidence of the onus. In Minister of Safety and Security v Sekhoto and Another13 (Sekhoto), this Court held that: 10 Mphahlele v First National Bank of South Africa 1999 (2) SA 667 (CC); 1999 (3) BCLR 253 (CC) para 12. 11 Knoop NO v Gupta 2021 (3) SA 88 (SCA) para 13. 12 In Minister of Law and Order v Hurley [1986] 2 All SA 428 (A); 1986 (3) SA 568 (A) the Court stated the following at 589E-F: ‘An arrest constitutes an interference with the liberty of the individual concerned, and it therefore seems to be fair and just to require that the person who arrested or caused the arrest of another person should bear the onus of proving that his action was justified in law’. 13 Minister of Safety and Security v Sekhoto and Another [2010] ZASCA 141; [2011] 2 All SA 157 (SCA); 2011 (5) SA 367 (SCA) (Sekhoto). The conflation identified by the court was in Louw and Another v Minister of Safety and Security and Others 2006 (2) SACR 178 (T). ‘A party who alleges that a constitutional right has been infringed bears the onus. The general rule is also that a party who attacks the exercise of discretion where the jurisdictional facts are present bears the onus of proof.’14 [17] The high court similarly conflated the onus to prove the jurisdictional requirements to arrest (which rested on the appellant) and the overall onus to prove other elements of the claim, including improper exercise of discretion to arrest (which rested on the respondent). Once the high court found that the jurisdictional requirements to arrest the respondent were met, the appellant discharged the onus, which rested on it to justify the arrest. This was dispositive of the case pleaded by the respondent. The high court, however, despite finding that the trial court was correct regarding the jurisdictional facts, held that it ought to have considered whether the discretion was properly exercised. The implication of the decision by the high court is that the onus to prove the proper exercise of the discretion to arrest rested with the appellant rather than the respondent. This is contrary to the decision in Sekhoto. The high court erred on this score. [18] W/O Erasmus was criticised for the 12-day delay in effecting the arrest even though on the objective evidence, he acted timeously after receiving the docket from Kwazakhele. The facts to account for the delay were not within his knowledge. The danger of a litigation by ‘ambush’ and the prejudice that could arise from reasoning pertinent questions backwards, is manifest. Whether or not the discretion was properly exercised cannot be judged based on facts not known at the time, against the standard of what is best in hindsight, based on a standard of perfection.15 If it was intended to found the case upon an alleged improper exercise of a discretion to arrest, then that ought to have been pleaded 14 Sekhoto ibid para 49. 15 Barnard v Minister of Police and Another [2019] 3 All SA 481 (ECG) para 10 and Sekhoto fn 8 above para 39. unambiguously. The high court would have determined the issue based on established facts. [19] We were urged to determine the issue afresh should we find there was a misdirection by the high court. The submission was that there had been no subsequent acts of violence post the incident. It was further contended that notwithstanding the close living arrangements, there was no imminent harm or risk of harm justifying an arrest and all these factors pointed to an improper reason for the arrest. The submission is unsound and implies that the respondent must have exhibited a recurrent pattern of violent behaviour in order to effect the arrest. Furthermore, it misses an important connection between an arrest made pursuant to s 40(1)(b) and one effected under s 40(1)(q) of the CPA. An arrest made in terms of s 40(1)(q) explicitly refers to ‘an offence in respect of which violence is an element’ while an arrest made pursuant to s 40(1)(b) requires that there be allegations of a commission of a schedule 1 offence. (Emphasis added.) The jurisdictional requirements for arrest are the same. A crucial difference is that, unlike an arrest under s 40(1)(b), the degree or extent of the violence referred to in s 40(1)(q) is not bounded, justifiably so, to afford the maximum protection intended by DVA. The offence for which the respondent was arrested fell under both ss 40(1)(b) and 40 (1)(q). [20] For the reasons above, the high court conflated the onus and pertinent questions about the lawful exercise of the discretion to arrest the respondent, which were neither pleaded nor fully canvassed at the trial. The high court therefore erred. [21] What remains is the issue of costs which must rightly follow the result. The appellant contended that if successful, we should grant it the costs of two counsel. I am not persuaded. The matter is not complex to justify such an award, and the appellant did not advance any cogent reasons for doing so. [22] In the result, I make the following order: The appeal is upheld with costs. The order of the high court is set aside and replaced with the following order: ‘The appeal is dismissed with costs.’ _________________________ N T Y SIWENDU ACTING JUDGE OF APPEAL Appearances For the appellant: V Madokwe and M M Ndamase The State Attorney, Gqeberha The State Attorney, Bloemfontein For the respondents: M du Toit Peter McKenzie Attorneys, Gqeberha Webbers Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 3 May 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Minister of Police v Gqamane (226/2022) [2023] ZASCA 61 (3 May 2023) Today the SCA upheld an appeal with costs, against the decision of the Eastern Cape Division of the High Court of South Africa, Makhanda (the high court). The respondent (Mr Gqamane) was arrested without a warrant on 17 February 2017 for allegedly assaulting the complainant with whom he was romantically involved, days earlier when she tried to collect her furniture from his home. She was admitted at Dora Nginza Hospital (the hospital) for two days and treated for a broken arm. A charge of assault with intent to commit grievous bodily harm was laid against the respondent. Upon his arrest, he was detained in police cells over the weekend until the Monday and was subsequently released directly from the cells at about 14h00 without a court appearance. In April 2017, the respondent instituted a claim for damages of R240 000 in the Regional Court, Port Elizabeth (the trial court), against the appellant arising from allegations of unlawful arrest and detention. The appellant’s defence was that: (a) the victim was a complainant as defined in the Domestic Violence Act 116 of 1998 (the DVA). (b) The assault constituted an incident of domestic violence with an element of violence.(c) The arresting officer was entitled to arrest without a warrant in terms of s 40(1)(q) of the Criminal Procedure Act 51 of 1977 (the CPA) read with s 3 of the DVA. (d) The arresting officer reasonably suspected the respondent of having committed a schedule 1 offence and as such, he could lawfully arrest the respondent without a warrant in terms of section 40(1)(b) of the CPA. The trial court dismissed the action and found that the jurisdictional requirements to arrest were met. On appeal, the high court reversed the decision of the trial court and ruled in favour of the respondent. It held that the trial court failed to address the issue of the discretion to arrest, and, this failure caused the trial court to reach a decision which could not reasonably have been made by a court properly directing itself to all the relevant facts and principles. The appeal to the SCA turned on the narrow question whether the high court could mero motu determine the question of the lawful exercise of a discretion to arrest even though not pleaded by the respondent. The respondent contended that a discretion to arrest was inherent to the question of the lawfulness of the arrest. A court on appeal can consider the issue if it was canvassed fully at the trial. The complaint by the appellant was that the issue was not pleaded. Its attention was directed to one case at the trial and thereafter, the respondent impermissibly attempted to canvass a different case on appeal to the high court. The SCA held that it was trite that a party was bound by their pleadings and ordinarily, they would not be allowed to raise a different or fresh case without a due amendment. A court was equally bound by those pleadings and should not pronounce upon any claim or defence not made in the pleadings. A court may relax this rule where the issue involves a question of law which emerged fully from the evidence or was apparent from the papers. The SCA held that the submission that a discretion to arrest is inherent to the question of the lawfulness of the arrest is incorrect in law. In the case at hand, the high court erred by conflating the onus to prove the jurisdictional requirements to arrest (which rested on the appellant) and the overall onus to prove other elements of the claim, including improper exercise of discretion to arrest (which rested on the respondent). The SCA held that once the high court found that the jurisdictional requirements to arrest the respondent were met, the appellant discharged the onus, which rested on it to justify the arrest. That should have been the end of the matter. Despite confirming that the trial court was correct regarding the jurisdictional facts, the high court held that it ought to have considered whether the discretion was properly exercised. The implication of the decision by the high court was that the onus to prove the proper exercise of the discretion to arrest rested with the appellant rather than the respondent. Accordingly, the high court erred on this score. The SCA went on to hold that the danger of a litigation by ‘ambush’ and the prejudice that could arise from reasoning pertinent questions backwards, was manifest in this case. Whether or not the discretion was properly exercised cannot be judged based on facts not known at the time, against the standard of what was best in hindsight, based on a standard of perfection. If it was intended to found the case upon an alleged improper exercise of a discretion to arrest, then that ought to have been pleaded unambiguously. The high court would have determined the issue on established facts. Importantly, the SCA held that the conclusion by the high court missed an important connection between an arrest made pursuant to s 40(1)(b) and one effected under s 40(1)(q) of the CPA. An arrest made in terms of s 40(1)(q) explicitly refers to an offence in respect of which violence is an element, while an arrest made pursuant to s 40(1)(b) requires that there be allegations of a commission of a schedule 1 offence. Given that s 40 (1) (q) incorporates s 3 of the DVA, the nature of the violence envisaged in s 40(1)(q) is unbounded, justifiably so to afford the maximum protection envisaged under the DVA. The offence for which the respondent was arrested fell under both ss 40(1)(b) and 40 (1)(q). For the reasons above, the high court conflated the onus and pertinent questions about the lawful exercise of the discretion to arrest the respondent, which were neither pleaded nor fully canvassed at the trial. The high court therefore erred and the appeal must succeed with costs. ~~~~ends~~~~

1508

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case no: 304/2007 In the matter between: JOSE DUARTE COELHO DA SILVA 1st Appellant RESINEX PLASTICS (PTY) LTD 2nd Appellant RESINEX SOUTHERN AFRICA (PTY) LTD 3rd Appellant and C H CHEMICALS (PTY LTD Respondent Neutral citation: Da Silva v C H Chemicals (Pty) Ltd (304/2007) [2008] ZASCA 110 (23 September 2008) ______________________________________________________________ Coram : SCOTT, FARLAM, CAMERON, CACHALIA JJA et LEACH AJA Date of hearing : 18TH and 19TH AUGUST 2008 Date of delivery : 23 SEPTEMBER 2008 Corrected : Summary: Whether there was a breach of a director’s fiduciary duty by the exploitation of various corporate opportunities after his resignation – whether there was a breach of the director’s fiduciary duty in other respects – whether the second and third appellants engaged in unlawful competition. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from the High Court, Pretoria, (Seriti J sitting as court of first instance). (1) The appeal succeeds to the extent set out hereunder. (2) The respondent is to pay the costs of the appellants including, in the case of the second and third appellants, the costs of two counsel. (3) The order of the court a quo is set aside and the following is substituted in its stead: (a) The plaintiff’s claims, save for those relating to the LLDPE transaction, are dismissed with costs including the costs of two counsel where two counsel were employed. (b) The first and second defendants are declared to be liable to the plaintiff for such damages as may be proved to have been suffered by the plaintiff arising out of the LLDPE transaction. In the event of either the first defendant or the second defendant paying any portion of such damages once determined, the other shall be liable for the balance only. (c) The issue of the costs in respect of the claims arising out of the LLDPE transaction is to stand over for determination by the court when the issue of quantum is determined. ______________________________________________________________ JUDGMENT ______________________________________________________________ SCOTT JA (Farlam, Cameron, Cachalia JJA et Leach AJA concurring): [1] The appellants were the defendants in an action instituted by the respondent in the Pretoria High Court for the disgorgement of profits, alternatively for the payment of damages arising from alleged breaches of the first appellant’s fiduciary duties as the respondent’s managing director, and, in the case of the second and third appellants, for damages arising from their alleged unlawful competition with the respondent. The respondent’s claims, as they ultimately unfolded following several amendments to its particulars of claim, were founded on a number of separate but closely related causes of action. Broadly stated, some related to the exploitation by the first appellant of two business opportunities which it was alleged were corporate opportunities and should have been exploited for the respondent’s benefit and others related to alleged conduct on the part of the first appellant while still the respondent’s managing director which in other respects was aimed at furthering his own interests and those of the second and third appellants to the detriment of the respondent. The court a quo (Seriti J) found for the respondent on all its claims but in terms of an agreement between the parties ordered that the issue of their quantification should stand over for later adjudication. The appeal is with the leave of the court a quo. For the sake of convenience I shall refer to the parties as in the court below. [2] Before attempting to outline the claims in greater detail or to consider the issues to which they give rise it is necessary first to summarize, as briefly as the circumstances permit, the facts which form the background to the dispute between the parties. They are largely common cause. [3] The Dow group of companies is a large international group which distributes chemicals, plastics and various other related substances. It had a local branch in South Africa until it disinvested in 1987. Its business was then purchased by the plaintiff company. The latter’s shareholders were Mr Peter Columbine and Mr Dennis Hellmann who had both been local managers of Dow. Hellmann became the chairman of the plaintiff and Columbine its managing director. The plaintiff proceeded to serve as the local distributor of Dow products. The first defendant, Mr Jose Da Silva, joined the plaintiff in 1987 and in 1989 became its managing director. Columbine remained active in the business until 1997 when his share in the business was bought out by Hellmann. [4] After the advent of democracy Dow re-entered the South African market in 1995. It incorporated a South African subsidiary and opened an office in Johannesburg. Mr Joaquin Schoch, who had joined the Dow group in 1976, became its managing director. It was the policy of Dow to deal directly with its larger customers, ie those who purchased their products in large quantities, and to permit other distributors to serve those customers whose purchases were in smaller quantities. In pursuance of this policy, Dow South Africa entered into a distribution contract with the plaintiff on 1 April 1995 which entitled the plaintiff to distribute a number of specified Dow products in South Africa. The contract was for a period of five years subject to extension of a further period of five years and thereafter indefinitely subject to one year’s notice of termination. In terms of clause 3 Dow was entitled to delete any of the listed products on six months’ notice to the plaintiff. [5] In 1996 the Du Pont group, which had its base in the USA and which was described as a giant in the chemical industry, entered into a joint venture agreement with the Dow group for the marketing of thermo-plastic elastomers in the international market. They did so through a Swiss based company, Du Pont Dow Elastomers SA. I shall refer to it simply as DDE. On 1 April 1996 DDE entered into a distribution contract with the plaintiff in terms of which the plaintiff was to distribute a single DDE product called tyrin. The contract could be terminated on 90 days’ notice. DDE entered into a similar contract with another South African company, Chemserve, for the distribution of some four DDE products. [6] Resinex NV, the European holding company of the second and third defendants, is in turn a member of a larger group of companies ultimately controlled by Ravago SA. The latter is a substantial multi-national conglomerate based in Belgium. The main business of Resinex is the international distribution of chemical and plastic products. Dow’s relationship with the Ravago group is of long standing and goes back to the late 1970’s. By the end of 1996 Resinex was Dow’s largest distributor and distributed the latter’s products in a number of countries. On 1 January 1998 Distriflex, a subsidiary of Resinex, entered into a distribution contract with DDE. In pursuance of this contract Resinex distributed DDE products in Eastern Europe, the Middle East and Africa with the exception of South Africa, Nigeria, Morocco, Tunisia and Egypt. [7] In the mid 1990’s Resinex took a decision to enter the South African market. Its decision to do so was well known in the industry and was known to Hellmann and Columbine of the plaintiff. It was obvious that if Resinex were to enter the South African market it would do so in competition with the plaintiff and would pose a significant threat to the latter’s Dow and DDE business. Resinex was a multi-national group that dwarfed the plaintiff and had extensive personal and business ties with Dow and DDE. When DDE was established it immediately embarked upon a policy of limiting the number of entities distributing its products. This was common knowledge in the industry. [8] Negotiations between Resinex and the plaintiff with a view to a joint venture or some other form of collaboration in South Africa commenced in 1996. Dow was aware of Resinex’s intended expansion and it was Dow that instigated the talks. It would have been obvious that Dow wished to avoid having to choose between Resinex and the plaintiff as its distributor in South Africa. The negotiations were initially conducted on the plaintiff’s behalf by Columbine, its then managing director. I shall describe these negotiations in greater detail later in this judgment. It suffices at this stage to record that the negotiations culminated in an offer being made by Resinex in February 1997. In essence it was that Resinex would immediately purchase 50% of plaintiff’s chemical performance products department and its plastics department and would acquire the remaining 50% over a period of five years, by which time it would have total control. The offer was rejected in April 1997. There was no counter offer. [9] At about this time Columbine sold his shares to Hellmann and withdrew from the plaintiff company. Thereafter Da Silva assumed responsibility for the talks with Resinex. Various meetings were held and letters written. From the correspondence it would appear that the driving force behind the attempt to establish some form of collaboration came from Da Silva. Although enthusiastic, his letters lacked what the managing director of Resinex, Mr Benoit De Keyser, described in evidence as ‘specifics’. His letters were in most instances simply left unanswered. [10] Resinex had made it clear at an early stage that it would be coming to South Africa, whether with or without the plaintiff. In 1998 Resinex took the decision not to enter the South African market via an interest in the plaintiff’s business or otherwise in collaboration with the plaintiff but to establish its own business in competition with the plaintiff. Just when that decision was taken and when it was conveyed to Da Silva was the subject of some debate in this court. However, both De Keyser and Da Silva testified that the decision was communicated to Da Silva for the first time in December 1998 when De Keyser invited Da Silva to join Resinex and head-up the business which Resinex had decided to establish in South Africa. Da Silva was reluctant to take a decision and stalled for time. According to De Keyser, Da Silva was still intent on achieving some form of collaboration between the plaintiff and Resinex. [11] In the following months De Keyser pressed Da Silva for an answer. Da Silva eventually agreed in principle in May 1998 and asked De Keyser to come to South Africa to discuss the details of the offer. De Keyser did so and an agreement was reached in the course of discussions from 8 to 10 June 1999. Da Silva wanted it in writing and De Keyser left it to Da Silva to draft the contract. The latter did so, using a precedent. He gave it the heading: ‘Heads of Agreement’. It was subsequently signed by both parties on 16 July 1999. I shall return to this document in due course. At this stage it is enough to say that it provided for the establishment of two South African subsidiaries of Resinex, a holding company and a trading company. Da Silva would get a 25 percent interest in the holding company and would be the managing director of both. All of the Resinex (and Ravago) business would be done through these subsidiaries. [12] On 11 June, being the day after the agreement was reached, Da Silva told Hellmann about it. They discussed the date of Da Silva’s departure. Initially they agreed that he would stay until the end of October 1999 but later agreed that he would leave at the end of August 1999. [13] During his notice period Da Silva acquired two shelf companies which became the second and third defendants. Their names were changed to Resinex Plastics (Pty) Ltd and Resinex Southern Africa (Pty) Ltd respectively. Da Silva was appointed a director of both on 19 August 1999. He hired premises for them from 1 September 1999 on which date they commenced business. While still with the plaintiff, but acting for and on behalf of the second defendant, being the trading company, he also purchased three containers of a substance called linear low density polyethylene (‘LLDPE’) which was subsequently on-sold by the second defendant to a local South African company. [14] Meanwhile, in the latter part of 1997 Dow had made a bid to acquire Sentrachem, a large South African company and participant in the chemical and plastics industry. It was generally known in the industry and to the plaintiff that should Dow obtain control of Sentrachem and its subsidiaries it was likely, in pursuance of its policy of dealing directly only with customers who purchased in large quantities, to pass on to another distributor that part of the business which related to the sale of its products in smaller quantities. One subsidiary of Sentrachem was Plastomark (Pty) Ltd which distributed chemical and plastic products and whose business the plaintiff would have had an interest in acquiring. Dow’s bid was successful and it ultimately gained control over Plastomark, but only in March 1999 after it had acquired the shares in that company which had been held by a German partner. In accordance with its policy Dow in due course took the decision to sell off that part of Plastomark’s business which related to the sale of products to customers who purchased in quantities of less than ‘a full truck load per order’. Notwithstanding Dow’s link with the plaintiff in South Africa this part of Plastomark’s business was sold to the third defendant and not to the plaintiff. The sale was in writing and dated 20 December 1999. [15] Subsequent to the second defendant commencing operations in South Africa and on 3 December 1999 Schoch (the managing director of Dow SA) gave the plaintiff six months' notice of the deletion of a list of products from their distribution contract concluded in April 1995. It will be recalled that Dow was entitled to do so in terms of clause 3. The deletion triggered a dispute between Dow and the plaintiff. It was ultimately settled by agreement on 1 November 2000. In terms of the settlement the distribution agreement was renewed but subject to the deletion of the products referred to in the 3 December 1999 notice. Dow did not enter into a formal distribution agreement with Resinex or its South African subsidiaries, ie the second and third defendants. In fact it had always been the custom of Dow and Resinex internationally to do business without a formal distribution contract. In due course Dow SA gave to the second defendant the business it had deleted from the plaintiff’s contract. [16] On 7 September 1999 Hellmann was told by DDE that it proposed to give the plaintiff three months’ notice of the cancellation of its distribution contract. The notice was formally given on 13 September 1999. On the same day notice was given to Chemserve, the other South African company that had distributed DDE products. On 25 October 1999 DDE and Distriflex (a subsidiary of Resinex) signed an agreement in terms of which the existing distribution contract was extended to include South Africa. Following the expiry of the notice period DDE’s products which had formerly been distributed by the plaintiff and Chemserve were distributed by the second defendant. [17] The plaintiff’s claims are founded primarily on alleged breaches of Da Silva’s fiduciary duty which he owed to the plaintiff as its managing director. The claims against the second and third defendants are for damages and are founded either on the latter’s alleged dishonest complicity in Da Silva’s breaches or on unlawful competition. The grounds on which the plaintiff relied for the allegation that Da Silva breached his fiduciary duties are briefly the following: (a) the exploitation for his own benefit or for that of the second and third defendants of the opportunity which the plaintiff had of establishing a joint venture or some other form of collaboration with Resinex (‘the Resinex opportunity’); (b) the exploitation for his own benefit, or for that of the second and third defendants, of the plaintiff’s opportunity to acquire the Plastomark business (‘the Plastomark opportunity’); (c) the procurement for his own benefit or for that of the second and third defendants of the existing business which the plaintiff had with Dow (‘the Dow contract’); (d) the procurement for his own benefit or for that of the second and third defendants of the existing business which the plaintiff had with DDE (‘the DDE contract’); and finally the purchase and sale for his own benefit and for that of the second and third defendants of the LLDPE (the ‘LLDPE transaction’). I shall deal with each in turn. Before doing so, however it is necessary to say something of the legal principles applicable to claims of this kind. [18] It is a well-established rule of company law that directors have a fiduciary duty to exercise their powers in good faith and in the best interests of the company. They may not make a secret profit or otherwise place themselves in a position where their fiduciary duties conflict with their personal interests (Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168 at 177). A consequence of the rule is that a director is in certain circumstances obliged to acquire an economic opportunity for the company, if it is acquired at all. Such an opportunity is said to be a ‘corporate opportunity’ or one which is the ‘property’ of the company. If it is acquired by the director, not for the company but for himself, the law will refuse to give effect to the director’s intention and will treat the acquisition as having been made for the company. The opportunity may then be claimed by the company from the delinquent director. Where such a claim is no longer possible, the company may in the alternative claim any profits which the director may have made as a result of the breach or damages in respect of any loss it may have suffered thereby (See Blackman, Jooste and Everingham, Commentary on the Companies Act Vol 2 p 8-161 to 8-162). [19] It is of no consequence that in the particular circumstances of the case the opportunity would not or even could not have been taken up by the company (Regal (Hastings) Ltd v Gulliver [1942] 1 All ER 378 (HL) at 389D, 392H-393A; Phillips v Fieldstone Africa (Pty) Ltd 2004 (3) SA 465 (SCA) para 31). But the opportunity in question must be one which can properly be categorized as a ‘corporate opportunity’. While any attempt at an all- embracing definition is likely to prove a fruitless task, a corporate opportunity has been variously described as one which the company was ‘actively pursuing’ (Canadian Aero Service v O’Malley (1973) 40 DLR (3d) 371 SCC at 382) or one which can be said to fall within ‘the company’s existing or prospective business activities’ (Davies, Gower and Davies’ Principles of Modern Company Law 7ed at 422) or which ‘related to the operations of the Company within the scope of its business’ (Bellairs v Hodnett 1978 (1) SA 1109 (A) at 1132H) or which falls within its ‘line of business’ (Movie Camera Company (Pty) Ltd v Van Wyk [2003] 2 All SA 291 (C) at 308b; 313d-e). Ultimately, the inquiry will involve in each case a close and careful examination of all the relevant circumstances, including in particular the opportunity in question, to determine whether the exploitation of the opportunity by the director, whether for the director’s own benefit or for that of another, gave rise to a conflict between the director's personal interests and those of the company which the director was then duty-bound to protect and advance. [20] A director will not escape liability by first resigning before seeking to exploit an opportunity which the company was actively pursuing (Canadian Aero Service v O’Malley supra) or one within the scope of the company’s business activities of which the director became aware in the performance of the latter’s duties as a director and which he or she deliberately concealed from the company (Industrial Developments Consultants v Cooley [1972] 1 WLR 443 (Birmingham Assizes)). The opportunity remains that of the company and the director will remain accountable. But if the opportunity is not of such a kind or if it is an opportunity which, although within the scope of the company’s business activities, only arose after his resignation or was one of which he was unaware prior to his resignation, he is at liberty in the absence of explicit contractual restraints to exploit it to the full. It must be emphasized that the expertise and experience acquired by a director during his period of employment with the company and in general even the personal relationships established by him during that period belong to him and not to the company. It is a well-established principle of the common law, now enshrined in s 22 of the Bill of Rights, that all persons should in the interests of society be productive and be permitted to engage in trade and commerce or their professions. (See eg Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486 (SCA) para 15.) The general policy of the courts is accordingly not to impose undue restraints on post-resignation activities. [21] Thus far, I have been dealing with corporate opportunities in the sense in which they are generally understood. But what has been said applies equally to the case of a director who in competition with the company and in breach of his fiduciary duty procures for his own benefit or for that of another, not a corporate opportunity as such, but some part of the existing business of the company. In that event the remedies available to the company will be the same and the director will be liable even if he first resigns before exploiting the business so procured. But in the absence of such conduct and provided there are no contractual restraints a director is free to resign and set up business in competition with his former company or obtain employment with a competing company. In that event, he is at liberty to compete with his former company even to the extent of enticing away existing customers. The Resinex opportunity [22] The plaintiff’s contention, in short, was that the contract entered into between Da Silva and Resinex NV in terms of which Da Silva was to establish and head-up Resinex’s local office in South Africa was a corporate opportunity which Da Silva was obliged to obtain and exploit for the plaintiff’s benefit. The contention was founded on the premise that the contract was in truth no more than a variant of the transaction with Resinex which the plaintiff had sought to achieve since 1996. It was also contended that the probabilities favoured the inference that Da Silva and De Keyser had connived as early as May 1998 to procure the opportunity for Da Silva rather than for the plaintiff. The defendants, on the other hand, argued that the contract between Da Silva and Resinex was fundamentally different from, and was the very antithesis of, the transaction which the plaintiff had pursued and was accordingly not a corporate opportunity, ie a business opportunity which Da Silva was obliged to obtain and exploit for the plaintiff. It was further argued that there was no basis for the inference sought to be drawn by the plaintiff with regard to the events of May 1998. [23] Before considering these issues it is necessary to examine in somewhat more detail the events preceding the conclusion of the contract between Da Silva and Resinex NV. As previously indicated, the talks between the plaintiff and Resinex were instigated by Dow in 1996 after the latter became aware that Resinex, one of its major distributors, was contemplating coming to South Africa. Following the exchange of correspondence and several meetings, Columbine wrote in July 1996 to Mr Theo Roussis, the chief executive officer of Ravago, recording by way of a summary what had been discussed thus far. ‘Resinex is interested in acquiring 50% of the [Plaintiff’s] Chemicals/Performance Products . . . and Plastics businesses as a first step with a second step resulting in total control. The second step would be accomplished over an agreed time period on a basis similar to that being used with Primoplast in Switzerland. A suitable PE ratio should be agreed.’ The offer subsequently made by Resinex by letter dated 10 February 1997 embodied what had been discussed. In short, it was that Resinex would immediately purchase a 50 percent interest in the two departments in question, ie the Chemical Performance Product department and the Plastics department, and would acquire the other 50 percent over a period of five years. The proposal was that Da Silva would be the general manager of the new company to be established to operate the two departments. The purchase price offered was DM 3 million. The effect would be that Resinex and the plaintiff would be partners in the business for the interim period until Resinex took it over altogether. Columbine referred the offer to Hellmann and noted in his accompanying memorandum that he was disinclined to accept it ‘even if Resinex sets up an operation here and competes in this market’. The risk of such an eventuality was accordingly known to Hellmann at that early stage. After some delay the proposal was rejected by the plaintiff in a letter dated 17 April 1997. It was written by Da Silva but its substance was determined by Hellmann. The letter did not say that the price was too low or raise some other objection. It rejected the very concept of the proposal. The second paragraph reads: ‘After careful consideration, we must advise that your offer to purchase our C & PP and Plastics businesses is unfortunately not of interest to us. The offer is thus not accepted.’ In the penultimate paragraph it was suggested that the plaintiff could start marketing some of Resinex’s brands and ‘some form of representations agreement’ could be reached. In the event nothing ever came of this for the reason that the involvement of more than one distributor resulted in a non- competitive price. According to De Keyser, who testified on behalf of the defendants, he was persuaded by the letter that a joint venture or other form of business alliance with the plaintiff was no longer a viable prospect. He testified, too, that shortly before the offer was made a final decision was taken by Resinex to extend its operations to South Africa. What was not finalized was whether it would do so by collaborating in some way with the plaintiff or by establishing its own business in competition with the plaintiff. [24] It appears that in June 1997 Da Silva had a meeting with De Keyser in Brussels at which some form of joint venture was discussed. On 11 September 1997 Da Silva wrote to De Keyser reporting that their June discussions ‘are still very much on track’ and that he had discussed with Hellmann the idea that Resinex take a stake in the plaintiff of 50 percent or more and that the former was ‘quite positive and open to suggestions’. In the same letter Da Silva mentioned that Dow was attempting to acquire Sentrachem and that ‘this could be of interest when Dow starts selling off what it does not want’. Significantly, the purchase of a 50 percent interest or more in the plaintiff was not dissimilar to the offer Resinex had made in February 1997, yet that offer had been rejected without a counter offer. [25] In the meantime in August 1997, Hellmann had met with Mr Jean-Louis Raynaud, the president for Europe of DDE, and the latter had insisted that Hellmann approach Roussis of Ravago with a view to establishing a joint venture with the Ravago group in South Africa. In October 1997 Hellmann wrote to Roussis to say that he and Da Silva would be in Europe in December and that he would like to use the opportunity to meet Roussis. In February 1998 Hellmann wrote to Raynaud to report that he had met Roussis and De Keyser in December 1997 and that he had found Roussis to be ‘a fine upstanding person as is Benoit de Keyser’. [26] On 23 December 1997, being the day after the meeting, Da Silva wrote an enthusiastic letter to Roussis and De Keyser which commenced: ‘We agreed to immediately start with establishing a joint venture partnership with yourselves’. It was clear, however, that what was agreed was no more than that they should attempt to agree. The letter proceeded to propose that each party should pool components of their respective businesses which they would run in partnership with each other. This was a shift from what had previously been proposed. Nonetheless, despite Da Silva’s enthusiasm, the letter elicited no response and nothing came of it. A further meeting was held in February 1998 and on 26 February 1998 Da Silva wrote: ‘As discussed, we will start by purchasing on open account at 60 days end of month’. This in effect was a reversal to what had been proposed in Da Silva’s letter of 17 April 1997 refusing Resinex’s offer. Da Silva explained that Hellmann had told him rather to focus on getting some trade going with Resinex. This would account for the absence of any reference to the proposal made in his letter of 23 December 1997. [27] There was a further meeting between Da Silva and De Keyser in May 1998. Da Silva testified that he had been invited by Dow to attend a World Cup football match and that he had used the opportunity to see De Keyser. He said that although a business meeting may have been scheduled his recollection was that they had only met socially for dinner. De Keyser said he had no recollection of the meeting. Da Silva was cross-examined at some length as to what passed between the two. He said he did recall De Keyser telling him that Resinex was definitely coming to South Africa, whether with or without the plaintiff. But other than that he could not remember what was said about a joint venture which, he said, was by then on the ‘back burner’. [28] In this court counsel for the plaintiff argued that the circumstances justified the inference that De Keyser had told Da Silva at this meeting that Resinex was establishing a local office in South Africa in competition with the plaintiff and had invited Da Silva to join Resinex. Building on this inference it was contended, admittedly somewhat tentatively, that it could also be inferred that De Keyser and Da Silva from then on conspired to procure the Resinex opportunity for Da Silva. In support of the inferences sought to be drawn, counsel relied first on the fact that from then on no further negotiations took place, second on a somewhat ambiguous statement by De Keyser in his evidence as to when the decision was taken to abandon some form of collaboration with the plaintiff, and third on the fact Da Silva failed to inform Hellmann of Resinex’s decision to establish an office in South Africa in competition with the plaintiff. In my view the inferences contended for are speculative, unjustified and lack any proper factual basis. De Keyser was adamant that he informed Da Silva of Resinex’s decision for the first time in December 1998 when he made Da Silva the job offer. This was also the evidence of Da Silva. The evidence of neither was challenged in cross- examination and nor was the inference sought to be drawn by counsel put to either of the witnesses. The fact that the negotiations came to a standstill in the first half of 1998 is hardly surprising having regard to the letter of 26 February 1998 which in effect put the clock back to April 1997. [29] In view of the criticism by the trial court of Da Silva’s evidence it is necessary at this juncture to comment briefly on the evidence of De Keyser which largely corroborated that of Da Silva in relation to the Resinex opportunity. Apart from the ambiguous statement to which I have referred – mainly as a result of incorrect dates being put to him by counsel – De Keyser’s evidence, although in English and not his home language of French, was clear and unequivocal and he emerged unscathed from cross- examination. The only comment the court a quo made regarding his credibility was to label as ‘false’ his evidence that the ‘Heads of Agreement’ contract constituted an employment contract. This was a misdirection. First, it was not a statement of fact but an opinion by a layman as to the categorization of a contract and, second, as I shall demonstrate later, the contract, if not in substance a contract of employment, was at least analogous to one. No reason was advanced in this court for rejecting De Keyser’s evidence. [30] To continue the narrative, in September 1998 Da Silva wrote to Roussis enclosing two press reports that Dow had bought out the other shareholder in Sentrachem’s subsidiary, Plastomark. Da Silva explained that the purpose of the letter was no more than an attempt to resurrect the talks. This is how De Keyser understood the letter when it was redirected to him. Some attempt was made by plaintiff's counsel to suggest that Da Silva wrote the letter in pursuance of a conspiracy between De Keyser and Da Silva to obtain for Resinex any business of Plastomark that Dow may not wish to retain, but once again there was no factual basis for such a far-reaching inference. [31] In December 1998 Da Silva and Hellmann travelled to Flimms, Switzerland, to attend a distributors' conference organised by Dow. While there, De Keyser invited Da Silva to his hotel room and told him that nothing had come of their talks over a period of more than two years and that Resinex had decided to come to South Africa in competition with the plaintiff. De Keyser offered Da Silva a position as head of Resinex’s operations in South Africa and they proceeded to discuss the kind of remuneration package Da Silva could expect to receive, which De Keyser said would include a shareholding in the local company that would be formed. De Keyser’s attitude was that Da Silva could virtually have whatever he wanted. However, even at that late stage, according to De Keyser, Da Silva attempted yet again to explore the possibility of some form of collaboration with the plaintiff. But by then, as far as Resinex was concerned, it was too late; a final decision had been taken to set up an operation in South Africa. [32] As previously indicated, Da Silva stalled for time and after being pressed by De Keyser agreed in principle in May 1999 to the terms offered. He asked De Keyser to come to South Africa to discuss the details of the proposal and the latter did so from 8 to 10 June 1999. Da Silva drafted a contract headed ‘Heads of Agreement’ which, as I have said, was subsequently signed by the parties on 16 July 1999. Da Silva testified that he had told Hellmann of the job offer in February 1999. This was denied by Hellmann. But the dispute is of little consequence. It is common cause that on 11 June 1999 Da Silva tendered his resignation to Hellmann and told him that he had accepted Resinex’s offer to head-up the latter’s operation in South Africa. Da Silva’s resignation and decision to join Resinex was accepted by Hellmann without animosity and when Da Silva finally left at the end of August a party was held in his honour and he was given a handsome present. After Da Silva’s departure a copy of the Heads of Agreement came into the possession of Hellmann in circumstances which need not be considered. It was on the strength of this document that the plaintiff contended that Da Silva had usurped for himself a business opportunity which as a director of the plaintiff he had been duty-bound to obtain and exploit for the company. [33] It is necessary to quote the contract in full: ‘HEADS OF AGREEMENT Made and entered into by and between: Jose Duarte Coelho da Silva (hereinafter referred to as JDS) and Resinex NV, represented by Theo Roussis and Benoit De Keyser (hereinafter referred to as RNV) Whereas JDS and RNV desire to enter an agreement to start an operation in South Africa with the objective of carrying on a business in the distribution of plastic raw materials and other products represented by the Resinex / Ravago Group. NOW THEREFORE IT IS AGREED AS FOLLOWS: 1. The Holding Company will be formed called Resinex Holdings (Pty) Limited, with the share capital being 75% RNV and 25% JDS. 2. A subsidiary company will be formed called Resinex Plastics (Pty) Limited with the share capital being 90% owned by Resinex Holdings (Pty) Limited and 10% by Leon van der Merwe. 3. All products sold by the Resinex Group companies including Distribution products of Ravago will be sold exclusively through Resinex Plastics (Pty) Limited for the following territories. - South Africa - Mozambique - Namibia - Swaziland - Botswana - Zimbabwe - Zambia 4. Any sales done direct (indent) to customers for the above territories by Resinex and Ravago companies will attract commission of between 3% - 5% depending on products and profit margins obtained. 5. Any future acquisitions, with particular reference to Mobil or Plastomark, will be done through Resinex Holdings (Pty) Limited and any new agencies obtained in future by either Resinex Holdings (Pty) Limited, Resinex Plastics (Pty) Limited or any subsidiaries or Group Companies of Resinex/Ravago where markets exist in the listed territories will form part of the Resinex Holdings Group and such sales recorded into the appropriate Group Companies. 6. Sales of share capital in future by any of the shareholders of the Resinex Group in South Africa will form part of the Global policy, namely, the average profits of the last two trading years and the year in operation multiplied by a price earnings ratio of 4 plus the share of the selling Shareholders Capital Employed. 7. All companies will have 5% of profits before tax available for distribution to key staff decided by the Managing Director of Resinex Holdings (Pty) Limited. 8. In the initial start of Resinex Plastics (Pty) Limited, JDS will, for the first 2 years, not receive a profit share of less than R120 000 00 p a. 9. Any dividends distributed will be in accordance with Group policy, namely, that the companies must return 20% returns before tax on shareholders capital (including retained earnings). Any excess return is available as dividend provided the capitalisation ratio of the companies remain between 25% - 33 1/3% shareholders capital to 75% - 66 2/3% external finance. 10. Share capital into the Resinex companies are interest free and initial start-up capital will be determined later for operations of Resinex Plastics (Pty) Limited. Share capital will in principle represent the value of stock holding. 11. JDS will be the Managing Director of Resinex Holdings (Pty) Limited and Resinex Plastics (Pty) Limited. His remuneration package will be: Cash salary R416 000.00 per annum Car allowance R 84 000.00 per annum Total R500 000.00 Leon van der Merwe will be the Business Manager for Thermoplastics and Olefins. His remuneration package will be: Cash salary R338 000.00 per annum Car allowance R 66 000.00 per annum Total R404 000.00 12. Medical aid will be provided by Momentum Discovery, the cost to be borne 50% by employees – 50% by the company in line with SA standards and in existence with CHC today. 13. A pension scheme will be set up wherein the employee contributes 6% of earnings and the company 9.12% in line with the CHC scheme in existence. 14. All Fringe Benefits, including golf subscriptions, etc that exist today in their personal employment will apply to JDS and Leon van der Merwe.’ [34] In the course of his judgment Seriti J observed that: ‘The language used in the agreement under consideration is simple and understandable. When interpreting it, [the] court must assign ordinary grammatical meaning to the words used, unless absurdity or inconsistency with the rest of the [document] might arise from such an approach.’ After referring to the identity of the parties to the agreement, ie Da Silva and Resinex NV, and the wording of the preamble which he said had ‘nothing to do with an employment contract’, the learned judge continued: ‘Certain clauses, particularly clauses 1 and 2, which deal with the structure of the business operations to be established in South Africa, and the allocation of shares to the [signatory] of the agreement and Mr Leon van der Merwe, and clause 5 which, inter alia makes provision for the acquisition of future opportunities, which future opportunities include Plastomark and Mobil, underpin the conclusion that the “Heads of Agreement” under consideration is not an employment contract, but a contract of a joint business venture. It regulates the relationship between Da Silva and Resinex NV/Ravago NV and not [the] employment of [Da Silva] by second or third defendant, nor Resinex NV/Ravago NV.’ The judge referred to a submission made by Da Silva‘s counsel and proceeded: ‘The main feature of the ‘Heads of Agreement’ entered into between Resinex NV and the first defendant is that a business relationship between [Da Silva] and Resinex was established. The fact that first defendant was also made the managing director of the second and third defendant does not diminish the fact that a business relationship was established.’ In the result he concluded that: ‘[Da Silva] breached his fiduciary duties by negotiating for himself, a business opportunity he should have negotiated on behalf of the plaintiff.’ In this court the reasoning of the trial court was largely adopted by the plaintiff’s counsel who placed particular emphasis on the heading, the identity of the parties and the wording of the preamble. [35] It is necessary for the purposes of the present inquiry to view the agreement between Da Silva and Resinex NV against the background of the events leading up to its conclusion. It is for this reason that I have set out in some detail the sequence of those events and the course of the negotiations between the plaintiff and Resinex. What is readily apparent is that at a relatively early stage Resinex took the decision to extend its operations to South Africa. It had a choice of either entering the market in competition with plaintiff or doing so in collaboration with the plaintiff, whether in the form of a joint venture, a take-over of its chemical and plastics departments or some other form of business alliance. It was either the one or the other and the plaintiff was fully aware of this. The very object of the negotiations and the establishment of some form of business alliance with Resinex was to avoid the consequence of the latter adopting the other course of entering the market in competition with the plaintiff. That other course was the very antithesis of what the plaintiff sought to achieve by negotiating with Resinex. The only business opportunity which the plaintiff pursued and sought to exploit was therefore a joint venture or other business alliance with Resinex. But that opportunity did not materialize. The negotiations came to nought and Resinex set up business in competition with the plaintiff. Once Resinex took the decision to do so, it put paid to any joint venture or business alliance of the kind the plaintiff had pursued. Da Silva was not precluded by reason of a restraint of trade agreement from joining the opposition, and that is what he did. [36] Much emphasis was sought to be placed on the format and wording of the agreement, particularly the preamble. But in an enquiry of this nature it is the substance of the agreement that must be looked at, not the form in which it is cast (Bellairs v Hodnett 1978 (1) SA 1109 (A) at 1130E-F). In this regard, it must also not be overlooked that Da Silva who drafted the agreement had no legal training or expertise in the drafting of contracts. As he explained, the draft was based on a precedent he had managed to obtain. In substance the agreement was for the employment of Da Silva as the managing director of two local subsidiaries of Resinex. (These subsequently became the second and third defendants.) One would be the holding company of the other. Da Silva would have a 25 percent shareholding in the holding company and Mr Leon van der Merwe (a friend of Da Silva who was then employed by Dow and who was to be the business manager for certain products) would have a 10 percent shareholding in the other company, which was presumably intended to be the trading company. The remaining 75 percent of the shares in the holding company would be held by Resinex NV. The agreement contained detailed provisions as to Da Silva’s remuneration package which included medical aid, a pension scheme and fringe benefits. It also made provision for a five percent participation in the profit of the companies by the key staff ‘as decided by the managing director of [the holding company]’, ie Da Silva. It is important to observe at this stage that the structure of Da Silva’s employment package with the plaintiff was no different. He earned a salary and received similar medical aid, pension fund and fringe benefits. He was entitled to a 15 percent shareholding in the plaintiff. According to the evidence he had received an initial four percent free and a further four percent which had been paid for out of dividends, but he had elected not to take up the remaining seven percent to which he would have been entitled. He was also entitled to a two percent share in the profits of the plaintiff. This compared with the five percent of the profits of the second and third defendants but which in his discretion he would have to share with other key staff members. As far as Da Silva’s shareholding in the holding company was concerned, De Keyser testified that it was Resinex’s policy to make provision for the managing directors of their foreign subsidiaries to have a substantial shareholding in the subsidiary concerned. He said Da Silva would have to pay for his shares but the payment would come from his share of the profits. In the event, Da Silva took up only a 20 percent shareholding. [37] The agreement also contains various provisions relating to the nature of the business of the trading company. Clause 3, for example, provides that all Resinex group products sold in a number of listed countries, including South Africa, would be sold through the trading company. Da Silva explained that as far as Resinex as an employer was concerned, it was an unknown quantity. He did not want to find himself in a position where Resinex was by- passing him and selling its products through some other company. Similarly, clause 5 made provision for any future acquisitions to be directed through the trading company. In this regard counsel for the plaintiff sought to make something of the reference to Mobil and Plastomark. But the possibility of the Plastomark business becoming available was common knowledge in the industry. Again, once the Resinex operation in South Africa commenced it would have been free to compete with the plaintiff for the Mobil business. In the event, Mobil remained with the plaintiff. The object of these provisions was therefore to define the parameters of the business of the second and third defendants. Given that Da Silva was to be employed as the managing director of those companies, the provisions were analogous to those relating to a job description in a typical contract of employment. It is true that the agreement does not amount to a contract of employment between Resinex NV and Da Silva in the formal sense. It made provision instead for the employment of Da Silva by Resinex’s subsidiaries to be established for the purpose of Resinex’s operation in South Africa. Da Silva was to contribute nothing more than his services as managing director. Whether one categorizes the contract as a contract of employment or one which is analogous to or in substance such a contract is of no consequence. The point is, it was not the transaction pursued by the plaintiff; it was the very antithesis of what was pursued and Da Silva was under no duty to obtain and exploit it for the plaintiff. It follows that in my view the plaintiff’s claims under the rubric of the Resinex opportunity had to fail and the court a quo’s finding to the contrary was wrong. The Plastomark opportunity [38] The plaintiff’s contention in this regard was that the opportunity to buy that part of the distribution business of Dow’s subsidiary, Plastomark (Pty) Ltd, which the former subsequently decided to sell was a corporate opportunity which Da Silva was obliged to have obtained and exploited for the plaintiff’s benefit. [39] It is clear, however, from the evidence of Schoch that although it was generally anticipated that Dow would dispose of part of the Plastomark business, the final decision to do so was taken some while after Da Silva had left the plaintiff and commenced his employment with the second and third defendants. Schoch’s evidence to this effect was fully supported by the internal memoranda exchanged between Schoch and other employees of Dow. Schoch explained that it was only in March 1999 that Dow finally gained control of Plastomark after buying out the other shareholder. Dow commenced in May 1999 what was termed a value-based management evaluation in order to determine the extent of Plastomark’s business that should be sold. The evaluation was conducted by a team of employees who reported directly to Mr Romeo Kreinberg who was the head of the plastics division of Dow and who operated from Switzerland. The decision to sell the part of the Plastomark business so identified was taken in October 1999. Schoch testified that it was only at this stage that he contacted Da Silva to enter into negotiations for the purchase of the Plastomark business. In the event, the negotiations were conducted in Europe and Schoch was not involved. They culminated in the third defendant purchasing the Plastomark business in terms of a written contract dated 20 December 1999. [40] The plaintiff’s contention was, however, that Da Silva and Schoch, and for that matter also De Keyser, were party to what was alleged to be a conspiracy to procure the Plastomark business for Resinex’s South African subsidiaries. The basis for this assertion was that, as revealed from Da Silva’s electronic diary which he had deleted from his computer when he left but was subsequently retrieved, Da Silva had in 1999 arranged various lunch and dinner dates with Schoch, one of which included De Keyser and Mr Gabbard of DDE and had also gone on holiday to Namibia with Schoch in August 1999. But, as Da Silva explained, he and Schoch were on friendly terms. They met socially and also for business reasons. The holiday in August 1999, he said, had been arranged in January and involved four families including the children of each. This was confirmed by Schoch. At best for the plaintiff, the deletion by Da Silva of various folders in his computer and his contact with Schoch may have given rise to some suspicion. But that is a far cry from establishing the conspiracy theory advanced by the plaintiff. [41] There were, in any event, other sound reasons why Dow should have chosen to sell the Plastomark business to the Resinex group in preference to the plaintiff. By the end of 1996 Resinex was Dow’s largest distributor in the international market and their relationship was one of long standing. It will be recalled that it was Dow that had first instigated the talks between the plaintiff and Resinex. The reason would have been Dow’s preference to do business in South Africa with its major distributor rather than with a smaller competitor and an alliance between the two would have rendered it unnecessary for Dow to have to take the South African business away from the competitor. The plaintiff, and in particular Hellmann, could hardly have been unaware of this. Indeed, it was inevitable that Resinex’s South African subsidiaries would capture some if not all of the Dow business in South Africa. The fact that it did so does not therefore suggest that Da Silva was guilty of any breach of his fiduciary duties to the plaintiff while he was in its employ. [42] Another important factor was the ongoing mutual animosity between Hellmann and Schoch. As early as 17 May 1996 Hellman wrote to Schoch’s superior, Mr Vincent Sinnott, saying that Schoch was ‘unpredictable, deceitful, and quite frankly has erred on the untruthful side on a number of occasions’. On 10 September 1999 Hellmann had a meeting with Sinnott. In his aide memoir of their meeting Hellmann recorded that he had told Sinnott ‘once again that Schoch is a liar, a crook, a fraud and only after his own agenda’. This was at the very time that the question had arisen as to whether the plaintiff or Resinex should be given the Plastomark business. While the decision was not that of Schoch alone, it is clear from the exchange of emails between Schoch and other senior employees of Dow that Schoch went out of his way to persuade his colleagues not to offer the Plastomark business to the plaintiff. In an email dated 13 September 1999 sent to Sinnott and Dow’s legal advisor, Mr Blackhurst, he described Hellmann as someone who 'has "fun" taking people and companies to court and who has "expressed the intention" to take Dow to court in SA’. He concluded by saying: ‘I am not interested in working with [the plaintiff]’. Again, in an email dated 20 September 1999 he wrote to Sinnott: ‘It is not the first time that we hear that Hellmann is after suing Dow (in the USA, so he can get more money) – whether he will or not, it is a liability to have someone like him as a partner’. When these emails were written the final decision to sell off part of the Plastomark business had not yet been taken. At the time both Hellmann and his son, Mr Neil Hellmann, who had taken over as managing director of the plaintiff, were in contact with Sinnott in an attempt to persuade the latter that in terms of the agreement dated 1 April 1995 Dow was obliged to offer the Plastomark business to the plaintiff and even went so far as to threaten to sue Dow. [43] From the aforegoing, it is apparent that while Da Silva was with the plaintiff there was a possibility, indeed a strong possibility, that Dow would sell off parts of the Plastomark business. Da Silva knew of the possibility as did everyone else, including Hellmann and his son who actively engaged with Dow to obtain the business. Dow’s decision ultimately to sell the Plastomark business to the third defendant is explicable on grounds wholly unrelated to any intervention on the part of Da Silva in breach of his fiduciary duties to the plaintiff. The plaintiff’s conspiracy theory lacked any proper factual basis and was not established. It follows that in my view the plaintiff’s claims, in relation to the ‘Plastomark opportunity’ were similarly unsubstantiated and the court a quo erred in upholding them. The Dow contract [44] The essence of the claim under this heading is that while still employed by the plaintiff, Da Silva persuaded Dow, whether directly or indirectly, to delete some of the products from the plaintiff’s distribution contract which it was entitled to do on six months written notice in terms of clause 3. [45] I have previously referred to the close relationship that existed between Dow and Resinex. According to De Keyser he had talks with Dow in Europe at about the time the Resinex subsidiaries commenced business in South Africa with a view to acquiring some of Dow’s South African business. The possibility of deleting some of the products distributed by the plaintiff was raised by Sinnott at a meeting with Hellmann on 13 September 1999. At a meeting between Schoch and Hellmann Jnr on 5 November 1999 Schoch informed the latter of Dow’s decision to do so. Written notice in terms of clause 3 of the distribution contract was subsequently given on 3 December 1999 and in due course the products so deleted were distributed by the second defendant. [46] From what has been said previously, it follows that it would have been clear to all that in the event of Resinex establishing a presence in South Africa it was to be expected that it would capture all or some of Dow’s business in South Africa. Added to this was the animosity that existed between Hellmann and Schoch. As in the case of the Plastomark opportunity, the mere fact that the plaintiff lost some of Dow’s business to the second defendant does not suggest that Da Silva was guilty of any breach of his fiduciary duties while employed by the plaintiff. The loss of that business accordingly adds no credence to the plaintiff’s conspiracy theory, which as I have said, lacked a proper factual basis. In my view the court a quo erred in upholding the claims under this heading. The DDE contract [47] It will be recalled that on 7 September 1999 Hellmann was informed that DDE proposed to give the plaintiff three months’ notice of the cancellation of their distribution contract of April 1996 in terms of which the plaintiff distributed a product called tyrin. The notice was formally given on 13 September 1999. On the same day notice was given to DDE’s other South African distributor, Chemserve. On 25 October 1999 DDE and a subsidiary of Resinex NV, Distriflex, signed an agreement extending their distribution contract of 1 January 1998 so as to include South Africa. After the expiry of the notice period tyrin was distributed in South Africa by the second defendant in pursuance of the latter contract. The plaintiff’s contention in essence was that while employed by the plaintiff and in breach of his fiduciary duties, Da Silva actively promoted the cancellation of the plaintiff’s distribution contract with DDE or at least failed to alert the plaintiff to the risk that it might be cancelled. The claim under this heading was limited to one for damages. [48] When DDE was established in 1996 there were about 60 international distributors distributing Dow and Du Pont products which in terms of the joint venture agreement were to be dealt with by DDE. DDE immediately embarked upon a policy of rationalisation aimed at reducing the number of its distributors to five. That DDE was reducing the number of its distributors was known to all the distributors and was known to Hellmann. Distriflex was one of the chosen five and in terms of its contract dated 1 January 1998 it distributed DDE’s products in a number of countries including several in Africa. Initially DDE’s policy posed no threat to the plaintiff’s distribution of tyrin because DDE’s African distributors, Resinex (acting through its subsidiary Distriflex), did not do business in South Africa. When DDE became aware that Resinex was contemplating moving into South Africa, DDE, it will be recalled, insisted that Hellmann approach Roussis of Ravago with a view to establishing some form of a joint venture with the Ravago group in South Africa. In view of DDE’s policy, the likelihood of DDE switching its South African business to Resinex in the event of the latter's coming to South Africa would therefore have been obvious to all concerned, including Hellmann. [49] Towards the end of 1998 De Keyser informed DDE of Resinex’s decision to move into South Africa on its own and not in collaboration with the plaintiff. Mr Pierre Burelli, the commercial director of DDE for Europe, the Middle East and Africa, who gave evidence on behalf of the defendants at the trial, testified that in about the middle of 1999 DDE decided to switch its business in South Africa to Resinex once the latter commenced its operations there. He explained that the decision was taken at the highest level by a leadership team headed by no lesser a person than Mr Don Faught who by then had replaced Raynaud as the president of DDE for Europe. He said Da Silva played no role in the decision and it was inconceivable that he could have done so as the decision was taken regardless of the persons involved in the distribution companies concerned. He explained that underlying the decision was DDE’s experience that distributors operating on a large scale and in a number of countries were able to achieve a greater efficiency and a lower service cost per unit. The decision affected not only the plaintiff but also Chemserve. He confirmed that once the decision had been taken he informed De Keyser. [50] Burelli’s evidence that Da Silva played no role in DDE’s decision to give its South African business to the Resinex subsidiaries was not challenged in cross-examination, nor was there any evidence to gainsay it. Nonetheless, the court a quo appears simply to have ignored it. There can be no reason for rejecting Burelli’s evidence and it follows that the plaintiff failed to establish its contention that in breach of his fiduciary duty Da Silva had promoted or procured the cancellation of the DDE contract. [51] Da Silva testified that he repeatedly warned Hellmann of the risk of losing DDE’s business in South Africa. Hellmann denied this. But whether he was actually warned or not seems to me to be of little consequence. Hellmann knew that Resinex was a major distributor of DDE products in a number of countries. He knew that DDE was drastically reducing the number of its distributors. He knew that if Resinex came to South Africa it would compete with the plaintiff and he knew that Raynaud of DDE had insisted that he open talks with the Ravago group with a view to establishing some form of a joint venture in South Africa. The reason for Raynaud’s insistence could hardly have escaped Hellmann and in all the circumstances he must have been fully aware of the very real danger of losing the DDE business in the event of Resinex coming to South Africa and competing with the plaintiff. I should add that it strikes me as highly unlikely that Da Silva and Hellmann would never have discussed the danger of losing the DDE business. [52] Finally, some reliance was placed on Da Silva’s failure to inform Hellman that DDE had decided to switch its business to Resinex when this information was conveyed to him in June 1999. But by then it was too late, the decision had been taken. The plaintiff’s claim under this head is one for damages. Whether Hellmann had been told or not would have made no difference to the loss it suffered by reason of the cancellation of the DDE contract. In any event, after being told of DDE’s decision on 7 September 1999 Hellmann Jnr made a considerable effort to persuade DDE to change its mind but without success. DDE was not prepared to depart from the decision it had taken. [53] It follows that in my view the court a quo similarly erred in finding for the plaintiff on the issue of the DDE contract. The LLDPE transaction [54] In Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1981 (2) 173 (T) at 198H-199A Van Dijkhorst J observed: ‘[C]ommon sense dictates that the mere creation by a managing director, whose services have been terminated and who is serving his month’s notice, of a future alternative means of employment, albeit in competition with his present company, need not necessarily create a conflict of interest greater than that of an ordinary director serving on the boards of two competing companies.’ The learned judge gave two examples of conduct which in the circumstances described would not amount to a breach of a director’s fiduciary duty. One was the mere incorporation of a company which was in the future to compete with the director’s existing employer; the other was the obtaining of suitable premises for that company’s operation. Such conduct, said the judge, could similarly not be regarded as amounting to unfair competition. He explained at 199C: ‘The planning of [the director’s] future and the preparatory steps taken to enable him to obtain alternative employment and earn a living even if taken during his month of notice cannot be regarded as against public policy and therefore unlawful. It can therefore not be branded as unfair competition.’ These statements of the law have not to my knowledge been departed from and I readily endorse them. [55] It is common cause that in the present case Da Silva acquired two shelf companies, changed their names, and was appointed a director of both while still employed by the plaintiff and serving out his notice period. He also hired premises so that the companies could commence business on 1 September 1999. Adopting Van Dijkhorst J’s ‘common sense’ approach, this conduct cannot be said to amount to a breach of Da Silva’s fiduciary duty or to unfair competition on the part of the second defendant on whose behalf the steps were taken. But Da Silva went further. It will be recalled that while still with the plaintiff, but acting for and on behalf of the second defendant, he purchased three containers of LLDPE, which is a plastic product and which he arranged to be on-sold by the second defendant. He sought to justify his conduct on the basis that it did not amount to competition with the plaintiff because the latter did nor normally deal in ‘off specification’ products, which the LLDPE was, and that the purchasers were not existing clients of the plaintiff. But Hellmann’s evidence was to the effect that any transaction involving the purchase and sale of plastic products, whether off specification or not, fell within the scope of the plaintiff’s business and that any purchaser of plastic products in South Africa was a potential customer of the plaintiff. Given the nature of the plaintiff’s business, I think Hellmann must be correct. While it may be difficult in certain circumstances to decide just where to draw the line when adopting a ‘common sense’ approach, I am satisfied that the transaction in the instant case was one which Da Silva while still the managing director of the plaintiff was obliged to pursue for the benefit of the plaintiff and not for the benefit of the second defendant. In my view, therefore, his conduct amounted to a breach of his fiduciary duty owed to the plaintiff and to unfair competition on the part of the second defendant on whose behalf the transaction was concluded. [56] Da Silva testified, however, that the second defendant in fact made no profit but a loss on the LLDPE transaction. It was contended on his behalf that the plaintiff could accordingly have no claim for damages. The true inquiry, however, is not whether the second defendant made a loss but whether Da Silva’s wrongful conduct caused the plaintiff to suffer a loss. Hellmann testified that the plaintiff could have made a profit from the purchase and sale of the LLDPE and therefore it suffered damage to the extent of the profit it would have made. There was nothing to gainsay this evidence. In my view, therefore, liability for damages arising from Da Silva’s breach of his fiduciary duty in relation to the LLDPE transaction was duly established, as was the second defendant’s liability for unlawful competition. The quantum of the plaintiff’s damages was an issue that was ordered to stand over for later adjudication. The extent of the plaintiff’s loss (if any) is therefore an issue which must be decided later. [57] It follows that the appeal must succeed save in so far as it relates to the claims of the plaintiff against the first and second defendants arising from the LLDPE transaction. These claims are relatively minor in relation to the others and the defendants have achieved substantial success on appeal. The defendants are accordingly entitled to their costs of appeal. The first defendant was represented separately from the second and third defendants and each is entitled to its costs of appeal, including in the case of the second and third defendants the costs of two counsel. The outcome on the issue of costs in respect of the LLDPE claims will depend on the quantum, if any, of those claims once this has been determined. In the circumstances, the order of the court a quo which I propose to substitute will provide for those costs to stand over for decision by the court that determines the issue of quantum. [58] The following order is made: (1) The appeal succeeds to the extent set out hereunder. (2) The respondent is to pay the costs of the appellants including, in the case of the second and third appellants, the costs of two counsel. (3) The order of the court a quo is set aside and the following is substituted in its stead: (a) The plaintiff’s claims, save for those relating to the LLDPE transaction, are dismissed with costs including the costs of two counsel where two counsel were employed. (b) The first and second defendants are declared to be liable to the plaintiff for such damages as may be proved to have been suffered by the plaintiff arising out of the LLDPE transaction. In the event of either the first defendant or the second defendant paying any portion of such damages once determined, the other shall be liable for the balance only. (c) The issue of the costs in respect of the claims arising out of the LLDPE transaction is to stand over for determination by the court when the issue of quantum is determined. D G SCOTT JUDGE OF APPEAL Appearances: For Appellant: 1st : M C Maritz SC 2nd and 3rd : W H Trengove SC J F Roos SC Instructed by: 1st : Phillip Silver Sweidan Inc Pretoria c/o Shapiro & Shapiro Inc Pretoria 2nd and 3rd : Webber Wentzel Bowens Pretoria Symington & De Kok Bloemfontein For Respondent: B W Burman SC B Leech Instructed by: Deneys Reitz c/o Savage Jooste & Adams Inc Pretoria Webbers Attorneys Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL JOSE DUARTE COELHO DA SILVA AND OTHERS /C H CHEMICALS (PTY) LTD From : The Registrar, Supreme Court of Appeal Date: 23 September 2008 Status: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal C H Chemicals (Pty) Ltd had in the High Court, Pretoria, successfully sued its former managing director and two companies, which then employed him, for disgorgement of profits and damages by reason of an alleged breach of his fiduciary duties owed to C H Chemicals and for unfair competition. On appeal the Supreme Court of Appeal held that save for one instance the former managing director had not breached his fiduciary duties and that save in respect of that one instance the appeal had to succeed. ---ends---

3599

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 234/2020 In the matter between: CITY OF JOHANNESBURG METROPOLITAN MUNICIPALITY APPELLANT and ZIBI YANGA FIRST RESPONDENT ZIBI LINDIZWE SECOND RESPONDENT Neutral citation: City of Johannesburg Metropolitan Municipality v Zibi and Another (234/2020) [2021] ZASCA 97 (09 July 2021) Coram: SALDULKER, MBHA, and SCHIPPERS JJA and CARELSE and POYO- DLWATI AJJA Heard: 05 May 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be have been at 10h00 on 09 July 2021. Summary: Municipal law – Local Government: Municipal Property Rates Act 6 of 2004 – municipality within its powers to impose a penalty tariff in the instance of illegal or unauthorised use of property within its jurisdiction – such action not ultra vires if it is in terms of a validly adopted municipal property rates policy – appeal upheld. ORDER ______________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Fourie AJ sitting as the court of first instance): The appeal is upheld with costs, including the costs of two counsel where so employed. The order of the high court is set aside in toto, and replaced with the following order: ‘The application is dismissed with costs.’ ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Mbha JA (Saldulker JA and Poyo-Dlwati AJA concurring) [1] The central issue in this appeal is whether a municipality is entitled to levy a rate in the form of a penalty on residential property for illegal or unauthorised use, without first changing the category of the property on its valuation roll or supplementary roll, from ‘residential’ to ‘illegal or unauthorised’ use. [2] The appellant, City of Johannesburg Metropolitan Municipality (the municipality), established in terms of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) and other related legislation governing local authorities, appeals against the judgment and order of the Gauteng High Court Division, Johannesburg (per Fourie AJ) (the high court), handed down on 9 October 2019. In terms of this judgment, the municipality was ordered to apply the residential category reflected on its valuation roll, when levying property rates against erf 671 Auckland Park 1, the property of Mr and Mrs Zibi (the property) from ‘1 October 2015 to date of implementation of a replacement valuation roll pertaining to the property’. The municipality was also ordered to rectify, within thirty days, the relevant municipal account for the respondents’ property and change the rating tariff from ‘illegal or unauthorised use’ to ‘residential’, and to replace the tariff charge with a residential category rating. This appeal is with leave of the high court. [3] At the core of this entire dispute, is the respondents’ complaint that since October 2015, the municipality has levied rates on the respondents’ immovable property, in accordance with the category of ‘illegal’ or ‘unauthorised’ use of the property. This, so the respondents contend, despite the fact that the zoning category of the property remained ‘Residential 1’ on the municipality’s 2013 and 2018 valuation rolls. [4] It bears mentioning that until October 2015, the municipality had levied a property rate of R898.01 monthly on the property, which at all relevant times has been zoned ‘Residential 1’. However, from October 2015 onwards, such rate as reflected on the municipality’s account number 552060383, has escalated to R3 592. 05. As appears from the tax invoice dated 23 October 2015, under the heading ‘Property Rates’, this penalty tariff for the higher amount of R3 592. 05 was debited, which incorporates the amount charged in respect of property rates. Thereafter, the penalty tariff was claimed monthly as per the tariff provided for in the appellant’s rates policy. This penalty tariff was calculated based on the market valuation of the property, being the amount of R1 650 000. [5] The nub of the dispute, from the municipality’s point of view, is that the aforementioned levied rate of R3 592, 05 represents a penalty for the respondents’ unlawful or unauthorised use of the property. On the other hand, the respondents contend that the municipality ought to have first re-categorised the property from ‘Residential 1’ to ‘illegal or unauthorised’ use on the municipality’s valuation roll, before the municipality could impose the escalated levy. [6] It is necessary to set out the relevant background facts, which are largely common cause, in order to have a better understanding of the context in which the dispute arose. The respondents took transfer of the property in their names on 24 June 2013. The property is a free-standing erf with a house consisting of 5 bedrooms, 2 bathrooms, a living room, a laundry room, a double garage, and an outside room with a toilet. In addition to residing in the property with their two minor children, the respondents aver that from January 2015 they started renting out 2 bedrooms to students and young professionals, thus using the property as a commune, a commercial concern. It is common cause that no authorisation was first sought and obtained from the municipality for such use. [7] On 28 October 2016, the municipality sent a letter to the respondents through its attorneys, notifying them of their wrongful and unlawful use of the property as a student commune, in contravention of the town planning scheme and zoning thereof without the necessary authorisation. Importantly, the respondents were notified of their contraventions since 2013 based on several site inspections conducted by officials of the municipality, which resulted in a contravention notice, referred to as a TP19 Notice, which was sent to them on 4 September 2013. This notice called upon the respondents to terminate their unauthorised use of the property by no later than 4 October 2013. [8] In the same correspondence it was also stated that further site inspections were conducted on the property on 3 August 2014, 16 November 2014, 31 January 2015, 20 June 2015 and 9 October 2016. These site inspections confirmed that the unauthorised use of the property by the respondents continued unabated. [9] From October 2015 to date, the municipality has levied rates on the property in the form of a penalty for the illegal and unauthorised use of the property. It transpired that, on 22 September 2015, the municipality’s town planning law enforcement section instructed the property rates policy finance and compliance division to impose a penalty tariff as contemplated in the municipality’s policy. [10] Aggrieved by the increased penalty tariff imposed by the municipality, on 11 December 2017, the respondents approached the City of Johannesburg Ombudsman (the Ombudsman), to investigate what according to them, was the incorrect billing on the property. On 31 January 2018, the Ombudsman responded and informed the respondents that the municipality’s records indicated that the respondents were advised that the increase in their account was a result of the implementation of a penalty tariff in terms of the municipality’s policy. The said penalty, the Ombudsman explained further, was imposed due to the fact that the property was being used in contradiction to its zoning. [11] On 10 October 2018, the municipality obtained an order in the Johannesburg High Court, per Meyer J, interdicting the respondents from using the property in contravention to its residential zoning within 30 days of the date of the order. Significantly, no appeal has been made against Meyer J’s order, and it remains in force. On 26 November 2018, the respondents launched an application challenging the municipality’s penalty tariff, which forms the subject matter of this appeal. [12] In finding in favour of the respondents, the high court relied on the decision in Smit v The City of Johannesburg Metropolitan Municipality1 and reasoned that the municipality was constrained to levy a penalty rate without first re-classifying the property as an ‘unauthorised category’. Its failure to follow this prescribed procedure, the high court held further, amounted to a contravention of its rates policy which in turn contravened s 3 of the Local Government: Municipal Property Rates Act 6 of 2004 (the MPRA). 1 Smit v The City of Johannesburg Metropolitan Municipality [2017] ZAGPJHC 386. [13] The high court concluded that the municipality was only authorised to levy rates on the property based on the categorisation thereof namely, in accordance with its ‘Residential 1’ zoning. If the municipality wished to charge the punitive rate, the high court reasoned, it was required to first amend the valuation roll or issue a supplementary roll, and comply with the relevant legislative requirements that are designed to ensure compliance with the audi alteram principle, in order to protect ratepayers like the respondents, against arbitrary increases before imposing any penalty rates. Accordingly, the high court held that the municipality’s failure to do so, rendered its conduct invalid. [14] It is necessary to examine the legislative provisions governing the powers and ability of municipalities to impose rates and tariffs. The municipalities’ power to levy rates on properties within their jurisdiction is an original power conferred in terms of s 229 (1)(a).of the Constitution of the Republic of South Africa (the Constitution).2 The MPRA3 is the national legislation envisaged in s 229 (2)(b)4 of 2 The Constitution of the Republic of South Africa, 1996. Section 229(1)(a) of the Constitution provides: ‘(1) Subject to sections (2), (3) and (4), a municipality may impose – (a). rates on property and surcharges on fees for services provided by or on behalf of the municipality.’ 3 Sections 2 and 3 of the MPRA read in relevant parts as follows: ‘2 Power to levy rates (1) A metropolitan local municipality may levy a rate on a property in its area. 3 Adoption and contents of rates policy (1) The council of a municipality must adopt a policy consistent with this Act on the levying of rates on rateable property in the municipality. (2) A rates policy adopted in terms of subsection (1) takes effect on the effective date of the first valuation roll prepared by the municipality in terms of this Act, and must accompany the municipality’s budget for the financial year concerned when the budget is tabled in the municipal council in terms of section 16(2) of the Municipal Finance Management Act. (3) A rates policy must - (a) treat persons liable for rates equitably; (b) determine the criteria to be applied by the municipality if it – (i) levies different rates for different categories of properties determined in terms of section 8; (ii) exempt a specific category of owners of properties, or the owners of a specific category of properties, from payment of a rate on their properties; (iii) grant to a specific category of owners of properties, or to the owners of a specific category of properties, a rebate on or a reduction in the rate payable in respect of their properties; or (iv) increases or decreases rates; (c) determine, or provide criteria for the determination of (i) categories of properties for the purpose of levying different rates as contemplated in paragraph (b) (i); and (ii) . . . .’ 4 Section 229(2)(b) of the Constitution provides: the Constitution, enacted to regulate the imposition of rates by municipalities. This legislation, read together with the Systems Act, and the Local Government: Municipal Finance Management Act 56 of 2003 (the Finance Act), form part of a suite of legislation that gives effect to the new system of local government established in terms of the Constitution. [15] Section 2 of the Systems Act provides that a municipality is an organ of state with a separate legal personality, whilst s 4(1)(b) provides that ‘the council of a municipality has the right to govern on its own initiative the local government affairs of the local community’. The object of the Finance Act is to secure sound and sustainable management of the financial affairs of municipalities by establishing norms and standards for, inter alia, ensuring accountability and appropriate lines of responsibility in the financial affairs of municipalities, budgeting and financial planning processes. [16] The power of a municipality to raise a surcharge over and above a rate it levies in respect of a property, is guaranteed by s 156(5) of the Constitution, which provides that ‘[a] municipality has the right to exercise any power concerning a matter reasonably necessary for, or incidental to, the effective performance of its functions’. It immediately becomes evident that the consequence of having an original power is that a municipality’s power to levy rates is not dependant on enabling national legislation as it is derived directly from the Constitution.5 It follows therefore that the imposition of a penalty against property owners, as has happened in this case, is necessary and incidental to the effective performance of the municipality’s functions and services. ‘(2) The power of a municipality to impose rates on property, surcharges on fees for services provided by or on behalf of the municipality, or other taxes, levies or duties – (a) . . . (b) may be regulated by national legislation.’ 5 City of Cape Town and Another v Robertson and Another 2005 (3) BCLR 199 (CC); 2005 (2) SA 323 (CC) para 60. [17] Nonetheless, s 75A(1)(a) of the Systems Act bestows a general power upon a municipality to ‘levy and recover fees, charges and tariffs in respect of any function or service of the municipality’. In terms of s 75A(2) the fees, charges or tariffs are levied by a municipality by a resolution passed by the municipal council, with a supporting vote of a majority of its members. [18] A municipality is obliged in terms of s 74 of the Systems Act, to ‘adopt and implement a tariff policy on the levying of fees for municipal services provided by the municipality itself or by way of service delivery agreements, and which complies with the provisions of this Act . . . and any other applicable legislation.’ This provision must be read together with subsecs 3(1) and (2) of the MPRA, which obliges a municipality to adopt a rates policy on the levying of rates on rateable property which takes effect on the effective date of the first valuation roll prepared by the municipality, and which must accompany the municipality’s budget for the financial year concerned. [19] In Kungwini Local Municipality v Silver Lakes Homeowners Association and Another,6 this Court held that the adoption of a rates policy and the levying, recovering and increasing of property rates is a legislative rather than an administrative act. The effect being that a municipality’s action in this regard can only be challenged on the principle of legality, an incidence of the rule of law. [20] Based on the various legislative provisions and established principles I have referred to above, it is beyond any doubt that a municipality’s powers to levy a 6 Kungwini Local Municipality v Silver Lakes Home Owners Association [2008] ZASCA 83; [2008] 4 All SA 314 (SCA); 2008 (6) SA 187 (SCA) para 14. penalty in respect of the use of any property within its jurisdiction, is not ultra vires its powers, provided it does so as part of a validly adopted property rates policy. It is common cause that, in casu, the respondents did not impugn the validity of the relevant municipality’s property rates policy, but its application. The respondents’ attack is only directed at the validity of the impugned tariff. Neither did the high court assail the validity of the property rates policy in question in any manner whatsoever. [21] In developing their case, the respondents submitted that in terms of the MPRA and the rates policy, the rating of the property is done in accordance with the category of the property as set out in the municipality’s valuation roll. It therefore followed, the respondents argued further, that before an illegal or unauthorised tariff can be levied, the municipality was obliged to first update the category of the property on its valuation roll. To the contrary, the municipality contended that the property rates policy was properly applied and there was no requirement that there should first be a re-categorisation before the application for a penalty tariff. [22] The municipality in this matter validly adopted and implemented a property rates policy in accordance with the provisions of subsecs 8(1) to (3) of the MPRA. Applying that policy, the municipality then levied different rates for different properties for the relevant period of 2015-2016. Clause 5 of the policy reads as follows: ‘5. CATEGORIES OF PROPERTY FOR LEVYING OF DIFFERENTIAL RATES (1) The Council levies different rates for different categories of rateable property in terms of section 8 of the Act. All rateable property will be classified in a category and will be rated based on the category of the property from the valuation roll which is based on the primary permitted use of the property, unless otherwise stated. For purposes of levying differential rates in terms of section 8, the following categories of property are determined, in terms of sections 3(3)(b) and 3(3)(c) of the Act. . . .’ The above clause is repeated in the municipality’s 2016/2017, 2017/2018 and 2018/2019 property rates policies. [23] Clause 5(2) of the policy contains a list of the various categories of rateable property in respect of which different rates are levied. Twenty-three different categories are listed based on the primary permitted use of the property, unless, otherwise stated. For example (a) is for business and commercial property, (b) is for sectional title business and (i) is for farming and so forth. The last item on the list under (w) is for ‘illegal use’, with which we are concerned in this case. The municipality’s 2016/2017 property rates policy has the same number of categories, save that under item (w), it has listed ‘unauthorised use’ in contrast to ‘illegal use’ that is found in the 2015/2016 rates policy. [24] The municipality’s property rates policy, for 2015/2016, explains, inter alia, under Clause 6 bearing the heading ‘6 Clarification of Categories of Property’, the primary permitted use of the rateable property, the reasons for the zoning of the specific property and how each particular category of property would be rated. The clarification given in respect of the ‘Illegal use’, in Clause 6.1, is particularly important. It reads as follows: ‘6.1 Illegal use (i) This category comprises all properties that are used for a purpose (land use) not permitted by the zoning thereof in terms of any applicable Town Planning Scheme or Land Use Scheme; abandoned properties and any properties used in contravention of any of the Council’s By-laws and regulations. . . (ii) The rate applicable to this category will be determined by the City on an annual basis. The City reserves the right to increase this penalty tariff higher than any other tariffs’. (My emphasis.) It bears mentioning that the ‘unauthorised use’ category is explained in similar terms in the municipality’s 2017/2018 and 2018/2019 property rates policies. This is clearly not without significance. [25] The approach to the interpretation of any legal document, be it legislation, any statutory instrument or contract, is now trite and has been affirmed in various judgments of this Court and the Constitutional Court. In Natal Joint Municipal Pension Fund v Endumeni Municipality,7 this Court outlined the approach to the judicial interpretive exercise as the process of attributing meaning to the words used in legal documents, taking into account the context in which they were used by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence.8 [26] A simple reading of the penalty tariff in Clause 6, read together with the rest of the municipality’s property and rates policy, reveals that it is plainly not applied as a ‘category’, although it is listed under the heading ‘Categories of Property for levying of Differential Rates’. From a mere interpretation of the MRPA, read with the policy, it is clear that the penalty charges levied under ‘illegal use’ or ‘unauthorised use’ are directed against a landowner’s illegal conduct, and not the property. [27] The municipality’s property rates policy states unequivocally, that the ‘illegal use’ or ‘unauthorised use’ tariff will be imposed in respect of all properties that are used for a purpose (land use) not permitted by the zoning thereof. The ‘illegal use’ 7 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18. 8Bothma-Batho Transport (edms) Bpk v S Bothma & Seun Transport [2013] ZASCA 176, [2014] 1 All SA 517 (SCA); 2014 (2) 494 (SCA) para 12; Airports Company South Africa v Big Five Duty Free (Pty) Ltd and Others [2018] ZACC 33;2019 (2) BCLR 165 (CC); 2019 (5) SA 1 (CC) para 29. or ‘unauthorised use’ category is thus clearly defined with reference to the zoning categories, and not the categories as contemplated in the valuation roll. [28] The respondents’ reliance on the fact that the penalty tariff is referred under the heading of ‘Categories’ in Clauses 5, is misconceived. The penalty tariff and how it is applied forms part of the concept of the tariff and charges against the property as informed by the municipality’s validly adopted property rates policy. A reading of this policy reveals a clear distinction between the general property rate for lawful use and a charge for the penalty tariff which is founded on illegal conduct. [29] I have already alluded to the various enabling legislative provisions in terms of which the municipality validly adopted and implemented a property rates policy. Clearly, the municipality validly reserved to itself the right to claim a higher charge and tariff against landowners who deliberately refuse to bind themselves to the municipality’s land use scheme, as set out in its municipal property rates policy. This is in my view, the only sensible conclusion that can be reached if the penalty provisions, tariffs and charges referred to in the policy, are interpreted in the context in which they appear therein, taken together with the purpose to which the policy is directed, and the object of the enabling suite of legislation referred to earlier. [30] The respondents’ argument that the municipality must first update the valuation roll whenever it wishes to charge an ‘illegal use’ or ‘unauthorised use’ tariff is based on the fallacy that such a valuation roll or supplementary roll must always reflect actual use. This argument completely misconstrues the lawful purpose of a valuation roll, which is to determine the value of the property in a specified category. As a matter of common sense, it follows that unauthorised use or a use for a non-permitted purpose can therefore only reflect the permitted use of the property. [31] Section 77 of the MPRA obliges the municipality to update the valuation roll annually, either through a supplementary valuation roll under s 78, or an amendment of the valuation roll under s 79. The object of updating the valuation roll is merely to correct objective errors in the category which is indicated in the roll, for example, errors or omissions in relation to rateable property. [32] Sections 77 to 79, read simply, do not deal with the changes or variation to rates. In casu, no such error or omission in respect of the value of the respondents’ property exists. It is common cause that the permitted use of their property was always residential. It accordingly follows that no amendment or supplementary valuation roll is required as the respondents suggest. [33] In the light of what I have stated above, I am in agreement with the municipality that the imposition of a higher tariff regarding rates payable on residential property, which is used for a purpose other than its authorised purpose, as has happened in this case, does not require a re-categorisation. The penalty or higher tariff the municipality validly imposed in respect of the respondents’ property, only seeks to address the current situation to the extent and for the duration of the illegal land use in operation. Clearly, the high court failed to appreciate the unreasonable administrative burden that would be placed on the municipality if a supplementary valuation roll had to be published in respect of every unlawful use of a property. [34] The high court however acknowledged, rightly in my view, that the respondents were acting in contravention of the appellant’s land use scheme and importantly, that they were acting in contempt of the order by Meyer J issued on 18 October 2018, interdicting them from using the property as an accommodation establishment as long as the property remained zoned as ‘Residential 1’. In my view, the respondents’ aforesaid unlawful conduct are clear jurisdictional facts for the application of the municipality’s policy of the penalty tariff. Furthermore, the application of the penalty tariff and charge to the respondents’ property is competent in terms of the policy. [35] As I have stated earlier, the policy was validly adopted and applied. It, together with the relevant valuation rolls, were published and subjected to a normal public participation process. It follows that the complaint of an alleged breach of the respondents’ right to the audi alteram procedure cannot be sustained. Clearly the high court erred in this respect. I must also point out that the respondents’ reliance on the Blom9 case is misconceived. That case concerned a municipality’s power to add categories of rateable property in terms of s 8 of the MPRA. Blom accordingly concerned a totally different issue. [36] In light of what has been stated above, I find that the high court misdirected itself in various manners already described above, and its order falls to be set aside. It has not been demonstrated why the costs order should not follow the result. [37] In the circumstances, I make the following order: The appeal is upheld with costs, including the costs of two counsel where so employed. The order of the high court is set aside in toto, and replaced with the following order: 9 City of Tshwane v Marius Blom & GC Germishuizen Inc. and Another [2013] ZASCA 88; 2014 (1) SA 341 (SCA); [2013] 3 All SA 481 (SCA). ‘The application is dismissed with costs.’ _________________ B.H MBHA JUDGE OF APPEAL Schippers JA (Carelse AJA concurring): [38] I am grateful to my colleague, Mbha JA, for setting out the circumstances in which the municipality’s claim to payment of a penalty tariff or higher rates arose. Unfortunately, however, I find myself in disagreement with the majority on the outcome of the appeal. In my respectful opinion, the municipality was not empowered under s 8 of the Local Government: Municipal Property Rates Act 6 of 2004 (the Rates Act) to determine ‘illegal use’ as a category of rateable property, nor to include such category in its rates policies. [39] The respondents’ use of their property for an illegal or unauthorised purpose is beyond question, hence the order issued by Meyer J in the Gauteng Division of the High Court, Johannesburg (high court) on 10 October 2018. In terms of that order the respondents were directed to cease using the property or permitting it to be used as an accommodation establishment, or for any purpose other than a dwelling house in conformity with the ‘Residential 1’ zoning of the property in terms of the Johannesburg Town Planning Scheme, 1979. However, the sanction for the respondents’ illegal use of their property must be sought elsewhere: it cannot be sourced in the Rates Act. [40] It is common ground that for the purpose of levying rates, the property has been categorised as a residential property in terms of s 8(2) of the Rates Act and valued at R 1 650 000. Based on this value the rates levied on the property for the 2015/2016 year was R898 per month. For the same period the municipality imposed a penalty tariff founded on an ‘illegal use’ category of rateable property, contained in the City of Johannesburg Property Rates Policy 2015/2016 (the Rates Policy). This category includes the use of property contrary to its zoning as defined in the relevant town planning scheme. The rate levied for the illegal use of the property was R3592 – four times higher than the monthly rates (the penalty tariff). Both tariffs used in the calculation of residential rates and the penalty were incorporated in the Rates Policy, following a public participation process before the Policy was adopted. [41] In 2018 the appellants applied to the high court for an order that the municipality: (1) apply the residential category reflected on its valuation roll in levying property rates on the property from 1 October 2015 to date of implementation of a replacement valuation roll; and (2) that it rectify the relevant municipal account within 30 days of the order to reflect that the rates levied on the property, based on an illegal or unauthorised use category since October 2015, have been replaced by property rates based on the residential category. [42] The grounds for the relief sought were these. The municipality had levied penalty tariffs for the illegal use of the property despite the fact that it remained categorised as a residential property on the municipality’s 2013 and 2018 valuation rolls. The municipality failed to comply with the Rates Act in that it ‘did not cause a supplementary valuation roll to be issued in relation to the property before it commenced levying illegal/unauthorised use rates tariffs on the property’, and did not change the category of the property when it published its 2018 valuation roll. [43] The answering affidavit states the ‘central issue’ in the case involves the interpretation and application of s 8(1) and (2) of the Rates Act. The municipality claimed that in terms of s8 (1) it was authorised to levy different rates for different categories of rateable property according to specified criteria set out in s 8(2) of the Rates Act. Then it referred to s 156(2) of the Constitution which empowers municipalities to make and administer by-laws to give effect to the functional areas in which they are authorised to govern, and s 156(5) which grants a municipality incidental powers for the effective performance of its functions.10 The municipality also cited s 229(1)(a) of the Constitution, which expressly authorises a municipality to impose ‘rates on property and surcharges on fees for services provided by or on behalf of the municipality’. Next, the municipality referred to s 3 of the Rates Act which enjoins the council of a municipality to adopt a policy consistent with the Act, for the levying of rates on rateable property in the municipality; and prescribes the contents of a rates policy. [44] Ultimately the municipality contended that its rates policies contained an express provision for an unauthorised, alternatively, illegal use category of rateable property. This category, so it was contended, comprised all properties used for a purpose (land use) not permitted by their zoning in terms of the applicable town planning scheme. The rate applicable to this category was determined by the municipality on an annual basis. Thus, the empowering provisions upon which the municipality relied for the imposition of the penalty tariff were s 8(1) and (2) of the Rates Act and the Rates Policy. [45] The relevant provisions of the Rates Policy are the following: ‘5. CATEGORIES OF PROPERTY FOR LEVYING OF DIFFERENTIAL RATES (1) The Council levies different rates for different categories of rateable property in terms of section 8 of the Act. All rateable property will be classified in a category and will be rated based on the category of the property from the valuation roll which is based on the primary permitted 10 Section 156(5) of the Constitution provides: ‘ Powers and functions of municipalities . . . (5) A municipality has the right to exercise any power concerning a matter reasonably necessary for, or incidental to, the effective performance of its functions.’ use of the property, unless otherwise stated. For purposes of levying differential rates in terms of section 8, the following categories of property are determined in terms of sections 3(3)(b) and 3(3)(c) of the Act: (2) The categories are as follows: . . . (e) Residential Property . . . (w) Illegal use . . . 6.1 Illegal use (i) This category comprises all properties that are used for a purpose (land use) not permitted by the zoning thereof in terms of any applicable Town Planning Scheme or Land Use Scheme, abandoned properties and properties used in contravention of the Council’s By-laws and regulations, which include the National Building Regulations and Building Standards Rates Act, 103 of 1977, and any Regulations made in terms thereof. (ii) The rate applicable to this category will be determined by the City on an annual basis. The city reserves the right to increase this penalty tariff higher than other tariffs.’ [46] The high court (Fourie AJ) followed Smit v City of Johannesburg,11 a similar case in which De Villiers AJ held that the municipality could not apply an illegal use tariff to property used in contravention of a town planning scheme. The court in Smit held that the municipality had levied the illegal use tariff in breach of its rates policy, contrary to the provisions of s 2(3) of the Rates Act.12 The high court concluded that the municipality was only authorised to levy rates on the property based on its categorisation, ie residential property. If it wished to levy the punitive rate, it was required to amend the valuation roll or issue a supplementary one, and comply with the relevant legislative requirements, which included the audi principle to protect ratepayers against arbitrary increases. 11 Smit v City of Johannesburg Metropolitan Municipality [2017] ZAGPJHC 386. 12 Smit fn 11 paras 11-14. [47] Consequently, the high court made an order directing the municipality to apply the residential category reflected on its valuation roll for the applicable period in levying property rates on the property, for the period 1 October 2015 to the date of implementation of the replacement valuation roll relating to the property. The municipality was also ordered to rectify the relevant municipal account within 30 days of the date of the order, to reflect that the rates levied on the property under the illegal or unauthorised use category since October 2015, had been replaced with rates levied based on the residential category. The parties were ordered to pay their own costs. Although the penalty tariffs were imposed for the period 2015 to 2019, the high court’s order dealt only with the 2015/2016 Rates Policy and the October 2015 account in respect of the property. [48] Before us the argument by counsel for the municipality, in summary, was this. The municipality was entitled to impose the penalty tariff in terms of the Rates Policy, which had been included in the Policy in order to deter landowners from contravening the municipality’s land use scheme. The penalty tariff is also authorised under ss 156(2), 156(5) and 229(1)(a) of the Constitution. Further, in terms of the s 75A of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) the municipality is given a general power ‘to levy and recover fees, charges or tariffs in respect of any function or service of the municipality’. [49] An analysis of these constitutional and statutory provisions however reveals that the argument does not bear scrutiny. At the outset it should be noted that s 75A of the Systems Act is inapplicable for the simple reason that the municipality did not act under that provision when it determined the illegal use category and imposed the penalty tariff. Instead, and as is clear from the provisions of the Rates Policy quoted above, the municipality purported to act in terms of ss 3 and 8 of the Rates Act. A decision deliberately and consciously taken under the wrong statutory provision cannot be validated by the existence of another statutory provision authorising that action.13 [50] The starting point therefore, is whether the municipality was authorised to determine ‘illegal use’ as a category of rateable property in terms of s 8(1) of the Rates Act, as it purported to do. Sections 8(1) to 8(3) read: ‘Differential rates- (1) Subject to section 19, a municipality may, in terms of the criteria set out in its rates policy, levy different rates for different categories of rateable property, determined in subsections (2) and (3), which must be determined according to the– (a) use of the property; (b) permitted use of the property; or (c) a combination of (a) and (b). (2) A municipality must determine the following categories of rateable property in terms of subsection (1): Provided such property category exists within the municipal jurisdiction: (a) Residential properties; (b) industrial properties; (c) business and commercial properties; (d) agricultural properties; (e) mining properties; (f) properties owned by an organ of state and used for public service purposes; (g) public service infrastructure properties; (h) properties owned by public benefit organisations and used for specified public benefit activities; (i) properties used for multiple purposes, subject to section 9; or (j) any other category of property as may be determined by the Minister, with the concurrence of the Minister of Finance, by notice in the Gazette. 13 Minister of Education v Harris [2001] ZACC 25; 2001 (4) SA 1297 (CC) paras 16-18; Howick District Landowners’ Association v Umgeni Municipality and Others [2006] ZASCA 153; 2007 (1) SA 206 (SCA) paras 21-22. (3) In addition to the categories of rateable property determined in terms of subsection (2), a municipality may determine additional categories of rateable property, including vacant land: Provided that, with the exception of vacant land, the determination of such property categories does not circumvent the categories of rateable property that must be determined in terms of subsection (2).’ [51] Section 8(1) requires rates to be determined according to the ‘use of the property’ ie the actual use, ‘the permitted use of the property’ (the limited purposes for which the property may be used)14 or a combination of actual and permitted use. A category of ‘vacant land’ is acceptable because it is based on actual use and the value determined is the undeveloped land value given the uses to which it could be put if developed. Mixed uses are the same. [52] In my opinion, the Rates Act does not permit ‘illegal use’ as a category of rateable property, for a number of reasons. First, ‘illegal use’, is not a use as such. This so-called category is not determined according to the use of the property. Instead, the category is determined, and the penalty tariff imposed, on the basis of the conduct of property owners who use their properties contrary to town planning or land use schemes, or contravene by-laws and regulations. Even owners who abandon their properties, or erect a building or structure in contravention of the National Building Regulations and Building Standards Act 103 of 1977 (the Building Standards Act), are subject to the penalty tariff. Indeed, it was submitted on behalf of the municipality that ‘the charge for the penalty is founded 14 The Local Government: Municipal Property Rates Act 6 Of 2004 (Rates Act) defines ‘permitted use’ as follows: ‘ “permitted use” in relation to a property, means the limited purposes for which the property may be used in terms of– (a) any restrictions imposed by– (i) a condition of title; (ii) provision of a town planning or land use scheme; or (iii) any legislation applicable to any specific property or properties; or (b) any alleviation of any such restrictions.’ on illegal conduct.’ It is the use itself, not the lawfulness of the use that determines the category of rateable property in s 8(1) of the Rates Act. [53] Second, the uses of property in s 8(1) plainly constitute lawful uses. This is buttressed by the immediate context – all the categories of rateable property listed in s 8(2) are lawful uses of property. Illegal, unauthorised or non-permitted uses of property cannot be categorised for the purpose of levying rates in terms of the Rates Act. In my view, a municipality cannot grant its imprimatur to the illegal use of property by levying a rate on such property. This, when in terms of the Rates Act, rates levied by a municipality on a property must be paid by the owner of that property.15 It seems to me that an interpretation that the Rates Act permits the determination of ‘illegal use’ as a category of rateable property, produces a manifest absurdity.16 [54] Third, it is impossible to determine a value for illegal use. The procedure set out in the Rates Act for the preparation of a valuation roll is a jurisdictional prerequisite for the exercise by a municipality of its power to collect rates.17 One cannot, for example, value a property or part of a property built in contravention of the Building Standards Act, in order to levy a rate on it. Neither can a property be valued on the basis of an owner’s non-compliance with a by-law or town planning scheme. It was rightly conceded by counsel for the municipality that ‘a property cannot be categorised on the basis of a non-permitted or illegal use’, and that a valuer could therefore not create such a category. Thus, the failure to prepare 15 Section 24(1) of the Rates Act. 16 Shenker v The Master and Another 1936 AD 136 at 142-143. 17 City of Tshwane Metropolitan Municipality v Lombardy Development (Pty) Ltd and Others [2018] ZASCA 77; [2018] 3 All SA 605 (SCA) para 21. a valuation roll as required by the Rates Act, ‘without first reclassifying the property as unauthorised use’, as the high court found, does not even arise. [55] Fourth, the penalty tariff is not a ‘rate’. The Rates Act defines ‘rate’ as follows: ‘a municipal rate on property envisaged in s 229(1)(a) of the Constitution’. The latter provision authorises a municipality to impose rates on property. In Gerber,18 Navsa JA said that the ordinary meaning of ‘rate’ is well established and referred to the Concise Oxford Dictionary meaning of the term which includes, an ‘assessment levied by local authorities for local purposes at so much per pound of assessed value of buildings and land owned’. Navsa JA went on to say that this meaning ‘accords with the tried and trusted practice of calculating property rates in relation to size or value of properties’, and that ‘there is nothing to suggest that the power given by s 229(1)(a) of the Constitution to local authorities to impose property rates was a power to depart from this established meaning’.19 [56] In this case the municipality determined the category of the property as ‘Residential’ as contemplated in s 8(2)(a) of the Rates Act, and calculated the municipal rate according to the value of the property. In terms of the Rates Policy, the tariff for 2015/2016 for the residential category was 0.006531 cents in the Rand and the penalty tariff for illegal use, 0.026124 cents in the Rand. And as is evident from the Rates Policy, the penalty tariff is four times higher than the amount levied for rates. However, the penalty tariff is neither a ‘rate’ as defined in the Rates Act nor does it conform to the established meaning of that term. 18 Gerber and Others v Member of the Executive Council for Development Planning and Local Government, Gauteng, and Another [2002] ZASCA 128; 2003 (2) SA 344 (SCA) para 23. 19 Gerber fn 18 para 24. [57] The penalty tariff is not a municipal charge but a sanction directed solely at the conduct of property owners. It is trite that the words of a statute ‘should be read in the light of the subject-matter with which they are concerned . . . and it is only when that is done that one can arrive at the true intention of the legislature’.20 There is nothing in the Rates Act which authorises a municipality to levy a rate to deter landowners from contravening a statute, by-law, or land use scheme; or to impose a penalty tariff ‘for as long as the property does not conform with the town planning scheme’, as stated in the answering affidavit. This is a case of using a power – the power to levy rates – as a means of punishment of those who use their properties unlawfully. It is impermissible.21 And it is directly at odds with the purpose in the long title of the Rates Act – to regulate the power of a municipality to impose rates on property, and ‘its power to levy a rate on property’ in s 2(3) thereof.22 [58] Fifth, the illegal use category cannot be applied equitably. Section 3(3)(a) of the Rates Act provides that a rates policy ‘must treat persons liable for rates equitably’. In this case the property is not being rated on the same basis as other properties used for the same purpose ie ‘accommodation establishments’. If it were and it was rated on that basis, there could be no complaint because the respondents would be treated the same as all other operators of such establishments. The municipality recognised the inequity. It submitted that the ‘category remains 20 University of Cape Town v Cape Bar Council and Another 1986 (4) SA 903 (A) at 914D-E, affirmed in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others [2004] ZACC 15; 2004 (4) SA 490 (CC) para 90 and Democratic Alliance v Speaker, National Assembly and Others [2016] ZACC 8; 2016 (3) SA 487 (CC) para 28. 21 Van Eck, N O, and Van Rensburg, N O v Etna Stores 1947 (2) SA 984 (A) at 997. 22 Section 2(3) of the Rates Act reads: ‘A municipality must exercise its power to levy a rate on property subject to– (a) section 229 and any other applicable provisions of the Constitution; (b) the provisions of this Act; and (c) the rates policy it must adopt in terms of section 3.’ Residential for all purposes except in circumstances where a penalty tariff is imposed, as in this instance’. [59] Finally, in determining the illegal use category and imposing the penalty tariff, the municipality acted contrary to the prohibition in s 19(1) of the Rates Act, to which s 8(1) is expressly rendered subject. Section 19(1) reads: ‘Impermissible differentiation (1) a municipality may not levy- (a) different rates on residential properties, except as provided for in sections 11 (2), 21 and 89A: Provided that this paragraph does not apply to residential property which is vacant; . . . (d) additional rates except as provided for in section 22.’ [60] Sections 11(2), 21 and 89A do not apply in this case.23 As already stated, in respect of the residential category the municipality levied rates of 0.006531 cents in the Rand on the property, as well as 0.026124 cents in the Rand as a penalty tariff in the illegal use category, calculated on the basis of four times the amount of the rates levied in the residential category. The penalty tariff is inextricably linked to the rates levied in the residential category. For this reason, the submission on behalf of the municipality that it ‘did not rely on a category of “unauthorised use” or “illegal” use for its imposition of a penalty tariff’ and that the ‘penalty tariff is independent of the general property rate for lawful uses’, is wrong. On the plain wording of s 19(1) of the Rates Act, the levying of residential rates by the municipality, together with the penalty tariff founded on the illegal use category, is prohibited. 23 In terms of s 11(2), a ‘rate levied by a municipality on residential properties with a market value below a prescribed valuation level may, instead of a rate determined in terms of subsection (1), be a uniform fixed amount per property’. Section 21 deals with the compulsory phasing-in of certain rates in relation to newly rateable property. Section 89A concerns transitional arrangements relating to the redetermination of municipal boundaries. [61] The penalty tariff further does not constitute an additional rate within the meaning of s 19(1)(d) read with s 22(1) of the Rates Act, for two reasons. It is firstly, not an additional rate on property levied for the purpose of raising funds for improving or upgrading an area determined as a special rating area.24 Secondly, the municipality did not act in terms of s 22(1) of the Rates Act. [62] In Fedsure,25 the Constitutional Court stated that the principle of legality, an aspect of the rule of law, requires that a body exercising a public power (in that case a municipality exercising original legislative power in the form of budgetary resolutions) must act within the powers lawfully conferred on it. In Pharmaceutical Manufacturers Association,26 the principle required that the exercise of public power should not be arbitrary or irrational. Chaskalson P said: ‘It is a requirement of the rule of law that the exercise of public power by the executive and other functionaries should not be arbitrary. Decisions must be rationally related to the purpose for which the power was given, otherwise they are in effect arbitrary and inconsistent with this requirement. It follows that in order to pass constitutional scrutiny the exercise of public power by the executive and other functionaries must, at least, comply with this requirement. If it does not, it falls short of the standards demanded by our Constitution for such action.’ [63] In my view, the action by the municipality in determining an illegal use category of rateable property and imposing the penalty tariff, ostensibly in terms of ss 3 and 8 of the Rates Act, violates the principle of legality in both respects. The 24 Section 22(1) of the Rates Act provides: ‘Special rating areas (1) a municipality may by resolution of its council– (a) determine an area within that municipality as a special rating area; (b) levy an additional rate on property in that area for the purpose of raising funds for improving or upgrading that area; and (c) differentiate between categories of properties when levying an additional rate referred to in paragraph (b).’ 25 Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council and Others 1999 (1) SA 374 (CC) paras 56 and 58. 26 Pharmaceutical Manufacturers Association of South Africa and Another: In re Ex parte President of the Republic of South Africa and Others 2000 (2) SA 674 (CC) para 85. action is beyond the powers conferred on the municipality. It is also arbitrary because it is not rationally related to the purpose for which the power to levy rates was given. [64] Finally, I should point out that the decision of this Court in Blom,27 is to the contrary. The issue in that case was whether, in terms of the Rates Act, the relevant municipality could determine ‘illegal use’ or ‘non-permitted use’ as a category of rateable property under the Rates Act, in order to levy a higher rate on property than it levied on properties used for the purpose permitted. The property had been zoned for use as ‘residential’ and was being used as attorneys’ offices, contrary to the appellant’s town planning scheme.28 The high court decided that the power to create additional categories of rateable property was not unfettered; that it was confined to lawful categories since all the categories listed in s 8(2) of the Rates Act are lawful; and that the levying of a higher rate than the normal rate on a property because it was being used for non-permitted purposes amounted to the imposition of a penalty without due process.29 [65] The decision was reversed on appeal. It was held that when the words ‘use of the property’ and ‘permitted use of property’ in s 8(1) of the Rates Act were considered in the light of the ordinary rules of grammar and syntax, the context in which they appear and the apparent purpose to which they are directed, the word ‘use’ was ‘wide enough to include “non-permitted use”’. The Court concluded that it was ‘competent for the municipality to include in its rates policy a ‘non-permitted use category for the purposes of determining applicable rates’30 and that ‘once the 27 City of Tshwane v Marius Blom & GC Germishuizen Inc and Another [2013] ZASCA 88; 2014 (1) SA 341 (SCA); [2013] 3 All SA 481 (SCA) para 17. 28 Blom fn 27 paras 1 and 5. 29 Blom fn 27 para 4. 30 Blom fn 27 para 17. determination of different categories of rateable property in terms of s 8 is completed the valuation process begins’.31 In my respectful opinion, the correctness of these findings is doubtful, for the reasons advanced above. [66] I would dismiss the appeal with costs. __________________ A SCHIPPERS JUDGE OF APPEAL 31 Blom fn 27 para 21. Appearances: For appellant: L G F Putter SC with C Makgato and S Ogunronbi Instructed by: Prince Mudau & Associates, Midrand Webbers Attorneys, Bloemfontein For respondent: C N Engelbrecht Instructed by: Neels Engelbrecht Attorneys, Johannesburg McIntyre van der Post, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 09 July 2021 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal City of Johannesburg Metropolitan Municipality v Zibi and Another (234/2020) [2021] ZASCA 97 (09 July 2021) Today the Supreme Court of Appeal (SCA) handed down judgment upholding the appeal against the order of the Gauteng Division of the High Court, Johannesburg (the high court). The issue before the SCA was whether a municipality is entitled to levy a rate in the form of a penalty on residential property for illegal or unauthorised use, without first changing the category of the property on its valuation roll or supplementary roll, from ‘residential’ to ‘illegal or unauthorised’ use. The respondents, Mr and Mrs Zibi, took transfer of erf 671 Auckland Park 1 (the property) in their names on 24 June 2013. In addition to residing in the property with their two minor children, the respondents aver that from January 2015 they started renting out 2 bedrooms to students and young professionals, thus using the property as a commune, a commercial concern. It is common cause that no authorisation was first sought and obtained from the municipality for such use. As a result, since October 2015, the municipality levied rates on the respondents’ property, in accordance with the category of ‘illegal’ or ‘unauthorised’ use of the property despite the fact that the zoning category of the property remained ‘Residential 1’ on the municipality’s 2013 and 2018 valuation rolls. The SCA held that the imposition of a higher tariff regarding rates payable on residential property, which was used for a purpose other than its authorised purpose does not require a re-categorisation. The penalty or higher tariff the municipality validly imposed in respect of the respondents’ property, only sought to address the current situation to the extent and for the duration of the illegal land use in operation. The SCA held further that the high court failed to appreciate the unreasonable administrative burden that would be placed on the municipality if a supplementary valuation roll had to be published in respect of every unlawful use of a property. The SCA therefore upheld the appeal. ~~~~ends~~~~

3706

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 852/2020 In the matter between: NOXOLO VICTORIA NONGOGO APPELLANT and THE STATE RESPONDENT Neutral Citation: Nongogo v The State (Case no 852/20) [2021] ZASCA 166 (03 December 2021) Coram: SALDULKER ADP and MOCUMIE, MOKGOHLOA, NICHOLLS and GORVEN JJA Heard: 12 November 2021 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be have been at 09h45 on 03 December 2021. Summary: Criminal law and procedure – conviction of murder and conspiracy to commit murder – whether the court a quo erred in convicting the appellant on both conspiracy to commit murder as well as murder – special entry – whether an irregularity had been committed in ordering the trial to start de novo before another judge. ___________________________________________________________ ORDER ___________________________________________________________ On appeal from: Eastern Cape Division of the High Court, Mthatha (Mjali J, sitting as court of first instance): 1 The appeal succeeds to the extent that the conviction and sentence on conspiracy to commit murder is set aside. 2 Save for the aforegoing, the appeal is dismissed. 3 The conviction and sentence on the count of murder are confirmed. ___________________________________________________________ JUDGMENT ___________________________________________________________ Nicholls JA (Saldulker ADP and Mocumie, Mokgohloa and Gorven JJA concurring) [1] The appellant, 44 years old at the time, was found guilty on two counts in the Eastern Cape Division of the High Court, Mthatha (per Mjali J) in 2013. The first was murder and the other conspiracy to murder her husband. For the purposes of sentencing both counts were taken together and she was sentenced to life imprisonment in terms of the minimum sentencing provisions embodied in s 51(1) of the Criminal Law Amendment Act 105 of 1997. [2] The appellant applied for leave to appeal against conviction and sentence. Leave to this Court was granted by the high court on two aspects, namely ‘on the strength of the special entry that was entered during the trial’ and whether the conviction on both the counts of murder and conspiracy to commit murder amounted to a duplication of convictions. [3] The State has conceded that the appellant should have been convicted of either murder or conspiracy to commit murder, but not both. This was explained in S v Fraser:1 ‘Normally, where a person conspires with another to commit a crime and the crime in question is committed, then the conspirator is liable for the crime itself and should be so charged: See Burchell South African Criminal Law and Procedure vol 1 General Principles of Criminal Law 3rd ed at 367 and cf R v Milne and Erleigh (7) 1951 (1) SA 791 (A) at 823G.’ This concession is well made and therefore the appeal on duplication of convictions must succeed.2 All that remains for consideration is the special entry. [4] Section 317 of the Criminal Procedure Act 51 of 1977 (the Act) provides that: ‘(1) If an accused is of the view that any of the proceedings in connection with or during his or her trial before a High Court are irregular or not according to law, he or she may, either during his or her trial or within a period of 14 days after his or her conviction or within such extended period as may upon application (in this section referred to as an application for condonation) on good cause be allowed, apply for a special entry to be made on the record (in this section referred to as an application for a special entry) stating in what respect the proceedings are alleged to be irregular or not according to law, and such a special entry shall, upon such application for a special entry, be made unless the court to which or the judge to whom the application for special entry is made is of the opinion that the application is not made bona fide, or that it is frivolous or absurd or the granting of the application would be an abuse of the process of the court.’ 1 S v Fraser 2005 (1) SACR 455 (SCA) para 7. 2 S v Whitehead and Others [2007] ZASCA 171; 2008 (1) SACR 431 (SCA) para 33. [5] During the course of the trial the court a quo entered a special entry on the basis of the following facts. The appellant was initially charged together with one Temba Tsekemane (Mr Tsekemane) for the murder of her husband before Griffiths J in the high court. Both pleaded not guilty. After 12 state witnesses had been led, Mr Tsekemane changed his plea to one of guilty, which plea was accepted by the State. This prompted Griffiths J, at the instance of the State, to grant a separation of trials in terms of s 157 (2) of the Act. The trial of the appellant was ordered to commence de novo. Mr Tsekemane was found guilty of murder, and acquitted on conspiracy to murder. He was sentenced to 20 years’ imprisonment. [6] Pursuant to the order of Griffiths J, the trial of the appellant commenced before Mjali J. During the cross-examination of Mr Tsekemane it came to light that he had previously been charged together with the appellant for the same offences. Both parties were instructed to address the court on whether the fact that the appellant was being charged for the same offence but before a different judge amounted to an irregularity. The court a quo then made a ruling that a special entry be entered in the record. [7] The wording of the special entry is lengthy but the crux of the special entry is the following: (a) Whether it was permissible for Griffiths J to have ordered a separation of the trials of Mr Tsekemane and the appellant at such a late stage of the proceedings; (b) whether it was irregular to have ordered that the trial of the appellant commence de novo before another judge when there was no order nullifying the trial before Griffiths J; (c) whether Mr Tsekemane could be called as a state witness in the trial of the appellant in the court a quo; (d) whether the appellant’s fair trial rights had been violated by the unreasonable delay in finalising her matter; and (e) whether the appellant had been tried twice for the same offence. [8] After the special entry had been entered the trial proceeded before Mjali J who duly convicted the appellant of both murder and conspiracy to murder and sentenced her to life imprisonment. [9] In order to determine whether any irregularity has occurred it is necessary to have regard to s 157 (2) of the Act which provides: ‘(1). . . (2) Where two or more persons are charged jointly, whether with the same offence or with different offences, the court may at any time during the trial, upon the application of the prosecutor or any of the accused, direct that the trial of any one or more of the accused shall be held separately from the trial of the other accused, and the court may abstain from giving judgment in respect of any of such accused.’ [10] The main test in deciding whether to grant an application for separation is whether there will be prejudice to the accused. In R v Zonele and Others3 the converse occurred in that a special entry had been entered because the trial judge had not ordered a separation of trials after one of three co-accused had pleaded guilty. The trial judge had permitted the trial to proceed in respect of all the accused, including the accused who had changed his plea to one of guilty. He had also given a verdict simultaneously on all the accused. This was alleged to be irregular. Holmes AJA, found that once the one accused had pleaded guilty, his trial should 3 R v Zonele and Others 1959 (3) SA 319 (A) at 325. have been separated from that of the other accused. Reference was made to s 155 of the previous Criminal Procedure Act 56 of 1955, which is substantially the same as s 157 of the present Act, and the learned judge stated that a separation of trials was the prudent and established practice where one of the accused changed his plea to one of guilty. However, this was not compulsory and the failure to separate did not per se result in the convictions being set aside. Emphasising that prejudice to the accused is the overarching consideration, the court held that on the facts of that matter, where there was overwhelming evidence against all of the accused, the conviction did not fall to be set aside. [11] The general rule, therefore, is that once an accused changes their plea to one of guilty it is necessary to separate the trials, entertain the guilty plea, and order that the trial against the other accused start de novo.4 The exception is where the interests of justice dictate otherwise.5 In this matter it is self-evident that the failure to separate would have caused prejudice to the appellant. Both Mr Tsekemane and the appellant were represented by the same legal representative. Inevitably a conflict of interest would have arisen. To ensure a fair trial it was prudent to order that the trial commence before another judge. There was no irregularity committed by Griffiths J by ordering a separation of the trials and, in fact, the appellant may have had grounds for complaint had a separation not been granted. [12] As regards to whether Mr Tsekemane could be called as a witness against the appellant, it is a long established principle that an accused person who has pleaded guilty can be called to give evidence against the 4 A Kruger Hiemstra Criminal Procedure Chapter 22 (Online Edition, May 2021) at 22-36; S v Somicza 1990 (1) SA 361 (A) at 365 D-E. 5 R v Nzuza 1952 (4) SA 376 (A) at 381 G; R v Solomon 1934 CPD 94 at 96. other accused once the trials have been separated.6 As far back as 1951 Schreiner JA held that when an accused charged with the same offence, changes his plea to one of guilty, he is a competent witness against the remaining accused in their trials. Further, the court held that it makes no difference whether the person who has pleaded guilty to the joint charge and been convicted, has been sentenced or not before being called as a state witness. This is open to some doubt but in any event it does not arise in this matter as Mr Tsekemane had already been sentenced before he testified against the appellant. [13] The delay in finalising the matter should be seen against the backdrop of the chronology of events. In the first trial Mr Tsekemane was convicted pursuant to his changed plea on 16 November 2011 and sentenced accordingly on 18 November 2011. The trial of the appellant commenced on 20 February 2012. She was convicted on both counts on 11 July 2013 which were treated as one for the purposes of sentence. On 4 March 2014 the appellant applied for leave to appeal and on 15 May 2014 leave to appeal was granted to this court on the issue of the special entry and the duplication on conviction. It appears that the appellant did not prosecute the appeal for a period of more than five years until 15 September 2020 when the appellant submitted an application for condonation for the late filing of the notice of appeal and the appeal record. On 30 April 2021 the appellant’s heads of argument were filed with this Court. In these circumstances where the delay in the finalisation of the matter lies squarely at the door of the appellant, there is no basis for finding that the delay has violated her constitutional fair trial rights. 6 Ex Parte v Minister of Justice: in re R v Domingo 1951 (1) (A) 36 at 38 F-G. [14] The final issue raised in the special entry was whether the appellant had been charged twice with the same offence. Once charged with an offence an accused person is entitled in terms of s 106 of the Act to plead that he or she has already been convicted, or alternatively, acquitted of the offence. The appellant did not demand a verdict in terms of s 106 (4) of the Act7 or plead autrefois acquit or autrefois convicti. Indeed, she was not entitled to, as s 157 (2) specifically states that the court may abstain from giving judgment. After a separation of trials the accused is tried afresh. The court a quo’s concerns in this regard are unwarranted. [15] The issues raised in the special entry have no merit. There was no irregularity committed by Griffiths J that vitiated the proceedings before the court a quo and the special entry should not have been entered into the record. The appeal in respect of the special entry must fail. The appeal on duplication of convictions succeeds and insofar as this may have an impact on the overall sentence, the court a quo found no substantial and compelling circumstances to depart from the prescribed minimum sentence for murder. This finding is unimpeachable and, for that reason, the sentence of life imprisonment is appropriate. [16] In the result the following order is made: The appeal succeeds to the extent that the conviction and sentence on conspiracy to commit murder is set aside. Save for the aforegoing, the appeal is dismissed. The conviction and sentence on the count of murder are confirmed. 7 Section 106 (4) provides that: ‘An accused who pleads to a charge, other than a plea that the court has no jurisdiction to try the offence, or an accused on behalf of whom a plea of not guilty is entered by the court, shall, save as is otherwise expressly provided by this Act or any other law, be entitled to demand that he be acquitted or be convicted’. ____________________ C NICHOLLS JUDGE OF APPEAL APPEARANCES: For appellant: L D Halam Instructed by: Mdledle-Malefane & Associates, Mthatha Webbers Attorneys, Bloemfontein For respondent: M L Makubalo Director of Public Prosecutions, Mthatha Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 03 December 2021 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgment of the Supreme Court of Appeal Nongogo v The State (Case no 852/20) [2021] ZASCA 166 (03 December 2021) Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against the order of the Eastern Cape Division of the High Court, Mthatha (the high court), which convicted and sentenced the appellant of murder and conspiracy to commit murder. In the high court, the appellant was charged together with accused 1 (the appellant was accused 2) for the murder of her husband. Both pleaded not guilty. After 12 state witnesses had been led, accused 1 changed his plea to one of guilty. The presiding judge then granted a separation of trials, at the instance of the State, in terms of s 157 (2) of the Criminal Procedure Act 51 of 1977 (the Act), and the trial of the appellant was ordered to commence de novo. When the trial of the appellant commenced de novo before another judge, accused 1 was a witness for the State. The judge in the new trial entered a special entry into the record, in terms of s 317 of the Act, on the basis that accused 1 had previously been charged together with the appellant for the same offences. The trial then proceeded and the appellant was convicted of both murder and conspiracy to murder and sentenced to life imprisonment. There were only two issues on which leave to appeal was granted to the SCA, namely whether the high court duplicated convictions when it convicted the appellant on both murder as well as conspiracy to commit murder and whether an irregularity had been committed by the judge in the first trial in high court, justifying the special entry. On the issue of duplicated convictions, the State conceded that the appellant should have been convicted of either murder or conspiracy to commit murder, but not both. The SCA held that this concession was well made and, as a result, the appeal on duplication of convictions succeeded. On the issue of the irregularity, the SCA held that the main test in deciding whether to grant an application for separation is whether there will be prejudice to the accused. The general rule is that once an accused changes their plea to one of guilty it is necessary to separate the trials, entertain the guilty plea, and order that the trial against the other accused start de novo. In this matter, the SCA held that it was self-evident that the failure to separate would have caused prejudice to the appellant. Further, there was nothing irregular in accused 1 testifying against the appellant after the trials had been separated. Therefore, the first judge in the high court did not commit any irregularity by ordering a separation of trials and that the trial against the appellant commence de novo. The SCA accordingly dismissed the appeal on this issue and found that the special entry should not have been made. The high court had sentenced the appellant to life imprisonment for murder, after finding no substantial and compelling circumstances. The SCA held that this finding was unassailable and therefore the sentence of the appellant was unchanged.

3503

non-electoral

2021

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 1158/2019 In the matter between: HAITAS KONSTANTINOS APPELLANT and FRONEMAN GABRIEL FRANCOIS VAN LINGEN FIRST RESPONDENT HAITAS MARIA ELPIS SECOND RESPONDENT FWC ESTATE & RELATED SERVICES (PTY) LTD THIRD RESPONDENT BRAND KITCHEN HOSPITALITY (PTY) LTD FOURTHRESPONDENT MEZEPOLI HOLDINGS (PTY) LTD FIFTH RESPONDENT MEZEPOLI CAMPS BAY (PTY) LTD SIXTH RESPONDENT MEZEPOLI MELROSE ARCH (PTY) LTD SEVENTH RESPONDENT MEZEPOLI NICOLWAY (PTY) LTD EIGHTH RESPONDENT PLAKA HOLDINGS (PTY) LTD NINTH RESPONDENT PLAKA MENLYN (PTY) LTD TENTH RESPONDENT PLAKA NORTHCLIFF RESTAURANT (PTY) LTD ELEVENTH RESPONDENT MERCHANT PROPERTY INVESTMENTS (PTY) LTD TWELFTH RESPONDENT THE COMPANIES AND INTELLECTUAL PROPERTY COMMISSION THIRTEENTH RESPONDENT THE MASTER OF THE HIGH COURT OF SOUTH AFRICA, GAUTENG DIVISION, PRETORIA FOURTEENTH RESPONDENT Neutral citation: Haitas v Gabriel Francois Van Lingen Froneman and Others (1158/2019) [2021] ZASCA 01 (06 January 2021) Coram: PETSE DP, ZONDI, VAN DER MERWE and NICHOLLS JJA and UNTERHALTER AJA Heard: 06 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ legal 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 15h00 on 06 January 2021. Summary: Trust Law - s 20(1) of Trust Property Control Act 57 of 1988 (the Act) - whether the conduct of the trustees justifies their removal in terms of s 20(1) of the Act, alternatively the common law - whether a breakdown of the relationship between a beneficiary and the trustees justifies the removal of the trustees from office. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Matojane J sitting as court of first instance): The appeal is dismissed with no order as to costs. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Nicholls JA (Petse DP, Zondi and van der Merwe JJA and Unterhalter AJA concurring): [1] When wealthy businessman, Evangelos Haitas (the deceased) died on 21 October 2018, a family feud broke out over the control of the restaurant businesses that he had built up during his lifetime. The appellant, Mr Konstantinos Haitas, is the deceased’s son and sole surviving heir. He is also the only income and capital beneficiary of an inter vivos trust, the Kam Trust (the Trust), established by his late father in 2007, and the vehicle through which the restaurant businesses are owned. While he was alive the deceased was the fulcrum of the businesses. His two co-trustees played little role, with effective control in the hands of the deceased. His death has resulted in suspicion and hostility between the appellant and the remaining two trustees. [2] The first and second respondents, respectively Mr Gabriel Froneman and Ms Maria Elpida Haitas, are the surviving trustees appointed by the deceased in December 2013. Mr Froneman is a chartered accountant employed as such at Middel & Partners Incorporated. He is the representative of FWC Estate & Related Services (Pty) Ltd (FWC), the third respondent. Ms Haitas is the deceased’s sister, the appellant’s aunt, and resides in Greece. The fourth to twelfth respondents are private companies owned by the Trust (the trust companies), and no relief is sought against them. The shares held by the Trust in the trust companies constitute its principal assets. The Trust owns the majority of the shares or all issued shares in the trust companies. They, in turn, own four restaurants situated in Melrose Arch, Nicolway, Menlyn Park and Eastgate and two franchise operations, under the Plaka and Mezepoli brands, which earn license fees. Merchant Property Investment (Pty) Ltd holds the various properties owned by the Trust. The head office, from which the businesses are managed and operated, is Brand Kitchen Hospitality (Pty) Ltd (Brand Kitchen). It is the fourth respondent. The thirteenth and fourteenth respondents are the Companies and Intellectual Property Commission and Master of the High Court, respectively, who took no part in these proceedings. [3] The appeal has its genesis in an urgent application in the Gauteng Division of the High Court, Johannesburg (the high court) launched by the appellant on 16 April 2019 when he was 19 years old. The main relief sought was the removal of Mr Froneman and Ms Haitas as trustees, and for the Master to urgently appoint two more trustees, one of whom should be an independent trustee. This Court was urged, in the alternative, to appoint two additional independent trustees to break any deadlock that might arise in the running of the Trust. The appellant also sought to declare the appointment of Mr Froneman and Ms Haitas as directors of the trust companies void ab initio. Further, ancillary relief was sought that the trustees produce the financial statements of the Trust and all the trust companies; that they meet urgently with the appellant regarding trust matters and that he be permitted to have legal representation at such meeting. Finally, the appellant seeks an order that Mr Froneman and Ms Haitas pay the costs of the application in their personal capacities. [4] The high court (Matojane J) dismissed the application and made no order as to costs. It held that although the trustees did not function optimally in all respects, there was no necessity to remove them and no reason to believe that they would be guilty of any future misconduct or would endanger the assets of the Trust. Leave to appeal was granted to this Court by the high court. [5] To understand the family dynamics, it is necessary to set out the dramatis personae. First and foremost is the appellant himself. As the sole heir and beneficiary, he is apparently keen to maintain a certain lifestyle. The obstacle he faces is that the trust property vests in him only when he turns 23 years old. In addition, in terms of the deceased’s Will any inheritance will be retained in a testamentary trust and only accrue to him once he turns 25 years old, if he is in possession of a university degree. If not, then a third will accrue to him at the age of 25 and the balance when he reaches 30 years of age1. The Will makes provision for the appellant to succeed the deceased as a trustee of the Kam Trust on reaching the age of majority.2 [6] At the time of his father’s death the appellant had commenced his studies at the University of Amsterdam in the Netherlands. These were abandoned soon after the death, ostensibly to attend to trust matters and to his father’s estate. His expenses while abroad were shared equally by his mother and father. His current complaint is that he is receiving no maintenance from the Trust. The trustees have only paid him € 878.82 when he was still in Amsterdam; a further R2 000 on his return; and an amount of R5 645.00 in repayment of monies paid by his stepfather for medical expenses. [7] A central character, and according to the trustees the driving force behind the appellant’s actions, is his mother and the former wife of the deceased, Ms Margarita Tsangaris-Scherf. During the subsistence of the marriage she was integrally involved with growing and running the businesses. The marriage ended in an acrimonious divorce. She was one of the original trustees and a capital beneficiary. Her resignation as a trustee was one of the terms of the divorce settlement. She has since remarried Mr Sandro Scherf who evidently also plays a supportive role in the appellant’s life. [8] Ms Sofia Lorena Lanuza Batista is a Panamanian national and had been the deceased’s romantic partner since 2013. She is the target of much of the appellant’s anger and resentment. Ms Batista is a businesswoman in her own right who, on the urging 1 Clause 5.2 of the Will. 2 Clause 5.3 of the Will. of the deceased, left her employment at Bidvest to become a consultant to the trust companies. She co-habited with the deceased and was sharing a house with him at the time of his death. The appellant accuses the trustees of making various unauthorised and unlawful payments on behalf of Ms Batista into a Panamanian bank account which he alleges contravened exchange control regulations, and amounts to money laundering. She is not a beneficiary of the Trust or an heir to the deceased’s Will. Nor is she a party to these proceedings. [9] Mr Mohsen Abdullah, also known as Manal, is a 10% shareholder in Brand Kitchen, which manages and operates the businesses. Mr Abdullah worked for the deceased for 12 years prior to his death and was the operations manager of the businesses at the time of the death. He has experience in the restaurant industry and has expressed concern for the future of the businesses. Mr Abdullah was aggrieved when the trustees overlooked him for the position as general manager and, instead, appointed Ms Batista. He has a close relationship with the owners of one of the Plaka franchisees, trading as Mastika Tree. They, with the support of Mr Abdullah, sought substantially to reduce their royalties after the deceased’s death. No royalties at all have been paid since November 2018 and as a result the trustees accuse Mr Abdullah of acting against the interests of the trust. He has made common cause with the appellant and his mother in trying to remove the trustees from office and brought to light what he perceived to be irregular payments made to Ms Batista. Mr Abdullah described the deceased as being the ‘heart and soul’ of the business whose personal relationships with franchisees, landlords, staff and supplier was an integral part of the businesses’ success. [10] Ms Otilia De Sousa is an attorney who represented the deceased in his divorce proceedings against Ms Tsangaris-Scherf. She has been appointed executrix of the deceased’s estate. She, too, is accused of attempting to sideline the appellant and deprive him of vital information. [11] According to Mr Froneman and Ms De Sousa the deceased, while he was ill, warned them that his son was immature and would be unduly influenced by his mother. This was a situation he wanted them to guard against at all costs. The undertaking they made to the deceased in this regard has inevitably informed most of their actions and has in turn infuriated the appellant and his mother. Their attempts to prevent Ms Tsangaris- Scherf from playing a role in the businesses has undoubtedly contributed to a pervasive mistrust between the trustees and Ms De Sousa on the one hand and the appellant and his mother on the other. [12] The day after the death of the deceased, a meeting was convened at the joint residence by Ms Batista. Staff salaries and rentals had to be paid in a few days at the end of the month. At the meeting, it was decided that Mr Froneman should be appointed as a director of the trust companies. The meeting was attended by the companies’ banker and lawyer who advised that this was the quickest way to gain access to the bank accounts for the purposes of paying necessary expenses. Mr Froneman was duly appointed on 23 October 2018. [13] On 1 November 2018, Ms Haitas was appointed as a director of the trust companies, the day before the deceased’s funeral was held in Greece. The day after the funeral, she read the Will to the appellant and his mother, and provided them with a copy of the Trust Deed. It turned out that this was an outdated Trust Deed which led to further suspicion. [14] On 9 November 2018, the appellant received a copy of the acceptance of trusteeship form to be completed in order to accept his appointment as a trustee of the Kam Trust. The appellant also wrote to Mr Froneman demanding access to financial information about the trust companies; the deceased’s life insurance policies and confirmation that the Trust would continue to cover half his living expenses in Amsterdam. He stated: “most importantly, I would like to inform all concerned that my mom will be involved in all matters, on my behalf, she has my power of attorney, signing power and is my most trusted advisor. . . ” It appears that from then on relations deteriorated rapidly. [15] Ms Tsangaris-Scherf started sending emails to Mr Froneman, as did the appellant’s current attorneys, all demanding documents and financial information. The appellant requested to meet with the trustees and Ms De Sousa but insisted that this be in the presence of his advisors, his attorney or his stepfather. The trustees indicated that any meeting would only take place directly with the appellant. A stalemate was reached. In November 2018, the question of whether the trust was quorate was raised, an issue which will be dealt with later. [16] On 27 November 2018, the appellant returned from the Netherlands. On his return, he wanted to visit the house his father lived in, and shared with Ms Batista, because he wanted to spend some time in his father’s room. He also requested the use of his father’s Pajero motor vehicle and the keys to a property on the Vaal River owned by one of the trust companies. The request was denied by his aunt, Ms Haitas, who also refused access to the house, saying that this was a matter that should be taken up with Ms Batista as the house was also her home. This further strained relations. [17] On 16 April 2019, the appellant launched the present application for the trustees’ removal. The appellant received his letters of executorship on 19 May 2019. No meeting of the trustees could be held as Mr Froneman and Ms Haitas insisted that the appellant could not have his advisors present. However, on 20 May 2018, he was given access to various financial documentation relating to payments made by the trust companies, including those to Ms Baptista. The financial statements provided to the appellant were the un-audited financial statements for the trust companies from 2009 to 28 February 2017. The financial statements for 2010 were missing. [18] Before dealing with the appellant’s complaints against the trustees, two preliminary points must be referenced. The first was that the amended Trust Deed is ‘suspicious’ and possibly fraudulent. It differed from the original Trust Deed in various respects, including that the appellant had to wait until the age of 23 before he would become a capital beneficiary of the trust property. The sole reason for the suspicion was that the Trust Deed was signed on 23 May 2018 at Melrose Arch when in fact the deceased was in Greece at the time. It was not signed by all the trustees on the same day and before all the witnesses. However, there is no dispute that the amended Trust Deed was signed by all the trustees, including the deceased. Ms Tsangaris-Scherf’s attempt to cast doubt on the Trust Deed was not pursued before this Court and requires no further consideration. [19] The second issue was that the Trust was inquorate after the deceased’s death when Mr Froneman and Ms Haitas were trustees. Clause 5.2 of the Trust Deed states that at all times there shall be a minimum of 3 and a maximum of 5 trustees. It goes on to deal with the situation where a trustee resigns or dies in the following manner: ‘Provided that if there is only one trustee . . . the remaining trustee will be authorised to exercise all the powers of trustees for the maintenance and administration of the trust fund until such time as another trustee has been appointed, which appointment the trustee so in office shall make within NINETY (90) days of the resignation or death of his co-trustee.’ [20] The thrust of the argument was that as there were two trustees, and not only one trustee, remaining after the death of the deceased, the provisions of clause 5.2 would not be applicable. Any other interpretation, so it was contended, would render the requirement of a minimum number of trustees entirely obsolete and counter to this Court’s decision in Land and Agricultural Bank of South Africa v Parker and others3. In that case the difficulty was that there was a sub-minimum number of trustees. It was held that a provision requiring a minimum number of trustees to hold office is a capacity-defining condition, unless the Trust Deed provides otherwise. If fewer than the required number of trustees hold office, a trust does not have the capacity to take any action. These facts are distinguishable from the current matter where the contention is that there are too many trustees for the relevant clause to have application. In my view clause 5.2 cannot have the meaning contended for by the appellant. It cannot be seriously suggested that after the death or resignation of a fellow trustee, one trustee can exercise all the powers to administer the Trust but not two – that would be a manifest absurdity.4 Interpreted 3 Land and Agricultural Bank of South Africa v Parker and Others 2005 (2) SA 77 (SCA). 4 Natal Joint Municipal Pension Fund v Emdumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA); 2012 4 SA 593 (SCA) and the later cases of this Court enjoin courts to interpret contracts in a commercially sensible and business-like manner, having regard to their language, context and purpose in what is a unitary exercise. sensibly, the proviso in Clause 5.2 means that provided there is at least one trustee, the remaining trustee or trustees will be authorised to exercise all the powers of the trustees. So understood, Clause 5.2 regulates the position when there remain either one or two trustees. [21] Aligned to the above is the contention that the appointment of Mr Froneman and Ms Haitas as directors of the trust companies was void ab initio. Relying again on Land and Agricultural Bank it is argued that that when the minimum number of trustees do not hold office the remaining trustees have a duty to appoint a further trustee. Because of the delay in appointing the appellant as the third trustee, the two trustees did not have the requisite capacity to appoint themselves as the directors without the appellant’s authorisation. In the absence of this, Mr Froneman and Ms Haitas could not exercise the rights attached to the shares in the trust companies to appoint themselves as directors. They did not act jointly as trustees and therefore their appointment is void ab initio. [22] Having found that clause 5.2 of the Trust Deed, properly interpreted, must mean that two trustees were within their rights and competent to attend to the administration of the Trust, it follows that this argument is equally unmeritorious and must suffer the same fate. It was contended that even if it is accepted that clause 5.2 is capable of being interpreted as applying to two trustees, their authority would be limited to the most essential aspects for maintaining the Trust, and not to usurp the powers to control the trust companies. This is precisely why the appointment of a director of the trust companies was urgently required - for ‘the maintenance and administration of the trust fund’. It would have been detrimental to the trust companies to have delayed the payment of staff salaries and rentals until the appellant had received his letters of authority. [23] I revert now to the crux of the appeal. Essentially, there are three broad categories of complaints that the appellant contends justify the removal of the trustees. These are the lack of disclosure and transparency in regard to the financial documents of the Trust and the trust companies; the trustees’ refusal to maintain the appellant; and the payments made to Ms Batista; [24] The appellant argues that instead of openness and transparency, Mr Froneman and Ms Haitas have shown a reluctance to disclose the financial records of the Trust and trust companies. Clause 15.1 of the Trust Deed expressly provides that the trustees shall keep a proper set of books recording the financial affairs of the Trust. In addition, ‘financial statements will be prepared and will be subject to annual audit. Every beneficiary of the trust shall on request be entitled to a copy of the financial audited statements of the trust.’ On 20 May 2019 the trustees furnished the appellant with the audited statements from 2009 – 2016 with the exception of the 2010 financial statements. That, in this regard, they were remiss in their duties as trustees is common ground. [25] One of the appellant’s greatest grievance is the trustees’ unwillingness to allow him to benefit from any trust monies. In February 2019, in response to a request from the appellant, Mr Froneman sent an email expressing his regret that the appellant had terminated his studies in Amsterdam as a good education was his father’s greatest wish for him. Mr Froneman pointed out that the deceased’s personal bank accounts were frozen and until the appellant turned 23 years old he was not entitled to a distribution from the Trust. Their fiduciary duties as trustees, stated Mr Froneman, was to ensure ‘that capital and income is preserved.’ The latter statement was not strictly correct, as the Trust Deed afforded the trustees a wide discretion as to the allocation and distribution of trust income.5 Nonetheless, the trustees remained trenchant in their refusal to make payment of any trust monies to the appellant. They persisted with the view that should he require maintenance he should make an application to the Trust which they would consider. 5 Clause 11 of the Trust Deed provides that: ‘Employment of Income The trust is a discretionary trust as far as the employment, allocation and distribution of trust income is concerned, and the trustees may in their absolute discretion, by way of a proper resolution passed by them, allocate income to any beneficiary who may qualify as an income beneficiary, and in particular they are entitled to: 11.1 pay all costs incurred by the trustees in connection with the administration of the trust; 11.2 pay such amounts to any beneficiary as the trustees may deem reasonable and desirable for the maintenance, education and general welfare of such beneficiary’. [26] While refusing to give the appellant any monies, the trustees made payments in the approximate sum of R600 000 to Ms Batista, which the appellant considered unduly generous and favoured Ms Batista over the appellant. In addition, the trustees approved payments of foreign exchange to Ms Batista which, it is contended, were unlawful. Two invoices in the ZAR amount of R61 528.52 and R61 350.75 were issued by Elango Implex Inc, based in Panama, for ‘consulting fees’ and ‘market research in the Region’ on behalf of Ms Batista. Mezepoli Holdings and Plaka Holdings made the application for the foreign exchange payments in January 2019 and, a few days later, on 25 January 2019 Mr Froneman authorised the payments. [27] Mr Froneman’s justification was that it was legal and permissible for Ms Baptista to have her consulting fees paid through this entity. Because of the administration involved, he later advised her to invoice her services through a local company in future. This she did through Tailor Webs (Pty) Ltd (Tailor Webs). Mr Froneman, on behalf of Brand Kitchens, signed an agreement in terms of which Tailor Webs would get paid R80 000 per month for consultancy fees and a further R15 000 for property management. It is not disputed that Ms Batista did the work, although the appellant queries whether she should have been paid this much. The appellant’s complaint is that because Ms Batista did not invoice the trust companies in her personal capacity, this resulted in a loss of R12 000 in respect of value added tax which would not otherwise have been payable and that the illegal foreign exchange payments imperilled the Trust. Further, that the conflict over Ms Baptista’s payments was a stark illustration of the conflict that arose from Mr Froneman and Ms Haitas having appointed themselves as directors of the trust companies. [28] It is common cause that when Ms Batista entered into an intimate relationship with the deceased, he persuaded her to leave her job with Bidvest and work as a consultant for the trust companies. On the appellant’s own version she was responsible ‘for overseeing work done by three outsourced personnel, being a social media or public relations assistant, a marketing consultant and an artwork designer.’ When the deceased became too ill to work, from March to October 2018, Ms Batista took over most of his workload, as well as her own. Mr Froneman says that before he died, the deceased had instructed him to pay her half her normal commission which had accumulated over 4 months and her annual bonus into a foreign entity. He denied that the offshore payments were irregular, asserting that they were legitimate and recorded in the companies’ books. As an accountant he was satisfied that the payments were reasonable for the work that had been done by Ms Batista. [29] The primary issue for determination is whether the conduct of the two trustees justifies their removal in terms of s 20(1) of the Trust Property Control Act 57 of 1988 (the Act), alternatively the common law. Section 20(1) provides that: ‘A trustee, may, on application of the Master or any person having an interest in the trust property, at any time be removed from his office by the court if the court is satisfied that such removal will be in the interests of the trust and its beneficiaries.’ [30] The general principle is that a court will exercise its common law jurisdiction to remove a trustee if the continuance in office of the trustee will be detrimental to the beneficiary or will prevent the trust from being properly administered.6 A trustee has a fiduciary duty to act with due care and diligence in administering property on behalf of another. However, courts have taken a pragmatic approach as to what misconduct should be construed as imperilling trust assets. As early as 1946 the court in Volkwyn NO v Clarke and Damant7 cautioned that this was a delicate matter and the power to remove a trustee was one that should be used with circumspection. Irrespective of whether the common law or s 20(1) is utilised, the courts have emphasised that when a deceased person has deliberately selected certain persons to carry out their wishes because they believe they are best placed to do so, a court should be loathe to interfere8. [31] The early authorities, and the circumspection required before a court exercises its power of removal, were cited with approval by this Court in Gowar9. It was held that 6 Sackville West v Nourse and Another 1925 AD 516 at 526; Gowar and Another v Gowar and Others [2016] ZASCA 101; [2016] 3 All SA 382 (SCA); 2016 (5) SA 225 (SCA). 7 Volkwyn NO v Clarke and Damant 1946 WLS 456. 8 Volkwyn NO v Clarke and Damant 1946 WLS 456 at 464. 9 Above fn 6 paras 30 & 31. neither mala fides nor misconduct necessarily warrant the removal of a trustee. Disharmony in the administration of a Trust is only to be considered if this imperils the trust assets and removal will only be necessary if it is in the interests of the Trust and its beneficiaries. [32] In certain circumstances it is not necessary that there be a finding of dishonesty, gross inefficiency or untrustworthiness on the part of the trustee and a conflict of interest may be sufficient justification for the removal of a trustee. The appellant argued that even an innocent trustee can be removed for conflict of interest. For this, reliance was placed on Kidbrooke Place Management Association and Another v Walton and Others10. That case concerned a Trust whose object was to donate land to develop a housing scheme for retired persons who obtained life rights to their unit. The trustees sold properties to companies in which they had a direct or indirect proprietary interest, which they then on- sold at a R50 000 profit for every erf. In addition, one of the trustees and his wife were the sole members of a close corporation which earned commission on the sale of life rights. The court held that the trustees were in breach of their fiduciary duties in that they had profited from their actions, which they had failed to disclose, and had acted in direct conflict with the express provisions of the Trust Deed. Their actions were motivated by personal gain and an order was granted removing the remaining trustee from office, the other trustee having resigned. [33] I do not understand Kidbrooke to be authority for the proposition that conduct by the trustees which does not find favour with the beneficiary justifies their removal. In fact this Court has found that enmity between the beneficiary and the trustees is not of and in itself an adequate reason for their removal.11 Rather, the court in Kidbrooke found that, although playing a valuable role in the administration of the trust, the trustees misconstrued the nature of their role and responsibilities. In Kidbrooke the removal 10 Kidbrooke Place Management Association and Another v Walton and Others NNO 2015 (4) SA 112(WCC). 11 Above fn 6 para 31. application was a precursor to further legal action by the life rights holders for a proper accounting and disgorgement of profits. [34] Insofar as it may be contended that Letterstedt v Broers12 which was cited with approval in Kidbrooke, provides support for the appellant’s contention this, too, is misplaced. In both Kidbrooke and Letterstedt the trustees breached their fiduciary duties by profiting at the expense of the Trust, with the trustees overcharging the trust estate in the latter. Lord Blackburn observed: ‘It is quite true that friction or hostility between trustees and the immediate possessor of the trust estate is not of itself a reason for the removal of the trustees. But where the hostility is grounded on the mode in which the trust has been administered, where it has been caused wholly or partially by substantial overcharges against the trust estate, it is certainly not to be disregarded.’13 [35] What the above authorities have emphasised is that the conduct of trustees must be detrimental to the trust assets and it is only then that their conduct may warrant removal. It not necessary that their conduct be unimpeachable but generally where there is no impropriety and no financial gain on the part of trustees, courts will not interfere. In this matter there is nothing to suggest any impropriety in the conduct of Mr Froneman and Ms Haitas. There is no evidence of any personal gain or of overcharging. The criticism to be levelled against them is that they have been over-zealous in carrying out what they believed to be the deceased’s wishes. What is clear is that since early November 2018 all meaningful communication between the trustees and the appellant had broken down. That there is disharmony cannot be disputed. But, in my view, it is not sufficient to warrant the removal of Mr Froneman and Ms Haitas as trustees and I see no reason to interfere with the high court’s reasoning in this regard. [36] That the trustees have, in some respects, been lax in maintaining proper accounting records of the Trust cannot be denied. The problem pre-dates the death of the deceased who did not require audited financial statements and ran the businesses 12 Letterstedt v Broers (1884) 9 AC 371 (PC). 13 Letterstedt v Broers (1884) 9 AC 371 (PC) 386 - 387. single-handed. Although access to some of the information is now only of historical value, once the appellant was appointed as a trustee, he still believed documents were being withheld from him and required unfettered access to all financial information to ensure that the trustees were complying with their duties. This underscores the depth of mistrust between the appellant and the trustees. Certainly, it was negligent of the trustees to give the deceased free rein during his lifetime, and subsequent to his death they have not been forthcoming with financial information. The information that is available was provided to the appellant once he became a trustee. It was not necessary to apply for the trustees’ removal to obtain financial disclosures. This could have been obtained by far less drastic remedial action. In prayer 6 of the notice of motion it is exactly this that is sought.14 [37] Similarly, the foreign exchange payments made to Ms Batista were at the instance and upon the instruction of the deceased and, while perhaps ill-advised, have not resulted in any negative repercussions to the trust companies because a proper case is made out that the payments were for services rendered. [38] The appellant is entitled to an income from the Trust for his education and general well-being. This, Mr Froneman has stated under oath that he and Ms Haitas will consider once they receive an application. While this approach is unnecessarily formalistic, it neither imperils the trust, nor subverts the interests of the appellant as the beneficiary of the trust. The trustees would be well-advised to properly consider the appellant’s needs in order to avoid further litigation. [39] The only issue is whether the trustees’ conduct has imperilled the trust companies, and therefore the trust assets. The appellant claims, as advised by Mr Abdullah, that this 14 Prayer 6 of the notice of motion provides: '6 An order that the first and second respondents forthwith, but in any event in no less than 5 days from the date of this order furnish to the applicant: - 6.1 the latest audited financial statements of the KAM Trust; and 6.2 the latest audited financial; statements (or if they have not been audited, the latest draft financial statements) accounting and financial records (which includes all audited financial statements) from inception of the Trust Companies.' is indeed the case. This is denied by the trustees who point out that Mr Abdullah has an axe to grind, as he was not elevated to the position that he thought he deserved. He has also actively encouraged Mastika Tree to stop paying license fees. There is no doubt that the restaurants have suffered a decline in turnover. With the deceased having played such a pivotal role in the businesses, it is only to be expected that his death would cause an upheaval, as well as a loss of confidence and morale amongst staff and management. [40] As regards the proposal that other independent trustees be appointed to break the deadlock, the issue is whether there is a deadlock to break. The appellant and his mother disapprove of the manner in which the Trust is being run but this does not mean that it is rendered dysfunctional. We were informed that the appellant would have peace of mind that he was being treated fairly if independent trustees were appointed. But even if one were to accept that this Court has the power to appoint further trustees, there is insufficient reason to do so. The appellant has elected not to attend meetings of trustees presumably because of the enmity with his co-trustees. The other trustees are his aunt and his father’s trusted financial advisor who, whatever their shortcomings, have the Trust’s interests at heart. The appellant would be well advised to attend these meetings, and take legal advice thereafter, if he so wishes. Until he participates in the governance of the Trust it is premature to claim that there is a deadlock requiring the appointment of an independent trustee. In any event the appellant is at liberty to approach the Master under s 7(2) of the Act to appoint further trustees, if warranted. [41] In conclusion, my view is that the conduct of the trustees, although leaving much to be desired in the way they handled certain matters, does not justify the primary relief sought against them - their removal. The appeal falls to be dismissed. [42] The high court made no order as to costs. In this court there was no argument on costs and no suggestion that any other order would be more appropriate. I find no reason to differ from the high court. [43] In the result I make the following order: The appeal is dismissed with no order as to costs. _________________ CH NICHOLLS JUDGE OF APPEAL APPEARANCES: For appellant: A C Botha SC (with him M F B Clark) Instructed by: Brian Kahn Inc., Johannesburg Claude Reid Inc., Bloemfontein For first to twelfth respondent: M Smith Instructed by: Nance-Kivell Attorneys, Germiston Israel & Sackstein Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 06 January 2021 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Haitas Konstantinos v Froneman and Others (1158/2019) [2021] ZASCA 01 (06 January 2021) Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against an order of the Gauteng Local Division of the High Court, Johannesburg (Matojane J). The appeal involved an application to remove two trustees from office and turned mainly on the issue of whether a breakdown in the relationship between beneficiary and trustees justifies removing the trustees from office in terms of s 20(1) of Trust Property Control Act 57 of 1988 (the Act) or the common law This matter began with an urgent application by the appellant in the high court on 16 April 2019 when he was 19 years old. The main relief sought was the removal of Mr Froneman and Ms Haitas as trustees and for the Master to urgently appoint two more trustees, one of whom should be independent. The high court dismissed the application and made no order as to costs. The crux of the appeal involved three broad categories of complaints levelled against the trustees, which the appellant contended justified their removal from office in accordance with s 20(1) of the Act or the common law. These were, a lack of disclosure and transparency in regard to the financial statements of the Trust and the trust companies; the refusal of the trustees to maintain the appellant; and certain payments made to Ms Batista who had been the deceased’s romantic partner since 2013. On lack of disclosure and transparency, the court found that the trustees furnished the appellant with all audited financial statements, save for the 2010 financial statements. The court held that the trustees were, in some respects, negligent in their maintaining of proper accounting records. However, the information that is available was provided to the appellant once he was a trustee. The court held further that it was not necessary to apply for the removal of the trustees to acquire financial disclosure. One of the appellant’s grievances was the refusal by the trustees to maintain him, stating that the appellant was not entitled to any distribution from the Trust until he turned 23 years old. Although the Trust Deed gave the trustees a wide discretion regarding the allocation and distribution of trust income, the trustees were adamant that the appellant should make an application for maintenance to the Trust which they would consider accordingly. The court held that the appellant is entitled to an income from the Trust for his education and general well-being. The court cautioned that the trustees should carefully consider the appellant’s needs to avoid further litigation. While refusing the appellant maintenance, the trustees approved foreign exchange payment to Ms Batista’s Panama based company for services rendered. The appellant argued that these payments were illegal and imperiled the Trust and that they resulted in a loss of R12 000 in respect of value added tax which would have been avoided had Ms Batista invoiced the Trust in her personal capacity. The court found that these payments were made at the instance and upon the instruction of the deceased, and for services rendered. The core issue for determination, said the court, was whether the conduct of the trustees justified their removal in terms of s 20(1) of the Act, alternatively the common law. In general, the court will exercise its common law jurisdiction to remove a trustee if the continuance in office of the trustee will be detrimental to the beneficiary or will imperil trust assets. In certain circumstances it is not necessary for there to be a finding of dishonesty, gross inefficiency or untrustworthiness on the part of the trustee and a conflict of interest may be sufficient justification for the removal of a trustee. The appellant argued that even an innocent trustee can be removed for conflict of interest. The court found that, irrespective of whether the common law or s 20(1) is utilised, the courts have emphasised that when a deceased person deliberately elects specific persons to carry out his or her wishes, a court should be slow to interfere. The court held further that there is nothing to suggest any impropriety in the conduct of the trustees and that a breakdown of the relationship between a beneficiary and the trustees does not justify the removal of the trustees. The appeal was dismissed with no order as to costs. ________________________________________

2224

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 697/08 LANGA CJ, First Appellant MOSENEKE DCJ Second Appellant MADALA J Third Appellant MOKGORO J Fourth Appellant O’REGAN J Fifth Appellant SACHS J Sixth Appellant NGCOBO J Seventh Appellant SKWEYIYA J Eighth Appellant VAN DER WESTHUIZEN J Ninth Appellant YACOOB J Tenth Appellant NKABINDE J Eleventh Appellant JAFTA AJ Twelfth Appellant KROON AJ Thirteenth Appellant and HLOPHE, MANDLAKAYISE JOHN Respondent Neutral citation: Langa v Hlophe (697/08) [2009] ZASCA 36 (31 MARCH 2009) Coram: HARMS DP, STREICHER, MTHIYANE, NUGENT, CLOETE, PONNAN, MLAMBO, SNYDERS AND MHLANTLA JJA Heard: 23 MARCH 2009 Delivered: 31 MARCH 2009 Updated: Summary: Judge – complaint of judicial misconduct by other judges – alleged violation of accused judge’s constitutional rights – no right to be heard before complaint filed and media statement issued ORDER On appeal from: High Court of South Africa (WLD): Mojapelo DJP (Moshidi J and Mathopo J concurring and Marais J and Gildenhuys J dissenting), a Full Bench sitting as a court of first instance. (a) The appeal is upheld. (b) The order of the court below is replaced by an order dismissing the application. JUDGMENT THE COURT: INTRODUCTION [1] This is an appeal from a judgment of the High Court, Johannesburg, relating to a dispute between Justices of the Constitutional Court (‘the CC’) and a Judge President of a high court. The court below was unusually though permissibly constituted as a full bench with five judges (Supreme Court Act 59 of 1959 s 13(1)(a)). The majority (Mojapelo DJP with Moshidi and Mathopo JJ concurring) upheld the respondent’s claim for declaratory orders in part (Hlophe v Constitutional Court of South Africa and Others (08/22932) [2008] ZAGPHC 289, [2009] 2 All SA 72 (W)). Marais J and Gildenhuys J in separate judgments but for similar reasons disagreed; they would have dismissed the application. (References in this judgment to the high court judgment are to the judgment of the majority.) [2] The high court granted the appellants leave to appeal. The respondent sought leave from the high court to cross-appeal to the CC notwithstanding that high courts (and, for that matter, this court) are not entitled to grant such leave. He asked, in the alternative, for leave to cross-appeal to this court, but that application was fatally defective. In the event both applications were struck from the roll. [3] As a rule this court sits as a panel of either three or five judges but in view of the importance of the matter, and taking into consideration the request of the appellants, in which the respondent acquiesced, it was directed that the matter be heard by a larger panel (s 12(1)(c) of the Act). [4] At the request of the court Adv NC Maritz SC and KS Hassim of the Pretoria Bar filed concise heads of argument as amici curiae. We wish to express our appreciation for their contribution. [5] The appellants are the Chief Justice (Langa CJ); the Deputy Chief Justice (Moseneke DCJ); eight CC Justices (Mokgoro J, O'Regan J, Sachs J, Ngcobo J, Skweyiya J, Van Der Westhuizen J, Yacoob J, and Nkabinde J); a recently retired CC Justice (Madala J); and a member of this court (Jafta AJ) and one of the Eastern Cape High Court (Kroon AJ) who both were at the time acting CC judges. The respondent is the Judge President of the Cape High Court, Judge MJ Hlophe. [6] The case arose from a complaint of judicial misconduct laid by the appellants against the respondent with the Judicial Service Commission (the JSC) on 30 May 2008. The respondent laid a counter-complaint against the appellants on 10 June. While these matters were pending (and they still are) the respondent launched the subject application for an order declaring, in essence, that the CC had violated certain of his constitutional rights by laying the complaint and by issuing a media release stating that the complaint had been laid. [7] The backdrop against which this case arose no doubt raises matters of public importance wherever the truth on those matters lies. But it needs to be said at the outset that those matters lie for examination and consideration in another forum, namely the JSC, and they are only peripherally relevant to this case. This appeal is confined instead to two narrow questions of law relating to alleged violations of the Constitution. The first is whether the appellants, as judges of the CC, were obliged in law to afford the respondent, because he is a judge, a hearing prior to laying the complaint against him before the JSC. And the second is whether, having lodged the complaint, they were obliged in law to keep that fact confidential. The circumstances in which those two questions arise appear later in this judgment. This judgment accordingly is not concerned with the merit of of the complaints to the JSC. [8] Two of the respondents in the court below are no longer parties to the litigation. The one is the CC as an institution. The thrust of the respondent’s substantive application was for an order declaring that the appellants had acted institutionally (‘as a Court’) and ‘not merely as an assortment of individual judges’ and, in that capacity, had violated his rights. The high court found that the appellants had not acted as an institution but as a group of persons who were coincidentally judges and that the respondent’s application was in that regard misconceived. As a result the court refused to make an order implicating the CC itself and dismissed the application pro tanto. [9] The other party in the high court that does not feature in this appeal is the JSC. The relief sought against the JSC was for a temporary interdict, which became moot, and the JSC has no further legal interest in the appeal. THE SEQUENCE OF EVENTS [10] During March 2008, the CC heard the Thint/Zuma appeals from this court. They were of public interest and importance since they concerned the prosecution of a high-ranking politician, Mr Jacob Zuma, on a number of counts. One of the issues related to legal privilege. The CC reserved judgment. It was ultimately delivered after the events that feature in this judgment and was reported as Thint (Pty) Ltd v National Director of Public Prosecutions and Others; Zuma and Another v National Director of Public Prosecutions and Others 2008 (2) SACR 421 (CC); 2009 (1) SA 1 (CC). [11] Towards the end of that month the respondent visited Jafta AJ who concluded that the respondent had attempted to influence him to find in favour of Mr Zuma. Knowing that the respondent intended to visit Nkabinde J, he warned her of the possibility that the respondent might repeat his attempt. [12] The anticipated visit to Nkabinde J took place on 25 April, and she, too, concluded that the respondent had sought to influence her. At the beginning of May and soon after the court term began Nkabinde J made a report to another appellant and through her the matter was taken up with other members of the court. They met in the absence of two appellants, discussed the subject, and eventually agreed to lodge a complaint of judicial misconduct against the respondent with the JSC based on the information provided by the two Justices. This was done on 30 May. [13] The gravamen of the complaint was in these terms: ‘A complaint that the Judge President of the Cape High Court, Judge John Hlophe, has approached some of the judges of the Constitutional Court in an improper attempt to influence this Court's pending judgment in one or more cases is hereby submitted by the judges of this Court to the Judicial Service Commission, as the constitutionally appointed body to deal with complaints of judicial misconduct.’ The document identified the case involved and stressed that there was no suggestion that any litigant was aware of or had instigated the respondent’s action. It contained further statements about the seriousness of the conduct; the democratic values contained in s 1 of the Constitution; the independence of the judiciary and the prohibition in s 165 of interference with courts; the judicial oath; that attempts to influence a court violates the Constitution and threatens the administration of justice; and that the CC and other courts would not yield to or tolerate attempts to undermine their independence. [14] A media release in virtually identical terms soon followed, which was sent automatically and electronically to all subscribers to the CC’s information system. [15] It should be noted at this early stage that (a) the respondent was not apprised of the allegations or their source; (b) he was not asked for his version or comments; (c) he received no effective prior notice of the intention to lodge the complaint; and (d) he was not told of the intention to issue a media statement. The public, too, was not given any detail and was left with nothing more than the knowledge that a complaint with serious implications had been lodged. [16] The JSC held an urgent meeting on 6 June to discuss the matter but due to the lack of information it put the appellants on terms to flesh out the complaint. The respondent, as mentioned, launched his counter-offensive on 10 June, charging the appellants with violating his rights by releasing a public statement about his alleged improper conduct before filing a proper (factual) complaint with the JSC. This, he said, violated his constitutional rights – the same rights implicated in the application before the high court and to which we shall revert. [17] The two Justices responded to the request of the JSC by stating that they had not lodged a complaint; that they did not intend to do so; and that they were not willing to make statements about the matter. However, the affidavit of the Chief Justice, which they in turn confirmed under oath, stated that the two Justices always considered themselves to have been part of a collective complaint on 30 May and not as individual complainants. They soon afterwards indirectly confirmed their accounts of what had occurred by agreeing that their version as related by the Chief Justice was correct. [18] In reaction to press reports the attorneys for Mr Zuma wrote a letter to the Chief Justice expressing concern about the matter and on 23 June he issued a practice direction in the Thint/Zuma case drawing the attention of the parties to the fact that a complaint had been lodged; informing them that the submissions filed were available from the JSC; and inviting the parties to make any consequent submissions. Nothing much eventuated. [19] On 4 July, the first appellant submitted the response to the JSC of the appellants to the counter-complaint. It, too, set out the allegations of the two Justices involved, and they again subscribed thereto. THE APPLICATION TO THE HIGH COURT [20] The respondent’s case was premised entirely on the allegation that the appellants had acted together institutionally (what the respondent called acting ‘as a court’) when they laid the complaint and issued the statement. As he put it in his founding affidavit, the appellants had done so ‘as the Court and not merely as an assortment of individual judges’ (underlining in the original) ‘without affording me an opportunity to reply to the allegations of the judges concerned.’ He added: ‘The question that arises is of a purely legal nature and has to do with whether or not it was lawful for the judges of the Constitutional Court, acting as a Court, to cause untested allegations of gross misconduct against me to be published in the media only on the basis of ex parte representations made to them by some of the judges of the Court, who had already indicated that they do not wish to complain against me.’ [21] The affidavits say more: The respondent was aggrieved by the manner in which the appellants treated the complaint against him. He felt that the appellants had violated the institution of the judiciary and undermined the judicial office, particularly his. He pointed out that the two Justices had not given their version to all their colleagues; that their version was never put in their own terms, and that they appear to have been unwilling complainants and witnesses. The complaint and the press release were in the name of all the CC judges – also those who had no personal knowledge of the matter – and this, he said, per se condemned him in the eyes of members of the public and the profession. In the result an ‘institutional’ bias had developed that made it unlikely that an unbiased bench of judges or academics could be constituted to hear his case. THE FUNCTIONS OF THE JSC [22] Under s 177 of the Constitution matters relating to gross misconduct of judges must be dealt with by the JSC. If the JSC makes a finding of gross misconduct and the National Assembly by a two-thirds majority calls for the removal from office of the judge concerned, the President must comply. That means that once a complaint of that kind has been laid against a judge the JSC must conduct the necessary inquiry and come to a finding. [23] The JSC is under the Constitution the forum for deciding whether or not a judge is guilty of gross misconduct. Such a conclusion presupposes a finding that the judge committed the conduct complained of, which may involve factual or legal findings. The JSC may find that the complaint is without merit and summarily dismiss it. If it has merit, two value judgments follow: did the conduct amount to misconduct and, if so, was it gross? If it finds that the judge was guilty of misconduct which was not ‘gross’ that ends the matter. If, however, it finds that the misconduct was gross, impeachment proceedings follow. [24] The JSC has procedural rules for dealing with complaints. These are exhaustive and there is no suggestion that they do not afford the right to a fair hearing to the judge. The procedure begins with the receipt of a complaint ‘from any source’ and, although it may require the complaint to be on oath, the JSC is entitled to act on any complaint, whether on oath, in writing or oral. The rules provide that the JSC may permit the media and the public, subject to such restrictions as may be considered appropriate, ‘to attend any enquiry unless good cause is shown for their exclusion’. [25] The respondent’s complaint against the appellants before the JSC, as mentioned before, is repeated in the notice of motion and founding affidavit: the appellants violated his constitutional rights to dignity, privacy, equality and so forth. He made it clear that the object of the application was to obtain a finding that the entire process before the JSC was tainted and that his only remedy was a dismissal of the complaint. He said that if the court were to find that the CC had unreasonably and unjustifiably violated his rights under the Bill of Rights or that the CC had abandoned its judicial functions ‘then that will be the end of the complaint against me’. In reply he pointed out that a process vitiated by illegality cannot be cured by ‘scrupulous attention to considerations of legality at a hearing on the merits’ and that he was not prepared to subject himself to a process which he believed was vitiated by illegality and unconstitutionality. [26] The appellants submitted that the high court had usurped the constitutionally imposed function of the JSC to decide the issue and had thereby failed to have regard to the separation of powers inherent in the Constitution. In the light of the way the case unfolded it is unnecessary to consider this argument. DECLARATORY ORDERS [27] In terms of s 38(a) of the Constitution any person acting in his or her interest has the right to approach a competent court on the ground that a fundamental right has been infringed, and the court may grant appropriate relief, including a declaration of rights. [28] The jurisdiction of a high court to grant a declaration of rights is derived from s 19(1)(a)(ii) of the Supreme Court Act. The court may, at the instance of any interested person, enquire into and declare any existing, future or contingent right or obligation, notwithstanding that the applicant cannot claim any relief consequential upon such determination. This involves a two-stage enquiry: First, the court must be satisfied that the applicant is a person interested in an ‘existing, future or contingent right or obligation’, and then, if satisfied, it must decide whether the case is a proper one for the exercise of its discretion (Durban City Council v Association of Building Societies 1942 AD 27 at 32). [29] Marais J and Gildenhuys J devoted some time to the question of that discretion and held that they would not have exercised it in favour of the respondent because the matter was one for the JSC. The majority found otherwise but, once again, in the light of the conclusions we have reached hereinafter on other aspects of the case, the question of discretion does not arise. [30] The respondent sought to persuade the high court to issue a declaration of invalidity under s 172(1)(a) of the Constitution, which provides that when deciding a constitutional matter a court must declare that ‘any law or conduct that is inconsistent with the Constitution is invalid to the extent of its inconsistency’. The court held that the provision did not apply to the case and expressly declined to declare the complaint lodged against the respondent invalid (at para 108). Since there is no cross-appeal that issue is not before us for reconsideration (Goodrich v Botha 1954 (2) SA 540 (A)). THE ORDER [31] As we indicated earlier, the foundation of the respondent’s case was that the appellants had acted institutionally (‘as a court’). It is abundantly clear that they did not do so, as the high court correctly found. That should have been the end of the matter. However the court proceeded to examine whether on any basis established by the facts the appellants violated the constitutional rights of the respondent in lodging the complaint and publishing the media statement. The court did so on what it considered to have been a concession of the appellants that the court was at large to consider the declaratory prayers on the basis that the appellants had acted other than institutionally. The appellants’ counsel denied that such a concession was made but stated, quite correctly, that it was in any event a matter of law whether there was a proper basis for the relief. [32] Having found that the appellants had not acted institutionally the high court dealt with the prayers as if they did not contain that qualification. The court held that the Constitution had not been violated (prayer 1); that the respondent’s right to privacy (prayer 4) and to access to courts (prayer 7) had not been infringed; and that the lodging of a complaint with the JSC had not been wrongful (prayer 8). In the absence of a cross-appeal the dismissal of those prayers does not require further consideration. [33] The first three declaratory orders that were issued concerned the publication of the complaint which was, in general terms, declared to have been ‘unlawful’ (para 1.1); to have violated the respondent’s constitutional ‘right to dignity’ (para 1.2); and to have violated his (presumably constitutional) right to a hearing (para 1.3). The fourth dealt with the lodging of the complaint, which was declared to have violated his constitutional right to equality (para 1.4). All the declarations were premised on the fact that the complaint was laid and the media release issued ‘on the basis of ex parte representations’ of the two Justices and additionally, in the case of para 1.1, on their ‘untested allegations’. As the high court said, ‘all these violations emanate from the applicant not being accorded the right to a hearing in relation to the publication and the laying of the complaint.’ [34] The finding that the appellants had not acted institutionally meant ineluctably that the respondent’s cause of action fell away. The duty to hear a person was at common law always limited to judicial or some administrative organs; and a person acting in a private capacity has never had such a duty. The Constitution is not different. The audi principle can only be sourced in either s 33 or s 34 of the Bill of Rights: the former deals with just administrative action and the latter with a fair public hearing before courts. Since the appellants did not ‘act as a court’ the fair trial provision did not arise and since they did not act as an administrative body the administrative justice provision did not apply either. THE RATIO OF THE HIGH COURT [35] The reasoning of the high court is difficult to encapsulate neatly especially in the light of what would appear to be some inconsistencies and conflicting findings. It would, however, be fair to say that the court reasoned along these lines: (a) A distinction must be made between the ‘trigger’ stage’, ie, the stage leading up to the laying of a complaint and the ‘examination’ stage, ie, the stage of the proceedings before the body charged with the investigation of the complaint (in this case the JSC). (We derive the term ’trigger’ stage from a dictum by Conteh CJ in Meerabux v. The Attorney General of Belize (Belize Supreme Court at www.belizelaw.org) which at a later stage came before the Privy Council in Meerabux v The Attorney General of Belize (Belize) [2005] UKPC 12, [2005] 2 AC 513). (b) To impose an obligation on a complainant to afford the accused judge an opportunity to be heard before lodging a complaint would ‘stretch the requirements of procedural fairness a bit too far’ (at para 24). (c) It quoted with apparent approval a statement by Professor Martin L Friedland (A place apart: Judicial independence and accountability in Canada (1995) p 134) that although it would be very unfair for a body such as the JSC itself to publicize complaints that have not gone on to a hearing, ‘one cannot prevent a complainant from going public.’ (d) In the light of this the two Justices involved were not obliged to give the respondent a hearing because they could rely on their personal knowledge. (e) The appellants ‘admittedly had a right and a duty to lodge the complaint’ with the JSC ‘once they received information about the events and they considered that a breach of judicial conduct had taken place’ (at para 48). (f) However, since the integrity of the judiciary resides in each and every member of the judiciary, the complaint procedure must assume the integrity and innocence of the judge, even in the face of a complaint, until the guilt of the judge has been proven following a fair procedure and process (at para 22). For this the court (at paras 69 and 72) relied on Rees v Crane [1994] 2 AC 173 (PC). (g) The distinction between the ‘trigger’ and examination stages falls away if the complaint, at its early stages and prior to it being lodged, is conveyed to a senior person who did not observe the alleged misconduct. (h) Under those circumstances the rules of natural justice require that the judge accused should be afforded an opportunity to be heard when such senior person considers lodging such complaint (at para 76). (i) The publication of the fact of the complaint was unfair and led to a violation of the respondent’s constitutional rights because the underlying facts had not been established; the witnesses were unwilling witnesses and had not conveyed their version to all the appellants personally; they had refused to provide a written statement and at best the complaint was based on hearsay; this should have made the other appellants alive to the fact that there was possibly another version to the same story; the complaint and the press release did not contain any detail, which made it impossible for the respondent to deal with the allegations and refute them immediately (at para 52 and 79); and the appellants acted with undue haste (at para 48). [36] The essential reasoning that led to the making of the orders seems to us to be contained in the assertions that we have paraphrased in (g) and (h) above. We regret that we cannot agree with those assertions for the reasons that are dealt with more fully below. In particular, it is not readily apparent to us on what legal grounds they were founded. The high court’s reliance on Rees v Crane (supra) to disregard the distinction between the ‘trigger’ and examination stages was not justified. That case was not concerned with the ‘trigger’ stage but with an initial investigation after the complaint had been laid by the Judicial and Legal Service Commission that was tasked with advising the President to appoint a tribunal to investigate and report to parliament on the judge’s alleged misconduct. The case did not deal with the rights of the judge before the complaint was laid with the Commission in the first instance. [37] Counsel for the appellants challenged the conclusions of the high court on various grounds that need no elaboration but they ultimately came down to contesting that the appellants were obliged in law to afford the respondent a hearing before they laid the complaint. The difficulty faced by the appellant’s counsel, however, was the difficulty inherent in establishing a negative, particularly when, as here, the case has mutated over time. We think it is convenient in those circumstances to identify the issues by turning first to the case for the respondent as it came to be presented before us. [38] But first a matter that calls for comment. In the course of its judgment the court below made certain factual findings that reflected adversely upon the appellants. We were asked by their counsel to draw attention to the fact that these were application proceedings in which a court is not called upon to make factual findings (except in exceptional cases) and ought to have been dealt with it as such. The undesirability of resolving issues of fact on affidavit has often been remarked upon and bears no repetition (National Director of Public Prosecutions v Zuma [2009] ZASCA 1 at para 26-27). We do not think we ought to delve into those matters save to say that to the extent that factual findings were made contrary to those ordinary principles we do not endorse those findings. THE RIGHT TO BE HEARD [39] It has been difficult to pin down precisely where the rights that are asserted by the respondent are said to be sourced. Although reliance was placed upon the Constitution that reliance was at times expressed in broad and unspecific terms. A court cannot overlook what was said by Kentridge AJ in the earliest case that came before the CC, namely that ‘it cannot be too strongly stressed that the Constitution does not mean whatever we choose it to mean’ (S v Zuma 1995 (2) SA 642 (CC) at para 17). [40] It nonetheless became clear early in argument that, whatever the source of the alleged right might be, the respondent does not assert a right on the part of a judge to be heard by complainants generally before they lay complaints before the JSC, and that is undoubtedly correct (Kaunda v President of the RSA (2) 2005 (4) SA 235 (CC) at para 83-84; National Director of Public Prosecutions v Zuma [2009] ZASCA 1 at para 35-36; Wiseman v Borneman [1971] AC 297 (HL) at 308E-F; Brooks v DPP of Jamaica [1994] 2 All ER 231 (PC) at 239g-j). While a judge is obviously entitled to be heard in the course of the investigation of a complaint (as appears from the various cases and protocols referred to by the high court and referred to in the heads of argument) that is not what we are concerned with in this appeal. We are concerned instead with the act that initiates such an enquiry (the ‘trigger’), which is the decision to lay a complaint. In that respect there is no authority to which we were referred or of which we are aware – whether in decided cases or in judicial protocols anywhere in the world – that obliges a complainant to invite a judge to be heard before laying the complaint. Indeed, the authorities all say the opposite (Meyer v Law Society, Transvaal 1978 (2) SA 209 (T) at 214F-H; Meyer v Prokureursorde van Transvaal 1979 (1) SA 849 (T) at 855G- 856E; Moran v Lloyd’s (a statutory body) [1981] 1 Lloyd’s Reports 423 (CA) at 427) and a rule to that effect would be absurd, because it would altogether undermine the process of investigating complaints. [41] The respondent confined himself instead to asserting a right to be heard when the complainant is a judge. The distinction that was drawn between complainants generally, on the one hand, and a complaining judge on the other hand, was said to lie in the oath of office taken by a judge and in s 165 of the Constitution, though as the argument progressed that was developed further to include the more general duty that is cast upon judges to uphold the dignity of the judicial institution. We think a fair summary of the argument in that regard was that judges are obliged at all times, by the nature of the office that they hold, to act judicially when deciding matters that relate to that office, which includes an obligation to observe the rules of natural justice when making such decisions. [42] There is considerable merit in the submission that a judge who is minded to lay a complaint against a colleague has special duties that are not shared by lay complainants, for there is an overarching duty upon judges, in whatever they do, to preserve the dignity of the judicial institution. Indeed, the Constitution itself commands all organs of state, which include the judiciary, to ‘assist and protect the independence, impartiality, dignity, accessibility, and effectiveness of the judiciary’. The duty that is cast upon judges no doubt calls upon them to act with due care and circumspection before exposing the judicial institution, and those who hold office in the institution, to loss of public confidence through allegations of misconduct, as submitted by the respondent’s counsel. That might indeed in some cases call for an invitation to be extended to the judge concerned to offer an explanation for the alleged misconduct before a complaint is laid. Whether that will be so in a particular case will necessarily be bound up with the particular circumstances in which the decision comes to be made, for there are peculiar complexities that are capable of arising if such an invitation were to be made. But we are not called upon to consider whether that was called for in this case, in which we are not adjudicating ethical questions but questions of law. And it is there that the submission on behalf of the respondents breaks down fatally on two related grounds. [43] The first is that those duties are not imposed upon a judge for the protection of the personal interests of other judges but for the protection of the institution in the interests of the public at large. And in this case the respondent does not purport to be asserting the interest of the public in the protection of the judicial institution, which he would have had no proper grounds for doing, but is asserting instead the protection of his personal interests. The court below seems to us to have blurred that distinction, and in that respect we think it erred, when it said in its judgment that the right that he sought to assert was a right that ‘is asserted in favour of the applicant as a member of the judiciary’. [44] But equally fatal to the respondent’s case on that score is that the duties we have referred to are not sourced in rules of law that are enforceable in the courts. They are sourced in ethical duties attaching to judicial office that are enforceable ultimately only by the sanction of removal from office. [45] It was no doubt that consideration that compelled the respondent at the outset to attempt to bridge the chasm between ethical principle and legal rule by founding his case upon the proposition that in making their decision the appellants were acting institutionally (‘as a court’) in the performance of the judicial function. For there is no doubt that in the performance of the judicial function, by which we mean the adjudication of rights and obligations, judges are bound to observe and apply the substantive rules of law that generally confer a right to be heard upon persons whose rights will be affected by a judicial decision. [46] So far as the respondent’s counsel relied upon the oath of office, and on s 165 of the Constitution, to distinguish judge complainants from other complainants, the submission simply takes us back to the proposition upon which the respondent founded his claim in the first place, namely, that the appellants were acting institutionally when they laid the complaint. The oath of office, and s 165, are concerned with the performance of judicial functions in the exercise of judicial authority. The insurmountable barrier that is encountered by counsel’s submission, as rightly found by the high court, is that in making their decision the appellants were not performing a judicial function (or as the respondent would have it, acting ‘as a court’). [47] It was no doubt in recognition of the insurmountability of that barrier that the respondent’s lead counsel found himself compelled to abandon that argument and concede that the order made by the high court in paragraph 1.4 could not be sustained. And while a valiant attempt was made by one of his juniors, who presented part of the respondent’s case, to later resuscitate the argument, contrary to the wiser appreciation by his leader of the futility of pursuing it, we have no doubt that the concession was inevitable on a proper analysis and was rightly and properly made. THE MEDIA RELEASE [48] That leaves the question whether it was unlawful for the appellants to publish (by way of the media release) the fact that the complaint had been made. As mentioned, the orders that were made by the high court in that regard were all premised on its finding that the appellants acted unlawfully in failing to afford the respondent an opportunity to be heard before making the complaint. When seen in the light of the reasoning of the court, in which the laying of the complaint and the publication of the allegations were intertwined, we think it is clear that the court did not consider, and it was not called upon to do so in view of its findings, the question that is now before us, which is whether the publication was unlawful notwithstanding that it was lawful to have laid the complaint. [49] Much of the argument of the respondent’s junior counsel, who presented that part of his case, was founded upon the supposition that the appellants were obliged to allow the respondent an opportunity to be heard, on much the same basis that we dealt with earlier, and in view of our findings on that issue they do not serve to take the matter further. He also sought to persuade us that the publication of the allegations was unlawful because its effect was to reflect adversely upon the judicial institution notwithstanding that it was lawful to have laid the complaint. But once more one needs reminding that in making his claim the respondent did not purport to be asserting the broader interests of maintaining the dignity of the institution but to assert his personal interests. In any event it was not the case of the respondent that the publication of the allegations, in itself, violated his rights. His case was that it violated his rights because he had not been permitted an opportunity to refute them. [50] Once having found the appellants did not act unlawfully in laying the complaint we can see no basis for finding that they were obliged to keep that secret for the reasons dealt with more fully below. On the contrary there is much to be said for the contrary proposition (bearing in mind the circumstances in which it occurred) that the constitutional imperatives of transparency obliged them to make the fact known. The appellants said in this regard: ‘In the circumstances where the independence of the Constitutional Court had been threatened and the integrity of the administration of justice in South Africa generally, it was considered imperative and appropriate that this be publicly disclosed. Should the facts have emerged at a later stage there would have been a serious risk that the litigants involved in the relevant cases and the general public would have entertained misgivings about the outcome and the manner in which the decisions were reached. It was especially important that the litigants and the general public were informed of the attempt and that the Constitutional Court had not succumbed to it.’ [51] So far as counsel sought to rely upon the constitutional protection of the respondent’s right to dignity he was constrained to confine that aspect of his dignity that was impaired to the personality rights that attach to his reputation but in that respect counsel moved onto slippery ground. For it is well established in our law, and not in conflict with the Constitution, that the prima facie wrongful violation of the right to dignity may be justified (Khumalo v Holomisa 2002 (5) SA 401 (CC) at paras 29-34). Justification, as Gildenhuys J pointed out (at para 51), can be raised validly if the statement was true and for the public benefit; constituted fair comment; or was made on a privileged occasion. These are all specific applications of the broader principle that conduct, which is reasonable, having regard to all the circumstances of the case, is not wrongful (Hardaker v Phillips 2005 (4) SA 515 (SCA) at para 15; Wentzel v SA Yster en Staalbedryfsvereniging 1967 (3) SA 91 (T) at 98). [52] An allegation that a judge is guilty of judicial misconduct by having sought to influence another judge is defamatory and violates that judge’s dignity. The media release contained at least such an innuendo and was therefore prima facie unlawful. To consider whether the publication was in fact unlawful on that score would call for us first to decide whether the factual averments made by the appellants (following the standard approach that is adopted in motion proceedings – Delta Motor Corporation (Pty) Ltd v van der Merwe 2004 (6) SA 185, [2004] 4 All SA 365 (SCA)) establish the truth of the innuendo. (The appellants went further, and submitted that on the respondent’s own version the imputation or innuendo was true.) Counsel for the respondent wisely declined to invite us to embark on that enquiry. Instead he fell back on the bald assertion that it is always unlawful for a judge to allege in public that another judge stands accused of serious misconduct and can never be justified, even if the allegation is true and the publication is for the public benefit. [53] The basis of the submission appears to have been that it can never be for the public benefit to know that a judge stands accused of gross judicial misconduct, especially if by another judge. There are indications that the high court agreed. It said the following (at para 49): ‘In deciding to go public at that initial stage of the complaint the respondents had to act in a manner that ensured a delicate balance between the right of the public to know and the inevitable result that publication itself may result in the corrosion of public confidence in the judiciary. The public right to know had to be balanced with the way that knowledge and information is purveyed. . . . The applicant was dealt with unfairly and his rights were violated by the failure to strike a balance between the right of the public to know and the need to maintain public confidence in the judiciary.’ The court also quoted the following passage from the Belize judgment (referred to above) in respect of the news that a judge of the Supreme Court was to appear before a body for the purposes of investigation (at para 50): ‘But the public weal itself will be damaged if the news is not handled with care and circumspection; for it may inevitably result in the corrosion of public confidence in the judiciary itself, with deleterious effects on the administration of justice as a whole.’ [54] The fallacy of the finding that the appellants had failed to strike a balance between the right of the public to know and the need to maintain public confidence in the judiciary is that the court would seem to have considered the truth or untruth of the defamatory allegation to be irrelevant. Disclosure of an allegation of gross misconduct against a judge may in certain circumstances not be for the public benefit but that could hardly be the case if the allegation is true. If the respondent in fact approached the two Justices in an attempt to influence their judgment it would have been to the public benefit that that fact be made known. The fact that the respondent is a judge does not give him special rights or special protection. Judges are ordinary citizens. What applies to others applies to them (Pharmaceutical Society of South Africa v Minister of Health; New Clicks South Africa (Pty) Limited v Tshabalala-Msimang NO 2005 (3) SA 238 (SCA) at para 39). They, too, like government, pressure groups, or other individuals, ‘may not interfere in fact, or attempt to interfere, with the way in which a Judge conducts his or her case and makes his or her decision’ (The Queen in Right of Canada v Beauregard (1986) 30 DLR (4th) 481 (SCC) quoted with approval in De Lange v Smuts NO 1998 (3) SA 785 (CC) at para 70). The Belize judgment, it may be added, was not concerned with the issue whether the publication of a complaint against a judge was improper of wrongful. It also did not suggest that it was – only that publication must be handled with care and circumspection. [55] It will always be distressing for a judge to learn in the media that he or she has been accused of misconduct but that seems to us to be an inevitable hazard of holding public office. The remedy that is available to a judge who finds that he or she is in that position is to insist that the body charged with investigating such a complaint does so with expedition so as to clear his or her name. Nor should it be thought that such accusations may be made with impunity: a judge, like any member of the public, is entitled to the consolation of damages for defamation if the publication of the statement cannot be justified (Argus Printing and Publishing Company Ltd v Esselen’s Estate 1994 (2) SA 1 (A)). But we do not think that his or her remedy lies in stifling the fact that a complaint has been made (Moran v Lloyd’s (a statutory body) [1981] 1 Lloyd’s Reports 423 (CA) at 427). [56] For those reasons we conclude that the court below erred by making the declaratory orders. The appeal must be upheld and the order of the court below replaced with an order dismissing the application. Costs were not in issue. It is accordingly ordered as follows: (a) The appeal is upheld. (b) The order of the court below is replaced by an order dismissing the application. On behalf of: HARMS DP, STREICHER, MTHIYANE, NUGENT, CLOETE, PONNAN, MLAMBO, SNYDERS AND MHLANTLA JJA _____________________ L T C HARMS DEPUTY PRESIDENT For Appellant: G J Marcus SC M Sikhakhane Instructed by: State Attorney Johannesburg State Attorney Bloemfontein For Respondent: D B Ntsebeza SC V Ngalwana T Masuku Instructed by: Nongogo, Nuku Inc Cape Town E G Cooper & Sons Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 MARCH 2009 Status: Immediate 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 LANGA AND OTHERS v HLOPHE The Supreme Court of Appeal (SCA) today held that justices of the Constitutional Court did not act unlawfully when they made a complaint to the Judicial Service Commission against the Judge President of the Cape High Court without first affording him an opportunity to be heard. It also held that they did not act unlawfully by issuing a media statement announcing that they had made the complaint. The appeal was brought by the justices of the Constitutional Court against declarations made by the High Court at Johannesburg that they had acted in breach of the Constitution by laying the complaint and issuing the statement without first having afforded the Judge President a hearing. The High Court found that although the justices were not performing judicial functions as a court when they made their decision they were nonetheless obliged to afford the Judge President a hearing before they did so. The SCA agreed with the finding by the High Court that the justices had not made the decision in the performance of the judicial function of the court. It went on to find that, that being the case, there was no requirement in law for a hearing to be afforded before they arrived at their decision to lay a complaint and issue a media statement. The SCA also held that, once having decided to make the complaint, the judges were not obliged by law to keep that secret. It held that if the imputation against the Judge President were true ─ a matter that the SCA was not called upon to decide ─ then it was clearly to the public benefit that that it should be known, and its publication would not be unlawful. The SCA pointed out that it will always be distressing for a judge to learn in the media that he or she has been accused of misconduct. The remedies that were available to a judge in such a case were to insist upon an expeditious disposal of the complaint so as to clear his or her name, and, in appropriate cases, an action for damages for defamation. The appeal against the declaratory orders made by the High Court was upheld and the orders were set aside. ---ends---

2334

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 52/09 LUC ARTHUR FRANCE CHRETIEN First Appellant CAROL ANNE CHRETIEN Second Appellant and LINDA STEWART BELL Respondent Neutral citation: Chretien v Bell (52/09) [2009] ZASCA 147 (26 November 2009). Coram: NAVSA, NUGENT, PONNAN, MAYA JJA et TSHIQI AJA Heard: 13 NOVEMBER 2009 Delivered: 26 NOVEMBER 2009 Summary: Alienation of Land – Purchase and Sale Agreement not stipulating time for payment – contract unenforceable for non-compliance with s 2(1) of the Alienation of Land Act 68 of 1981. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: High Court, Durban (Van Zyl J sitting as court of first instance). 1. The appeal is upheld with costs. 2. The order of the court below is set aside and substituted as follows: 3. The application is dismissed with costs, including the costs of two counsel. _____________________________________________________ JUDGMENT ______________________________________________________________ TSHIQI AJA (NAVSA, NUGENT, PONNAN, MAYA JJA concurring): [1] The issue in this appeal is whether a written purchase and sale agreement between the appellants and the respondent, is void ab initio for non-compliance with the provisions of s 2(1) of the Alienation of Land Act 68 of 1981(‘the Act’) [2] The appellant brought an application to the Durban High Court for an order declaring the agreement enforceable and an order for the transfer of the property into her name. Her application was upheld with costs, including the costs of two counsel and this appeal is brought with leave of the court below. [3] On 30 March 2005, the appellants, Luc Arthur France and his wife Carol Anne Chretien, both property developers, entered into a written purchase and sale agreement with the respondent, Ms Linda Stewart Bell for the sale of immovable property known as Erf No 374, Ballitoville, South Ballito, KwaZulu Natal. The agreement was recorded in a pre-printed form normally utilised by estate agents, containing blank spaces to be completed by the parties to record specific terms of their agreement. [4] The agreement contained the details of the parties, a proper description of the property and set out the purchase price. The effect of the terms under the heading ‘Method of Payment of Purchase Price’ was that no deposit was required to be paid, that no loan was required to be obtained by the purchaser, and that the full price would be paid in cash. This integral part of the agreement is reproduced hereunder: The special conditions were inserted in manuscript in Clause M(1) and M(2) and read : '1. The parties have entered into a separate agreement in terms of which the Seller is obliged to effect improvements on the said property to the value of R2,800 000,00 (Two Million, Eight Hundred Thousand Rand) and other terms contained therein. [initialled] 2. The Purchaser & Seller have mutually agreed that the purchase price payment details will be agreed upon in writing between the two relevant parties by not later than the 30/04/2005. This will be a cash payment. [initialled] Conditions of Contract' [5] The agreement provided further in Clause 2.3 that ‘ the Purchaser shall not be entitled to take transfer of the property until the whole of the purchase price and all other charges for which he is liable have been paid in full or secured to the satisfaction of the seller'. [6] As Clause M(1) pertains to a separate agreement already concluded by the parties in relation to improvements to be effected on the land, the disputes that arose between the parties concerning that separate agreement are immaterial for the determination of the validity of the purchase and sale agreement. M(2) is the controversial clause, because, although it provides that the parties would conclude an agreement in writing regarding the purchase price details before 30 April 2005, no such written agreement was ever concluded. [7] During July 2005, Ms Bell paid the purchase price in the amount of R1,3m to the nominated conveyancing attorney together with all costs and other amounts necessary to effect transfer into her name. The first sign that the Chretiens no longer wished to continue with the agreement was conveyed by their attorney to Ms Bell’s attorneys by way of a letter dated 13 June 2006. Para 3 of the letter states: 'Our counsel has formed the prima facie view that there is no contract between your client, Mrs Bell and my clients, Mr and Mrs Chretien. The basis for his view is that the written document signed by our respective clients did not stipulate in writing the method of payment as is required by legislation. If our counsel is correct, the purported agreement would be void ab initio.' This deadlock culminated in the application by Ms Bell to the court below. [8] Section 2(1) of the Act provides: 'No alienation of land after the commencement of this section shall, subject to the provisions of section 28, be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority.' [9] The formal legal requirements of a contract of purchase and sale have been analysed in a number of decisions and were summed up concisely in Dijkstra v Janowsky:1 'In regard to these requisites certain legal principles have been settled by our Courts: (i) The whole contract ─ or at least all the material terms ─ must be reduced to writing (Johnston v Leal 1980 (3) SA 927 (A) at 937C-G). (ii) The Court must be able to ascertain with reasonable certainty the terms of the contract. As Colman J stated in Burroughs Machines Ltd v Chenille Corporation of SA (Pty) Ltd 1964 (1) SA 669 (W) in a passage cited with approval in Clements v Simpson 1971 (3) SA 1 (A) at 7E: "inelegance, clumsy draftsmanship or loose use of language in a commercial document purporting to be a contract will not impair its validity as long as one can find therein, with reasonable certainty, the terms necessary to constitute a valid contract". (iii) There is no valid contract where a material term has not been finally agreed upon, but is left open for further negotiations (Jammine v Lowrie 1958 (2) SA 430 (T) and authorities there cited). 1 1985 (3) 560 (C) at 564G-H and 565A. (iv) The material terms are not confined to the essentialia of the contract of sale (Johnston's case supra at 937H). (v) The manner of payment is ordinarily a material term (Patel v Adam 1977 (2) SA 653 (A) at 666A-C).' [10] In Patel v Adam (supra) the following was said:2 'It has been held by this Court that one of the terms of a contract of sale of land which has to be in writing is the manner of payment of the purchase price. (Du Plessis v Van Deventer 1960 (2) SA 544 (AD) at p 551A-B; Neethling v Klopper en Andere 1967 (4) SA 459 (AD) at p 465B-C.) In the agreement in issue in the present case clause 3 provides that the purchase price "shall be payable in monthly instalments free of interest". The clause contains no statement of the amount of the monthly instalments, and there are no other provisions in the agreement from which the amount, or the period in which the purchase price has to be paid, can be inferred. The agreement, it seems clear, leaves it to the purchaser alone to decide what amount he wishes to pay every month, with the result that a court of law would not be able to determine the monthly amount to be paid by him. Mr Wulfsohn, for the plaintiff, relying, inter alia, on what was said in Dawidowits v Van Drimmelen 1913 TPD 672, and Towert v Towert 1956 (1) SA 429 (W), contended that in these circumstances the agreement should be held to be void for uncertainty. . ..' [11] There is no doubt that the time within which payment is to be made is a material term of the agreement. As appears from the agreement itself, the parties thought it so, and provided for that to be determined and to be reduced into writing. This, as stated above, did not occur. [12] It was submitted that because the parties have stipulated that the payment will be a cash payment, in the absence of further agreement between the parties, the sellers could not have expected anything better than cash against transfer of property into the name of the purchaser. Whilst this submission echoes the position in common law, it cannot be held to apply in the present matter. It was an express term of the agreement that the purchase price was required to be paid before the obligation to transfer arose, and agreement still had to be reached in respect of the time of payment. 2 666A-C. [13] Counsel for the respondent submitted that the term ‘purchase price payment details does not refer to the time of payment but rather the manner in which the cash payment would be made ie bank guaranteed cheque, bank transfer etc. This argument is flawed because even such payments are in fact cash payments. The term therefore clearly referred to the time for payment which is logically the only outstanding issue and which is clearly a material term (Patel v Adam supra). Consequently; as the agreement does not stipulate the time of payment; it does not comply with s 2 (1) of the Act and is unenforceable. [14] I accordingly make the following order: 1. The appeal is upheld with costs. 2. The order of the court below is set aside and substituted as follows: 3. The application is dismissed with costs, including the costs of two counsel. _______________________ Z L L TSHIQI ACTING JUDGE OF APPEAL Appearances: Counsel for Appellant: W Singh SC Instructed by Legator McKenna Incorporated, Durban Matsepes Inc, Bloemfontein Counsel for Respondent: A Horwitz SC Instructed by Michael Werner & Associates, Sandton E G Cooper Majiedt Inc, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 26 November 2009 Status: Immediate 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 L A F CHRETIEN AND ANOTHER v L S BELL The Supreme Court of Appeal has upheld an appeal and set aside an order declaring a purchase and sale agreement enforceable. The agreement provided that the parties would conclude a written agreement regarding the purchase price payment details at a future date. No such agreement was concluded. The SCA found that the 'purchase price payment details' referred to the time of payment and that as the manner of payment is a material term, the agreement was unenforceable for non- compliance with s 2(1) of the Alienation of Land Act 68 of 1981. --ends--

3039

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 20507/2014 In the matter between: MINISTER OF CORRECTIONAL SERVICES First Appellant NATIONAL COMMISSIONER OF CORRECTIONAL SERVICES Second Appellant REGIONAL COMMISSIONER Third Appellant AREA COMMISSIONER JOHANNESBURG CORRECTIONAL SERVICES Fourth Appellant CHAIRPERSON OF CORRECTIONAL SUPERVISION AND PAROLE BOARD/JOHANNESBURG CORRECTIONAL SERVICES Fifth Appellant CHAIRPERSON OF THE CASE MANAGEMENT COMMITTEE, JOHANNESBURG MEDIUM B CENTRE Sixth Appellant MINISTER OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT Seventh Appellant and TONY PHAKISO SEGANOE Respondent Neutral citation: Minister of Correctional Services and others v Seganoe (20507/2014) [2015] ZASCA 148 (01 October 2015) Coram: Maya ADP, Leach, Pillay, Zondi, Mathopo JJA Heard: 25 August 2015 Delivered: 01 October 2015 Summary: Correctional Services Acts 8 of 1959 and 111 of 1998 – Parole – whether the eligibility for placement on parole of a sentenced offender who committed offences during the operation of the 1959 Act but was sentenced after the 1998 Act came into force should be determined in terms of the parole regime applicable at the time of the commission of such offences under the 1959 Act or the different regime applicable at time of sentencing under the 1998 Act. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Gauteng Local Division, Johannesburg (Kolbe AJ sitting as court of first instance) 1 The appeal is upheld with no order as to costs. 2 The order of the high court is set aside and replaced with the following: ‘The application is dismissed with costs.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Maya JA (Leach, Pillay, Zondi and Mathopo JJA concurring): [1] The crisp question in this appeal is which statutory regime governs the eligibility for placement on parole of sentenced offenders convicted of offences committed during the existence and operation of the Correctional Services Act 8 of 1959 (the 1959 Act) but sentenced after the commencement of the Correctional Services Act 111 of 1998 which repealed it.1 The Gauteng Local Division, Johannesburg (the high court) held that it is the statutory regime in force at the time of the commission of the offences that is applicable. The Minister of Correctional Services (the Minister) appeals against that judgment with the leave of this court. [2] The respondent is a sentenced offender currently serving two determinate sentences of 15 and 7 years imprisonment, resulting in a cumulative sentence of 22 years imprisonment, consequent upon conviction in respect of two separate offences. The first offence was committed on 29 April 2002. The matter proceeded in the Soweto Regional Court and he pleaded to the charge on 14 February 2003. He was convicted on 1 June 2004 and sentenced to 20 years imprisonment on 13 January 2005. This sentence was subsequently reduced on appeal by the high court on 8 September 2008, antedated to run with effect from the original date of sentence, 13 January 2005. The second offence was committed on 21 July 2001. The respondent was charged and entered a plea of not guilty in the Johannesburg Regional Court on 23 September 2003. He was convicted and sentenced to 7 years imprisonment on 10 November 2005. A subsequent appeal against such sentence was unsuccessful. [3] In March, and again in May 2012, after completing one third of his sentence,2 the respondent applied to the sixth appellant, the Chairperson of Case Management of the Johannesburg Medium B Correctional Center where he is being held. He sought consideration for placement on parole. His applications were rejected in both instances. They were dismissed on the ground that he did not qualify for consideration for placement on parole in terms of the relevant provisions of the 1959 Act but in terms 1 By s 137 of the 1998 Act, except for ss 29, 84F, 97 and Schedules 1 and 2 which were repealed by s 99(1) of the Child Justice Act 75 of 2008 with effect from 1 April 2010. 2 He would have served half of his sentence on 12 October 2015 taking into account a six month special remission period granted to offenders on 28 May 2005. And after a further six months special remission granted on 27 April 2012 he would have served one third of his sentence on 12 September 2011 and half thereof on 12 April 2015. Chapter VII of the 1998 Act3 which came into effect on 1 October 2004, because he was sentenced in respect of both offences in January and November 2005 respectively, after the commencement of the latter Act. (The date of commencement of the 1998 Act was 31 July 2004 and Chapter VII thereof came into effect on 1 October 2004.)4 [4] These decisions prompted the respondent to launch an application in the high court. In essence, he sought consideration for placement on parole, and the date thereof accelerated, under the credit system envisaged in s 22A of the 1959 Act, by the application of the credits he had earned by undergoing various treatment, training and rehabilitation programmes during his incarceration. His main contention was that his application should be determined in accordance with the policies and guidelines governing parole placement applicable in terms of the 1959 Act because the offences for which he was convicted were committed during its operation. [5] The high court agreed with the respondent, in contrast to previous high court decisions which held that in terms of the law, the date of sentencing was the operative date for purposes of determining eligibility for placement on parole.5 The court found that although the transitional provisions in s 136 of the 1998 Act, which retained the credit system in respect of certain classes of offenders, did not avail the respondent, he was nonetheless entitled to have his case determined under the old parole regime. On 3 Chapter VII of the 1998 Act deals with the release of offenders from correctional centres and placement under correctional supervision and on parole and day parole. 4 Commencement of the Correctional Services Act 111 of 1998 and Repeal of the Correctional Services Act 8 of 1959, GN R38, GG 26626, 30 July 2004. 5 Makaba v Minister of Correctional Services & others (5369/2011) [2012] ZAFSHC 157 (16 August 2012) (Free State High Court); Elton Wayne Ackers v Minister of Correctional Services & others (11746/2012) (15 April 2013) (Gauteng Local Division, Johannesburg); Broodryk v Minister of Correctional Services & others (69585/11) [2013] ZAGPPHC 280 (9 September 2013); 2014 (1) SACR 471 (GJ). the authority of various decisions,6 the court invoked the presumption against the retrospective application of a statute increasing a penalty in the absence of express language or clear implication, and the general rule against interpreting legislation to extinguish existing rights and obligations. On that basis the court held that the sixth respondent was wrong to subject the respondent to the new parole regime which took away the credit system. And this was because of the established rule that the date of the offence fixes the punishment, of which parole forms part. The respondent was therefore entitled to be treated on the basis of the penalty existing at the date of commission of the offences. [6] In its judgment refusing leave to appeal, which was wrong particularly in view of the existing contrary decisions of various divisions of the high court, the court oddly backtracked on its initial findings on the interpretation of the relevant provisions. It also expanded on its earlier reasons for its finding that the date of the offence fixes the punishment. The court relied on a judgment of this court, Mchunu v The State,7 (handed down after the delivery of its main judgment, which dealt with the effect of court orders fixing non-parole periods) and certain foreign authorities for a finding that similar to the fixing of a non-parole period by a court, the fixing of a non-parole period by statute, which was tantamount to the retrospective abolition of the credit system, constituted punishment. [7] On appeal before us, the Minister’s counsel criticised the high court’s judgment for misinterpreting the relevant statutory provisions, relying on distinguishable decisions and the contradiction in its two judgments. The respondent, supported by the 6 For example, R v Sillas 1959 (4) SA 305 (A); R v Mazibuko 1958 (4) SA 353 (A); Veldman v Director of Public Prosecutions, WLD (CCT 19/05) [2005] ZA CC 22 (5 December 2005); 2006 (2) SACR 319 (CC); Van Wyk v Minister of Correctional Services & others (40915/10) [2011] ZAGPPHC 125; 2012 (1) SACR 159 (GNP). 7 Mchunu v The State (825/2012) ZASCA 126 (25 September 2013). amicus curiae,8 repeated his contentions in the high court and urged us to uphold its decision. [8] As the Constitutional Court remarked in Van Vuren v Minister of Correctional Services & others,9 ‘Prison administration, more specifically community corrections in South Africa, is presently conducted within the framework of the [1998] Act and where applicable, the [1959] Act, together with relevant policies and guidelines under these Acts. The [1998] Act is being gradually brought into operation with the simultaneous abolition and repeal of the corresponding parts of the [1959] Act.’ (footnotes omitted) [9] Although some of these gradual changes had begun when the respondent pleaded (and was convicted in respect of the first offence in June 2004) in respect of both offences, eligibility for placement on parole10 of sentenced offenders was still regulated by the 1959 Act. In terms of s 65(4)(a)(ii) of the 1959 Act, where no non- parole period was fixed, a prisoner (as offenders were called thereunder)11 serving a determinate sentence was eligible to be considered for placement on parole upon serving half of his term of imprisonment. This date could be brought forward by the application of the number of credits earned by the offender in accordance with s 22A, subject to the applicable criteria for the allocation of such credits. [10] Section 22A created a system for the allocation of credits to offenders for their 8 The amicus curiae attended the appeal at the request of this court as the respondent appeared in person. The court is grateful for his assistance. 9 Van Vuren v Minister of Correctional Services & others (CCT 07/10) [2010] ZACC 17 (30 September 2010); 2012 (1) SACR 103 (CC) para 24. 10 Defined in s 1 of the 1998 Act as meaning ‘a form of community corrections contemplated in Chapter VI. ‘Community corrections’ on the other hand is defined in the same section as meaning ‘all non-custodial measures and forms of supervision applicable to persons who are subject to such measures and supervision in the community and who are under the control of the Department [of Correctional Services]’. 11 The definition of ‘prisoner’ was deleted by s 1 of the Correctional Services Amendment Act 25 of 2008. compliance with the rules of the correctional institution and their active participation in programmes aimed at their treatment, training and rehabilitation.12 This section (and various provisions of the 1959 Act) was, however, repealed by the Parole and Correctional Supervision Amendment Act 87 of 1997 which came into force on 1 October 2004.13 By the time he was sentenced in 2005, the 1959 Act had been repealed and replaced by the 1998 Act. [11] Simultaneous with this abolition, the 1998 Act created a new system for the early release of offenders in Chapters IV, VI and VII. In terms of the new dispensation, ‘a sentenced offender serving a determinate sentence or cumulative sentences of more than 24 months may not be placed on day parole or parole until such sentenced offender has served either the stipulated non-parole period, or if no non- parole period was stipulated, half of the sentence’ (s 73(6)(a) of the 1998 Act). [12] The 1998 Act makes no reference to any kind of a credit system except in s 136, which contains transitional provisions, and reads, in relevant part: ‘(1) Any person serving a sentence of incarceration immediately before the commencement of Chapters IV, VI and VII is subject to the provisions of the Correctional Services Act, 1959 (Act 8 of 1959), relating to his or her placement under community corrections, and is to be considered for such release and placement by the Correctional Supervision and Parole Board in terms of the policy and guidelines applied by the former Parole Boards prior to the commencement of those Chapters. (2) When considering the release and placement of a sentenced offender who is serving a determinate sentence of incarceration as contemplated in subsection (1), such sentenced offender must be 12 The section provided: ‘(1) A prisoner may earn credits to be awarded by an institutional committee, by observing the rules which apply in the prison and by actively taking part in the programmes which are aimed at his treatment, training and rehabilitation. Provided that– (a) a prisoner may not earn credits amounting to more than half of the period of imprisonment which he has served; . . . (2) The number of days and months earned by a prisoner as credits may be taken into account in determining the date on which a parole board may consider the placement of such a prisoner on parole.’ 13 In s 4 thereof. allocated the maximum number of credits in terms of section 22A of the Correctional Services Act, 1959 (Act 8 of 1959). (3) (a) Any sentenced offender serving a sentence of life incarceration immediately before the commencement of Chapters IV, VI and VII is entitled to be considered for day parole and parole after he or she has served 20 years of the sentence. . . .’ [13] The position of sentenced offenders serving determinate sentences at the commencement of Chapter VII of the 1998 Act, ie on 1 October 2004, is clear from a plain reading of the above provisions. In Van Vuren,14 the Constitutional Court held that the phrase ‘any person’ in s 136(1) refers to any person serving a sentence of incarceration and that the provisions relate ‘to an offender’s placement under community corrections and his or her consideration for such release and placement in terms of the policy and guidelines applied by the former parole boards prior to 2004’. Section 136(1) therefore preserves the parole policy and guidelines that applied before the commencement of the 1998 Act, in 2004, in relation to this particular class of offenders. Their eligibility for placement on parole must, therefore, be assessed in terms of the 1959 Act. They are entitled to receive the maximum number of credits in terms of s 22A thereof.15 Obviously, the legislature’s intention was to obviate prejudice to offenders sentenced under the old dispensation by the retrospective application of the new provisions which take away the credit system available when they were sentenced. [14] But then s 136 says nothing at all about offenders sentenced after the commencement of Chapter VII. The respondent argued that there was a lacuna in the 14 Fn 8. In this matter the Constitutional Court considered the proper interpretation of s 136 and, pertinently, whether the provisions of the 1959 Act and the policy and guidelines applied by the former parole boards applied to the applicant, an offender whose death sentence had been commuted to life imprisonment in 1992, or whether the applicant was entitled to be considered for placement on parole only after completing 20 years in detention in terms of s 136(3)(a) and the new policy and guidelines. section which, for its proper application and interpretation, should be remedied by reading in the words ‘for an offence committed’ so that it reads: ‘Any person serving a sentence of imprisonment/incarceration for an offence committed immediately before the commencement of Chapters IV, VI and VII is subject to the provisions of the Correctional Services Act, 1959 (Act No, 8 of 1959)…’ (Emphasis added) [15] As was pointed out in Van Vuren,16 the provisions of s 136 must be read as a whole to determine the impugned subsection. Similar to ss 136(1) and (2), s 136(3) also deals expressly with sentenced offenders serving incarceration ‘immediately before the commencement of Chapters IV, VI and VII’. Only subsection (4) refers to an offender sentenced to incarceration after the commencement of the new dispensation. But these provisions are set apart by their context and could not possibly have anything to do with the respondent’s class of offenders. This is so because they deal with ‘a person … sentenced to life incarceration after the commencement of Chapters IV,VI and VII while serving a life sentence imposed prior to the commencement’, whose assessment for parole must be referred to the Minister for his consideration in consultation with the National Council for Correctional Services. So, clearly the legislature was not oblivious of the class of offenders sentenced after 1 October 2004. It seems to have rather been concerned only with those offenders sentenced to life incarceration after the commencement of chapter IV,VI and VII while serving a life sentence. There is, therefore, no room for the ‘reading in’ proposed by the respondent which, in my view, would not cure the ‘gap’ even if it was effected. [16] The interpretation contended for by the respondent is also beset by practical difficulties and could yield absurd results. One glaring example is a case of, say, a 15 See also S v Mafoho (149/12) [2012] ZASCA 49 (28 March 2013); 2013 (2) SACR 179 (SCA) para 12. 16 At para 55. murderer who commits murder before the coming into operation of chapters IV, VI, and VII but evades capture or is for any reason not brought to justice over a long period of time. If the respondent’s interpretation were accepted, such an offender would be entitled to demand the implementation of a parole regime that no longer existed and for which there were no implementation mechanisms when he was finally brought to justice. Clearly, the legislature could not have contemplated such a scenario. [17] This reasoning inexorably leads to one conclusion: that the respondent’s class of offenders, ie those not yet sentenced and serving determinate sentences of incarceration on 1 October 2004, was deliberately left outside the ambit of s 136 and that these provisions were intended to retain the benefits of the parole regime under the 1959 Act only in respect of offenders serving determinate sentences of incarceration by 1 October 2004.17 This intention is replicated in the transitional provisions of the Parole and Correctional Supervision Amendment Act contained in s 24. In terms thereof ‘[a]ny person serving a sentence of imprisonment immediately before the commencement of this Act shall be deemed to have been awarded the maximum number of credits in terms of s 22A of the [1959] Act as it was in force immediately before the commencement of this Act’. [18] In that case, s 73(6)(a) of the 1998 Act governs the respondent’s consideration for placement on parole or community corrections. This was the ultimate finding in the Broodryk, Ackers and Makaba decisions with which the high court disagreed. Needless to say, its change of mind in the comprehensive judgment on application for leave to appeal regarding its initial view in its main judgment, that s 136 did not avail the respondent because he did not fit the definition of the offender contemplated in s 17 J Moses ‘Parole in South Africa’ (2012) at 69. 136(1), was impermissible and constituted a material misdirection on its part. And none of the authorities upon which the court relied came any closer to dealing with the question when a sentenced offender should be considered for placement on parole or community corrections. They were all distinguished by their own facts. [19] The appeal should accordingly succeed. Neither of the parties sought a costs order as this is a test case, and none will be made. In the premises the following order is made: 1 The appeal is upheld with no order as to costs. 2 The order of the high court is set aside and replaced with the following: ‘The application is dismissed.’ ____________________ M M L Maya Judge of Appeal APPEARANCES For the Appellant: S J R Mogagabe SC (with Z Buthelezi) Instructed by: The State Attorney, Johannesburg The State Attorney, Bloemfontein For the Respondent: In Person Amicus Curiae: D M Grewar Instructed by: Free State Bar, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 01 October 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Minister of Correctional Services v Tony Phakiso Seganoe (20507/2014) [2015] ZASCA 148 (01 October 2015) MEDIA STATEMENT Today, the Supreme Court of Appeal (SCA) upheld an appeal by Minister of Correctional Services (the Minister), against an order by the Gauteng Local Division, Johannesburg. The high court had found that the respondent, a sentenced offender currently serving two determinate sentences of 15 and 7 years imprisonment for two separate offences which were committed during 2001 and 2002, was eligible to be considered for placement on parole in terms of the repealed Correctional Services Act 8 of 1959 (the 1959 Act), which was operative at the time of the commission of the offences but had been repealed by the Correctional Services Act 111 of 1998 (the 1998 Act) at the time that the respondent was sentenced. Section 22A of the 1959 Act created a system for the allocation of credits to offenders for their compliance with the rules of the correctional institution and their active participation in programmes which were aimed at their treatment, training and rehabilitation. These credits were taken into account in determining the date on which the parole board may consider the placement of such an offender on parole. The 1998 Act created a new system for the release of offenders on parole and repealed the credit system in respect of those offenders who do not fall under the provisions of its s 136, who were sentenced after the coming into effect of Chapter VII of the 1998 Act ie, 1 October 2004. The provisions of s 136 of the 1998 Act retains the credit system in respect of certain categories of offenders, who had been serving a determinate sentence of imprisonment immediately before the commencement of Chapters IV, VI and VII of the 1998 Act. The respondent contended that his application for placement on parole should be determined in terms of the policies and guidelines governing parole in terms of the 1959 Act because the offences for which he was convicted were committed during its operation. The court a quo agreed with this contention. Overturning this decision, the SCA found that the applicable statutory regime to consider placement on parole in respect of convicted offenders sentenced at the commencement of the 1998 Act, is the 1998 Act and that the provisions of s 136 of the 1998 Act do not apply to his category of offenders ie, those sentenced after the commencement of Chapter VII of the 1998 Act. The SCA held that the provisions of s 136 are intended to preclude prejudice to offenders sentenced under the 1959 Act by the retrospective application of the provisions of the 1998 Act which takes away the credit system. The SCA also held that it could not have been the intention of the legislature to include the respondent’s category of offenders under the provisions of s 136 of the 1998 Act as this section deals expressly with offenders serving imprisonment immediately before the commencement of Chapters IV, VI and VII of the 1998 Act, which excludes the respondent. The SCA concluded that the respondent’s category of offenders was governed by the provisions of s 73(6)(a) of the 1998 Act which provides for the consideration for placement on parole in terms of a stipulated period, or half of the sentence where there is no stipulation of a period.

3913

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case No: 772/2021 In the matter between: ROELOF LOUIS BARRY SLABBERT N O FIRST APPELLANT JORITHA WELMAN SECOND APPELLANT DIETER SCHUTTE LOCHNER N O THIRD APPELLANT HELEN RUTH KROES N O FOURTH APPELLANT (In their capacities as the duly appointed joint trustees of the Venezia Trust (IT 1817/96)) and MA-AFRIKA HOTELS (PTY) LTD T/A RIVIERBOS GUEST HOUSE RESPONDENT Neutral Citation: Slabbert N O & 3 Others v Ma-Afrika Hotels t/a Rivierbos Guest House (772/2021) [2022] ZASCA (04 November 2022) Coram: MOLEMELA, MAKGOKA and GORVEN JJA, and KGOELE and GOOSEN AJJA Heard: 31 August 2022 Delivered: 04 November 2022 Summary: Contract Law – whether cancellation clause unfair or unreasonable – doctrine of pacta sunt servanda. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (de Villiers AJ sitting as court of first instance): 1. The appeal is upheld with costs. 2. The order of the high court is set aside and replaced with the following: ‘2.1 The respondent is evicted from the premises known as Erf 14144 Stellenbosch, situated at 1 Hannam Street, Stellenbosch, Western Cape. 2.2 The Applicant is authorised to have a writ of ejectment issued forthwith, in order for the eviction to be carried out by the Sheriff for the High Court, Stellenbosch or his deputy, assisted by the South African Police Service, if necessary, should the respondent fail to vacate the premises forthwith. 2.3 The respondent is ordered to pay the costs of Part A of the application.’ 3. The cross appeal is upheld with costs. 4. The determination of Part B of the Application is remitted to the high court for adjudication. ______________________________________________________________ JUDGMENT ______________________________________________________________ Molemela JA (Makgoka and Gorven JJA and Kgoele and Goosen AJJA concurring) Introduction [1] This appeal concerns a dispute arising from a failure by Ma-Afrika Hotels (Pty) Ltd t/a Rivierbos Guest House (the respondent), to pay rental and related charges allegedly owing to the respondent, the Trustees of the Venezia Trust (the Trust), in terms of a lease agreement. Factual Matrix [2] The facts of this matter are largely undisputed. On 8 October 2018, the parties concluded a sale and leaseback agreement where the Trust purchased a certain erf in Stellenbosch (the property) for an amount of R15 500 000. The property was then leased back to the respondent to enable it to conduct the business of a guesthouse. In addition to the leased premises, the respondent also trades in the hospitality industry from other premises. The lease agreement, which was envisaged in clause 18 of the Deed of Sale, was concluded on 12 February 2019. On the same day, the parties also agreed to the terms of an addendum to the lease agreement. The addendum, which allowed for the potential redevelopment of the property, is irrelevant for the purposes of this appeal. It was agreed that the lease would terminate ten years from the date of its commencement. In terms of the agreement, the permitted use of the property was as a guesthouse. [3] The material terms of the lease agreement on which the Trust relies are: ‘2. LEASE The parties agreed that the Property is leased on a triple net basis and the Lessee will in addition to the rental be liable for all expenses, consumption, charges, taxes, Insurance, interior and exterior maintenance and any other cost related to the Property including the erf and the improvements forming part of it. 3. MONTHLY NET RENTAL The Lessee shall pay a monthly net rental to the Lessor as indicated on the annexed schedule of payment marked Annexure “B” 4. PERIOD 4.1 The lease will commence on the first day of the month following the month during which the transfer of the property is registered in the name of the Lessor (“the Commencement Date”) . . . The Lease shall endure be for a period of 10 (ten) years calculated from the Commencement Date. 4. PAYMENT OF AMOUNTS DUE The Lessee shall pay without any deduction of setoff (for any reason whatsoever) the Monthly Net Rental as well as any increases in the monthly net rental and other amounts which may become due and payable in terms of this Lease, monthly in advance on or before the 1st day of each calendar month during the then ruling office hours of the Lessor, free of bank exchange and other charges, in South African currency, at the address of the Lessor stated below or such other address which the Lessor may from time to time notify the Lessee of in writing. 7. BREACH OF LEASE 7.1 Should the Lessee: 7.1.1 Fail to pay any amount owing by the Lessee in terms of this Lease on the due date thereof or – . . . 7.2 In any of the abovementioned events the Lessor shall in addition to and without prejudice to all other rights available to the Lessor as a result thereof be entitled but not obliged notwithstanding and previous waiver or anything to the contrary herein contained either - 7.2.1 forthwith to cancel this Lease and to resume possession of the Property but without prejudice to its claim for arrears of rent and any other amount owing hereunder or for damages which it may have suffered by reason of the Lessee's breach of the Lease or of the premature cancellation in which case the Lessee shall pay to the Lessor over and above any rental and other monies which may be in arrears in terms of the Lease as at date of cancellation, the following amounts (if applicable). . . . 12. PURPOSE FOR WHICH THE PROPERTY SHALL BE USED 12.1 The Property is let for the purpose of the Lessee carrying on business therein of a guest house trading as Rivierbos and for no other purpose without the written approval of the Lessor. The Lessee are will specifically not use the Property for any purpose that is not allowed in terms of the title deed, consent use and/or zoning of the property. 12.2 The Lessor does not warrant that the Property is fit for the purpose for which it is let or that the Lessee will be granted a licence for the conduct of his business on the Property or that any (sic) licence granted will be renewed, and the Lessor shall not be obliged to do any work or make any alterations or effect any repairs to the Property to comply with the requirements of any licensing authority.’ [4] It is common cause that on 15 March 2020, the advent of the Covid-19 pandemic caused the South African government to declare a National State of Disaster1 in terms of s 15(1)(aA) read with s 23(8) of the Disaster Management Act, 57 of 2002 (the Act), with the Minister of Co-operative Governance and Traditional Affairs (the Minister) promulgating regulations in terms of the Act on 18 March 2020. Thereafter the Minister, acting in terms of s 27(2) of the Act, and as a further result of the Covid-19 pandemic, from time to time, made regulations embodying a national public health response to the Covid-19 pandemic (the Covid-19 regulations). [5] On 23 March 2020, the President2 announced a national ‘lockdown’ commencing on 26 March 2020 at 23h59. The ‘lockdown’ was defined as ‘the restriction of movement of persons’ during the period for which this regulation is in force and effect, namely from 23h59 on Thursday, 26 March 2020, until 23h59, 16 April 2020, and during which time the movement of persons is restricted. For that period, every person was confined to his or her place of residence except those performing an essential service, obtaining an essential good or service, collecting a social grant or seeking emergency, life- saving or chronic medical attention. Regulation 11B(1)(b) stipulated that all ‘businesses and other entities shall cease operations during the lockdown, save for any business or entity involved in the manufacturing, supply, or provision of an essential good or service’. The respondent's guest house business did not qualify as any business or entity involved in the manufacturing, supply, or provision of an essential good or service in terms of the regulations and was therefore prohibited from trading. [6] The Covid-19 regulations were again amended on 26 March 2020 (in terms of Government Notice 419). Businesses and other entities, except for businesses or entities which were involved in the manufacturing, supply or provision of essential goods or services, were prohibited from operating, save for operations that were provided for outside of the Republic or could be provided remotely by a person from their normal place of residence. On 6 April 2020, the Covid-19 regulations were again amended (in terms of 1 This was published in Government Notice 312 of 15 March 2020. 2 The President of the Republic of South Africa. Government Notice 465), extending the period of the lockdown to 30 April 2020. [7] On 29 April 2020, in Government Notice 480, new regulations were promulgated, repealing the original regulations. In terms of the new Covid-19 regulations, the Minister was empowered to declare various levels of restriction that would be applicable nationally or in a province, metropolitan area or district (‘alert levels’) to manage the Covid-19 pandemic during the national state of disaster. A five-level COVID-19 alert system was introduced to manage the gradual easing of the lockdown. That risk-adjusted approach was guided by several criteria, including the level of infections and rate of transmission, the capacity of health facilities, the extent of the implementation of public health interventions and the economic and social impact of continued restrictions. The following alert levels were declared: 11.1 Alert level 5 from 26 March 2020 to 30 April 2020; 11.2 Alert level 4 from 1 May 2020 to 31 May 2020; 11.3 Alert level 3 from 1 June 2020 to 17 August 2020; 11.4 Alert level 2 from 18 August 2020 to 20 September 2020; 11.5 Alert level 1 from 21 September 2020 to 7 December 2020.3 The operation of guest houses was permitted under alert level 2. [8] On 22 February 2021, the Trust launched an urgent application against the respondent in the high court. In Part A of the Notice of Motion, the Trust essentially sought an order of ejectment in terms of which the respondent would be evicted from the premises in which the guesthouse was conducted, coupled with an order of costs. In Part B the Trust claimed arrear rental, interest thereon and costs.4 3 Different ‘alert levels’ entailed different levels of restriction upon movement of persons and the operation of businesses. 'Alert Level 1' indicated a low Covid -19 spread with a high health system readiness; 'Alert Level 2' indicated a moderate Covid -19 spread with a high health system readiness; 'Alert Level 3' indicated a moderate Covid -19 spread with a moderate health system readiness; 'Alert Level 4' indicated a moderate to a high Covid -19 spread with a low to moderate health system readiness; and 'Alert Level 5' indicated a high Covid -19 spread with a low health system readiness. 4 The relief sought by the Trust followed was set out as follows in the notice of motion: ‘Part A [9] The Trust alleged that the respondent failed to pay the rentals provided for in the lease and that as of 31 December 2020 it was in arrears with its rental payments in the amount of R872 266.00. As a result, so the Trust averred, it was entitled to claim payment of the unpaid rentals without notice, cancel the lease in terms of clause 7.2.1 and compel the ejectment of the respondent from the premises. The Trust further asserted that between 1 March 2020, when the respondent’s default commenced and 7 December 2020, when it issued a notice of cancellation of the lease, many discussions took place, and communications were exchanged between the parties in an attempt to resolve the matter amicably. This had been in vain. [10] The high court dismissed the application for eviction.5 It also ordered the respondent to pay the amount claimed as arrear rental with interest. Aggrieved by the order dismissing the application for eviction, the Trust 1. That the forms and service provided in the Rules be dispensed with and that Part A of this application be heard as one of urgency in terms of Rule 6(22), in the FAST LANE of the THIRD DIVISION of the Honourable Court. 2. That the Respondent be evicted from the premises known as Erf 14144 Stellenbosch, situated at 1 Hannam Street, Stellenbosch, Western Cape (“the premises”), on a date to be determined by the Honourable Court. 3. That the Applicant be authorised to have a writ of ejectment issued forthwith, in order for the eviction to be carried out by the Sheriff for the High Court, Stellenbosch or his deputy, assisted by the South African Police Services, if necessary, should the Respondent fail to vacate the premises on the aforesaid date determined by the Honourable Court. 4. That the Respondent shall pay the costs of Part A of this application. 5. That such further and/or alternative relief be granted to the Applicant as the Honourable Court may deem fit. Part B 6. The forms and service provided in the Rules be dispensed with and that Part B of this application be heard as one of urgency in terms of Rule 6(12), on the basis that, should it be opposed, Part B of this application be postponed for hearing on the SEMI URGENT ROLL of the FOURTH DIVISION of the Honourable Court. 7. That the Respondent shall pay arrear rental of R872 266.98 to the Venezia Trust (IT 1817/96), represented by the Applicants. 8. That the Respondent shall pay interest, at the prescribed rate, to the Applicants, on the aforementioned amount, calculated from 1 January 2021 until date of final payment. 9. That the Respondent shall pay the costs of Part B of this application.’ 5 The high court granted the following order: ‘27.1 The Respondent shall pay the arrear rental of R872 266.98 to the Venezia Trust (IT 1817/96); 27.2 The Respondent shall pay interest on the aforementioned amount at the prescribed interest rate calculated from the 1st of January 2021 to date of payment; 27.3 The remainder of the Applicant’s (Venezia Trust) claims are dismissed. 28. In respect of costs, given the fact that the Applicants were only partially successful, the following order is made: 28.1 No order as to costs is made.’ sought and was granted leave to appeal that order. The high court also granted the respondent leave to cross-appeal the order directing it to pay the amount claimed plus interest. Before us, both parties agreed that the high court misdirected itself by considering Part B of the application, the hearing was limited to the issue of eviction. The central issue is whether the high court erred in dismissing the application for eviction. The parties’ contentions [11] On behalf of the Trust, it was contended that given the fact that the lease in question contains the provisions that rentals are payable in advance without deduction whatsoever, the parties are bound by those terms and that defences such as reciprocity of performance are not competent. [12] The respondent’s primary defence was that due to the Covid-19 pandemic and the restrictions imposed by the government, it was impossible for it to perform its obligations in terms of the lease. It contended that under alert levels 5, 4 and 3 it was not permitted to operate its guest house business. Thus, from 18 August 2020, when alert level 2 was put in place until 20 September 2020, it was permitted to operate its guest house, subject to a restriction on the number of persons allowed to not more than 50 per cent of the available floor space, with patrons observing a distance of at least one and a half meters from each other. From 21 September 2020 to 7 December 2020 (the date the Trust purported to cancel the lease agreement), under alert level 1, it was permitted to operate its guest house at full capacity, with patrons observing a distance of at least one and a half meters from each other when in common spaces. [13] The respondent alleged that over the period 1 April 2020 to 31 August 2020, it did not earn any revenue as its occupancy levels remained at zero. Although the respondent was permitted to operate under restricted circumstances from 18 August 2020, under alert level 2, no guests occupied the guest house, and it accordingly earned zero revenue over the period 18 to 31 August 2020. The respondent asserted that it achieved an occupancy rate of 8 percent for September 2020, 8 percent for October 2020, and 18 percent for November 2020. Historically, 47 percent of the respondent’s guests are foreigners. The respondent averred that the prohibition on international travel to this country has severely affected the respondent’s business. Its occupancy rate for December increased to 27.7 percent, mainly as a result of the lifting of the international air travel ban. While it continued to trade under restricted conditions, it remained totally exposed to the presence of the Covid-19 pandemic and the Government’s response thereto. [14] The respondent contended that due to its absolute or partial inability to trade on account of restrictions imposed by Covid-19 Regulations, it had no rental obligation towards the Trust for the months of April to August 2020. The total amount claimed from the respondent by the Trust for these months is the sum of R560 651.24. The respondent asserted that if this amount is deducted from the total allegedly owed on the date of cancellation, the balance was an amount of R332 555.47, which is less than the R403 503.85 which was paid over the relevant period. As such, so the contention went, the respondent was not in arrears at the date of cancellation of the agreement; to the contrary, it was in effect in credit with the Trust in an amount of R70 948.38. [15] In determining the application, the high court observed that the lease agreement did not contain a vis major provision. In addition, the high court expressed the view that a question that needed to be answered was whether the right to cancel the lease and claim eviction from the premises was also unaffected by the Trust’s inability to perform. The high court found that the lease between the parties excluded reciprocity and that the respondent was obliged to persist in making the stipulated payments. It found that as of 31 January 2021, the respondent was indebted to the Trust in an amount of R872 266.98. [16] In respect of the order of eviction, the high court found that it was not clear to what extent the effect of the regulations made in terms of the Act would have on the relief sought in Part A of the notice of motion. It accepted that the respondent was unable to perform its obligations to pay rentals during the various levels during the restrictive periods. It reasoned as follows on this aspect: ‘[23] It may be that after payment of all the arrears, the Respondent shall institute a claim for a reduction or rather a repayment of rentals against the Trust. Without making any finding in this regard, the possibility remains that after a full ventilation of the issues by way of application or trial, it could be found that as a result of any impossibility, the Applicant was not entitled to cancel the lease. To my mind, the right to the remission of rentals and the right to cancel the agreement are two distinct rights. [24] Whatever the circumstances may be, the possibility to fully trade and exploit the commercial potential of the premises were as a fact impaired (if not temporarily prevented), by the emergency regulations. I do not doubt that these circumstances would have made it impossible for the Respondent from properly, fully and timeously making the payments required in terms of the lease. [25] In these circumstances, I find that the Trust, as a result of the Respondent's impossibility to perform in terms of the lease, could not invoke the provisions of clause 7.2 of the lease and summarily cancel the lease. [26] In the light of this finding, it is not competent to evict the Respondent from the premises.’ [17] As stated before, the respondent contends that as a result of the Covid-19 regulations and its absolute inability to trade, it had no rental obligation towards the Trust for the months of April to 17 August 2020. In respect of the period 18 August 2020 to 7 December 2020, the date of the purported cancellation of the agreement, it claims there was a partial inability to pay. The Trust denies that the respondent had no beneficial occupation of the property at any stage. It contended that the respondent remained in possession of the property throughout the lockdown period and housed its computers in the building. The Trust also contended that clause 4 of the lease agreement altered the common law position and that the payment of rent was, therefore, not contingent on the Trust’s prior performance. Applicable legal principles [18] As has been observed in a plethora of cases, a lease of immovable property is generally a reciprocal agreement between the lessor and the lessee in terms of which the lessor agrees to give the lessee the temporary use and enjoyment of the property in return for the payment of rent. The temporary use and enjoyment of the leased property is an essential ingredient of a lease.6 Under the exceptio non adimpleti contractus, where a lessee is deprived of or disturbed in the use or enjoyment of leased property to which it is entitled in terms of the lease, it can in appropriate circumstances be relieved of the obligation to pay rent, either in whole or in part. [19] As authority for its stance that the exceptio non adimpleti contractus is not available to the respondent in this matter, the Trust relied on this Court’s judgment in Baynes Fashions (Pty) Ltd t/a Gerani v Hyprop Investments (Pty) Ltd (Baynes Fashions)7 as well as Tudor Hotel and Brasserie and Bar (Pty) Limited v Hence Trade 15 (Pty) Limited (Tudor Hotel).8 In Baynes Fashions, a dispute arose about the entitlement of a lessee to withhold the rental payment or claim for losses to a business due to the lessor having interfered with the lessee’s beneficial occupation by effecting building works on the property on which the leased premises were located. This Court acknowledged that the common law principle of reciprocity, which imposes reciprocal duties on the part of the lessor and lessee, and which underpins the exceptio non adimpleti contractus, would ordinarily entitle the lessee to claim a reduction of rent from the lessor for the deprivation of or interference with the former’s beneficial occupation. It found, however, that a contrary intention appeared clearly from two clauses of that lease. One of the clauses stipulated that all rentals payable by the lessee in terms of the lease were to be paid ‘monthly in advance without any deduction or set off’. Another clause (clause 24) stipulated that the tenant would not have any claim against the landlord ‘by reason of any interference with his tenancy or his beneficial occupation of the premises’ caused by repairs or building works. This Court found that the terms of the lease excluded the principle of reciprocity. 6 See AJ Kerr The Law of Sale and Lease 3 ed (2004) at 245 and WE Cooper Landlord and Tenant 2 ed (1994) at 2. 7 Baynes Fashions (Pty) Ltd t/a Gerani v Hyprop Investments (Pty) Ltd 2005 JDR 1382 (SCA). 8 Tudor Hotel and Brasserie and Bar (Pty) Limited v Hence Trade 15 (Pty) Limited [2017] JOL 38843 (SCA); [2017] ZASCA 111. [20] In Tudor Hotel, this Court, relying on the principle laid down in Baynes, found that a lessee was not entitled to withhold rental on the basis of the exceptio non adimpleti contractus where the lease made it clear that the obligations were not reciprocal. It held as follows: ‘[11] The agreement that the rent was payable ‘monthly in advance’ had the effect of altering the usual position, that in the absence of contractual provisions, rent is payable in arrear at the end of each period in the case of a periodical lease, after the lessor has fulfilled his obligation. The lease agreement therefore altered the reciprocal nature of the obligations of the lessor and the lessee. The obligation of the lessee to make payment of the rent was no longer reciprocal to the obligation of the lessor to grant beneficial occupation of the premises to the lessee. [12] The application of the principle of reciprocity to contracts is a matter of interpretation. It has to be determined whether the obligations are contractually so closely linked that the principle applies. Put differently, in cases such as the present the question to be posed is whether reciprocity has been contractually excluded. … [17] The provision that the rental was to be paid ‘on or before the first day of each month’ had the effect that it was to be paid in advance by the appellant. The obligation of the appellant to pay the rental was accordingly not reciprocal to the obligation of the respondent to provide beneficial occupation of the entire premises.’ (Footnotes omitted.) Discussion [21] It is trite that where the performance of an obligation by a party to an agreement becomes impossible after the conclusion of the agreement, through no fault of its own, that party is discharged from liability if it was prevented from performing its obligation by vis major. On the respondent’s version, the Covid-19 Regulations impaired its ability to fully trade and exploit the commercial potential of the premises and thus constituted vis major, thereby discharging it from the liability to pay rent during alert levels 4 and 5 and entitling it to partial payment of rental during alert levels 1 to 3. Regardless of the view that this Court may take of the defence raised by the respondent, the catastrophic effect of the Covid-19 pandemic on lives and livelihoods worldwide is indisputable, as this is attested to by various speeches made by the World Health Organisation. This Court is not oblivious to that impact. The justification for the promulgation of the Covid-19 Regulations in South Africa was aptly expressed as follows in Santam Limited v Ma-Afrika Hotels (Pty) Ltd and Another:9 ‘It is by now well-known that the Covid-19 pandemic has claimed the lives of millions of people worldwide. Governments throughout the world have taken measures to curb its effects. Our government, on 15 March 2020, responded by declaring a National State of Disaster in terms of s 27(1) of the Disaster Management Act 57 of 2002, with the responsible Minister, on 18 March 2020, promulgating regulations in terms of the Act. The National State of Disaster has since been extended from time to time, and the regulations promulgated in terms thereof have also undergone modifications to deal with prevailing conditions. In the main, the regulations contain measures designed to contain the spread of Covid-19 by curtailing movement and social interaction.’ Although made in the context of an indemnity insurance claim, these remarks are equally apposite in casu. [22] Articulating the entitlement of a lessee to remission of rent in the face of vis major which impacts the beneficial occupation of the premises, this Court said the following in Thompson v Scholtz:10 ‘Where a lessee is deprived of or disturbed in the use or enjoyment of leased property to which he is entitled in terms of the lease, either in whole or in part, he can in appropriate circumstances be relieved of the obligation to pay rental, either in whole or in part; the Court may abate the rental due by him pro rata to his own reduced enjoyment of the merx. This is true not only where the interference with the lessee’s enjoyment of the leased property is the result of vis major or casus fortuitus but also where it is due to the lessor’s breach of contract, eg because the leased property is not fit for the purpose for which it was leased or, as in this case, because the performance rendered by the lessor is incomplete or partial . . . The lessee would be entirely absolved from the obligation to pay rental if he were deprived of or did not receive any usage whatsoever. That would simply be a manifestation of the exceptio [non adimpleti contactus], more particularly of the first proposition in B K Tooling [B K Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391 (A)] (cf Fourie NO en ’n Ander v Potgietersrus Stadsraad 1987 (2) SA 921 (A)).’ 9 Santam Limited v Ma-Afrika Hotels (Pty) Ltd and Another [2021] ZASCA 141 para 10. 10 Thompson v Scholtz 1999 (1) SA 232 (SCA) at 247A-D. [23] It bears mentioning that both parties cited the judgment of Hansen, Schrader & Co v Kopelowitz (Hansen)11 as authority supporting their respective contentions. In that matter, the full court of the Supreme Court of the Transvaal (now known as the Gauteng Division of the High Court) recognised an entitlement to remission of rent in the face of a supervening impossibility of performance. It considered that remission of rent would be justified in circumstances where war prevented the lessee from subletting the property and customers from dealing with the lessee. It, however, held that to be entitled to remission of rent, a lessee’s loss of beneficial occupation must be the direct and immediate result of the vis major, not merely indirectly or remotely connected therewith. It, therefore, refused to recognise a right to remission of rent merely because the lessee had suffered a loss because the country in which the leased property was situated was at war. [24] The full court explained thus: ‘If the lessee of a house leaves that house either through fear or prudence so as to escape the accidents of war or plague, he cannot bring an action for remission of rent. In this case vis major would not be the direct and immediate cause of his leaving the house. It was not a necessary effect of the outbreak of war that these particular bedrooms were not hired by persons. There were people in Johannesburg and bedrooms were occupied, only there were not enough people to occupy all the available bedrooms in the town. The war no doubt was the indirect cause of the dearth of tenants, and a heavy and continued fall in the market may also produce an exodus of people, and lessees of rooms may find themselves without sub-tenants, but the fall in stock will not be the direct, immediate and necessary cause of particular bedrooms not being let.’12 [25] For reasons that follow, I am of the view that it is not necessary for this Court to decide whether the restrictive regulations applicable during the period 26 March 2020 to 20 September 2020 constituted a supervening impossibility of performance that discharged the respondent from liability to pay the full amount of rental. At best for the respondent, Hansen may mean that the 11 Hansen, Schrader & Co v Kopelowitz 1903 TS 707. 12 Hansen at 716. period during which the Covid-19 regulations prohibited or restricted trade (i.e. 26 March to 20 September 2020) is a direct and immediate cause of the inability to perform, thus comparable to the situation described as ‘the first case’ in Hansen, where the subletting of the property was unattainable as a direct result of the war. But the period after 20 September 2020 is on a different footing, as there was no government-imposed bar to trading at that stage. It stands to reason that even if it were to be accepted in the respondent’s favour that the Covid-19 regulations which prevented or restricted trade were behind the respondent’s default in the payment of rental, there was no justification for such default beyond 20 September 2020 despite the diminished commercial ability that may have resulted from the Covid 19 pandemic. As I see it, the doctrine of impossibility of performance could not conceivably have been triggered beyond 20 September 2020. I shall return to this aspect. [26] Even on the acceptance for present purposes that the respondent was entitled to remission of rent during the period in which trade was prohibited or restricted by the Covid-19 regulations, the inevitable question arising would be whether the respondent was entitled to withhold payment of rental based on its alleged entitlement to remission of rent. In Ethekwini Metropolitan University (North Operational Entity) v Pilco Investments CC,13 this Court held that where remission of rent is applicable, a court must be approached for the computation of the remission if the amount of the remission is not promptly ascertainable. In such instances, the lessee may not simply deduct what it conceives to be an amount that represents the remission. The court said: ‘Of course, because the plaintiff was, until early June 1997, deprived of the use of that portion of the property which was being used by the person making pre-cast fencing, the plaintiff would be entitled to a remission of rent over the period in question, proportional to its reduced use and enjoyment of the property. If the amount to be remitted was capable of prompt ascertainment, the plaintiff could have set this amount off against the defendant’s claim for rent; if not, the plaintiff was obliged to 13 Ethekwini Metropolitan Unicity (North Operational Entity) v Pilco Investments CC [2007] SCA 62; [2007] SCA 62 (RSA). pay the full rent agreed upon in the lease and could thereafter reclaim from the defendant the amount remitted.’ (Footnotes omitted) [27] Before us, both parties admitted that the amount of rent to be remitted, if remission of rent is applicable, is not promptly ascertainable given how the rental was structured. The only option would be for a court to determine the extent of the remission, if any. Given that the application was split into two parts, with the claim in respect of arrear rental being Part B of the application, it appears that the computation of the remission, if any, could be ascertained when Part B is adjudicated. It would appear therefore that the defence of the remission of rent is, as argued by the Trust, not competent in respect of Part A of the application. [28] Notwithstanding all the aspects traversed earlier in this judgment, a fundamental difficulty for the respondent insofar as the relief for its eviction from the Trust’s premises is this: clause 7.2.1 of the lease agreement entitles the Trust to ‘forthwith cancel this lease and resume possession of the property’ in the event of a failure to timeously pay the rental. According to the undisputed payment schedule attached to the papers, the respondent’s last payment of rent was on 7 September 2020.Thus, even if the remission of rent for the period up to 20 September 2020 is factored in, the respondent was, at the date of the cancellation of the lease agreement, in arrears. On the computation that can be gleaned from the affidavits and the invoices filed, the arrear rental amounted to R43 847.11. [29] It is plain that regardless of any considerations that could be made for remission of rent from April 2020 to September 2020 (on the acceptance that there was an impossibility of performance due to restrictions on trade), the respondent, in any event, failed to pay rent when it fell due on 1 October 2020, 1 November 2020 and 1 December 2020, thereby breaching clause 7.1.1 of the lease agreement. This entitled the Trust to cancel the lease agreement in the event of rent not being paid on due date. It was on the basis of that clause that the Trust cancelled the lease on 7 December 2020, pursuant to several warnings to the respondent about the Trust’s intention to enforce its right pertaining to the payment of rent. Under these circumstances, the question raised for consideration by the high court, namely, whether the right to cancel the lease and claim eviction from the premises was unaffected by the Trust’s alleged inability to perform (by providing beneficial occupation), simply does not arise. [30] As regards the interpretation of clause 7.1.1 of the lease agreement, it is unnecessary to deal in any depth with the principles applicable to the interpretation of contracts; suffice it to state that the interpretation thereof is to be approached holistically, in other words, ‘simultaneously considering the text, context and purpose’.14 In considering clause 7.1.1 in the context of the parties’ agreement, it must be borne in mind that the agreement in question is a triple net lease for commercial purposes, from which a business is conducted. Furthermore, it being a leaseback agreement, it was entered pursuant to the same parties having entered into a purchase and sale agreement in respect of the same premises, in circumstances where the payment of the purchase price was facilitated by registering a mortgage bond over the property. In terms of the lease agreement, the respondent was not only liable to pay rental in advance but was also responsible for payment of the leased premises’ rates and taxes, among other levies. Having considered all the relevant circumstances, I am unable to find any indication that the respondent’s obligation to pay the rental was reciprocal to the obligation of the Trust to provide beneficial occupation of the entire premises. [31] This Court in Mohamed’s Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd (Mohamed Holdings)15 had occasion to deal with a dispute pertaining to the interpretation of a similar clause. As is the case in this matter, it was a material term of the lease concluded by the parties in that matter that should the lessee fail to pay the rental on the due date; then the 14 University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (6) SA 1 (CC) para 65; Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA); Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA); 15 Mohamed’s Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd [2017] ZASCA 176; 2018 (2) SA 314 (SCA). lessor would be entitled to cancel the lease agreement and retake possession of the property. The business had been running for 35 years, and the lessee maintained regular and prompt payment during the lease period. It was common cause that the lessee had, apparently due to an error committed by its banker, failed to pay the rental when it was due. It failed to remedy the breach within the time stipulated, and the lessor cancelled the agreement and applied for the lessee’s eviction from its premises. The high court had characterised the issue to be whether, in the circumstances of that case, the invocation of the cancellation clause was manifestly unreasonable and against public policy. It held that it was and dismissed the application for eviction. [32] Before this Court, it was argued, inter alia, that the common law should be developed by interpreting the impugned clause through the prism of the spirit of the Constitution. And that the interpretation of that clause should be infused with good faith, ubuntu, and fairness, among others. The circumstances of the Mohamed Holdings case were, to a large extent, comparable to those in the present matter.16 Having considered all the circumstances, this Court in Mohamed Holdings said: ‘[30] The fact that a term in a contract is unfair or may operate harshly does not by itself lead to the conclusion that it offends the values of the Constitution or is against public policy. In some instances the constitutional values of equality and dignity may prove to be decisive where the issue of the party’s relative power is an issue. There is no evidence that the respondent’s constitutional rights to dignity and equality were infringed. It was impermissible for the high court to develop the common law of contract by infusing the spirit of ubuntu and good faith so as to invalidate the term or clause in question. [31] The terms of the agreement made it clear that the appellant was entitled to enforce clause 20 in the event that the respondent fails to pay the rent on due date. A person who promised to pay rental on a certain date and upon failure to do so, faces the possibility of an eviction, cannot be heard to say he was not warned; he should remember his obligation. In this case the respondent was forewarned in June that 16 These are set out in para 29 of that judgment. any default in payment would result in the cancellation of the lease and possible eviction. This notwithstanding it failed to comply with its obligation. [32] It must therefore bear the consequences of its agent’s (bank) failure in paying the October rental on due date. Its defence was clearly to restrict the lawful reach of the contract and to limit what can be regulated by way of a contractual agreement between parties, in circumstances where the terms of the contract were clear and unambiguous. In this case the parties freely and with the requisite animus contrahendi agreed to negotiate in good faith and to conclude further substantive agreements which were renewed over a period of time. It would be untenable to relax the maxim pacta sunt servanda in this case because that would be tantamount to the court then making the agreement for the parties.’ [33] As was the case in Mohamed Holdings, the lessor in this case (the Trust) did not rush to evict the respondent. Correspondence was exchanged between the parties’ attorneys for months, but the parties could not settle their differences. As mentioned earlier, this Court must also consider that the lease agreement is a triple net lease for commercial purposes, from which a business is conducted. Moreover, the considerations of fairness and good faith dictate that the hardships that the Trust had to endure due to non- payment of rent be taken into account. Sight cannot be lost of the fact that due to the respondent defaulting on the regular payment of the rental, the Trust ended up having to service the repayments of the mortgage bond from a loan to avert foreclosure. The circumstances of this matter oblige this Court to apply the same principle applied in Mohamed Holdings in this matter. Against that background, a proper interpretation of the parties’ lease agreement leads to the ineluctable conclusion that the lease agreement was validly cancelled. It follows that the Trust was entitled to evict the respondent from the leased premises. On this basis alone, the appeal ought to succeed. It is, therefore, not necessary to traverse the remainder of the arguments advanced on behalf of the respondent. Cross appeal [34] Both parties are agreed that the high court, in granting paragraphs 27.1, 27.2, and 28.1 of its order, erroneously pronounced itself in respect of the claim for arrear rental, which is relief falling under Part B of the orders sought in the notice of motion. This means that the ascertainment of the amount of remission of rental, if any, and its bearing on the amount of rent claimed are aspects that the high court will still need to determine under Part B. Accordingly, the parties agreed that the cross-appeal must succeed. I agree. In my view, the issues raised in the cross-appeal are not complex and therefore did not warrant the engagement of two counsel. [35] For all these reasons, the following order is granted: 1. The appeal is upheld with costs. 2. The order of the high court is set aside and replaced with the following: ‘2.1 The respondent is evicted from the premises known as Erf 14144 Stellenbosch, situated at 1 Hannam Street, Stellenbosch, Western Cape. 2.2 The Applicant is authorised to have a writ of ejectment issued forthwith, in order for the eviction to be carried out by the Sheriff for the High Court, Stellenbosch or his deputy, assisted by the South African Police Service, if necessary, should the respondent fail to vacate the premises forthwith. 2.3 The respondent is ordered to pay the costs of Part A of the application.’ 3. The cross appeal is upheld with costs. 4. The determination of Part B of the Application is remitted to the high court for adjudication. ________________________ M B Molemela Judge of Appeal Appearances For appellants: RB Engela Instructed by: De Klerk & van Gend Inc, Cape Town McIntyre Van Der Post Inc, Bloemfontein For respondent: G Elliott (with him G Samkange) Instructed by: Thomson Wilks, Cape Town Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 04 November 2022 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Slabbert N O & 3 Others v Ma-Afrika Hotels t/a Rivierbos Guest House (772/2021) [2022] ZASCA 152 (04 November 2022) Today the Supreme Court of Appeal (SCA) handed down a judgment upholding, with costs, an appeal against the decision of the Western Cape Division of the High Court, Cape Town (the high court). The issue before the SCA concerned a dispute of failure by Ma-Afrika Hotels (Pty) Ltd t/a Rivierbos Guest House (the respondent), to pay rental and related charges allegedly owing to the respondent, the Trustees of the Venezia Trust (the Trust), in terms of a lease agreement. On 8 October 2018, the parties concluded a sale and leaseback agreement where the Trust purchased a certain erf in Stellenbosch (the property). The property was leased back to the respondent to enable it to conduct a business of a guesthouse. In addition to the leased premises, the respondent also traded in the hospitality industry from other premises. The lease agreement, which was envisaged in clause 18 of the Deed of Sale, was concluded on 12 February 2019. It was agreed that the lease would terminate ten years from the date of its commencement. In terms of the agreement, the permitted use of the property was as a guesthouse. Following the Covid-19 pandemic, the President announced a national ‘lockdown’ which commenced on 26 March 2020 at 23h59. For that period, every person was confined to his or her place of residence except those performing an essential service, obtaining an essential good or service, collecting a social grant or seeking emergency, life-saving or chronic medical attention. Moreover, regulation 11B(1)(b) stipulated that all ‘businesses and other entities shall cease operations during the lockdown, save for any business or entity involved in the manufacturing, supply, or provision of an essential good or service’. Covid-19 regulations were amended from time to time and the Minister declared various ‘alert’ levels to manage the Covid-19 pandemic. On 22 February 2021, the Trust launched an urgent application against the respondent in the high court. Accordingly, the Trust essentially sought an order of ejectment in terms of which the respondent would be evicted from the premises in which the guesthouse was conducted, coupled with an order of costs; as well as arrear rental, interest thereon and costs. The high court dismissed the application for eviction. As a result of this, it was placed before this Court as to whether the high court erred in dismissing the application for eviction. The SCA held that it was trite that where the performance of an obligation by a party to an agreement became impossible after the conclusion of the agreement, through no fault of its own, that party was discharged from liability if it was prevented from performing its obligation by vis major. Moreover, the SCA held that the catastrophic effect of the Covid-19 pandemic on lives and livelihoods worldwide was indisputable, as this was attested to by various speeches made by the World Health Organisation. Hence, the SCA was not oblivious to that impact. Relying on Thompson v Scholtz, the SCA agreed with the contention that where a lessee was deprived of or disturbed in the use or enjoyment of leased property to which he was entitled in terms of the lease, either in whole or in part, he can in appropriate circumstances be relieved of the obligation to pay rental, either in whole or in part. In addition, the SCA held that it was of the view that the facts of this matter did not necessitate this Court to decide whether the Covid-19 regulations being applicable during the period 26 March 2020 to 20 September 2020 constituted a supervening impossibility that discharged the respondent from liability to pay the full amount of rental. Moreover, the SCA held that applying the Hansen principle, it was evident that the period after 20 September 2020 was on a different footing, as there was no government-imposed bar to trading at that stage. Accordingly, it stood to reason that even if it were to be accepted in the respondent’s favour that the Covid-19 regulations which prevented or restricted trade were behind the respondent’s default in the payment of rental, there was no justification for such default beyond 20 September 2020 despite the diminished commercial ability that may have resulted from the Covid 19 pandemic. As the SCA saw it, the doctrine of impossibility of performance could not conceivably have been triggered beyond 20 September 2020. Furthermore, the SCA held that it was unable to find any indication that the respondent’s obligation to pay the rental was reciprocal to the obligation of the Trust to provide beneficial occupation of the entire premises. The SCA further held that this Court must also consider that the lease agreement was a triple net lease for commercial purposes, from which a business was conducted. Moreover, the considerations of fairness and good faith dictate that the hardships that the Trust had to endure due to non-payment of rent be taken into account. Accordingly, sight could not be lost of the fact that due to the respondent defaulting on the regular payment of the rental, the Trust ended up having to service the repayments of the mortgage bond from a loan to avert foreclosure. Hence, the circumstances of this matter obliged this Court to apply the same principle applied in Mohamed Leisure. Against that background, the SCA held that a proper interpretation of the parties’ lease agreement led to the ineluctable conclusion that the lease agreement was validly cancelled. More so, it followed that the Trust was entitled to evict the respondent from the leased premises. On that basis alone, the SCA held that the appeal ought to succeed. In relation to the appeal, the SCA held that the ascertainment of the amount of remission of rental, if any, and its bearing on the amount of rent claimed are aspects that the high court will determine under Part B. The SCA agreed that the cross-appeal must succeed. In the SCA’s view, the issues raised in the cross-appeal are not complex and therefore did not warrant the engagement of two counsel. ~~~~ends~~~~

1488

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 693/15 In the matter between: THE MINISTER OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT FIRST APPELLANT CHIEF MASTER OF THE HIGH COURT OF SOUTH AFRICA SECOND APPELLANT and THE SOUTH AFRICAN RESTRUCTURING AND INSOLVENCY PRACTITIONERS ASSOCIATION FIRST RESPONDENT THE CONCERNED INSOLVENCY PRACTITIONERS ASSOCIATION SECOND RESPONDENT NATIONAL ASSOCIATION OF THIRD RESPONDENT MANAGING AGENTS SOLIDARITY FOURTH RESPONDENT VERENIGING VAN REGSLUI VIR AFRIKAANS FIFTH RESPONDENT Neutral Citation: Minister of Justice v The SA Restructuring & Insolvency Practitioners Association (693/15) [2016] ZASCA 196 (2 December 2016) Coram: Mpati P, Wallis, Swain, Mathopo and Van der Merwe JJA Heard: 13 September 2016 Delivered: 2 December 2016 Summary: Constitutional law: Equality and affirmative action measures: the ambit of the test for equality. Insolvency law: Insolvency Act 24 of 1936 s 18(1) – policy issued by Minister in terms of s 18(1) – policy also applicable to appointments of liquidators in terms of ss 368 and 374 of Companies Act 61 of 1973 – aim to transform the insolvency industry to make it more accessible to previously disadvantaged insolvency practitioners – policy unconstitutional and irrational – policy declared unlawful and invalid. _________________________________________________________ ORDER ________________________________________________________ On appeal from the Western Cape Division of the High Court, Cape Town (Katz AJ sitting as court of first instance): judgment reported sub nom SA Restructuring and Insolvency Practitioners Association v Minister of Justice and Constitutional Development & others, and another application 2015 (2) SA 430 (WCC). 1. The appeal is dismissed with costs, such costs to include the costs of two counsel. ________________________________________________________ JUDGMENT ________________________________________________________ Mathopo JA (Mpati P, Wallis, Swain and Van der Merwe JJA concurring): [1] This appeal concerns the constitutionality of a policy that seeks to regulate the appointment of insolvency practitioners, primarily as provisional trustees and liquidators, but also as co-trustees and co- liquidators, as well as appointments to certain other comparable positions under various statutes. In this judgment I will deal with the policy as if it applied only to appointments of trustees on insolvency, but it must be read mutatis mutandis as applying to and including all the appointments that are the subject of the policy. Where I refer expressly to liquidators, as opposed to trustees, I am referring to liquidators, either provisional or final, appointed in terms of the Companies Act 61 of 1973, as amended, or under the Close Corporations Act 69 of 1984. [2] The policy was determined by the Minister of Justice and Constitutional Development pursuant to his powers in terms of s 158(2)1 of the Insolvency Act 24 of 1936 (the Act), and was to come into operation on 31 March 2014. Insofar as it related to appointments under other statutes the promulgation of the policy occurred in terms of corresponding powers.2 The first respondent challenged the policy by way of an application in two parts; part A being an interim interdict restraining its implementation, and part B review proceedings directed at having it set aside. In the Western Cape Division of the High Court, Gamble J dealt with the urgent application in respect of Part A and interdicted the appellants from implementing the policy. The review application in Part B came before Katz AJ in which the policy was challenged on four bases. These were that it infringed the right to equality provided for in s 9 of the Constitution; it unlawfully fettered the discretion of the Master; is ultra vires the Act; and was irrational. [3] Acting in terms of s 172(1)(a) of the Constitution, the high court declared the policy inconsistent with the Constitution and invalid. An application for leave to appeal was refused. This appeal is with the leave of this court. Litigation history [4] The appellants are the Minister of Justice and Constitutional Development (the Minister) and the Chief Master of the High Court of South Africa (the Chief Master).3 The respondents are The South African Restructuring and Insolvency Practitioners Association 1 This subsection reads as follows: „The Minister may determine policy for the appointment of a curator bonis, trustee, provisional trustee or co-trustee by the Master in order to promote consistency, fairness, transparency and the achievement of equality for persons previously disadvantaged by unfair discrimination.‟ 2 Section 10(1A)(a) of the Close Corporations Acts 69 of 1984 and s 368 of the old Companies Act 61 of 1973. 3 The office of the Chief Master as the executive officer of all Masters‟ offices was introduced by the promulgation of the Judicial Matters Amendment Act 16 of 2003 which came into effect on 9 July 2004. Section 2(a)(i) of the Administration of Estates Act 66 of 1965 makes provision for the appointment of a Chief Master of the High Court and a Master of each High Court. (SARIPA), The Concerned Insolvency Practitioners Association (CIPA), the National Association of Managing Agents (NAMA), Solidarity and the Vereniging van Regslui vir Afrikaans. Originally there were two applications; the first one being that referred to in [2] above brought by SARIPA against the Minister and the Master. The second was brought by CIPA in the Gauteng Division, Pretoria of the High Court to declare the policy to be unconstitutional. That application and the present application by agreement were heard together by the court a quo.4 NAMA and Solidarity were granted leave to intervene by the high court, and the Vereniging van Regslui vir Afrikaans was joined as a party. The respondents represent various interested groups of persons who are involved, either as insolvency practitioners, legal practitioners and academics, creditors and employees, in the sequestration or liquidation of insolvent estates. Background The appointment of insolvency practitioners prior to the impugned policy [5] The background relating to the history of the impugned policy was described comprehensively by the court a quo. The administration of insolvent estates was originally regulated by the Insolvency Act 32 of 1916. This placed the responsibility for appointing provisional trustees on the court. With the advent of the Insolvency Act 24 of 1936 (the Act) that duty and power was transferred to the Master. Before the Act was amended, in 2004, the Master‟s power of appointment of a provisional trustee or liquidator was entirely discretionary.5 Currently, in terms of s 18(1) of the Act, the Master may, after an estate has been sequestrated, in accordance with the Policy determined by the 4 Presumably an order was made in terms of s 27(1)(b) of the Superior Courts Act removing the application by CIPA from the Gauteng Division, Pretoria to the Western Cape Division. 5 Prior to its amendment, s 18(1) read: „As soon as an estate has been sequestrated (whether provisionally or finally) or when a person appointed as trustee ceases to be a trustee or to function as such, the Master may appoint a provisional trustee to the estate in question who shall give security to the satisfaction of the Master for the proper performance of his duties as provisional trustee and shall hold office until the appointment of a trustee. Minister, appoint a provisional trustee. The Minister exercises his powers in terms of s 158 of the Act when determining the policy envisaged in s 18. It is the Master who, in terms of this policy, appoints the provisional trustee, once a provisional sequestration order has been granted. The provisional trustee will administer and control the estate until such time that the trustee is appointed at the first meeting of creditors. The Master may still, however, be involved inasmuch as he or she is empowered by s 57(5) of the Act, whenever they consider it desirable, to appoint a co-trustee. [6] It appears that the present policy is the first of its kind promulgated under s 158 of the Act. Previous policies and directives were issued by the Minister, during 1998 and 2001, aimed at making the insolvency industry accessible to previously disadvantaged persons. However, these policies were not policies promulgated in terms of any specific provision of the Act. The 2001 Policy made provision for a previously disadvantaged person to be appointed as a co-provisional trustee in every estate. The main rationale behind appointing a previously disadvantaged individual was that he or she could learn from the experienced trustee how properly to administer an estate, in order to gain sufficient experience and exposure in the industry. The Master, in accordance with the 2001 policy, created a separate panel of names for this category of practitioner. [7] The 2001 policy was implemented as follows. Creditors, on becoming aware of an application for the provisional sequestration of an estate, would indicate their support for a provisional trustee by filing a requisition which indicated the extent of their claims against the estate, and their provisional trustee of choice. The Master‟s office would review the requisitions and, once satisfied that they were in order, ordinarily appoint a provisional trustee using the following as guidelines: i) the candidate nominated by the creditors who held the majority in value of claims; ii) the candidate nominated by the creditors who held the majority in number of claims; iii) the candidate who enjoyed the support of the employees or trade union In addition a previously disadvantaged individual or individuals would be appointed from a list held by the Master. All the individuals identified as suitable candidates to be appointed in that estate, would then be informed that they should immediately lodge with the Master bonds of security for the estimated value of the assets of the estate involved. Thereafter, the Master would issue certificates of appointment as provisional trustees. The provisional trustee would then take charge of the estate and immediately administer the estate until the first meeting of creditors. At the first meeting, creditors who had proved their claims against the estate were entitled to elect trustees and the person receiving a majority of the votes, by number and value of claims, would be elected as trustee. If one person gained a majority in number, and another a majority in value, they would both be elected. The Master would then ordinarily6 confirm those who had been elected and would also confirm the appointment of the previously disadvantaged individual, if that person was not elected as trustee by the creditors. This system, known as the requisition or referral system, has according to the Minister, not achieved its purpose of including previously disadvantaged persons in the appointment of insolvency practitioners. That proposition is hotly disputed by both SARIPA and CIPA. [8] As noted above the Judicial Matters Amendment Act 16 of 2003, made provision for the appointment of a Chief Master of the High Courts who serves as the executive officer of all the Masters‟ offices and exercises control, direction and supervision over all the Masters. The Minister‟s power to determine policy for the appointment of practitioners was also provided for in the Judicial Matters Amendment Act, which conferred the power to lay down policy in relation to the appointment of insolvency practitioners. 6 The master has a discretion under s 57(1) of the Act in certain circumstances not to appoint a person elected as trustee at a first meeting of creditors, but this occurs fairly infrequently and does not affect the discussion in the body of the judgment. [9] Subsequent to the promulgation of the Judicial Matters Amendment Act, the Chief Master revoked the „Lategan Document‟, a document issued by a Deputy Master in the High Court in Pretoria, which purported to deal with the appointment of practitioners. In surveys conducted over the period 2011 to 2013 by the Chief Master, the picture appeared to be a bleak one for the advancement of previously disadvantaged practitioners. The numbers showed that far fewer previously disadvantaged practitioners were appointed, than was reflected on the list of active insolvency practitioners. In 2013, the national statistics, which only focused on race and gender, showed that the workload amongst insolvency practitioners was unevenly distributed: White males received approximately 43%; White females received approximately 10%; African, Coloured, Indian and Chinese females received approximately 4% and African, Coloured, Indian and Chinese males received approximately 30%. I leave aside the fact that this is significantly short of 100%, which is unexplained. [10] The impugned policy was formulated against the backdrop of what has been set out above. It went through various phases, which included consultations meetings and comments from interested parties.7 For the purpose of this judgment we need not detain ourselves with these phases, save to mention that the policy was published in the Government Gazette by the Minister on 7 February 2014.8 The Chief Master has also issued several directives in terms of the policy to deal with its implementation. The Policy [11] At the heart of the dispute between the parties lie clauses 6 and 7 of the policy. According to the appellants, the objective of the policy is to „promote consistency, fairness, transparency and the achievement 7 The extent of these consultations is in dispute. 8 Department of Justice and Constitutional Development Regulations, GN R77, GG 37287, 7 February 2014. Clauses 6 and 7 of the Policy were amended with effect from 17 October 2014, and the notice was gazette by Department of Justice and Constitutional Development Regulations, GN R789, GG 38088, 17 October 2014. of equality for persons previously disadvantaged by unfair discrimination‟ and it is intended to form the basis for the transformation of the insolvency industry. The policy replaces all previous policies and guidelines, in relation to the appointment of insolvency practitioners, used in the Masters‟ offices. It applies amongst others, not only to the appointment of provisional trustees by the Master in terms of s 18(1) of the Act but also to a range of other appointments. The policy sets out the procedure to be followed by Masters when making a discretionary appointment and their power to do so. [12] In terms of clause 6.1 of the policy, every Master‟s List must be divided into various categories. Clause 6 reads: „Insolvency practitioners on every Master‟s List must be divided into the following categories: „Category A: African, Coloured, Indian and Chinese females who became South African citizens before 27 April 1994; Category B: African, Coloured, Indian and Chinese males who became South African citizens before 27 April 1994; Category C: White females who became South African citizens before 27 April 1994; Category D: African, Coloured, Indian and Chinese females and males, and White females, who became South Africa citizens on or after 27 April 1994 and White males who are South African citizens, and within each category be arranged in alphabetical order according to their surnames and, in the event of similar surnames, their first names. Insolvency practitioners added to the list after the compilation thereof must be added at the end of the relevant category. 6.2 A Master‟s List must distinguish between “senior practitioners”, being insolvency practitioners who have been appointed at least once every year within the last five years and “junior practitioners”, being insolvency practitioners who have not been appointed as such at least once every year within the last five years but who satisfy the Master that they have sufficient infrastructure and experience to be appointed alone. The senior and junior practitioners must be arranged where they fit alphabetically in Category A to D on the same Master‟s List.‟ [13] The appointment process is then set out in clause 7 which reads as follows: „7. Appointment of insolvency practitioners by Masters of High Courts 7.1 Insolvency practitioners must be appointed consecutively in the ratio A4: B3: C2: D1, where- "A" represents African, Coloured, Indian and Chinese females who became South African citizens before 27 April 1994; "B" represents African, Coloured, Indian and Chinese males who became South African citizens before 27 April 1994; "C" represents White females who became South African citizens before 27 April 1994; "D" represents African, Coloured, Indian and Chinese females and males, and White females, who have become South African citizens on or after 27 April 1994 and White males who are South African citizens, and the numbers 4: 3: 2: 1 represent the number of insolvency practitioners that must be appointed in that sequence in respect of each such category. 7.2 Within the different categories on a Master's List, insolvency practitioners must, subject to paragraph 7.3, be appointed in alphabetical order. 7.3 The Master may, having regard to the complexity of the matter and the suitability of the next-in-line insolvency practitioner but subject to any applicable law, appoint a senior practitioner jointly with the junior or senior practitioner appointed in alphabetical order. If the Master makes such a joint appointment, the Master must record the reason therefor and, on request, provide the other insolvency practitioner therewith. . . . „ This means that the Master must appoint insolvency practitioners consecutively in the ratio A4:B3:C2:D1 across all classes of appointments. In other words, the Master must appoint four practitioners from category A, then three from category B, then two from category C and finally one from category D, before returning to category A to appoint another four practitioners. When appointing within a category, the Master must proceed down the alphabetical list until the end is reached and then start again at the top. There is no power to depart from this, but the Master may in the circumstances set out in clause 7.3 appoint an additional trustee. A great amount of the argument before us was addressed to the extent of the discretion that this clause gives to Masters. [14] It is common cause that the policy is aimed at the discretionary appointments, in terms of the Act, of insolvency practitioners by the Master. The policy further obliges the Chief Master to issue directives to be used by all Masters in order to implement and monitor the application of the policy. The Chief Master issued three such directives in 2014. [15] The policy principally implicates the provisions of the Act that deal with the appointment of provisional trustees and co-trustees. The relevant legislative provisions governing the appointment of provisional trustees are as follows. Section 18 of the Act states: „(1) As soon as an estate has been sequestrated (whether provisionally or finally) or when a person appointed as trustee ceases to be trustee or to function as such, the Master may, in accordance with policy determined by the Minister, appoint a provisional trustee to the estate in question who shall give security to the satisfaction of the Master for the proper performance of his or her duties as provisional trustee and shall hold office until the appointment of a trustee. (2) At any time before the meeting of the creditors of an insolvent estate in terms of section forty, the Master may, subject to the provisions of subsection (3) of this section, give such directions to the provisional trustee as could be given to a trustee by the creditors at a meeting of creditors. (3) A provisional trustee shall have the powers and the duties of a trustee, as provided in this Act, except that without the authority of the court or for the purpose of obtaining such authority he shall not bring or defend any legal proceedings and that without the authority of the court or Master he shall not sell any property belonging to the estate in question. Such sale shall furthermore be after such notices and subject to such conditions as the Master may direct. . . . .‟ [16] According to the above section the power to appoint provisional trustees resides with the Master, and the Master‟s discretion is to be exercised in accordance with the policy determined by the Minister in terms of s 158(2) of the Act. As noted earlier in this judgment the Minister is also empowered, in terms of s 10(1A)(a) of the Close Corporations Acts 69 of 1984,9 and s 368 of the old Companies Act 61 of 1973,10 to determine the policy for the appointment of liquidators and provisional liquidators. The policy thus applies to these appointments as well. [17] It is apparent that provisional trustees and provisional liquidators play a significant role in the liquidation of an estate and the winding-up of a company or close corporation. They are appointed to control and administer the estate or the property of the company until a trustee or liquidator has been appointed. Only persons included on a Master‟s list of insolvency practitioners may be appointed as provisional trustees or liquidators, and their appointment must be done in accordance with the procedures set out in clauses six and seven of the policy. Unlike a final trustee appointed at the first meeting of creditors, the provisional trustee takes instructions from the Master, who stands in the position of the creditors (s 18(2) of the Act). They may be authorised by the Master or the court to sell property belonging to the estate. Experience in the high court suggests that this authority is frequently sought and granted. 9 This section reads: „The Minister may determine policy for the appointment of a liquidator by the Master in order to promote consistency, fairness, transparency and the achievement of equality for persons previously disadvantaged by unfair discrimination.‟ 10 The section provides that: „As soon as a winding-up order has been made in relation to a company, or a special resolution for a voluntary winding-up of a company has been registered in terms of section 200, the Master may, in accordance with policy determined by the Minister, appoint any suitable person as provisional liquidator of the company concerned, who shall give security to the satisfaction of the Master for the proper performance of his or her duties as provisional liquidator and who shall hold office until the appointment of a liquidator.‟ [18] The policy replaces all previous policies and guidelines relating to the appointment of insolvency practitioners and envisages that only persons included on the Master‟s list may be appointed. It is one of the policy considerations that the Master's list must be revised before the policy is implemented. To be included on the list an interested person must have applied, supported by an affidavit. Among the requirements for appointments include, that the appellant must have sufficient infrastructure within the area of jurisdiction of the Master in question. They must also be appropriately qualified in the field of law or commerce and hold a four years‟ bachelor‟s degree, or have five years suitable experience in administration and winding-up of an insolvent estate, at the time when the policy comes into effect. [19] The policy empowers the Master to appoint provisional trustees on a rotational basis in line with the categories set out in clauses 6 and 7 which are based on race and gender. The policy does not provide for the wishes of creditors to be taken into account in these discretionary appointments. The High Court [20] The high court agreed with the respondents and found that the policy puts in place a rigid regime in which the Master becomes a rubberstamp, compelled to appoint designated persons by rote from the Master‟s list, which is arranged alphabetically on a race and gender basis. It also found that the policy constituted an unlawful fettering of his discretion. The high court adopted an approach that, in so far as the policy aimed to transform and make the insolvency industry accessible to previously disadvantaged individuals, it needed to do more than increase numbers. The policy had to ensure that there was a correlation between the individual‟s skill set and the requirements for the role, within the system provided for by the legislation. The policy failed, as a remedial measure, to provide clear timelines or targets to determine whether it was likely to achieve its intended objective. As a result of this the high court concluded that there was insufficient evidence to support the notion that the policy was likely to achieve its aim of transforming the industry within a specific period, or at all. It also took issue with what it found to be a mechanical application of the policy which failed to appreciate and provide any scope allowing the Master to take into account the skills, knowledge, expertise and experience of the practitioner when appointing a trustee. As a result, it held that the policy could not pass constitutional muster and declared the policy inconsistent with the Constitution and invalid. Equality submissions [21] The mainstay of the appellant‟s argument was that the policy was intended to form the basis of transformation of the insolvency industry. The respondents accept that the object of the policy was to promote consistency, fairness, transparency and the achievement of equality for insolvency practitioners previously disadvantaged by unfair discrimination. SARIPA contended that the policy will not achieve these objectives and that it would undermine the transformation already achieved in the industry mainly by detracting materially from the business of skilled previously disadvantaged practitioners. [22] The appellants argued that the policy was a measure contemplated by s 9(2) of the Constitution in that it promotes the achievement of equality and was designed to protect and advance persons (and categories of persons) previously disadvantaged by unfair discrimination. The purpose of the policy was to protect and develop previously disadvantaged insolvency practitioners who had suffered unfair discrimination because of past injustices. These past injustices were being preserved by the requisition system of appointment of provisional trustees or liquidators, which system was creditor driven. The appellants attacked the requisition system as reducing previously disadvantaged insolvency practitioners to mere beggars and submitted that it perpetuated the myth that previously disadvantaged insolvency practitioners are incompetent. During oral submissions before us, they submitted that if properly applied, the policy would help to eradicate the socially constructed barriers inhibiting entry, by previously disadvantaged practitioners, into the insolvency industry. It would also root out systemic or institutionalised racism prevalent in the current practice of the requisition system. We were urged to incline to the view that the current system for the appointment of provisional trustees or liquidators was skewed in favour of previously advantaged practitioners who obtained knowledge and skills at the expense of the disadvantaged practitioners, as a result of the oppressive and discriminatory practices which existed in the past. [23] In support of their submissions, the appellants relied on the three pronged test espoused in Minister of Finance & another v Van Heerden 2004 (6) SA 121 (CC) para 37 where Moseneke J said the following: „When a measure is challenged as violating the equality provision, its defender may meet the claim by showing that the measure is contemplated by s 9(2) in that it promotes the achievement of equality and is designed to protect and advance persons disadvantaged by unfair discrimination. It seems to me that to determine whether a measure falls within s 9(2) the enquiry is threefold. The first yardstick relates to whether the measure targets persons or categories of persons who have been disadvantaged by unfair discrimination; the second is whether the measure is designed to protect or advance such persons or categories of persons; and the third requirement is whether the measure promotes the achievement of equality.‟ [24] The appellants contended that the policy met all three requirements and that it was neither unfair, nor presumed to be unfair. It was submitted that it would facilitate access to the industry and restore the previously disadvantaged insolvency practitioners‟ rights to equality, dignity and would also realise their right to follow their trade, profession or occupation – which was previously denied and was now being curtailed by the requisition system. In essence we were urged to accept that the measures proposed in the policy will ameliorate the imbalances of the past. [25] As regards the requisition system the argument advanced is that this system adds to the social barriers to entry and perpetuated the imbalances of the past, because it allows creditors to determine and dictate who should be appointed in the provisional phase. The requisition system was inimical to s 9(2) of the Constitution and was not a measure which promoted the achievement of equality. It was urged upon us that the policy appointment had two benefits: (a) first, that disadvantaged persons from the categories identified would be appointed to larger estates by virtue of being the next-in-line practitioner and (b) second, that they would benefit when they were appointed as co-practitioners. [26] The respondents, however, submitted that the transformation which had been attained in the insolvency industry would be undermined. Previously disadvantaged individuals would lose work currently assigned to them because of their skill and expertise. Under the current system previously disadvantaged individuals are appointed as co-provisional trustees in every insolvent estate. The crux of the respondents‟ submission is that the mechanical process of appointments contemplated in the policy will do more harm than good, because some of the previously disadvantaged insolvency practitioners will not be allocated the same amount of work, owing to the roster system. [27] It was contended by SARIPA that the policy discriminated against white males, white females and African, Indian, Chinese or Coloured males, in varying degrees. They also submitted that it discriminated against African, Indian, Coloured and Chinese persons who became South African citizens after 27 April 1994. Having regard to the test in Van Heerden, the policy was almost an absolute barrier to white males, who would be assigned no more than 10% of the available work, even though many of them were active in the profession. They submitted that the „rigid race and gender-based‟ categories and ratios amounted to the imposition of quotas as opposed to numerical targets, rendering the policy constitutionally impermissible. [28] Under the requisition system, employees and trade unions have a say in the appointment of insolvency practitioners, a factor which Solidarity as a trade union, appreciates. Their submission was that the policy‟s exclusion of the employees‟ or trade union‟s voice from the appointment resulted in the policy lacking a rational connection to its objective. Solidarity‟s argument that the policy fails to take the role of trade unions and employees into account cannot be disputed. The approach by both the Minister and the Chief Master was that this was irrelevant, as was the exclusion of any role for creditors in regard to provisional appointments. [29] Affirmative action measures are designed to ensure that suitably qualified people, who were previously disadvantaged, have access to equal opportunities and are equitably represented in all occupation categories and levels.11 They must be suitably qualified in order not to compromise efficiency at the altar of remedial employment. Due to our country‟s history and the constitutional obligation, post democracy, to redress the past injustices, measures directed at affirmative action may in some instances embody preferential treatment and numerical goals, but cannot amount to quotas. In advancing employment equity and transformation, flexibility and inclusiveness is required. Remedial measures must operate in a progressive manner assisting those who, in the past, were deprived of the opportunity to access the relevant 11 This is recognised in terms of s 9(2) of the Constitution which states: „Equality includes the full and equal enjoyment of all rights and freedoms. To promote the achievement of equality, legislative and other measures designed to protect or advance persons, or categories of persons, disadvantaged by unfair discrimination may be taken.‟ requirements necessary to enter the insolvency profession, but such remedial measures must not trump the rights of previously advantaged insolvency practitioners. Rigidity in the application of the policy or which has the effect of establishing a barrier to the future advancement of such previously advantaged insolvency practitioners, is frowned upon and runs contrary to s 9(2) of the Constitution. These principles emerge from the decisions of the Constitutional Court to be referred to below. [30] The essence of the parties‟ contentions on the equality leg is this. They agree that the policy is designed to be a remedial measure within the meaning of s 9(2) of the Constitution and implicates the right of every citizen to pursue their career of choice, trade and profession, a right afforded in s 21 of the Constitution. The respondents, however, submit that the policy was rigid in its application and calculated to establish a barrier to the future advancement of affected people, contrary to s 9(2) of the Constitution. [31] It was stated by Moseneke ACJ in South African Police Service v Solidarity OBO Barnard [2014] ZACC 23; 2014 (6) SA 123 (CC) that: „[32] Remedial measures must be implemented in a way that advances the position of people who have suffered past discrimination. Equally, they must not unduly invade the human dignity of those affected by them, if we are truly to achieve a non-racial, non-sexist and socially inclusive society. [33] We must remind ourselves that restitution measures, important as they are, cannot do all the work to advance social equity. A socially inclusive society idealised by the Constitution is a function of a good democratic state, for the one part, and the individual and collective agency of its citizenry, for the other. Our state must direct reasonable public resources to achieve substantive equality “for full and equal enjoyment of all rights and freedoms”. It must take reasonable, prompt and effective measures to realise the socio- economic needs of all, especially the vulnerable. In the words of our Preamble the state must help “improve the quality of life of all citizens and free the potential of each person”. That ideal would be within grasp only through governance that is effective, transparent, accountable and responsive. Our public representatives will also do well to place a premium on an honest, efficient and economic use of public resources.‟ [32] Remedial measures must therefore operate in a progressive manner assisting those who, in the past, were deprived, in one way or another, of the opportunity to practise in the insolvency profession. Such remedial measures must not, however, encroach, in an unjustifiable manner, upon the human dignity of those affected by them. In particular, as stressed by Moseneke J in para 41 of Van Heerden, when dealing with remedial measures, it is not sufficient that they may work to the benefit of the previously disadvantaged. They must not be arbitrary, capricious or display naked preference. If they do they can hardly be said to achieve the constitutionally authorised end. One form of arbitrariness, caprice or naked preference is the implementation of a quota system, or one so rigid as to be substantially indistinguishable from a quota. This explains why s 15(3) of the Employment Equity Act 55 of 1998, permits preferential treatment and numerical goals, but disallows quotas.12 Counsel for the Minister and the Chief Master accepted that if the policy imposed a quota or rigid system for the appointment of insolvency practitioners as trustees it would infringe these principles and would have to be struck down. [33] The policy embodied in clause 7.1 embodies a strict allocation of appointments in accordance with race and gender. Insolvency practitioners are for this purpose divided into four groups stratified by race, gender and age. Appointments are to be made from these groups in strict order from group A to group B and thence to group C, and finally group D. Within each group allocations are to be made alphabetically. The Chief Master‟s directives served to establish committees to monitor compliance by Masters with the policy. The 12 South African Police Service v Solidarity (obo Barnard) 2014 (6) SA 123 (CC) para 42; Solidarity v Department of Correctional Services 2016 (5) SA 594 (CC) paras 51 and 103-109. clause contains none of the flexibility and all of the rigidity that the Constitutional Court has said is impermissible. [34] In an endeavour to overcome the rigidity of clause 7.1 counsel for the Minister and Chief Master argued that the requisite flexibility was to be found in the Master‟s powers under clause 7.3. She submitted that this vested the Master with a discretion in every case. I disagree. Clause 7.3 does not permit a departure from the appointment process prescribed in clause 7.1 of the policy. It provides the Master with a mechanism, in an ill-defined range of cases, to compensate to some degree for the fact that the policy dictates the appointment of someone not qualified to undertake the task, either because of its complexity, or because of their unsuitability – the two are not mutually exclusive. This power of appointment does not resolve the fact that clause 7.1 requires the Master to make an appointment in accordance with a rigid quota. After all the unqualified person is still to be appointed and to have their share in the fees accruing from the administration of the estate, even though the reason for invoking clause 7.3 is that they are not qualified or unsuitable to perform that task. The Master‟s ability to insert a backstop into the process does not detract from the need in every case to comply with clause 7.1. The system is arbitrary and capricious. [35] In its recent decision in Solidarity v Department of Correctional Services, the Constitutional Court was divided over whether the Department of Correctional Services‟ policy regarding appointments embodied a quota. The difference between the two judgments (Zondo J and Nugent AJ) was that Zondo J held that the power of the National Commissioner to depart from the strict numerical categorisation by race and gender in the policy – which was almost identical to the policy in the present case – saved it from being an impermissible quota. Here there is no such general discretion. The policy is entirely dependent on a strict racial and gender allocation of appointments and is arbitrary with no saving discretion. The Master has a remedial power that does not avoid the result of the policy being applied. That is not the kind of general discretion that Zondo J held saved the policy before the Constitutional Court. [36] The rigid and unavoidable appointment process prescribed by clause 7.1 is arbitrary. It is also in my view capricious because it has been formulated with no reference to its impact when applied in reality. One illustration of how capricious the system is arises from a consideration of the fact that it has no regard to the relative number of insolvency practitioners falling in each category. The Chief Master‟s statistics and schedules, although contested, reveal that the majority of insolvency practitioners at present are White males, followed by African, Indian, Coloured and Chinese males, White females and African, Indian, Coloured and Chinese females. The 4 appointments in category A will benefit persons in that category – Black, Indian, Coloured and Chinese women – to a far greater extent than the ratio 4:3:2:1 might suggest. Because this is the smallest group of practitioners, the turn of members of the group to be appointed will come round relatively rapidly (4 in every 10 appointments), while that of White males and insolvency practitioners of every race and gender born after 27 April 1994 (1 in every 10 from among a far larger group) will come round but rarely.13 The prejudice to young Black men and women who have recently completed their studies, are well qualified and wishing to enter practice as an insolvency practitioner, is obvious. There is no evidence either that this was considered by the Minister when formulating the policy. [37] Nor is there any evidence that the implementation of the policy is even practical at present given the disproportion in numbers between the four groups. The policy makes no allowance for a practitioner to refuse an appointment or for what the Master is to do in that case. In a small largely rural area there may be only a handful of 13 An early analysis, when the categories were differently composed, indicated that White males would get fewer than 4% of all appointments. insolvency practitioners falling into category A, yet they are to be appointed in forty percent of cases. It is unclear what is to happen if they are too busy to undertake more work. The Master has no discretion to appoint someone from Category B without departing from the policy. But even if this is viewed as an extreme case and the priority given to people in category A prompts more people in that category to enter the business of an insolvency practitioner, that will not matter if they were born after 27 April 1994. Why young people should be discriminated against in this fashion escapes me. The disproportionate treatment of the different groups is obvious and no rational reason has been advanced therefor. The likely effect will be to force many insolvency practitioners in category D, or category C, out of the profession and deter others, especially the young, from entering it. [38] For those reasons I agree with the high court that the policy fails to meet the test in Van Heerden, and is thus unconstitutional. Ordinarily, such a finding would be the end of the dispute, but I agree with the high court‟s approach in para 67 of its judgment: „Not all the parties have requested that I deal with all the challenges and some have been argued in the alternative. However, the respondents have requested that if I conclude that the Policy is unlawful, unconstitutional and invalid on any of the grounds, I nevertheless make findings in respect of the other challenges. This approach conforms with Constitutional Court guidance provided by Ngcobo J . . . in S v Jordan & others (Sex Workers Education and Advocacy Task Force and others as Amici Curiae) 2002 (6) SA 642 (CC) para 21. I intend to follow it.‟ Fettering the Master’s discretion [39] The relevant parts of clause 7 of the policy are set out in para 13 above. The case of the appellants is that the Master retains his discretion to appoint insolvency practitioners who are on the Master‟s list because the list has been categorised into senior and junior practitioners. The argument advanced was that before an appointment was made the Master would consider issues such as the complexity of the matter, and whether the next-in-line practitioner has the infrastructure to deal with complex insolvent estates. According to the appellants this would entail an exercise of discretion to ascertain whether the next-in-line practitioner was suitable. In assessing the suitability of a practitioner, we were urged to accept that the Master would also consider issues such as race, gender, years of experience, as well as his or her specific knowledge and expertise. The argument continued that, in the exercise of the discretion, junior insolvency practitioners who had no skills would benefit when they were co- appointed to handle complex estates with senior practitioners, in terms of clause 7.3 of the policy. The nub of the appellants‟ argument was that the exercise of this discretion dispelled the notion that the Master is shackled by the policy. [40] SARIPA‟s submissions on this score were in essence, that the policy goes beyond providing a guideline to the Master, but served to predetermine the outcome of the exercise of the Master‟s powers, thus binding his decision-making powers inflexibly. Their view is that the Master would, under the policy, not retain the ability to make decisions based on his own appreciation of all the facts before him. Because the policy requires the Master to appoint the next-in-line practitioner, the Master was debarred from considering each individual estate and applying his mind, having regard to the relevant factors. [41] CIPA‟s submissions with regards to the discretion of the Master were essentially that except for clause 7.3, the Master was given no discretion in terms of the policy. No allowance was made for the aptitudes pertinent to the industry, and the wishes of the creditors and other persons of interest were not catered for. They are joined in this submission by NAMA who contended that by excluding creditors, from the decision about who to appoint as provisional trustees or liquidators, creditors were potentially prejudiced. The policy took away any discretion the Master might have, and reduced the Master‟s function to one of rubberstamping. [42] Solidarity pointed out that under the policy, the Master would disregard all other factors and allocate work on the basis of race and gender. This, they contended, deprives the Master of exercising an appropriate discretion and was accordingly inconsistent with section 9(2) of the Constitution. [43] The high court agreed with the appellants‟ contention that clause 7.3 does provide for a discretion by the Master. In terms of clause 7.3 the Master was at large to appoint any suitable practitioner jointly with a senior or junior practitioner appointed in alphabetical order, having regard to the complexity of the matter and the suitability of the next-in-line practitioner. The high court accordingly held that the discretion of the Master was unfettered in this regard. [44] In my view the arguments under this head proceeded from a misconception as to the scope of the Master‟s powers of appointment. The argument proceeded from the premise that the Master had an unfettered discretion to appoint a provisional trustee and contended that the policy dictated by the Minister improperly fettered that discretion. In my view the premise is faulty. Section 18(1) confers on the Master a power to make appointments of provisional trustees „in accordance with policy determined by the Minister‟. The Master does not have an unfettered discretion. That may have been the case in the past before the amendments to the Act brought about in 2003,14 but it is no longer the case. The Master‟s discretion is now to make appointments in accordance with the policy. So the existence of the policy cannot be taken as unduly fettering the Master‟s discretion, because the Master only has a discretion to exercise in accordance with the policy. (This is a different matter from whether the policy imposes an unduly rigid system of, or akin, to a quota.) 14 Hartley NO v The Master 1921 AD 403 at 412; Lipschitz v Wattrus NO 1980 (1) SA 662 (T) at 671G. [45] I accept for the purposes of argument that the provisions of s 18 do not mean that the Minister is entitled to remove all discretion from the Master. It merely means that the Minister may circumscribe the parameters within which the Master exercises the discretion. Viewed in that light there is a considerable restriction imposed by clause 7.1, but some discretion remains in terms of clause 7.3. If the Master decides that an estate is a complex estate, or that the next in line practitioner is unsuitable, they are accorded the power to exercise their discretion by making an additional appointment of a senior practitioner to supplement the appointment made in terms of clause 7.1. In doing so the Master is not bound by the requirements of clause 7.1 and may simply appoint a senior practitioner who the Master believes will remedy the deficiency. The Master is left to determine what is a complex estate and may exercise judgment in regard to the capabilities of different insolvency practitioners. There is a limited residual discretion left for the Master to exercise in making these appointments. That suffices to hold that the Master‟s discretion is not improperly fettered. Irrationality [46] It is desirable to deal briefly with this argument. Rationality is not a high hurdle to surmount. What needs to be shown is that the policy lacks a rational connection to the objectives it is directed at achieving. The problem here is that there is no explanation in the affidavit of the Chief Master, who also spoke for the Minister, as to the basis upon which the policy was formulated. The explanation of the 4:3:2:1 ratio and how it was derived was that: „The percentages were arrived at by taking numbers which can work with ease in practice (4:3:2:1) and give approximately the same result (70%) as the target of 75% for non-whites used when work is allocated by the State to lawyers.‟15 15 Vol 2, p 197. This is taken from the explanation for the policy annexed to the Chief master‟s answering affidavit. No reliable figures were put forward by the Chief Master to show the number of practitioners in each category16 so that it is impossible to say that those falling in the different categories are indeed not receiving their fair share of the work of insolvency practitioners. It does not suffice for the Chief Master to say that White males receive 43% of appointments and African, Indian, coloured and Chinese males 30%, unless we have an appreciation of the relative proportions of people falling in these categories in the profession as a whole. If White males constitute 65% of insolvency practitioners and African, Indian, coloured and Chinese males only 20% then the distribution of appointments under the current system may be demonstrating a rapid advancement of the latter group at the expense of the former. [47] The real problem is that in the absence of proper information about the basis upon which the policy was formulated, and proper information concerning the current demographics of insolvency practitioners, one cannot say that the policy was formulated, on a rational basis properly directed at the legitimate goal of removing the effects of past discrimination and furthering the advancement of persons from previously disadvantaged groups. The absence of any explanation at all for its manifestly discriminatory impact on young people is telling. The impression is given that the ratio is arbitrary and cobbled together with no apparent justificatory basis. [48] That difficulty is compounded by the many aspects of the policy that are unexplained. For example, there is no explanation proffered by the appellants as to what constituted a complex estate or an unsuitable practitioner. In assessing what is a complex estate important factors such as: (i) knowledge, skill and locality of the insolvency practitioners; (ii) value of the assets in the insolvent estate; (iii) nature of the insolvent business and its assets; 16 The explanation of the policy said that these figures would only emerge after the various Masters‟ lists had been cleaned up. (iv) requisitions by creditors and trade unions are to be excluded from the list. [49] Another weakness is to be found in the Master's definition of a senior practitioner which is a person who has received at least one appointment per annum over the preceding five years. It matters not whether the appointment involved winding up a few small estates created by voluntary surrenders, or five major liquidations of companies. This does not suggest any consideration of the skills and expertise necessary to deal with an insolvent estate. There is no rational basis for this distinction and it undermines the rationality of the policy as a whole. [50] The fact that the policy requires the Master to appoint the next- in-line practitioner in each case is itself irrational. It fails to take into account factors such as the nature of the individual estate, and the industry specific knowledge, expertise or seniority of the practitioner concerned. What this means is that absent consideration of these factors, which are not exhaustive, the Master does so mechanically as per the roster. The policy negates what was described by Bertelsmann J in Ex Parte The Master of the High Court South Africa (North Gauteng) 2011 (5) SA 311 (GNP) para 26, as the „institutional knowledge and expertise‟ of the Master to assess the ability and integrity of the trustees and liquidators, and decide whether they are qualified to be appointed to a specific estate. Costs [51] I now turn briefly to deal with the argument relating to costs. In the high court, CIPA, Solidarity and the appellants requested that no order as to costs be made. SARIPA and NAMA submitted that costs should follow the result. The high court awarded no costs against the appellants. However, as regards the costs of this appeal there are no reasons for costs not to be awarded against the appellants. [52] In the result the following order is made: 1. The appeal is dismissed with costs, such costs to include the costs of two counsel. ________________________ R S Mathopo Judge of Appeal Wallis JA (Mpati P, Swain and Mathopo JA concurring) [53] I have had the pleasure of reading the judgment of Mathopo JA with which I am in entire agreement. I write this addendum to his judgment to deal with my concern that in formulating and publishing the policy the Minister has disregarded a significant constraint on his powers and thereby infringed the principle of legality or, as it was said in the past, acted ultra vires. [54] My starting point is that we are dealing with the legislation that governs the liquidation of insolvent estates and the winding up of companies and close corporations. Noticeably missing from the submissions on behalf of the Minister and the Chief Master was any argument addressed to that fact. A brief resumé of the law in this regard and the purpose of this legislation is therefore called for. I start with the statement in Walker v Syfret NO,17 where Innes J said that the effect of a sequestration order is to bring about a concursus creditorum which has the effect that: „[T]he hand of the law is laid upon the estate, and at once the rights of the general body of creditors have to be taken into consideration. No transaction can thereafter be entered into with regard to estate matters by a single creditor to the prejudice of the general body. The claim of each creditor must be dealt with as it existed at the issue of the order.‟ 17 Walker v Syfret NO 1911 AD 141 at 166. Nothing can be done thereafter to affect the rights and obligations of creditors in the insolvent estate.18 What was true in 1911 remains true over a century later.19 [55] This passage highlights the fundamental purpose of insolvency legislation, which is to secure the realisation of the remaining assets of the insolvent and the distribution of the resulting amounts among creditors in accordance with the order of preference laid down by law. Although the Master plays a vital role in overseeing the process of winding-up an estate,20 the process is nonetheless creditor-driven. It is the majority of creditors in number or value of claims that have the right to elect trustees or nominate liquidators. They have the right to take decisions in respect of the manner in which the assets falling into the estate, or constituting property of the corporate body, in winding-up are to be dealt with.21 The logic of this is obvious. It is the creditors who stand to lose as a result of the insolvency. They are the best judges of their own interests and they are the people best situated to instruct the trustee or liquidator how to go about the process of liquidation or winding-up. They are the people who can judge whether it is desirable to borrow more money in order to complete a building project in the hope of a substantial payment, or to commence litigation with a view to recovering amounts owing to the estate, to give but two examples. It is after all their money that is being spent on this and their money that is at risk. [56] While there have been changes to our company law, with the enactment of the new Companies Act 107 of 2008, which replaces the old system of judicial management with the new system of business rescue, the focus of the statutes on the interest of creditors has not 18 Ward v Barrett NO and Another 1963 (2) SA 546 (A) at 552E-G. 19 Gainsford and Others NNO v Tanzer Transport (Pty) Ltd 2014 (3) SA 468 (SCA) para 1. 20 Ex parte v Master of the High Court South Africa (North Gauteng) 2011 (5) SA 311 (GNP) para 19. 21 Ibid para 28; Geduldt v The Master 2005 (4) SA 460 (C) at 466A-C. altered. The interests of employees are now looked after but primarily from the perspective of their role as creditors. It remains the position that their contracts of employment are terminated by a liquidation or sequestration order. Although the judge in the high court devoted a portion of his judgment22 to the proposition that there is a changing role of insolvency in society, nothing that he said detracts from the fundamental principle that the purpose of a sequestration or liquidation order is to bring the estate of the insolvent or the affairs, of the corporate body, under the jurisdiction of the law to be administered with a view to realisation to best advantage in the interests of creditors. [57] Once it is recognised that the purpose of the Insolvency Act, and the provisions in the Companies Act, dealing with the liquidation of companies are designed to be driven by creditors in their own interests, that necessarily affects the basis upon which trustees and liquidators are to be appointed. The primary consideration must be the interests of the creditors and serving those interests. If the appointment of trustees and liquidators occurred speedily as contemplated by the relevant statutes this understanding of the situation would be even clearer, because there might not even be a need for the appointment of a provisional trustee or liquidator. Neither statute requires such an appointment to be made and both contemplate that the first meeting of creditors will be speedily convened. Thus the Insolvency Act provides in s 40(1) that on receipt of an order of the court sequestrating an estate finally the Master shall immediately convene a first meeting of creditors.23 Furthermore the Master has only a limited basis for refusing to appoint the person chosen by the creditors as trustee or liquidator. 22 Paras 23-29. 23 Section 364(1) of the Companies Act 61 of 1973 is to like effect. In a members voluntary winding-up the Master is obliged to appoint the person nominated by the company as liquidator subject only to their not being disqualified from appointment. See s 369(1). [58] Provisional appointments have become more significant because of delays in progressing from a provisional to a final sequestration or winding-up order and because of delays in the various Masters‟ offices. The evidence tendered by CIPA indicated that the average delay in Gauteng is some seven months. Under the requisition system, where creditors were able to play a significant role in the selection of the provisional trustee or liquidator, this mattered less and there was usually a smooth transition from provisional to final liquidation or winding-up, with the provisional trustee or liquidator being elected or nominated for final appointment. But the system envisaged by the policy deliberately sets out to remove the voice of the creditors from the process of appointment. The Chief Master said this explicitly in his answering affidavit: „I deny that the law provides that the Master‟s discretion has to take into account creditors‟ directives at the provisional appointment phase.‟ [59] While that stance may be technically correct, in that there is nothing in the relevant statutes that expressly obliges the Master to pay heed to creditors‟ wishes when making provisional appointments, it is beside the point. The statutes make it clear that they exist to serve the interests of creditors. Nothing in the statutes empowers the Master to disregard the interests of creditors and to appoint on a roster basis persons who, in terms of the policy, the Master may regard, either because of the complexity of the estate or because they are unsuitable, as unqualified for such appointment. In other words it is not open to the Master to act in a manner that disregards or is in conflict with the interests of creditors. [60] The Chief Master annexed to his answering affidavit a document explaining the policy. It said that: „To determine the persons to be appointed in a particular matter is no doubt the most critical aspect of insolvency appointments …‟ I agree. The reason is that in view of the delays in reaching the stage of final sequestration or winding-up and the delays in convening the first meeting of creditors, an increasing proportion of the work of liquidation or winding-up is undertaken by the provisional trustee or liquidator. Under the policy they are able to do this without any directions from the creditors and solely on the basis of the directions of the Master. [61] The problems with this approach are manifest. If the matter is in the hands of creditors they will follow the maxim of horses for courses and select as trustees or liquidators persons with knowledge of the area of business in which the insolvency has occurred. With the roster the next-in-line will be appointed even though what is involved is a mine or a farm or some other business requiring specialised knowledge, such as a chain of pharmacies or a major retailer. The creditors must tolerate the appointment even though there is a substantial risk that the steps the appointee takes in the course of liquidation or winding-up are inimical to their interests. All they can do is ask the Master to exercise the discretion under clause 7.3 of the policy. But the sale of an asset at an under price, or at a time that is not propitious for realising maximum value, is beyond their powers to prevent. [62] There can be no objection to the broad purpose of consistency, fairness, transparency and the elimination of the impact of past discrimination. Nor can there be any objection to the elimination of certain undesirable features of the appointment process, ranging from importuning to solicitation to outright dishonesty, that the Chief Master claims were endemic under the old system. But in my view it remains a requirement that any policy that is put in place for the appointment of trustees and liquidators must be consistent with the purpose of our insolvency legislation and be directed at serving the interests of creditors. In formulating this policy their interests have quite deliberately been disregarded at any stage prior to the first meeting of creditors. That is what the explanatory document said and it was echoed in the affidavit of the Chief Master. [63] In my view that was impermissible. Given the purpose of the legislation with which we are concerned, it seems to me that the actions of the Minister in determining the policy under s 158 of the Act, and the actions that the Master must undertake in terms of that policy, must be in accordance with the interests of creditors in the liquidation of the estate or the winding-up of the company or close corporation. As the policy was formulated on the basis that those interests were irrelevant, and on its face it does not recognise or serve those interests it was in my view outside the legitimate powers vested in the Minister and its promulgation involved a breach of the principle of legality. [64] There is a fundamental principle that must be observed in this regard. It was summarised in Gauteng Gambling Board24 where Navsa JA, speaking for a unanimous court said: „More than six decades ago this court in Van Eck NO and Van Rensburg NO v Etna Stores 1947 (2) SA 984 (A) said the following: “For to profess to make use of a power which has been given by statute for one purpose only, while in fact using it for a different purpose, is to act in fraudem legis, construing that term in the more restricted manner adopted by the majority of this Court in the case of Dadoo Ltd v Krugersdorp Municipal Council (1920 AD 530). . . Such a use is a mere simulatio or pretext. . . . And I should add that, of course, if the person exercising the power avowedly uses it for some purpose other than that for which alone it has been given, he acts simply contra legem: where, however, he professes to use it for its legitimate purpose, while in fact using it for another, he acts in fraudem legis.” In present-day jurisprudence acting with an ulterior motive or purpose is subsumed under the principle of legality.‟ [65] In my opinion it is precisely that type of breach of the principle of legality that has occurred here. In their legitimate desire to address past discrimination and disadvantage, the Minister and the Chief Master have overlooked the fundamental purpose of the legislation that 24 Gauteng Gambling Board and Another v MEC for Economic Development, Gauteng 2013 (5) SA 24 (SCA) paras 46 and 47. governs the sequestration of estates and the winding-up of companies and close corporations, which is to serve the interests of creditors as conceived by the creditors themselves. The policy that has been promulgated is not directed at that purpose and disavows the need for the process of appointment that it governs to have regard to the views or interests of creditors. That is an exercise of power for a purpose other than any for which it was bestowed. It should not be difficult for the Minister and the Chief Master to devise a policy that serves both purposes instead of trying to serve one at the expense of the other. [66] For that further reason as well as those set out in his judgment I concur in the order proposed by Mathopo JA. ________________ M J D Wallis Judge of Appeal APPEARANCES: For appellants: R T Williams SC A L Platt SC Instructed by: The State Attorney, Cape Town The State Attorney, Bloemfontein For first respondent: B Manca SC E van Huyssteen M Adhikari Instructed by: De Klerk & Van Gend Inc, Cape Town McIntyre & Van der Post, Bloemfontein For second respondent: M S M Brassey SC M J Engelbrecht Instructed by: Tintingers Inc c/o Werksmans Attorneys, Cape Town Symington & De Kok, Bloemfontein For third respondent: M J Engelbrecht Instructed by: Stuart Van der Merwe Inc, Arcadia Honey Attorneys, Bloemfontein For Fourth respondent: M J Engelbrecht Instructed by: Serfontein, Viljoen and Swart, Brooklyn Claude Reid Attorneys, Bloemfontein Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 2 December 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Minister of Justice v The SA Restructuring & Insolvency Practitioners Association (693/15) [2016] ZASCA 196 (2 December 2016) MEDIA STATEMENT The Supreme Court of Appeal today dismissed an appeal against a judgment of the Western Cape Division of the High Court, Cape Town concerning the constitutionality of a policy that seeks to regulate the appointment of insolvency practitioners, primarily as provisional trustees and liquidators, but also as co-trustees and co-liquidators (and other comparable positions) under various statutes. The policy was issued by the Minister of Justice and Constitutional Development in terms of s 18(1) of the Insolvency Act 24 of 1936 (the Act), pursuant to his powers in terms of s 158(2) of the Act and was to come into operation on 31 March 2014. The challenge to the policy was made in two parts, ie, Part A was for an interim order restraining its implementation, and Part B, was to have it reviewed and set aside. In the Western Cape Division of the High Court, Gamble J dealt with the urgent application in respect of Part A and interdicted the appellants from implementing the policy. The review application in Part B came before the court a quo, Katz AJ, in which the policy was challenged on four bases. These were that it infringed the right to equality provided for in s 9(3) of the Constitution; it unlawfully fettered the discretion of the Master; is ultra vires the Act; and was irrational. The court a quo largely upheld the respondents’ contentions and granted the application. And acting in terms of s 172(1)(a) of the Constitution, declared the policy inconsistent with the Constitution and invalid. The SCA, after reviewing clauses 6 and 7 of the policy, upheld the court a quo’s finding that the policy is unconstitutional. The court held that clause 7.1 of the policy embodied strict allocation of appointments in accordance with race and gender, which were arbitrary, capricious and displayed naked preference, which is prohibited by s 9(3) of the Constitution. The court held that the policy’s arbitrariness was not saved by clause 7.3 of the policy as it does not resolve the fact that clause 7.1 requires the Master to make an appointment in accordance with a rigid quota. With regards to the question whether the Master’s discretion was unlawfully fettered, the SCA held that there was a limited residual discretion left for the Master to exercise in making appointments in terms of clause 7.3 of the policy, and so the Master’s discretion was not improperly fettered in that regard. On the issue of the rationality of the policy, the SCA lamented the fact that there was no explanation by the Master for the basis upon which the policy was formulated. There was for instance no proper explanation regarding how the ratio in the policy was determined, and no proper figures to show the number of practitioners in each category. Thus, the court held that in the absence of proper information about the basis upon which the policy was formulated, and proper information concerning the current demographics of insolvency practitioners, it was not possible to say that the policy was formulated, on a rational basis properly directed at the legitimate goal of removing the effects of past discrimination and furthering the advancement of persons from previously disadvantaged groups. In a concurring judgment, Wallis JA (Mpati P, Swain and Mathopo JJA concurring) held that given the purpose of the insolvency legislation, the actions of the Minister in determining the policy under s 158 of the Act, and the actions that the Master must undertake in terms of that policy, must be in accordance with the interests of creditors in the liquidation of the estate or the winding-up of the company or close corporation. And that as the policy was formulated on the basis that those interests were irrelevant, and on its face it does not recognise or serve those interests, it was outside the legitimate powers vested in the Minister, and the promulgation thereof involved a breach of the principle of legality. The SCA accordingly dismissed the appeal with costs. --- ends ---

2985

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable CASE NO: 965/2013 In the matter between: ABDUL RAHIM FIRST APPELLANT HOSSAIN KAMAL SECOND APPELLANT ZAKIR HOSSAIN THIRD APPELLANT HARUN MOHAMMED FOURTH APPELLANT MOHAMMED SALLA UDDIN FIFTH APPELLANT ABDUL SHAMOL SIXTH APPELLANT MAHBUB ALOM SEVENTH APPELLANT TOYOBUR RAHMAN EIGHTH APPELLANT SUMAN CHUDHURY NINTH APPELLANT MUSTAFI GURRAMAN TENTH APPELLANT EUNICE HAYFORD ELEVENTH APPELLANT ZAIUR RAHMAN TWELFTH APPELLANT MD ALAP THIRTEENTH APPELLANT NORUL ALOM FOURTEENTH APPELLANT MAHE MINTU FIFTEENTH APPELLANT and THE MINISTER OF HOME AFFAIRS RESPONDENT Neutral Citation: Rahim v The Minister of Home Affairs (965/2013) [2015] ZASCA 92 (29 May 2015). Coram: Navsa, Majiedt, Mbha & Zondi JJA and Meyer AJA Heard: 18 May 2015 Delivered: 29 May 2015 Summary: Detention of illegal foreigners pending deportation in terms of s 34(1) of the Immigration Act 13 of 2002 – illegal foreigners to be detained in a manner and place determined by the Director-General – absence of evidence concerning such determination – principle of legality – detentions unlawful. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: The Eastern Cape Division of the High Court, Port Elizabeth (Chetty J sitting as court of first instance). The following order is made: 1. The appeal is upheld and the respondent is ordered to pay the appellants‟ costs, including the costs of two counsel. 2. The order of the court below is substituted by the following order: „1. The detention of each of the Plaintiffs is declared to have been unlawful. 2. The Defendant is ordered to pay damages to the Plaintiffs as follows: 2.1 To the First Plaintiff an amount of R10 000 together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.2 To the Second Plaintiff an amount of R12 000 together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.3 To the Third Plaintiff an amount of R3 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.4 To the fourth Plaintiff an amount of R6 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.5 To the Fifth Plaintiff an amount of R5 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.6 To the Sixth Plaintiff an amount of R8 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.7 To the Seventh Plaintiff an amount of R20 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.8 To the Eighth Plaintiff an amount of R10 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.9 To the Ninth Plaintiff an amount of R25 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.10 To the tenth Plaintiff an amount of R12 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.11 To the Eleventh Plaintiff an amount of R12 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.12 To the Twelfth Plaintiff an amount of R18 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.13 To the Thirteenth Plaintiff an amount of R16 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.14 To the Fourteenth Plaintiff an amount of R14 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.15 To the Fifteenth Plaintiff an amount of R5 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof. 3. The Defendant is ordered to pay the Plaintiffs‟ costs of suit, including the costs of two counsel.‟ ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Navsa ADP (Majiedt, Mbha & Zondi JJA and Meyer AJA concurring): [1] This is an appeal against a judgment of the Eastern Cape Division of the High Court, Port Elizabeth (Chetty J), in terms of which the court a quo dismissed the claims of the 15 appellants, all foreign nationals, for damages said to have been sustained as a result of their alleged unlawful arrest and detention at the instance of officials of the respondent, the Minister of Home Affairs (the Minister). The appeal is before us with the leave of the court below. [2] This case is adjudicated against the following backdrop. South Africa has kilometre upon kilometre of porous borders which the Department of Home Affairs (the Department) has difficulty controlling. There is public concern about the illegal influx of foreigners. Many of our African brothers and sisters and even people, like most of the appellants, from more distant shores, flock to our country in search of a better life and economic opportunities. This has caused a degree of animosity to be directed at foreigners and more recently has led to what has been described as xenophobic attacks on foreigners. It is vital in this context to affirm that we are a constitutional state subscribing to the principle of legality, an incident of the rule of law. Our Constitution demands a normative standard and we must be held bound by it. In adjudicating this case, sight will not be lost of the logistical and other difficulties that the Department experiences in dealing with an influx of foreign nationals. At the same time we cannot lose sight of our constitutional duty to do justice in accordance with constitutional norms. I turn to deal with the relevant facts and the applicable law. [3] Fourteen of the appellants are Bangladeshis. The eleventh appellant is Ghanaian. All of the appellants were asylum seekers who had applied for asylum in terms of s 21 of the Refugees Act 130 of 1998 (the RA) and had, in terms of s 22(1) of the RA, been granted an asylum seeker permit. Section 22(1) reads as follows: „The Refugee Reception Officer must, pending the outcome of an application in terms of section 21(1), issue to the applicant an asylum seeker permit in the prescribed form allowing the applicant to sojourn in the Republic temporarily, subject to any conditions, determined by the Standing Committee, which are not in conflict with the Constitution or international law and are endorsed by the Refugee Receptions Officer on the permit.‟ Section 22(3) of the RA, recognising that the process for finalising such applications is protracted, provides: „A Refugee Reception Officer may from time to time extend the period for which a permit has been issued in terms of subsection (1), or amend the conditions subject to which a permit has been so issued.‟ [4] Having been granted asylum seeker permits, the appellants attended at the Port Elizabeth office of the Department at regular intervals to have their permits extended in contemplation of the finalisation, not just of a decision in respect of the application for asylum, but also of an appeal to an appeal board in terms of s 26 of the RA. If the officials of the respondent are to be believed each one of the appellants were arrested only after: (i) they had been informed in their home language that their appeals had been unsuccessful and were thus illegal foreigners; and (ii) they had been informed of their rights to pursue further processes to thwart deportation. [5] The power to arrest and detain the appellants was claimed in terms of s 34(1) of the Immigration Act 13 of 2002 (the IA), which reads as follows: „Without the need for a warrant, an immigration officer may arrest an illegal foreigner or cause him or her to be arrested, and shall, irrespective of whether such foreigner is arrested, deport him or her or cause him or her to be deported and may, pending his or her deportation, detain him or her or cause him or her to be detained in a manner and at a place determined by the Director-General, provided that the foreigner concerned – (a) shall be notified in writing of the decision to deport him or her and of his or her right to appeal such decision in terms of this Act; (b) may at any time request any officer attending to him or her that his or her detention for the purpose of deportation be confirmed by warrant of a Court, which, if not issued within 48 hours of such request, shall cause the immediate release of such foreigner; (c) shall be informed upon arrest or immediately thereafter of the rights set out in the preceding two paragraphs, when possible, practicable and available in a language that he or she understands; (d) may not be held in detention for longer than 30 calendar days without a warrant of a Court which on good and reasonable grounds may extend such detention for an adequate period not exceeding 90 calendar days; and (e) shall be held in detention in compliance with minimum prescribed standards protecting his or her dignity and relevant human rights.‟ (My emphasis.) [6] At the commencement of the trial in the court below there were several issues in dispute. The appellants disputed their status as determined by the Department and which at trial was the asserted basis of their arrest, namely that of being illegal foreigners. Furthermore, the appellants contended that at the time of their arrest they had not been provided with reasons. They also complained that their rights: (i) to use further processes provided for in the IA to resist deportation and; (ii) under the Constitution (especially s 35 which deals with the rights of arrested, detained and accused persons); and (iii) to Consular access and assistance in terms of Article 36(1)(b) of the Vienna Convention on Consular Relations, 1963, were not explained to them, rendering their detention unlawful. Importantly, they invoked the principle of legality in relation to s 34(1) of the IA, contending that they could only, as prescribed by that subsection, be detained in a manner and at a place determined by the Director- General of the Department, which they were adamant had not occurred. The submission was that this requirement of s 34 was in appreciation of the right of illegal migrants recognised in civilised states, namely, that they should, because of their vulnerability, be treated as a separate category of detainees and be rigorously separated from the general prison population. The appellants submitted that their detention at either Kwazakhele police station or St Albans prison or New Brighton Police, or other police station or prison (as fourteen of the fifteen appellants had spent the greater part of their detention at a prison or police station), or even at Lindela deportation facility was in disregard of the provisions of s 34 as they were not places „determined by‟ the Director-General, thus rendering their detention unlawful. [7] At inception the appellants applied in the court below, in terms of Uniform Rule 33, for a decision to be made separately, in respect of their contentions set out at the end of the preceding paragraph, namely, the interpretation and application of s 34(1) in relation to a determination by the Director-General. Simply put, the appellants argued that the respondents were required to prove that a determination as contemplated in s 34(1) of the IA had been made by the Director-General, and the appellants contended that the absence of such a determination would render the detention unlawful. They sought a separation of and a decision on this issue. Chetty J ruled against them and a trial ensued on all the issues in dispute. [8] The court below, considering the evidence and having regard to the applicable statutory provisions, rejected the submissions on behalf of the appellants that they were not illegal foreigners because their asylum-seeker permits had not yet expired at the time that they were arrested. Chetty J reasoned that such permits remained valid only until the outcome of the applications and that they lapsed upon the application or any associated review or appeal being finalised. [9] The court below also dealt with the submission on behalf of the appellants that the arresting officials were imbued with a discretion and were required to consider arrest as a last resort in the deportation process and that in respect of the appellants they did not apply their minds to each individual case but rather arrested all of the appellants on the basis of a blanket policy that all illegal foreigners were subject to arrest. The contention on behalf of the appellants was that the arresting officials could have considered requiring the appellants to report regularly or they could have employed other means to monitor their position until deportation was imperative – ie arrest should have been a final resort after all other processes available to them were exhausted. The court below, after considering the evidence, said the following: [I]t is clear . . . that the decision to arrest and deport the plaintiffs was not arbitrary but effected against the background of all material factors.‟ [10] Furthermore, the court below rejected the appellants‟ claims that they had not been informed of their rights; in terms of ss 34(1)(a) and (b) of the IA; s 35 of the Constitution; and the Vienna Convention. Chetty J also rejected the assertion that proper warrants for the detention of the appellants had not been issued. He accepted the evidence on behalf of the respondent that the appellants‟ rights had been explained to them in a language they understood and that the anomalies in the documents presented in evidence were overcome by the viva voce evidence of the officials who effected the arrests. He rejected the appellants‟ attack on the integrity of the interpreters employed by the Department. [11] Dealing with the question whether, in terms of s 34(1) of the IA, there had to be a special determination by the Director-General for the detention of illegal foreigners. Chetty J had regard to the decision in Lawyers for Human Rights v Minister of Safety and Security and 17 others [2009] JOL 23612 (GNP) in which Raulinga J held that the IA aimed at setting in place a new system of immigration control which ensured, inter alia, that immigration control is conducted within „the highest applicable standards of human rights protection‟. The court there held that „no facility can be used for detention and deportation of foreigners without the necessary designation by the Director-General of Home Affairs‟. Chetty J disagreed. He had regard to s 34(7) of the IA which provides: „(7) On the basis of a warrant for the removal or release of a detained illegal foreigner, the person in charge of the prison concerned shall deliver such foreigner to that immigration officer or police officer bearing such warrant, and if such foreigner is not released he or she shall be deemed to be in lawful custody while in the custody of the immigration officer or police officer bearing such warrant.‟ His reasoning in relation to the effect of that subsection is set out in the latter part of para 14 of the judgment of the court below: „There is a clear indication in subsection (7), which refers to the detention of an illegal foreigner in a prison that it is the place which the Director-General had determined that an illegal foreigner be detained pending his or her deportation. Although the term “prison” is not defined in the IA, its meaning is hardly obscure. By necessary implication, it includes a police cell or lock-up.‟ [12] The court below also placed reliance on the following part of the minority judgment in Jeebhai & others v Minister of Home Affairs & another 2009 (5) SA 54; [2009] ZASCA 3 (SCA): „The detention contemplated in s 34(2) must be by warrant addressed to the station commissioner or head of a detention facility. Thereafter the suspected illegal foreigner may either be released or, if he is in fact an illegal foreigner, detained further under s 34(1) for the purpose of facilitating the person‟s deportation.‟ Chetty J concluded as follows: „It follows from the aforegoing analysis that the finding by Raulinga, J, that the place of detention contemplated by s 34(1) has to be designated as such in order to render an illegal foreigner‟s detention lawful, was clearly wrong. I am satisfied that the plaintiffs were lawfully detained at the prisons or police stations for purposes of deportation.‟ [13] It is against the conclusions set out in the preceding paragraphs that the present appeal is directed. Before us counsel on behalf of the appellants accepted that in practical terms a decision on the discrete point the appellants had applied to have decided by the court below, as set out in para 7 above, would be dispositive and that a decision on quantum could then be made on the available evidence. [14] It is necessary to record the number of days that each appellant spent in detention. Before doing so, it is also necessary to note that they were released after litigation, in terms of agreements reached with the Department and court orders to that effect followed. We were informed that the appellants, who were all arrested during 2010, were still in the country and that various processes in relation to their continued stay in our country were still being undertaken and were not yet finalised. [15] The details of the appellants‟ detention are set out hereafter: (i) First appellant – 16 days. (ii) Second appellant – 18 days. (iii) Third appellant – 4 days. (iv) Fourth appellant – 8 days. (v) Fifth appellant – 7 days. (vi) Sixth appellant – 13 days. (vii) Seventh appellant – 30 days. (viii) Eight appellant – 16 days. (ix) Ninth appellant – 35 days. (x) Tenth appellant – 18 days. (xi) Eleventh appellant – 18 days. (xii) Twelfth appellant – 26 days. (xiii) Thirteenth appellant – 23 days. (xiv) Fourteenth appellant – 20 days. (xv) Fifteenth appellant – 7 days. [16] In the court below the respondent accepted that he bore the onus to justify the detention. The high-water mark of the respondent‟s case, insofar as a determination by the Director-General in relation to the manner and place of detention was concerned, was the evidence of Mr Mudiri Matthews, the Chief Director of Immigration Inspectorate, at the Department‟s Pretoria office. He was referred by counsel on behalf of the respondent to a document purporting to be a service-level agreement between the Department and a private company for the provision of a deportation facility at the Lindela Detention Facility, Krugersdorp, at which illegal foreigners could be detained, pending deportation. Four of the fifteen appellants spent a limited time at Lindela subsequent to their detention elsewhere. Mr Matthews had no personal knowledge concerning the conclusion of the contract and was unable to take the matter any further than a supposition that there must have been a determination by the Director-General in terms of s 34(1) of the IA. There was no viva voce evidence by the Director-General. No document of any kind purporting to be a determination in terms of s 34(1) of the IA was presented. [17] Faced with this conundrum, counsel on behalf of the respondent sought refuge in the following submissions: First, that s 34(1) does not prescribe how the determination by the Director-General is to be made and therefore, having regard to the „everyday use‟ of the word „determine‟ nothing more is required of the Director-General than a firm or conclusive decision about where illegal foreigners may be detained. It was contended that „determine‟ has a very different connotation from the word „designate‟. The contention was that Lindela is the only facility in the country whose sole purpose is to detain illegal foreigners for purposes of their deportation. Furthermore, it was contended that Matthews‟ evidence concerning Lindela as a transit facility that served to hold illegal foreigners until their deportation could not be ignored. Moreover, so the submission was developed, it must be clearly understood that Lindela, together with police and prison cells, are places that the Director-General has determined as places where illegal foreign nationals may be detained until their deportation. It was argued that the evidence by the respondent‟s witnesses was that the appellants were detained as a means to an end in the course of facilitating their deportation and thus their detention was in accordance with s 34(1). Second, reliance was placed on the minority judgment of Cachalia JA in Jeebhai and the judgment of the Constitutional Court in Lawyers for Human Rights and another v Minister of Home Affairs and another 2004 (4) SA 125; [2004] ZACC 12 (CC), as support for the contention that detention at any state detention facility would suffice. [18] I now turn to deal with the respondent‟s contentions set out in the preceding paragraph. Before us it was uncontested that it is internationally accepted that illegal foreign nationals are particularly vulnerable and that international best practice dictates that they should be kept apart from the general prison population. In the Report of the Special Rapporteur of the Human Rights Council of the United Nations on the rights of migrants for 2012, 1 which has a particular focus on the detention of migrants in irregular situations, it is noted that the fact that a person is irregularly in the territory of a state does not imply that he or she is not protected by international human rights standards. The Special Rapporteur noted with concern that irregular entry and stay by migrants is considered a criminal offence in some countries. Whilst s 48 of the IA does make it an offence to enter, remain or depart from South Africa with a concomitant punitive sanction, this is not what we are dealing with here. We are dealing with detention pending deportation. In this regard the following comments of the Special Rapporteur are apposite (para 13): „He [the Special Rapporteur] wishes to stress that irregular entry or stay should never be considered criminal offences: they are not per se crimes against persons, property or national security. It is important to emphasize that irregular migrants are not criminals per se and should not be treated as such.‟ 1 François Crèpeau, A/HR/C/20/24 (2 April 2012) para 13, available at: http://www.ohchr.org/Documents/HRBodies /HRCouncil/RegularSession/Session20/A-HRC-20-24_en.pdf (accessed 27 May 2015). The Special Rapporteur‟s statements on places of detention of migrants are significant (para 33): „The Standard Minimum Rules for the Treatment of Prisoners provide that persons imprisoned under a non-criminal process shall be kept separate from persons imprisoned for a criminal offence. Additionally, the Working Group on Arbitrary Detention stated in its deliberation No. 5 that custody must be effected in a public establishment specifically intended for this purpose or, when for practical reasons, this is not the case, the asylum-seeker or immigrant must be placed in premises separate from those for persons imprisoned under criminal law. At the regional level, the Principles and Best Practices on the Protection of Persons Deprived of Liberty in the Americas2 provide that asylum- or refugee-status-seekers and persons deprived of liberty due to migration issues shall not be deprived of liberty in institutions designed to hold persons deprived of liberty on criminal charges.‟ (footnotes omitted) In para 34 of the report the following appears: „However, information received by the Special Rapporteur indicates that migrants are detained in a wide range of places, including prisons, police stations, dedicated immigration detention centres, unofficial migration detention centres, military bases, private security company compounds, disused warehouses, airports, ships, etc. These detention facilities are placed under the responsibility of many different public authorities, at local, regional or national level, which makes it difficult to ensure the consistent enforcement of standards of detention. Migrants may also be moved quite quickly from one detention facility to another, which also makes monitoring difficult. Moreover, migrants are often detained in facilities which are located far from urban centres, making access difficult for family, interpreters, lawyers and NGOs, which in turn limits the right of the migrant to effective communication.‟ It further bears mentioning that the report reveals that detentions have not been shown to reduce migration anywhere in the world, and in this regard it is reported in para 8 that: „The Special Rapporteur would like to emphasize that there is no empirical evidence that detention deters irregular migration or discourages persons from seeking asylum. Despite increasingly tough detention policies being introduced over the past 20 years in countries around the world, the number of irregular arrivals has not decreased. This may be due, inter alia, to the fact that migrants possibly see detention as an inevitable part of their journey.‟ 2 Inter-American Commission on Human Rights (IACHR), Resolution 1/08 (13 March 2008), available at: http://www.refworld.org/docid/48732afa2.html (accessed 27 May 2015). [19] The Inter-American Commission on Human Rights (IACHR), in terms of Resolution 03/08 of the Inter-American Commission on Human Rights of Migrants, International Standards and the Return Directive of the EU, (25 July 2008),3 resolved as follows: „As international law establishes, migrants may not be held in prison facilities. The holding of asylum seekers and persons charged with civil immigration violations in a prison environment is incompatible with basic human rights guarantees.‟ Article 17(2) of the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families,4 (although it must be noted that South Africa is not a signatory), provides: „Accused migrant workers and members of their families shall, save in exceptional circumstances, be separated from convicted persons and shall be subject to separate treatment appropriate to their status as unconvicted persons. Accused juvenile persons shall be separated from adults and brought as speedily as possible for adjudication.‟ Article 17(3) reads as follows: „Any migrant worker or member of his or her family who is detained in a State of transit or in a State of employment for violation of provisions relating to migration shall be held, in so far as practicable, separately from convicted persons or persons detained pending trial.‟ [20] Cognisant of international best practice the legislature adopted s 34(1) of the IA, with the Director-General being required to make a determination which would be in line with what is set out in the preceding paragraphs. The detention of illegal foreigners subject to deportation in circumstances such as in the present case is not subject to the Criminal Procedure Act 51 of 1977. Section 34(1) of the IA regulates their detention. Thus, the detention can only take place as prescribed by that subsection and that means in the manner and at a place determined by the Director-General. The exercise of public power is constrained by the principle of legality which is foundational to the rule 3 Available at: http://www.refworld.org/docid/488ed6522.html (accessed 27 May 2015). 4 United Nations Treaty Series vol.2220, p. 3; Doc. A/RES/45/158, available at: https://www.ohchr.org/english/law/cmw.htm (accessed 27 May 2015). Adopted 18 December 1990. Entered into force 1 July 2003. of law. 5 In s 34(1) the words that dictate the manner and place of detention are deliberate and not superfluous. Detention pending deportation can only occur according to its prescripts. Reliance on s 34(7) by the court below and the respondents is misplaced. The latter subsection of the IA regulates the removal or release of a detained illegal foreigner on the basis of a warrant to be presented to „the person in charge of the prison‟. It does not follow that the prison referred to, does not have to be determined by the Director-General as a place at which an illegal foreigner may be detained pending deportation. There is nothing to prevent a determination by the Director-General that a discrete part of a prison or other State detention facility which meets international standards, is to be used as a place at which illegal foreigners can be detained pending their deportation. [21] The court below and the respondents relied on the following dictum in the Constitutional Court decision in Lawyers for Human Rights v Minister of Home Affairs 2004 (4) SA 125; [2004] ZACC 12 (CC) (para 39) for their contrary view: „Section 34(1) is concerned with a situation different from that contemplated by s 34(8). Subsection (8), in part, is concerned with and authorises the detention of people suspected of being illegal foreigners on a ship by which they arrived. It will be remembered that s 34(8) gives immigration officers a choice. They can either be content with the detention of the people concerned on the ship, or cause people to be detained elsewhere. Section 34(1) is designed to cater for the situations in which illegal foreigners are detained in a facility over which the government has control and which is serviced or frequented by State officers.‟ (My emphasis.) It was submitted on behalf of the respondent that the latter part of the paragraph indicates that a detention facility which the State services and over which it has control would suffice, without a specified determination having to be made by the Director- General. In that case the court was concerned with the validity of ss 34(2) and (8) of the IA. Section 34(8) provides for the detention of a person at a port of entry or on a ship. Section 34(1) was referred to by the Constitutional Court by way of contrast. Section 34(2) deals with the maximum period of detention of a person detained in terms of the 5 See Fedsure Life Assurance v Greater Johannesburg TMC 1999 (1) SA 374; [1998] ZACC 17 (CC) at 399B-C and Pharmaceutical Manufacturers of South Africa: In re Ex Parte President of the Republic of South Africa 2000 (2) SA 674; [2000] ZACC 1 (CC) para 40. IA for purposes other than his or her deportation. The issue we are presently grappling with was not raised or dealt with by the Constitutional Court in that case, and in any event it seems tenuous to interpret the above dictum, in which the Constitutional Court was explaining the general context of one section and contrasting it against the general context of another, as conclusively determining the substantive requirements laid down by those provisions. [22] The reliance on the minority judgment by Cachalia JA in Jeebhai is also unwarranted. In para 24, referred to earlier, on which reliance was placed, the following appears: „The detention contemplated in s 34(2) must be by warrant addressed to the station commissioner or head of a detention facility. Thereafter the suspected illegal foreigner may either be released, or if he is in fact an illegal foreigner, detained further under s 34(1) for the purpose of facilitating the person‟s deportation.‟ (Footnotes omitted.) The respondents once again sought to persuade us that this passage indicated that any detention facility would suffice for the detention of illegal foreigners pending deportation without a specific determination having to be made by the Director-General. In Jeebhai, this court was concerned with an individual who fell within the definition of illegal foreigner and who was therefore subject to arrest in terms of s 34 of the IA. The decision of the court flowed from the failure of the respondent to secure a warrant for his detention and deportation in terms of the applicable regulation. This court was not there dealing with the point presently under discussion. [23] In Zealand v Minister of Justice and Constitutional Development 2008 (4) SA 458; [2008] ZACC 3 (CC), the Constitutional Court reaffirmed a long-standing principle. The following appears in para 25: „This is not something new in our law. It has long been firmly established in our common law that every interference with physical liberty is prima facie unlawful. Thus, once the claimant establishes that an interference has occurred, the burden falls upon the person causing that interference to establish a ground for justification. In Minister van Wet en Orde v Matshoba [1990 (1) SA 280; [1989] ZASCA 129 (A)], the Supreme Court of Appeal again affirmed that principle, and then went on to consider exactly what must be averred by an applicant complaining of unlawful detention. In the absence of any significant South African authority, Grosskopf JA found the law concerning the rei vidicatio a useful analogy. The simple averment of the plaintiff‟s ownership and the fact that his or her property is held by the defendant was sufficient in such cases. This led that court to conclude that, since the common-law right to personal freedom was far more fundamental than ownership, it must be sufficient for a plaintiff who is in detention simply to plead that he or she is being held by the defendant. The onus of justifying the detention then rests on the defendant. There can be no doubt that this reasoning applies with equal, if not greater, force under the Constitution.‟ (Footnotes omitted.) [24] In Jeebhai, Ponnan JA said the following about the detainee in that matter (para 63): „Given that the deprivation of Mr Rashid‟s liberty was prima facie unlawful, it was for the respondents to justify such deprivation. In this instance one would have thought that as a bare minimum the respondents would have sought to show compliance with reg 28. It would to my mind have been a relatively simple matter to have adduced duly completed forms 28 and 35 as proof of compliance with reg 28. That the respondents failed to do. After all, it seems to me that the reg 28 safeguards exist, not just for the benefit of the illegal foreigner, but also to protect the respondents against unjustified and unwarranted claims flowing from detention or deportation, or both.‟ In the present case, it was for the respondent to show that the Director-General had made the determinations contemplated in s 34(1). This they failed to do. No attempt was made to show that any part of St Albans prison or any part of any police holding cells, or indeed even in respect of the Lindela detention centre, was determined by the Director-General, in accordance with international norms to be a place at which illegal foreigners were to be detained pending deportation. The making of a determination by the Director-General under s 34(1) of the IA seems, on its face, to be both a relatively simple exercise while at the same time being crucially important in upholding the rights of detained foreign persons. No attempt was made by the respondent to justify the failure to do so. And, although the issue did not arise for a final determination in this case, I would add that it seems to me that such a determination must be publicly proclaimed as this is vital for certainty and effective administration according to constitutional and international standards. The reasoning of Raulinga J set out in para 11 above is accordingly unassailable. It follows that the detention of all of the appellants was unlawful. It is not necessary to deal with the other conclusions reached by Chetty J save to state that I have reservations about his ready acceptance of the evidence of the respondent‟s officials, that they explained to each appellant his or her rights including the rights to Consular access. The evidence adduced before Chetty J by the respondent concerning interpretation by way of telephone is ludicrous. In respect of one of the appellants it was accepted that there was no opportunity to explain the rights he was entitled to pursue. That leads us to the next question, which is the quantum of damages. [25] Counsel on behalf of the appellants accepted that the appellants had failed to present evidence concerning the conditions under which they were held and furthermore had failed to testify about the personal impact of detention. Such evidence as there was about the conditions at St Albans prison and at Kwazakhele police station was elicited by way of cross-examination of the respondent‟s witnesses. It certainly appears, as would be the case with many people who cross our borders without the necessary authorisation, that most of the appellants did so to earn a living and make a better life. Appellants‟ counsel conceded that this sparse material was far from satisfactory and urged us to do the best we could under the prevailing circumstances. [26] It was conceded in the court below that the asylum-seeker application forms were what they purported to be and the information therein was unchallenged. The appellants provided information in support of their application for asylum which included, inter alia, the floods in Bangladesh as a reason for seeking asylum in South Africa which, predictably, the appeal board held to be manifestly unfounded. The appellants chose not to testify to controvert that conclusion. I agree with the conclusion by the court below that the appeal board decision superseded the temporary asylum-seeker permit. Whilst the appellants certainly have the right to pursue further processes to resist deportation, the limited information referred to earlier in this and the preceding paragraph is the sparse basis upon which we are called upon to make a determination concerning quantum. The parties agreed that, should we incline in favour of the appellants on the law point, we would be at large to determine compensation. [27] The deprivation of liberty is indeed a serious matter. In cases of non-patrimonial loss where damages are claimed the extent of damages cannot be assessed with mathematical precision. In such cases the exercise of a reasonable discretion by the court and broad general considerations play a decisive role in the process of quantification.6 This does not, of course, absolve a plaintiff of adducing evidence which will enable a court to make an appropriate and fair award. In cases involving deprivation of liberty the amount of satisfaction is calculated by the court ex aequo et bono. Inter alia the following factors are relevant: (i) circumstances under which the deprivation of liberty took place; (ii) the conduct of the defendants; and (iii) the nature and duration of the deprivation.7 Having regard to the limited information available and taking into account the factors referred to it appears to me to be just to award globular amounts that vary in relation to the time each of the appellants spent in detention. The third appellant spent the least amount of time in detention, namely, four days. In my view a fair amount to be awarded to him as compensation would be R3 000. The fifth and fifteenth appellants spent seven days in prison. In my view, a fair amount in respect of their detention would be an amount of R5 000. The fourth appellant spent 8 days in detention. In my view, a fair amount in relation to his detention, is an amount of R6 000. The sixth appellant spent 13 days in detention. In my view, a fair amount in relation to his detention would be an amount of R8 000. The first and eight appellants spent 16 days in detention. In my view, a fair amount for them is R10 000. The second, tenth and eleventh appellants spent 18 days in detention. In my view an amount of R12 000 is appropriate. The fourteenth appellant spent 20 days in detention. In my view an amount of R14 000 is adequate. The thirteenth appellant spent 23 days in detention. In this regard an amount of R16 000 appears proper. The twelfth appellant spent 26 days in detention. In my view an amount of R18 000 is satisfactory. The seventh appellants spent 30 day in detention. An award of R20 000 seems in order. The ninth appellant spent 35 days in detention. In my view an amount of R25 000 appears fair. 6 J M Potgieter, L Steynberg and T B Floyd Visser & Potgieter’s Law of Damages 3 ed (2012) at 568. 7 H J Erasmus and J J Gauntlett „Damages‟ in 7 Lawsa 2ed at para 101. [28] The following order is made: 1. The appeal is upheld and the respondent is ordered to pay the appellants‟ costs, including the costs of two counsel. 2. The order of the court below is substituted by the following order: „1. The detention of each of the Plaintiffs is declared to have been unlawful. 2. The Defendant is ordered to pay damages to the Plaintiffs as follows: 2.1 To the First Plaintiff an amount of R10 000 together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.2 To the Second Plaintiff an amount of R12 000 together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.3 To the Third Plaintiff an amount of R3 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.4 To the fourth Plaintiff an amount of R6 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.5 To the Fifth Plaintiff an amount of R5 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.6 To the Sixth Plaintiff an amount of R8 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.7 To the Seventh Plaintiff an amount of R20 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.8 To the Eighth Plaintiff an amount of R10 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.9 To the Ninth Plaintiff an amount of R25 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.10 To the tenth Plaintiff an amount of R12 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.11 To the Eleventh Plaintiff an amount of R12 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.12 To the Twelfth Plaintiff an amount of R18 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.13 To the Thirteenth Plaintiff an amount of R16 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.14 To the Fourteenth Plaintiff an amount of R14 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof; 2.15 To the Fifteenth Plaintiff an amount of R5 000, together with interest thereon, at the rate of 15,5 per cent per annum until the date of full and final payment thereof. 3. The Defendant is ordered to pay the Plaintiffs‟ costs of suit, including the costs of two counsel.‟ ________________________ M S NAVSA ACTING DEPUTY PRESIDENT APPEARANCES: FOR APPELLANT: A Beyleveld SC (with him A C Moorthouse and D S Bands) Instructed by: McWilliams & Elliott Inc., Port Elizabeth Webbers, Bloemfontein FOR RESPONDENTS: M T K Moerane SC (with him L T Sibeko SC and W Msizi) Instructed by The State Attorney, Port Elizabeth The State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE ___ May 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Rahim v The Minister of Home Affairs (965/2013) [2015] ZASCA (###) MEDIA STATEMENT Today, the Supreme Court of Appeal (SCA) upheld the appeal by Abdul Rahim and 14 others (the appellants) and overturned the decision of the Eastern Cape Division of the High Court, Port Elizabeth, in terms of which the claims of the appellants for damages flowing from an asserted unlawful detention were dismissed with costs. In the result, it declared that the detention of each of the appellants was unlawful, and awarded them damages as a consequence. The issue before the SCA was the interpretation of s 34(1) of the Immigration Act 13 of 2002 (IA), which provides that illegal foreigners must be detained ‘in a manner and at a place determined by the Director-General’. The question the SCA was called upon to decide was whether the detention of illegal foreigners was lawful where there had been no such determination of detention facilities by the Director-General. The Minister of Home Affairs (the respondent) claimed that the appellant were all illegal foreigners who had been arrested by immigration officers in the employ of the respondent, and were each detained for various periods at various facilities, including police stations and ordinary prison cells. The appellants had instituted action in the court a quo to have their arrests and detentions declared unlawful and for consequential damages, which claims, as were stated before, were dismissed on the basis that both the arrests and the detentions were lawful. Before the SCA, a number of arguments were advanced. However, the primary issue was whether the Director-General had ‘determined’ the places at which the appellants had been detained in compliance with s 34(1) of the IA. It was argued on behalf of the respondent that there was no particular form which the ‘determination’ had to take, and provided that the facilities in question were under state control, the lack of a formal determination did not render their use unlawful. In rejecting this argument, the SCA explained that the case was adjudicated against a sensitive backdrop. South Africa has kilometre upon kilometre of porous borders which the Department of Home Affairs has difficulty controlling, and there is public concern about the illegal influx of foreigners. This has caused a degree of animosity to be directed at them, and more recently has led to what have been described as xenophobic attacks on foreigners. It is vital in this context, the SCA held, to affirm that we are a constitutional state subscribing to the principle of legality, an incident of the rule of law, and that we are bound by the normative standard demanded by our Constitution. The SCA then referred to a number of international conventions which emphasise the vulnerability of asylum seekers and migrants, who are often unable to understand or communicate with immigration officials, or to obtain the help of interpreters or legal advisors, and are not aware of their rights and the appropriate procedures to enforce them. The SCA also noted that international best practice, precisely because of this vulnerability, is to ensure that illegal foreign nationals are kept apart from the general prison population. Consequently, having regard to the wording of s 34(1) of the IA in its context and with reference to the applicable international law framework, the SCA held that it was clear that the ‘determination’ contemplated is a formal identification of places which are run in accordance with international norms and which are appropriate for the detention of illegal foreigners pending deportation. No evidence was placed before the SCA of any such determination, and accordingly the detentions of the appellants were in contravention of s 34(1) of the IA and thus unlawful. In the light of this, the SCA upheld the appeal and granted damages to the appellants, calculated in relation to the duration of their unlawful detentions. --- ends ---

3292

non-electoral

2006

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA Reportable CASE NO: 393/04 In the matter between: HEIDI BOTHA Appellant and GABRIËL JOHANNES BOTHA Respondent Coram: Harms, Brand, Conradie, Lewis et Van Heerden JJA Heard: 17 February 2006 Delivered: 09 March 2006 Summary: Divorce – forfeiture of patrimonial benefits of the marriage – proceeds of two insurance policies taken out by the defendant (husband) on the life of his father – application of three factors referred to in s 9 of the Divorce Act 70 of 1979 Neutral citation: This judgment may be referred to as Botha v Botha [2006] SCA 7 (RSA) JUDGMENT VAN HEERDEN JA: [1] The only issue in this appeal is whether or not the trial court was correct in making a partial forfeiture order against the appellant in terms of s 9 of the Divorce Act 70 of 1979. [2] The parties were married to each other on 24 April 1993, the proprietary consequences of their marriage being regulated by an antenuptial contract in terms of which community of property and community of profit and loss were excluded and the marriage was made subject to the accrual system specified in Chapter 1 of the Matrimonial Property Act 88 of 1984. [3] In July 2003, the appellant (‘plaintiff’) instituted action against the respondent (‘defendant’) in the Port Elizabeth High Court, claiming a decree of divorce and ancillary relief. In his counterclaim, the defendant claimed partial forfeiture by the plaintiff of the patrimonial benefits of the marriage. On the evidence led at the trial, it was accepted on behalf of both parties that the plaintiff was entitled to payment of R497 300 from the defendant as being half of what was, at least, the difference between the accruals of their respective estates. This payment by the defendant to the plaintiff formed part of the order made by the trial court immediately after the conclusion of the trial. The sole remaining question (which was reserved for judgment at a later stage) was whether the plaintiff was entitled to any further amount in this regard, this issue revolving around the proceeds of two insurance policies that the defendant had taken out on the life of his father who died on 24 July 2001. The respective insurers had paid out an amount of R500 120 to the defendant in respect of each policy. [4] As regards this remaining question, Jennett J ultimately issued an order directing that the plaintiff forfeit one-half of the proceeds of the first policy (the Sanlam policy) and the full proceeds of the second policy (the Fedsure policy). In consequence of this order, he directed the defendant to pay to the plaintiff a further amount of R125 030 as the balance of her share of the accrual of their respective estates. The defendant was also ordered to pay the plaintiff’s taxed party and party costs. The appeal, which comes before us with leave of the High Court, is directed at these orders. [5] The counterclaim for forfeiture is governed by the provisions of s 9(1) of the Divorce Act 70 of 1979, which reads as follows: ‘When a decree of divorce is granted on the ground of the irretrievable break-down of a marriage the Court may make an order that the patrimonial benefits of the marriage be forfeited by one party in favour of the other, either wholly or in part, if the Court, having regard to the duration of the marriage, the circumstances which gave rise to the break-down thereof and any substantial misconduct on the part of either of the parties, is satisfied that, if the order for forfeiture is not made, the one party will in relation to the other be unduly benefited.’ [6] In Wijker v Wijker,1 this court considered the question whether proof of ‘substantial misconduct on the part of either of the parties’ was an essential requirement for a forfeiture order. It answered this question in the negative, holding2 that the context and the subject-matter of s 9(1) made it abundantly clear that the legislature never intended the three factors mentioned in the section to be considered cumulatively. As regards the approach to be followed by a court of appeal when hearing an appeal in respect of a forfeiture order, Van Coller AJA stated the following:3 ‘It is obvious from the wording of the section that the first step is to determine whether or not the party against whom the order is sought will in fact be benefited. That will be purely a factual issue. Once that has been established the trial Court must determine, having regard to the factors mentioned in the section, whether or not that party will in relation to the other be unduly benefited if a forfeiture order is not made. Although the second determination is a value judgment,4 it is made by the trial Court after having considered the facts falling within the compass of the three factors mentioned in the section.’ (Emphasis added.) 1 1993 (4) SA 720 (A). 2 At 729E-F. 3 At 727E-F. 4 On the nature of the discretion exercised by the court in this regard, see Wijker at 727F-728C. Cf Bezuidenhout v Bezuidenhout 2005 (2) SA 187 (SCA) paras 16-18 and Kirkland v Kirkland [2005] 3 All SA 353 (C) paras 45-51. [7] In relation to the trial court’s finding in the Wijker case that it would be unfair to permit the appellant husband to share in the respondent wife’s estate agency business while he had made hardly any contribution towards its management, administration and profit-making, Van Coller AJA held5 that -- ‘The finding that the appellant would be unduly benefited if a forfeiture order was not made, was therefore based on a principle of fairness. It seems to me that the learned trial Judge, in adopting this approach, lost sight of what a marriage in community of property really entails. . . . The fact that the appellant is entitled to share in the successful business established by the respondent is a consequence of their marriage in community of property. In making a value judgment this equitable principle applied by the Court a quo is not justified. Not only is it contrary to the basic concept of community of property, but there is no provision in the section for the application of such a principle. . . . . The benefit that will be received cannot be viewed in isolation, but in order to determine whether a party will be unduly benefited the Court must have regard to the factors mentioned in the section. In my judgment the approach adopted by the Court a quo in concluding that the appellant would be unduly benefited should a forfeiture order not be granted was clearly wrong.’ (Emphasis added.) [8] The three factors governing the value judgment to be made by the trial court in term of s 9(1) thus fall within a relatively narrow ambit: they 5 At 731C-H. are limited to (a) the duration of the marriage; (b) the circumstances which gave rise to the breakdown thereof; and (c) any substantial misconduct on the part of either of the parties. Conspicuously absent from s 9 is a catch-all phrase, permitting the court, in addition to the factors listed, to have regard to ‘any other factor’. (Compare in this regard the wording of s 7(2) of the Divorce Act dealing with maintenance orders upon divorce which, apart from the fact that the list of relevant factors is significantly longer, also entitles the court to have regard to ‘any other factor which in the opinion of the court should be taken into account’. So too, in terms of s 7(5), the list of factors which must be taken into account by a court in the determination of which assets should be transferred by one spouse to the other upon divorce, when the circumstances set out in ss 7(3) and (4) justify the making of such a ‘redistribution order’, also expressly includes ‘any other factor which should in the opinion of the court be taken into account.’) The trial court may therefore not have regard to any factors other than those listed in s 9(1) in determining whether or not the spouse against whom the forfeiture order is claimed will, in relation to the other spouse, be unduly benefited if such an order is not made. [9] The circumstances under which the two insurance policies were taken out by the defendant were canvassed in some detail during the trial and in the judgment of the High Court. The defendant’s father (‘Mr Botha’) owned two farms in the Tarkastad area. He had two sons, the defendant and his elder brother, Matthias Gysbert Botha (‘Gys Botha’), and two daughters. He intended to bequeath one of his farms to each of his sons, with the elder son having the choice of which farm he wanted. However, as the defendant had no intention of farming, it was envisaged that Gys Botha, who was also farming in the Tarkastad area, might buy the defendant out if and when the sons inherited their father’s farms. It was apparently suggested that Gys Botha might take out an insurance policy on his father’s life in order to provide him with the finances necessary to fund such a buy-out, but he was not willing to do so. Mr Botha then suggested that an insurance policy be taken out on his life with the proceeds thereof to be used to ‘compensate’ the defendant for the loss of the farm which Mr Botha now intended to bequeath to Gys Botha. After discussing various options in this regard, it was decided that the defendant would take out the policy on his father’s life and, in April 1997, the Sanlam policy (for R500 000) was taken out in the defendant’s name. The defendant paid all the premiums due under the policy. [10] Because of the increasing price of land, the defendant and Mr Botha subsequently decided, in late 2000, that a second insurance policy for the same amount should be taken out by the defendant on Mr Botha’s life. The Fedsure policy thus came into being, the defendant once again paying all the premiums due thereunder. [11] Mr Botha died in July 2001 as a result of injuries sustained during a motor accident. In terms of his will, Gys Botha inherited (inter alia) both Mr Botha’s farms, while the defendant inherited only a cash amount of R300 000, as did each of his sisters. The defendant initially contended that the proceeds of the policies accrued to him as either an inheritance or a donation from his late father and that, in terms of s 5(1) of Act 88 of 1984, these proceeds had to be excluded from the accrual of the defendant’s estate. This contention was, however, abandoned at the end of the trial. [12] Having dealt with the factual background, as summarised above, as well as the relevant statutory provisions and the judgment of this court in the Wijker case, Jennett J came to the following conclusion with regard to the factual portion of the s 9(1) enquiry: ‘There is no doubt, in my view, that, if an order for forfeiture is not made in respect of the proceeds of the insurance policies, either wholly or in part, plaintiff will indeed be benefited in that defendant will have to make some payment to her in respect thereof. Before a forfeiture order can be made, however, I have to be satisfied that plaintiff will not simply be benefited but that she will be unduly benefited in relation to defendant if a forfeiture order is not made, and this is to be determined “having regard to the duration of the marriage, the circumstances which gave rise to the breakdown thereof and any substantial misconduct on the part of either of the parties.’’ ’ [13] According to the trial judge, neither party had been guilty of any substantial misconduct. He also appeared to have regarded the duration of the parties’ marriage (ten years) as a more or less ‘neutral’ factor, stating that – ‘The parties were in their early twenties when they married. . . . If their marriage had endured, the prospects are that they would have remained married for a long time and in relation thereto a marriage of 10 years might be regarded as having been of fairly short duration. Nevertheless a marriage of 10 years duration cannot be regarded as being of very short duration.’ [14] With regard to the circumstances which gave rise to the breakdown of the marriage, Jennett J referred to the differences in the personalities of the parties, concluding that this factor, as a circumstance giving rise to the breakdown of their marriage, was ‘of no relevance to the issue that I have to decide.’ [15] A factor that was, however, held clearly to have been a circumstance giving rise to the breakdown of the marriage, was the plaintiff’s relationship with her mother-in-law. The plaintiff appeared to feel that her mother-in-law was overly possessive of her son and that she interfered unduly in their married life. According to the plaintiff, the defendant’s family members frequently visited and stayed at the parties’ home with little notice and did not leave the parties to lead their own lives. Indeed, in early 2000, matters had reached such a stage for the plaintiff that she instituted divorce proceedings against the defendant. Although the parties reconciled shortly thereafter, one of the conditions set by the plaintiff for her withdrawing the divorce summons was an embargo on her mother-in-law – according to the defendant, also on his father and siblings – visiting the parties’ home. This was the situation which prevailed at the time the Fedsure policy was taken out. [16] Jennett J concluded as follows: ‘Under the above circumstances it seems to me that plaintiff would indeed be unduly benefited if a forfeiture order is not made in respect of the proceeds of the second insurance policy taken on defendant’s father’s life [the Fedsure policy]. I have already mentioned the motivation behind the taking out of the policy, which was to benefit defendant, and clearly not plaintiff and defendant as a unit, and to order defendant to pay plaintiff half of the proceeds of the policy taken out at the time in circumstances when plaintiff was estranged from defendant’s family would in my view result in plaintiff being unduly benefited in relation to defendant. I will therefore order that plaintiff forfeit any patrimonial benefit resulting from the payment of the proceeds of the second insurance policy to defendant. For much the same reasons I am also of the view that, if plaintiff were to share in the full proceeds of the first insurance policy taken out on the life of defendant’s late father [the Sanlam policy], she will be unduly benefited in relation to the defendant. This insurance policy taken out during 1997 was, however, taken out at a stage when relations between plaintiff and defendant’s family had not deteriorated to the extent they subsequently did. I am mindful of the fact that in terms of their marriage contract plaintiff is entitled to share in the full accrual of defendant’s estate unless a forfeiture order is made against her, and in exercising what may be described as a value judgment I conclude that plaintiff should forfeit [such] patrimonial benefit of the marriage as would result from the payment of one half of the proceeds of the first insurance policy to defendant.’ [17] In my view, it is quite clear that, while referring to the approach laid down by this court in the Wijker case, the trial judge misdirected himself in that he did not, in the exercise of his value judgement, confine himself to the factors mentioned in s 9(1). On the contrary, it would appear that, at the very least, one of the main reasons for his making the forfeiture order against the plaintiff was what he accepted to be ‘the motivation behind the taking out’ of the policies. While the strained relationship between the plaintiff and the defendant’s family, in particular his mother, was taken into account by Jennett J as ‘a circumstance giving rise to the breakdown of the marriage’, it appears from his judgment that neither this strain, nor the duration of the marriage, nor a combination of both, would have led him to make the forfeiture order in question had he not had regard to what he accepted, on the evidence, to be the reasons motivating the taking out of the policies. The trial judge thus cannot be said to have exercised his value judgement ‘having regard to the factors mentioned’ in s 9, as required by the judgment of this court in the Wijker case. It follows that the appeal must succeed. Order [18] In the circumstances, the following order is made: 1. The appeal is upheld with costs, including the costs of the application for leave to appeal. 2. Paragraphs (a) and (b) of the order made by the Port Elizabeth High Court on 10 June 2004 are set aside and substituted with the following: (a) The defendant’s counterclaim is dismissed. (b) The defendant is ordered to pay to the plaintiff an amount of R500 120, in addition to the amount of R497 300 payable by the defendant to the plaintiff in terms of the order made on 14 May 2004 by the Port Elizabeth High Court, such amounts together representing the plaintiff’s share of the accrual of the parties’ respective estates. B J VAN HEERDEN JUDGE OF APPEAL CONCUR: Harms JA Brand JA Conradie JA Lewis JA

In the Supreme Court of Appeal of South Africa MEDIA SUMMARY – JUDGMENT DELIVERED IN SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 9 March 2006 Status: Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal H BOTHA v G J BOTHA The Supreme Court of Appeal today handed down judgment in the matter of Botha v Botha. The case revolved around the question of whether the appellant wife (Mrs Botha) should share in the proceeds of two insurance policies which the respondent husband (Mr Botha) had taken out on the life of his father who died in July 2001. Each of the insurers had paid out R500 120 to Mr Botha upon his father’s death. As the parties were married (in 1993) in terms of an antenuptial contract which excluded community of property and of profit and loss, but made the marriage subject to the accrual system provided for in Chapter 1 of the Matrimonial Property Act of 1984, Mrs Botha was entitled to share equally in the proceeds unless she was ordered by the court making the divorce order to forfeit the benefit of such proceeds. The Port Elizabeth High Court ordered Mrs Botha to forfeit one-half of the proceeds of the first policy and the full proceeds of the second policy, with the result that Mrs Botha would only share in the proceeds of the policies in the amount of R125 030. Mrs Botha appealed against this order. The Supreme Court of Appeal set out the provisions of s 9(1) of the Divorce Act of 1979, in terms of which the court granting the divorce may order that the property benefits of the marriage be forfeited by one party in favour of the other, either wholly or partially, if the court, having regard to the duration of the marriage, the circumstances which gave rise to the breakdown of the marriage and any substantial misconduct on the part of either of the parties, is satisfied that, if the forfeiture order is not made, the one party will be unduly benefited in relation to the other party. The SCA pointed out that the first step in applying s 9 is to determine whether or not the spouse against whom the forfeiture order is sought will in fact be benefited – this is purely a factual issue. Once that has been established, then the court must go on to determine, having regard to the factors mentioned in s 9, whether or not that spouse will be unduly benefited in relation to the other spouse if the forfeiture order is not made. This second step is a value judgement, but it must be made by the court after having considered the facts falling within the ambit of the three factors mentioned in the section. As had been held in an earlier judgment of the SCA, the court cannot take into account factors falling outside the three listed factors in exercising its value judgement. Mr Botha’s father had owned two farms in the Tarkastad area. He had two sons, Mr Botha being the younger, and two daughters. He had intended to bequeath one of his farms to each of his sons, but Mr Botha did not intend to farm and his elder brother did. The Port Elizabeth High Court accepted on the evidence that the two policies had been taken out by Mr Botha, at his father’s suggestion, with the purpose of compensating Mr Botha for the loss of the farm which his father had decided to bequeath to his elder brother. Mr Botha had paid all the premiums due under the policies. The father was involved in a fatal motor accident in 2001 and, in terms of his will, Mr Botha’s elder brother did inherit both farms, while Mr Botha only inherited a cash amount of R300 000, as did each of his sisters. According to the trial court, neither of the two parties had been guilty of any substantial misconduct. The SCA held that, while the strained relationship between Mrs Botha and her husband’s family, in particular her mother-in-law, was taken into account by the trial judge as ‘a circumstance giving rise to the breakdown of the marriage’, it appeared from his judgment that neither this strain, nor the duration of the marriage, nor a combination of both, would have led him to make the forfeiture order against Mrs Botha had he not had regard to the reasons which he accepted, on the evidence, to have motivated the taking out of the policies. By doing this, the trial judge had not exercised his value judgement properly as he had had regard to factors outside the ambit of the three factors mentioned in s 9 of the Divorce Act. Mrs Botha’s appeal thus succeeded and the SCA replaced the order of the Port Elizabeth High Court with an order to the effect that Mr Botha pay Mrs Botha one-half of the proceeds of each of the two policies.

3154

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case No: 250/06 In the matter between: VERIMARK (PTY) LTD Appellant and BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT Respondent and in the matter of a cross-appeal between: BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT Appellant and VERIMARK (PTY) LTD Respondent Coram : Harms ADP, Streicher, Cloete, Ponnan and Combrinck JJA Heard : 2 MAY 2007 Delivered : 17 MAY 2007 Summary: Trade mark infringement – use as a trade mark – unfair advantage of a well-known trade mark. Neutral Citation: This judgment may be referred to as Verimark (Pty) Ltd v BMW AG [2007] SCA 53 (RSA) HARMS ADP [1] This case is about trade mark infringement. The well-known BMW logo1 is registered in different classes and those in contention are registered (a) in class 3 for, amongst others, cleaning and polishing preparations and vehicle polishes (the polish mark, TM 1987/05127); and (b) in class 12 for vehicles, automobiles and the like (the car mark, TM 1956/00818/1). The owner of the mark, the present respondent (Bayerische Motoren Werke AG, in short BMW) applied in the high court under the provisions of s 34(1) of the Trade Marks Act 194 of 19932 for an interdict restraining the respondent (the present appellant, Verimark (Pty) Ltd) from infringing these two trade marks. The court (per de Vos J) found in 1 The representation of the logo below is of a better quality than the one on the registration certificate. 2 It reads as follows: ‘34(1) The rights acquired by registration of a trade mark shall be infringed by— (a) the unauthorized use in the course of trade in relation to goods or services in respect of which the trade mark is registered, of an identical mark or of a mark so nearly resembling it as to be likely to deceive or cause confusion; (b) the unauthorized use of a mark which is identical or similar to the trade mark registered, in the course of trade in relation to goods or services which are so similar to the goods or services in respect of which the trade mark is registered, that in such use there exists the likelihood of deception or confusion; (c) the unauthorized use in the course of trade in relation to any goods or services of a mark which is identical or similar to a trade mark registered, if such trade mark is well known in the Republic and the use of the said mark would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark, notwithstanding the absence of confusion or deception: Provided that the provisions of this paragraph shall not apply to a trade mark referred to in section 70 (2).’ favour of BMW in relation to its claim based on the polish mark (a) but dismissed the application in relation to its car mark (b).3 This gave rise to an appeal and cross-appeal with the leave of that court. [2] Verimark is the market leader in the field of direct response television marketing in which demonstrative television commercials are used. Two of its many products are its Diamond Guard car care kit and Diamond Guard car polish. These have been widely advertised and sold since 1996. Throughout this period Verimark used vehicles of different makes, but more particularly BMW cars, to demonstrate the wonders of these products. In one particular television flight a BMW car is first treated with Diamond Guard and then an inflammable liquid is poured onto the hood of the car and set alight without causing any damage to the car’s paintwork. In another instance an older and cheaper car is treated with Diamond Guard and it then metamorphoses into a shining BMW. The complaint of BMW is that its logo on the BMW car is clearly visible and because of this its case is that Verimark is infringing its trade mark registrations. The same complaint is directed at the use of a clip from the first flight as background on its packaging material and in its internet 3 Two other marks were also in contention but they did not figure during argument on appeal and, in any event, the outcome of this appeal makes it unnecessary to consider them separately. BMW’s reliance on passing-off was abandoned during the appeal hearing. advertisement. A representation of the packaging material is annexed to this judgment. [3] BMW relies on the provisions of s 34(1)(a) for its allegation that its class 3 trade mark for polishes has been infringed. This paragraph provides (to the extent relevant) that the rights acquired by registration of a trade mark are infringed by the unauthorized use of an identical mark in the course of trade in relation to goods in respect of which the trade mark is registered. The argument is simply that the BMW logo appears on the packaging material and in the advertisements; the logo is identical to the registered trade mark; the use by Verimark is not authorised; and it is use in the course of trade in relation to polishes. Therefore there is infringement. [4] Verimark, on the other hand, argues that ‘use’ in this context must be ‘trade mark use’ meaning ‘use of a registered trade mark for its proper purpose (that is, identifying and guaranteeing the trade origin of the goods to which it is applied) rather than for some other purpose’4 4 R v Johnstone [2003] UKHL 28, [2003] 3 All ER 884, [2004] ETMR 2, [2003] 1 WLR 1736, [2003] FSR 42, [2003] 2 Cr App R 33 at para 76. and that its use of the BMW logo does not amount to trade mark use because it is not used as and cannot be perceived to be a badge of origin. It argues that the product is clearly identified as Diamond Guard and nothing else and that the BMW logo identifies the car on which the product is being used and not the polish. In this regard Verimark relies on recent developments in the European Court of Justice (the ECJ) and the English courts5 and on a dictum of this Court in Bergkelder.6 Against this are two high court judgments7 that were based on a literal interpretation of the provision and on the reasoning in British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 (Ch), which has since been overruled in this regard. [5] It is trite that a trade mark serves as a badge of origin and that trade mark law does not give copyright-like protection. Section 34(1)(a), which deals with primary infringement and gives in a sense absolute protection, can, therefore, not be interpreted to give greater protection than that which is necessary for attaining the purpose of a trade mark registration, namely protecting the mark as a badge of origin. In Anheuser-Busch8 the ECJ was asked to determine the conditions under which the proprietor of 5 Especially R v Johnstone. As for Scotland: Procurator Fiscal v. Gallacher [2006] ScotSC 40. 6 Bergkelder Beperk v Vredendal Koöp Wynmakery 2006 (4) SA 275 (SCA), [2006] 4 All SA 215 (SCA) footnote 15. 7 Abbott Laboratories v UAP Crop Care (Pty) Ltd 1999 (3) SA 624 (C) 632B-C and Abdulhay M Mayet Group(Pty) Ltd v Renasa Insurance Co Ltd 1999 (4) SA 1039 (T) 1045I-J 8 Anheuser-Busch Inc. v Budĕjovický Budvar, národní podnik Case C-245/02 of 16 November 2004. a trade mark has an exclusive right to prevent a third party from using his trade mark without his consent under a primary infringement provision. The ECJ affirmed (at para 59) that ‘the exclusive right conferred by a trade mark was intended to enable the trade mark proprietor to protect his specific interests as proprietor, that is, to ensure that the trade mark can fulfill its functions and that, therefore, the exercise of that right must be reserved to cases in which a third party’s use of the sign affects or is liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods.’ That is the case, the ECJ said (at para 60), where the use of the mark is such that it creates the impression that there is a ‘material link in trade between the third party’s goods and the undertaking from which those goods originate’. There can only be primary trade mark infringement if it is established that consumers are likely to interpret the mark, as it is used by the third party, as designating or tending to designate the undertaking from which the third party’s goods originate. [6] As far as English courts are concerned, I do not intend to trawl through the development of the law9 but shall limit myself by referring to 9 See Arsenal Football Club Plc v Reed [2003] EWCA Civ 696 (21 May 2003). There are many cases under this name. some of the observations of the House of Lords in Johnstone.10 Lord Nicholls of Birkenhead stated (at para 13): ‘But the essence of a trade mark has always been that it is a badge of origin. It indicates trade source: a connection in the course of trade between the goods and the proprietor of the mark. That is its function. Hence the exclusive rights granted to the proprietor of a registered trade mark are limited to use of a mark likely to be taken as an indication of trade origin. Use of this character is an essential prerequisite to infringement. Use of a mark in a manner not indicative of trade origin of goods or services does not encroach upon the proprietor's monopoly rights.’ Taking his cue from the ECJ jurisprudence, Lord Walker said (at para 84): ‘The [ECJ]11 has excluded use of a trade mark for "purely descriptive purposes" (and the word "purely" is important) because such use does not affect the interests which the trade mark proprietor is entitled to protect. But there will be infringement if the sign is used, without authority, "to create the impression that there is a material link in the course of trade between the goods concerned and the trade mark proprietor" . . .’ [7] This approach appears to me to be eminently sensible. It gives effect to the purpose of the Act and attains an appropriate balance 10 R v Johnstone [2003] UKHL 28. Although delivered at approximately the same time the House was apparently unaware of the proceedings in the Court of Appeal mentioned in the preceding footnote, and vice versa. 11 In Arsenal Football Club plc v Reed [2003] RPC 144; [2002] EUECJ C-206/01 (12 November 2002). between the rights of the trade mark owner and those of competitors and the public. What is, accordingly, required is an interpretation of the mark through the eyes of the consumer as used by the alleged infringer. If the use creates an impression of a material link between the product and the owner of the mark there is infringement; otherwise there is not. The use of a mark for purely descriptive purposes will not create that impression but it is also clear that this is not necessarily the definitive test. [8] Turning then to the facts of this case, I am satisfied that any customer would regard the presence of the logo on the picture of the BMW car as identifying the car and being part and parcel of the car. It is use of the car to illustrate Diamond Guard’s properties rather than use of the trade mark.12 No-one, in my judgment, would perceive that there exists a material link between BMW and Diamond Guard or that the logo on the car performs any guarantee of origin function in relation to Diamond Guard. [9] Counsel for BMW sought to escape this conclusion by relying on dicta in Adidas13 where AS Botha J dealt with the distinction between trade mark infringement and passing-off and where he mentioned that in 12 Cf Jeremy Phillips Trade Mark Law (2003) para 8.52-8.55. 13 Adidas Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty) Ltd 1976 (1) SA 530 (T) 535E- 536A the former instance one simply has to compare the two marks as registered without reference to the get-up whereas in the latter case one has to have regard to the whole get-up when determining whether or not there is a probability of confusion or deception. This dictum is, in context, correct although it has from time to time been used to blur the distinction between added matter extrinsic to a defendant’s mark and added matter that is intrinsic thereto.14 In any event, the dictum dealt with the issue of determining identity or the likelihood of confusion or deception and not with the determination of the public’s perception of what the defendant’s mark is.15 Here the issue is whether the public would perceive the BMW logo to perform the function of a source identifier and for that purpose one cannot simply isolate the logo on the bonnet of the car and ignore the context of use. [10] The effect of this is that BMW’s claim based on s 34(1)(a) was misconceived and that the high court erred in granting an interdict in relation to the polish mark. Verimark’s appeal must therefore be upheld. 14 For an explanation of the difference see: Standard Bank of SA Ltd v United Bank Ltd 1991 (4) SA 780 (T); Bata Ltd v Face Fashions CC 2001 (1) SA 844 (SCA) para 6; Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ159, [2004] RPC 40; Compass Publishing BV v Compass Logistics [2004] EWHC 520, [2004] RPC 41 (Ch). 15 Cf Miele et Cie & Co v Euro Electrical (Pty) Ltd 1988 (2) SA 583 (A) 596F-I; Apple Corps Ltd v Apple Computer Inc [2006] EWHC 996 (Ch). [11] This brings me to BMW’s case based on s 34(1)(c) – the anti- dilution provision – which provides (to the extent relevant) that the unauthorized use in the course of trade in relation to any goods of a mark identical to a registered trade mark, if the latter is well known in the Republic and the use of the mark would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark amounts to trade mark infringement, notwithstanding the absence of confusion or deception. [12] It is common cause that the BMW logo is well known16 and that the issue is whether Verimark’s use as described is likely to take ‘unfair advantage’ of the distinctive character or the repute of the BMW mark, in other words, whether there is the likelihood of dilution through an unfair blurring of BMW’s logo, it being accepted that Verimark’s use is not detrimental to nor does it tarnish BMW’s logo. [13] Contrary to rather wide dicta in Johnstone (at para 17)17 stating the opposite, the position in our law is that this provision does not require trade mark use in the sense discussed as a pre-condition for liability. In 16 Whether the logo is well known in relation to polishes has not been established but this fact has no bearing on the outcome of the case. 17 These appear to require trade mark use for the anti-dilution provision also. The dicta are explicable because the case dealt with counterfeiting and counterfeiting is concerned with primary infringement and does not concern dilution. other words, the provision ‘aims at more than safeguarding a product’s “badge of origin” or its “source-denoting function”.’18 It also protects the reputation, advertising value or selling power of a well known mark.19 But that does not mean that the fact that the mark has been used in a non trade mark sense is irrelevant; to the contrary, it may be very relevant to determine whether unfair advantage has been taken of or whether the use was detrimental to the mark. [14] The following points made by Lord Menzies with reference to a number of authorities are in this context apposite:20 the provision is not intended to enable the proprietor of a well-known registered mark to object as a matter of course to the use of a sign which may remind people of his mark; there is a general reluctance to apply this provision too widely; not only must the advantage be unfair, but it must be of a sufficiently significant degree to warrant restraining of what is, ex hypothesi, non-confusing use; and that the unfair advantage or the detriment must be properly substantiated or established to the satisfaction 18 Laugh It Off Promotions CC v SAB International (Finance) BV t/a Sabmark International 2006 (1) SA 144 (CC) para 40. 19 Laugh It Off Promotions CC v SAB International (Finance) BV t/a Sabmark International 2005 (2) SA 46 (SCA) para 13. 20 Pebble Beach Company v Lombard Brands [2002] ScotCS 265. of the court: the court must be satisfied by evidence of actual detriment, or of unfair advantage.21 [15] The high court found that although Verimark may be taking advantage of the reputation of the BMW logo, this is not done in a manner that is unfair. It mentioned that Verimark’s emphasis is on the effectiveness of its own product sold under established trade marks and found that one cannot expect Verimark to advertise car polish without using any make of car and it would be contrived to expect of Verimark to avoid showing vehicles in such a way that their logos are hidden or are removed. I agree. As before, the question has to be answered with reference to the consumer’s perception about Verimark’s use of the logo. Once again, in my judgment a consumer will consider the presence of the logo as incidental and part of the car and will accept that the choice of car was fortuitous. In short, I fail to see how the use of the logo can affect the advertising value of the logo detrimentally. A mental association does not necessarily lead either to blurring or tarnishing.22 21 Depending on the primary facts these may be self-evident. On the requirement of proof of actual detriment see Laugh It Off Promotions CC v SAB International (Finance) BV t/a Sabmark International 2006 (1) SA 144 (CC) para 49. 22 Cf Moseley v V Secret Catalogue 537 US 418 (2003), 4 Mar 2003 per Stevens J: ‘We do agree, however, with that court’s conclusion that, at least where the marks at issue are not identical, the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution. As the facts of that case demonstrate, such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory requirement for dilution under the FTDA. For even though Utah drivers may be reminded of the circus when they see a license plate referring to the “greatest snow on earth,” it by no means follows that they will associate “the greatest show on earth” with skiing or snow sports, or associate it less strongly or [16] This means that the high court was correct in its dismissal of the claim for an interdict in relation to the car mark and that the cross-appeal stands to be dismissed. The resultant order is the following: (a) The appeal is upheld and the cross-appeal dismissed with costs, such costs to include the costs of two counsel. (b) The order of the court below is amended to read: ‘The application is dismissed with costs.’ ___________________________ L T C HARMS ACTING DEPUTY PRESIDENT AGREE: STREICHER JA CLOETE JA PONNAN JA COMBRINCK JA exclusively with the circus. “Blurring” is not a necessary consequence of mental association. (Nor, for that matter, is “tarnishing.”)’

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 17 MAY 2007 Status: Immediate 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 VERIMARK (PTY) LTD v BAYERISCHE MOTOREN WERKE AKTIENGESELLSCHAFT The SCA today upheld an appeal against a judgment in the High Court in terms of which the High Court held that Verimark infringed BMW’s trade mark, the well- known BMW logo, registered in respect of vehicle polishes, by using a picture of a BMW car on which the logo is visible, on packaging and advertisements in respect of the Diamond Guard vehicle polish being marketed by it. The SCA stated that a trade mark serves as a badge of origin; that the car was being used to illustrate Diamond Guard’s properties and that no-one would perceive that there existed a material link between BMW and Diamond Guard or that the logo on the car performed any guarantee of origin function in relation to Diamond Guard. It therefore concluded that the logo was not being used as a trade mark and that no infringement of the trade mark was committed in terms of s s 34(1)(a) of the Trade Marks Act 194 of 1993. The section provides that the unauthorised use of a mark identical to a registered trade mark, in the course of trade, in relation to goods or services in respect of which the trade mark is registered, constitutes an infringement of the registered trade mark. The SCA at the same time dismissed an appeal against the dismissal by the High Court of BMW’s claim that Verimark’s use of the BMW logo, being a well-known registered trade mark in respect of vehicles, would be likely to take unfair advantage of the distinctive character or repute of the registered trade mark, thereby infringing the registered trade mark in terms of s 34(1)(c) of the Trade Marks Act. The SCA agreed with the High Court that although Verimark may be taking advantage of the reputation of the BMW logo, it is not done in a manner that is unfair; Verimark’s emphasis is on the effectiveness of its own product sold under established trade marks and cannot be expected to advertise car polish without using any make of car; it would be contrived to expect of Verimark to show vehicles in such a way that their logos are not visible. It concluded that it failed to see how the use of the logo could affect the advertising value of the logo detrimentally. --ends--

117

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1108/2016 In the matter between YARONA HEALTHCARE NETWORK (PTY) LTD APPELLANT and MEDSHIELD MEDICAL SCHEME RESPONDENT Neutral Citation: Yarona Heathcare Network v Medshield (1108/2016) [2017] ZASCA 116 (22 September 2017) Coram: Navsa ADP, Petse & Mathopo JJA & Mbatha & Rogers AJJA Heard: 29 August 2017 Delivered: 22 September 2017 Summary: Condictio indebiti: respondent’s mistakes in making payments inexcusably slack: excusability not a requirement where claimant a medical scheme: respondent proved its impoverishment: if respondent enriched by services provided by appellant, latter should have counterclaimed with condictio indebiti. Prescription: actual or constructive knowledge necessary for prescription to start running that of board of trustees: appellant failed to prove that board had actual or constructive knowledge by relevant date. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: The Gauteng Division of the High Court, Pretoria (Molefe J sitting as court of first instance). The appeal is dismissed with costs including the costs of two counsel. JUDGMENT ___________________________________________________________________ Rogers AJA (Navsa ADP, Mathopo and Petse JJA & Mbatha AJA concurring) Introduction [1] The appellant (Yarona) and the respondent (Medshield) were the defendant and plaintiff respectively in the court a quo. Medshield, a medical scheme registered in terms of the Medical Schemes Act 131 of 1998 (the Act), sued Yarona for R6 110 237, being the sum of various payments made to Yarona over the period 6 August 2007 to 17 July 2009. Medshield alleged that the payments were made in the bona fide and reasonable but mistaken belief that they were owing, whereas in truth they were not, and that Yarona was unjustifiably enriched by the payments and Medshield correspondingly impoverished. The summons was served on 9 June 2011. [2] Yarona defended the action, pleading that the payments were made for services rendered in terms of an agreement concluded during June 2007. Yarona counterclaimed for additional amounts allegedly owing under the agreement. There was also a special plea of prescription in respect of the payments made prior to 7 June 2008 – Yarona alleged that Medshield had the requisite knowledge, or could, by exercising reasonable care, have acquired the requisite knowledge, by the date of each payment, alternatively by 7 June 2008 at the latest. In its replication Medshield denied the existence of the alleged agreement. [3] A separation order was made for the determination, in advance of other issues, of the question whether the service agreement had been concluded. The separated issue was enrolled for trial on 2 March 2015. On 26 February 2015 Yarona’s attorneys wrote to Medshield’s attorneys stating that during their client’s trial preparation it had become evident that Yarona would not be able to prove that the persons who purported to represent Medshield in concluding the agreement had the authority to do so and that Yarona thus conceded the separated issue. An order to this effect, including a dismissal of Yarona’s counterclaim, was made. [4] The trial of the remaining issues was conducted before Molefe J in April 2016. Prior to the commencement of evidence Yarona’s counsel clarified that Yarona’s concession that no valid service agreement was concluded did not entail an admission that Yarona had not performed work for Medshield’s benefit or that such work could be left out of account in assessing Medshield’s claim of unjustified enrichment. Apart from this reservation, the main issues were whether recovery was barred because of inexcusable slackness on Medshield’s part and the date by which Medshield could, through the exercise of reasonable care, have acquired knowledge of the facts giving rise to Yarona’s alleged indebtedness. [5] Medshield called five witnesses. Yarona closed its case without adducing evidence. On 5 July 2016 Molefe J granted judgment in Medshield’s favour. She gave leave to appeal to this court. Factual background [6] In what follows I shall, after their first mention, refer to individuals by their surnames. Medshield had four benefit options, the Access, Bonus, Value and Plus options. In 2006 Medshield concluded an agreement with Calabash Health Solutions (Pty) Ltd (Calabash) in terms of which Calabash was to provide managed care services in relation to the Access option for which it was entitled to a capitation fee (ie a specified amount per member subscribing to the Access option). Yarona in turn had an agreement with Calabash for the supply of network management services, namely the establishment and maintenance of networks of health practitioners who agreed to render services at negotiated rates. According to Ms Melani Coetsee, one of Medshield’s witnesses, there was a corporate connection between Calabash and Yarona - they both formed part of what she called the Bathabile group of companies. [7] With effect from 1 April 2007 Old Mutual Healthcare (Pty) Ltd (OMHC) replaced Medscheme as Medshield’s administrator. OMHC had an office in Randburg dedicated to Medshield’s administration. Medshield’s only employees at that time were its principal officer and his secretary. Until mid-2007 the principal officer was Mr Welcome Mboniso. When he resigned on account of ill-health he was replaced by Mr Clinton Alley. There was a short period of overlap between them. Alley’s secretary was Ms Joselyn Baatjies. [8] Yarona, which had an indirect involvement in Medshield’s Access option via its contract with Calabash, wanted to extend its involvement to Medshield’s other benefit options. There were discussions along these lines with representatives of OMHC, including a workshop in late May 2007. Yarona’s managing director was Mr Bradley Soll. Alley, who was at this time a trustee and the principal officer in-waiting, was aware of the discussions. At Soll’s request, Alley facilitated the obtaining of a letter dated 31 May 2007, purportedly signed by Mboniso, in which Medshield requested OMHC to provide Yarona with such information as Yarona needed to undertake ‘an exercise on their risk sharing models and reimbursement strategies’. Mboniso testified that he had not signed or known about this letter but said that his secretary and Baatjies had access to his electronic signature for urgent documents. [9] For its contention that there was a binding agreement, Yarona relied on this letter and on a draft service agreement with an effective date of 1 June 2007. Yarona’s case (until it conceded the issue) was that Medshield had accepted the terms in the draft. The draft, which purported to have been signed by Soll on Yarona’s behalf on 1 June 2007, made provision for Medshield to pay Yarona a monthly fee of R250 000 plus VAT. In fact, the draft agreement was not submitted to Medshield’s board of trustees for approval and Medshield did not conclude a contract with Yarona. [10] Notwithstanding this state of affairs, Medshield began to make monthly payments to Yarona. The first was on 6 August 2007 in the amount of R279 300 (R245 000 plus VAT). Although Medshield could not locate any documents relating to the first four payments, Yarona’s documentation shows that it began invoicing Medshield in June 2007. Since the first payment for which Medshield had records was for an invoice in respect of services supposedly rendered in November 2007, the first four payments probably related to invoices covering July to October 2007. Yarona continued to issue monthly invoices well into 2009. Each invoice was for R279 300. Over the period 6 August 2007 to 17 July 2009 Medshield made 20 payments in this amount or multiples thereof. According to Medshield’s records, these covered monthly invoices up to January 2009. There was no payment for April 2008 but the invoice for June 2008 was paid twice and the invoice for August 2008 thrice. In each invoice the services rendered were described as ‘healthcare provider research and geo-mapping’. [11] Medshield also paid Yarona an amount of R15 092 on 27 March 2008. According to Yarona’s invoice, this was for flights and accommodation for Soll and Alley in respect of a ‘Medshield roadshow’ in March 2008. Furthermore, on 26 June 2009 Medshield paid Yarona an amount of R229 845 which, if it was owing at all, was due to Calabash, not Yarona. These further payments, together with the payments in respect of the monthly invoices, make up Medshield’s claim of R6 110 237. [12] In April 2008, and despite the absence of valid contracts, Ms Angela Blackburn, at that time employed by OMHC at the Randburg office as the Medshield claims manager, loaded Yarona ‘baskets’ onto OMHC’s system in respect of the Value, Bonus and Plus options. These ‘baskets’ contained details of Yarona’s health practitioner networks. Claims for services provided to Medshield members by health practitioners belonging to these networks were paid at the rates negotiated by Yarona. Blackburn testified that she loaded the baskets on Alley’s instructions. She said that April 2008 was when ‘we went live with the Yarona network’. This accords with internal Yarona documents stating that the implementation date of the ‘reimbursement model’ for Medshield’s Bonus, Plus and Value options was 1 April 2008. The Yarona baskets were operative for the rest of the year. Blackburn accepted in cross-examination that over the period April to December 2008 OMHC processed thousands of Medshield claims for these options, some of which were from practitioners on the Yarona network who would have been remunerated in accordance with Yarona’s discounted rates. [13] During May 2008 Calabash defaulted on its obligations in respect of the Access option. After May 2008 Medshield paid Access claims directly. The Calabash agreement formally terminated in October 2008, though for several months there was a winding-down period during which Calabash performed certain administrative functions for which it was paid an administration fee of around R230 000 per month. [14] During August 2008 Medshield’s board decided to terminate its administration agreement with OMHC. Preparation for self-administration took some months. In anticipation of self-administration, Blackburn resigned from OMHC and began employment with Medshield as from 1 October 2008 as General Manager: Operations. Ms Melani Coetsee, who served as a trustee from July 2007 to November 2008, was engaged as Medshield’s Chief Operating Officer as from January 2009. By 1 March 2009, when self-administration began, Medshield had over a hundred employees. One of these was Ms Nawaal Davids, a former OMHC accountant who was appointed as Medshield’s bookkeeper. [15] In early January 2009 Blackburn asked Coetsee whether she should load the Yarona baskets for 2009. Coetsee testified that she did not know what Blackburn was talking about. She was aware of Yarona’s involvement with the Access option via the Calabash agreement but knew that the Calabash agreement had terminated in October 2008. Coetsee instructed Blackburn not to load the Yarona baskets. [16] I have mentioned that Medshield’s last payment to Yarona was on 17 July 2009 (a delayed but duplicate payment for services supposedly rendered in June 2008) and that the last month of purported services for which payment was made was January 2009 (this payment was made on 20 February 2009). [17] During September 2009 Medshield’s financial department detected suspicious payments made from Medshield’s bank account, apparently for Alley’s personal benefit. Following preliminary investigation Alley was suspended. Soll, in the meanwhile, was claiming that Yarona had a valid contract with Medshield and was demanding ongoing payment. When Mr Clive Stuart, Medshield’s acting principal officer, asked Coetsee whether she knew anything about payments due to Yarona, she told him that Medshield’s contract with Calabash had ended in 2008 and that there was no contract with Yarona. Subsequent investigation revealed the payments which became the subject of Medshield’s claim. Coetsee testified that Alley had instructed OMHC to allocate the payments to ‘marketing fees’, a single globular amount in the accounts which included payments to other service providers as well, with the result that the monthly payments to Yarona were not detected. Coetsee testified that it was only in January 2010 that Medshield discovered the full extent of the unlawful payments to Yarona. Following a disciplinary hearing in January 2010 Alley was dismissed. Neither Alley nor Soll testified. The payment procedure in general [18] Coetsee, who was a trustee from July 2007 to November 2008 and thereafter Medshield’s Chief Operating Officer, testified that only the board could authorise the conclusion of contracts. There was no delegated authority. Once a contract was duly concluded, the principal officer was responsible for authorising payment in terms of the contract. She said that there was a procurement policy in place but could not recall its content. No such document was produced by Medshield in discovery. [19] From the evidence of Coetsee and Davids it emerges that the procedure for payment during the Alley era was as follows: Alley received the invoice and approved or declined it. If he approved it, he signed it. He gave the approved invoice to Baatjies who wrote it in her payment instruction book. Alley signed the instruction. Every few days an OMHC driver collected documents from Medshield, including invoices and accompanying payment instructions. On receipt of these documents, Davids checked that the instruction accorded with the invoice (both of which were meant to bear Alley’s signature) and asked a clerk to prepare an electronic funds transfer (EFT) requisition. If the EFT requisition accorded with the invoice, Davids authorised it. The payment instruction was then loaded onto the electronic banking system. Davids thereafter sought a payment release authority from two of the signatories authorised to operate on Medshield’s bank account. Usually the signatories would be Alley and an OMHC manager. Coetsee testified that a senior OMHC manager could sign in place of the principal officer. Normally, the authorised EFT signatories were presented with batches of EFT requisitions for signature. Davids testified that she never queried an instruction to pay, whether to Yarona or anyone else. Her role was limited to checking that the payment instruction and EFT requisition accorded with the invoice. [20] It seems that when Medshield began self-administration in March 2009 the payment procedure carried on as before, save that the roles previously played by the OMHC employees were now performed by corresponding Medshield employees. The payment documentation in this case [21] As I have said, Medshield was not able to locate any documentation relating to the first four payments (relating to the July-October 2007 invoices). One thus does not know to what extent the procedure described by Coetsee and Davids was faithfully observed. In respect of the November and December 2007 invoices, Medshield located the EFT requisition but not the invoices and payment instructions. The EFT requisition for the payment of these two invoices bears Alley’s signature, though not in the place provided for the signature of the EFT signatories. The requisition was not signed by a second signatory. In respect of all but one of the subsequent payments there are payment instructions bearing Alley’s signature. Where Medshield was able to locate the invoices, they generally bore Alley’s signature though again there are exceptions. The EFT requisitions routinely contained the signature of only one authorised EFT signatory, presumably that of an authorised OMHC manager. Alley did not sign them. No EFT requisitions were discovered in respect of the payments of 27 March 2008 (R15 091,67 for the ‘roadshow’), 12 February 2009 (R279 300 for Yarona’s July 2008 invoice) and 20 February 2009 (R558 600 for Yarona’s December 2008 and January 2009 invoices) and the related invoices did not bear Alley’s signature (which may be because the copies in the record are Yarona’s file copies). [22] In respect of the four payments made to Yarona after self-administration began in March 2009, two of the EFT requisitions were signed by two authorised signatories, being Alley and Coetsee. In the case of the other two payments the EFT requisitions in the record only contain Alley’s signature. Error and excusability [23] Medshield’s pleaded case was the condictio indebiti. The payments were said to have been made in the reasonable but mistaken belief that they were owing. It is not every mistake which entitles the mistaken party to recover payment. Our courts have approved statements in the old authorities to the effect that the mistake should have been ‘neither heedless nor far-fetched’; that it should not have been based on ‘gross ignorance’; that it should have been ‘neither slack nor studied’.1 In Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue & another2 Hefer JA said the following: ‘It is not possible nor would it be prudent to define the circumstances in which an error of law can be said to be excusable or, conversely, to supply a compendium of instances where it is not. All that need be said is that, if the payer’s conduct is so slack that he does not in the Court’s view deserve the protection of the law, he should, as a matter of policy, not receive it. There can obviously be no rules of thumb; conduct regarded as inexcusably slack in one case need not necessarily be so regarded in others, and vice versa. Much will depend on the relationship between the parties; on the conduct of the defendant who may or may not have been aware that there was no debitum and whose conduct may or may not have contributed to the plaintiff’s decision to pay; and on the plaintiff’s state of mind and the culpability of his ignorance in making the payment.’ Although this passage is formulated with reference to errors of law, it is equally applicable to errors of fact. As Hefer JA observed at an earlier point in his judgment,3 there is no logic in the distinction between mistake of fact and mistakes of law in the context of the condictio indebiti. 1 Union Government v National Bank of South Africa Ltd 1921 AD 121 at 126; Rahim v Minister of Justice 1964 (4) SA 630 (A) at 634A-C; Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue & another 1992 (4) SA 202 (A) at 223I-224B. 2 See previous fn, at 224E-G. 3 At 220H. [24] The onus rests on the claimant to prove the excusability of the error.4 In Affirmative Portfolios CC v Transnet Ltd t/a Metrorail5 a contractor implemented an increase in the rates payable for its services. The court found that the contractor had not been entitled to charge the increased rates. The employer, Transnet, sought to recover the amounts overpaid over a six-month period. The trial court found that Transnet’s mistake was excusable but this court disagreed. Boruchowitz AJA said that although the nature of Transnet’s mistake was clear the reason for the mistake was not. Transnet failed to explain why the mistake occurred and why it occurred repeatedly over a six-month period. The written agreement was readily accessible to its officials. Their failure to detect the unauthorized increase and to check the rates stipulated in the invoices against the agreement could only be attributed to extreme slackness or negligence on their part.6 [25] In the present case Medshield submitted that the trial judge was right to find that the payments were made as a result of excusable error. In the alternative it argued that this court should hold that in the circumstances of this case excusability was not a requirement. We were asked to build on the exception recognised in relation to executors in Wessels The Law of Contract7 and extended by analogy to liquidators and trustees in Bowman, De Wet and Du Plessis NNO & others v Fidelity Bank Ltd.8 Payments pre-dating self-administration [26] I start with the payments which occurred before Medshield’s self- administration began in March 2009. Because a medical scheme is a corporate body,9 it is necessary – in order to assess excusability – to identify the individuals who represented Medshield in making the payments. Medshield did not plead their identity. The evidence was that there were several authorised signatories on the bank account and that an EFT had to be authorised by two of them. The two 4 Willis Faber fn 2 above at 224I-225A; Affirmative Portfolios CC v Transnet Ltd t/a Metrorail 2009 (1) SA 196 (SCA) para 29. 5 See previous fn. 6 Paras 34-35. 7 2 Ed para 999. 8 Bowman, De Wet and Du Plessis NNO & others v Fidelity Bank Ltd 1997 (2) SA 35 (A) at 44H-45G. 9 Section 26 of the Act. signatories would thus be the persons who represented Medshield in respect of any particular payment. [27] Both sides focused their submissions on the responsibilities of the board of trustees and finance committee. In my view those submissions were misdirected. The board and finance committee were not involved in making the payments. The question is not whether these bodies were slack in failing to detect that unlawful payments had been made (though this may be relevant to prescription). Excusability is concerned with the mistakes made by those persons who actually effected payment, in this case the authorised signatories. It may be that if the board had established better systems of control, OMHC’s authorised signatories would have been more careful. There is insufficient evidence to make a finding to this effect but I do not think it matters. The fact remains that the board was ignorant of, and thus not privy to, the making of the payments. The board was not the functionary which mistakenly made the payments and it thus makes no sense to enquire whether the board’s ‘mistake’ was excusable. [28] As I have said, the EFT requisitions generally bore the signature of only one person, being an OMHC manager. They should also have been signed by Alley or by a second senior OMHC manager. Since Alley’s signature usually appeared on one or both of the payment instruction and invoice, it may be that OMHC, not unreasonably, regarded this as a sufficient signed authority from him to proceed with the payment without obtaining his separate signature on the EFT requisitions. On that basis, excusability would on the face of it need to focus on the conduct of Alley and the relevant OMHC signatory. [29] Medshield’s case was conducted on the basis that Alley knew that the payments were not owing to Yarona. It is difficult to avoid that conclusion. Medshield’s counsel argued (albeit in relation to prescription) that Alley’s knowledge should not be attributed to Medshield, invoking the rule that where an agent in the course of his employment defrauds his principal the latter is not charged with constructive knowledge of the transaction.10 If Alley had acted alone in causing 10 As to this principle, see R v Kritzinger 1971 (2) SA 57 (A) at 59H-60D; NBS Bank Ltd v Cape Produce Company (Pty Ltd & others [2002] 2 All SA 262 (A) para 34. Medshield to make the payments, Medshield could not have brought its enrichment claim as a condictio indebiti because Alley did not mistakenly believe that the money was owing.11 However Alley did not act alone. In such circumstances I consider (and the contrary was not argued) that the condictio indebiti is available if the second person, without whose participation the payment could not have been made, mistakenly believed the money was owing, provided of course the mistake was excusable. [30] The difficulty confronting Medshield is that there is no evidence as to who signed the EFT requisitions as authorised EFT signatories or what their thinking was. Davids testified that the authorised OMHC signatories were Ms Nikita Sigaba and Mr Regan van Heerden. For eight of the payments which occurred before self- administration, no signed EFT requisitions were located so one does not know which OMHC official authorised them. For one payment the EFT requisition does not contain an OMHC signature. For the other nine payments the OMHC signatures are indecipherable but appear to come from three different people. Assuming two of them were Sigaba and Van Heerden, the identity of the third is unknown. Sigaba and Van Heerden did not testify. One thus does not know what went on in their minds when they authorised the EFTs or what steps, if any, they took to satisfy themselves that the payments were owing. [31] In the absence of evidence, the furthest one might go in making assumptions in favour of the OMHC signatories is that they relied, without more, on Alley’s approval for the payment of the invoices. In my view this was inexcusably slack. OMHC was a professional administrator. In accordance with good corporate governance, Medshield’s rules required the board to ensure that proper control systems were employed and expressly specified that payments from its bank account had to be authorised under the joint signature of at least two persons authorised by the board. In order to obtain accreditation as an administrator, OMHC would have had to satisfy the Registrar that its own systems of financial control were adequate.12 The OMHC signatories must have known that the purpose of requiring 11 Absa Bank Ltd v Leech & others NNO 2001 (4) SA 132 (SCA) para 8. 12 Regulation 17(2)(d) of the regulations promulgated in terms of the Act (GNR 1262, 20 October 1999, as amended). two signatories was to neutralise as far as possible the dangers inherent in reposing complete confidence in one person. The advantage of the second signatory would entirely disappear if such signatory could rely solely on representations made by the first signatory. One has no evidence as to what knowledge the OMHC signatories had of Alley’s credentials. One knows that the payments started very shortly after he assumed office. The payments were substantial and took place virtually every month. As administrator OMHC could be expected to have been placed in possession of all material contracts concluded by Medshield. If not, OMHC ought to have demanded that they be made available. As a most basic precaution, the OMHC signatories should, when the payments started, have ascertained whether they were in accordance with a contract concluded by Medshield. One does not know that they even asked Alley or anyone else whether a contract existed.13 [32] In the passage quoted earlier from Willis Faber Hefer JA said that relevant considerations in assessing excusability included whether the defendant’s conduct induced the plaintiff’s mistake and whether the defendant knew that the money was not owing. Medshield argued that there was an improper relationship between Alley and Soll. In their heads of argument Medshield’s counsel submitted that Alley and Soll actively deceived OMHC and Medshield’s board. I do not think it is open to Medshield to advance that case insofar as Soll and Yarona are concerned. During the course of the trial Yarona’s counsel objected to evidence designed to show that Yarona acted fraudulently and on the second occasion on which this occurred the judge disallowed the line of questioning. Yarona’s counsel, in motivating the objection, submitted that fraud should be pleaded, an established principle recently reiterated by this court in Home Talk Developments (Pty) Ltd & others v Ekurhuleni Metropolitan Municipality.14 [33] If Medshield wanted to prove that Yarona acted in cahoots with Alley, the obvious claim would been one based on fraud or theft. I do not say that in such circumstances the condictio indebiti would not have been available as an 13 See Greyling v ISCOR [1984] ZASCA 156 (unreported judgment in Case 233/83) where the defendant’s counter-claim based on the condictio indebiti failed because the defendant failed to adduce evidence from the official or officials who caused payment of unowed sick leave to be paid to the plaintiff. 14 Home Talk Developments (Pty) Ltd & others v Ekurhuleni Metropolitan Municipality [2017] ZASCA 77; [2017] 3 All SA 382 (SCA) paras 29-31. alternative.15 But if Medshield wished to rely on Yarona’s alleged fraud as a factor excusing Medshield’s mistake, it was required to plead it. Yarona’s concession that no valid agreement existed was not a concession that it knew there was no agreement when it invoiced Medshield and received the payments. Although there are emails between Alley and Soll which might be thought suspicious, it is difficult to assess their import in the absence of evidence from Alley and Soll. If Medshield had pleaded fraud, Yarona might have been constrained to call Soll as a witness. For the rest it seems to me that the OMHC signatories probably relied not on Yarona’s conduct in issuing the invoices but, improperly, on Alley’s conduct in approving them. Payments post-dating self-administration [34] Coetsee co-signed two of the four EFT requisitions post-dating self- administration. The first was a payment of R279 300 on 17 April 2009 for Yarona’s October 2008 invoice. Coetsee appended her signature to the invoice and EFT requisition on 16 April 2009, about a month and a half after self-administration began. She testified that Alley came to her office and told her that Medshield had reneged on its agreement with Calabash in respect of the Access option, that the outstanding invoice related to Access services rendered for October 2008 and that if Medshield did not pay it might be taken to court. She did not find it strange that the invoice was in Yarona’s name – she saw Calabash and Yarona as the same thing and assumed Medshield would be making payment in terms of its agreement with Calabash. Although the Calabash agreement had terminated, Alley told her that the invoice related to October 2008. She knew that Calabash was entitled to a wind- down fee until the end of 2008. She continued: ‘We were still in the process of setting, or starting the self-administration and he actually misled me into believing this was an outstanding payment which it was not. I did not have the ability to check the financials or question Mr Alley because he is the accounting officer of the scheme and he would have known what we had paid and not paid, he had been the accounting officer since 2007 so I did not question him. I trusted him and I signed the invoice.’ 15 Cf Diamond Fields Advertiser v Colonial Government Buch App Cases (1910-1911) 8. [35] Coetsee’s view that Alley could not be questioned was unreasonable. It was also unacceptable for her to assume that it made no difference whether the recipient of the payment was Calabash or Yarona. Her co-signing of this EFT requisition was inexcusably slack. [36] The second payment which Coetsee authorised was an amount of R229 845 on 26 June 2009. Unlike the first payment, this was in fact a payment arising from Medshield’s contractual relationship with Calabash. Coetsee testified that Alley approached her to say that there was still a balance owing to Calabash in respect of the period ending December 2008. She was shown a spreadsheet listing all invoices and payments. The figures on the spreadsheet are not fully legible. Be that as it may, Alley’s proposal was that Medshield settle with Calabash by paying 50 per cent of the allegedly outstanding amount. Alley told her he had confirmed with Calabash’s managing director, Mr Martin Rimmer, that this would be acceptable. Coetsee understood that 50 percent totalled R229 845. It was on this basis that she co-signed the EFT requisition. The requisition reflected Calabash as the supplier but contained Yarona’s bank details. There is nothing to show that the money was not in fact owed to Calabash. Coetsee’s error was to sign a requisition which resulted in the money going to Yarona instead of Calabash. She may not even have noticed that the bank details were those of Yarona. I think her explanation in this instance just passes muster though in the light of what follows this is not a matter of great moment. [37] In respect of the other two payments made after self-administration began, the EFT requisitions do not contain Coetsee’s signature. And only one of them contains Alley’s signature. The one payment was a third payment of Yarona’s August 2008 invoice and the other a second payment of Yarona’s June 2008 invoice. In the absence of evidence as to who (apart from Alley) caused these payments to be made, Medshield did not discharge the onus of proving excusable error. Is excusability a requirement in this case? [38] In his work The Law Of Contract16 Sir John Wessels dealt with the question whether an executor who paid heirs or legatees with full knowledge of the facts but under a mistaken belief as to their legal rights could recover the money by way of the condictio indebiti. After observing that the decision in Rooth v The State17 stood in the way of such a conclusion, he continued (citation of authority omitted): ‘It seems, however, more reasonable to hold that a person who, like an executor, is acting for the benefit of others, and who in that capacity overpays an heir or legatee under a bona fide mistake as to their legal rights, should not suffer for his mistake . . . .’ [39] Although the focus of this passage was whether the executor could, contrary to the general rule then prevailing, rely on an error of law, this court in Bowman18 understood Wessel’s proposal as entailing the further proposition that excusability was not a requirement in the circumstances contemplated by the author.19 In that case Harms JA said that Wessels’ proposal seemed ‘eminently sensible’. In support of this view Harms JA said that a creditor could by way of the condictio indebiti recover from an heir money improperly paid to him by the executor without having to prove that the executor’s mistake was excusable. That being so, there was no reason why, if the executor himself instituted the condictio, he had to prove that his mistake was excusable. In Bowman this view was applied by analogy to liquidators and trustees who had paid more than was owing to a secured creditor. Their error, I should add, was one of fact. [40] Medshield’s counsel argued that we should extend this exception to errors made in the administration of a medical scheme’s affairs. While recognising that a medical scheme is a separate juristic person, Medshield submitted that the Act requires medical schemes to be administered in the interests of members and beneficiaries and that those charged with its administration can be seen to be acting in a representative capacity similar to executors, liquidators and trustees. 16 Fn 7 above. 17 Rooth v The State (1888) 2 SAR 259. 18 Bowman Fn 8 above. 19 44H-45G. [41] Yarona’s counsel argued that the rationale for the exception recognised in Bowman was the undesirability of holding the representative liable to the heir or creditor for his mistake. That did not apply here where the medical scheme itself as a corporate body made the payments. The members of the scheme would not have a claim against the medical scheme for negligent payments. There might be a claim for negligence against the trustees or principal officer but there was no reason in policy why they should not bear the consequences of their inexcusable slackness. [42] Wessel’s justification for the exception is unconvincing, at least under our modern system for administering deceased and insolvent estates. In insolvency cases, and in many deceased estates, the persons appointed as liquidators, trustees and executors are professionals who earn substantial fees and carry professional indemnity insurance. There is no compelling reason of policy from their perspective to make an exception to the excusability requirement. In Bowman Harms JA appears to have been swayed not so much by the need to protect executors and insolvency practitioners but by authority supporting the view that where an heir or creditor proceeds directly against the recipient of an unowed payment, the heir or creditor need not prove that the executor’s mistake was excusable. It would be illogical in those circumstances to say that if the claim was instituted by the executor or liquidator rather than heir or creditor, the executor or liquidator has to prove excusable error. [43] In my opinion, the more powerful considerations of policy (and policy is a relevant factor, as the passage I earlier quoted from Wills Faber shows) are those which focus on the persons in whose interests the representative is meant to act. For purposes of the present decision it is unnecessary to go beyond the case of a medical scheme. Healthcare is a matter of fundamental importance to everyone. Medical schemes provide a way of ensuring as far as possible that people have access to adequate healthcare, often by a system in which contributions are made by members from their earnings and by employers for the benefit of members. Medical schemes are closely regulated to ensure that their assets are prudently administered for the attainment of the sole object of conducting the medical scheme business. One of the primary duties of a scheme’s board is to take all reasonable steps to ensure that the interests of beneficiaries in terms of the rules and the Act are protected at all times.20 The board must consist of persons who are fit and proper to manage the scheme’s business.21 Members of medical schemes are particularly vulnerable to abuse. Many of them earn modestly. If the funds which should be administered for their benefit are abused, they stand not only to lose moneys deducted from their earnings but to have their access to health care jeopardised. [44] In deciding whether to extend the protection recognised in Bowman, I do not think it matters that a medical scheme is a juristic person. The important feature is that the scheme exists for the benefit of its members, often vulnerable people, and is administered by persons who owe a fiduciary duty to them. In that sense the persons charged with the administration of the scheme can be viewed as representatives standing in a similar position to executors, trustees and liquidators. Indeed, in the case of a company in liquidation its assets and liabilities do not vest in the liquidator. The liquidator succeeds to the administration of the company in the place of its directors.22 A similar view was taken by a full court in Grant Thornton Capital Umbrella Fund v Da Silva23 where the condictio was brought by a provident fund (also a juristic person). While it is unnecessary to decide whether the requirement of excusability should be relaxed in the case of provident funds, the full court was right not to regard the juristic personality of the fund as a bar to extending Bowman by analogy to other situations. [45] In regard to Yarona’s contention that there is no reason to shield a scheme’s board and principal officer from liability for their negligence, I have already indicated that in my view the focus should be on the vulnerability of the members rather than the need to protect the office bearers. This said, there are important differences between the trustees of a medical scheme on the one hand and executors and insolvency practitioners on the other. At least half of a scheme’s board must be elected from among members of the scheme.24 Often a fund’s rules require (as in Medshield’s case) that the remaining members of the board are to be elected from 20 Section 57(6)(a). 21 Section 57(1). 22 Leigh v Nungu Trading 353 (Pty) Ltd & another 2008 (2) SA 1 (SCA). 23 Grant Thornton Capital Umbrella Fund v Da Silva [2013] ZAGPJHC 231. 24 Section 57(2). persons nominated by the employers. The trustees are not professional administrators. Furthermore, a remedy against them may be inadequate. They may not have the resources to meet claims. Litigation against them might be costly and protracted. An exception to the excusability requirement would not, I must emphasise, take away any rights which the scheme or members might have against delinquent office bearers; it would simply mean that the scheme can, in the interests of members, recover unowed payments even though its office bearers acted with inexcusable slackness. That said, I cannot stress enough that this is not an invitation to slackness on the part of office bearers who might face other sanctions for such conduct. [46] I thus conclude that although Medshield has failed, in respect of all but one of the payments, to prove that such payments were made as a result of excusable error, Medshield’s right to recover them by way of the condictio indebiti is not barred. Impoverishment [47] Yarona contends that Medshield was required to prove not only that Yarona was enriched by the amounts claimed but also that such enrichment occurred at Medshield’s expense, ie that Medshield was impoverished by the amounts claimed.25 Since Yarona received unowed moneys, its enrichment was presumed and it bore the onus to plead and prove loss of enrichment which it did not do.26 Yarona argued, however, that Medshield failed to prove its impoverishment. This argument was based on Blackburn’s evidence that the Yarona baskets were loaded onto Medshield’s system in April 2008 and were used in meeting claims over the period April to December 2008. Simply put, the argument is that Medshield received value from the use of the baskets. [48] I do not think that this argument can be upheld. It is as well to begin by emphasising that Medshield’s claim was not a claim for restitutio in integrum. That is a special remedy accorded by our law where voidable contracts are rescinded on 25 For this requirement, see McCarthy Retail Ltd v Shortdistance Carriers CC 2001 (3) SA 482 (SCA) para 19 per Schutz JA and para 2 per Harms JA; Kudu Granite Operations (Pty) Ltd v Caterna Ltd 2003 (5) SA 193 (SCA) para 17. 26 African Diamond Exporters (Pty) Ltd v Barclays Bank International Ltd 1978 (3) SA 699 (A) at 713 in fine. certain recognised grounds. A party seeking rescission and restitutio in integrum must generally be willing and able to restore what he has received and should tender such restoration when claiming.27 Restitutio in integrum does not find application in a case such as the present, where no contract came into existence. Medshield’s claim was thus correctly the condictio indebiti. In Davidson v Bonafede Marais J referred with approval to Prof de Vos’ warning against the tendency to confuse restitutio in integrum, which is not an enrichment action, with the condictiones.28 [49] There is no clear authority that a party who institutes a condictio indebiti in respect of performance made under a putative contract must tender to return what he received from the defendant;29 still less that he must prove the value of what he received. Prof de Vos’ view is that no such tender is needed.30 He also makes the point31 that even in cases of restitutio in integrum the plaintiff need not make a tender where what he received was a factum (a service).32 [50] The authors of the chapter on enrichment in Lawsa33 state that a party who uses the condictio indebiti to recover a transfer of value made under an unenforceable contract must tender to restore what he received. They cite four cases,34 all dealing with unenforceable oral agreements for the sale of land. The first three (Wepener, Van der Berg and Bushney) were rei vindicationes by sellers. Wepener and Van der Berg do not support the proposition. Although Bushney does, the court incorrectly based its statement on the two earlier case and incorrectly described the plaintiff’s claim as one for restitutio in integrum. The fourth case, Mattheus, was a condictio by the purchaser and does not deal with the question of 27 Feinstein v Niggli & another 1981 (2) SA 684 (A) at 700F-701C; Davidson v Bonafede 1981 (2) SA 501 (C) at 509D-511H. Cf Van der Merwe et al Contract: General Principles 4 ed at 116-118. 28 Fn 27 above, at 510B, with reference to De Vos Verrykingsaanspreeklikheid 2 ed at 144. 29 See Du Plessis The South African Law of Unjustified Enrichment (2012) at 161; Visser Unjustified Enrichment (2008) at 164 and fn 30. 30 De Vos Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg 3 ed at 166-167. 31 Loc cit. 32 See, eg, Hall-Thermotank Natal (Pty) Ltd v Hardman 1968 (4) SA 818 (D) at 830G-831C. 33 Lotz & Brand Lawsa 2 ed vol 9 para 213 and fn 12. 34 Wepener v Schraader 1903 TS 629; Van der Berg v Shaw NO 1933 TPD 242; Bushney v Joliffe 1953 (4) SA 273 (W) at 276H-277A; Mattheus v Stratford & another 1946 TPD 498. tender. In regard to the seller’s rei vindicatio, there is more recent authority that no tender is required by the seller in such cases.35 [51] This is not to deny that the seller is legally obliged to repay the purchase price. To say that no tender is needed merely acknowledges that the seller’s rei vindicatio is independent of any claim which the buyer may have against him for unjustified enrichment. The purchaser’s condictio indebiti could be adjudicated simultaneously with the buyer’s rei vindicatio, which is what this court envisaged in Menqa & another v Markom & another.36 [52] To return to Yarona’s contention that Medshield failed to prove its impoverishment, the requirement of impoverishment in the condictio indebiti is concerned with whether the plaintiff suffered a loss in the act of making the payment or performance giving rise to the condictio. Issues of non-impoverishment typically arise in tripartite situations where on analysis it emerges that the loss was in truth suffered by a third party or where the claimant was shielded from loss by an indemnity or the like.37 [53] In the present case there were no circumstances prevailing at the time of each payment which would justify a conclusion that Yarona’s enrichment did not occur at Medshield’s expense and cause an immediate corresponding impoverishment. Medshield did not have a contractual arrangement with a third party which shielded it from the impoverishment. Whatever Yarona may have thought, there was in fact no contract between Medshield and Yarona. A non- existent contract cannot be used to forge a causal link between one or more of the unowed payments which Medshield made to Yarona and the benefit which Yarona supposedly conferred on Medshield by way of the loaded baskets. [54] I have no quibble with the proposition that in cases of bilateral performances by P and D under non-existent or unenforceable contracts our law of unjustified enrichment would be lacking if the end result were not, at least generally, a netting- 35 See Vogel NO v Volkersz 1977 (1) SA 537 (T), a full court judgment, at 554H-555C; Hartland Implemente (Edms) Bpk v Enal Eiendomme BK & andere 2002 (3) SA 653 (NC) at 663I-664H. 36 Menqa & another v Markom & others 2008 (2) SA 120 (SCA) para 25. 37 See, eg, Visser op cit (fn 27 above) at 360 and 366; Gouws v Jester Pools (Pty) Ltd 1968 (3) SA 563 (T). And cf Kudu Granite fn 25 above para 23. off of gains but the question is how one reaches this result. The correct solution in my view is that P and D should each use the condictio indebiti to recover from each other. If this were done in the same proceedings, the end result would be set-off pursuant to the procedure provided for in rule 22(4) of the Uniform Rules. The party with the higher enrichment liability would have to pay the difference to the party with the lower enrichment liability. [55] It might be argued that there is another solution, one which flows from the rebuttable presumption of enrichment which arises when an indebitum is transferred and the related right of the recipient to plead loss of enrichment as a defence.38 The fallacy in this argument, so it seems to me, is the assumption that D’s transfer of value to P results in an irreversible diminution of D’s patrimony (ie a loss of enrichment). If D has the right to recover what he has transferred, a defence of loss of enrichment is not available. In the case of a putative contract, D has the same right which P has to reclaim, by the condictio indebiti, his unowed transfers of value. [56] The defence of loss of enrichment is also unsatisfactory in bilateral cases for other reasons. Other than in a simultaneous exchange of performances, D would usually have transferred value to P because of a mistaken belief that he had a contractual obligation to do so rather than because of any particular payment received from P. Furthermore the rules which determine whether and in what amount D has a condictio against P are not the same as the rules which determine whether D can raise loss of enrichment as a defence and the quantum of the permissible reduction. In a condictio by way of counterclaim, D would be limited to the lower of P’s enrichment and D’s impoverishment whereas a defence of loss of enrichment would entitle D to deduct the full extent of his own impoverishment, even though P may have derived no benefit from D’s performance. [57] I do not wish to be understood as elevating formality above substance. If a defendant were to plead loss of enrichment in circumstances where a condictio indebiti by way of counterclaim was technically the correct remedy, a court would not be precluded from awarding the plaintiff a net amount if all the issues relevant to 38 African Diamond Exporters fn 26 above. a pleaded counterclaim had been canvassed at the trial. However the net position should be the one flowing from reciprocal condictiones indebiti. [58] It is surprising that this situation is not the subject of clear authority. The question how to unwind void mutual contracts has engendered lively academic discussion.39 Prof Visser and Prof Sonnekus in their respective works on unjustified enrichment40 appear to approve the solution I have proposed – they do so with reference to this court’s decision in Rubin v Botha41 though the procedural methodology was not worked out in that case. In Dugas42 the applicant sued for the return of payments he had made under an invalid hire-purchase agreement for the purchase of a car. The respondent contended that it would be unjust to allow the applicant to recover his payments without taking into account the benefit he had enjoyed by having the use of the car for 21 months. Without discussing the procedural aspects, Henochsberg J said that it was for the respondent to establish the applicant’s unjustified enrichment.43 This was also the view of the appeal court in the Scottish case of Haggarty.44 [59] In German law45 the initial approach to the problem was the one I have proposed, known in German as the Zweikondiktionentheorie (the two-claims theory). This theory was subsequently thought to produce potentially unfair results where one of the parties but not the other was able to raise a defence of loss of enrichment. This led to the emergence of the Saldotheorie (the balance theory). In terms of this approach P’s claim is reduced by the amount of any enrichment that he has lost, even if the loss of enrichment was without fault on his part. Even so, 39 See, eg, Peter Birks ‘No Consideration: Restitution after Void Contracts’ (1993) 23 Western Australian Law Review 195-234; Phillip Hellwege ‘Unwinding Mutual Contracts: Restitutio in Integrum v. the Defence of Change of Position’ in Unjustified Enrichment: Key Issues in Comparative Perspective Eds David Johnston and Reinhard Zimmermann (Cambridge University Press, 2012) pp 243-286; Sonja Meier ‘Unwinding Failed Contracts: New European Developments’ (2017) 21 Edinburgh Law Review 1-29. 40 Visser op cit (fn 27 above) at 612 and fn 264; Sonnekus Unjustified Enrichment in South African Law (2008) at 50-51 and fn 40. 41 Rubin v Botha 1911 AD 568. 42 Dugas v Kempster Sedgwick (Pty) Ltd 1961 (1) SA 784 (D). 43 At 793A. I express no opinion on the learned judge's further statement that use of the vehicle could not constitute unjust enrichment within the meaning of the law (793B). 44 Haggarty v Scottish TGWU [1954] ScotCS CSIH 6; 1955 SC 109. 45 As to which, see Visser op cit (fn 27 above) at 102-106 and 498-501; Du Plessis op cit (fn 27 above) at 387-388. German law still used the two-claims theory in certain cases of voidable contracts – for example where the recipient was in bad faith or the contract was voidable by reason of fraud, duress or immorality. The balance theory has also been thought to have its weaknesses with the result that the modifizierte Zweikondiktionentheorie (the modified two-claims theory) has gained traction. In terms of this theory P and D should each sue each other by way of the condictio but neither can plead loss of enrichment. [60] It is unnecessary in this case to decide what modifications if any to the normal rules should be made where parties to a putative or void contract make cross-claims for enrichment against each other. They are best worked out on the facts of specific cases. The simple point is that Yarona did not institute a condictio against Medshield by way of a counterclaim and did not raise Medshield’s supposed enrichment or its own impoverishment in any other way on the pleadings. Prescription [61] The final issue is prescription. The onus rested on Yarona to establish the date by which Medshield acquired, or could by exercising reasonable care have acquired, knowledge of the facts giving rise to the claim.46 In the absence of evidence that the authority to litigate was delegated, the requisite actual or constructive knowledge would have to be that of the board of trustees.47 [62] Yarona pleaded that Medshield had or could have acquired the requisite knowledge by the date of each payment and at any rate by not later than 7 June 2008 (ie three years before service of summons). There is no evidence that the board had actual knowledge before January 2010 or that the board by 7 June 2008 had knowledge of circumstances which should have caused it to investigate. The board was entitled, in the absence of warning signs, to assume that the principal officer and OMHC were administering the scheme properly and in accordance with concluded contracts. 46 Gericke v Sack 1978 (1) SA 821 (A) at 826B-828C. 47 Cf PricewaterhouseCoopers Inc & others v National Potato Cooperative Ltd & another [2015] ZASCA 2; [2015] 2 All SA 403 (SCA) paras 148-149. [63] Medshield’s financial year-end was 31 December. Coetsee testified that the board would receive the audited financial statements for approval the following April. It may thus be assumed that as at 7 June 2008 the board had seen the financial statements for the year ended 31 December 2007. Those financial statements mentioned the contract with Calabash but made no reference to Yarona. The investigations undertaken in the latter part of 2009 revealed that the payments to Yarona were included in the line item ‘marketing fees’ which was in turn part of ‘administration expenses’. For the year ended 31 December 2007 the administration expenses were R191 465 000 and the marketing fees R14 467 000. The latter figure probably included R1 396 500 in respect of payments to Yarona (being the payments for Yarona’s invoices for July to December 2007) but this would not have been apparent to a reader of the financial statements. [64] Included in the trial bundle were the management accounts for December 2008. According to Coetsee the monthly management accounts were prepared by OMHC and considered by the finance committee. The December 2008 accounts run to 31 pages and contain fairly dense financial information. Page 6 contained the income statement. The line item ‘Marketing Fees and Promotions’ was R1 555 023 as against a budgeted figure of R850 996. On page 7 a breakdown was provided of administration costs per line item. In regard to ‘Marketing Fees and Promotions’, the expenditure was said to comprise inter alia a marketing research fee of R1 275 261 and ‘R279 300 Healthcare provider Research & Geo mapping supplied by Yarona Network’. It was noted that an identical amount had been paid to Yarona in the preceding month. Coetsee testified that the finance committee, whose members were drawn from the board, submitted reports to the board. [65] If the above information had been reported to the board, there can be little doubt that the board could by the exercise of reasonable care have ascertained that unowed payments were being made. The board members would have known that they had not approved a contract with Yarona. The difficulty is that there is no evidence that the management accounts for earlier periods contained the same references to Yarona. One might expect that they would, but there is no explanation as to why, if that were so, the earlier management accounts were not adduced to support a contention that the finance committee, and potentially by implication the board, knew or could reasonably have ascertained that unowed payments were being made. When Coetsee was asked whether other management accounts contained a similar breakdown of administration expenses, she said she did not know because she was not a member of the finance committee. There was also no explanation as to why the finance committee’s reports to the board were not adduced. Coetsee was not asked in cross-examination what, if anything, those reports said regarding Yarona. It was not put to her that, as a trustee, she knew of the payments to Yarona. [66] I do not think we would be justified, in the circumstances, in finding on a balance of probability that the management accounts which served before the finance committee prior to June 2008 explicitly referred to payments made to Yarona. In the circumstances it is unnecessary to decide whether, if it had been proved that the finance committee had the requisite knowledge by June 2008, such knowledge could have been imputed to the board. Conclusion [67] The following order is made: The appeal is dismissed with costs including the costs of two counsel. _____ _________________ OL Rogers Acting Judge of Appeal Appearances For the Appellant Mr MC Maritz SC (and with him Mr DR van Zyl Instructed by Gildenhuys Malatji Inc, Pretoria, c/o Honey Attorneys, Bloemfontein For the Respondent Mr D Berger SC (with him Ms K Millard) Instructed by Hogan Lovells, Sandton, c/o McIntyre van der Post, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 22 September 2017 STATUS Immediate Yarona Healthcare Network (Pty) Ltd v Medshield Medical Scheme (1108/2016) [2017] ZASCA 116 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. The Supreme Court of Appeal (SCA) today dismissed an appeal against a judgment of the Gauteng Division of the High Court, Pretoria, in which that court had granted judgment in favour of Medshield for payment by Yarona Healthcare Network (Yarona) of R6 110 237 plus costs. Medshield’s claim was based on unjustified enrichment, more specifically the condictio indebiti. Medshield alleged that over the period August 2007 to July 2009 it had made payments to Yarona totalling R6 110 237 in the genuine and reasonable but mistaken belief that they were owing whereas they were not. It was common cause that there had been discussions about a contract between Medshield and Yarona for the provision of services by the latter to the former but that no contract was ever concluded. The first issue before the SCA was whether Medshield’s mistakes in making the payments were excusable, which is ordinarily a requirement of the condictio indebiti. The SCA held that in all but one instance Medshield’s mistakes had been inexcusably slack. Medshield argued in the alternative that the requirement of excusability should be relaxed in the case of medical schemes. The SCA upheld this argument. Excusability is a policy-based element of the condictio indebiti. In the case of medical schemes, which are closely regulated by statute and whose members are usually a vulnerable class, the scheme and thus its members should not be prejudiced by the slack conduct of the representatives whose fiduciary duty it is to administer the scheme in the members’ best interests. The second issue was whether Medshield had established that it was impoverished to the extent of R6 110 237. Yarona argued that Medshield had benefited from services provided by Yarona, that such benefits reduced Medshield’s impoverishment, and that Medshield’s claim should fail because it had failed to prove the value of the benefits and thus the extent of its impoverishment. The SCA rejected this argument, finding that when each mistaken payment was made Medshield was impoverished by the amount in question. If Yarona considered that Medshield was enriched by services supplied by Yarona, it was for Yarona to allege and prove the value of such benefit, which it could have done by instituting its own condictio indebiti by way of counterclaim. The final issue was whether Medshield’s claim in respect of the mistaken payments made prior to June 2008 had prescribed. The SCA found that Yarona had failed to establish that by June 2008 Medshield’s board had knowledge of the mistaken payments or could by exercising reasonable care have acquired such knowledge. ~~ ends~~

3364

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1086/2018 In the matter between: CHARMAINE HELEN MONTANARI APPLICANT and EMILIO PIETRO VALFREDO MONTANARI RESPONDENT Neutral citation: Montanari v Montanari (1086/2018) [2020] ZASCA 48 (5 May 2020) Coram: Maya P and Wallis, Mokgohloa and Dlodlo JJA and Eksteen AJA Heard: 7 November 2019 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be at 10:00 am on 5 May 2020. Summary: Divorce – accrual – value of annuitant spouse’s right to future annuity payments in respect of a living annuity as defined in s 1 of the Income Tax Act 58 of 1962, read with General Note 18 of the Second Schedule to the said Act, is an asset in his estate and is subject to accrual. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Keightley and Modiba JJ and Sardiwalla AJ sitting as court of appeal): 1 The application for special leave to appeal is granted and the appeal is upheld with costs. 2 The order of the Full Court of the Gauteng Division, Johannesburg is set aside and replaced with the following: ‘(a) The appeal is upheld with costs. (b) The value of the respondent’s right to future annuity payments under Personal Portfolio Living Annuities 002419307, 003491172 and 004662953 (the living annuities) from Glacier Financial Solutions (Pty) Ltd, a member of the Sanlam Group is an asset in his estate for purposes of calculating the accrual in his estate. (c) The matter is remitted to the trial court for the admission of evidence on the value of the respondent’s right to receive future payments from Sanlam in respect of the living annuities.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Maya P: (Wallis, Mokgohloa, Dlodlo JJA and Eksteen AJA concurring): [1] This is an application for special leave to appeal which was referred for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013.1 The 1 In terms of which the Judges considering an application for leave to appeal may, inter alia, if they are of the opinion that the circumstances so require, order that it be argued before them at a time and place appointed. applicant, Mrs Charmaine Helen Montanari, seeks to challenge the judgment of the Full Court of the Gauteng Division of the High Court, Johannesburg (Keightley J, Modiba and Sardiwalla JJ concurring). The full court dismissed the applicant’s appeal, brought with Victor J’s leave, against her judgment in the divorce action instituted by the applicant’s husband, the respondent, Mr Emilio Pietro Valfredo Montanari. The full court affirmed the trial court’s decision, on the strength of this Court’s judgment in ST v CT,2 that the respondent’s living annuities do not form part of his estate for purposes of calculating an accrual. [2] The relevant factual background to the matter is briefly the following. The parties married in December 1999, out of community of property and subject to the accrual system as defined in the Matrimonial Property Act 88 of 1984. In July 2008, the respondent used a portion of his pension benefit, which arose from his employment, to purchase a Personal Portfolio Living Annuity 002419307 from Glacier Financial Solutions (Pty) Ltd, a member of the Sanlam Group (Glacier by Sanlam). In March 2012, he used the remainder of the proceeds of his pension benefit, which he cashed upon retiring from his employment in November 2011, to make another purchase with Glacier by Sanlam, Living Annuity 003491172. In circumstances that do not appear from the record, he purchased a further living annuity 004662953 on 7 January 2015.3 I refer to these collectively as ‘the living annuities’. 2 ST v CT [2018] ZASCA 73; [2018] 3 All SA 408 (SCA); 2018 (5) SA 479 (SCA), which was delivered before the hearing of the matter by the full court. 3 This living annuity was purchased two weeks before the notice of amendment of the plaintiff’s claim, dated 28 January 2015. but is curiously not mentioned in that document. It was, however, included in the respondent’s Summary of Portfolio and was included in the respondent’s asset pool furnished to the applicant’s expert witness, an actuary, Mr Immerman, for the purposes of his valuation of the respondent’s assets. There is, therefore, no reason to exclude it from this judgment. [3] In 2014, the respondent instituted divorce proceedings against the applicant. In addition to a claim for spousal maintenance, he sought a declaratory order that the living annuities, which provide his monthly source of income, were not assets in his estate and were consequently not subject to the applicant’s accrual claim. The applicant did not contest the dissolution of the marriage but lodged a counterclaim seeking an order against the respondent for the payment ‘of an amount equal to half of the difference in the accrual of the respective estates of the parties, alternatively . . . full particulars and a statement of his estate in order to determine the accrual in his estate, the debatement thereof . . . and . . . payment . . . of an amount equal to half of the difference in the accrual in the respective estates of the parties’. [4] At the commencement of the trial, the parties agreed to separate the issues for decision. The question whether the living annuities acquired by the respondent form part of his estate for purposes of calculating the accrual would be resolved ahead of the merits of the action. The essence of the respondent’s case was that the living annuities were not subject to accrual because on a proper interpretation of the relevant legislation, they were not a pensionable interest as defined in the Divorce Act 70 of 1979, a view which the appellant rightly endorsed.4 Furthermore, the ownership of the capital value of the annuities vests in the insurer, Sanlam, and the respondent is entitled only to the annuity income. [5] The respondent called three expert witnesses to support his case, Mr William Herbert Hunter Thyne, an attorney specialising in banking and finance, including pension funds and insurance; Dr Elizabeth Lear, an asset consultant on pension and provident funds; and Ms Deirdre van Niekerk, a certified financial planner in 4 ST v CT ibid para 107. investments and estate planning with long-time experience in the field. The applicant, on the other hand, led the evidence of a benefit valuation actuary, Mr Ryan Immerman. [6] The essence of the evidence of the respondent’s witnesses was that the capital of a living annuity belongs to the provider of the benefit and not the annuitant. Thus, it does not form part of the annuitant’s estate. According to Mr Thyne, the purpose of converting a pension fund into a living annuity was to continue to make the capital inaccessible to an annuitant; to ensure that there is a benefit in the fund to pay an income upon the annuitant’s retirement. An annuitant may switch the underlying investment vehicles of the living annuity to another fund. But his entitlement in the scheme is only to ‘an income based on the amount the pension fund paid to the insurer which then becomes an insurer’s asset . . . a right to an income stream’, which he may elect to draw down at any rate between 2,5 per cent and 17,5 per cent per annum. To support his view, he also referred to s 29(4) of the Income Tax Act 58 of 1962, which requires that an annuity must be placed in ‘[a] fund, to be known as the Untaxed Policy Fund Holder Fund, in which shall be placed assets having a market value equal to the value of liabilities determined in relation . . . to any annuity contracts entered into by it in respect of which annuities are being paid’. [7] Ms Van Niekerk agreed with Mr Thyne’s opinion and adduced testimony that was similar to that given by Dr Lear. She confirmed the parties’ agreed view that a living annuity is not a pension interest as defined in the Divorce Act and is, therefore, not deemed to be an asset under those provisions. She described it as ‘a ring-fenced' asset held on the annuitant’s behalf by the insurer in an untaxed policy holder’s fund to provide him with a regular annuity income. But, the underlying capital amount of the annuity never accrues to the annuitant during his lifetime. Whilst an annuitant may nominate a beneficiary to the living annuity to whom the insurer must pay the value of the underlying capital upon his death, the beneficiary has a right to continue with the annuity payments and receive income or exercise a commutation of the cash value of the capital amount. A non-member spouse would only be able to access the annuity or income when it accrued to the annuitant by way of a maintenance order. [8] Mr Immerman, on the other hand, testified only on the computation of the actuarial value of a pool of assets, including the living annuities, that was based on the assumption that they belonged to the respondent. He disavowed any expertise on the question of the actual ownership of living annuities. However, he did venture an opinion when pressed, that if the living annuities were found not to be assets in the respondent’s estate, a market value could still be placed on the income stream they generate at any given time. To that end, regard would be had to variables such as the investment return assumptions, the level of contributions and the annuitant’s mortality. [9] The trial court found that respondent’s witnesses possessed ‘the necessary expertise in the field of living annuities’ and provided ‘background information of what living annuities mean in the industry’. In its view, Mr Immerman had ‘the necessary expertise in the field of calculating the actuarial value of an income stream’. The court determined that the overriding consideration was whether ‘within the context of the statutory framework of living annuities and its strict regulation, the capital can be said to be vested in the [applicant] for purposes of calculating the accrual’. The court accepted the respondent’s version that the annuities belonged to the insurer and did not form part of his estate for the calculation of accrual. Its reasoning was that a contrary finding would defeat the purpose of a living annuity – to provide an income stream so that pensioners do not become a burden on the State. This was so because an annuitant ‘could hypothetically be placed under severe financial pressure to pay’ an amount from the annuities that would constitute part of the accrual and ‘be left without any income at all’. The court concluded that the monthly or periodical payment of the living annuities was relevant and could be taken into account to assess the applicant’s future maintenance needs. [10] This court’s judgment in ST v CT had been delivered before the appeal to the full court was heard. The applicant accepted in the full court that the decision meant that the appeal had to be dismissed and this is what occurred without any additional consideration of the applicable legal principles. [11] The applicant raised a number of contentions on appeal before us. Her case, in the main, was that the court a quo erred in fact and in law in finding that ownership of the funds invested in the annuities belonged to Sanlam and that the annuities did not form part of the respondent’s estate for purposes of accrual. To illustrate the point, it was argued that a consequence of that finding was that a married person who had accumulated R100 million before a divorce could invest the whole amount in a living annuity. This would bear the untenable result of denuding his estate to the detriment of his spouse because the value of his estate for purposes of calculating accrual would diminish by that sum. Moreover, there was no indication in the contracts concluded between the respondent and Sanlam that ownership of the invested funds would vest in the insurer. [12] The applicant relied squarely on the judgment of the full court in Commissioner, South African Revenue Service v Higgo,5 which she argued the trial court misinterpreted. She also relied on the provisions of the Financial Institutions (Protection of Funds) Act 28 of 2001 (the Financial Institutions Act) which, she contended, apply to the living annuities as they constitute ‘trust property’ as defined in that Act. She argued that the attention of this Court was obviously not drawn to these authorities in ST v CT as it would otherwise not have found that the annuities belonged to the insurer. We were further urged to decide a question left open in ST v CT, namely whether a married annuitant’s right to future annuity payments is an asset which can be valued and included in his or her accrual upon divorce. [13] Before I deal with the merits of this matter, it is necessary to foreshadow an error that derailed the separated enquiry and led to these proceedings. The issue that the parties sought to be adjudicated by the trial court seems to have been mischaracterised. Notwithstanding repeated judgments from this court establishing the necessity for any separation of issues to be properly and clearly formulated in an order by the trial court, this was not done, with the result that there was never clarity as to the real issue before the trial court. [14] As is apparent from the pleadings, the applicant merely sought to identify the assets in the respondent’s estate and their values so that she could quantify her accrual claim in the divorce action. In his answering affidavit in the application for leave to appeal, the respondent said that the issue to be determined was ‘the status of the living annuities’. Thus, the purpose of the separated enquiry was simply to determine determine whether the living annuities should be included in the 5 Commissioner, South African Revenue Service v Higgo 2007 (2) SA 189 (C). calculation of the accrual of the respondent’s estate and on what basis that should be done. [15] However, as pointed out, the parties failed to define the issue properly and the trial court’s judgment and declaratory order perpetuated the misunderstanding that the applicant’s target was solely the underlying capital value of the annuities. Another worrisome feature of the trial proceedings is the court’s adjudication of the matter without having sight of the living annuity contracts, which were not produced as they should have been if their terms and effect were in dispute, as they were. [16] It also requires mention at the outset that the issue of the ownership of the living annuities in respect of which the respondent’s expert witnesses testified and explained in the context of the various statutory provisions to which they referred, is a question of law. Its determination, therefore, fell strictly within the trial court’s domain. The trial court held that it considered such evidence ‘as providing expert background information of what living annuities mean in the industry’. But the record indicates otherwise and the evidence clearly went beyond that scope. The witnesses were pertinently questioned and gave their opinion on where the ownership of the living annuities lay. This includes the applicant’s own witness, Mr Immerman who, as I noted, was called merely to provide the value on a pool of the respondent’s assets and had to proclaim his lack of expertise in this area. [17] An example may be found in Mr Thyne’s evidence, which was peppered with various references to statutory provisions and his interpretation thereof. He invoked s 5 of the Pension Funds Act 24 of 1956 for his opinion that Sanlam owned the respondent’s annuities and rounded off his evidence in re-examination as follows: ‘Question: So just to tie up very briefly Mr Thyne. In your opinion do the living annuities form part of the plaintiff’s estate for the purposes of an accrual? Answer: No again I will reiterate, what the annuitant is entitled to is an income stream . . . in terms of which one has to look at GN 18, where it talks about the liability [that] has been transferred . . . the fourth paragraph [which] says . . . I have already gone through the provisions of the Pension Funds Act to say all assets of the pension fund belong to the pension fund. What is happening here is the liability is being transferred from the pension fund to the insurer. Why would SARS or the regulator say there is going to be a change in the ownership, it has to be the insurer who owns the asset as the funds owns the asset and the insurer then pays the annuity based on the underlying asset.’ Needless to say, to the extent that the trial court’s reasoning may have been guided by the expert witnesses’ impermissible foray into the interpretive exercise of the relevant law on the question before it, it committed a misdirection. [18] Turning to the merits, a convenient starting point for determining whether a living annuity is susceptible to an accrual claim is assessing the precise nature of this type of investment. Section 1 of the Income Tax Act defines it as follows: ‘“living annuity” means a right of a member or former member of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund, or his or her dependant or nominee, or any subsequent nominee, to an annuity purchased from a person or provided by that fund on or after the retirement date of that member or former member in respect of which– (a) the value of the annuity is determined solely by reference to the value of assets which are specified in the annuity agreement and are held for purpose of providing the annuity; (b) the amount of the annuity is determined in accordance with a method or formula prescribed by the Minister by notice in the Gazette; (c) the full remaining value of the assets contemplated in paragraph (a) may be paid as a lump sum when the value of those assets become at any time less than an amount prescribed by the Minister by notice in the Gazette; (d) the amount of the annuity is not guaranteed by that person or fund; (e) on the death of the member or former member, the value of the assets referred to in paragraph (a) may be paid to a nominee of the member or former member as an annuity or lump sum or as an annuity and a lump sum, or, in the absence of nominee, to the deceased’s estate as a lump sum; and (f) further requirements regarding the annuity may be prescribed by the Minister by notice in the Gazette.’ [19] There was no dispute that the living annuities were contracts complying with the requirements of the Income Tax Act. It follows that they were contracts providing for Glacier by Sanlam to pay annuities, ie regular amounts at regular intervals, to the respondent. The value of the annuities was determined by the value of the assets delivered to Glacier by Sanlam in terms of the annuity agreements and held by them for the purpose of providing the annuities. The full value of the assets would only be payable to the respondent if their value fell below a figure prescribed by the Minister of Finance. The respondent would have no other claim to those assets. As it happens, this description accords with the evidence of the respondent’s witnesses as well as a description in a document titled “Glacier Investment – Linked Living Annuity – Personal Portfolio Living Annuity (Technical Guide for Personal Portfolio Living Annuity April 2018). That document was placed before us by the applicant in a ‘core bundle’ produced three days before the hearing without the consent of the respondent. But it merely confirmed what was already apparent. [20] The terms of the respondent’s annuities are described as Personal Portfolio Living Annuities, which are investment-linked and can be purchased only with compulsory funds coming from a contractual pre-retirement product. They are administered by Glacier by Sanlam. They are member-owned ie they were purchased from a registered South African Insurer in the name and on the life of the member, the respondent in this case. They are non-commutable, payable for and based on the lifetime of the retiring member and may not be transferred, assigned, reduced, hypothecated or attached by creditors as contemplated by the provisions of ss 37A and 37B of the Pension Funds Act read with General Note 18.6 [21] The member can direct in which investments the amount paid to the insurer will be placed (with options including offshore collective investment funds and offshore shares) and has the right to draw an income and, to a limited extent, manage the underlying funds by altering the investments once a year. The member has a right to the income and can give instructions and nominate beneficiaries. The income is not guaranteed but depends on the performance of the underlying investment options and the draw-down rate selected by the annuitant. The annuitant can choose the level of income and the income frequency between a pre-defined minimum of 2,5 per cent and a maximum of 17,5 per cent level as prescribed by the Minister of Finance in the Government Gazette under the Income Tax Act. The annuitant may change the income percentage on the anniversary date. [22] The annuity contracts state that once a living annuity is purchased the underlying capital in it is no longer accessible to the annuitant. The proceeds or annuity income do not fall within the ambit of ‘pension interest’ as defined in the Divorce Act, hence the parties’ agreement in this regard. Thus, an annuitant cannot give part or all of the living annuities to an ex-spouse in terms of a divorce order or agree to split the annuity income with the ex-spouse. Glacier by Sanlam pays the annuity to the member spouse, who is taxed on it at his or her marginal rate and then 6 General Notes Second Schedule to the Income Tax Act 1962 General Note 10 (Issue 2 with effect from 1 September 2008), which contains the definitions of the Pension Fund and Provident Fund and specifically, provides for ‘annuities on retirement from employment’. General Note 18 replaced General Note 12 ‘so as to allow retirement funds to purchase an annuity from a South African registered insurer in the name and on the life of a member who is retiring from employment (a member owned annuity)’. left to sort out any payment of maintenance to the non-member spouse in accordance with the divorce order under his own steam. [23] There is another listed class of annuities; the conventional life annuities, which are completely different from the member-owned living annuities. They are described as fund-owned and are purchased from an insurer by the fund on behalf of the member. In their case, the trustees, and not the annuitant, sign all transfer documentation. They may override the annuitant’s nominee options for a dependant and can appoint beneficiaries. These annuities pay a guaranteed income for life. The income is based on the life expectancy of the annuitant, who cannot choose the level of the income, which ceases upon his death or at the end of the guaranteed term. [24] In the applicant’s submission, the distinguishing features of this class of annuities supported her view that the respondent’s living annuities are not owned by the insurer. She took issue with what she described as a failure by Dr Lear and Ms Van Niekerk to address the differences between the two classes of annuities. These witnesses merely stated in their identical statements that ‘[b]oth the life and living annuity options would provide the member with a certain regular income until death … are still “owned” by either the retirement fund or insurer on behalf of the member and cannot be attached for eg. insolvency … exactly the same reason that these annuities cannot be assigned (and the deeming provisions built into the Divorce Act)’. [25] I deal first with the question whether ST v CT was wrongly decided as contended by the applicant. There, the living annuity under consideration was a Sanlam Glacier product similar to the ones in this matter, from which the annuitant also drew a monthly income. This Court accepted that the annuity qualified as a living annuity for income tax purposes as it complied with the requirements set out in s 1 of the Income Tax Act read with Government Notice 290 of 11 March 2009.7 It also endorsed the parties agreement that the provisions of the Divorce Act dealing with a spouse’s pension interest are not applicable as his pension interest had become payable to him before the divorce.8 The Court further recognised the general principle in the pension fund industry that the provisions of ss 37A to 37D of the Pension Funds Act apply to a living annuity purchased in the name of a former member of a retirement annuity fund.9 7 ‘Notice in terms of paragraph (B) of the definition of "Living Annuity" in section 1 of the Income Tax Act, 1962 (Act No. 58 of 1962) GG 32005, GN 290, 11 March 2009. 8 Sections 7(7) and 7(8) of the Divorce Act 70 of 1979. See also, Eskom Pension and Provident Fund v Krugel 2012 (6) SA 143 (SCA); 2011 (3) BPLR 309 (SCA) 314; [2011] ZASCA 96 para 12; Saunders v Eskom Pension Fund and Provident Fund 2013 JOL 30305 (PFA). 9 These provisions read, in relevant part: ‘37A Pension benefits not reducible, transferable or executable (1) Save to the extent permitted by this Act, the Income Tax Act, 1962 (Act 58 of 1962), and the Maintenance Act, 1998, no benefit provided for in the rules of a registered fund (including an annuity purchased or to be purchased by the said fund from an insurer for a member), or right to such benefit, or right in respect of contributions made by or on behalf of a member, shall, notwithstanding anything to the contrary contained in the rules of such a fund, be capable of being reduced, transferred or otherwise ceded, or of being pledged or hypothecated, or be liable to be attached or subjected to any form of execution under a judgment or order of a court of law, or to the extent of not more than three thousand rand per annum, be capable of being taken into account in a determination of a judgment debtor's financial position in terms of section 65 of the Magistrates' Courts Act, 1944 (Act 32 of 1944), and in the event of the member or beneficiary concerned attempting to transfer or otherwise cede, or to pledge or hypothecate, such benefit or right, the fund concerned may withhold or suspend payment thereof: Provided that the fund may pay any such benefit or any benefit in pursuance of such contributions, or part thereof, to any one or more of the dependants of the member or beneficiary or to a guardian or trustee for the benefit of such dependant or dependants during such period as it may determine. 37B Disposition of pension benefits upon insolvency If the estate of any person entitled to a benefit payable in terms of the rules of a registered fund (including an annuity purchased by the said fund from an insurer for that person) is sequestrated or surrendered, such benefit or any part thereof which became payable after the commencement of the Financial Institutions Amendment Act, 1976 (Act 101 of 1976), shall, subject to a pledge in accordance with section 19 (5) (b) (i) and subject to the provisions of sections 37A (3) and 37D, not be deemed to form part of the assets in the insolvent estate of that person and may not in any way be attached or appropriated by the trustee in his insolvent estate or by his creditors, notwithstanding anything to the contrary in any law relating to insolvency.’ [26] Regarding the question whether the capital invested in the living annuity formed part of the annuitant’s divorce accrual, the Court said:10 ‘Having regard to the nature of the Glacier contract, we are of the view that its supposed capital value cannot be included as part of the appellant’s accrual. The capital belongs to Sanlam, not the appellant. The appellant’s only contractual right is to be paid an annuity in an amount selected by him within the permissible range specified by law. His right to receive any particular annuity instalment is subject to a condition of survivorship, ie that he should be alive on the date on which the next annuity instalment becomes payable. If he does not survive to the next date, the fate of the capital will be determined by whether or not he has nominated a beneficiary. The capital may or may not be paid to his estate, depending on whether or not there is such a nomination.’ Explaining the rationale for this view, the Court continued:11 ‘If the supposed capital value of the Glacier contract were included in the appellant’s accrual, one would have the anomalous outcome that he would be obliged to pay half its value to the respondent in circumstances where he has no right to claim half the capital from Sanlam. He would have to satisfy this part of an accrual award from other assets. While in the present case the appellant may have other assets from which to make payments, the question is one of principle. If the Glacier contract is to be included in the appellant’s accrual, it would have to be included in the accrual of any spouse with a comparable annuity contract, even though the contract were such spouse’s only “asset”. The outcome would be even more anomalous if the spouse’s interest in the annuity contract was exempt from attachment in terms of s 37A of the Pension Funds Act, because then there would be nothing for the other spouse to attach in satisfaction of the accrual award.’ [27] As I have mentioned, the appellant relied, inter alia, on Higgo for his challenge against the above decision, in ST v CT. In that matter the full court held that on the facts of the case, the provider of a living annuity, Momentum Life Ltd, was not a beneficial owner of the capital that was paid to it by the annuitant’s pension fund for 10 ST v CT fn 2 para 108. 11 ST v CT fn 2 para109. re-investment.12 In the full court’s view, the money was received by the insurer on the annuitant’s behalf and for his benefit and was held by the insurer to cover its obligation to the pensioner until that obligation was entirely fulfilled.13 As the full court put it: ‘The money which had been transferred . . . to Momentum and used to purchase the “underlying assets was not merely the measure of the cash payments which Momentum was obliged to make” . . . but was the guarantee for payment to [the annuitant] of that to which he, and after his death his dependants, were entitled.’ [28] The applicant’s reliance on Higgo is, however, beset by the simple problem that the case is distinguished by its own circumstances. As appears from the stated case set out in the judgment of the Cape Income Tax Special Court,14 it concerned what was described in the stated case as a ‘life annuity’, but incorrectly referred to in the judgment as a ‘living annuity’. The contract was concluded before the definition of a ‘living annuity’ was introduced into the Income Tax Act in 2008 and allowed the taxpayer a free hand throughout the year to manage the investment of the funds with the assistance of a financial adviser, whose fees he sought to set off against the income generated by the life annuity. That is impermissible with a living annuity under the present definition. The judgment is thus of no assistance in this case because it dealt with a contract that was not a living annuity of the type now regulated by the Income Tax Act. Its characterisation of the contract in issue cannot apply to the living annuities in this case. Higgo is, therefore, not authority for the applicant’s contentions and does not assist her case. 12 At 196I. 13 At 196H-197D. 14 ITC 11135 (2005) 96 SATC. [29] I turn to deal with the second arrow in the applicant’s bow. This is the contention that the underlying capital of the respondent’s living annuities constituted ‘trust property’ as envisaged in the Financial Institutions Act and therefore remained his asset held by Glacier by Sanlam on his behalf. This statute provides for and consolidates the laws relating to the investment, safe custody and administration of funds and trust property by financial institutions. It defines ‘trust property’, in s 1, as ‘any corporeal or incorporeal, movable or immovable asset invested, held, kept in safe custody, controlled, administered or alienated by any person … hereinafter referred to as the principal’. Chapter 1, ss 4.4 and 4.5 provide as follows in relevant part: ‘A financial institution must keep trust property separate from assets belonging to that institution, and must in its books of account clearly indicate the trust property as being property belonging to a specified principal. Despite anything to the contrary in any law or the common law, trust property invested, held, kept in safe custody, controlled or administered by a financial institution or a nominee company under no circumstances forms part of the assets or funds of the financial institution or such nominee company.’ ‘Financial institution’ is defined in s 1 of the Financial Services Board Act 90 of 1990 and includes, in s 1(vi), any ‘registered insurer’ as defined in s 1(1) of the Insurance Act 27 of 1943. [30] The only basis advanced by the applicant for her contention that the living annuities constituted trust property was the evidence of the respondent’s expert witnesses; that the annuities were owned by the insurer which held them on behalf of the annuitant to provide him with regular annuity income. The applicant challenged the notion of owning something on behalf of another having regard to the incidence of ownership or dominium, ie the right to possess, use, take the fruits of, destroy or alienate a thing.15 [31] But, the applicant’s argument overlooked Mr Thyne’s uncontested evidence that the underlying capital is owned by the insurer and is accordingly reflected in the insurer’s balance sheet, and the annuitant is entitled only to the annuity income.16 The annuity, and not the capital, is the asset that would be reflected in his or her balance sheet. And whilst the living annuity enjoys the protection provided by ss 37A and 37B of the Pension Funds Acts, s 1 of the Income Tax Act nonetheless stipulates that the amount of the annuity is not guaranteed by the person or fund from whom the annuity is purchased. [32] This is replicated in the Glacier documents in which the insurer disavows any responsibility for the preservation of the underlying capital of the annuity and specifies that the ‘underlying capital, and the income, is not guaranteed by Glacier in any way’. Therefore, there is no obligation on the insurer to repay the capital paid for the annuity, merely the agreed annuity. And in the case of a breach by the insurer, ‘the cause of action of the annuitant will lie in damages for breach of contract’, subject of course to the terms of the annuity.17 This is by virtue of the contractual right to annuity payments held by the annuitant against the insurer. 15 Wille Principles of South African Law 5ed at194. 16 This is stated as follows in the Technical Guide for Personal Portfolio Living Annuity, under the heading ‘Maintenance orders’: Upon entering into a living annuity contract, the annuitant becomes entitled to an annuity income only. The annuitant is not entitled to the underlying capital providing the annuity. The annuitant’s legal interest is therefore limited to the receipt of an annuity income on the basis stipulated in the annuity contract, but always subject to the relevant legislation, the most important being that the living annuity may not be commuted for a single payment other than in very limited circumstances as prescribed in terms of the Income Tax Act No. 58 of 1962. Accordingly, there is no statutory mechanism to dip into the underlying capital for a lump sum payment.’ 17 See, ANZ Savings Bank Ltd v FCT 25 ATR 369 at 392. [33] It is also instructive to have regard to the nature of Sanlam. It is an unambiguously profit-driven business entity, which is required by law, inter alia, to: ‘. . . maintain its business in a financially sound condition by – (a) having assets; (b) providing for its liabilities and capital adequacy requirement; and (c) generally conducting its business, so as to be in a position to meet its liabilities and capital adequacy requirements at all times.’18 All relevant indications are therefore that the insurer’s relationship with the annuitants is purely contractual in nature. [34] There is no indication in any of the legislation that applies to living annuities ie, the Pension Funds Act (in ss 37A and 37B), and the Income Tax Act (which defines a living annuity), the Financial Institutions Act itself and the Glacier contracts concluded between the parties, that the living annuities are regarded as ‘trust property’. Neither is there even a hint of a fiduciary relationship between the parties in these legal instruments. The provisions of the Financial Institutions Act add nothing to the applicant’s case. [35] But do these findings disentitle the applicant from any claim whatsoever in regard to the respondent’s annuities? I think not. In an analogous decision, De Kock v Jacobson,19 the court determined whether a pension that the husband was receiving was an asset in the joint estate of a couple married in community of property. Upon his retirement, prior to the divorce, he ceased to be a member of the pension fund to which he had belonged and his pension interest was converted into a pension. His 18 Section 29 of the Long-term Insurance Act 52 of 1998. 19 De Kock v Jacobson & another 1999 (4) SA 346 (W). right against the pension fund had two components; a right to a cash payment (which he conceded fell within the community of property) and a right to monthly payments by way of pension. [36] The court answered the question in the affirmative stating: ‘The question then remains whether the right to the pension is part of the community of property. There is to my mind no reason in principle why the accrued right to the pension should not form part of the community of property existing between the parties prior to the divorce. Community of property is defined in Hahlo The South African Law of Husband and Wife 5th ed at 157 - 8 in these terms: “Community of property is a universal economic partnership of the spouses. All their assets and liabilities are merged in a joint estate, in which both spouses, irrespective of the value of their financial contributions, hold equal shares.’ See Grotius Jurisprudence of Holland 3.21.10. A spouse's salary falls within the community of property. See Hahlo (op cit at 161), where he says: “The joint estate consists of all the property and rights of the spouses which belonged to either of them at the time of the marriage or which were acquired by either of them during the marriage.” … See also Voet 23.2.68, 69.’ [37] The court cited with approval two judgments. First was Clark v Clark,20 in which the court accepted that a spouse's interest in a pension which had not yet accrued did indeed form part of the community estate, as did a pension right which had accrued. The second one was a case of this Court, Commissioner for Inland Revenue v Nolan's Estate,21 which reaffirmed that the right to a pension is a right which vests in the parties to a marriage in community of property in undivided shares. The court in De Kock concluded that there was no logical or legal reason why 20 Clark v Clark 1949 (3) SA 226 (D). 21 Commissioner for Inland Revenue v Nolan's Estate 1962 (1) SA 785 (A) at 791C – E. both the cash component and the accrued right to the pension should not form part of the community of property existing between the parties prior to the divorce.22 [38] I align myself fully with this reasoning and see no reason why it cannot extend to the case at hand. The respondent has a clear right to the investment returns yielded by his capital re-investment with Sanlam, in the form of future annuity income which he draws from the agreement. Such annuity income is evidently an asset which can be valued, as was testified to by Mr Immerman. The trial court actually took that evidence into account, correctly so in my view. But then it erroneously considered the annuity income relevant only for purposes of a maintenance claim. It should have found it to be an asset in the respondent’s estate, which is subject to accrual, and allowed Mr Immerman to provide a valuation of that income stream. This it failed to do. The court a quo perpetuated the misdirection by dismissing the appeal. Thus, there is no basis to deviate from the judgment in ST v CT. The application for special leave to appeal must be granted and the appeal allowed so that the error may be righted. [39] In the result the following order is made: 1 The application for special leave to appeal is granted and the appeal is upheld with costs. 3 The order of the Full Court of the Gauteng Division, Johannesburg is set aside and replaced with the following: ‘(a) The appeal is upheld with costs. (b) The value of the respondent’s right to future annuity payments in respect of Personal Portfolio Living Annuities 002419307, 003491172 and 004662953 (the 22 At 349G. living annuities) from Glacier Financial Solutions (Pty) Ltd, a member of the Sanlam Group is an asset in his estate for purposes of calculating the accrual in his estate. (c) The matter is remitted to the trial court for the admission of evidence on the value of the respondent’s right to receive future payments in respect of the living annuities.’ ________________________ MML Maya President of the Supreme Court of Appeal APPEARANCES: For the Appellant: F Joubert SC Instructed by: R C Christie Inc, Gauteng Webbers Attorneys, Bloemfontein For the Respondent: A de Wet SC Instructed by: Schindlers Attorneys, Gauteng Honey Attorneys, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 5 May 2020 STATUS Immediate Montanari v Montanari (1086/2018) [2020] ZASCA 48 (5 May 2020) 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. The issue was whether the respondent’s Personal Portfolio Living Annuities purchased from Glacier Financial Solutions (Pty) Ltd, a member of the Sanlam Group (Glacier by Sanlam), which he purchased prior to his divorce action against his wife, were assets in his estate and subject to his wife’s accrual claim. The SCA reaffirmed that on a proper interpretation of the relevant legislation, the living annuities were not a pensionable interest as defined in the Divorce Act 70 of 1979 and that the ownership of their underlying capital vests in Sanlam from which they were purchased. The SCA further held that the respondent has a clear right to the investment returns yielded by his capital re-investment with Sanlam, in the form of future annuity income which he draws from the agreement; that such annuity income is an asset in his estate which can be valued and that it is subject to accrual. The SCA ordered a remittal of the matter to the trial court for the leading of evidence on the value of the respondent’s right to receive future payments in respect of the living annuities. …

2711

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 362/11 In the matter between Reportable MUSA DLAMINI APPELLANT and THE STATE RESPONDENT Neutral citation: Dlamini v S (362/11) [2012] ZASCA 26 (27 March 2012) Coram: FARLAM, VAN HEERDEN, CACHALIA, SNYDERS and MAJIEDT JJA Heard: 17 FEBRUARY 2012 Delivered: 27 MARCH 2012 Summary: Duplication of convictions – armed robbery involving three robbers acting with a common purpose to rob three people on a single occasion. Accused charged with three offences – correctly convicted as evidence established three separate robberies – no duplication of convictions. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: KwaZulu-Natal High Court, Pietermaritzburg (Ntshangase J and Gorven AJ sitting as court of appeal): 1. The appeal against the convictions on counts 2 and 3 is dismissed. 2. The appeal against the sentence is upheld. 3. The order of the court below on sentence is set aside and substituted with the following: „The appeal against sentence is upheld and the order of the trial magistrate is set aside and the following order is substituted in its place: “(a) The accused is sentenced to fifteen years‟ imprisonment on each of counts 1 and 2 and to ten years‟ imprisonment on count 3; (b) The accused is sentenced to three years‟ imprisonment on count 4; (c) The accused is sentenced to one year‟s imprisonment on count 5; (d) The sentences on counts 2 and 3 are ordered to run concurrently with the sentence on count 1 and the sentence on count 5 is ordered to run concurrently with that on count 4; (e) One year of the three years on count 4 is ordered to run concurrently with the sentence on count 1. (f) In terms of s 12 of the Arms and Ammunition Act 75 of 1969, the accused is declared unfit to possess a firearm. (g) The effective sentence to be served is seventeen years‟ imprisonment.”‟ ________________________________________________________________ JUDGMENT ________________________________________________________________ CACHALIA JA (FARLAM JA concurring): [1] This appeal, from the KwaZulu-Natal High Court, is aimed at securing the reduction of an effective sentence of 43 years‟ imprisonment that was imposed on the appellant on three counts of robbery arising from an incident on 26 April 2002, and two unrelated charges for the unlawful possession of a firearm and ammunition. [2] Although this court, on petition, granted the appellant leave to appeal only against his sentence – and Mr Kemp, who appeared on his behalf, drew his heads of argument on this basis – Ms A Watt, counsel for the state, in her written submissions, requested us to consider the „fact that there was a duplication of convictions‟ for the three robbery charges. In support of this submission, and relying on dicta of Wessels JA in S v Grobler & another1 she contended that the three charges arose from actions committed with a „single intent‟ in a „continuous transaction‟. There was, she submitted, in substance only one offence of robbery – not three – which this court ought to consider when deciding on an appropriate sentence. Ms Watt accordingly supported the appellant‟s appeal for the sentence to be reduced. So, at the court‟s invitation, Mr Kemp applied to amend his grounds of appeal to include duplication of the robbery convictions, and was granted leave to proceed on this basis. 1 S v Grobler & another 1966 (1) SA 507 (A) at 523A-524B. [3] The appellant, Mr Musa Dlamini, was indicted in the Pinetown Regional Court on six counts: three of robbery arising from the incident on 26 April 2002, one of theft and two for the unlawful possession of an unlicensed firearm and ammunition. The theft charge – not related to the robbery – concerned a motor vehicle that was allegedly stolen in 1999. The police discovered the firearm and ammunition, which were the subject of the remaining charges, in Mr Dlamini‟s possession three days after the robbery. There was, however, no evidence linking this firearm and the ammunition to the robbery. [4] The regional magistrate convicted Mr Dlamini on all counts and found that the robbery occurred in the manner described below. [5] At about 19h00 on 23 April 2002, Mrs Janet Burgess was at her private residence in Pinetown waiting for her friends, Mrs Ingrid Usher and Mrs Gale Acutt, to arrive. They had arranged to drive together to a church nearby. [6] Mrs Usher arrived, first in a Volvo motor-vehicle. As she drove into the driveway of Mrs Burgess‟s house, Mrs Burgess emerged from her house, locked her front door and turned on the lights illuminating the driveway in front of the garage. She walked a few steps to Mrs Usher‟s vehicle and asked her whether it would be convenient for all of them to travel to their destination in the Volvo. Mrs Usher agreed and Mrs Burgess then got into the car next to her. [7] Soon Mrs Acutt also arrived there in her Toyota motor-vehicle and parked in the driveway a short distance from the Volvo. She alighted from her vehicle and began walking towards the Volvo, which had its headlights on and was facing the entrance gate ready to depart. [8] At that point three men clad in blue overalls appeared in the driveway. They moved swiftly towards the Volvo. Mr Dlamini was among them. One of the men pointed a firearm at Mrs Acutt, who had reached the Volvo and was preparing to open the rear passenger door to join her friends. The men demanded that the women hand over their possessions. Mrs Acutt tried to steer clear of the armed man by moving towards the back of the vehicle. At the same time she dropped her car keys next to the back wheel in an attempt to conceal them from the intruders. [9] Mrs Burgess stepped out of the car as one of the two unarmed robbers – later identified as Mr Dlamini – moved quickly towards her demanding that she give him all her possessions. She complied by handing over her handbag and house keys to him. [10] The robbers also commanded the women to hand over the keys of both cars. Again, they obeyed. The men then got into the two cars and drove off quickly, taking with them the personal effects of the three women including their handbags, prescription glasses, cellular phones, cash and a video camera. The incident lasted only a few minutes. [11] The three charges of robbery were for the items taken from the three women, including the two vehicles belonging to Mrs Acutt and Mrs Usher. Mr Dlamini was the only person charged with these offences. His evidence that he was not present at the scene of the robbery was false and was properly rejected by the magistrate. The high court correctly confirmed this finding. [12] Mr Dlamini‟s conviction for the unrelated firearm and ammunition offences was also upheld by the high court. However, the high court set aside his conviction for the theft of the motor vehicle in 1999 because of insufficient evidence. The Magistrate’s Judgment on Sentence [13] The magistrate sentenced Mr Dlamini to 15 years‟ imprisonment each for the robbery of Mrs Acutt‟s and Mrs Usher‟s vehicles as well as their personal effects, and to ten years for robbing Mrs Burgess. Section 51(2) of the Criminal Law Amendment Act 105 of 1997 read with Part ll of Schedule 2 is the sentencing regime applicable to these offences. It requires a minimum sentence of 15 years‟ imprisonment to be imposed on a first time offender, where there were aggravating circumstances during a robbery or where the offence involved the taking of a motor vehicle. Section 1 of the Criminal Procedure Act 51 of 1977 includes within its definition of aggravating circumstances the wielding of a firearm and the threat to inflict grievous bodily harm. Both conditions were present during the robbery. This being so, the magistrate did not explain why he imposed a sentence of 10 years instead of 15 years, for the count relating to the robbery of Mrs Burgess, but nothing turns on this. [14] On the firearm and ammunition charges Mr Dlamini was sentenced to three years‟ imprisonment (three years for the firearm and one year for the ammunition, which were ordered to run concurrently) and to two years for the theft of the motor vehicle in 1999. Together with the three robbery counts he was sentenced to serve a total of 45 years‟ imprisonment. [15] Mr Dlamini‟s legal representative asked the court to order that the sentences run concurrently „as (they) were committed at the same time‟. The prosecutor on the other hand asked for the maximum sentence for each of the robbery counts to be served consecutively because of the gravity of Mr Dlamini‟s conduct. This submission was surprising in the light of her concession that he was „an ideal candidate for rehabilitation‟. Nevertheless she accepted that the „maximum sentence‟ may be considered too excessive and therefore asked for a sentence of „nothing less than 30 years‟. The magistrate had no regard to these submissions. His judgment is replete with misdirections the effect of which I shall consider later. [16] But first I must consider the issue that was raised at the beginning of this judgment – whether Mr Dlamini‟s conviction for three counts of robbery instead of just one count offended the rule against duplication of convictions. The purpose of the rule is to avoid a person being convicted and sentenced more than once for what is in substance a single offence, which could have been embodied in a composite charge.2 It forms part of the constitutional right to a fair trial.3 [17] Although s 83 of the Criminal Procedure Act 51 of 1977 permits prosecutors to charge a person with more than one offence when it is doubtful which of several offences may have been committed, it remains the court‟s duty to be vigilant that no duplication occurs.4 This is to avoid prejudice to an accused: not only is there the likelihood that the accused may be punished more severely if convicted for multiple offences instead of just one, but these offences become part of the offender‟s criminal record. The prejudice is evidently more serious in cases where compulsory minimum sentences apply. 2 S v Grobler & another 1966 (1) SA 507 (A) at 523B-524A; See generally E Du Toit, FJ De Jager, A Paizes, A Skeen and S Van Der Merwe Commentary on the Criminal Procedure Act Ch 14 at 5-8B. 3 S v Whitehead & others 2008 (1) SACR 431 (SCA) para 10. 4 S v Whitehead & others 2008 (1) SACR 431 (SCA) para 33. [18] In this regard s 51(2) of the Criminal Law Amendment Act 105 of 1977, which is applicable here, requires a court to impose a harsher sentence in the case of second or third and subsequent offenders. The effect on the appellant is that he not only has a less flattering criminal record, but if he re-offends a court would be obliged to treat him as a triple-offender if he is again found guilty of robbery, and to apply a minimum sentence of 25 years‟ imprisonment unless the circumstances justify a lesser sentence. [19] Our courts have applied different tests to decide whether duplication has occurred. In S v Maneli5 Streicher JA explained: „One such test is to ask whether two or more acts were done with a single intent and constitute one continuous criminal transaction. Another is to ask whether the evidence necessary to establish one crime involves proving another crime.‟ [20] There is however no all-embracing formula. The various tests are mere guidelines – they are not rules of law, nor are they exhaustive. Their application may yield a clear result, but if not a court must apply its common sense, wisdom, experience and sense of fairness to make this determination.6 [21] Robbery consists of the theft of property by intentionally using violence or threats of violence to induce submission to its taking.7 It is thus a crime involving two unlawful acts – taking property and performing a violent act upon a person.8 Mr Dlamini committed no violent act himself. He took Mrs Burgess‟s property 5 S v Maneli 2009 (1) SACR 509 (SCA) para 8. 6 S v Whitehead & others 2008 (1) SACR 431 (SCA) para 35. 7 S v Maneli 2009 (1) SACR 509 (SCA) para 6; J R L Milton South African Criminal Law and Procedure Vol II Common Law Crimes 1 ed at 642-643. 8 Burchell J Principles of Criminal Law 3 ed (2005) at 218. from her after one of his co-robbers threatened the three women at one and the same time with a firearm. His liability for the robbery of the three women could thus only have arisen from a common purpose, which the state neither alleged nor sought to prove. The evidence did not establish any prior agreement to commit the crime. But it did prove that the three men, including Mr Dlamini, actively associated themselves with the commission of the crime against each of the three women with the requisite fault element. So the finding that Mr Dlamini was liable for the robbery of the three women was correct, albeit that the charge sheet may have been deficient in failing to specify a common purpose to commit the crime. [22] In my view it is clear that the „single intent‟ – or in this case the single common intent – of the robbers involved the threat to take property from the three women and the taking of their property in „one continuous transaction‟. Furthermore, this was accomplished through a single threat of violence directed at the three women simultaneously. This evidence – the violent threat – which was necessary to establish each charge involved proving the other two charges. So both tests in Maneli were satisfied. [23] However, even without the application of these tests to this case, to conclude that three offences were committed – when in substance only one was – would defy common sense and fairness. Moreover, it would contradict the recent approach of this court in Maneli. [24] The facts in Maneli were these: Several robbers went to a farm. They first stole money from an office and shortly afterwards also stole electronic equipment from a homestead nearby. To achieve their purpose they incapacitated the owner of the farm and assaulted one of his gardeners in the office. They then went to the homestead and tied up a visitor to the farm and a domestic employee. The robbers were charged with two offences, the robbery of the farmer‟s cash from the office and the electronic equipment from the visitor, and were convicted in a lower court on this basis. On appeal, it was held that because the assaults on the farmer and the visitor were done with the same object in mind – to steal the property from the office and the homestead – only one offence was committed. The court said that „the theft of the money from the office and from the house by the use of violence to induce submission was done with a single intent and constituted one continuous transaction‟.9 There was thus, it held, a duplication of convictions. [25] One of the differences between Maneli’s case and the present one is that there the property of a single person was taken, whereas here three women had their property removed by force. That is not a material difference because ownership of property stolen is not an element of the crime of robbery. The case for a duplication of convictions is even stronger in the present case because the property was taken from the three women through a single threat of violence at the same time and at the same place, which was not the case in Maneli where the theft involved two physical acts of violence on two separate occasions. [26] During the hearing Ms Watt informed us that the practice of the Director of Public Prosecutions is to charge offenders in cases such as this with a single offence, not multiple crimes. That approach is sensible and the facts of this case demonstrate this. 9 Ibid para 8. [27] Mr Dlamini‟s conduct could comfortably have been brought within the ambit of one charge.10 He therefore ought to have been charged with only one count of robbery committed with a common purpose – and to have been punished on this basis. Moreover, the learned magistrate failed in his duty to consider whether there had been a duplication of convictions. Had he done so he would doubtless have come to another conclusion and imposed a significantly lesser sentence that was proportionate to the crime. [28] I now turn to examine the magistrate‟s approach to sentence. The record shows that Mr Dlamini‟s legal representative placed his personal circumstances before the magistrate in mitigation on 28 February 2003. These were scant and hardly touched upon the important questions always relevant to sentencing – the offender‟s motive for committing the crime and his prospects for rehabilitation. They revealed that he was 22 at the time of the robbery, but was still at school doing Grade 11. He had no parents, having lost his mother in 1984 and his father in 2000. However, he had two children – a six-year old and a baby of just seven months. At the time of his arrest on 26 April 2002 he was living with his aunt. He had no prior history of offending. The record also shows that the Mr Dlamini spent approximately ten months in custody before he was sentenced. The learned magistrate considered none of this evidence relevant in his determination of sentence. As mentioned earlier he misdirected himself completely on this aspect. [29] First, he appears to have misunderstood how to apply the minimum sentence regime to these offences. „Sentences, relating to these offences have been prescribed by the legislature, not by the court‟ he wrote. „And‟, he continued: „if the courts do not comply with the laws made by parliament, then the courts might as well close down because they are not complying with the 10 Cf S v Grobler & another 1966 (1) SA 507 (A) at 523E-524A. rules and laws of the lawmakers‟. Moreover, he concluded, „if an offence is of such a serious nature, one does not have to worry about the personal circumstances of the accused like that he is a first offender and so on because the interest of society require that it be dealt with commensurately‟ (sic). [30] The magistrate‟s reasoning suggests that he was not aware of this court‟s judgment in S v Malgas11 that was handed down two years earlier. It dealt with the effect of the minimum sentence dispensation and concluded that while the minimum sentence prescribed by the legislature should ordinarily be imposed the sentencing court retained its discretion to impose a lighter sentence if there was weighty justification for doing so.12 In this regard the court made clear that all factors traditionally taken into account in sentencing (whether or not they diminish moral guilt) continue to be relevant. [31] The second misdirection was that he punished Mr Dlamini for the participation of his co-robbers in the commission of these crimes. Of course, the fact that a robber acts with others when committing a crime is an aggravating factor of which a court must take account. But it is not permissible to make an accused „shoulder the blame‟, as the magistrate put it, because the other robbers were not made to account for their part in the crime. An offender can be punished only for his own criminal conduct and the conduct of co-perpetrators that is imputed to him – nothing more. [32] Thirdly, the magistrate surmised that the crime had been carefully planned, which is an aggravating factor. But this was pure speculation. There was no evidence whatsoever to suggest that this crime was planned, and it was 11 S v Malgas 2001 (2) SA 1222 (SCA). 12 Para 25B. certainly not an inference that could safely have been drawn from the circumstances under which the robbery took place. [33] Finally, and assuming that there was no duplication of convictions, the magistrate‟s most serious misdirection was his failure to consider the cumulative effect of the sentences. Only the sentences imposed on the firearm and ammunition counts were ordered to run concurrently, the effect of which was to reduce the total sentence to be served by just one year. All the other sentences, including the theft of the motor vehicle, were ordered to run consecutively. The total of 45 years‟ imprisonment was a sentence of 15 years more than even the state thought it could legitimately ask for. It seems that the magistrate‟s unexplained premise for ordering the sentences to run consecutively was his erroneous assumption that the minimum sentence regime required this. So even if Mr Dlamini had committed three offences, they were perpetrated „at the same time and place, and in a single unbroken sequence‟.13 Here too common sense and fairness suggest that he ought to have been punished as if only one offence was committed. The Judgment of the High Court [34] As I have mentioned the high court set aside Mr Dlamini‟s conviction for the unrelated motor vehicle theft in 1999, but confirmed the convictions for the three counts of robbery as well as the firearms and ammunition charges. So the two year sentence for the theft fell away leaving an effective sentence of 43 years‟ imprisonment, which it also upheld. [35] The high court (Gorven AJ, Ntshangase J concurring) dealt cursorily with Dlamini‟s appeal against his sentence and concluded: 13 Fourie v S 2001 (4) All SA 365 (A). „[I]n the light of all the relevant circumstances of the matter and taking into account the relative youth of the appellant as well as the fact that this was a first offence and weighing it against the manner in which the offence was committed, indicating that this was a slick and professional operation, and weighing it also in the light of the legislature‟s indication of the seriousness of the offence in the eyes of the community, I cannot find that the magistrate imposed a sentence any different from the one which I myself would have imposed. There is therefore no basis on which to find that this court is at large to intervene and impose its own sentence.‟ [36] In approaching the issue in this manner the high court seems to have laboured under the same misapprehension as the magistrate did – that the minimum sentence regime required these sentences to be served consecutively. What also weighed with the high court was, as the magistrate similarly found, that this „was a slick and professional operation‟ justifying the severest sentence. As I indicated earlier, there was simply no evidence, circumstantial or otherwise, to support this inference. Ms Watt, who appeared for the state in this appeal, to her credit did not seek to defend this flawed reasoning. [37] I turn to consider the appropriate sentence. The robbery was a serious crime aggravated by the fact that Mr Dlamini acted in concert with two others. The three women who were going about their normal business went through a terrifying experience – one that they would no doubt fear could happen to them again. Only one of the two cars and some of the items taken during the robbery were recovered. [38] However, Mr Dlamini directed no physical violence against any of the victims. His conduct went no further than taking Mrs Burgess‟s possessions, albeit that this was induced under the threat of violence by one of his co-robbers. [39] It is unfortunate that Mr Dlamini‟s legal representative placed so little evidence in mitigation of sentence before the trial court. On the face of it the fact that the appellant had lost both his parents – his mother when he was only 13 – must have had some bearing on what happened to him. Also the court was told nothing of the circumstances of how he came to father two children and whether he was fulfilling any responsibility for them. Importantly, no evidence was led regarding his schooling, save for the fact that he was in Grade 11, which may have assisted the court in considering his prospects for rehabilitation. In short no substantial and compelling circumstances were placed before the court to justify the imposition of a lesser sentence. Fifteen years‟ imprisonment is therefore a proper sentence for his role in the robbery notwithstanding the wrong approach by both the magistrate and the high court. [40] The effective sentence of three years‟ imprisonment for the firearm and ammunition charges is in and of itself not unduly harsh. Mr Kemp did not suggest that it was. So taken together with the fifteen years‟ for the robbery the sentence he ought to serve is eighteen years. [41] This brings me to the ten months Mr Dlamini spent in custody before he was sentenced which, as I have mentioned, neither the magistrate not the high court took into account in deciding the appropriate sentence. It is trite that the period an accused is held in custody while awaiting completion of his trial should be taken into account when deciding on the appropriate sentence.14 This is done by making the period of imprisonment actually imposed shorter than it would otherwise have been. However, the courts have not spoken clearly on how to 14 See generally Terblanche Sentencing in South Africa p 205 and the cases there cited. calculate this period. One approach has been to do an inexact subtraction;15 another is to deduct the period actually spent;16 yet another is to treat the time spent in custody at the very least as equivalent to the time served without remission17and a fourth more adventurous method is to treat the period as equivalent to about twice the length because of the harsher conditions that awaiting-trial prisoners are subjected to in comparison with the conditions of sentenced prisoners.18 [42] As we have not had the benefit of argument on what the correct approach should be I refrain from saying anything further on this question – particularly in the case of prison conditions – as this would depend on the facts. Suffice to say that the courts have spoken clearly that an appellant is entitled to the benefit of the period of his incarceration. In Mr Dlamini‟s case this was ten months, which equates roughly to a year in custody. I would deduct this period from the overall 15 S v Njikelana 2003 (2) SACR 166 (C) where the court subtracted three years‟ imprisonment for 35 months spent in custody; In S v Vilakazi 2009 (1) SACR 552 (SCA) para 60 a minimum sentence of 15 years‟ imprisonment was reduced by two years because the accused had spent „just over two years‟ in custody. 16 In S v Hawthorne and another 1980 (1) SA 521 (A) at 523F-G read with 525H the court deducted the exact period of one year spent in custody from the sentence imposed by a provincial division. 17 S v Brophy 2007(2) 56 SACR (W) para 18. This is a decision of the full court of the Johannesburg High Court. It agreed with the dictum in S v Stephen 1994 (2) SACR 163 (W) at 168f where the court, following Canadian authority, approved the statement that „Imprisonment whilst awaiting trial is the equivalent of twice that length.‟ In Brophy the court reduced a sentence of 24 years‟ imprisonment, which would have been appropriate, to 16 years for a period of four years and four months in custody in respect of one accused and to 18 years‟ imprisonment in respect of the other accused for two years and four months in custody. In S v Egglestone 2009 (1) SACR 244 (SCA) para 33, Farlam JA in a minority judgment said that he would hesitate to give general approval to the statement in Stephen though he thought that the circumstances of the particular case warranted its application. 18 S v Brophy para 18. sentence of 18 years‟ imprisonment, which it otherwise would have been, and impose an effective sentence of 17 years‟ imprisonment. _______________ A CACHALIA JUDGE OF APPEAL MAJIEDT JA ( VAN HEERDEN AND SNYDERS JJA concurring): [43] I have read the judgment of Cachalia JA. I disagree with his conclusion that there was a duplication of convictions on counts 1, 2 and 3. I, however, agree with him that the appeal against sentence should be upheld for the reasons enunciated in paras 28 to 42 above, in particular paras 33 and 36, as far as the concurrency of the sentences on counts 1, 2 and 3 is concerned. [44] The facts are fully detailed in the judgment of Cachalia JA. It is, however, necessary that I expand on some of the facts and place others in proper context. [45] A useful point to start with is the charge sheet. Counts 1, 2 and 3 are germane to the appeal and I shall, in the interest of brevity, refer to them collectively as „the charges‟. There were three complainants on the charges. In count 1 the appellant was charged with „robbery with firearms‟, understood by all concerned at the trial to mean robbery with aggravating circumstances where a firearm was used. The State alleged that Mrs Acutt was unlawfully, intentionally and by force divested of a Toyota Corolla motor vehicle, a video camera, a cellphone, two pairs of sunglasses, one pair of prescription glasses and a handbag containing cosmetics. In count 2 the charge was one of robbery with aggravating circumstances in respect of Mrs Burgess. The State averred that Mrs Burgess had been robbed of a Volvo motor vehicle, a pair of prescription sunglasses, a pair of prescription reading glasses, various tapes and a pair of sandals. Count 3 was also one of robbery with aggravating circumstances in respect of Mrs Usher who was allegedly robbed of a handbag containing a purse, a cellular phone, a cheque book, cash, a cosmetics bag, two pairs of reading glasses and one pair of sunglasses. Counts 2 and 3 were wrongly framed inasmuch as Mrs Usher, and not Mrs Burgess, had been robbed of the Volvo and the other items listed above. It appears that the State had erroneously switched the lists of stolen items around in this regard. [46] As stated, the appeal was before us only on sentence – the appellant sought leave on petition only against the sentence, which was granted. Counsel argued the duplication of convictions aspect without the advantage of prior preparation and research, in the circumstances explained by Cachalia JA. [47] According to the evidence, one of the three robbers had a firearm which he pointed at all three complainants. Mrs Usher was in her car (the Volvo) in the driver‟s seat, Mrs Burgess was seated in the front passenger seat and Mrs Acutt was approaching the Volvo from the rear to occupy the seat behind the driver, when the firearm was pointed at them. This constituted the main threat to the complainants, although other threats and demands were also uttered and addressed to them individually and as a group. The complainants testified that one robber (identified by Mrs Burgess at an identification parade as the appellant) first approached Mrs Burgess and demanded her handbag and other possessions. The other robber approached Mrs Acutt to demand the keys of her Toyota Corolla, while the one with the firearm continued pointing it at Mrs Usher. Mrs Usher vacated the driver‟s seat, walked towards the rear of the Volvo and handed over her car keys to one of the robbers when this was demanded of her. The robbers eventually drove off with both vehicles and with various belongings of the complainants in their possession. [48] Against this factual background, together with the facts set out by Cachalia JA, what falls to be decided is whether there has been a duplication of convictions on the charges. For the reasons that follow, I am of the view that the evidence established three separate counts of robbery and that the appellant had been correctly convicted. In my view, S v Maneli,19 relied upon by Cachalia JA, is distinguishable on the facts. But before I set out my reasons for differing on these aspects, it is necessary to restate the general legal principles regarding robbery. [49] Cachalia JA cites the definition of robbery as set out in Maneli20 which, in turn, emanates from Prof Milton‟s work.21 That definition accords broadly with those advanced by Prof Snyman22 and by Prof de Wet.23 As Cachalia JA states, robbery comprises two unlawful acts, one the taking of property and the other the perpetrating or uttering of a violent act upon or violent threats to a person.24 While the definition and the essential elements of the offence are straightforward, the application thereof to factual situations is not, as this case demonstrates. Prof Milton correctly observes that „[t]his duality lends a measure of complexity to the analysis and application of the elements of the crime that has ensured a continuing quality of ambiguous uncertainty about the crime, which sometimes leads to strange anomalies‟.25 19 S v Maneli 2009 (1) SACR 509 (SCA). 20 S v Maneli para 6. 21 J R L Milton South African Criminal Law and Procedure 3 ed (1996) at 642. 22 C R Snyman Criminal Law 5 ed (2008) at 517. 23 De Wet and Swanepoel Strafreg 4 ed (1985) at 373. 24 Cf S v Moloto 1982 (1) SA 844 (A) at 850B. 25 Milton at 643. [50] Two further elements of the offence bear emphasis. Firstly, there must be a causal link between the violence perpetrated and the taking of the property.26 Secondly, robbery, unlike theft, is not a continuing crime – the offence of robbery is complete once contrectatio is effected.27 These are important considerations in assessing whether there has been a duplication of convictions. I hasten to point out that the observation that robbery is not a continuing crime must not be confused with the factual matrix (as in Maneli) where two or more acts are done with a single intent, constituting one continuous transaction. In the first instance a robbery would be completed once property has been taken from the victim as a result of violence or threats directed at him or her. Where violence is directed at a person after the goods had been taken, our courts have held that it is not the offence of robbery that is committed.28 In the second instance, on the other hand, a single intent to take property by means of violence towards persons at separate locations in one continuous transaction can, in appropriate circumstances, constitute one robbery. This was the case in Maneli,29 which I turn to discuss next. [51] My brother Cachalia JA has already expounded the facts and findings in Maneli. The present matter differs in my view materially from Maneli on the facts in the following respects: firstly, all three women were threatened separately and together and their property taken from them individually, separate from the others. Unlawful threats of violence and the taking of property were thus perpetrated separately in relation to each of the women. In Maneli various people were threatened and violent acts were directed at various people, but only the complainant‟s (Mr Maske‟s) property was stolen. That property was in the complainant‟s possession and under his control, thus only one robbery was committed. The threats and violence against the persons present there, 26 Snyman at 518; Milton at 648. 27 Milton at 647. 28 Milton at 647 and cases cited at footnote 63. 29 And see further Ex parte Minister van Justisie: In re S v Seekoei 1984 (4) SA 690 (A). including the complainant, facilitated the theft of the complainant‟s property. The second difference is to be found in the intent requirement. In Maneli there was a single intent, namely to deprive the complainant of his property through violence. That single intent was executed in one continuous transaction, at the complainant‟s office and at his house. As the appellant in the present matter denied involvement in the incident, his subjective intention could not be investigated during the trial. As his conviction is dependent upon him having had the requisite intention, it has to be inferred from his actions and those of his accomplices insofar as he associated himself with their actions, as testified to by the three victims. That evidence reveals: (a) A threat with a firearm by one of the perpetrators (I refer to him as the second perpetrator for ease of reference) aimed and directed at all three women; (b) That threat, together with threatening and demanding utterances by all the perpetrators, facilitated the removal of property from all three women; (c) The appellant took a handbag and other possessions from Mrs Burgess; (d) The inference that the appellant had the intention to rob Mrs Burgess lies in his own action of taking her property from her, threatening her and associating himself with the second perpetrator‟s threat towards her. That completes the crime of robbery of Mrs Burgess; (e) The third perpetrator (reference again for convenience) took the handbag, the Toyota motor vehicle and its keys from Mrs Acutt whilst threatening her and associating himself with the threat by the second perpetrator towards her. Thus the third perpetrator‟s actions fulfilled all the elements of the crime of robbery towards Mrs Acutt; (f) Because the appellant made common purpose with the second and third perpetrators, as correctly pointed out by Cachalia JA in para 21 above, he is also guilty of the robbery committed by the third perpetrator against Mrs Acutt although he personally took no action against her; (g) The same reasoning, applied to the robbery of Mrs Usher, leads to the conclusion that the appellant is also guilty of the robbery committed against her. (h) This illustrates that it is not possible to conclude, from the events testified to by the three victims, that the appellant had „a single intent‟. In the present matter there was a separate intent by the three robbers to rob each of the three women. That separate intent in respect of each woman was executed separately in respect of each woman. [52] One might ask rhetorically: if the three women had been raped by the appellant, can it ever be argued that there was only one offence of rape? Reverting to robbery: if violent acts are performed on a number of persons, but property is taken from only one of them, then there is only one robbery, and several assaults, as was the case in Maneli. If violence is directed at only one person, but property is taken from several persons, including the one against whom violence was directed, then there is one robbery and several thefts. But where violence or threats are perpetrated against three persons and property taken from all three as a result of such violence or threats, there are three robberies. The point can be made by simply asking – who was robbed by the appellant? If it was only one robbery, the inevitable consequence must be that only one of the women was robbed of all of the property, despite the fact that it was taken from the possession of the others. The next logical question would be – who is the woman that was robbed? The difficulty in answering these questions does not arise when they are posed in respect of Maneli. There Mr Maske, the complainant, was robbed of all of the property, as it was in his possession or under his control. The presence of others against whom violence was directed in the course of the robbery, was merely incidental to the robbery of the complainant, although the accused in Maneli could legitimately have been charged with the assault of the other persons. In the present matter, however, property was taken from the possession and control of each of the women separately, through the use of threats of violence. [53] It is difficult to comprehend how, for example, the taking by force of Mrs Acutt‟s property could constitute a robbery of Mrs Burgess, and vice versa. A similar difficulty arises with the finding that the appropriation of Mrs Usher‟s property by force constitutes a robbery of Mrs Acutt or Mrs Burgess. Snyman defines robbery as the „theft of property‟ by intentionally and unlawfully using violence or threats to take the property from someone else.30 So, one of the elements of robbery is theft. All the requirements of theft also apply to robbery. Theft is in turn defined as appropriation of corporeal, movable property which, inter alia, „belongs to, and is in the possession of another‟.31 So, in the case of robbery, the fact that the perpetrator takes property belonging to and in possession of three different persons clearly constitutes three counts of robbery. In Maneli, on the other hand, property belonging to and in the possession of only one person was appropriated. [54] The single intent and continuous transaction test, as applied to an enquiry regarding the improper duplication of convictions, has already been discussed above. Another test is the enquiry whether the evidence necessary to establish one crime involves proving another crime.32 As is the case with the single intent test, above, this second test also compels one to the ineluctable conclusion that there were three separate robberies. If the State had led the evidence of one complainant only in relation to the property she had been forcibly deprived of, all the elements of the crime of robbery would have been proved. This is true of all three complainants. 30 Snyman at 517. 31 Snyman at 483. 32 S v Maneli para 8 and cases cited there. [55] A brief consideration of the principles regarding duplication of convictions is apposite. Section 83 of the Criminal Procedure Act 51 of 1977 enables the State to draft charges as widely as it may deem necessary, to the extent that it may technically amount to a duplication of charges. That the law permits. But what is not permitted is duplication of convictions in order to safeguard an accused against being convicted twice in the same case for the same offence. As stated by Cachalia JA, where the application of the two tests to determine whether there has been a duplication of convictions yields no clear result, a court is called upon to apply its common sense, wisdom, experience and sense of fairness to reach a decision.33 As demonstrated above, on the evidence and in applying the two tests, three separate offences were committed. To hold otherwise would be to distort a fundamental legal principle, leading to anomalous results. As Wessels JA said in S v Grobler en ‘n ander:34 „The test or combination of tests to be applied are those which are on a common sense view best calculated to achieve the object of the rule.‟ The rule is primarily aimed at fairness. This, however, embodies fairness to both the accused and the State. Harms DP put it thus in the context of the Constitution‟s fair trial provisions in s 35: „Fairness is not a one-way street conferring an unlimited right on an accused to demand the most favourable possible treatment, but also requires fairness to the public as represented by the State‟.35 The rule cannot be applied where it would lead to manifest unfairness to the State, as would be the case, in my view, were Cachalia JA‟s views to be upheld. To borrow again from Wessels JA in S v Grobler en ‘n ander:36 „The main purpose and social function of criminal proceedings are to establish the guilt of an accused person in respect of criminal conduct so that he may be punished according to law for that conduct.‟ 33 S v Whitehead & others 2008 (1) SACR 431 (SCA) para 35; S v Dos Santos & another 2010 (2) SACR 382 (SCA) para 44. 34 S v Grobler en ‘n ander 1966 (1) SA 507 (A) at 523F. 35 See: National Director of Public Prosecutions v King 2010 (2) SACR 146 (SCA) para 5. 36 At 522F-G. The practice of the DPP, referred to by Cachalia JA in para 26, is ill conceived as s 83 of the Act specifically permits a broader approach to be followed in the formulation of charges. But once evidence is heard a court should be mindful of the rules regarding the duplication of convictions. The manner in which charges had been formulated in the present matter constitutes the proper approach. [56] To summarise: the evidence plainly established the commission of a separate robbery against each of Mrs Acutt, Mrs Burgess and Mrs Usher. The application of the single intent, continuous transaction test and of the evidence test inexorably leads to this conclusion. [57] In the premises, I would dismiss the appeal against conviction on counts 2 and 3. I would, however, for the reasons set out above, uphold the appeal against sentence. In the result, the following order is made: 1. The appeal against the convictions on counts 2 and 3 is dismissed. 2. The appeal against the sentence is upheld. 3. The order of the court below on sentence is set aside and substituted with the following: „The appeal against sentence is upheld and the order of the trial magistrate is set aside and the following order is substituted in its place: “(a) The accused is sentenced to fifteen years‟ imprisonment on each of counts 1 and 2 and to ten years‟ imprisonment on count 3; (b) The accused is sentenced to three years‟ imprisonment on count 4; (c) The accused is sentenced to one year‟s imprisonment on count 5; (d) The sentences on counts 2 and 3 are ordered to run concurrently with the sentence on count 1 and the sentence on count 5 is ordered to run concurrently with that on count 4; (e) One year of the three years on count 4 is ordered to run concurrently with the sentence on count 1. (f) In terms of s 12 of the Arms and Ammunition Act 75 of 1969, the accused is declared unfit to possess a firearm. (g) The effective sentence to be served is seventeen years‟ imprisonment.”‟ ________________________ S A MAJIEDT JUDGE OF APPEAL APPEARANCES For Appellant: K J Kemp SC Instructed by: Hulley & Associates Inc, Durban Honey, Bloemfontein For Respondent: A A Watt Instructed by: Director of Public Prosecutions, Pietermaritzburg Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF APPEAL 27 March 2012 STATUS: Immediate MUSA DLAMINI V STATE (362/11) 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 The Supreme Court of Appeal (the SCA) today upheld an appeal from the KwaZulu Natal High Court against the sentence imposed in respect of three counts of robbery, unlawful possession of firearm and ammunition and theft. The court substituted an effective sentence of 43 years’ imprisonment with one of 17 years’ imprisonment on all the counts. The majority held that the regional magistrate erred in not ordering the sentences on the three robbery convictions to run concurrently. The majority found that the appellant had been correctly convicted on three counts of robbery. Three women had been threatened inter alia with a firearm and each one was robbed separately of various possessions, which included two motor vehicles. The majority held that this constituted three separate robberies. The minority, however, held that these acts constituted a continuous transaction with one single intent, hence there should have been only one conviction of robbery in respect of the three complainants. The minority would therefore have interfered with the sentence on this basis, but it also held that, even if there were to be three convictions of robbery, the sentences should have been ordered to run concurrently. -- ends --

9

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 216/2016 In the matter between: MPUMALANGA TOURISM & PARKS AGENCY FIRST APPELLANT MOUNTAINLANDS OWNERS ASSOCIATION SECOND APPELLANT and BARBERTON MINES (PTY) LTD FIRST RESPONDENT THE DEPUTY DIRECTOR GENERAL: DEPARTMENT OF MINERAL RESOURCES SECOND RESPONDENT THE REGIONAL MANAGER: EMALAHLENI REGIONAL OFFICE DEPARTMENT OF MINERAL RESOURCES THIRD RESPONDENT THE DIRECTOR GENERAL: DEPARTMENT OF MINERAL RESOURCES FOURTH RESPONDENT THE MINISTER OF MINERAL RESOURCES FIFTH RESPONDENT Neutral citation: Mpumalanga Tourism & Parks Agency v Barberton Mines (Pty) Ltd (216/2016) [2017] ZASCA 9 (14 March 2017) Bench: Ponnan, Tshiqi, Majiedt, Dambuza and Van Der Merwe JJA Heard: 17 February 2016 Delivered: 14 March 2016 Summary: Mining and Environmental Law: grant of a prospecting right in terms of s 17(1) of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA): whether prospecting area part of a protected area as contemplated by s 12 of the National Environmental Management: Protected Areas Act 57 of 2003 (NEMPAA): whether prospecting prohibited by s 48(1) of NEMPAA. _____________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Gauteng Local Division, Johannesburg (Baqwa J sitting as court of first instance): (a) Save for dismissing the appellants‘ application for leave to adduce further evidence with costs, the appeal is upheld with costs, such costs in each instance to include those consequent upon the employment of two counsel. (b) The order of the court below is set aside and in its stead is substituted: ‗The application is dismissed with costs.‘ ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Ponnan JA (Tshiqi, Majiedt, Dambuza and Van Der Merwe JJA): [1] The Barberton Mountain Land (also described as the Barberton Greenstone Belt or Makhonjwa Mountains) is one of the most ecologically important areas in the Province of Mpumalanga. It is home to some 2200 plant and 300 bird species. The area has been placed on the National List of Terrestrial Ecosystems that are Threatened and in Need of Protection,1 and has been identified as the most important refugium in the province for plant species threatened by climate change. It is also world renowned for its unique geology, consisting, as it does, of rocks estimated to be 3600 million years old, which have been described as the oldest and best preserved sequence of volcanic and sedimentary rocks on Earth. According to geologists, these exposures of Archaean rock provide an unparalleled repository of scientific information about early Earth. At the request of the Minister of Environmental Affairs and Tourism and with the approval of UNESCO the area was placed on South Africa‘s Tentative List of World Heritage Sites in 2008.2 All of that notwithstanding, on 6 October 2006 the first respondent, Barberton Mines (Pty) Ltd (Barberton Mines), was granted a prospecting right in terms of s 17(1) of the Mineral and Petroleum Resources Development Act 28 of 2002 (the MPRDA) to conduct prospecting operations for gold and silver on certain properties situated in the District of Barberton (the prospecting area). [2] On 11 November 2006 the Department of Minerals and Energy (as it then was) approved Barberton Mines‘ Environmental Management Plan in terms of s 17(5) of the MPRDA and in consequence, the prospecting right for a period of five years came into effect on that date. On 10 August 2011 Barberton Mines lodged an application for the 1 See Government Gazette No. 34809 of 9 December 2011, published in terms of the National Environmental Management: Biodiversity Act 10 of 2004. 2 The designation was made on 6 June 2008 in terms of s 1(xxiv)(a)(ii) of the World Heritage Convention Act 49 of 1999. renewal of its prospecting right in terms of s 18 of the MPRDA. That application is yet to be granted or refused and, by virtue of s 18(5) of the MPRDA,3 Barberton Mines‘ original prospecting right remains in force. When Barberton Mines sought to commence with the prospecting work it encountered resistance from the first appellant, the Mpumalanga Tourism and Parks Association (the MTPA) and several members of the second appellant, the Mountainlands Owners Association (MOA), who asserted that the prospecting area constitutes part of a nature reserve or protected area. On 21 October 2008 the two appellants and three others – the Trustees for the Time Being of the Lomshiyo Trust (the Lomshiyo Trust), Way Prop Two (Pty) Ltd (Way Prop) and Simply See (Pty) Ltd (Simply See) lodged an internal appeal with the Minister of Mineral Resources against the grant of the prospecting right to Barberton Mines. The appeal was dismissed by the Director General: Mineral Resources on 16 April 2012. [3] On 12 July 2013, and after several meetings and failed attempts at negotiation with the MTPA and MOA, Barberton Mines lodged an application with the North Gauteng High Court, Pretoria.4 The relief sought, duly amended on 18 August 2015 at the hearing of the matter, was: ‗1. It is declared that the applicant is entitled to conduct the prospecting activities referred to in Section 5(3) of the Mineral and Petroleum Resources Development Act 28 of 2002 in accordance with prospecting right MP/30/5/1/2/1040PR in relation to the following properties: Lot 119 Section A Kaap Block, Bickenhall 346JU and Dycedale 368JU, District of Barberton, Mpumalanga Province. 2. The first [MTPA], second [MOA] and fifth [Simply See] respondents are interdicted from denying the applicant access to the prospecting area for the purpose of conducting prospecting activities in accordance with the foresaid prospecting right or interfering with such prospecting activities.‘ 3 Section 18 (5) of the MPRDA provides: ‗A prospecting right in respect of which an application for renewal has been lodged shall, despite its stated expiry date, remain in force until such time as such application has been granted or refused.‘ 4 The application cited Mpumalanga Tourism and Parks Agency as the first respondent, Mountainlands Owners Association as the second respondent, The trustees for the time being of the Lomshiyo Trust as the third respondent, Way Prop Two (Pty) Ltd as the fourth respondent, Simply See (Pty) Ltd as the fifth respondent, the Deputy Director General: Department of Mineral Resources as the sixth respondent and the Regional Manager of the Emahaleni Regional Office of the Department of Mineral Resources as the seventh respondent. [4] The MTPA, MOA, Lomshiyo Trust, Way Prop and Simply See, who had been cited as the first to fifth respondents respectively, opposed Barberton Mines‘ application. In addition, they launched a counter application seeking that: ‗1. The Director-General: Department of Mineral Resources is joined as the eighth respondent, and the Minister of Mineral Resources is joined as the ninth respondent, in the main application and the counter-application. 2. The first to fifth respondents‘ delay in instituting the review of the decision of the sixth respondent and/or seventh respondent to grant the prospecting right MP/20/5/1/1/2/1040PR to the applicant (―the initial decision‖) and/or the decision of the eighth respondent to uphold the initial decision on appeal (―the appeal decision‖) is condoned. 3. The initial decision and/or the appeal decision referred to in paragraph 2 are reviewed and set aside. 4. The applicant and the sixth to ninth respondents are jointly and severally liable for the costs of the counter-application, the one paying the others to be absolved.‘ [5] In support of the counter application, MTPA‘s Regional Manager, Mr Louis Loock, alleged: ‗5.1 The properties constitute part of a ―nature reserve‖ or ―protected environment‖ as contemplated in section 48(1)(a) or 48(1)(b) of the National Environmental Management: Protected Areas Act 57 of 2003 (―the NEMPA‖) respectively and in respect of which ―no person may conduct commercial prospecting or mining activities‖. The applicant is accordingly not entitled to conduct prospecting activities in the prospecting area, notwithstanding that it holds a prospecting right to do so. The application should be dismissed on this basis. 5.2 The properties ―comprise land being used for public or government purposes or reserved in terms of any other law‖ as contemplated in section 48(1)(c) of the Mineral and Petroleum Resources Act 28 of 2002 (―the MPRDA‖) in respect of which ―no reconnaissance permission, prospecting right, mining right or mining permit may be issued‖ save if the conditions stipulated in section 48(2) of the MPRDA have been met. It is common cause that such conditions have not been met. The applicant is accordingly not the holder of any valid prospecting right entitling it to prospect on the properties. The application should be dismissed on this basis.‘ [6] The High Court (per Baqwa J) found in favour of Barberton Mines that the prospecting area did not constitute part of a ‗nature reserve‘ or ‗protected environment‘. In arriving at that conclusion, the court considered and rejected in turn three ‗acts‘ of provincial government (in 1985, 1996 and 2014) relied upon in support of the contention that the prospecting area formed part of a nature reserve or protected area as defined in s 1 of the National Environmental Management: Protected Areas Act 57 of 2003 (the NEMPAA). Accordingly, the court found that the prospecting area was not subject to the prohibition against prospecting under s 48(1) of the NEMPAA.5 It declined to enter into the merits of the counter application because, so it held, the ‗application is out of time and condonation cannot be granted‘. The High Court accordingly issued an order in these terms: ‗95.1 It is declared that the applicant is entitled to conduct the prospecting activities referred to in Section 5 (3) of the Mineral and Petroleum Resources Development Act 28 of 2002 in accordance with prospecting right MP/30/5/1/2/1040PR in relation to the following properties: Lot 119 Section A Kaap Block, Bickenhall 346 JU and Dycedale 368 JU, District Barberton, Mpumalanga Province. 95.2 The first, second and fifth respondents are interdicted and restrained from denying the applicant access to the prospecting area for the purpose of conducting prospecting activities in accordance with the aforesaid prospecting right or interfering with such prospecting activities. 95.3 The applicant is authorised – 95.3.1 to enter the properties mentioned in paragraphs 95.1 hereof together with its employees and to bring onto the land any plant, machinery or equipment, and build, construct or lay down any surface or underground structure which may be required for purposes of prospecting; 95.3.2 to carry out any other activity incidental to its prospecting operations. 95.4 The first, second and fifth respondents are ordered to pay the costs of this application jointly and severally, the one paying the other to be absolved.‘ MTPA and MOA (collectively referred to as the appellants) appeal with the leave of that court. [7] The prospecting area falls on land that the provincial government has been actively trying to conserve for more than thirty years. The land was first identified as worthy of protection in the late 1960s by the then Transvaal Provincial Administration. A 5 Section 48(1) provides: ‗Despite other legislation, no person may conduct commercial prospecting, mining, exploration, production or related activities – (a) in a special nature reserve, national park or nature reserve; (b) in a protected environment without the written permission of the Minister and the Cabinet member responsible for minerals and energy affairs; or (c) in a protected area referred to in section 9 (b), (c) or (d).‘ range of planning initiatives and several scientific surveys were undertaken culminating in a request in 1981 by the then Nature Conservation Division to reserve the land, including the prospecting area, for purposes of nature conservation and outdoor recreation. Consequently, on 17 January 1985, the Executive Committee of the Transvaal Provincial Administration adopted a Resolution (the 1985 Resolution), which reads: ‗It is decided that: (i) The reservation of approximately 20,000 hectares of state land and state mining land in Barberton as in Appendix A of the Memorandum for the purposes of nature conservation and outdoor recreation is approved; . . .‘ Appendix A of the Memorandum comprised a map depicting the reserved properties and approximately 7 000 hectares of private properties that were designated to be reserved subsequent to agreement with the respective land owners. Although the 1985 Resolution does not record the law under which the Executive Committee acted, the applicable provincial law then in force was the Transvaal Nature Conservation Ordinance 12 of 1983 (the Ordinance). [8] In 1994 the Transvaal Provincial Administration (and with it the Nature Conservation Division) was abolished pursuant to the Interim Constitution Act 200 of 1993. The Nature Conservation Division, together with the administrations responsible for conservation management in the former Lebowa, KwaNdebele and KaNgwane were then absorbed into the Eastern Transvaal Parks Board. The Eastern Transvaal Parks Board was established in terms of the Eastern Transvaal Parks Board Act 6 of 1995 (the ETPB Act) ‗to provide effective conservation management of the natural resources of the Province, and to promote the sustainable utilisation thereof‘.6 The ETPB Act also provided for the transfer of the administration of certain provincial nature conservation laws, including the Ordinance, to the Eastern Transvaal Parks Board.7 On 29 March 1996 the responsible member contemplated by the ETPB Act, namely the Member of the Executive Council for Environmental Affairs, Mpumalanga (the MEC) issued 6 Section 14(1) of the ETPB Act. 7 Section 20 read with Schedule 5. Proclamation Number 12 of 1996 (the 1996 Proclamation).8 The 1996 Proclamation read: ‗―Conservation Areas‖ in section 1 of the [ETPB Act], include the following areas from 1 April 1996‘. There followed a list of some 31 names including the Barberton Nature Reserve. Section 1 of the ETPB Act defined a ‗―conservation area‖ to mean an area designated by the responsible Member in the Provincial Gazette to be a conservation area.‘ [9] On 22 May 2014, the Member of the Executive Council for Economic Development, Environment and Tourism (the MEC) published a Proclamation to ‗amend the definition of the geographical areas comprising the Provincial Nature Reserves, referred to in the Schedules‘ (the 2014 Proclamation).9 The 2014 Proclamation was promulgated in terms of s 85(a) of the Mpumalanga Nature Conservation Act 10 of 1998, which provides: ‗In addition to any other power conferred upon him or her in terms of this Act or any other law, the Responsible Member may – (a) by notice in the Provincial Gazette declare any area defined in the notice to be a nature reserve and he or she may at any time by notice amend the definition of such an area or withdraw the declaration of such an area to be a nature reserve: . . .‘Schedule 4 of the 2014 Proclamation is headed ‗Description of Provincial Nature Reserves – Mpumalanga Province: Barberton Nature Reserve‘ and provides: ‗The Barberton Nature Reserve situated in the Mpumalanga Province, measuring in extent 27 808.4725 hectares and [is] defined as follows – ‘. The schedule includes a map of the Barberton Nature Reserve which defines the geographical boundaries of the reserve. The map is accompanied by a list of the properties that are labelled on the map, together with the size of each property (in hectares) and the plot number. All of the properties listed in Barberton Mines‘ prospecting right are included as properties comprising part of the Barberton Nature Reserve in Schedule 4.10 8 Proclamation No. 12 of Provincial Gazette Number 132 of 29 March 1996. 9 Published in General Notice 185 of 2014 in the Provincial Gazette 2302 of 22 May 2014. 10 Although Covington 245 JU is not listed in Schedule 4 of the 2014 Regulations, it is apparent from the map in Schedule 4 that Covington 245 JU is included in the area marked 54 on the map (designated as Sheba 949JU). [10] The High Court identified the principal issue in the matter as: ‗34.1 whether the alleged Barberton Nature Reserve constitutes a ―nature reserve‖ for the purposes of the National Environmental Management: Protected Areas Act;‘ It approached that enquiry thus: ‗40. Reading from the above provisions or Sections 1, 23 and 28 respectively; for the Barberton Nature Reserve to qualify either as a nature reserve or a protected environment under the Protected Areas Act, it must have been declared or regarded as having [been] declared as a nature reserve or a protected environment in terms of the Act or it must have been declared or designated in terms of provincial legislation as a nature reserve or a protected environment in terms of the Act.‘ In arriving at that conclusion the High Court reasoned that: (a) the 1985 Resolution had neither been issued under the hand of the Administrator nor published in terms of s 14 of the Ordinance and that it accordingly lacked legal efficacy;11 the 1996 Proclamation did not ‗identify the area of ―Barberton Nature Reserve” as a conservation area‘; and (c) the 2014 Proclamation purported to amend not establish the Barberton Nature Reserve. I may say at the outset that, in my opinion, the High Court took far too narrow a view of the matter. [11] A useful starting point is s 24 of the Constitution,12 which affords everyone the right ‗to an environment that is not harmful to their health or well-being‘. One of the objects of the MPRDA (s 2(h)) is to ‗give effect to section 24 of the Constitution by ensuring that the nation‘s mineral and petroleum resources are developed in an orderly and ecologically sustainable manner while promoting justifiable social and economic development.‘ The granting of prospecting rights under the MPRDA is thus made subject to environmental protections and constraints.13 Section 48(1)(c) of the 11 Section 14 of the Ordinance headed ‗Declaration of nature reserves‘ provides: ‗The Administrator may by notice in the Provincial Gazette declare an area defined in the notice to be a nature reserve and he may at any time by like notice amend the definition of such an area or withdraw the declaration of such an area to be a nature reserve.‘ 12 Everyone has the right— (a) to an environment that is not harmful to their health or well-being; and (b) to have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that— (i) prevent pollution and ecological degradation; (ii) promote conservation; and (iii) secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development. 13 See ss 5A, 17(1)(c), 39(2), 41(1) of the MPRDA. See also Bengwenyama Minerals (Pty) Ltd v Genorah Resources (Pty) Ltd 2011 (4) SA 113 (CC) para 34. MPRDA,14 which must be read subject to s 48 of the NEMPAA, prohibits the granting of a prospecting right in respect of ‗any land being used for public or government purposes or reserved in terms of any other law.‘ [12] NEMPAA binds all organs of state (s 4(2)) and trumps other legislation in the event of a conflict concerning the management or development of protected areas.15 According to s 9(a) of NEMPAA, ‗the system of protected areas in South Africa‘ includes ‗special nature reserves, national parks, nature reserves (including wilderness areas) and protected environments‘. In terms of s 1: A ‗nature reserve‘ is defined as - ‗(a) an area declared, or regarded as having been declared, in terms of section 23 as a nature reserve; or (b) an area which before or after the commencement of this Act was or is declared or designated in terms of provincial legislation for a purpose for which that area could in terms of section 23(2) be declared as a nature reserve, and includes an area declared in terms of section 23(1) as part of an area referred to in paragraph (a) or (b) above‘. A ‗protected area‘ is defined as – ‗any of the protected areas referred to in section 9;‘ and, a ‗protected environment‘ is defined as - ‗(a) an area declared, or regarded as having been declared, in terms of section 28 as a protected environment; (b) an area which before or after the commencement of this Act was or is declared or designated in terms of provincial legislation for a purpose for which that area could in terms of section 28(2) be declared as a protected environment; or (c) . . ., and includes an area declared in terms of section 28(1) as part of an area referred to in paragraph (a), (b) or (c) above.‘ 14 Section 48(1)(c) of the MPRDA provides: ‗(1) Subject to section 48 of the National Environmental Management: Protected Areas Act, 2003 (Act No. 57 of 2003), and subsection (2), no reconnaissance permission, prospecting right, mining right may be granted or mining permit be issued in respect of- . . . (c) and land being used for public or government purposes or reserved in terms of any other law‘. 15 Section 7(1)(a) provides: ‗(1) In the event of any conflict between a section of this Act and (a) other national legislation, the section of this Act prevails if the conflict specifically concerns the management or development of protected areas‘. Significantly therefore, a ‗protected area‘ by definition encompasses a ‗protected environment‘, which, in turn, includes an area ‗declared or designated in terms of provincial legislation‘. [13] Importantly, there is as well s 12 of NEMPAA, which reads: ‗A protected area which immediately before this section took effect was reserved or protected in terms of provincial legislation for any purpose for which an area could in terms of this Act be declared as a nature reserve or protected environment, must be regarded to be a nature reserve or protected environment for the purpose of this Act.‘ Section 12 is a deeming provision. Such a provision is employed by the legislature to ‗denote merely that the persons or things to which it relates are to be considered to be what really they are not, without in any way curtailing the operation of the Statute in respect of other persons or things falling within the ordinary meaning of the language used‘ (Chotabhai v Union Government (Minister of Justice) and Registrar of Asiatics at 33).16 Interpretation must be solved by linguistic construction, and albeit not an entirely happily worded section, the safest clue to its meaning is to look at the language which the Legislature has itself employed. In terms of the s 12, a protected area that was reserved or protected in terms of provincial legislation is entitled to be regarded as a nature reserve or protected environment for the purposes of NEMPAA. The effect of this provision is thus to extend the protection afforded to a nature reserve by NEMPAA, to a protected area reserved in terms of provincial legislation as well. The deeming provision serves to broaden the scope of NEMPAA to include within its reach a protected area reserved or protected by provincial legislation. [14] Textually and lexically the words ‗declaration‘ and ‗designation‘ bear different meanings. According to the Concise Oxford English Dictionary: ‗declaration‘ means, inter alia, ‗a formal or explicit statement or announcement‘ . . . ‗an act of declaring‘; and ‗designation‘ means ‗the action of giving someone or something a specified name, position, or status‘; ‗an official title or description‘. 16 Chotabhai v Union Government (Minister of Justice) and Registrar of Asiatics 1911 AD 13 at 33. The NEMPAA thus contemplates the protection of areas that have been either ‗declared or designated‘ in terms of provincial legislation. And, the definition of a nature reserve in NEMPAA includes areas ‗designated in terms of provincial legislation‘. [15] The effect of the 1996 Proclamation was thus that the designated area was reserved or protected in terms of provincial legislation for a purpose for which it could be declared as a nature reserve or protected environment under s 12 of the NEMPAA. The High Court took the view that because the description of the area therein is vague, it must be regarded as void. It is so that if it is impossible for the court to say what area was intended to be included, the 1996 Proclamation must be regarded as void. But, as Centlivres JA pointed out in Pretoria Timber Co. at 17017 ‗it is . . . the duty of the Court to avoid, if possible, the conclusion that the Notice is too vague to be effective‘. In that case (at 176 F-G), Schreiner JA observed: ‗The degree of certainty, clarity or precision that must be present in such a description as the one in question, on pain of invalidity, depends on the circumstances, including the nature of the problem to be solved by the framer of the description. . . . The law requires reasonable and not perfect lucidity and the fact that cases may arise in which it would be difficult, perhaps extremely difficult, to decide whether a place falls within or outside the area is not, by itself, a reason for holding that the description is not reasonably clear.‘ More recently, the Constitutional Court had occasion in Affordable Medicines Trust v Minister of Health 2006 (3) SA 247 (CC) to consider the doctrine of vagueness. It stated (para 108): ‗The doctrine of vagueness is founded on the rule of law, which, as pointed out earlier, is the foundational value of our constitutional democracy. It requires that laws must be written in a clear and accessible manner. What is required is reasonable certainty not perfect lucidity. The doctrine of vagueness does not require absolute certainty of laws. The law must indicate with reasonable certainty to those who are bound by it what is required of them so that they may regulate their conduct accordingly. The doctrine of vagueness must recognise the role of Government to further legitimate social and economic objectives. And should not be used unduly to impede or prevent the furtherance of such objectives.‘ 17 R v Pretoria Timber Co (Pty) Ltd 1950 (3) 163 (A). [16] There are certain considerations which I think must be borne in mind in approaching the problem. As Schreiner JA pointed out in Jaga v Dönges NO at 664H18 ‗the legitimate field of interpretation should not be restricted as a result of excessive peering at the language to be interpreted without sufficient attention to the contextual scene.‘ Context, the learned judge of appeal explained (at 662H), ‗is not limited to the language of the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted. Often of more importance is the matter of the statute, its apparent scope and purpose, and, within limits, its background.‘ There is no evidence to suggest that the area cannot be ascertained. And, whilst it is so that one must use outside evidence as conservatively as possible, ‗one must use it if it is necessary to reach what seems to be a sufficient degree of certainty as to the right meaning‘ (Delmas Milling Co Ltd v Du Plessis at 454). One is thus entitled in a situation such as the present to have regard to extrinsic evidence of an identificatory nature to clear up ambiguity or uncertainty (Delmas Milling Co Ltd v Du Plessis at 454).19 Recourse can be had to such provable surrounding circumstances as might throw light on and clarify the meaning to be given to the description of the area (R v Pretoria Timber Co (Pty) Ltd at 175 D-E). [17] The reference to the ‗Barberton Nature Reserve‘ in the 1996 Proclamation had the meaning given and applied to it by the provincial authorities since at least 1985. When regard is had to the nature of the 1996 Proclamation as a ‗designation‘ and to its context – including its relationship to the 1985 Resolution and the administration of the land as the Barberton Nature Reserve since then, it cannot be said that the persons to whom it is addressed would be left in any uncertainty. Since the 1996 Proclamation was a designation of an area already as a matter of fact reserved, its validity and effectiveness did not require a detailed description of the area concerned, as the High Court found. To achieve its purpose, the 1996 Proclamation could simply indicate the designated area by name, as it did. It enabled members of the public to comprehend that the named areas were classified as ‗conservation areas‘ under the ETPB Act. 18 Jaga v Dönges NO; Bhana v Dönges NO 1950 (4) SA 653 (A). 19 Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A) at 454. [18] Common sense, I daresay, must prevail. It cannot be, to borrow from Van Wyk v Rottcher’s Saw Mills (Pty) Ltd (at 989),20 that what is required, under pain of nullity, is a ‗faultless description . . . couched in meticulously accurate terms‘. To be sure, the court was there concerned with the validity of a written agreement of sale of land under one of the predecessors of the present s 2(1) of the Alienation of Land Act 68 of 1981.21 As Van Wyk v Rottcher’s Saw Mills22 made plain ‗provided the land sold is described in such a way that it can be identified by applying the ordinary rules of construction of contracts and admitting such evidence to interpret the contract as is evidence under the parol evidence rule . . . the provisions of the law are satisfied.‘ Albeit a less than perfect analogy, it is nonetheless instructive that our courts have been willing to hold that the test for compliance with that section is whether the land sold can be identified on the ground by reference to the provisions of the contract (Clemens v Simpson at 7F-G).23 [19] What was said in those cases with reference to contracts of sale of land is of equal application to contracts of suretyship in terms of s 6 of the General Law Amendment Act 50 of 1956.24 In that context, the following dictum by Corbett JA in Trust Bank of Africa Ltd v Frysch 1977 (3) SA 562 (A) at 586 D-F bears repeating: ‗This being essentially a question of applying the language of the contract to the facts of the case, one is entitled, in doing so, to have regard to evidence of an indentificatory nature (Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A.D.) at p 454). This would include, in the present case, evidence of the conclusion of the hire-purchase agreement relating to the cash register machines and of its proposed and actual transfer and cession to Trust Bank. If regard be had to the terms of the suretyship agreement, considered in the light of such identificatory evidence, I do not think that there can be any doubt that it was this hire-purchase agreement, and the obligations owing by the purchaser thereunder, that were being guaranteed by Frysch to Trust Bank. It is true that these obligations were, in effect, misdescribed as being presently 20 Van Wyk v Rottcher’s Saw Mills (Pty) Ltd 1948 (1) SA 983 (A) at 989. 21 The section reads: ‗No alienation of land . . . shall . . . be of any force or effect unless it is contained in a deed of alienation signed by the parties thereto or by their agents acting on their written authority.‘ 22 Van Wyk v Rottcher’s Saw Mills (Pty) Ltd 1948 (1) SA 983 (A) at 989. 23 Clemens v Simpson 1971 (3) SA 1 (A) at 7F-G; see also inter alia JR 209 Investments v Pine Villa Estates 2009 (4) SA 302 (SCA) and Exdev (Pty) Ltd v Pekudei Investments (Pty) Ltd 2011 (2) SA 282 (SCA). 24 Section 6 of Act 50 of 1956 provides: ‗No contract of suretyship entered into after the commencement of this Act, shall be valid, unless the terms thereof are embodied in a written document signed by or on behalf of the surety. . . .‘ See Trust Bank of Africa Ltd v Cotton 1976 (4) SA 325 (N) at 329G-H. owing but I do not regard this misdescription to be of so vital or fundamental a nature as to lead one to the view that the obligations cannot be identified as those arising under the hire-purchase agreement in question and, therefore, that there is no subject matter to which the language of the suretyship contract can be applied. On the contrary, it seems to me that, as far as identification is concerned, this misdescription does no more detract from the efficacy of the contract than, say, a minor deviation in the description of the area of land sold under a sale ad corpus . . . or a falsa demonstatio in a deed of grant . . .‘. [20] l accordingly incline to the view that the area is indicated with sufficient certainty to meet the challenge that the 1996 Proclamation is void for vagueness. And, as the 1996 Proclamation meets the requirements of s 12 of the NEMPAA, it follows that the prospecting area falls to be protected against prospecting under s 48(1) of that Act. In those circumstances as the High Court was, in effect, being asked to compel an illegality, which it could not do (Hoisain v Town Clerk, Wynberg),25 Barberton Mines‘ application ought to have failed. [21] It follows that the appeal must succeed and it is accordingly upheld. As to costs: In this court the appellants sought leave to adduce further evidence on appeal. That application was opposed by Barberton Mines. During argument it became apparent that the evidence sought to be introduced was not relevant to the determination of the appeal. That the application must accordingly be dismissed with costs. Save for those costs, the appellants are entitled to the remaining costs of the appeal. The appellants were ordered to pay the costs of Barberton Mines‘ application by the high court. And, although it declined to grant condonation to the appellants, which had the effect of its counter application failing, it made no order as to costs in that regard. As there is no cross appeal by Barberton Mines I need say nothing further on that score. 25 Hoisain v Town Clerk, Wynberg 1916 AD 236. [22] In the result: (a) Save for dismissing the appellants‘ application for leave to adduce further evidence with costs, the appeal is upheld with costs, such costs in each instance to include those consequent upon the employment of two counsel. (b) The order of the court below is set aside and in its stead is substituted: ‗The application is dismissed with costs.‘ _________________ V M Ponnan Judge of Appeal APPEARANCES: For Appellants: MA Wesley (with him J Bleazard) Instructed by: Richard Spoor Inc Attorneys, Johannesburg Webbers Attorneys, Bloemfontein For First Respondent: P Lazarus SC (with him I Currie) Instructed by: Malan Scholes Attorneys, Johannesburg Claude Reid Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM : The Registrar, Supreme Court of Appeal DATE 14 March 2017 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Mpumalanga Tourism and Parks Agency & another v Barberton Mines (Pty) Ltd & others (216/2016) [2017] ZASCA 9 (14 March 2017) MEDIA STATEMENT Today the Supreme Court of Appeal (SCA) upheld an appeal by the Mpumalanga Tourism and Parks Agency and The Mountainlands Owners Association against a judgment of the Gauteng Division of the High Court, Johannesburg. The SCA was concerned with whether the area in which the first respondent, Barberton Mines (Pty) Ltd, sought to commence mining operations, formed part of the Barberton Nature Reserve and whether the Barberton Nature Reserve was a protected area in terms of the National Environmental Management: Protected Areas Act 57 of 2003. The SCA held that on a proper interpretation of the National Environmental Management: Protected Areas Act read together with s24 of the Constitution, the Barberton Nature Reserve is in fact a protected area upon which mining operations are prohibited by law. Consequently, the appeal succeeded and the order of the High Court authorising Barberton Mines to commence prospecting operations in that area was set aside. . --- ends ---

3125

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No 125/06 Reportable In the matter between: CLIPSAL AUSTRALIA (PTY) LTD 1st Appellant CLIPSAL SOUTH AFRICA (PTY) LTD 2nd Appellant and TRUST ELECTRICAL WHOLESALERS 1st Respondent GAP DISTRIBUTOR 2nd Respondent Coram: HARMS ADP, STREICHER, CLOETE, LEWIS AND CACHALIA JJA Heard: 27 FEBRUARY 2007 Delivered: 23 MARCH 2007 Summary: Designs Act 195 of 1993 – novelty – originality – infringement. Neutral Citation: Clipsal Australia (Pty) Ltd v Trust Electrical Wholesalers [2007] SCA 24 (RSA). HARMS ADP/ HARMS ADP: [1] The proprietor of a registered design and the local exclusive licensee (the appellants) sought relief against the respondents on the ground that they are infringing their design registration. Blieden J, in the high court, dismissed the application with costs on the ground that the design had not been validly registered because it was not new or original; he also held that the design in any event had not been infringed. He granted the necessary leave to appeal. [2] The design (A 96/0687) was registered under the Designs Act 195 of 1993 as an aesthetic design in class 13, which covers equipment for the production, distribution or transformation of electricity. The Act draws a distinction between aesthetic and functional designs. The definition of the former reads (s 1(1)): ‘“aesthetic design” means any design applied to any article, whether for the pattern or the shape or the configuration or the ornamentation thereof, or for any two or more of those purposes, and by whatever means it is applied, having features which appeal to and are judged solely by the eye, irrespective of the aesthetic quality thereof.’ [3] The articles to which the design registration applies are ‘a set of electrical accessory plates with surrounds’. According to the definitive statement protection is claimed for ‘the features of shape and/or configuration of a set of electrical accessory plates with surrounds as shown in the accompanying drawings’. The drawings, which are an annexure to this judgment, show two configurations, hence the reference to a ‘set’ in both the title and the definitive statement. The one configuration is for what is normally known as a cover plate for a single wall socket for a three-prong electric plug with switch and the other is a cover plate for a double socket with two switches. These cover plates are rectangular. They are both surrounded by a square plate which has a slightly convex slope. Because of the relative shape of the rectangular cover plate and the square surround only the opposite sides of the surround are of the same width. [4] The effect of the registration of a design is to grant to the registered proprietor the right to exclude others from the making, importing, using or disposing of any article included in the class in which the design is registered and embodying the registered design or a design not substantially different from the registered design (s 20(1)). [5] The defendant in infringement proceedings may counterclaim for the revocation of the design registration or, by way of defence, rely on any ground on which the registration may be revoked (s 35(5)). In this case the respondents chose the second option, namely to rely by way of defence on the grounds that the design was neither new nor original as required by s 14(1)(a), which are grounds for revocation under s 31(1)(c). In addition they denied infringement, alleging that their products do not embody either of the two designs and differ substantially from them. [6] The respondents are making and marketing electrical accessory plates with surrounds under the name Lear G-2000 series single electrical socket SYZ – 16 (100 x 100) and double electrical socket S2YZ2 – 16 (100 x 100). These fall in the same class as the protected designs, which means that the first issue to determine is the scope of the design registration, which in turn requires a construction of the definitive statement and the drawings.1 The purpose of the definitive statement, previously known as a statement of novelty, is to set out the features of the design for which protection is claimed and is used to interpret the scope of the protection afforded by the design registration.2 [7] The definitive statement in this case is of the omnibus type because it does not isolate any aspect of the design with the object of claiming novelty or originality in respect of any particular feature. As Laddie J explained in Ocular Sciences Ltd v. Aspect Vision Care Ltd [1997] RPC 289 at 422: 1 TD Burrell ‘Designs’ 8 Lawsa 2 ed para 257. Further references to Lawsa are to this edition and volume. 2 Design Regulations GNR 844 of 2 July 1999 reg 15(1). ‘The proprietor can choose to assert design right in the whole or any part of his product. If the right is said to reside in the design of a teapot, this can mean that it resides in design of the whole pot, or in a part such as the spout, the handle or the lid, or, indeed, in a part of the lid. This means that the proprietor can trim his design right claim to most closely match what he believes the defendant to have taken.’ This means that the shape or configuration as a whole has to be considered, not only for purposes of novelty and originality, but also in relation to infringement.3 [8] Important aspects to consider when determining the scope of the registered design protection flow from the definition of an ‘aesthetic design’, namely that design features have to appeal to and be judged solely by the eye. First, although the court is the ultimate arbiter, it must consider how the design in question will appeal to and be judged visually by the likely customer.4 Secondly, this visual criterion is used to determine whether a design meets the requirements of the Act and in deciding questions of novelty and infringement.5 And thirdly, one is concerned with those features of a design that ‘will or may influence choice or selection’ and because they have some ‘individual characteristic’ are ‘calculated to attract the attention of the beholder.’6 To this may be added the statement by Lord Pearson that there must be something ‘special, peculiar, distinctive, significant or striking’ about the appearance that catches the eye and in this sense appeals to the eye.7 3 Schultz v Butt 1986 (3) SA 667 (A) at 686D-G per Nicholas AJA. Jones & Attwood Ltd v National Radiator Co Ltd (1928) 45 RPC 71 at 83 line 5-12. 4 Homecraft Steel Industries (Pty) Ltd v SM Hare & Son (Pty) Ltd 1984 (3) SA 681 (A) at 692B-D per Corbett JA. I agree with these comments by Jacob J in Oren and Tiny Love Ltd v. Red Box Toy Factory Ltd [1999] EWHC Patents 255: ‘I do not think, generally speaking, that "expert" evidence of this opinion sort (i.e. as to what ordinary consumers would see) in cases involving registered designs for consumer products is ever likely to be useful. There is a feeling amongst lawyers that one must always have an expert, but this is not so. No-one should feel that their case might be disadvantaged by not having an expert in an area when expert evidence is unnecessary. Evidence of technical or factual matters, as opposed to consumer "eye appeal" may, on the other hand, sometimes have a part to play - that would be to give the court information or understanding which it could not provide itself.’ 5 Homecraft at 692D. 6 Lord Morris of Borth-Y-Gest in Amp Inc v Utilux (Pty) Ltd 1972 RPC 103 (HL) at 112 quoted with approval in Homecraft at 691D-F. 7 Amp Inc v Utilux (Pty) Ltd at 121 quoted with approval in Robinson v D Cooper Corporation of SA (Pty) Ltd 1984 (3) SA 699 (A) at 704G per Corbett JA. [9] The respondents sought to rely on the fact that a ‘set’ of articles was registered by arguing that the relevant features to be considered in determining the scope of the protection are those that are common to all members of a set. A ‘set of articles’ is a number of articles of the same general character which are ordinarily on sale together or intended to be used together, and in respect of which the same design, or the same design with modifications or variations not sufficient to alter the character of the articles or substantially affect their identity, is applied to each separate article (s 1(3)). Any question as to whether a number of articles constitute a set has to be determined by the registrar (s 1(4)). The object of the provision is to enable an applicant to obtain registration for the design of more than one article for the price of one.8 If the Registrar has registered articles as a set when they in truth do not form a set it is at best a matter for review but it cannot be raised as a defence to infringement or be a ground for revocation.9 Can the registration as a set then be a method of interpreting the scope of the registration? I think not. This follows not only from the purpose of the provision relating to sets but also from other definitions and especially s 1(2). A design has to apply to an ‘article’ which includes any article of manufacture and a reference to an article is deemed to be a reference to (a) a set of articles; (b) each article which forms part of the set of articles; or (c) both a set of articles and each article which forms part of that set. This can only mean that each member of a set has its own individuality and must be assessed on its own and that the exercise which we were asked to undertake is not permissible. [10] Against that background I turn to determine those features of the two designs that appeal to the eye and are to be judged solely by the eye. There is no direct evidence about who the likely customers are (whether architects, builders, electricians or homeowners) or how the likely customer would view them but there is the evidence of the managing director of the exclusive licensee, Mr Evans, and that of a director of the second respondent, Mr 8 Laddie, Prescott and Vitoria The Modern Law of Copyright and Designs 2 ed vol 1 para 30.40. 9 Cf Kimberly-Clark of SA (Pty) Ltd (formerly Carlton Paper of SA (Pty) Ltd) v Proctor & Gamble SA (Pty) Ltd [1998] 3 All SA 77, 1998 (4) SA 1 (A). Also s 32: ‘Registration of a design shall be granted for one design only, but no person may in any proceedings apply for the revocation of such registration on the ground that it comprises more than one design.’ Botbol, who are both experienced in this field, and their evidence defined the issues in the case (the affidavits performing in these proceedings the function of pleadings and evidence). [11] Mr Evans alleged that the dominant aesthetic feature of the design resides in the shape and configuration of the ‘substantially square’ surround and the rectangle contained therein, and the shape and configuration of the socket holes and their associated switches, relative to the rectangle. He added that the secondary and further aesthetic features are the slope of the square surround at the top and bottom and on the left and right-hand sides and the annular recesses surrounding the socket holes. Mr Botbol’s response was not enlightening. He did not deny any of these allegations, especially not those about the relative value of the different features. He added though that curvature of the square surrounds is convex. [12] As mentioned, the high court held that the design was not new. In coming to this conclusion the court had regard to eight prior art documents, each showing ‘that various elements of the registered socket (sic!) were all previously part of the art.’ The court added that the registered ‘sockets’ show nothing ‘novel or original’ and that they are no more than an ordinary trade variant of similar products. [13] Over the objection of the appellants the high court held that it was entitled to mosaic different pieces of prior art. This is a surprising conclusion. It is old law that one is not entitled to mosaic for purposes of novelty.10 This principle is also well established in patent law and as Pollock B had said more than a century ago, the Designs Act was intended to add to the Patent Act by making that which was not patentable the subject of a design.11 There is nothing in the Act to justify a departure from this principle especially since obviousness is not a ground of invalidity of a design. A design is not novel if it forms part of the prior art – meaning that it is to be found in the prior art – and not if it can be patched together out of the prior art. 10 Jones & Attwood at 82 line 44-49. 11 Moody v Tree (1892) 9 RPC 333 at 335. [14] This does not mean that absolute identity has to be shown; only substantial identity is required. Immaterial additions or omissions are to be disregarded, so, too, functional additions or omissions.12 That is why it is usually said that an ordinary trade variant is not sufficient to impart novelty. This principle is well illustrated by the facts in Schultz v Butt.13 The design in issue related to a boat and differed from a previous design by the addition of what was assumed to be a novel and original window structure. This addition did not make the claimed design new. Basically its function was to protect the occupants against spray and wind and since it was an ordinary trade variant and since the design as a whole was not substantially novel, the design was held to be invalid.14 [15] That brings me to the second finding of the high court, namely that the design is merely a trade variant of similar products. The problem is, however, that the court did not identify the similar products. The first document relied upon by the respondents to destroy novelty shows a square cover plate for a single socket with a rectangular hole for a switch. The second is also a square cover plate but the switch has two press points. The third is similar to the first except that a swivel switch is shown. The fourth is simply the double socket variety of the first. The fifth consists of what the present registration certificate calls a surround but it is rectangular, the sides are at a 90 degree angle and they all have the same width. The next one is for a single switch assembly with no socket holes and the form of the switch is the same as that shown in the drawings, which is not unexpected in view of the fact that the applicant for that registration is the present proprietor’s predecessor in title. There is also one showing the same type of switch but as a double switch. [16] In conclusion there is US Patent 327 212 which relates to an ornamental design for a wall plate for an electric wiring device, in other words, for a surround. It has two embodiments of which the second is material and is reproduced as an annexure to this judgment. It shows a surround that is substantially identical to the surround in the drawings because the outer 12 Le May v Welch (1884) 28 Ch D 24 at 35; Sebel’s Applications [1959] RPC 12 at 14. 13 Schultz v Butt 1986 (3) SA 667 (A). 14 Schultz v Butt at 686G-687G. perimeter is square whereas the inner boundary (where a covering plate could be placed) is rectangular and the sides are all convex, sloping from the inner border to the outer border. The argument for the respondents is that this document discloses the design in issue because it permits one to place any socket design within the surround. Although attractive at first blush, the argument has to fail because it means that the more general a prior disclosure is, the easier it anticipates, whereas the opposite is true: the more general the disclosure the less likely it renders the particular design identifiable.15 There is another aspect and that is that the inner border of this surround has a clearly defined frame, something lacking in the registered design which leads to the consideration of another test: that which infringes if later, anticipates if earlier.16 I find it difficult to envisage that this design could be said to be to be an infringement of the registered design in issue. [17] I therefore conclude that the high court erred in finding that the design lacked novelty. But this exercise was nevertheless important for another reason. The definitive statement and the drawings have to be assessed in the light of the state of the art to determine the degree of novelty achieved. This is so because where the measure of novelty of a design is small the ambit of the ‘monopoly’ is small.17 As Burrell suggests, to consider the definitive statement without regard to the prior art would eviscerate its purpose.18 [18] The high court also held that the design was not original as required by the Act. Originality, it held, requires that the design has to be substantially different from what has gone before, so as to possess some individuality; it has to be special, noticeable, and capture and appeal to the eye. For this the court relied on Malleys Ltd v JW Tomlin (Pty) Ltd (1994) 180 CLR 120, a judgment of the High Court of Australia. The judgment is not authority for the proposition. The main issue was whether the design was altogether too vague to qualify for registration. It was in this context that the court had regard to the 15 Cf Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A) at 648E-G, a patent case under the Patents, Designs, Trade Marks and Copyright Act 9 of 1916. 16 I am aware that this ‘rule’ is usually used in a different context but the underlying principle appears to be applicable. Cincinnati Grinders Inc v BSA Tools Ltd (1931) 48 RPC 33 at 58. 17 Homecraft Steel Industries (Pty) Ltd v SM Hare & Son (Pty) Ltd 1984 (3) SA 681 (A) at 695F per Corbett JA. 18 Lawsa para 271. factors mentioned, including the individuality of the design and it concluded on the facts that ‘there is sufficient individuality of appearance to justify registration if the design was new or original.’ Another aspect of the judgment that should be noted is that the Australian Act required that a design had to be ‘new or original’ and not (as our Act now reads) that it has to be new and original. Because the court had found that the design was new it did not find it necessary to consider whether it was original (in whatever sense of the word). [19] Because of the difference in wording and underlying structure of design statutes older and foreign authorities must be read in context.19 The UK Designs Act 1842 spoke of new and original but this was changed to new or original in the UK Patents, Designs and Trade Marks Act 1883.20 It was this latter usage that was taken over in our 1916 Act but what was new or original had to be assessed against prior use, publication, registration, or patenting.21 Our Designs Act 57 of 1967 had a similar provision, which required that a design had to be ‘new or original’ if tested against certain prior art.22 In a similar statutory context Graham J held that the term was disjunctive and that what ‘original’ added was merely that the design had to be substantially novel.23 [20] The current Act of 1993 differs structurally from its antecedents. It requires that a design must be new and original. Only novelty is tested against the defined prior art (‘a design shall be deemed to be new if it is different from 19 Cf Landor & Hawa International Ltd v Azure Designs Ltd [2006] EWCA Civ 1285 para 39. 20 Aspro-Nicholas Ltd’s Design Application [1974] RPC 645 at 651. 21 Patents, Designs, Trade Marks and Copyright Act 9 of 1916 s 80(1). 22 Section 4(2): ‘For the purposes of this Act a design shall be deemed to be a new or original design if, on or before the date of application for registration thereof, such design or a design not substantially different therefrom, was not— (a) used in the Republic; (b) described in any publication in the Republic; (c) described in any printed publication anywhere; (d) registered in the Republic; (e) the subject of an application for the registration of a design in the Republic or of an application in a convention country for the registration of a design which has subsequently been registered in the Republic in accordance with section 18.’ 23 Aspro-Nicholas Ltd’s Design Application at 653 lines 6-9. or if it does not form part of the state of the art’).24 There is no measure against which originality has to be tested. Before proceeding, it is necessary to recall that this Court in Homecraft,25 following the House of Lords in Amp Inc v Utilux, has held that a design must have, by virtue of the definition, some ‘individual characteristic’ ‘calculated to attract the attention of the beholder’26 and that there must be something ‘special, peculiar, distinctive, significant or striking’ about the appearance that catches the eye and in this sense appeals to the eye.27 These requirements have nothing to do with originality. In fact, neither Amp Inc v Utilux nor Homecraft dealt with originality. It is furthermore incorrect to equate (as the high court did) originality with not being commonplace in the art although that is how the concept is defined in the UK Copyright, Designs and Patents Act 1988. The reason is obvious. The 1993 Act requires that aesthetic designs must be new and original and that functional designs must be new and not commonplace.28 Originality and being ‘not commonplace’, consequently, cannot mean the same. The only other meaning ‘original’ can bear is one that is the same or akin to the meaning in copyright law,29 something that is not farfetched if regard is had to the fact that the 1916 Act spoke of design copyright. As was said by Mummery LJ in Farmers Build v Carier [1999] RPC 461 at 482:30 ‘The court must be satisfied that the design for which protection is claimed has not simply been copied (e.g. like a photocopy) from the design of an earlier article. It must not forget that, in the field of design of functional articles, one design 24 Section 14(2). The state of the art comprises principally all matter which has been made available to the public (whether in the Republic or elsewhere) by written description, by use or in any other way (s 14(3)). 25 Homecraft Steel Industries (Pty) Ltd v SM Hare & Son (Pty) Ltd 1984 (3) SA 681 (A). 26 Lord Morris of Borth-Y-Gest in Amp Inc v Utilux (Pty) Ltd 1972 RPC 103 (HL) at 112 quoted with approval in Homecraft at 691D-F. 27 Amp Inc v Utilux (Pty) Ltd 1972 RPC 103 (HL) at 121 quoted with approval in Robinson v D Cooper Corporation of SA (Pty) Ltd 1984 (3) SA 699 (A) at 704G per Corbett JA. 28 Section 14(1): ‘The proprietor of a design which— (a) in the case of an aesthetic design, is— (i) new; and (ii) original, (b) in the case of a functional design, is— (i) new; and (ii) not commonplace in the art in question, may, in the prescribed manner and on payment of the prescribed fee, apply for the registration of such design.’ 29 Cf Christine Fellner Industrial Design law (1995) para 2.255 who points out that there may be differences in application. 30 Quoted in Dyson Ltd v Qualtex (UK) Ltd [2006] EWCA Civ 166. may be very similar to or even identical with another design and yet not be a copy: it may be an original and independent shape and configuration coincidentally the same or similar. If, however, the court is satisfied that it has been slavishly copied from an earlier design, it is not an "original" design in the "copyright sense".’ [21] In the light of these considerations I conclude that the respondents’ case on lack of originality as adopted by the high court founders because it is based on an incorrect premise. This then brings me to the question of infringement which involves a determination of whether the respondents’ products embody the registered design or a design not substantially different from the registered design. The search is not for differences but for substantial ones. [22] This test is not a trade mark infringement test and the issue is not whether or not there is confusion or deception and it would therefore be wrong to introduce concepts developed in a trade mark context such as imperfect recollection into this part of the law. The designs test is closer to the patent infringement test. This dictum from Incandescent Gas Light Co v de Mare etc System31 in a patent infringement context is equally applicable to the present context: ‘When, however, you come to make that comparison, how can you escape from considering the relative magnitude and value of the things taken and of those left or varied; it is seldom that the infringer does the thing, the whole thing, and nothing but the thing claimed by the specification. He always varies, adds, omits and the only protection the patentee has in such a case lies, as has often been pointed out by every Court, from the House of Lords downward, in the good sense of the tribunal which has to decide whether the substance of the invention has been pirated.’ [23] Both the single and double socket articles produced and sold by the respondents have square surrounds with rectangular cover plates. Both incorporate in general terms the registered designs, even down to the annular recesses and the shapes and configuration of the switches. What are the differences? As Mr Evans mentioned, the respondents’ surrounds have 31 13 RPC 301 at 330 and quoted more than once with approval by this Court. See Letraset Ltd v Helios Ltd 1972 (3) SA 245 (A) at 275A-B. stepped slopes on the right and left (the narrow) sides instead of the substantially convex curvature of the registered design.32 Recognising this difference, the next question is whether it is a substantial difference. Mr Evans’s allegation that this particular feature is a secondary feature has not been placed in issue. It is difficult to see how a difference in respect of a secondary feature can be substantial. [24] The other differences are these. The position of the respondents’ double socket switches is directly above the earth socket hole whereas that of the design is closer to the upper corners of the rectangular plate. Mr Evans said that this difference was not substantial and Mr Botbol did not deny his evaluation. The same applies to the single socket article where the position of the switch is closer to the earth socket hole. There is an additional feature in the single socket design and that is the presence of what appears to be a small hole above the switch. This may be for an indicator light but, in any event, the respondents do not have it. No-one has suggested that its absence makes a substantial difference and I do not think that anyone could have done so seriously. [25] My evaluation of the prior art shows that the level of novelty of this design is not such that small differences are material. There is against this background another way of determining whether there was infringement and that is to ask whether, if the respondents’ article had been part of the prior art, the design would have been new. The answer must be no because the move of the position of the switches and the removal of the steps on the narrow sides of the surrounds would have been regarded as trade variants. What anticipates if earlier, in general terms, infringes if later, the converse of the general rule mentioned earlier. It follows that the differences, which are per se insubstantial, do not save the respondents from infringing. [26] The appeal is upheld with costs and the order of the court below replaced with an order – 32 The photographic exhibits do not show this and are of a too poor quality to reproduce. It is, however, apparent from the physical exhibits. 1. interdicting the respondents from infringing registered design A96/0687 by making, importing, using, or disposing of the Lear G-2000 series single electrical socket SYZ – 16 (100 x 100) and double electrical socket S2YZ2 – 16 (100 x 100); 2. directing the respondents to surrender all infringing articles in their possession to the applicants; 3. directing that an enquiry be held for the purposes of determining the amount of any damages suffered by the applicants or for the determination of a reasonable royalty as contemplated in s 35(3)(d) of the Designs Act 195 of 1993, and ordering payment of such damages found to have been suffered or of such reasonable royalty; 4. directing, in the event of the parties being unable to reach agreement as to the future pleadings to be filed, discovery, inspection or other matters of procedure relating to the enquiry, that any party is authorized to apply for directions in regard thereto; 5. directing the respondents to pay the applicants’ costs. _________________________ L T C HARMS ACTING DEPUTY PRESIDENT AGREE: HARMS ADP STREICHER JA CLOETE JA LEWIS JA CACHALIA JA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 23 MARCH 2007 Status: Immediate 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 CLIPSAL AUSTRALIA (PTY) LTD AND ANOTHER v TRUST ELECTRICAL WHOLESALERS AND ANOTHER The SCA today upheld an appeal by the appellants, Clipsal Australia and Clipsal SA. Clipsal Australia is the registered owner of a registered design concerning a set of electrical accessory plates with surrounds (or frames) used for wall sockets for electric plugs. The appellants’ case was the respondents are infringing these designs by marketing certain Lear electric sockets. The high court found that the design was invalid and therefore not infringed. This finding was reversed on appeal. The SCA found that the design registration was valid and had been infringed. The SCA issued an interdict against further infringement and declared that the respondents were liable for damages suffered. --ends--

3081

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 20819/2014 Reportable In the matter between: MOTOR INDUSTRY STAFF ASSOCIATION APPELLANT and IAN ANTHONY MACUN NO FIRST RESPONDENT MINISTER OF LABOUR NO SECOND RESPONDENT MOTOR INDUSTRY BARGAINING COUNCIL THIRD RESPONDENT NATIONAL UNION OF METALWORKERS OF SOUTH AFRICA FOURTH RESPONDENT RETAIL MOTOR INDUSTRY ORGANISATION FIFTH RESPONDENT FUEL RETAILERS’ ASSOCIATION OF SOUTHERN AFRICA SIXTH RESPONDENT Neutral Citation: Motor Industry Staff Association v Macun NO & others (20819/2014) [2015] ZASCA 190 (30 November 2015). Coram: Navsa, Lewis, Pillay, Petse & Dambuza JJA Heard: 12 November 2015 Delivered: 30 November 2015 Summary: High Court and Labour Court – concurrent and exclusive jurisdiction – validity of extension of collective agreement to non-parties – arising out of the Labour Relations Act 66 of 1995 – matter within exclusive jurisdiction of Labour Court. ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: The Gauteng Division of the High Court, Pretoria (Phatudi J sitting as court of first instance). The appeal is dismissed with costs. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Navsa JA (Lewis, Pillay, Petse & Dambuza JJA concurring): [1] This case raises, for the umpteenth time before a court, the now more than vexed question about the crossroads or divergences between the jurisdiction of the High Court and that of the Labour Court. There is apparently no end to legal representatives contriving to fashion a case to suit a client‟s choice of forum. [2] In the court below, the appellant, the Motor Industry Staff Association (MISA), a trade union registered in terms of s 96(7)(a) of the Labour Relations Act 66 of 1995 (the LRA), applied for an order in the Gauteng Division of the High Court, Pretoria, declaring that a decision of the first respondent, the Director: Collective Bargaining, Department of Labour, to extend the period of operation of the Motor Industry Bargaining Council‟s Main Collective Agreement (the Main Agreement) to 31 August 2014 and further to 31 January 2015, was unlawful and invalid. The further orders sought were, inter alia, as follows: „2. The aforesaid decision of the First Respondent is reviewed and set aside. 3. It is declared that the First Respondent‟s notice as published in Government Gazette 37247, No 22 of 24 January 2014, to declare that the provisions of Government Notice No R687 of 26 August 2011 be effective from the date of publication of the said notice until the period ending 31 August 2014, is unlawful and invalid. 4. The aforesaid notice is reviewed and set aside. 5. It is declared that the decision of the First Respondent to extend the period of operation on the [Motor Industry Bargaining Council] Administrative Collective Agreement to 31 January 2015 is unlawful and invalid. 6. The First Respondent‟s decision, as per 5 above, is reviewed and set aside. 7. It is declared that the First Respondent‟s notice as published in Government Gazette 37247, No 23 of 24 January 2014, namely to declare the provisions of Government Notices No R 1034 of 20 October 2006, R 487 of 8 June 2007, R 1029 of 2 November 2007, R 1035 of 3 October 2008, R 881 of 4 September 2009 and R 56 of 4 February 2011 be effective from the date of publication of the said notice until the period ending 31 January 2015, is unlawful and invalid. 8. The notice referred to in 7 above is reviewed and set aside.‟ [3] The Motor Industry Bargaining Council (MIBCO) is the bargaining council established for the motor industry.1 The basis for MISA‟s application was as follows: the parties to the Main Agreement, which include MISA, the fourth respondent, the National Union of Metalworkers of South Africa (NUMSA), the fifth respondent, the Retail Motor Industry Organisation (RMI), a registered employers‟ organisation, and the sixth respondent, the Fuel Retailers‟ Association of South Africa (FRA), did not conclude a new Main Agreement after the prior Main Agreement (previously extended) had lapsed on 31 August 2013. It was submitted on behalf of MISA that there was no agreement to „revive‟ and „resurrect‟ the lapsed agreement. Thus, MISA argued, there could be no extension of the collective agreement in terms of s 32(6) of the LRA. Section 32 provides for the extension of collective agreements concluded in bargaining councils. Section 32(1) states that a bargaining council may request the Minister in writing to 1 Section 27 of the LRA provides for one or more registered trade unions and one or more employers‟ organisations to establish a bargaining council for a sector and area. Section 28 of the LRA, which deals with the powers and functions of a bargaining council include, among others, the ability to conclude and enforce collective agreements, to prevent and resolve labour disputes, and to establish and administer schemes or funds for the benefit of the parties to the bargaining councils or their members. Section 31 provides that a collective agreement concluded in a bargaining council binds parties to the bargaining council who are parties to the collective agreement. extend the collective agreement to non-parties that are within its registered scope. Section 32(2) stipulates that the Minister is obliged to extend a collective agreement within 60 days of receipt of a request from a bargaining council by notice in the Government Gazette. Section 32(3) obliges the Minister to satisfy him or herself that a number of requirements are met before a collective agreement may be extended, including that the request falls properly within the prescripts of s 32(1). For present purposes it is not necessary to consider the other requirements in any greater detail. Section 32(6)(a) provides as follows: „(6)(a) After a notice has been published in terms of subsection (2), the Minister, at the request of the bargaining council, may publish a further notice in the Government Gazette – (i) extending the period specified in the earlier notice by a further period determined by the Minister; or (ii) if the period specified in the earlier notice has expired, declaring a new date from which, and a further period during which, the provisions of the earlier notice will be effective.‟2 The principal submission on behalf of MISA appeared to be that since the prior Main Agreement had lapsed, the decision to extend it was ultra vires. The same argument was the underpinning for the relief sought with regard to a second collective agreement, the MIBCO Administrative Collective Agreement. [4] At the commencement of proceedings in the court below, the third respondent, MIBCO, raised a point in limine, namely, lack of jurisdiction, contending that the propriety of decisions taken by the first and/or second respondent pursuant to the provisions of the LRA fell within the exclusive jurisdiction of the Labour Court. [5] The court below (Phathudi J) had regard to the provisions of 157(1) and (2) of the LRA, which provide: „(1) Subject to the Constitution and section 173, and except where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all matters that elsewhere in terms of this Act or in terms of any other law are to be determined by the Labour Court. 2 Note that the LRA makes use of italics for defined terms, and this formatting has been retained in quotations from this Act. (2) The Labour Court has concurrent jurisdiction with the High Court in respect of any alleged or threatened violation of any fundamental right entrenched in Chapter 2 of the Constitution of the Republic of South Africa, 1996, arising from – (a) employment and from labour relations; (b) any dispute over the constitutionality of any executive or administrative act or conduct, or any threatened executive or administrative act or conduct, by the State in its capacity as an employer; and (c) the application of any law for the administration of which the Minister is responsible.‟ The learned judge also considered conflicting decisions of two different divisions of the High Court, namely, Valuline CC & others v Minister of Labour & others 2013 (4) SA 326 (KZP) and O Thorpe Construction & others v Minister of Labour & others [2014] ZAWCHC 140. [6] Phatudi J concluded, in line with the latter decision that the matter sought to be adjudicated, namely, the validity of the extension of a collective agreement to non- parties, fell within the exclusive province of the Labour Court. He took the view that the decisions of the Constitutional Court in Gcaba v Minister for Safety and Security & others [2009] ZACC 26; 2010 (1) SA 238 (CC) and Chirwa v Transnet Ltd & others [2007] ZACC 23; 2008 (4) SA 367 (CC) were instructive and that the objection to the jurisdiction of the High Court was well founded. Consequently, he dismissed the application by MISA with costs, including the costs attendant upon the employment of two counsel. The learned judge granted leave to this court. Before us, the primary question for determination was whether his conclusion that the issues sought to be adjudicated by MISA fell within the exclusive jurisdiction of the Labour Court, is correct. I proceed to deal first with the reasoning and conclusions of the divergent high court decisions. [7] In Valuline, Koen J dealt with an application, in terms of which a decision of the Minister of Labour to extend a collective agreement, purportedly under the provisions of s 32 of the LRA, to non-parties was sought to be set aside. In para 12 of Valuline the following appears: ‟12. The crucial issues arising for consideration on the merits of this application are: (a) Whether the requirements of s 32(3) [of the LRA] were satisfied. (b) If not, whether the decision is reviewable on the principle of legality. (c) Whether the court has the jurisdiction to entertain such review.‟ (footnotes omitted.) [8] In adjudicating the challenge to the High Court‟s jurisdiction on the basis that the matter was one that fell within the exclusive jurisdiction of the Labour Court in terms of s 157(1) of the LRA, Koen J concluded that the High Court did have jurisdiction to review and set aside a decision of the Minister to extend a collective bargaining agreement to non-parties. The learned judge appeared to place emphasis on the fact that the basis for the application was the principle of legality.3 He had regard to s 1(c) of the Constitution which provides that the Republic of South Africa was founded, inter alia, on the supremacy of the Constitution and the rule of law. That, he reasoned, is „the foundation for the legality principle‟ (para 15). Thus, he concluded, any review of a power performed by the Minister of Labour „in accordance with the principle of legality would constitute a “constitutional matter”‟ (para 16). Koen J turned to examine s 169 of the Constitution which then provided:4 „A High Court may decide – (a) any constitutional matter except a matter that – (i) only the Constitutional Court may decide; or (ii) is assigned by an Act of Parliament to another court of a similar status to a High Court; and (b) any other matter not assigned to another court by an Act of Parliament.‟ [9] The court in Valuline considered the provisions of s 169 alongside para 35 of the decision of the Constitutional Court in Fredericks & others v MEC for Education and Training, Eastern Cape & others [2001] ZACC 6; 2002 (2) SA 693 (CC), which reads as follows: „Having concluded that s 24 of the Act does not oust the jurisdiction of the High Court in constitutional matters and that the applicants in this case raise a constitutional matter, it follows that the High Court was not correct when it concluded that s 24 of the Labour Relations Act 3 See para 13 of Valuline. 4 The amendments are not material to this dispute. deprived it of jurisdiction to determine the dispute. It is now necessary to consider whether the High Court has jurisdiction to determine the dispute. In particular, we must determine whether Parliament has conferred the jurisdiction to determine this dispute upon the Labour Court in such a manner that it either expressly or by necessary implication has excluded the jurisdiction of the High Court.‟ I pause to record that the challenge in Fredericks by teachers whose application to be retrenched voluntarily had been refused by the Department of Education in the Eastern Cape, was based on an alleged infringement of their right to equality, in terms of s 9 of the Constitution and their right to just administrative justice in terms of s 33. [10] Koen J, with reference to the decision of this court in City of Tshwane Metropolitan Municipality v Engineering Council of South Africa & another [2009] ZASCA 151; 2010 (2) SA 333 (SCA), rightly noted that there is a long line of authority that the High Court would be slow to incline towards holding that its jurisdiction was ousted (para 19). The learned judge went on to consider the provisions of s 157 of the LRA set out above and then proceeded to examine s 158(1) of the LRA, which then provided:5 „158 Powers of Labour Court (1) The Labour Court may – (a) make any appropriate order, including – (i) the grant of urgent interim relief; (ii) an interdict; (iii) an order directing the performance of any particular act which order, when implemented, will remedy a wrong and give effect to the primary object of this Act; (iv) a declaratory order; (v) an award of compensation in any circumstances contemplated in this Act; (vi) an award of damages in any circumstances contemplated in this Act; and (vii) an order for costs; (b) order compliance with any provision of this Act; (c) make any arbitration award or any settlement agreement an order of the Court; 5 The amendments are not material to this dispute. (d) request the Commission to conduct an investigation to assist the Court and to submit a report to the Court; (e) determine a dispute between a registered trade union or registered employers’ organisation and any one of the members or applicants for membership thereof, about any alleged non-compliance with – (i) the constitution of that trade union or employers’ organisation (as the case may be); or (ii) section 26(5)(b); (f) subject to the provisions of this Act, condone the late filing of any document with, or the later referral of any dispute to, the Court; (g) subject to section 145, review the performance or purported performance of any function provided for in this Act on any grounds that are permissible in law; (h) review any decision taken or any act performed by the State in its capacity as employer, on such grounds as are permissible in law; (i) hear and determine any appeal in terms of section 35 of the Occupational Health and Safety Act, 1993 (Act 85 of 1993); and (j) deal with all matters necessary or incidental to performing its functions in terms of this Act or any other law.‟ [11] Koen J considered the contention by the respondents in Valuline that the provisions of s 158(1)(g) indicated that the Labour Court had exclusive jurisdiction to determine the propriety of the Minister‟s decision to extend the collective agreement to non-parties. He contrasted the wording of matters that „are‟ to be determined exclusively in terms of s 157(1) of the LRA, with the wording, at the commencement of s 158(1), that the Labour Court „may‟ make orders in respect of the matters listed thereunder (para 26). Paras 27–29 of Valuline bear repeating: „As the provisions of the LRA do not expressly, or by necessary implication, provide that such a review is to be determined by the labour court, the jurisdiction of the high court to determine such reviews is not ousted and jurisdiction of the labour court therefore not exclusive. The interpretation of the provisions of s 158(1)(e) do not arise in this application, except to the limited extent that it might affect the proper interpretation to be given to s 158(2)(g). Section 158(1)(e), in referring to “determine a dispute”, might be closer to complying with the requirement of s 157(1) conferring exclusive jurisdiction on the labour court in respect of matter that “are” to be determined by the Labour Court, as contended for by the respondents. Nevertheless, I am not persuaded that it does. The correct interpretation of s 158(1) is simply that it confers enabling powers on the labour court. Section 158 does not provide for matters of substantive jurisdiction. What s 158(1)(g) does is to provide and place it beyond any doubt that, where the labour court has jurisdiction in a particular matter, whether exclusive or in a situation of concurrent jurisdiction with the high court, and the subject-matter of such dispute entails a review and relief consequent upon a review, the labour court will have the power to review the performance or purported performance of any such function.‟ (footnotes omitted.) [12] Paragraph 31 of Valuline also bears repeating, as it appears to have been strong motivation for the court concluding as it did, as set out in para 7 above: „If the respondents‟ interpretation of s 158(1)(g), that the granting of the permissive power to review contained in s 158(1)(g) constitutes a direction that any matter involving a review “is to be determined” by the labour court, whether express or by necessary implication, as contemplated in s 157(1), thus conferring exclusive jurisdiction on the labour court, then by parity of reasoning, any dispute in respect of which “any appropriate order” may be granted would also confer exclusive jurisdiction on the labour court. That would entail exclusive jurisdiction being conferred on the labour court in probably almost all matters that could conceivably come before it with reference to the kind of relief that may be granted, rather than with reference to the cause of action relied upon. An exception to the express provisions of s 169 of the Constitution should not be inferred that readily and can certainly not be implied by any considerations of necessity.‟ [13] It is necessary to record the following brief reference in a footnote in Valuline to the judgments by the Constitutional Court in Gcaba and Chirwa (fn 24 para 29): „As contemplated in s 157(2) relating to the violation of a fundamental right entrenched in ch 2 of the Constitution. In [Gcaba] the Constitutional Court held that s 157(2) should not be understood to extend the jurisdiction of the high court to determine issues which (as contemplated by s 157(1)) have been expressly conferred upon the labour court by the LRA. Rather, it should be interpreted to mean that the labour court will be able to determine constitutional issues which arise before it in the specific jurisdictional area which have been created for it by the LRA and which are covered by s 157(2)(a), (b) and (c). Any reliance on the decision in Gcaba supra or [Chirwa] as decisive of the issue of jurisdiction, seems in my view misplaced in the context of the present matter. Both involved conduct held not to constitute administrative action but dealt with entirely different matters, namely non-promotion and dismissal in an employee relationship, and were in respect of different labour issues than the issue of legality before this court.‟ [14] In O Thorpe Construction Davis J disagreed with the reasoning and conclusions of Koen J in Valuline. He commenced by stating that, as reflected in the preamble to the LRA, the legislature clearly envisaged a category of cases in respect of which the exclusive power of adjudication was bestowed on the Labour Court. The learned judge considered the following passage of the concurring majority judgment of Ngcobo J in Chirwa to be instructive (para 123): „While s 157(2) remains on the statute book it must be construed in the light of the primary objectives of the LRA. The first is to establish a comprehensive framework of law governing the labour and employment relations between employers and employees in all sectors. The other is the objective to establish the Labour Court and Labour Appeal Court as superior courts, with exclusive jurisdiction to decide matters arising from the LRA. In my view the only way to reconcile the provisions of s 157(2) and harmonise them with those of s 157(1) and the primary objects of the LRA is to give s 157(2) a narrow meaning. The application of s 157(2) must be confined to those instances, if any, where a party relies directly on the provisions of the Bill of Rights. This, of course, is subject to the constitutional principle that we have recently reinstated, namely, that “where legislation is enacted to give effect to a constitutional right, a litigant may not bypass that legislation and rely directly on the Constitution without challenging that legislation as falling short of the constitutional standard.‟ (footnote omitted.) [15] The issue before Davis J in O Thorpe Construction, as in Valuline and the present matter, concerned a decision to extend a collective agreement to non-parties within its registered scope. That decision was challenged on the basis that there had been non-compliance with the prescripts of s 32 of the LRA. At para 24 of O Thorpe Construction, the following appears: „The very act of extension of a collective agreement to non-parties in the building industry constitutes the performance of functions provided for expressly in the LRA.‟ In this regard Davis J quoted paras 70 – 72 of Gcaba, which read as follows: „Section 157(1) confirms that the Labour Court has exclusive jurisdiction over any matter that the LRA prescribes should be determined by it. That includes, amongst other things, reviews of the decisions of the CCMA under s 145. Section 157(1) should, therefore, be given expansive content to protect the special status of the Labour Court, and s 157(2) should not be read to permit the High Court to have jurisdiction over these matters as well. Section 157(2) confirms that the Labour Court has concurrent jurisdiction with the High Court in relation to alleged or threatened violations of fundamental rights entrenched in Ch 2 of the Constitution and arising from employment and labour relations, any dispute over the constitutionality of any executive or administrative act or conduct by the State in its capacity as employer and the application of any law for the administration of which the minister is responsible. The purpose of this provision is to extend the jurisdiction of the Labour Court to disputes concerning the alleged violation of any right entrenched in the Bill of Rights which arise from employment and labour relations, rather than to restrict or extend the jurisdiction of the High Court. In doing so, s 157(2) has brought employment and labour-relations disputes that arise from the violation of any right in the Bill of Rights within the reach of the Labour Court. This power of the Labour Court is essential to its role as a specialist court that is charged with the responsibility to develop a coherent and evolving employment and labour relations jurisprudence. Section 157(2) enhances the ability of the Labour Court to perform such a role. Therefore, s 157(2) should not be understood to extend the jurisdiction of the High Court to determine issues which (as contemplated by s 157(1)) have been expressly conferred upon the Labour Court by the LRA. Rather, it should be interpreted to mean that the Labour Court will be able to determine constitutional issues which arise before it, in the specific jurisdictional areas which have been created for it by the LRA, and which are covered by s 157(2)(a), (b) and (c).‟ (footnotes omitted.) After considering these passages, the court in O Thorpe Construction said the following (para 25): „It follows from this holding that, if as in this case, the cause of action concerns an alleged breach of a provision of the LRA, it is a matter which falls within the exclusive jurisdiction of the Labour Court.‟ [16] According to Davis J (para 31), „the implication of the judgment in [Valuline], is that s 157(1) of the LRA has a very narrow scope and that almost all matters of a labour nature are potentially, at least, subject to the concurrent jurisdiction of the High Court and the Labour Court.‟ The court in O Thorpe Construction considered that the conclusion reached in Valuline „compromise[d] the very purpose of s 157(1) of the LRA‟ and stood „in stark contrast to two critical judgments which Koen J did not canvass in the [Valuline] case, namely the Constitutional court judgments in Chirwa and Gcaba . . . .‟ [17] I now turn to consider which of the approaches in the High Court judgments referred to above is correct. The starting point is to consider what the Constitution envisaged in respect of a regulatory regime to ensure protection of the rights to fair labour practices and collective bargaining. Section 23(1) of the Constitution entrenches the right to fair labour practices. Section 23(4) gives every trade union and every employers‟ organisation the right to determine its own administration, programmes and activities, and to organise and to form and join a federation. Section 23(5) and (6) of the Constitution provide: „(5) Every trade union, employers‟ organisation and employer has the right to engage in the collective bargaining. National legislation may be enacted to regulate collective bargaining. To the extent that the legislation may limit a right in this Chapter the limitation must comply with section 36(1). (6) National legislation may recognise union security arrangements contained in collective agreements. To the extent that the legislation may limit a right in this Chapter the limitation must comply with section 36(1).‟ [18] The LRA was enacted, inter alia, to „change the law governing labour relations‟, to „give effect to s 23 of the Constitution‟, and to „promote and facilitate collective bargaining at the work place and sectorial level‟.6 As noted by Ngcobo J at para 123 of Chirwa (quoted in para 13 above), section 157(2) of the LRA, which deals with where the Labour Court and the High Court have concurrent jurisdiction, has to be construed in the light of the primary objectives of the LRA. The Constitutional Court has put it beyond doubt that the primary objective of that Act was to establish a comprehensive 6 See the long title of the LRA. See also Chapter 2 of the LRA, dealing with the freedom of association and general protections and Chapter 3, which, inter alia, regulates collective agreements and bargaining councils. legislative framework regulating labour relations. An allied objective expressly stated in the preamble to the LRA was to „establish the Labour Court and Labour Appeal Court as superior courts, with exclusive jurisdiction to decide matters arising from the [LRA]‟. (My emphasis.) In Chirwa, Ngcobo J indicated that in the light of what is set out above, s 157(2) has to be narrowly construed and that it should be confined to issues where a party relies directly on the provisions of the Bill of Rights. [19] The Constitutional Court, in Gcaba, considered the tensions that might arise in relation to the interpretation of s 157 of the LRA and related provisions. Van der Westhuizen J noted the principle that „legislation must not be interpreted to exclude or unduly limit remedies for the enforcement of Constitutional rights‟ (para 55). Alongside that, however, is the consideration that „the Constitution recognises the need for specificity and specialisation in a modern and complex society under the rule of law‟ (para 56). The following paragraph in Gcaba is significant: „. . . Therefore, a wide range of rights and the respective areas of law in which they apply are explicitly recognised in the Constitution. Different kinds of relationships between citizens and the State and citizens amongst each other are dealt with in different provisions. The legislature is sometimes specifically mandated to create detailed legislation for a particular area, like equality, just administrative action (PAJA) and labour relations (LRA). Once a set of carefully crafted rules and structures has been created for the effective and speedy resolution of disputes and protection of rights in a particular area of law, it is preferable to use that particular system. This was emphasised in Chirwa by both Skweyiya J and Ngcobo J. If litigants are at liberty to relegate the finely tuned dispute-resolution structures created by the LRA, a dual system of law could fester in cases of dismissal of employees.‟ (footnotes omitted.) [20] The approach to be followed, in summary, is as follows: The LRA is legislation envisaged by the Constitution. In construing the provisions of the LRA the two objectives referred to above must be kept in mind. Section 157(2) of the LRA was enacted to extend the jurisdiction of the Labour Court to disputes concerning the alleged violation of any right entrenched in the Bill of Rights which arise from employment and labour relations, rather than to restrict or extend the jurisdiction of the high court. The Labour Court and Labour Appeal Court were designed as specialist courts that would be steeped in workplace issues and be best able to deal with complaints relating to labour practices and collective bargaining. Put differently, the Labour and Labour Appeal Courts are best placed to deal with matters arising out of the LRA. Forum shopping is to be discouraged. When the Constitution prescribes legislation in promotion of specific constitutional values and objectives then, in general terms, that legislation is the point of entry rather than the Constitutional provision itself. [21] I agree that Valuline did not pay sufficient attention to what is set out in the preceding paragraph. It will be recalled that s 157(2) provides for concurrent jurisdiction in the face of an allegation of a violation or threatened violation of a fundamental right. In the present case, unlike Fredericks, there was no allegation of a violation or threatened violation of any fundamental right entrenched in Chapter 2 of the Constitution. The court in Valuline allowed itself to be distracted by the submission that the challenge to jurisdiction was based on „the principle of legality‟. In adjudicating any matter properly within its province the Labour Court would, in any event, be astute to ensure that its decision was one that complied with the principle of legality, which is all- embracing and which permeates our entire constitutional scheme. One cannot assert the „right‟ to the principle of legality in vacuum. In essence, the complaint by the appellant is that the Minister, in purporting to extend the collective agreement to non- parties, acted beyond the powers conferred upon him in terms of s 32 of the LRA. The protections, both procedural and substantive, that exist in relation to collective bargaining are to be sourced in the LRA and not in the „principle of legality‟. In Minister of Home Affairs v National Institute for Crime Prevention and the Reintegration of Offenders and others 2005 (3) SA 280 (CC), the Constitutional Court said the following (para 21): „The values enunciated in s 1 of the Constitution are of fundamental importance. They inform and give substance to all the provisions of the Constitution. They do not, however, give rise to discrete and enforceable rights in themselves This is clear from the language of s 1 itself, but also from the way the Constitution is structured and in particular the provisions of ch 2 which contains the Bill of Rights.‟ As set out in para 7 above, Koen J had regard to s 1(c) of the Constitution which provides that South Africa is a sovereign democratic State founded on the Constitution and the rule of law. The „principle of legality‟ is an incident of the rule of law. As set out in the Constitutional Court dictum referred to earlier in this paragraph, a founding value in itself does not give rise to a discreet and enforceable right. A founding value gives substance to all the provisions of the Constitution. The court in Valuline did not take this into account. [22] Section 32 of the LRA is located in Part C of Chapter 3, which deals with collective bargaining. It sets certain preconditions for the extension of a collective agreement concluded in a bargaining council. The question whether there has been compliance with the provisions of s 32 of the LRA is one that pre-eminently arises out of the LRA [23] It is unhelpful to contrast, as was done by Koen J, the word „may‟ in the introductory part of s 158 with the word „are‟ in the latter part of s 157 of the LRA in order to determine the question of jurisdiction. The powers and functions of the Labour Court set out in s 158 of the LRA may, depending on the power, be exercised both in respect of its exclusive jurisdiction, as provided for in s 157(1), or in respect of its concurrent jurisdiction with the high court, as provided for in s 157(2). So, for example, an interdict as provided for in s 158(1) or a declaratory order, may issue in respect of a purely labour related matter or in respect of a case brought before the labour court premised on the alleged or threatened violation of a right entrenched in Chapter 2 of the Constitution. The provisions of s 158(1)(g) on their own are not decisive. In the present case the question that should rightly be asked is whether the basis of the challenge to the decision to extend the collective agreement is one that arises out of the LRA. The obvious answer is that it does. [24] Koen J, in expressing his concern in para 31 of his judgment, quoted in para 11 above, that the necessary implication of a conclusion contrary to that reached by him, would be to confer exclusive jurisdiction on the Labour Court in all matters that came before it, overlooked the dicta in Gcaba and Chirwa, that the purpose of s 157(2) was to extend the jurisdiction of the Labour Court to disputes concerning the alleged violation of any right entrenched in the Bill of Rights which arise from employment and labour- relations, rather than to restrict or extend the jurisdiction of the High Court. I agree with Davis J that the implication of the judgment in Valuline is that s 157(1) of the LRA has a very narrow scope and that almost all matters of a labour nature are potentially, at least, subject to the concurrent jurisdiction of the high court and the Labour Court. I also agree that the conclusion reached in Valuline compromised the objectives of the LRA and stand in stark contrast to the judgments of the Constitutional Court in Chirwa and Gcaba. [25] Had it not been for the precedential potential of the present case, it might well have been liable to be dismissed in terms of s 16(2)(a)(i) of the Superior Courts Act 10 of 2013 on the basis that it would, in the circumstances of the present case, have no practical effect. The extensions of the agreements in question have run their course. The relief sought by the appellant would ordinarily serve no purpose. MISA sought to overcome this hurdle by submitting that although the extended agreements had lapsed, the notices published in relation thereto remain extant until set aside and that it was entitled to seek the relief referred to above. We were not told whose rights in respect of the expired agreements might have been violated or what litigation might emanate from the alleged unlawful agreements. However, because the decision in the appeal is one which extends beyond the facts of the present case the route of dismissing it on the basis of s 16(2)(a)(i) of the Superior Courts Act was not followed.7 [26] The appeal is dismissed with costs. 7 See Radio Pretoria v Chairperson, Independent Communications Authority of South Africa, and another 2005 (4) SA 319 (CC), para 22. ________________________ M S Navsa Judge of Appeal APPEARANCES: For Appellants : G Ebersöhn Instructed by: Gerrie Ebersöhn Attorneys, Johannesburg Phatshoane Henney Attorneys, Bloemfontein For First and Second Respondents: P G Seleka Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein For Third Respondents: G C Pretorius SC Instructed by: Cliffe Dekker Hofmeyr Inc. c/o Gildenhuys Malatji Inc., Pretoria Matsepes, Bloemfontein For Fourth Respondents: P Kennedy SC Instructed by: Haffegee Roskam Savage Attorneys c/o Macrobert Inc., Pretoria Webbers, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 30 November 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Motor Industry Staff Association v Macun NO (20819/2014) [2015] ZASCA 190 (30 November 2015) MEDIA STATEMENT Today, the Supreme Court of Appeal (SCA) dismissed the appeal by the Motor Industry Staff Association (MISA) against an order of the Gauteng Division of the High Court, Pretoria, which had dismissed, for lack of jurisdiction, an application by MISA challenging the extension of a collective agreement. MISA had applied for a declaration of unlawfulness and invalidity in respect of a decision by the first respondent, the Director: Collective Bargaining, Department of Labour, to extend the period of operation of two collective agreements concluded in the Motor Industry Bargaining Council (MIBCO). The court a quo held that it had no jurisdiction to hear the application, as this was a matter that fell within the exclusive jurisdiction of the Labour Court. The issue before the SCA was whether this was correct. MISA’s principal argument was that the extension of the collective agreements was ultra vires, as it was not in accordance with the provisions of the Labour Relations Act 66 of 1995 (the LRA). However, this challenge was not framed as a labour matter falling within the exclusive jurisdiction of the Labour Court, but rather as a matter involving the ‘principle of legality’ which, so MISA’s argument went, meant that the the High Court had concurrent jurisdiction. The SCA noted that the issue of the respective areas of jurisdiction of the High Court and the Labour Court in terms of the LRA was now ‘more than vexed’. The SCA held that section 157 of the LRA, which deals with the jurisdiction of the Labour Court and the High Court, has to be construed in the light of the primary objectives of the LRA. These include establishing a comprehensive legislative framework regulating labour relations, and establishing the Labour Court and Labour Appeal Court as superior courts, with exclusive jurisdiction to decide matters arising from the LRA. Further, it held that ‘the Labour Court and Labour Appeal Court were designed as specialist courts that would be steeped in workplace issues and be best able to deal with complaints relating to labour practices and collective bargaining. The constitutional scheme requires courts to approach jurisdictional disputes with the primary objects of the LRA in mind.’ Accordingly, where a dispute clearly arises from the LRA, the mere fact that it is framed in terms of the principle of legality (which permeates our entire constitutional scheme) does not mean that the High Court should have concurrent jurisdiction with the Labour Court. To do so would ‘stand in stark contrast’ to the established jurisprudence of the Constitutional Court and compromise the objectives of the LRA. Accordingly, the SCA held that this was an issue which fell under the exclusive jurisdiction of the Labour Court, and the appeal was dismissed. --- ends ---

1878

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 473/10 In the matter between: LES FLOYD SCOTT First Appellant LAWRENCE BEATON Second Appellant JEREMY BEATON Third Appellant and THE STATE Respondent Neutral citation: Scott v The State (473/10) [2011] ZASCA 121 (31 August 2011) Coram: HEHER, MAYA and MAJIEDT JJA Heard: 25 May 2011 Delivered: 31 August 2011 Summary: Criminal law – doctrine of common purpose – whether appellants’ guilt proved beyond reasonable doubt. ___________________________________________________________________ ORDER On appeal from: KwaZulu-Natal High Court, Pietermaritzburg (Gorven J and Luthuli AJ sitting as court of appeal): In the result the following order is made: The first appellant’s appeal against his convictions is dismissed. Save as set out below, the first appellant’s appeal against sentence is refused. The second and third appellants’ appeals against their convictions and sentences are upheld. The order of the court below is varied as follows: ‘1 The sentences imposed against accused number 1 shall run concurrently. 2 Accused numbers 3 and 4 are found not guilty on all counts.’ ____________________________________________________________________ _ JUDGMENT __________________________________________________________________ MAYA JA (HEHER AND MAJIEDT JJA concurring): [1] The appellants together with their co-accused, Mr Praveen Singh (Singh), appeared in the Durban Regional Court facing (Mr W.F Hahn) charges of the murder of Mr Franktel Mostert (the deceased) and the attempted murder of Mr Conrad Cornelius Meyer (Conrad). They were all convicted as charged. The first appellant and Singh were sentenced to undergo 15 years imprisonment on the count of murder and seven years imprisonment on the count of attempted murder. The second and third appellants, who are brothers, were sentenced to undergo seven years imprisonment on each count. Their sentences were, however, ordered to run concurrently. The appellants’ appeal to the KwaZulu-Natal High Court (Gorven J and Luthuli AJ) against their convictions and sentences was unsuccessful. The present appeal is with the leave of the court below granted in February 2009. [2] At the commencement of the hearing before us, the first appellant’s local attorney, Mr van Vuuren, applied from the bar for a postponement of the matter on the basis that his client had not been able to raise sufficient funds to engage counsel of his choice to represent him in court. Mr van Vuuren had received instructions from his instructing colleague in Durban on the preceding day. The first appellant, who also had not filed heads of argument, had been notified of the date of hearing about six weeks in advance and had rejected his attorneys’ advice to apply for legal aid. After some anxious consideration, we refused the application and ordered the hearing to proceed. [3] Whilst a court will generally be slow to refuse a postponement because of the adverse consequences which may arise, a litigant who seeks this indulgence must nonetheless satisfy the court fully that it should condone his non-preparedness. This, in my view, the first appellant dismally failed to do. As I have indicated, more than two years had passed since leave to appeal was granted, no explanatory affidavit has been forthcoming from the first appellant and his verbal instructions to Mr van Vuuren are lacking in any persuasion. [4] Quite apart from his failure to adequately explain his eleventh-hour bid to delay the proceedings and his refusal to heed his attorneys’ counsel to obtain legal aid, there are other compelling factors to be considered. These include the undue lapse of time from the commencement of the criminal proceedings and the resultant prejudice to the other parties if the matter was protracted further. As rightly emphasized by State counsel who strenuously opposed the postponement application, the case has dragged on for an entire decade and finality is long overdue for all concerned. This is particularly so for the family of the deceased who have carried the burden of the loss of their young son without the comfort of closure for so long and had travelled a long distance to attend the appeal hearing. Furthermore, the comprehensive nature of the appeal record, which included the legal representatives’ addresses at the various stages of the proceedings and the full judgments of the trial court and the court below (in two sets of proceedings in which the first appellant was legally represented and the merits of the case were fully ventilated and determined) convinced us that we could, with no undue risk to the first appellant’s interests, fairly adjudicate the appeal, without the additional benefit of his submissions. [5] I turn to deal with the merits of the appeal. It is necessary to set out the factual background in some detail. During the evening of 30 September 2001 Conrad’s parents hosted a ‘braai’ at their home for a few family members and friends. Among those present were Annike van Rooyen, a female identified only as Lindy and the deceased who was Conrad’s close childhood friend. Around midnight Conrad, his mother Lida Susara Meyer (Mrs Meyer), Lindy, Annike and the deceased, left the premises to buy soft drinks at a nearby shop. Mrs Meyer and the deceased had consumed a little brandy but Conrad, a teetotaller who was only 17 years old at the time, had not consumed any liquor. [6] The tragic events which culminated in the deceased’s death and Conrad’s nearly fatal injuries from stab wounds occurred on their way back from this jaunt. Nearby Hillary Spar Supermarket on Stella Road, Conrad’s party encountered the appellant (19) and second and third appellants (19 and 17 respectively) described as ‘coloured’ and Singh (20) described as ‘Indian’, standing in the road with two white males who did not appear to be part of the group. One of the whites was bleeding profusely from the face and was being pushed and insulted by the appellant’s group, some of whom directed racial insults at Conrad’s party. In reaction, Conrad and the deceased crossed the road and approached the group to confront them, leaving the womenfolk on the other side of the street. [7] The course of events from that point differs markedly between the respective versions adduced by the State and the defence. According to Conrad (corroborated in large part by his mother) who testified for the State, the trouble started when the deceased asked the bleeding man why they had sworn at them. The third appellant swung a beer bottle at the deceased’s head. The bottle hit the ground and broke. In retaliation, Conrad threw the third appellant to the ground and pinned him down by putting a foot on his chest. Mrs Meyer then crossed the street to fetch Conrad and the deceased. She kicked the third appellant in the ribs as he tried to rise. [8] Conrad, the deceased and Mrs Meyer crossed the road and rejoined the two women. At that stage, Annike noticed blood on the back of Conrad’s shirt which turned out to be coming from a stab wound he had not felt being inflicted. (In evidence he guessed that he had been struck by the third appellant with the broken bottle during their tussle.) The appellants had followed them and as Conrad turned round to face them, Singh stabbed him above the right collarbone. Conrad pushed Singh away ripping the latter’s shirt in the process. At that moment he saw the first appellant, at ‘arm’s length’ away from him, make a stabbing motion with his right hand from an upward angle downwards at the deceased’s chest. The deceased pulled a dark object out of his chest and threw it at the appellants who then ran away. As Conrad and the deceased left the scene both collapsed. The deceased shortly died from a penetrating incised wound into the right ventricle of the heart. Conrad was conveyed to hospital where he was treated in the Intensive Care Unit for four days. Conrad had sustained two stab wounds – described by Dr Ogg, who examined him, as stab wounds of the anterior chest above the right nipple and of the posterior chest over the right scapula resulting in a punctured lung. [9] Mrs Meyer explained that she crossed the street to fetch Conrad and the deceased. She saw the second appellant attack Conrad from the side as he pinned down the third appellant who was trying to get up. She stated that she kicked the third appellant to keep him on the ground and that the second appellant then threw a bottle at her from which she was saved by the deceased who moved her out of its path. She did not see who stabbed Conrad but did observe the first appellant stab the deceased, who stood next to her, in the chest with a dark object. [10] Another witness called by the State, Mr Mzimela, told how he observed what appeared to be a fight as he drove along Stella Road on his way to drop off friends who lived in that neighbourhood. The area was well-lit by streetlights – a fact which had been mentioned by Conrad and his mother without contestation – and he was driving very slowly because of the nature of the road. The spectacle engaged his attention and he kept watching the scene from the rear-view mirror as he drove past. He and his passengers had noticed the biggest male in the group, who he identified as the first appellant, and they discussed him as they drove on. At a distance of about 30 metres away from the scene he realised that the fight was getting serious as he saw the first appellant raising his hand and make a stabbing motion towards a white male. He turned back to the scene to assist. This took some time as he was followed by other traffic and he found Mrs Meyer cradling the deceased who was severely injured. She informed him that the deceased had been stabbed by a man who ran down the road. He telephoned the police and gave chase. He saw the first appellant struggling up a hill assisted by others, but they disappeared into the neighbouring houses before he could catch them. [11] The defence version as told by the first appellant and Mr Trevor Lubbe who he called as his eyewitness – Singh and the second and third appellants did not testify – is different. They both attributed the deceased’s stabbing to Singh who, in his plea explanation, had actually admitted to stabbing the deceased in self-defence. According to the first appellant his group was walking home from a tavern and came across one Seun fighting with one Patrick. They intervened and stopped the fight. Seun went into a nearby bar and returned with Lubbe. Seun then demanded a ‘fair fight’ with Patrick who obliged and then overpowered him. Lubbe intervened and Patrick left. The group walked on until they met Conrad’s party at which Seun swore. A woman in that party said they should be assaulted. [12] According to the first appellant, the deceased crossed the street and argued with Seun but Lubbe intervened successfully. The deceased then attacked the third appellant for no apparent reason and also punched him, Singh and the second appellant. He punched the deceased back. Conrad then joined in and trampled on the third appellant. Beer bottles were thrown around and broke on the ground. But the fight ended and the deceased left. Seun began swearing at the deceased again and then, together with Singh, chased him across the road. The deceased turned back and ran towards them. They met in the middle of the road and the deceased tried to hit Singh who then stabbed him in the chest with a knife. The deceased pulled it out of his chest and threw it at Singh. Lubbe picked it up and they all fled the scene. [13] Lubbe’s version mostly matched the first appellant’s. On his account the deceased assaulted the third appellant because the latter made an inflammatory utterance as the deceased walked away after Lubbe had stopped his argument with Seun. He picked up the knife used by Singh to stab the deceased after the latter threw it away and gave it to Singh on his insistence. He last saw the deceased running down the road before he left the scene with his group. [14] Dr Bana, a pathologist and State witness who conducted the post-mortem examination on the deceased, discounted any possibility that the fatal chest wound could have been inflicted by Singh. It was suggested to her (and, earlier, to Conrad) by Singh’s attorney in cross-examination that the deceased was stabbed accidentally when he ran into the knife held by Singh. Dr Bana’s opinion was based on the protagonists’ disparate body types (on her description, the deceased was big, muscular and tall whereas Singh had a small build), the degree of force used in inflicting the wound which cut through the breastbone, and the path of the wound. [15] The magistrate accepted the version of the State witnesses whom he found satisfactory. He dismissed the first stage of the fight, which occurred on the appellant’s side of the road, as trivial and refused to infer that it was the third appellant who stabbed Conrad in the back at that stage in view of the patchy evidence in that regard. However, the magistrate found that by chasing Conrad and the deceased across the road, Singh and the appellants manifested a common purpose and actively associated themselves with the assaults on Conrad and the deceased. Moreover the second and third appellants had done nothing to prevent the stabbing of the deceased and Conrad, had left the scene together with Singh and the first appellant and had failed to testify. [16] The magistrate rejected the version that the deceased was stabbed by Singh. He mentioned that when Singh was granted an opportunity to lead evidence in his defence, he stood, apparently against his attorney’s instructions, and muttered that he wanted to tell the truth. The proceedings were adjourned to give him and his attorney time to regroup. It later transpired that during that adjournment the first appellant who, unlike Singh, was out on bail followed the latter to the police cells. On his return to court Singh closed his case without testifying. The magistrate found this incident odd and the judgment suggests that he suspected the first appellant to have influenced Singh to exculpate him. Nonetheless, the magistrate concluded that Singh probably mistook the identity of his victim and thought that he stabbed the deceased whereas he stabbed Conrad, which he did not gainsay. [17] The magistrate then applied the doctrine of common purpose and convicted the appellants and Singh for the murder and attempted murder on that basis. In determining sentence the magistrate found that the second and third appellants had played a lesser role in the commission of the offences and for that reason, imposed more lenient sentences on them. On appeal, the court below found that the magistrate did not misdirect himself in any way and confirmed the convictions and sentences. [18] The issues raised in the appeal before us concerned (a) the identity of the person who stabbed the deceased; (b) whether the State established the existence of a common purpose and intent to commit the offences; and (c) the propriety of the sentences imposed by the magistrate. [19] Regarding the deceased’s stabbing, it was not in dispute that visibility at the scene of the offences was good. I find it highly unlikely in the circumstances that Mzimela, the independent witness and passing Samaritan who observed the fight from no more than 30 metres away and Conrad and his mother, who were right at the scene, could all confuse the first appellant, undisputedly the biggest person there, with the slightly built Singh as the person who inflicted the stab wound. It is the very stabbing motion made by the ‘big man’ which Mzimela saw that prompted him to turn back and it is improbable that he would mistake that with a fist fight as was suggested by the defence. In any event, according to the witnesses, the fist fight occurred only on the other side of the road during the first round of the fight and not where Mzimela observed the incident. [20] As indicated above, Dr Bana rejected the likelihood that the deceased was stabbed by Singh or that he could have impaled himself on the knife-blade. In her opinion, that would have required the deceased to run a distance with considerable speed, generating severe force, in order for the knife to go all the way through the breastbone. She concluded as follows: ‘I’m just looking at [Singh], and I have obviously done the autopsy, and the deceased is quite a big, muscular, tall person and for him to run towards a knife held by a small built, average height person . . . he would have to run at great speed . . . and I would expect then expect that knife wound to be much lower down, more likely to be more thoracic and an abdominal wound rather than high up there on the chest’. I see no reason to disturb the credibility findings made by the magistrate regarding the State eyewitnesses who implicated the first appellant and, in my view, on a consideration of all the relevant evidence and the inherent probabilities, their evidence coupled with that given by Dr Bana established it beyond doubt that Singh did not stab the deceased. [21] The nature of the fatal wound itself leaves no doubt that whoever stabbed the deceased intended to kill him. Dr Bana described it as a ‘wound which passed from the right going down towards the back . . . through the breastbone . . . through the sac that covers the heart [and] through the right chamber of the heart’ indicating a downward thrust inflicted probably with a knife with ‘a considerable amount of force . . . because the knife went through the breastbone itself which is quite a strong bone to break’. It is inconceivable that anyone, least of all the person who inflicted it, would believe that any human being could survive such an injury. I would accordingly confirm the first appellant’s conviction for the deceased’s murder. [22] As to the appellants’ culpability or otherwise for the attempt on Conrad’s life by Singh and the second and third appellants’ guilt or otherwise for both offences on the basis of the doctrine of common purpose which the magistrate applied, it is necessary to consider their individual conduct to determine whether there is a sufficient basis for holding that each one of them is liable, on the ground of active participation in the achievement of a common purpose that developed at the scene. (See S v Le Roux (444/08)[2010] ZASCA 7; 2010 (2) SACR 11 (SCA) at 19e; S v Mgedezi 1989 (1) SA 687 (A) at 703B-I.) [23] In the absence of proof of a prior agreement to commit the offences, as here, the appellants can be convicted on the basis of the doctrine of common purpose, if (a) they were present where the violence was being committed; (b) they were aware of the assault on Conrad and the deceased; (c) they intended to make common cause with the perpetrator(s) of the assault; (d) they manifested their sharing of a common purpose with the perpetrator(s) of the assault by themselves performing some act of association with the conduct of the perpetrator(s); and (e) they had the requisite mens rea concerning the unlawful outcome at the time the offence was committed, ie intended the criminal result or foresaw the possibility of the criminal result ensuing and nevertheless actively associated themselves reckless as to whether the result was to ensue. (See S v Safatsa 1988 (1) SA 868 (A); S v Mgedezi above at 705I-706C; S v Thebus 2003 (2) SACR 319 (CC) para 49.) [24] I have no difficulty, on an application of these requirements, in confirming the first appellant’s conviction in respect of the count of the attempted murder. He pursued Conrad and the deceased after the first round of the fight ended and the two men had left them and instigated a fresh, unprovoked attack against them. According to Conrad and his mother, Conrad was next to the deceased and the first appellant when Singh stabbed him. The first appellant, of necessity, must have seen this assault. Instead of dissociating himself from Singh’s violent conduct, he proceeded to stab Conrad’s companion. In my view, by so acting he manifestly associated himself with Singh’s behaviour and cannot have been in any doubt that their victims would be seriously injured or even killed, as indeed happened. [25] The case of the second and third appellants is, however, different. There is no evidence whatsoever that they were armed – apart from the beer bottle which the third appellant earlier threw at the deceased – or knew that Singh and the first appellant were armed with deadly weapons before the stabbings occurred. The first stage of the fight was largely fisticuffs and, according to Conrad, the bottle used contained beer someone obviously intended to consume and was not carried as a weapon. I favour the magistrate’s view not to attach any significance to this round of the events (which the victims aided to spark by crossing the road to confront a bunch of rowdy and aggressive males who Conrad himself said appeared drunk) and Conrad’s back wound in the light of his own uncertainly as to how and where he sustained it. [26] The only evidence against the two appellants in relation to the second stage of the fight is that they were part of the group which followed Conrad and the deceased. No one saw them do or say anything thereafter that indicated an intent to associate themselves with the stabbings. They did not approach the victims and fled the scene immediately after the assault. To my mind, it is not at all far-fetched that they envisaged nothing more than a continuation of the fist fight. There is simply no basis to conclude that they intended the stabbing of Conrad and the deceased and made common cause therewith. And, in that case, they had no evidentiary burden to discharge ie that they dissociated themselves from the commission of the offences and they certainly did not have to testify. They should, therefore, not have been convicted for these offences. [27] It remains to determine whether the sentences imposed by the magistrate on the first appellant are appropriate. The record shows that his youthful age – he was 20 years old at the material time – and clean record were taken into account and that the magistrate cautioned himself against ever-emphasizing the sentencing element of deterrence. The magistrate, however, determined that the seriousness of the offences perpetrated against unarmed victims who did not provoke the assailants and posed no threat to them justified the custodial sentences he imposed. It is so that the first appellant was convicted of very grave offences which warranted the imposition of substantial custodial sentences. A young man with a bright future ahead of him – the deceased’s father described him as a well-loved, very good rugby player with a real prospect at joining the sport at provincial level, who had just turned 21 and was due to start a new job – lost his life in a senseless crime and it is a miracle that Conrad survived. In cases of this nature society demands punishment that reflects its outrage at the intolerable level of violence which is ravaging our country. [28] Be that as it may however, mindful also that sentencing is pre-eminently a matter for the trial court’s discretion which is not to be interfered with by a court of appeal unless unreasonably exercised, I consider the cumulative effect of the sentences imposed by the magistrate, which add up to 22 years imprisonment, disturbingly inappropriate and unduly severe in the circumstances. It does not appear to me that the magistrate took proper account of the first appellant’s youth and capacity for reform. Ordering the sentences to run concurrently would, in my opinion, adequately serve the objects of sentencing by addressing the elements of retribution and deterrence whilst affording the first appellant some modicum of mercy and an opportunity for rehabilitation. This court is entitled to interfere in the circumstances and the sentences should run concurrently. [29] In the result, the following order is made: The first appellant’s appeal against his convictions is dismissed. Save as set out below, the first appellant’s appeal against sentence is refused. The second and third appellants’ appeals against their convictions and sentences are upheld. The order of the court below is varied as follows: ‘1 The sentences imposed against accused number 1 shall run concurrently. 2 Accused numbers 3 and 4 are found not guilty on all counts.’ ____________________ MML MAYA Judge of Appeal APPEARANCES FOR FIRST APPELLANT: Van Vuuren Instructed by: Mthembu & Van Vuuren Attorneys Bloemfontein. FOR SECOND AND THIRD APPELLANTS: SB Mngadi Instructed by: Durban Justice Centre, Durban Bloemfontein Justice Centre, Bloemfontein FOR RESPONDENT: N Moosa Director of Public Prosecutions, Pietermaritzburg Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 August 2011 Status: Immediate 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 LES FLOYD SCOTT v THE STATE (473/10) [2011] ZASCA 121 (31 AUGUST 2011) The Supreme Court of Appeal today dismissed an appeal brought by Mr Les Floyd Scott but upheld those of Messrs Lawrence and Jeremy Beaton against the judgment of the KwaZulu- Natal High Court, Pietermaritzburg in which Judges Gorven and Luthuli, sitting as a court of appeal, confirmed their convictions and sentences imposed by the Durban Regional Court for the murder of Mr Franktel Mostert (the deceased) and the attempted murder of Mr Conrad Meyer. The regional magistrate had found, (a) on the basis of the evidence of state eyewitnesses and Dr Bana, the pathologist who conducted the post-mortem examination on the deceased, that contrary to Scott’s evidence, it was him and not Mr Praveen Singh (his co-accused who was similarly convicted and sentenced but did not appeal) stabbed the deceased to death and (b) that Singh stabbed Meyer and caused his nearly fatal injury. The Supreme Court of Appeal upheld these findings and approved the magistrate’s decision to convict Scott of the attempted murder count on the basis of the doctrine of common purpose. But the Supreme Court of Appeal found that the cumulative effect of the sentences imposed on Scott for the two offences – he was sentenced to 15 years imprisonment for the murder and 7 years imprisonment for the attempted murder – was too harsh considering his young age of 20 at the material time and his capacity for reform. The sentences were thus ordered to run concurrently. The Supreme Court of Appeal set aside the convictions and sentences of the Beaton brothers, who were convicted on the basis of common purpose, because there was no evidence proving that they associated themselves with the commission of the offences apart from the fact that they were with Scott and Singh when the offences were committed. ---ends---

236

non-electoral

2018

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 267/17 In the matter between: JOHN ANTHONY SHAW 1st APPELLANT WADE GRAHAM TAYLOR 2nd APPELLANT and GLENN WILLIAM MACKINTOSH 1st RESPONDENT MABILI SEARCH & SELECTION (PTY) LTD 2nd RESPONDENT Neutral Citation: Shaw & another v Mackintosh & another (267/17) [2018] ZASCA 53 (29 March 2018) Coram: Shongwe ADP and Wallis, Dambuza and Mathopo JJA and Davis AJA Heard: 22 February 2018 Delivered: 29 March 2018 Summary: National Credit Act 34 of 2005 (the NCA) – co-principal debtors – whether transaction is a credit guarantee in terms of s 8(5) of the NCA – whether credit provider required to register in terms of s 40 of the NCA. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: The Gauteng Local Division, Johannesburg (Tsoka, Makume & Wepener JJ, sitting as court of appeal): The appeal is dismissed with costs. ______________________________________________________________ JUDGMENT ______________________________________________________________ Mathopo JA (Shongwe ADP and Wallis, Dambuza JJA and Davis AJA concurring): [1] This appeal concerns the proper interpretation of s 8(5) of the National Credit Act 34 of 2005 (the NCA). The question is whether the effect of that section is to exclude the transaction between the appellants, Messrs Shaw and Taylor, and the first respondent, Mr Mackintosh (the respondent), which is described below, from the ambit of the NCA. If it does, then the judgment granted in Mr Mackintosh’s favour by the Gauteng Local Division, Johannesburg (Georgiades AJ) and upheld on appeal by the full court of that division (Tsoka J, with Makume and Wepener JJ concurring), must stand. If it does not, then the appellants invoke the provisions of the NCA to avoid liability to Mackintosh. The present appeal is with the special leave of this Court. [2] In about 2009, Mackintosh lent Mabili Search & Selection (Pty) Limited (Mabili) an amount of R2 million. During October 2012 the parties signed a written acknowledgement of debt (the agreement) in terms whereof Mabili as the debtor acknowledged its indebtedness to Mackintosh as the creditor in the sum of R2 million payable over a period of twelve months from the date of advancing the said amount. It was a term of the agreement that the sum of R2 million would attract interest at the rate of R50 000 per month with effect from October 2012 until the date of final payment. It was further agreed that should the debtor make a part payment of the capital to the creditor (Mackintosh), the interest payable would be pro-rated. Mabili further acknowledged being indebted to Mackintosh in the sum of R100 000 representing interest for the months of August and September 2012. [3] When Mabili defaulted on its repayments in terms of the agreement, Mackintosh obtained default judgment against it. It is common cause that Mabili was subsequently liquidated. Invoking the provisions of clause 5 of the agreement, Mackintosh sued the appellants as sureties. [4] In view of the amount involved and Mabili’s turnover, it was common cause that, insofar as Mabili was concerned, the agreement fell outside the area of operation of the NCA. The dispute between the parties was whether their relationship was governed by the NCA. Clause 5 of the agreement reads as follows: ‘THE SURETYSHIP Shaw and Taylor hereby: 5.1 Bind themselves jointly and severally unto and in favour of Mackintosh as joint and several co-principal debtors with Mabili for the repayment of any amounts which now are, or which may hereafter become owing by Mabili to Mackintosh from whatsoever cause (including without limitation the Admitted Debt); and 5.2 Waive the benefits of excussion, division and cession of action.’ [5] Mackintosh alleged that the agreement arose as a result of a loan granted to Mabili and not to the appellants during 2009. He submitted that the effect of clause 5 of the agreement was to constitute the appellants as sureties for Mabili’s indebtedness. He contended that the agreement between himself and the respondents was a credit guarantee as defined in the NCA and was excluded from the operation of the NCA by s 8(5) thereof, because it was a credit guarantee in respect of an agreement that was not itself subject to the NCA. [6] The appellants argued that the agreement was a stand-alone credit agreement falling within the ambit of the NCA and that clause 5 did not constitute them as sureties because they became parties to the agreement as co-principal debtors in respect of the Admitted Debt as defined in clause 2.1.1 of the agreement. In support of their argument, they relied on clause 2.1.3 which described them and Mabili as ‘the Debtors’. They further contended that the agreement between them and Mackintosh was not a credit guarantee, but a credit transaction as defined in s 8(4)(f) of the NCA and that there had been no compliance by Mackintosh with his obligations under the NCA. They alleged that the failure of Mackintosh to register as a credit provider in terms of the NCA rendered the agreement between them void. [7] The argument in the high court, both at first instance and on appeal, proceeded on the basis that the key issue was whether the effect of clause 5 of the agreement was to constitute the appellants as sureties. Following this approach both courts held that they were. In view of the attitude I take of this matter, it is unnecessary for me to consider whether their conclusion on this issue was correct. For the purposes of this appeal I will accept that the appellants became co-principal debtors with Mabili for the repayment of the admitted debt. The proper question we are called upon to decide is whether the contract between them and Mackintosh was a credit guarantee in terms of s 8(5) of the NCA, in which event it is an agreement to which the NCA does not apply, or a credit transaction in terms of s 8(4)(f) as they contended. [8] The NCA applies in respect of three kinds of agreements, namely a credit facility, a credit transaction or a credit guarantee. A credit guarantee is defined in s 1 as being an agreement meeting the criteria set out in s 8(5). That section reads in material part as follows: ‘An agreement, irrespective of its form . . . constitutes a credit guarantee if, in terms of that agreement, a person undertakes or promises to satisfy upon demand any obligation of another consumer in terms of a credit facility or a credit transaction to which this act applies.’ If the agreement between the appellants and Mackintosh is a credit guarantee as defined, it does not fall within the NCA because s 4(2)(c) provides that: ‘… (c) this Act applies to a credit guarantee only to the extent that this Act applies to a credit facility or credit transaction in respect of which the credit guarantee is granted.’ If the appellants bound themselves in terms of a credit guarantee as defined, the credit transaction in respect of which the credit guarantee was granted was the transaction between Mabili and Mackintosh. If the NCA does not apply to the credit transaction, it cannot apply to the credit guarantee. [9] It is apparent that the question in this case is answered by determining whether the agreement between the appellants and respondent was a credit guarantee and then whether the credit transaction between Mabili and Mackintosh falls within the NCA. These questions falls to be answered by applying the ordinary provisions of statutory interpretation stated in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18 to s 8(5) and then determining whether the agreement between the appellants and Mackintosh falls within that section. [10] I turn to consider the relevant provisions of the agreement. An essential precondition to the operation of s 8(5) of NCA is that it applies to the obligations of another. The language of the section, refers both to an undertaking and a promise to satisfy the obligation of another. It makes no reference to a suretyship or guarantee or any similar word. In terms of clause 5 of the agreement the appellants, as joint and co-principal debtors, with Mabili in terms of clause 2.1.3, undertook or promised to pay on demand the Admitted Debt owed by Mabili to Mackintosh as detailed in clauses 3.1, 3.1.1, 3.1.2 and 3.1.3 of the agreement. It must be stressed that Mabili, and only Mabili, was the debtor in respect of the Admitted Debt. The loan was granted pursuant to an oral agreement which was concluded between Mabili and Mackintosh. The purpose of the acknowledgement of debt which the appellants signed, was to arrange how the amount owing to Mackintosh was to be repaid. As debtors the appellants undertook to settle the admitted indebtedness to Mackintosh in terms of the provisions of clause 6 of the agreement which provides as follows: ‘6. The Debtors hereby undertake to settle the admitted indebtedness to Mackintosh as follows: 6.1.1 the Debtors will make payment to Mackintosh of the monthly instalments that becomes due between the signature date and the date upon which the Admitted Debt is discharged in full; and 6.1.2 the Debtors undertake to settle the full Admitted Debt on or before the end of March 2013.’ [11] When Mabili defaulted with its repayments and was subsequently liquidated, Mackintosh invoked the provisions of clause 7 of the agreement and sued the appellants on the basis of clause 5 of the agreement. Clause 7 provides as follows: ‘7. BREACH 7.1 Should the Debtors default in the due performance of any of their obligations in terms of this Agreement, all of which are material, including in particular if any payment is not made on due date, then: 7.1.1 Mackintosh may in is sole discretion proceed against the Debtors on the basis of this Agreement, or on the basis of the underlying causes of action; and 7.1.2 the full balance of the Admitted Debt shall immediately become due, owing and payable by the Debtors to Mackintosh.’ [12] It is clear that the appellants were not granted any loan nor was any credit advanced to them and neither were they parties to the historical agreement between Mabili and Mackintosh concluded in 2009. Their involvement only arose when they undertook or promised to pay on demand the admitted indebtedness of Mabili to Mackintosh. The agreement expressly stated that the sum of R2 million was advanced to Mabili and not the appellants. That brings the obligations of the appellants squarely within the language of s 8(5). However, s 4(2)(c) of the NCA provides that this Act applies to a credit guarantee only to the extent that this Act applies to a credit facility or credit transaction. Mackintosh was not a credit provider in terms of s 40 of the Act. He was not in the business of providing credit. The agreement was a once-off transaction and not falling within the ambit of the provisions of the NCA Act. It was rightly not suggested that the arrangement could be both a credit guarantee and a credit transaction in terms of s 8(4)(f) of the NCA (see JMV Textiles v De Chalain Spareinvest 2010 (6) SA 173) (KZD). The agreement between appellant and Mackintosh thus falls outside of the scope of the NCA. For these reasons the appeal must fail. [13] The appeal is dismissed with costs. ________________________ R S Mathopo Judge of Appeal APPEARANCES: For appellant: J J Meiring Instructed by: Fullard Mayer Morrison Inc, Johannesburg Lovius Block, Bloemfontein For respondent: D Mahon T Moretlwe Instructed by: Harris Billings Attorneys, Fourways Honey Attorneys Inc, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA - MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 29 March 2018 STATUS Immediate 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. Shaw & another v Mackintosh & another (267/17) [2018] ZASCA 53 (29 March 2018) Today the Supreme Court of Appeal (SCA) dismissed an appeal against the judgment of the Gauteng Local Division, Johannesburg. The issue on appeal concerned the proper interpretation of s 8(5) of the National Credit Act 34 of 2005 (the NCA). A brief background of the matter is that, the first respondent, Glenn William Mackintosh (Mackintosh) and Mabili Search & Selection (Pty) Limited (Mabili) concluded an oral agreement, in 2009, in terms of which an amount of R2 million would be loaned to Mabili by Mackintosh. The parties, in October 2012, signed a written acknowledgement of debt (the agreement) in terms of which Mabili, as the debtor, acknowledged its indebtedness to Mackintosh, the creditor. In the agreement Mr Shaw and Mr Taylor (the appellants) bound them self as sureties for the amount owed by Mabili, the appellants were not party to the oral agreement. Mabili subsequently defaulted on its repayments. Mackintosh contended that the agreement between it and the appellants was a credit guarantee and therefor falls outside the operation of the NCA because it was a credit guarantee in respect of an agreement that was not itself subject to the NCA. The appellants’ argued that the agreement between them and Mackintosh was not a credit guarantee, but a credit transaction as defined in s 8(4)(f) of the NCA and that there had been no compliance by Mackintosh with his obligations under the NCA. The SCA accepted that, for the purpose of the appeal, the appellants were co-principal debtors. The SCA considered that the NCA applies to three kinds of agreements, namely a credit facility, a credit transaction or a credit guarantee. In terms s 1 of the NCA an agreement is a credit guarantee if a person undertakes or promises to satisfy upon demand any obligation of another consumer in terms of a credit facility or a credit transaction to which the NCA applies. The SCA considered the operation of s 8(5), a precondition to the operation of s 8(5) is that it applies to the obligations of another. The language of the section refers both to an undertaking and a promise to satisfy the obligation of another. In the section no reference to a suretyship or guarantee or any similar word is used. The appellants were not granted any loan nor were any credit advanced to them. The involvement of the appellants only arose when they undertook or promised to pay on demand the admitted indebtedness of Mabili to Mackintosh. The SCA found that the agreement expressly stated that the sum of R2 million was advanced to Mabili and not the appellants. That brings the obligations of the appellants squarely within the language of s 8(5). However, Mackintosh was not a credit provider in terms of s 40 of the Act. He was not in the business of providing credit. The agreement was a once-off transaction and not falling within the ambit of the provisions of the NCA. Section 4(2)(c) of the NCA provides that the NCA applies to a credit guarantee only to the extent that the NCA applies to a credit facility or credit transaction. Due to the provisions of s 4(2)(c), and even though obligations of the appellants fall within the language of s 8(5), the agreement between the appellant and Mackintosh falls outside the NCA. The appeal was dismissed with costs.

2338

non-electoral

2009

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 532/08 In the matter between: CITY OF TSHWANE METROPOLITAN MUNICIPALITY Appellant and ENGINEERING COUNCIL OF SOUTH AFRICA First Respondent ADRIANUS JACOBUS WEYERS Second Respondent Neutral citation: City of Tshwane Metropolitan Municipality v Engineering Council of South Africa and another (532/08) [2009] ZASCA 151 (27 November 2009) Coram: MPATI P, NAVSA, NUGENT and MLAMBO JJA AND WALLIS AJA Heard: 16 November 2009 Delivered: 27 November 2009 Summary: Whistleblower – employee writing a letter to Engineering Council and Department of Labour concerning appointments to posts – whether contents of the letter constituted a protected disclosure under the Protected Disclosures Act 26 of 2000. ORDER On appeal from: High Court at Pretoria (Prinsloo J sitting as court of first instance). The appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel. JUDGMENT WALLIS AJA (MPATI P, NAVSA, NUGENT AND MLAMBO JJA concurring) [1] Mr Weyers, the second respondent, is an electrical engineer holding a Masters degree in engineering and registered as a professional engineer with the first respondent in terms of section 18(1)(a)(i) of the Engineering Profession Act, 46 of 2000 (the “EPA”). He has been employed by the appellant since 1996 and since 2003 has held the position of Managing Engineer: Power System Control (PSC). As such he is responsible for Tshwane’s PSC centre the primary function of which is to ensure that correct systems of configuration and safety measures are applied in Tshwane’s high, medium and low voltage networks so as to ensure continuity, quality and safety of electrical supply to all consumers within the metropolitan area. [2] On 31 August 2005 Mr Weyers addressed a letter to Dr Lukhwareni, the Strategic Executive Officer (SEO) of the Electricity Department, in which he expressed concerns about the employment of new system operators in the PSC centre. He copied the letter to Mr Benny Mahlangu, the General Manager: Electricity Development and Energy Business and to the Municipal Manager. Whilst it is clear that the contents of the letter were not well received, at least by Mr Mahlangu, it is not suggested that there was anything untoward in his addressing the letter to them. However he also sent the letter to the Department of Labour and to the Engineering Council, which is constituted in terms of the EPA and discharges a range of statutory responsibilities, most importantly for present purposes dealing with improper conduct by professional engineers. [3] On 9 November 2005 Mr Weyers was suspended and disciplinary proceedings were commenced against him. Initially he faced a number of charges, but at the hearing all charges were abandoned other than one ‘that you copied a letter you had written to the SEO Electricity Department to … the Department of Labour and the Engineering Council of South Africa … without authorisation and/or prior approval and/or knowledge of the Head of the Electricity Department’ When he was convicted on that charge, he approached the Pretoria High Court, with the support of the Engineering Council, for an order interdicting the appellant from imposing any disciplinary sanction upon him. That order was granted on the basis that sending the letter to these parties was a protected disclosure under various statutes and as such that it was impermissible for the municipality to impose a disciplinary sanction on Mr Weyers for doing so. This appeal lies against that order with the leave of the court below. [4] In order to appreciate the circumstances leading up to the sending of the letter and the basis for the claim that its being copied to parties outside the municipality is a protected disclosure it is necessary to give some background based on the facts that are not in dispute between the parties. One of the major functions of the PSC centre is to ensure safe electrical operations on the network. Key employees in this regard are the system operators who are all qualified electricians, who have completed an 11kV switching course,1 and who have the necessary technical knowledge and skill to undertake this work, which is more complex and potentially more dangerous than the work of an electrician working solely on low voltage systems. All qualified electricians are qualified to work on low voltage networks (400 volts and below) but work on medium and high voltage networks (11kV and 132kV respectively) requires specialist skill and knowledge because of the high levels of danger involved. [5] The system operators work with the network when it is live at all voltage levels, whilst electricians in the municipality’s Maintenance and Construction depots work on the low voltage and medium voltage sections of the network and then only when they have permission from the PSC centre. Generally (there may be exceptions) they only work on a network when the system is dead and certified to be such by a PSC system operator. The PSC section deals with complaints about electrical shocks; takes steps to prevent power failures in overload conditions and reconnects a network after a power failure. It is accepted that the higher the voltage level in a network the higher the fault level (the energy or 1 Electrical switching is a process whereby the voltage of current is altered, the position being that current is obtained by the local authority from Eskom at 132kV but this has to be transformed to lower levels for use by consumers. System operators also control when there is power in the network by switching. ‘spark’ emitted if a fault occurs) and therefore the more potentially dangerous the associated electrical work on such a network. Every time an electrical connection in a network is broken by a switch operation it also creates an electrical spark the size of which is dependent upon the voltage level in the system. The system operators work with high, medium and low voltages. [6] The electrical work performed by the PSC system operators has considerably greater potential for negative consequences than the work done by electricians in the Maintenance and Construction depots. The latter’s actions may result in the power supply to between one and twenty consumers being affected. Errors by system operators may cause a power failure in an entire suburb or even throughout the municipality. [7] All of the above is common cause on the papers. There was some dispute whether the work performed by system operators is, as Mr Weyers contends, significantly more dangerous than the work done by electricians in the Maintenance and Construction depots. However, that was not persisted in before us and can be disregarded. On the basis of the matters that are common cause it is an obvious conclusion that the systems operators perform more dangerous work and consequently must be more skilled than ordinary electricians, even if the additional competence is something that can be acquired with training and experience. [8] Turning then to the circumstances leading up to Mr Weyers writing the letter in question these emerge from the following facts that are either common cause or are no longer in dispute because the appellant no longer seeks to rely on the series of bald and unsupported denials in relation thereto contained in the answering affidavit. The starting point is that in 2005 there was a significant shortfall in the municipality’s complement of system operators with only 13 of the 48 posts specified in the approved structure for the PSC section being filled. In the result those who were so employed were required to perform excessive and dangerous levels of overtime, well in excess of 60 hours a month and sometimes running to as much as 100 hours a month. The municipality accepts that staff was overworked and blamed exhaustion for accidents. In February 2005 Mr Weyers was given permission to recruit a foreman and eight additional system operators in order to address this problem. [9] In late February Mr Weyers and three of his subordinates prepared a test when considering applications for a system operator foreman. This test was approved by Mr Booysen, who was Mr Weyers’ immediate superior, and had been sent to Ms Zaayman, the Deputy Manager: Recruitment and Selection in the human resources department. She returned it with the comment that it asked the right type of question but was possibly a little long. She accordingly said that Mr Weyers should ensure that candidates had sufficient time to answer the test. The test was used to shortlist candidates for the post of foreman in April 2005 and, after interviews had been conducted, led to a Mr von Gordon being appointed. It is plain from the internal e-mails that passed between Mr Weyers, Mr Booysen and Mr Ratsiane, the Manager: Recruitment and Selection in the human resources section of the electricity department, that the last-mentioned was aware that the test had been used to select those who were short-listed and raised no objection to its use as a tool for that purposes. [10] Applications for the system operators’ posts were considered at the same time as the foreman’s position. The posts were advertised internally and attracted 13 applicants. Mr Weyers decided that the foreman’s test should also be used for the operators because in his view the technical and safety requirements for the positions were the same and the test was directed to these. He discussed this with Mr Booysen, who agreed with him, although one of his subordinates thought the standard might be too high. This was a view he was prepared to accept and his later conduct bears that out. When the initial batch of applicants fared poorly, he suggested that all eight of those who achieved better than 31% should be interviewed, although he qualified that by saying that they ‘may very well constitute a huge risk to Tshwane Electricity and to themselves’ in view of their lack of knowledge. In due course only the four candidates who achieved better than 40% were short-listed by Mr Booysen. This happened on 8 April, but thereafter the forms changed and it was necessary for Mr Weyers to re-submit them, which he did on 24 April, recommending that two candidates be short-listed for the foreman’s position and four for the system operator posts. [11] The immediate response from Mr Ratsiane was that the shortlists were unacceptable and he asked for a meeting. The problem was that all the persons on the list were white and all the existing foremen and system operators were white. In the result the appointment of those on the lists would not satisfy transformation objectives within the municipality or assist in achieving its goals under the Employment Equity Act.2 Mr Weyers was clearly aware of this as he dealt with this issue in an e-mail accompanying the list, saying that the employment equity candidates had 2 Act 55 of 1998. lacked sufficient technical knowledge of the network to be appointed even when 10% had been added to their marks. [12] The suggested meeting took place on 10 May in Dr Lukhwareni’s office and was attended by Mr Booysen and Mr Ratsiane amongst others. On 19 May Mr Booysen circulated a summary of the agreement reached at the meeting and a memorandum on further appointments of system operators.3 The agreement was that 60% of the vacancies would be filled by ‘competent personnel based on training and test results’ and the balance from ‘qualified trainable personnel’. Accordingly four system operator posts were to be filled ‘from the competent group based on test results’; four system operator posts were to be re-advertised and a foreman was to be appointed. The agreement appears to have struck a reasonable balance between the urgent needs of the PSC centre and the pursuit of transformation and employment equity. It had the endorsement of the SEO and Mr Ratsiane from human resources as well as Mr Weyers and his immediate superior. It led to Mr von Gordon being appointed. It also meant that the four white males, identified as the best candidates by the tests, would be appointed. Meanwhile an advertisement was placed in the Pretoria News on 18 May in respect of the posts to be re-advertised. [13] Although it was submitted that the test became a bone of contention and its appropriateness had been challenged, this did not emerge at that time. Not only was the foreman position filled on the basis of the test,4 but Mr Booysen’s minute reflects that the test was to be used in the 3 Whilst the answering affidavit denied that an agreement was reached and denied that the addressees of the two documents received them, the appellant does not persist in this stance in its heads of argument or in oral submissions. 4 It was in respect of this position that the test had the most impact on employment equity candidates, because seven of the fourteen applicants for this position were equity candidates whilst only one of the applicants for a systems operator post came from this group future. In addition had the test been controversial in itself, as opposed to in the results it produced, one would have expected there to be a clear instruction to Mr Weyers and Mr Booysen that it was not to be used in short-listing the candidates for the positions that were to be re-advertised. There is no such instruction. Instead, once the applications were received, the applicants were required to sit the test. It is inconceivable that this would have occurred if the test had been rejected as inappropriate in May 2005. The issue surrounding the test only arose later when Mr Mahlangu came on the scene. [14] Fifteen employment equity candidates applied for the system operator positions but when they sat the test they performed dismally.5 With one exception, who with the benefit of an adjustment for employment equity that added 10% to the mark scored 42.22%, they all scored less than 40% and only two managed, with the same adjustment, to score more than 30%. Mr Weyers forwarded the results to Mr Booysen on 29 July and asked for a meeting to discuss a shortlist. [15] While this was going on an important change occurred in the Electricity Department. Mr Benny Mahlangu was appointed to the position of General Manager: Electricity Development and Energy Business. On 28 July Dr Lukhwareni informed his staff that he had delegated to Mr Mahlangu all transformation responsibilities with regard to human resources. From then on all applications for posts were to be forwarded to Mr Mahlangu who would appoint a committee for short- listing and a committee, chaired by himself, to conduct interviews. The decision of that committee in regard to appointments would be binding. 5 This is the description in the appellant’s heads of argument. Accordingly Mr Mahlangu would now play the central role in all new appointments. [16] The impact of this change was immediate insofar as the appointment of system operators in the PSC section was concerned. On 1 August 2005 Mr Booysen sent him the list of applicants for the systems operator posts ‘with test results for approved test’ and the document embodying the agreement reached on 10 May 2005 in regard to these positions. According to Mr Weyers two of his existing operators had resigned by this stage and the need for new appointments had become even more urgent. However, Mr Mahlangu immediately made it clear that he was dissatisfied with what he saw (although there is no indication that either Mr Weyers or Mr Booysen had made any recommendations in regard to short-listing from these applicants) and a meeting was convened on 3 August 2005 attended by Messrs Mahlangu, Booysen, Weyers and some others. [17] The meeting started with Mr Mahlangu stating that shortlists had to be approved by him, something that was not in dispute. Mr Weyers suggested that he shortlist the top six employment equity candidates. However as Mr Booysen suggested that managers internally had sought to discourage their best workers from applying, Mr Mahlangu directed that the posts should again be advertised internally. It is now accepted that Mr Mahlangu undertook personally to visit the depots and make sure that the best employment equity electricians applied. This was baldly denied in the answering affidavit, but as that denial is inconsistent with contemporary documents it carries no weight. On 4 August Mr Weyers sent an e-mail to Mr David Mahlangu (apparently in error) referring to the meeting the previous day; recording the decision to re-advertise internally and that Mr Benny Mahlangu would speak to the depots with a view to getting employment equity candidates to apply. It is inconceivable that he could have sent that e-mail had no such decision been made and even more inconceivable that, if they were untrue, he could, in response to the e-mails referred to in the next paragraph, have repeated these statements. This he did on 5 August 2005 in an e-mail to Mr David Garegae, the manager: electricity support services responsible for human resources within the electricity department, who was himself a party to the agreement of 10 May 2005. [18] What appears to have happened is that Mr Mahlangu changed his mind after the meeting. This emerges from two e-mails that he sent out on the afternoon of 4 August. The first addressed to Mr Booysen reads as follows: ‘I am disappointed to see that a list containing only Whites was submitted to HR against what was agreed upon.6 This act can be construed as fighting against transformation. To fast track transformation all tests are to be submitted to me and HR for review and it is HR that shall administer all the tests if there is a need for one. The lack of skills and expertise is not the fault of the Black employees but of their managers who did not ensure that everyone irrespective of colour acquired experience and expertise. Given our numbers with regards to equity, candidates who do not comply with equity requirements will not be short-listed at all. This is the policy that has to be adopted and has the full support of council.’ The second, sent less than an hour later to Mr Weyers, reads as follows: ‘It has been decided that only candidates that comply with the requirements of equity shall be considered. Your previous agreement with David Garegae and Ndhivo [Dr Lukhwareni] does not hold anymore. Tests shall be approved by me and HR and HR shall conduct the testing without your involvement. The list that you had, shall be used for short listing for equity candidates.’ 6 It is unclear to what list he was referring, as no shortlist had been prepared in regard to the employment equity candidates. If he was referring to the four recommended in May it had already been agreed that they should be employed. [19] The effect of these e-mails was considerable. No white males were to be considered for appointment notwithstanding the agreement on 10 May with Dr Lukhwareni, who was the head of the electricity department and Mr Mahlangu’s superior. Accordingly the four candidates who had been identified as suitable to commence work immediately would not be appointed. Mr Weyers would be removed from any process of assessing the competence of the candidates and the previous agreement in regard to the filling of these posts was set aside. Finally the blame for the absence of suitable black candidates was simply laid at the door of their managers without more. That left Mr Weyers in the position that he recorded in his e-mail to Mr David Garegae on 5 August namely that: These positions I would like to fill are critical to the Service Delivery of Tshwane Electricity, and while they are not filled with competent personnel we are sacrificing Batho Pele.” [20] Mr Weyers’ difficulties were compounded by the fact that on 25 July Dr Lukhwareni had circulated a letter dealing with staff working overtime beyond the conventional limit of 40 hours a month. This was directed at ensuring that staff did not exceed this level of overtime. With his current staff complement this was impossible for Mr Weyers to achieve. One of the suggestions in the letter was that breakdowns in the network would have to be left overnight to be dealt with when staff came on duty in the morning. That would clearly impact upon service delivery. In addition there had been at least some discussion (of which staff had become aware) that the municipality would program its computers dealing with salaries to prevent payment of more than 40 hours of overtime a month. This had led to talk of industrial action over the issue. [21] Over and above the problems with overtime the system operator posts had been advertised twice, no new appointments had been made and virtually no employment equity candidates had come forward who possessed what Mr Weyers regarded as the basic level of skills to perform these jobs. Now all this was largely taken out of his hands and only employment equity candidates were to be considered for the eight positions. He was no longer even able to employ the four candidates identified in the original process whose employment had been agreed to in May. The view he formed was that candidates would be employed irrespective of their level of skills or their ability to perform the tasks of a system operator and that the absence of skills would be disregarded in making appointments. That he held that view bona fide was accepted in argument before us, and it was an inference he could legitimately draw from what had happened. [22] In those circumstances Mr Weyers sought guidance from his professional body the Engineering Council. He wanted to know what his professional responsibilities were if, as he feared, system operators were appointed in the PSC centre who in his judgment lacked the requisite skills to perform the work entrusted to such operators. He was advised that it would be unprofessional and misconduct on his part were he to be party to the appointment of persons to positions where, in his judgment, their lack of skills meant that they were not competent to fill those posts and that might give rise to safety risks. He was also advised that in the event that his employer forced him to make such appointments he would be obliged to report that to the Engineering Council. He informed a top management meeting of this on 10 August. Dr Lukhwareni convened the meeting and Mr Mahlangu was listed in the notice as one of the participants. The denial in the answering affidavit that such a meeting took place was demonstrated to be false and, even though a fourth set of affidavits was delivered on behalf of the municipality it did not deal with this meeting. Accordingly Mr Weyers’ version of what transpired stands unchallenged. He says that Mr Mahlangu’s response to being told that he would have to make a report to the Engineering Council was to say that the Engineering Council could not dictate to the municipality who it should employ. His reply was that the council could not instruct him on how to conduct himself professionally. [23] That the problems in the PSC centre remained critical is apparent from an e-mail addressed by Mr Booysen to Mr Garegae on 11 August in which he said that: ‘We are not coping with the increasing number of resignations and not filling of vacancies resulting in people [having] to work overtime in excess of 40 hours and people working alone without assistants which could be seen as one of the reason for increasing incidents which could lead to incidents similar to the equipment blow-up at Morgan road in Mayville where members of the public were hurt.’ Mr Booysen finished by saying: ‘We need internal electricians with experience on our network.’ [24] A further management meeting took place on 15 August at which Mr Weyers said that it appeared to be impossible to find internal employment equity candidates with the necessary competence and experience to fill the vacant system operator posts and requested that outside candidates should be head-hunted. He also proposed that in order to overcome the lack of skills internally 40 electricians in the municipality’s employ be made available for training by him. In the meantime and in order to address the urgent existing problem he should be authorised to appoint people capable of fulfilling the immediate need for skilled system operators. It is accepted that this is what he said at the meeting and that Mr Mahlangu was opposed to these proposals. [25] On 17 August Mr Mahlangu asked Mr Weyers to provide him with the ‘job specs and job requirements’ for inter alia the system operator positions. This led him again to seek the advice of the Engineering Council, which on this occasion was furnished by its Manager: Legal Services, Mr Faul. The advice he received was to report his concerns to the mayor of Tshwane and that he was obliged also to report them to both the Engineering Council and the Department of Labour. [26] On 24 August Mr Weyers sent to Mr Booysen and Mr Mahlangu a list of names of those employment equity candidates who had the minimum academic qualifications necessary for amongst others the system operator posts and said in the covering e-mail: ‘Please note that academic qualifications are not enough as additional qualities are also needed. All of the positions to be filled are operational positions ie the people appointed need to take up the job immediately, failure to perform satisfactorily will endanger the lives of the candidates, their colleagues and the public.’ There was no response to this. On 25 August a further e-mail was sent to Mr Ratsiane and copied to Mr Mahlangu querying the decision to invalidate the tests (or more accurately the results of the tests) he had given to candidates and saying that he did not regard this as being in the best interests of the municipality as they had been devised to see if the candidates had the knowledge necessary to perform satisfactorily in the positions under consideration. Once again there was no response. [27] The final act in the drama was a meeting on 29 August to prepare a short-list for the vacant positions. In the case of the system operators Mr Mahlangu proposed simply to short-list all the black applicants and none of the others. The range of unadjusted scores for these candidates on Mr Weyers’ test ranged between 32,2% and 2,22%. Not surprisingly Mr Weyers said that he could not agree to and sign this shortlist as he regarded it as contrary to his professional obligations to do so. He told Mr Mahlangu that if he continued with this process he would be compelled to write a letter to the Department of Labour reporting the issue to them. The response was: ‘You can write a letter. I don’t care.’ As Mr Mahlangu says he cannot recall the meeting this stands unrebutted. Mr Weyers says that Mr Mahlangu then said he had heard that Mr Weyers was a racist, a charge that was strongly rejected. Mr Booysen also expressed concern about the competence of the candidates but Mr Mahlangu said that they would be sent for training at Eskom.7 A check made by Mr Weyers the following day revealed that no arrangements had been made for any such training and this compounded his scepticism whether the training would eventuate. [27] Against that background Mr Weyers wrote his letter of 31 August. It was addressed to the persons mentioned in paragraph [2] above and reads as follows: ‘SHORT LISTING OF INCOMPETENT CANDIDATES Dear Sir, In my capacity as a Professional Electrical Engineer bound by the Engineering Profession of South Africa Act, 1990 (Act No. 114 of 1990) and as a Municipal Staff member bound by the Code of Conduct of the City of Tshwane Metropolitan Municipality ... I am compelled to inform the Council about possible irregularities in the process of the appointment of personnel in the Power System Control Section of which I am the Managing Engineer. 7 Mr Booysen, who did not depose to an affidavit, clearly shared Mr Weyers’ concerns. That much emerges from a memorandum he prepared on 12 September and from an e-mail he sent to Dr Lukhwareni on 5 October. As the Section of Power System Control is primarily involved in ensuring the supply of electricity to the Tshwane Community and is required to work with dangerous live electrical equipment, the Managing Engineer sets high standards in appointing staff that have the best skills and competencies in the field. It is my professional opinion that academic qualifications alone, is not sufficient and therefore all applicants are tested on their knowledge of the theory, work, electrical network and of safety procedures. These tests are approved by Human Resources before being used. After obtaining the test results, the best candidates are invited for an interview. It was however found that the highest marks were mostly obtained by white candidates, and in order to adhere to the Employment Equity (EE) Act, 10% was added to each EE candidate’s test result to give them a better chance of being invited to an interview. This whole process was implemented in order to appoint System Operators and a shortlist was ready to be signed by HR on 8 April 2005. There was a great deal of unhappiness from HR as the shortlist only contained white candidates purely for the reason that they scored the highest marks and that it would be in the best interests of Council to interview such candidates for possible employment in the section. It was decided by HR and Top Management of Electricity to re-advertise the positions externally to draw a greater complement of possible EE candidates. With this done the candidates were tested again and very few EE candidates proved to be competent enough. No further actions as suggested by myself, such as ‘Head Hunting’ or the use of personnel agencies to find specific candidates, was taken by HR to find the right EE candidates for the positions. On 29 April8 2005 I was involved in a meeting with HR and Members of Top Management where it was decided that my competency test marks will be totally disregarded and only black candidates, some of whom scored worst in the tests, be short listed this was done for the position of System Operator, System Controller and Dispatch agent, all positions that are critical for effective and safe service delivery. The personnel structure of Power System Control currently consists of 54,5% EE candidates, 1,5% women and 44% white candidates. The Technical Service section under which Power System Control resides has 48% EE personnel, 4,3% Female personnel and 47,7% White personnel. 8 Clearly this should be August. “The report to Council 23 June 2005: ELECTRICITY DEPARTMENT: SUPPORT SERVICES DIVISION UPDATE ON THE EMPLOYMENT EQUITY STATUS OF THE DEPARTMENT AND PLANS TO ACCELERATE THE PROCESS, where the equity target is set at 50% was disregarded by the short-list team, all white candidates applications were removed and only black candidates applications were accepted, no one cared about the levels of competency of persons being short-listed. I raised my concern about the fact that it should not be a question of white or black but of the most competent person in order for it to be in the best interest of the Council’s Service Delivery and Electrical Safety. The General Manager responded to my concern by implicating me of being a racist. The decision was however taken that all black candidates will be sent to training at ESKOM and will be certified competent by ESKOM before they are allowed to perform operational functions in the Power System Control Section. (Arrangements with ESKOM have yet to be made and money for the training must still be found). I wish to confirm that I support the policy to train EE candidates to increase levels of competent service delivery to the public. This is in the best interest of our municipality. I have on different occasions proposed to different members of HR and Top Management to give me 30 EE candidates in special training positions created for this purpose, who will then be trained on the job, but as the Section is an operational section with immense staff shortages, the personnel needed NOW has to be competent to perform the work required of them without endangering their own lives, the lives of their colleagues or those of the public. I believe that the short-listing of the candidates with the lowest competency levels, even though they will be sent for training (probably for a period of 2 months) is not in the best interest of the Council. With the current staff levels of Power System Control at a mere 58%, having no competent people appointed and with the possibility of training being done that may take a great deal of time, or even may not even materialise at all, it is my Professional opinion that the following Acts, collective agreements and codes could be contravened. [A list of the provisions then follows.] I wish therefore to distance myself from this process, and I wish to be exonerated of the negative impact this process might have on the performance of the Power System Control Section, the Electricity Department, the Council and the public of Tshwane in regards to safety as well as service delivery. I would also like to humbly request that my 2(7) appointment according to the OHS Act hereby be withdrawn and that someone else be appointed with that capacity. Please be assured that despite this problematic situation, I remain committed to doing my job to the best of my ability and with the necessary diligence with the limited resources I have, whilst acting in the best interests of the City of Tshwane Metropolitan Municipality. I eagerly await your response regarding the abovementioned issues and am looking forward to receiving guidance from your office in respect of the issues raised by me in this letter.’ [29] On receipt of the letter Dr Lukhwareni responded by e-mail saying: ‘Should you colleagues not discuss matters personally with me before sending letters to the MM (municipal manager)?’ The reply from Mr Weyers was that he had been instructed by the lawyer at the Engineering Council to do this. The following day Mr Mahlangu addressed this e-mail to Dr Lukhwareni: ‘To avoid such incidents where junior officials jump the SEO and run to the MM, calls for strong disciplinary measures. This is perturbing especially from an individual who has failed to demonstrate a commitment to transformation. If disciplinary measures are not taken, this scenario will be a recurring event where the SEO’s directives are challenged by everyone and you can’t run the department in this fashion. Your mandate to transform this section is being challenged and failure to act will result in every decision that you make being challenged because someone does not like it. That is my contribution to this matter and I personally will not change from the stance I have taken unless you give in to this threat.” [30] It is a curious feature of this case that the initial complaint was not that the letter had been copied to the Engineering Council and the Department of Labour, but that it had been sent to the Municipal Manager and Mr Weyers was perceived to have gone over Dr Lukhwareni’s head thereby challenging his authority. What is clear is that the entire imbroglio arose when Mr Mahlangu intervened to prevent the implementation of the agreement of 10 May and it seems from this e-mail that he was also largely the driving force behind the disciplinary proceedings. Be that as it may, until his suspension on 9 November, Mr Weyers continued in his post thereafter trying to resolve the impasse and participated in an interview process that resulted in six employment equity candidates being selected for system operator positions on the basis that they would undergo training. His conviction on the one disciplinary charge ultimately pursued against him precipitated the present proceedings. The only issue in the appeal is whether the court below was correct to hold that the distribution of the letter to the Engineering Council and the Department of Labour was protected under one or other of the statutes relied upon by Mr Weyers. [31] It is perhaps as well at the outset to make it clear what this case is not about. It is not about the disciplinary proceedings and whether the sending of the letters in fact constituted misconduct or whether Mr Weyers received a fair hearing. Nor is the case about the application of the Employment Equity Act in the Tshwane Metropolitan Municipality. Nor does it require any view to be expressed on the wisdom of the approach adopted by either of the main protagonists, Mr Weyers and Mr Mahlangu, to the appointment of system operators and other staff in the PSC centre. Quite plainly they approached that issue from different perspectives and senses of priority. Whilst one might hope that these difficult issues in our society would always be resolved by mature discussion and mutual understanding, that did not occur in this instance and it is not for this court to determine the rights and wrongs of the situation that arose. Our only task is to determine whether the sending of the letter to the Engineering Council and the Department of Labour was protected by statute. It is to that question that I now turn. [32] Mr Weyers relies on three statutory provisions to justify what he did. They are section 30 of the Engineering Profession Act, 46 of 2000; section 26(1) of the Occupational Health and Safety Act 85 of 1993 (OHSA) and section 3 of the Protected Disclosures Act 26 of 2000 (‘the PDA’). All the oral argument revolved around this latter provision and in view of the conclusion I have reached it is necessary for me to deal only with that aspect. [33] According to its long title the purpose of the PDA is to make provision for procedures in terms of which employees in both the private and the public sectors may disclose unlawful or irregular conduct by their employers or by other employees and to provide for the protection of employees who make such disclosures. The preamble records that employees bear a responsibility to disclose criminal and any other irregular conduct in the workplace, and that employers have a responsibility to take all necessary steps to protect employees who make disclosures from reprisals as a result of making such disclosures. All of this is located within the constitutional imperative of good, effective, accountable and transparent government in organs of state. Section 3(1) of the PDA states as its objects the protection of an employee who makes a protected disclosure from any occupational detriment; the provision of remedies for those who suffer an occupational detriment in consequence of having made a protected disclosure and the provision of procedures to enable an employee, in a responsible manner, to disclose information concerning improprieties by his or her employer. Whilst it was submitted to us that the purpose was to have the subject of a disclosure investigated, and no doubt it is hoped that will flow from disclosures, that is not a stated purpose of the PDA. It recognises that disclosures are frequently not welcome to an employer and seeks to protect the employee who makes a protected disclosure from retribution from their employer in consequence of having made a protected disclosure.9 [34] Before addressing the question whether Mr Weyers’ letter contained a protected disclosure it is necessary to deal with a contention on behalf of the appellant that this is not a matter within the jurisdiction of the High Court, but one exclusively within the jurisdiction of the labour tribunals established under the LRA.10 The basis for that contention is an interpretation of section 4 of the PDA in the light of certain recent decisions by the Constitutional Court and this Court. The starting point is section 4 itself, the relevant portions of which read as follows: ‘(1) Any employee who has been subjected, is subject or may be subjected, to an occupational detriment in breach of section 3, may — (a) approach any court having jurisdiction, including the Labour Court established by section 151 of the Labour Relations Act, 1995 (Act No 66 of 1995), for appropriate relief; or (b) pursue any other process allowed or prescribed by any law. (2) For the purposes of the Labour Relations Act, 1995, including the consideration of any matter emanating from this Act by the Labour Court — (a) any dismissal in breach of section 3 is deemed to be an automatically unfair dismissal as contemplated in section 187 of that Act, and the dispute about such a dismissal must follow the procedure set out in Chapter VIII of that Act; and (b) any other occupational detriment in breach of section 3 is deemed to be an unfair labour practice as contemplated in Part B of Schedule 7 to that Act, and the dispute about such an unfair labour practice must follow the procedure set out in that Part…’ 9 See in general Tshishonga v Minister of Justice and Constitutional Development 2007 (4) SA 135 (LC) paras 166 to 169 and 170 to 175. 10 The Labour Relations Act 66 of 1995. [35] In my opinion the clear answer to this contention is that section 4(1) specifically states that an employee who may be subjected to an occupational detriment by his or her employer in consequence of having made a protected disclosure may approach ‘any court having jurisdiction’. In principle that is the appropriate High Court bearing in mind the jurisdiction conferred on High Courts by section 169 of the Constitution, read with section 19 of the Supreme Court Act 59 of 1959, and that the reference to ‘any court’ is extremely broad. There is nothing in section 4 to exclude that jurisdiction. Instead the section says that the Labour Court will also be included as a court having jurisdiction. Bearing in mind that the Labour Court’s jurisdiction is carefully circumscribed in sections 156 and 157 of the LRA that statement alone might have occasioned some difficulties in understanding the precise extent of the Labour Court’s jurisdiction under the PDA. Accordingly the legislature went on in section 4(2) to place any dismissal in the category of automatically unfair dismissals and any other occupational detriment in the category of unfair labour practices, thereby locating the jurisdiction of the Labour Court under the PDA within the framework of its existing jurisdiction in respect of unfair dismissals and unfair labour practices. Subsequently it introduced sections 186(2)(d) and 187(1)(h) into the LRA to harmonise the two statutes. There is nothing in any of this to indicate that it was intended to deprive the High Court of jurisdiction in these matters. [36] That straightforward reading of section 4 was challenged on the basis that because section 4(2) created what were referred to as LRA rights and remedies that meant that the Labour Court has exclusive jurisdiction. The explanation proffered for the reference to ‘any court having jurisdiction’ was that section 2 of the LRA excludes from its ambit members of the National Defence Force, the National Intelligence Agency, the South African Secret Service, the South African National Academy of Intelligence and Comsec and accordingly it was necessary to provide for another court to have jurisdiction in respect of these employees. The submission for the appellant is that the Labour Court is the court having primary jurisdiction in cases under the PDA with the jurisdiction of the High Court being incidental thereto and limited to the excluded employees who amount at most to a few percent of all employees in South Africa. [37] The answer is that this inverts the language and structure of the section. The section starts by saying that all employees may have resort to any court having jurisdiction. It then says that the Labour Court is included in that broader category presumably because otherwise it would have had no jurisdiction at all in respect of cases arising under the PDA. Perhaps the effect is that for these purposes employees otherwise excluded from the scope of the LRA may have resort to its provisions and to the Labour Court or the CCMA, but it cannot mean that they are obliged to do so. Nor can it mean that employees otherwise subject to the LRA are deprived of the right to approach the ordinary courts for relief under the PDA. The language of the section is simply not apt for that purpose. There was a strong body of authority prior to the Constitution that held that the jurisdiction of the then Supreme Court was not lightly excluded.11 That is now reinforced by the Constitution, which provides in section 169(b) that the High Court may decide any matter not assigned to another Court by an Act of Parliament. Where the statute in question gives the right to approach any court having jurisdiction and then adds by way of inclusion the Labour Court that is not an assignment of the matter 11 Paper, Printing, Wood and Allied Workers’ Union v Pienaar NO 1993 (4) SA 621 (A) at 635A-C. to the Labour Court. Had the intention been as suggested the section would have started by referring all cases under the PDA to the Labour Court and then, if necessary, dealing separately with the few employees who fall outside the purview of the LRA. It does not do so. [38] Mr Pauw SC, who appeared for the appellant, sought to support his argument by reference to the recent decision of this Court in Makhanya v University of Zululand12 and that of the Constitutional Court in Gcaba v Minister for Safety and Security and others.13 He submitted, with reference to paragraph 66 of the latter judgment, that this was ‘a quintessential labour-related issue’ and accordingly that the Labour Court has exclusive jurisdiction in regard to disputes arising under the PDA, with the exception of disputes in regard to those employees excluded from the scope of operation of the LRA. However that quotation is taken out of context. It must be seen in the light of paragraph 64 of the judgment where it was said that: ‘Generally, employment and labour relationship issues do not amount to administrative action within the meaning of PAJA.’ and also in the light of the full passage where the phrase occurs, which reads: 'In Chirwa Ngcobo J found [at paras 142 and 150] that the decision to dismiss Ms Chirwa did not amount to administrative action. He held that whether an employer is regarded as "public" or "private" cannot determine whether its conduct is administrative action or an unfair labour practice. Similarly, the failure to promote and appoint Mr Gcaba appears to be a quintessential labour-related issue, based on the right to fair labour practices, almost as clearly as an unfair dismissal. Its impact is felt mainly by Mr Gcaba and has little or no direct consequence for any other citizens.' 12 [2009] ZASCA 69. 13 [2009] ZACC 26; [2009] 12 BLLR 1145 (CC). The basis of the judgment in Gcaba is that the decision in regard to Mr Gcaba’s promotion did not amount to administrative action.14 Whilst pointing to the advantages of specialised courts and the undesirability of forum shopping15 it laid down no wider principle. The reference to a ‘quintessential labour-related matter’ is made in the context of the constitutional concept of an unfair labour practice that is given shape and form by the LRA. [39] The issues in this case, whilst arising in the context of employment, relate to questions of public safety and the professional obligations of persons in the position of Mr Weyers in the context of the accountability of a municipality for proper service delivery of electricity within its municipal area. Those issues are by no means solely or at all labour- related matters. The questions that can arise in relation to a protected disclosure, such as whether the person concerned had reasonable grounds for believing that a criminal offence had been committed or that a miscarriage of justice had occurred or that the environment is likely to be damaged16 are not labour-related issues and are more appropriately dealt with in the ordinary courts. The mere fact that it is an employee who is protected under the PDA from an occupational detriment in relation to that employee’s working environment does not mean that every issue arising under the PDA is a ‘quintessential labour-related issue’ as contended by Mr Pauw. For those reasons I reject the challenge to the High Court’s jurisdiction.17 14 As has been held in two recent decisions by this Court. Tshavhungwa v NDPP [2009] ZASCA 136 and Mkumatela v The Nelson Mandela Metropolitan Municipality [2009] ZASCA 137. 15 Paragraphs 56 and 57. 16 See the definition of ‘disclosure ‘ in section 1 of the PDA. 17 As did Kroon J in Young v Coega Development Corporation (Pty) Ltd 2009 (6) SA 118 (ECP). [40] I turn then to consider the provisions of the PDA. Under section 3 of the PDA an employee who makes a protected disclosure may not be subjected to an occupational detriment by his or her employer on account, wholly or partly, of having made that disclosure. An occupational detriment is defined in section 1 as including being subjected to any disciplinary action. Accordingly the question is whether Mr Weyers’ action in sending his letter to the Department of Labour and the Engineering Council constituted a protected disclosure. If it did then the appellant was not entitled to institute disciplinary proceedings against him and he was entitled to obtain the interdict that was granted by the Pretoria High Court. [41] The material portion of the definition of a disclosure reads: ‘...any disclosure of information regarding any conduct of an employer, or an employee of that employer, made by any employee who has reason to believe that the information concerned shows or tends to show one or more of the following: (a) ... (b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which that person is subject; (c) ... (d) that the health or safety of an individual has been, is being or is likely to be endangered...’ The first argument advanced before us was that the contents of the letter did not constitute information because they contained only Mr Weyers’ opinion that people who were not competent were about to be appointed as system operators and not a fact or similar form of information.18 However a person’s opinion is itself a fact, for as Bowen LJ pointed out: 18 Reliance was placed on CWU and another v Mobile Telephone Networks (Pty) Ltd [2003] 8 BLLR 741 (LC) at para 22. To the extent that it was held that a subjective opinion cannot be information the judgment is wrong. ‘the state of a man's mind is as much a fact as the state of his digestion’.19 In addition an opinion often relates to a fact the existence of which can only be determined by considering the views of a suitably qualified expert. Whether a person has the requisite skills to undertake a dangerous and skilled task is a question of fact, but prior to their appointment, which was the relevant time in this instance, that fact can only be ascertained by way of tests and the assessment of people who know what the job requires of their level of skill. The letter dealt with that issue and as such contained information concerning the possible lack of competence of those who were likely to be appointed to the system operator posts. It also contained information to the reader about the state of mind of Mr Weyers as the person in charge of the PSC centre and the person responsible, both under his contract and by virtue of his appointment under the OHSA, for the safety of the machinery under his control and that of the PSC centre staff. [42] A further difficulty with this approach to the nature of information under the PDA is that its narrow and parsimonious construction of the word is inconsistent with the broad purposes of the Act, which seeks to encourage whistleblowers in the interests of accountable and transparent governance in both the public and the private sector. That engages an important constitutional value and it is by now well-established in our jurisprudence that such values must be given full weight in interpreting legislation. A narrow construction is inconsistent with that approach. On the construction contended for by Mr Pauw the threat of disciplinary action can be held as a sword of Damocles over the heads of employees to prevent them from expressing honestly held opinions to those entitled 19 Edgington v Fitzmaurice (1885) 29 Ch D 459 (CA) at 483. to know of those opinions. A culture of silence rather than one of openness would prevail. The purpose of the PDA is precisely the opposite. [43] For those reasons I am satisfied that the letter contained a disclosure of information regarding the conduct of those employees of the appellant20 who had taken responsibility for the selection of people to be appointed as system operators and a professional view on the suitability of the persons concerned to be appointed to those jobs. Both the letter itself and the background sketched earlier in this judgment demonstrate quite clearly that this information concerned the actual or prospective health and safety of individuals in the employ of the municipality and possibly outsiders as well and related to compliance with statutory obligations in regard to safety. Accordingly the letter constituted a disclosure in terms of the PDA. In terms of the definition of a protected disclosure in section 1, whether it was protected depends upon whether it was made to the Department of Labour and the Engineering Council in accordance with section 9 of the PDA. [44] Section 9 reads in its material part as follows: ‘General protected disclosure (1). Any disclosure made in good faith by an employee – (a) who reasonably believes that the information disclosed, and any allegation contained in it, are substantially true; and (b) who does not make the disclosure for purposes of personal gain, excluding any reward payable in terms of any law; is a protected disclosure if – (i) one or more of the conditions referred to in subsection (2) applies; and 20 Referred to in the letter as ‘HR”, an abbreviation for human resources, and ‘Top Management” referring to senior management in the electricity undertaking. (ii) in all the circumstances of the case, it is reasonable to make the disclosure.” The conditions in subsection (2) that are relevant for the purposes of this case are contained in paragraphs (c) and (d) which read: “(c) that the employee making the disclosure has previously made a disclosure of substantially the same information to: (i) his or her employer; or (ii) a person or body referred to in section 8, in respect of which no action was taken within a reasonable period after disclosure; or (d) that the impropriety is of an exceptionally serious nature.” [45] The effect of these provisions is that the disclosure would be protected if Mr Weyers acted in good faith; reasonably believed that the information disclosed and the allegations made by him were substantially true; was not acting for personal gain and one or other of the conditions in section 9(2)(c) and (d) was satisfied. Mr Pauw rightly conceded that the first three requirements were satisfied. In the light of the evidence summarised earlier in this judgment he could do no less. It is plain that Mr Weyers was throughout painfully aware of his professional responsibilities and of the need to provide residents of Tshwane with a safe and reliable electricity supply. His concern about the dangers arising from appointing people who, after testing, he regarded as insufficiently skilled to undertake the onerous duties attaching to a system operator position shines through each document. His bona fides and his belief in the truth of what he was saying are apparent. As this case shows he made the disclosure at considerable personal cost and not for personal gain. He acted in the discharge of what he conceived, and had been advised, was his professional duty. The disclosure was made to parties that would manifestly be interested in such disclosure. It would be surprising in those circumstances to learn that the disclosure was not protected. [46] Mr Pauw confined his contentions on this part of the case to the submission that Mr Weyers had not made a prior disclosure to his employer of substantially the same information in terms of paragraph (c), as the latter was at all times aware of his view, so that nothing was disclosed to it. He also contended that the disclosure did not relate to any impropriety as required by paragraph (d). Accordingly, so he submitted, the last necessary element of a protected disclosure was missing. [47] I cannot accept these contentions. In regard to the first it was put to him that the effect of his submission was that if the employer knew of a problem before the employee went and reported it there could be no prior disclosure to the employer and accordingly no protected disclosure could be made to anyone else. There was no answer to this point and the postulate cannot be correct. Its effect is that if an employee goes to the managing director and reports that bribes are being paid in order to secure contracts flowing from successful tenders that is not a disclosure if the managing director authorised the payments, and that knowledge would bar a protected disclosure to anyone else, such as the party issuing the tenders. Such a construction would undermine the whole purpose of the PDA because it has the result that the more culpable the employer in the conduct giving rise to the report and the greater its knowledge of wrongdoing, the less would be the protection enjoyed by the employee. [48] The alternative submission was that the letter merely reflected a disagreement between Mr Weyers and his employer and therefore there had been (and could be) no previous disclosure to the employer because that disagreement did not amount to a disclosure. However that is merely the argument that the letter contained no information decked out in a different guise and the way in which it is couched further undermines that original submission. If the letter is so construed then the information it contains is that there is a disagreement between the manager of the PSC centre, a skilled and highly qualified electrical engineer, and the representatives of management and human resources concerning the abilities of persons to be appointed as system operators in the PSC centre. That is a most important item of information that could cause the Department of Labour to intervene to conduct a safety inspection and engage with the relevant individuals to address the concerns being raised by Mr Weyers. Equally it could cause the Engineering Council to become involved in the interests of public safety and protecting the standing and reputation of its member. It also illustrates why these were the appropriate parties to whom to make the disclosure in question. [49] In my view therefore the requirements of section 9(2)(c) were satisfied, it being common cause that the relevant officials in the municipality had disregarded Mr Weyers’ concerns and intended to ride roughshod over them. Accordingly he had made the disclosure to his employer and no action had been taken consequent upon it, other than to disregard his bona fide concerns. It was not suggested that a reasonable period for acting upon his disclosure had not passed. [50] That conclusion suffices to hold that the letter embodied a protected disclosure. The same result is reached by considering the requirements of sub-section (d). An ‘impropriety’ is defined in section 1 as being conduct in any of the categories in the definition of disclosure, which includes any conduct that shows or tends to show that the health or safety of an individual has been, is being or is likely to be endangered. Having regard to the nature of the enterprise and the nature of the work that system operators would be employed to perform it would be likely that the safety of an individual would be endangered by the appointment of a person who did not possess the skills necessary to do the job safely. That is an impropriety as defined and, against the background set out in paragraphs [3] to [6] above, it cannot be contended that it was not an impropriety of an exceptionally serious nature. Clearly lives were at risk as the municipality’s own advertisement for the position had stated. [51] It follows that the respondents proved that the publication of the letters to the Department of Labour and the Engineering Council constituted a protected disclosure by Mr Weyers. It was accordingly impermissible for the municipality to discipline him for doing so and it would be impermissible for it to impose any sanction upon him for doing so. Lest it be taken that in referring to the municipality in this regard I am attributing conduct to the council of the municipality it is appropriate for me to record that it is unclear from the record, and counsel were not in a position to inform us, of the extent to which the council, as opposed to its officials acting in accordance with their delegated powers were responsible for both the disciplinary proceedings and the opposition to the present litigation, including this appeal. Accordingly my references to the municipality must be understood as referring to the conduct of those officials as representatives of the municipality. It is important to say this because it is not apparent that in the dispute that arose the broader interests of the residents of Tshwane and their need for service delivery, in the form of a safe and stable supply of electricity, were always kept in mind. In addition the manner in which these proceedings were conducted was deplorable with an answering affidavit being delivered by the manager: legal support services supported by purely formal confirmatory affidavits. The answering affidavit was replete with vague, evasive and in many cases demonstrably untruthful denials, as well as an attack on Mr Weyers’ bona fides that could not be, and was not, supported by counsel in argument. This judgment would not be complete without recording that this was not justified and that it was not in the interests of the residents of Tshwane. [52] The appeal is dismissed with costs, such costs to include those consequent upon the employment of two counsel. M J D WALLIS ACTING JUDGE OF APPEAL APPEARANCES FOR APPELLANT: PIETER PAUW SC (with him S SHABA) Instructed by Ngoepe Attorneys, Johannesburg Webbers, Bloemfontein FOR RESPONDENT: J F MULLINS SC (with him P A SWANEPOEL) Instructed by Serfontein Viljoen & Swart, Pretoria Vermaak & Dennis, Bloemfontein.

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: Friday 27 November 2009 Status: Immediate 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. CITY OF TSHWANE METROPOLITAN MUNICIPALITY v ENGINEERING COUNCIL OF SOUTH AFRICA and ADRIANUS JACOBUS WEYERS The Supreme Court of Appeal today handed down judgment in a case involving Mr Weyers, an employee of the Tshwane Municipality, who wrote a letter to the Department of Labour and the Engineering Council of South Africa concerning the possible employment in the Power System Control centre of system operators whom he regarded as not qualified to undertake the dangerous work attaching to those positions. The letter was written against an urgent need to employ additional system operators as the centre was understaffed and the existing operators were working dangerously high levels of overtime. Mr Weyers was suspended and subjected to a disciplinary enquiry because he had distributed the letter to the two outside parties. He brought proceedings to interdict the municipality from imposing any disciplinary sanction on him arising from his distribution of the letter to the Department and the Engineering Council. He sought protection under the Protected Disclosures Act, which protects whistleblowers against disciplinary sanction arising from their whistleblowing activities. The High Court in Pretoria granted Mr Weyers relief and the Supreme Court of Appeal upheld that decision. It held that the contents of the letter constituted a protected disclosure under the Protected Disclosures Act and that it had been written bona fide in the belief that its contents were true and not for personal gain. Accordingly the appeal was dismissed.

3471

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 73/2020 In the matter between: BEYOND PLATINUM (PTY) LTD APPELLANT and ELLIES ELECTRONICS (PTY) LTD FIRST RESPONDENT ROBRIDGE CONSTRUCTION CC T/A EASY STORE SECOND RESPONDENT MINISTER OF TRADE AND INDUSTRY THIRD RESPONDENT MINISTER OF POLICE FOURTH RESPONDENT CYANRE FIFTH RESPONDENT MUHAMMAD MOOLA STORAGE CC T/A ALLIED STORAGE SOLUTIONS SIXTH RESPONDENT Neutral citation: Beyond Platinum (Pty) Ltd v Ellies Electronics (Pty) Ltd [2020] ZASCA 154 (27 November 2020) Coram: NAVSA, PONNAN and CACHALIA JJA and MATOJANE and MABINDLA-BOQWANA AJJA Heard: 13 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h00 on 27 November 2020. Summary: Counterfeit Goods Act 37 of 1997 – whether search and seizure warrants lawfully obtained – whether interim interdict to preclude dealing in offending goods properly sought. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Janse van Nieuwenhuizen J sitting as a court of first instance): The appeal is dismissed with costs, including costs consequent upon the employment of two counsel. JUDGMENT Mabindla-Boqwana AJA (Navsa, Ponnan and Cachalia JJA and Matojane AJA concurring): [1] This appeal concerns the interpretation and application of provisions of the Counterfeit Goods Act 37 of 1997 (the Act) in terms of which the appellant, Beyond Platinum (Pty) Ltd (BP), caused to be issued three search and seizure warrants by a magistrate in Johannesburg, authorising a search for and the seizure of alleged counterfeit goods, at the business premises located at Village Deep Johannesburg, of the first respondent, a listed company, Ellies Electronics (Pty) Ltd (Ellies). [2] The Act prescribes the procedure to be followed to obtain such a warrant. ‘Protected goods’ in terms of the Act are inter alia defined as ‘goods featuring, bearing, embodying or incorporating the subject matter of an intellectual property right with the authority of the owner of that intellectual property right, or goods to which that subject matter has been applied by that owner or with his or her authority’. The purpose of the Act is to protect against the unlawful application of intellectual property rights and against the release of counterfeit goods into the channels of commerce. ‘Counterfeiting’ is defined in s 1 of the Act.1 Section 2 makes it an offence to trade in counterfeit goods and to possess them for that purpose. Section 3 provides for the laying of a complaint by a person who has an interest in ‘protected goods’, whether as owner, licensee, importer, exporter or distributor where such person reasonably suspects that an offence referred to in s 2 has been or is being committed or is likely to be committed. [3] In terms of s 3(1) of the Act, persons identified in the preceding paragraph, may lay a charge with an inspector, who, may include a police official as defined in s 1(1) of the Criminal Procedure Act 51 of 1977, holding the rank of sergeant or a higher rank. The inspector, in turn, in terms of s 4 of the Act, either on the strength of the complaint or the strength of any other information at his or her disposal, if he or she has reason to suspect that an offence contemplated in s 2(2) of the Act has been or is being committed or is likely to be committed, or that an act of dealing in counterfeit goods has taken or is taking place or is likely to take place, has the power of search and seizure set out, fairly extensively, in s 4. [4] The powers of search and seizure referred to in the preceding paragraph may however, only be exercised if a warrant has been authorised by a judge of the high court or a magistrate who has jurisdiction in the applicable area, if it appears to the judge or magistrate, from information presented on oath or affirmation, that there are reasonable grounds for believing that an act of dealing in counterfeit goods has taken or is taking place or is likely to take place. 1 In s 1 of the Act: ‘counterfeiting’, inter alia, means ‘without the authority of the owner of any intellectual property right subsisting in the Republic in respect of protected goods, the manufacturing, producing or making, whether in the Republic or elsewhere, of any goods whereby those protected goods are imitated in such manner and to such a degree that those other goods are substantially identical copies of the protected goods’; and ‘counterfeit goods’ are defined as ‘goods that are the result of counterfeiting, and includes any means used for purposes of counterfeiting’. [5] Pursuant to a search and seizure the inspector is required to complete an inventory and to give notice to the parties concerned, including the suspect, in this case Ellies, of the action taken and of where the goods are being kept.2 The complainant must also be notified of the right to lay criminal charges with the police and has three days after receiving such notice in which to do so.3 If upon the expiry of that three day period a criminal charge has not so been laid, the relevant seized goods must be released to the suspect.4 Goods must also be released if the State fails, within ten working days after the date of the notice given to the suspect, to inform the suspect by further written notice of its intention to institute criminal proceedings against him or her for having committed an offence. Notice of intention to institute civil proceedings must similarly be given within ten days by the complainant.5 That then is the applicable scheme of the Act. [6] I now turn to the facts of the present case. BP, on its website, describes itself, in alliance with a company in Korea, as a developer and manufacturer of radio frequency and infra-red remote controls units (RCUs). These devices are used in a variety of applications in the domestic space, to control appliances including television sets and decoders, which receive signals, from a source, that provides the basis for television channel programmes. In the present case the RCUs in question, which were the subject of the search and seizure warrants, are used to communicate with or control a set-top box (a decoder) employed by DSTV, a well-known broadcaster of television programs. 2 Section 7. 3 Section 7(2)(a) of the Act read with s 9(1)(a). 4 Section 9(1)(b). 5 Section 9(2). [7] Ellies was established in 1979. It is a leading Southern African manufacturer, importer, wholesaler and distributor of lighting, electrical and electronic products. It also supplies aerial and satellite equipment, accessories and hardware to commercial entities and the public at large. Ellies presently employs hundreds of people and has a nationwide presence. Its assertion that it is a household name in South Africa is unchallenged. [8] For many years Ellies has been buying RCUs from a variety of sources and packaging them for onward sales as Ellies’ products. They are replacements for original equipment which get lost, broken, chewed by dogs, dropped in swimming pools and the like. Judging from this litigation the market in relation to these products is substantial. [9] According to Ellies, the technology in respect of RCUs is not new. They have a long history and are utilised in different forms premised on the same basic technology, which is that frequencies are used on infra-red emissions to enable communication between an RCU and a receiving device. Simply put, the RCU and device talk to each other in binary code by means of an infra-red signal. All that this means in the digital space is that information is represented in binary form, it allows for numbers and letters to be represented and transmitted in this case by infrared light pulses and permits communication between an RCU and a device. Ellies explained that universal remote controls are becoming common place. RCUs, according to Ellies, have been around for a long time and their manufacturers are plentiful. [10] For some time before the problems in the present case arose Ellies had been buying RCUs from BP and on-selling them in Ellies’ packaging. The RCUs are designed to look like the original DSTV RCU. The RCUs were sold through major retail chains and through Ellies’ own distribution network. During the middle of 2017, Ellies took a decision to source RCUs directly from a manufacturer in China rather than from BP. This decision was motivated by a lower price resulting in higher profit margins for Ellies. [11] On 11 December 2017, shortly before the Christmas period, acting on a warrant obtained at the instance of BP, which had laid a complaint in terms of s 3 of the Act and, after the steps set out earlier were followed, Inspector Khubeka, a senior police official, arrived at Ellies’ head office with a posse of 20 people. They were there to execute the warrant and to conduct a search and seizure operation on the basis that Ellies was trading in counterfeit goods, more particularly any RCUs not sourced from BP. BP claimed that the RCUs that were being seized were counterfeits of its RCUs. It asserted intellectual property rights in respect of the RCUs. [12] BP, in its complaint and in the litigation that ensued, claimed that its RCUs embodied an infra-red protocol, known as MNEC IR protocol that it had developed. According to BP, the protocol constitutes a computer program or literary work as defined in the Copyright Act 98 of 1978.6 BP claimed to be the author of the protocol. It alleged that the MNEC IR protocols were developed in or around 2009 by one Kim Yong Tae, a citizen of the Republic of Korea who was an employee of a Korean company known as Seoby Electronics Company Ltd, which BP had instructed to develop the contested infra-red protocols, by providing the necessary specifications. [13] The search and seizure operation had apparently, been conducted in a very abrupt and aggressive manner. This caused panic and embarrassment to the company 6 In terms of the Copyright Act, a ‘computer program’ means ‘a set of instructions fixed or stored in any manner and which, when used directly or indirectly in a computer, directs its operation to bring about a result’ and ‘literary work’ is defined inter alia to include ‘tables and compilations, including tables and compilations of data stored or embodied in a computer or a medium used in conjunction with a computer, but shall not include a computer program’. and its employees. This extended to Ellies’ customers who were apparently written letters by BP to stop trading in the offending products. At a huge loss to it, Ellies requested all of its customers to remove the stock from their shelves and return it to Ellies. [14] Millions of rands worth of Ellies’ stock was seized as was their entire accounting record base and email servers. BP’s attorney was also in attendance. The seized goods were kept in detention at the premises of a designated Counterfeit Goods Depot7 of the second respondent, Robridge Construction CC t/a Easy Store (Easy Store). [15] Following the aforesaid seizure of goods, more RCUs ordered by Ellies from China arrived in shipping containers. Without admission of liability and in order to demonstrate good faith, while the copyright issue was being investigated, Ellies’ attorneys addressed a letter to BP’s attorneys, dated 11 January 2018, wherein it undertook to quarantine the products in question on the following basis: ‘10.1 Remove the products from its shelves at its head office and all branches throughout South Africa; 10.2 Replace the offending products at retail outlets with the new products ordered from and supplied by your client which are presently in the process of being packaged by our client. As soon as the packaging is complete the products will be distributed and swapped out whereafter the return products will be placed in the caged storage facility controlled by your client referred to in paragraph 10.3 below. In so doing our client will keep comprehensive records of the quantity and movement of the products; 10.3 At no charge provide your client with a storage facility at its premises at 94 Eloff Street Extension Johannesburg which area will be caged thereby securing access/agrees from the 7 In terms of s 1 of the Act ‘counterfeit goods depot’ means ‘a place designated under section 23 to be a counterfeit goods depot, and includes any place deemed by section 7(1)(c) to be a counterfeit goods depot’. Counterfeit goods depots are designated by the Minister of Trade and Industry in terms of s 23(1) of the Act. cage controlled by your client who will hold the keys. Your client is also welcome to appoint a security guard if it so wishes to ensure compliance with the undertaking.’ [16] This offer was accepted by BP via an email from its attorneys dated 12 January 2018 (the January 2018 agreement). On 29 January 2018 BP issued summons against Ellies claiming damages for infringement of its alleged copyright. Ellies filed a notice of intention to defend the action and thereafter in terms of rule 30 a notice that BP’s particulars of claim be set aside as constituting an irregular proceeding on several grounds. As can be gathered from the letter set out in the preceding paragraph, Ellies, in order to deal with holiday period demand was, in the interim, compelled to purchase RCUs from BP. [17] Three months later, despite the above, without warning, BP sought and obtained two further search and seizure warrants, one issued on 17 May 2018 (the second warrant) and the other on 29 May 2018 (the third warrant). The second warrant related to the goods that were safely stored under lock and key, ie securely embargoed in terms of the agreement between the parties. The third warrant concerned goods that were kept at the designated Counterfeit Goods Depot (Easy Store’s premises) pursuant to the first warrant. Both warrants were executed on 6 June 2018 at the premises of Ellies and Easy Store respectively. The reasons advanced in the complaint affidavit deposed to by BP’s attorney in support of these warrants were essentially the following: ‘28. I was advised by the State Advocate charged with prosecuting the criminal complaint on behalf of the National Prosecuting Authority that the Specialised Commercial Crime Unit did not deliver to the Suspects a notice in terms of Section 9(2)(a)(i) of the Counterfeit Goods Act. For this reason, the State Advocate declined to proceed with a criminal complaint. 29. The Complainant wishes to have the Suspects prosecuted for the offences under the Counterfeit Goods Act. . . . 32. In the circumstances, the Complainant requires a warrant to perform a search and/or to seize: (a) Any remaining counterfeit remote controls that are held by the Suspects at their premises (94 Eloff Street Ext, Village Deep, Johannesburg) including any such remote controls in the caged area; and (b) The counterfeit remote controls that are identified in the section 7 (1) (d) notice (annexure “AD 2”) and currently held at the premises of Easy Store (11 Highview Boulevard, Ferndale Ext 29, Randburg). 33. The search and/or seizure referred to would reinstate the timelines for compliance under the Counterfeit Goods Act in relation to the counterfeit remote controls already seized and any further counterfeit remote controls that can be seized from the Suspects premises.’ [18] Earlier, on 6 June 2018, Mr Paul Kampel, Ellies’ attorney, had telephoned Mr Anthony Dessington, BP’s attorney, to enquire whether BP’s attorneys could serve on them an application Ellies had launched in the Gauteng Division of the High Court, Pretoria (high court) for the setting aside of the first warrant. In the founding affidavit in support of the application, Ellies asserted that BP held no intellectual property right in the RCU technology, that the technology had been developed by a Japanese corporation in the past and was commonplace, that the MNEC protocol was not a computer programme and that if this had been properly explained to the inspector and the magistrate they would have appreciated that Ellies could independently have created their own computer programme, which they did, that generates signals readable by devices which recognise the IR protocol. [19] No mention was made by Mr Dessington during the telephone conversation mentioned above, of the further warrants that were about to be executed on Ellies’ and Easy Store’s premises on that very day. The issuance and execution of the two further warrants resulted in Ellies supplementing its papers and amending its notice of motion. In turn, BP brought a counter-application seeking an interim interdict geared towards preventing Ellies from trading in the seized goods pending the outcome of the action it had instituted against Ellies. [20] The application brought by Ellies served before Janse van Nieuwenhuizen J in the high court, who granted an order setting aside all three warrants and ordering the release of the goods seized in terms of those warrants. She further directed that an inquiry be conducted in order to determine damages suffered by Ellies as a result of such search and seizures. To show her displeasure at the way it had behaved she granted a punitive costs order against BP and in effect dismissed its counter- application. The appeal by BP is with her leave. [21] The first issue for determination is whether the second and third search and seizure warrants were obtained lawfully. The second is whether BP was entitled to the interim interdict sought in the counter-application. Counsel for BP rightly conceded that if the appeal on the first issue failed that disposed as well of the second issue. [22] In their papers and written argument, parties devoted much time and attention to intellectual property rights issues, including the question of copyright and whether the MNEC IR protocol is a computer program or literary work. This matter has less to do with those questions (which are issues for the pending action) and more to do with the interpretation and application of the Act. [23] The remedies contained in the Act are far-reaching and highly invasive. They impact negatively upon constitutionally enshrined rights to privacy, property ownership and fair trial of a suspected trader. It is settled that these provisions should be resorted to only when it is justifiable to do so.8 That is, when ‘there are reasonable grounds for believing that an act of dealing in counterfeit goods has taken or is taking place.’9 As was stated in LA Group Limited and Another v B & J Meltz (Pty) Limited and Others,10 the use of the word ‘reasonable’ sets a standard that must be met by a complainant before a warrant can be granted. The remedies are directed at preventing fraudulent conduct and not ‘to give a party to a genuine trade mark [or copyright] dispute a weapon to be used in terrorem against its opponent.’11 [24] Having regard to what is set out in the preceding paragraph and considering that warrants are sought and granted ex parte, it is incumbent on a complainant to place all the relevant information before the judge or magistrate who has to decide the matter and to ensure that it is in compliance with the requirements of the Act. 12 [25] It is common cause that no notice of intention to institute criminal proceedings was ever sent to Ellies. BP says as much in its complaint affidavit when it sought the issuance of the second and third warrants as quoted in para 17 above. Because of the criminal proceedings not being pursued at the expiry of the 10-day period after the notice of seizure was given, Ellies was entitled to have the goods that were kept at Easy Store’s premises released back to it. The inspector ought to have directed the release of the goods in terms of s 9(3)(a). BP, instead, sought to have the timelines for the institution of criminal proceedings reinstated by deceptively seeking a second and third warrant. There is some force to the contention by Ellies that the first warrant was unlawfully procured but there is no need to interrogate that question any 8 LA Group Limited and Another v B & J Meltz (Pty) Limited and Others [2005] ZAGPHC 23 (23 February 2005) para 45. See also Cadac (Pty) Ltd v Weber-Stephen Products Company and Anothers 2005 JDR 0704 (W) para 17. 9 Section 3(1) read with s 6 of the Act. 10 Ibid fn 8. 11 Cadac fn 8. 12 Schlesinger v Schlesinger [1979] 3 All SA 780 (W); 1979 (4) SA 342 (W) at 349A. further as it was common cause that the first warrant had lapsed and in any event had been overtaken by the second and third warrants. [26] As to the second warrant, all the offending goods were still in quarantine when the warrant was sought and there was no indication that the undertaking to keep the goods so quarantined would not be kept. Ellies in its undertaking had offered BP the key to the premises where the goods were being kept and had offered it the option of placing a security guard there to ensure compliance. There were no reasonable grounds to suspect that in respect of those goods an act of dealing in counterfeit goods was taking place. There was no basis for, nor was any provided for suspecting that there were any more allegedly offending RCUs on Ellies premises. Significantly, no evidence was presented that any remaining goods were found at Ellies’ premises. [27] The third warrant related to the goods that were kept at the depot, subsequent to the first search and seizure. There was no indication that those goods could then enter the marketplace at the instance of Ellies. The second and third warrants ought not to have been sought or granted. All the warrants were correctly set aside and, for all the reasons set out above the appeal must fail. [28] As to costs, BP did not seek this court’s interference with the punitive costs order in the event it were to be unsuccessful in the appeal. In any event, its conduct justified the granting of that order. On appeal, Ellies sought the costs on the normal party and party scale. [29] In the result, the following order is issued: The appeal is dismissed with costs, including costs consequent upon the employment of two counsel. _____________________________ N P MABINDLA-BOQWANA ACTING JUDGE OF APPEAL Appearances: For appellant: R Michau SC with K D Iles Instructed by: Dessington & Dessington Incorporated, Johannesburg Symington De Kock Attorneys, Bloemfontein For first respondent: O Salmon SC with I Learmonth Instructed by: Kampel Kaufmann Attorneys, Johannesburg Matsepes Incorporated, Bloemfontein.

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 27 November 2020 STATUS Immediate Beyond Platinum (Pty) Ltd v Ellies Electronics (Pty) Ltd (Case no 73/2020) [2020] ZASCA 154 (27 November 2020) 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. Today the Supreme Court of Appeal (the SCA) dismissed the appeal of the appellant, Beyond Platinum (Pty) Ltd (BP), against the decision of the Gauteng Division of the High Court, Pretoria (the high court). The matter dealt with the interpretation and application of the Counterfeit Goods Act 37 of 1997 (the Act) which purpose is to protect against the unlawful application of intellectual property rights and against the release of counterfeit goods into the channels of commerce. A person who has an interest in such protected goods whether as an owner or licensee, among others and who reasonably suspects that an act of dealing in counterfeit goods has taken or is taking place or is likely to take place, may lay a complaint with an inspector who may include a member of the South African Police Service. Acting on the authority of a warrant, issued by a judge of the high court or a magistrate, the inspector may search the premises where the offending goods are kept and seize such goods for detention at a designated depot. Goods must be released to the suspect if upon the expiry of the time stipulated in the Act, no criminal proceedings have been instituted against the suspect. In this case BP laid a complaint with the inspector against the first respondent, Ellies Electronics (Pty) Ltd (Ellies), that remote control units (RCUs) distributed by Ellies embodied an infra-red protocol, known as MNEC IR protocol (the protocol) that BP had developed. BP contended that the protocol constituted BP’s computer program or literary work as defined in the Copyright Act 98 of 1978. The protocol communicates with or controls a set- top box (a decoder) employed by DSTV. Ellies denied that BP owned the protocol contending that the technology used in RCUs is not new. They have a long history and are utilised in different forms premised on the same basic technology, which is that frequencies are used on infra-red emissions to enable communication between an RCU and a receiving device. On 11 December 2017, after a warrant obtained at the instance of BP, which had laid a complaint in terms of s 3 of the Act, a senior police official conducted a search and seizure operation at Ellies’ premises, on the basis that Ellies was trading in counterfeit goods. Millions of rands worth of Ellies’ stock was seized and kept in detention at the premises of a designated Counterfeit Goods Depot of the second respondent, Robridge Construction CC t/a Easy Store (the depot). Following the seizure of goods, more RCUs ordered by Ellies from China arrived in shipping containers. Without admission of liability and as a show of good faith, in January 2018, Ellies undertook to quarantine the offending RCUs pending the resolution of the dispute, which offer was accepted by Ellies. The time in which to institute criminal proceedings against Ellies, pursuant to the December 2017 warrant, lapsed. Despite the January 2018 agreement and without warning, BP sought and obtained two further search and seizure warrants against Ellies on 17 and 29 May 2018 respectively. The purpose for these further warrants, according to BP, was to reinstate the timelines for compliance under the Act in relation to the alleged counterfeit RCUs already seized and any further counterfeit RCUs that could be seized from Ellies’ premises, in order to have BP prosecuted under the Act. Both warrants were executed on 6 June 2018. Ellies brought an application before the high court to set aside the three warrants which was successful. To show its displeasure at the way it had behaved the high court granted a punitive costs order against BP. In turn BP’s counter-application seeking an interim interdict to prevent Ellies from trading in the seized goods pending the outcome of its action proceedings against Ellies was in effect dismissed. The matter came to the SCA with the leave of the high court. The SCA held that the remedies contained in the Act were far-reaching and highly invasive. They impact negatively upon constitutionally enshrined rights to privacy, property ownership and fair trial of a suspected trader. It reiterated a settled position that these provisions of the Act should be resorted to only when it is justifiable to do so. The remedies are directed at preventing fraudulent conduct and not to give a party to a genuine trade mark or copyright dispute a weapon to be used in terrorem against its opponent. Because the warrants are sought and granted ex-parte it is incumbent upon the complainant to place all the relevant information before the judge or magistrate who has to decide the matter and to ensure that it is in compliance with the requirements of the Act. The SCA found it to have been common cause that the first warrant had lapsed and had been overtaken by the second and third warrants. All the offending goods were still in quarantine when the second warrant was sought and there was no indication that the undertaking to keep the goods so quarantined would not be kept. There were no reasonable grounds to suspect that in respect of those goods an act of dealing in counterfeit goods was taking place; and there was no basis for, nor was any provided for suspecting that there were any more allegedly offending RCUs on Ellies’ premises. As to the third warrant (which related to the goods kept at the depot), there was no indication that those goods could then enter the marketplace at the instance of Ellies. The SCA held that the second and third warrants ought not to have been sought or granted; and that all of the warrants were correctly set aside. In the circumstances, the appeal was dismissed with costs.

2836

non-electoral

2012

SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 602/2011 Not Reportable In the matter between: MARTIN JAMES BROSSY APPELLANT and DEBORAH GREER BROSSY RESPONDENT Neutral citation: Brossy v Brossy (602/11) [2012] ZASCA 151 (28 September 2012). Coram: Mthiyane DP, Snyders, Van Heerden, Malan et Pillay JJA Heard: 17 August 2012 Delivered: 28 September 2012 Summary: Maintenance of minor children – variation order refused – appeal to high court – record incomplete – matter postponed sine die for completion and reconstruction of the record. ORDER On appeal from: Western Cape High Court, Cape Town (Allie and Saldanha JJ sitting as court of first instance) The following order is made: 1 The appeal succeeds. 2 No order is made as to costs. 3 The order of the high court dated 11 March 2011 is set aside and replaced with the following: ‘a) The appeal is postponed sine die to enable the appellant to complete and reconstruct the record of proceedings in the maintenance court. b) Costs are reserved.’ JUDGMENT VAN HEERDEN AND PILLAY JJA (MTHIYANE DP AND MALAN JA CONCURRING) [1] This appeal, which is before us with the leave of this court, concerns an ongoing battle about maintenance between ex-spouses. This battle commenced in the maintenance court in about 2005. In that year, and again in March 2007, the respondent (Ms Deborah Brossy) filed a complaint against the appellant (Mr Martin Brossy) in terms of s 6(1)(b) of the Maintenance Act 99 of 1998 (the Act).1 Ms Brossy sought an upward variation of the maintenance payable by Mr Brossy in respect of the parties’ two children. An enquiry was then held in the 1Section 6(1)(b) provides as follows: ‘(1) Whenever a complaint to the effect – (b) that good cause exists for the substitution or discharge of a maintenance order, has been made and is lodged with a maintenance officer in the prescribed manner, the maintenance officer shall investigate that complaint in the prescribed manner and as provided in this Act.’ maintenance court. The magistrate found that Ms Brossy had not provided sufficient grounds to justify any increase to the existing maintenance award and the variation was refused. [2] Ms Brossy appealed to the Western Cape High Court (Allie and Saldanha JJ), as was her right in terms of s 25 of the Act. That court made an order in the following terms: ‘1. [That] this matter be referred back to the magistrate’s court for it to commence de novo before a new magistrate. 2. Such proceedings shall commence within 30 days from the date of this order. 3. The Legal Aid Board of South Africa shall consider an application for legal aid brought on behalf of the children in terms of section 28(2) of the Constitution, within 7 days of this order. 4. The Appellant is to do all things necessary to facilitate the completion of the necessary application and provide all the supporting documents required by the Legal Aid Board. 5. At the finalisation of the trial, the magistrate presiding shall determine whether either or both of the parties should pay all or a contribution towards the legal costs incurred by the Legal Aid Board in providing the necessary legal representation to the minor children. 6. No order as to costs is made.’ It is this order against which the present appeal is directed. [3] By way of background, the parties have two children, Christopher, born on 12 November 1993, and Emma, born on 4 November 1996. The parties were divorced from each other in February 1998. An agreement, entered into between the parties by way of a consent paper, was made an order of court. In terms thereof Mr Brossy undertook to pay maintenance for the children at the rate of R1 500 per month per child. In addition, Mr Brossy undertook to pay the costs of schooling for the children at public schools. If, however, he consented to the children attending a private school, he was obliged to pay the costs of schooling charged by the private school concerned. Mr Brossy also undertook to pay the cost of extra-mural activities for the children, provided that he agreed to them participating in such activities and that the children maintained an interest in them. [4] On 14 September 2000, a ‘consent and maintenance order’ was made in terms of s 17 read with s 16 of the Act, whereby Mr Brossy’s obligation to pay maintenance for the children was increased to R2 000 in respect of Christopher and R1 800 in respect of Emma, such amounts to be increased annually in accordance with the Consumer Price Index. He also undertook to pay ‘the Hill pre-school school fee rate’ (a private school) for Emma’s education and the ‘SACS primary school fee rate’ for Christopher’s education. The rest of the agreement between the parties in terms of the consent paper remained intact. [5] In 2007, the parties entered into a co-parenting agreement in terms of which they had to make joint decisions about the general welfare of the children, including decisions about which schools or other educational institutions the children would attend in the future. That notwithstanding, the agreement further provided that Ms Brossy would in the ordinary course make decisions regarding, inter alia, the children’s schooling, the courses they took, their ‘general education’, as well as decisions about the children’s extramural activities, including the choice of such activities. It was recorded that the children ‘currently attend Reddam School’ (a private school). [6] Ms Brossy ultimately sought an amount of R25 000 per month per child as a global maintenance payment, with the exception of all medical, dental and other like expenses, which Mr Brossy was in any event obliged to pay in terms of the consent paper. Mr Brossy was at that time paying R5 300 per month in respect of both children. Ms Brossy also sought ‘back payments from 1 June 2005’. Her claim, in effect, thus purported to include a claim for ‘arrear maintenance’ in a capital amount which, by the date of the magistrate’s judgment on 27 August 2009, exceeded R2 million. [7] The biggest dispute between the parties was the payment of school fees and the cost of extra-mural activities. At the time of the maintenance enquiry, the children were both attending a private school (Reddam School), where Christopher had been for more than six years and Emma had been for nine years. Mr Brossy had never paid the total Reddam School fees. He paid an amount equal to the fees charged by, respectively, SACS and Rustenburg Girls’ School. Because the Reddam School fees were considerably higher than these other (public) schools, Ms Brossy had always paid the balance. She testified that she had only managed to do so by borrowing money from her parents, who (she alleged) had lent her more than R4 million. [8] Ms Brossy also testified that Mr Brossy had consistently paid too little for the children’s’ extra-mural activities and that she had to pay the balance, making her financial position even more precarious. [9] During the course of the maintenance enquiry, reference was made to a large number of exhibits, most of which did not form part of the record before the high court. In addition, because of malfunctioning recording equipment, the examination-in-chief and part of the cross-examination of Ms Brossy had not been recorded and the transcript of this evidence was thus not available. It would seem that the record before the high court was also defective in other aspects. In the light of the incomplete record, the high court did not deal with the merits of the appeal. [10] Ordinarily, an appellant bears the onus of placing a complete record before the court. Should the record be defective in material respects, a court of appeal would generally strike the matter from the roll and render the appellant liable for costs. The high court invited the parties to address it on whether the appeal should be struck from the roll. Ultimately, however, despite the incompleteness of the record, the high court did not strike the matter from the roll, apparently to protect the interests of the minor children involved. It also did not postpone the appeal in order to afford Ms Brossy an opportunity to place a complete record before it to ensure that all the necessary material was available to enable proper adjudication on appeal. [11] It does not, however, appear from the record that the deficiencies could not be made good. Both parties were of the view that the record could indeed be completed and reconstructed. In fact, during the hearing of Mr Brossy’s application to the high court for leave to appeal to this court, his legal representatives tendered to provide the exhibits handed up in the maintenance court that did not form part of the record. In argument before this court, Mr Brossy’s counsel once again tendered to assist Ms Brossy in efforts to ensure that the record was completed and reconstructed to an acceptable level to enable the high court to deal with the appeal. We are certain that this tender will be made good. [12] The high court came to the conclusion that the magistrate had acted irregularly ‘in as much as he launched a scathing attack upon the respondent [Mr Brossy] and his legal representative’. The court listed several examples of what it considered to be overly aggressive questioning of, apparent disrespect for and disbelief of Mr Brossy on the part of the magistrate. The court also concluded that the magistrate’s questioning of Mr Brossy ‘leaves us in no doubt’ that the magistrate had prejudged the case. It was on this basis that the high court made the order referred to in paragraph 2 above. [13] It is trite that a judicial officer must ensure not only that justice is done, but, in addition, that it is seen to be done. He or she must therefore so conduct the trial that his or her open-mindedness, impartiality and fairness are manifest to all concerned in the trial and its outcome.2 However, in the present case, bias or improper conduct on the part of the magistrate did not form part of either party’s case in the high court or before us. Neither party at any stage objected to the magistrate’s conduct or applied for his recusal. Indeed, the magistrate’s alleged hostility toward Mr Brossy did not influence the outcome of the maintenance enquiry in that the judgment ultimately given by the magistrate was in favour of Mr Brossy. This was overlooked by the high court. [14] In our view, having decided not to strike the appeal from the roll, the proper course for the high court to have taken was to have postponed the appeal in order to enable Ms Brossy to complete and reconstruct the record and then to have decided the case on its merits. First, the retrospective rights of children were at stake and Ms Brossy was unrepresented. Second, if, as it now appears, the record could be reconstructed, affording Ms Brossy an opportunity to do so would, from her perspective, preserve the children’s accrued rights and would 2 See S v Rall 1982 (1) SA 828 (A) at 831H-832A. spare the additional costs of a fully-fledged maintenance enquiry in respect of the period in question. Third, Mr Brossy was being disadvantaged by Ms Brossy’s failure to prepare a complete record, and starting matters anew in circumstances where he was not the defaulting party would further prejudice him. Fourth, a postponement to facilitate a full record, with costs reserved, would effectively retain the rights of each party to have his or her day in an appeal hearing. [15] As regards maintenance claims for the period beyond that of the complaint which formed the basis of the enquiry before the maintenance court, Ms Brossy will be entitled to approach the maintenance court for a further variation based on circumstances prevailing at that stage, and this can be tested by a new maintenance court enquiry. The circumstances of the children have clearly changed in the interim. At the time of the judgment of the maintenance court, Christopher was 15 years and nine months’ old and still at school. Emma was 13 years and nine months’ old and also at school. Christopher is now a major and will turn 19 years’ old in November 2012. He is no longer at school, having matriculated last year. Emma is now 15 years’ old and will turn 16 in November 2012. She is in Grade 10 and continues to attend Reddam School. Mr Brossy’s liability for Emma’s private school fees is therefore still a live issue, while his liability for the costs of tertiary education for Christopher will now also have to be determined. It is important that the children’s rights as regards both past and future maintenance be preserved. [16] As indicated above, it appears that the record of proceedings in the maintenance court can be completed and reconstructed without too much difficulty. As indicated above, in argument before us, Mr Brossy’s counsel tendered to assist Ms Brossy in this regard and we have no reason to doubt that such assistance will be forthcoming. Given the nature of the case and the lengthy delays that have already occurred, it is to be expected that the process of putting the record in order will take place speedily. Once the record is in order, Ms Brossy can apply for a date for the hearing of the appeal. Should she fail to do so within a reasonable period of time, then Mr Brossy will be entitled to apply for a date for the hearing of the appeal and to ask for a dismissal of the appeal with costs, including the costs of the postponement. It will then be for the high court to determine the appeal on such basis as to it seems meet. [17] As indicated above, the high court ordered Legal Aid, South Africa to consider an application for legal aid brought on behalf of the children in terms of s 28(2) of the Constitution. This was on the basis that the interests of the minor children should be protected and advanced by affording them legal representation at the envisaged retrial before the maintenance court. The Centre for Child Law, which appeared before us as amicus curiae, pointed to international and regional instruments to which South Africa is a party, such as the United Nations Convention on the Rights of the Child (CRC)3 and the African Charter on the Rights and Welfare of the Child (ACRWC),4 both of which entrench children’s rights to express their views in all matters affecting them and their right to be heard in all judicial and administrative proceedings affecting them. Section 28(1)(h) of the Constitution guarantees the child’s right to have a legal representative assigned by the State, and at State expense, in civil proceedings affecting the child, if substantial injustice would otherwise result [18] Children’s right to participate has been incorporated into domestic legislation in the Children’s Act 38 of 2005, s 10 of which reads as follows: ‘Every child that is of such an age, maturity and stage of development as to be able to participate in any matter concerning that child has the right to participate in an appropriate way and views expressed by the child must be given due consideration.’ As one of the general principles of the Children’s Act, s 10 must guide the implementation of all legislation applicable to children (s 6(1)). In appropriate cases, this would include the Maintenance Act. [19] It is correct that, in many maintenance enquiries, the dispute will be between the parents, and the children will have an identity of interest with the parent claiming maintenance on their behalf. This does not mean, however, that there will never be situations where it will be important for a child to be given a 3 Article 12 of the CRC. 4 Article 4(2) of ACRWC. say in a maintenance matter, although the form that such participation will take will depend on a variety of factors, such as the age and ability of the child to express his or her own views. In this case, for example, much of the acrimony between the parents arises from the choice of school that the children are attending and the extra-mural activities in which the children are involved. It does not appear from the record that the children’s preferences and choices in this regard have ever been canvassed before the court. As was pointed out by Wallis AJ in Legal Aid Board v R 2009 (2) SA 262 (D) para 20: ‘When one is dealing with acrimonious litigation concerning the fundamentally important questions of where a child shall live and who shall be responsible for their principal day- to-day care and the central decisions concerning their lives, such as schooling, health, religion and the like, it seems to me that, if the court comes to the conclusion that the voice of the child has been drowned out by the warring voices of her or his parents, it is a necessary conclusion that substantial injustice to the child will result if he or she is not afforded the assistance of a legal practitioner to make his or her voice heard.’ [20] This is not an area where it is possible to lay down hard and fast rules. Whether or not a legal representative should be appointed for a child who is the subject of a maintenance dispute will depend on the specific facts and circumstances of each case. It is primarily a question of recognising the child as an autonomous individual whose right to express views and to be heard should be tested against the nature of the dispute and the role that the child can play in adding a significant dimension to the dispute. It is no longer the case that children should be seen and not heard. Maintenance matters are not an exception to this rule. [21] Christopher is now a major and will be able to institute his own maintenance claim against his father, should this become necessary. However, as far as Emma is concerned, one must bear in mind that she might well require the assistance of a legal representative in any future maintenance claim by Ms Brossy acting on Emma’s behalf against Mr Brossy. [22] As regards the costs of this appeal, it seems to us to be just that Ms Brossy should not at this stage be mulcted in the costs of appeal. She has acted throughout in what she believed to be in the best interests of her children, even to the extent of representing herself throughout the proceedings due to lack of funds for a legal representative. In our view, the fairest outcome is that there should be no order as to costs in this court. [23] Subsequent to the appeal hearing and after judgment was reserved, but before this judgment was finalised, Snyders JA became indisposed. This judgment is therefore a decision of the remaining members of this court. [24] The following order is made: 1 The appeal succeeds. 2 No order is made as to costs. 3 The order of the high court dated 11 March 2011 is set aside and replaced with the following: ‘a) The appeal is postponed sine die to enable the appellant to complete and reconstruct the record of proceedings in the maintenance court. b) Costs are reserved.’ B J VAN HEERDEN JUDGE OF APPEAL R PILLAY JUDGE OF APPEAL APPEARANCES APPELLANT: D Watson Instructed by: KG Druker Attorneys, Cape Town Honey Attorneys, Bloemfontein RESPONDENT: Deborah Greer Brossy In person

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 September 2012 Status: Immediate 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. Brossy v Brossy The Supreme Court of Appeal (SCA) today set aside an order of the Western Cape High Court, Cape Town in an appeal concerning maintenance. Mr and Ms Brossy were married to each other. Two children were born of the marriage. The parties were divorced in 1998 and the appellant (Mr Brossy) agreed to pay maintenance for the children. In March 2007, the respondent (Ms Brossy) who appeared in person, approached the Maintenance Court with a view to obtain a variation order to increase the maintenance for the children. The magistrate dismissed the application in August 2009. Ms Brossy then appealed to the Western Cape High Court, Cape Town. The high court was confronted with a materially incomplete record and consequently could not deal with the merits of the appeal. The high court did not strike the matter from the roll, as would normally be the case, because the interests of children were at stake. Instead it ordered that the matter be remitted to the maintenance court to be heard afresh before another magistrate. Mr Brossy then appealed against that decision to the SCA. The SCA was confronted with the same incomplete record which lacked portions of the oral evidence and the exhibits such as bank statements which were referred to in parts of the record. During the hearing of the appeal, Mr Brossy’s legal representative undertook to assist Ms Brossy to complete and reconstruct the record. In the light thereof, the SCA set aside the order of the high court. It substituted that order with an order postponing the matter in order to give Ms Brossy an opportunity to rectify the record so that the merits of the appeal could be dealt with by the high court.

206

non-electoral

2018

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 216/2017 In the matter between: NOKUTHULA NOMSA KHOZA obo ZAMOKUHLE KHOZA APPELLANT and THE MEMBER OF THE EXECUTIVE COUNCIL FOR HEALTH OF THE GAUTENG PROVINCIAL GOVERNMENT RESPONDENT Neutral citation: Khoza v MEC for Health, Gauteng (216/17) [2018] ZASCA 13 (15 March 2018) Coram: Lewis, Majiedt, Willis and Dambuza JJA and Pillay AJA Heard: 2 March 2018 Delivered: 15 March 2018 Summary: Medical negligence – quantum of damages – court a quo erred in this regard – award for general damages increased – contingency deduction for future loss of earnings reduced – appeal upheld. ORDER On appeal from: Gauteng Local Division, Johannesburg (Mashile J sitting as court of first instance): 1 The appeal is upheld, with costs, including the costs of two counsel. 2 Paragraphs 1 and 2 of the orders of the court a quo are set aside and are replaced with the following: ‘1 The Defendant shall pay an amount of R19 048 290 to the plaintiff in her representative capacity, for and on behalf of her minor child, Zamokuhle Khoza, which amount is computed as follows: (a) Past medical expenses: R1 375 (b) Future hospital, medical and related expenses: R14 490 799 (c) Future loss of earnings: R1 427 166 (d) General damages: R1 800 000 SUB-TOTAL: R17 719 341 (e) Trust (7.5% of R17 719 340.40): R1 328 950 TOTAL AMOUNT: R19 048 291 2 The total amount mentioned in paragraph 1 above, less the amount of R15 578 983.93 that was paid by the defendant on 29 February 2016, shall be paid in accordance with the provisions of section 3(a)(i) of the State Liability Act 20 of 1957 within 30 days from the date of this order directly into the trust account of the plaintiff’s attorneys of record. The banking details are as follows: WIM KRYNAUW ATTORNEYS TRUST Bank: ABSA – Trust account Account number: 405 735 0513 Reference: H NORTJE I MEC0003 3 The amount of R19 048 290.93 shall be retained by the plaintiff’s attorneys in an interest- bearing account in terms of section 78(2)(A) of the Attorneys Act 53 of 1979 for the benefit of the minor child.’ JUDGMENT ___________________________________________________________________ Willis JA (Lewis, Majiedt and Dambuza JJA and Pillay AJA concurring): Introduction [1] This appeal is concerned with two issues arising from a claim for medical negligence. The first is the award made for general damages, and the second is the amount that should be deducted for contingencies in respect of the loss of future earnings. For general damages, the court a quo awarded R200 000 but the appellant contends that it should have been R1 800 000. The agreed loss of future earnings was R1 159 642. From this amount, the high court made a 35 per cent contingency deduction. The appellant submits that the deduction should have been 20 per cent. She appeals to this court with the leave of the court a quo. [2] The appellant instituted the action as the parent and natural guardian of her minor son, Zamokuhle Khoza. She gave birth to him at the Chris Hani Baragwanath Hospital on 25 May 2008. The Gauteng Provincial Government is responsible for the administration and management of the hospital. The respondent is the political head of the Provincial Department of Health. [3] During the course of his birth, Zamokuhle experienced foetal distress, more particularly a hypoxic-ischaemic incident, due to perinatal asphyxia. As a result, he has severe brain damage, which manifests itself in spastic cerebral palsy, quadriplegia, mental retardation, epilepsy, marked delays in development, speech deficits, general spasticity, compromised respiratory function, subluxation of the hip, scoliosis of the spine and behavioural problems. The appellant claimed that it was the negligence of the staff at the hospital which caused Zamokuhle’s maladies and extensive suffering. [4] The parties agreed that there should be a separation of the merits of the case from the quantum and an order was made to this effect in terms of Rule 33(4) of the Uniform Rules of Court. The merits were adjudicated by Spilg J. On 2 February 2015, he found that Zamokuhle’s brain damage was indeed the result of the negligence of the staff at the hospital and that the respondent was liable for 100 per cent of the plaintiff’s proven damages. The court a quo (Mashile J) adjudicated the damages. [5] The damages were claimed under four separate heads: past hospital, medical and related expenses; future hospital, medical and related expenses; future loss of earnings and general damages. The parties agreed on past and future hospital, medical and related expenses in an aggregate amount of R14 490 799. This amount was to be paid into a trust for the benefit of Zamokuhle. A further 7.5 per cent of this amount was allowed for the costs of establishing and administering the trust. The parties agreed that the estimated loss of future earnings would be R1 783 958, subject to an appropriate contingency deduction. Accordingly, the only issues left for the court a quo to determine were the quantum of general damages and the contingency deduction from the agreed future loss of earnings. The two issues are now in contention before this court. The fact that there was no cross- appeal indicates that the respondent does not contend that there should be no award for general damages. This was confirmed by counsel for the respondent during the course of oral argument. The Issue of Quantum for General Damages [6] The appellant’s expert witnesses testified that Zamokuhle will be incontinent for his entire life. This will result in the perpetual use of nappies. The wet and soiled nappies will have to be changed by caregivers. Moreover, the experts said that he experiences pain and discomfort as well as unhappiness and frustration with his situation. He will have to undergo physiotherapy, requiring the regular use of a hoist in later years. He dislikes being moved by others. He will lose his entire mobility when he is about 37 years old. He has difficulty eating and, at least to some extent, he has to be force-fed. This evidence was not disputed. Zamokuhle is not in a state of ‘unconscious suffering’. [7] In Marine & Trade Insurance Co Ltd v Katz NO,1 Trollip JA pointed out that, in awards arising from brain injuries, although a person may not have ‘full insight into her dire plight and full appreciation of her grievous loss’, there may be a ‘twilight’ situation in which she is not a so-called ‘cabbage’ and accordingly an award for general damages would be appropriate.2 This case has been followed in numerous instances.3 Zamokuhle’s awareness of his suffering, albeit diminished by his reduced mental faculties, puts him in this ‘twilight’ situation. During the course of argument this became common cause. This confirms that he is entitled to an award for general damages and that all that remains to be determined, under this head, is how much would be suitable in all the circumstances. [8] In coming to its conclusions on the appropriate amount to award as general damages, the court a quo said that the figure agreed between the parties relating to past, future and related medical and hospital expenses took Zamokuhle’s loss of amenities of life into consideration. Accordingly, it held that a further award in that regard would be a duplication of compensation. [9] As was said by Nicholas JA in Southern Insurance Association Ltd v Bailey NO,4 this court has not adopted a ‘functional’ determination as to how general damages should be awarded. It has consistently preferred a flexible approach, determined by the broadest general considerations, depending on what is fair in all the circumstances of the case.5 We do not have to determine what the award will be 1 Marine & Trade Insurance Co Ltd v Katz NO 1979 (4) SA 961 (A). 2 Ibid at 983A-G. Today we may prefer to use the term ‘vegetative state’ to ‘cabbage’. See, for example, PM obo TM v MEC for Health, Gauteng Provincial Government [2017] ZAGPJHC 346 (7 March 2017) para 55. 3 See, for example, more recently, Road Accident Fund v Delport NO 2006 (3) SA 172 (SCA) para 23; and Mbele v Road Accident 2017 (2) SA 34 (SCA). 4 Southern Insurance Association Ltd v Bailey NO 1984 (1) SA 98 (A) at 119D-H. See also Sandler v Wholesale Coal Suppliers Ltd 1941 AD 194 at 199. 5 Ibid. used for – its purpose or function. What we must consider is the child’s loss of amenities of life and his pain and suffering. [10] The appellant relied on the following unreported cases, dealing with similar circumstances, in support of her contentions as to the appropriate amount to be awarded as ‘general damages’: (a) S obo S v MEC for Health, Gauteng6 in which Louw J on 12 August 2015 awarded R1 800 000; (b) Matlakala v MEC for Health, Gauteng7 in which Keightley J on 2 October 2015 awarded R1 500 000; (c) Mbhalate v MEC for Health, Gauteng8 in which Campbell AJ on 17 February 2016 awarded R1 800 000; and (d) PM obo TM v MEC for Health, Gauteng Provincial Government9 in which Meyer, Weiner and Monama JJ on 7 March 2017 in an appeal to the full court, also awarded R1 800 000. In PM obo TM v MEC for Health the full court referred extensively to the judgment of Rogers J in AD & another v MEC for Health and Social Development, Western Cape Provincial Government.10 The appellant also referred us to The Quantum Yearbook.11 [11] We endorse the following position which Rogers J held in AD & another v MEC for Health and which was followed by the full court in PM obo TM v MEC for Health: ‘Money cannot compensate IDT [the minor on behalf of whom the claim had been made] for everything he has lost. It does, however, have the power to enable those caring for him to try things which may alleviate his pain and suffering and to provide him with some pleasures in substitution for those which are now closed to him. These might include certain of the treatments which I have not felt able to allow as quantifiable future medical costs . . .’12 [12] Compensation for pain and suffering – to the extent that one can ever ‘compensate’ for it – is neither a duplication of the amount awarded for past and 6 S obo S v MEC for Health Gauteng (2009/27452) [2015] ZAGPPHC 605. 7 Matlakala v MEC for Health, Gauteng Provincial Government (2011/11642) [2015] ZAGPJHC 223 (2 October 2015). 8 Mbhalate v MEC for Health, Gauteng Provincial Government (2012/45017/12) (dated 17 February 2016). 9 PM obo TM v MEC for Health supra fn 2. 10 AD & another v MEC for Health and Social Development, Western Cape Provincial Government (27428/10) [2016] ZAWCHC 116 (7 September 2016). 11 Robert J Koch The Quantum Yearbook 2017 at 126. 12 AD & another v MEC for Health supra fn 12 para 618. See also PM v MEC for Health supra fn 2 para 56. future medical and hospital expenses, nor for loss of amenities of life. The court a quo was clearly wrong in regard to the ‘duplication’ issue and, accordingly, its award must be interfered with by this court. There is, moreover, a striking disparity between what the court a quo has ordered and what this court thinks should have been awarded.13 [13] Counsel for the respondent submitted that this court should not, without further ado, make an award that accords with other awards made by the high court in various divisions and, especially, this court should guard against assuming that all brain injury cases deserve the same award. Of course, this court will scrutinise past awards carefully and, in each case before it, make its own independent assessment. It is trite that past awards are merely a guide and are not to be slavishly followed, but they remain a guide nevertheless.14 It is also important that awards, where the sequelae of an accident are substantially similar, should be consonant with one another, across the land. Consistency, predictability and reliability are intrinsic to the rule of law. Apart from other considerations, these principles facilitate the settlement of disputes as to quantum. We have had particular regard to the cases upon which counsel for the appellant has relied and, especially AD & another v MEC for Health and PM obo TM v MEC for Health, where the issues are substantially similar to those before us. The appellant has asked for an award of R1 800 000 as general damages. This has been justified in all the circumstances of this case. The Deduction for Contingencies [14] At the trial the appellant argued for 20 per cent and the respondent 50 per cent as a deduction for contingencies. The high court decided that ‘the best approach would be to divide the difference’ between the two, arriving at a figure of 35 per cent. Counsel for the respondent defended the court a quo’s deduction of 50 per cent for ‘contingencies’ on the basis that this had been the deduction in Katz. Two points operate to diminish the force of that argument. The first is that the deduction for contingencies was made by agreement between the parties in that 13 See, for example, AA Mutual Insurance Association Ltd v Maqula 1978 (1) SA 805 (A) at 809B-D; Road Accident Fund v Guedes 2006 (5) SA 583 (SCA) at 587B-D. 14 See, for example, Minister of Safety and Security v Seymour 2006 (6) SA 320 (SCA) paras 17-19; and Minister of Safety and Security v Tyulu 2009 (5) SA 85 (SCA) para 26. case.15 The second is that the facts of that case were very different and, in particular, the contingency deduction took into account the likelihood of the patient’s remarriage.16 [15] As Nicholas JA said in Bailey17 the deduction for contingencies is meant to take into account the ‘vicissitudes of life’.18 These include: ‘[T]he possibility that the plaintiff may in the result have less than a “normal” expectation of life; and that he may experience periods of unemployment by reason of incapacity due to illness or accident, or to labour unrest or general economic conditions.’19 Counsel for the respondent also relied very strongly on the following, which follows shortly after what Nicholas JA had to say about the vicissitudes of life: ‘The rate of the discount cannot of course be assessed on any logical basis: the assessment must be largely arbitrary and must depend upon the Judge’s impression of the case.’20 He did so to defend what he conceded may seem to have been an arbitrary assessment of the appropriate deduction. [16] The leading case, in recent years, of the meaning of ‘arbitrary’ is First National Bank of SA Ltd t/a Wesbank v Commissioner for the South African Revenue Service & another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance.21 Ackermann J, delivering the unanimous judgment of the court, emphasised that although ‘arbitrary’ may often mean without any ‘rational connection between means and ends’, it does not always carry the same meaning and context is important.22 Ackermann J was also referring to the interpretation of a statute and not a word used in a judgment. To my mind, simply taking the median between what the respective parties ask for on the deduction or contingencies without any further explanation, is indeed devoid of any rational connection between the means by 15 Katz supra fn 1 at 979H. 16 Ibid at 979C-G. 17 Bailey supra fn 4 1984 (1) SA 98 (A). 18 Ibid at 116H. 19 Bailey supra fn 4 at 116H-117A. 20 Ibid. 21 First National Bank of SA Ltd t/a Wesbank v Commissioner for the South African Revenue Service & another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) para . 22 Ibid paras 61-69. which the decision was made and the result (or end) of the decision-making process. Nevertheless, in context, something more reasoned is required, not only if a court is to depart from the normal range of between 15 and 20 per cent, but also simply to take the median of what the respective parties asked for. It is like the rolling of a dice. A court is not a casino. Of particular relevance is that there are no special circumstances present to indicate that, but for his perinatal asphyxia, the vicissitudes of Zamokuhle’s life are likely to be more adverse than the norm. Conjecture may be required in making a contingency deduction, but it should not be done whimsically. [17] In regard to the deduction for contingencies, the appellant enjoined us to have particular regard to the judgment of this court in Singh v Ebrahim,23 in which a 15 per cent contingency deduction was approved, and PM obo TM v MEC for Health in which 20 per cent was deducted.24 The appellant made it plain that she would consider 20 per cent to be eminently fair and reasonable to both parties. [18] As with the award for general damages, the disparity between what the court a quo ordered and what this court thinks should have been awarded is again too striking to be left undisturbed. A 20 per cent deduction for contingencies in respect of future loss of earnings, as asked for by the appellant, would be appropriate. [19] The order which follows is that which the parties agreed should be made in the event that the appellant succeeded to the extent that R1 800 000 was to be awarded as general damages and a 20 per cent deduction for contingencies made from estimated future earnings: 1 The appeal is upheld, with costs, including the costs of two counsel. 2 Paragraphs 1 and 2 of the orders of the court a quo are set aside and are replaced with the following: ‘1 The Defendant shall pay an amount of R19 048 290 to the plaintiff in her representative capacity, for and on behalf of her minor child, Zamokuhle Khoza, which amount is computed as follows: 23 Singh & another v Ebrahim (413/09) [2010] ZASCA 145 (26 November 2010); 2010 JDR 1431 (SCA). 24 PM obo TM v MEC supra fn 2 para 51. (a) Past medical expenses: R1 375 (b) Future hospital, medical and related expenses: R14 490 799 (c) Future loss of earnings: R1 427 166 (d) General damages: R1 800 000 SUB-TOTAL: R17 719 341 (e) Trust (7.5% of R17 719 340.40): R1 328 950 TOTAL AMOUNT: R19 048 291 2 The total amount mentioned in paragraph 1 above, less the amount of R15 578 983.93 that was paid by the defendant on 29 February 2016, shall be paid in accordance with the provisions of section 3(a)(i) of the State Liability Act 20 of 1957 within 30 days from the date of this order directly into the trust account of the plaintiff’s attorneys of record. The banking details are as follows: WIM KRYNAUW ATTORNEYS TRUST Bank: ABSA – Trust account Account number: 405 735 0513 Reference: H NORTJE I MEC0003 3 The amount of R19 048 290.93 shall be retained by the plaintiff’s attorneys in an interest-bearing account in terms of section 78(2)(A) of the Attorneys Act 53 of 1979 for the benefit of the minor child.’ ______________________ N P WILLIS Judge of Appeal APPEARANCES: For Appellant: N Van der Walt SC (with him, M Coetzer) Instructed by: Wim Krynauw Inc Johannesburg c/o Martins Attorneys Bloemfontein For Respondent: V Soni SC Instructed by: The State Attorney Johannesburg and Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 15 March 2018 STATUS Immediate Khoza v MEC for Health, Gauteng (216/17) [2018] ZASCA 13 (15 March 2018) Please note that the media summary is for the benefit of the media and does not form part of the judgment. This morning, the Supreme Court of Appeal (SCA) unanimously upheld an appeal, with costs, in respect of the quantum of damages and the deduction for contingencies for a child who had suffered severe brain damage but was conscious of his suffering, as a result of a hypoxic-ischaemic incident during his birth at the Chris Hani Baragwanath Hospital. Having regard to other awards in similar cases across the country, the SCA held that R1 800 000 and not R200 000 was appropriate as general damages. Insofar as the deduction for contingencies was concerned, the SCA found that there was no proper justification for a figure of 50 per cent and that 20 per cent was appropriate.

3172

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT REPORTABLE CASE NO 41/06 In the matter between MP FINANCE GROUP CC (IN LIQUIDATION) Appellant and COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE Respondent _____________________________________________________________________ CORAM: HOWIE P, NUGENT, LEWIS, VAN HEERDEN JJA et SNYDERS AJA _____________________________________________________________________ Date Heard: 2 May 2007 Delivered: 31 May 2007 Summary: Amounts taken by illegal and fraudulent pyramid scheme constitute amounts ‘received’ within the meaning of ‘gross income’ in the Income Tax Act where intention of scheme operator is not to contract with the investors but to appropriate their money to facilitate the fraud. Neutral citation: This judgment may be referred to as MP Finance Group CC v Commissioner for South African Revenue Service [2007] SCA 71 (RSA) _____________________________________________________________________ HOWIE P HOWIE P [1] For some years beginning in 1998 one Marietjie Prinsloo operated an illegal investment enterprise commonly called a pyramid scheme. As is the pattern with such schemes, it readily parted greedy or gullible ‘investors’ from their money by promising irresistible (but unsustainable) returns on various forms of ostensible investment. It paid such returns for a while to some before finally collapsing – owing many millions – when the predictable happened and the total amount of supposedly due returns vastly exceeded the total amount of obtainable investment money. [2] The scheme was conducted by way of successively created entities, incorporated and unincorporated. They were all eventually insolvent. By order of 4 February 2003 made by the High Court at Pretoria, these original entities were, for ease of administration and legal practicality, consolidated into a single entity named MP Finance Group CC (in liquidation) (the CC). The order decreed, among other things, that it did not prejudice claims against an individual entity provided that only assets of that entity could be realised to meet such claims. It laid down, further, that the joint liquidators of the CC (who are also the joint liquidators of the original entities) were to regard claims proved against any of the individual entities as claims against the CC. [3] Presumably pursuant to that order, the respondent (the Commissioner) has regarded the CC as the taxpayer liable for the taxes respectively due by the original entities. He accordingly assessed the CC to tax in respect of the tax years 2000, 2001 and 2002. (These were revised assessments. It is unnecessary to refer to the original ones.) The liquidators objected on behalf of the CC. By letter dated 15 December 2003 their attorneys ‘accepted that the ... assessments are indeed assessments as contemplated in Part II of the Income Tax Act’ but contended, in the main, that investment amounts (referred to by them and in the record as ‘deposits’, among other terms) were not ‘received’ within the meaning of ‘gross income’ as defined in the Income Tax Act 58 of 1962 (the Act). (For convenience I shall refer to the monies paid to, and accepted by, the entities concerned as deposits.) [4] The objection was disallowed and the CC appealed. The appeal was heard by the Tax Court at Durban, Levinsohn J presiding. The appeal was dismissed, the Tax Court concluding that notwithstanding that the scheme was illegal, as also the investors’ transactions in the course of the scheme, the deposits were ‘receipts’ within the meaning of the Act. With the necessary leave, the CC appeals to this Court. [5] On behalf of the CC, its counsel advanced two arguments in their heads. The principal one was that, as contended before the Tax Court, the deposits were not taxable because they were not amounts ‘received’. The other submission was that any tax payable could not in law be owed by the CC because it was merely a creature of convenience formed after the tax years in question. [6] The second argument has no merit and was not seriously pressed before us. Not only were the liquidators parties to a consolidation agreement which led to the Court order of 4 February 2003 but, as already stated, they accepted that the assessments in issue were appropriately raised on the CC. In terms of that order it will still be a question of determining which deposits relate to which original entity and calculating the tax accordingly. The convenience of consolidation will be that the tax can be claimed from the CC. [7] Reverting to the main contention for the CC, it relied essentially on a passage in a judgment of this Court pertaining to the same scheme in which the question was whether repayments to investors were recoverable by the liquidators in terms of s 30(1) of the Insolvency Act 24 of 1936.1 On the premise that investors’ deposits were loans, the passage in question reads as follows: 2 ‘All loans made to the scheme were – in the light of at least the provisions of section 11 of the Banks Act 94 of 1990 and a prohibition under the Consumer Affairs (Unfair Business Practices) Act 71 of 1988 – illegal and therefore void; this proposition of law is uncontested. The scheme never had the least entitlement to retain investors’ money until the date which had supposedly been agreed as the due date for repayment. The perpetrators of the scheme knew the investments to be illegal. There is, on the other hand, no evidence that any of the investors knew their investments to be tainted, nothing from which to infer that any of them acted ex turpi causa. That being so, no question arises of relaxing the in pari delicto potior est conditio defendentis rule ... . Upon receipt of a payment the scheme was liable promptly to repay it to the investor who had a claim for it under the condictio ob iniustam causam. Instead it used the money to pay the claims of other investors who had invested earlier. That was the whole idea of the scheme.’ [8] The argument for the CC was that because, on the authority of the quoted passage, the scheme was liable in law immediately to refund the deposits, there was no basis on which it could be said that the deposits were ‘received’ within the meaning of the Act. They were, it was argued, consequently not subject to tax. 1 Fourie NO v Edeling NO [2006] 4 All SA 393 (SCA). 2 Para 13. [9] In s 1 of the Act ‘gross income’ means the total amount ‘received by or accrued to or in favour’ of a taxpayer during a tax year. This case is concerned with receipt, not accrual. [10] To place the CC’s principal argument in proper perspective I would make brief reference to the contents of the statement of agreed facts admitted into the record before the Tax Court. The salient features may be summarised as follows. Prinsloo operated the scheme with the aid of family and employees, as also so-called agents who solicited and transmitted investors’ deposits in return for commission. She controlled the various entities in the names of which the scheme was conducted and procured their printing of a range of convincing-looking documentation issued to investors when they made deposits. This included acknowledgments of receipt, membership certificates and share agreements, all of which purported to pertain to their investments. Most of the money received by the scheme was kept in cash and not banked. This cash float provided the source of payments to investors. However, substantial amounts of it were appropriated by Prinsloo and her accomplices. Some investors received repayment of their investments plus returns. The majority received less or nothing. What is of essential importance in the present matter is that throughout the tax years in question ie 1 March 1999 to 28 February 2002, the perpetrators of the scheme knew that it was insolvent, that it was fraudulent and that it would be impossible to pay all investors what they had been promised. [11] On those facts the inference must be that whatever intention there was at any time on the part of investors to enter into a contractual relationship with the entities concerned and whatever corresponding intention to contract there might possibly have been on the relevant entities’ part prior to 1 March 1999, there can no longer have been any such corresponding intention after that date. In short, from that date onwards the entities run by Prinsloo made their money by swindling the public. That was their income. It must follow that the amounts they were paid in that period were ‘received’ within the meaning of the Act. It was for the CC to prove the contrary and that onus was not discharged.3 [12] This Court’s judgment in the matter of Fourie NO v Edeling NO cannot assist the CC. That dealt with the relationship between investor and scheme. This case is about the relationship between scheme and fiscus. Even if, as correctly stated in that matter, with respect, the scheme was legally obliged to repay an investor immediately on receipt, that was because of the legal principles applicable to the parties to an illegal contract, as between themselves. An illegal contract is not without all legal consequences; it can, indeed, have fiscal consequences.4 The sole question as between scheme and fiscus is whether the amounts paid to the scheme in the tax years in issue came within the literal meaning of the Act.5 Unquestionably they did. They were accepted by the operators of the scheme with the intention of retaining them for their own benefit. Nothwithstanding that in law they were immediately repayable, they constituted receipts within the meaning of the Act. In other words it does not matter for present purposes that the scheme was not entitled, as against the investors, to retain their money. What matters is that what they took in was income received and duly taxable. The assessments were correctly raised. 3 See 82 of the Act. 4 Commissioner for Inland Revenue v Insolvent Estate Botha 1990 (2) SA 548 (A) at 556C-557B. 5 Ibid at 557I-558A. [13] In dismissing the appeal before it the Tax Court referred the case back to the Commissioner to consider the quantum of the receipts and if necessary to issue a further assessment. It has not been suggested that such referral was unwarranted if the appeal to that Court was correctly dismissed. [14] The appeal is dismissed, with costs, including the costs of two counsel. ___________________ CT HOWIE PRESIDENT SUPREME COURT OF APPEAL CONCUR: NUGENT JA LEWIS JA VAN HEERDEN JA SNYDERS AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL MP FINANCE GROUP v CSARS FROM: The Registrar, Supreme Court of Appeal Date: 31 May 2007 Status: Immediate Pyramid scheme swindlers must pay tax on their takings. This is the conclusion reached by the Supreme Court of Appeal. The case before it involved an illegal and fraudulent scheme operated by Marietjie Prinsloo through various corporations in the tax years 2000 to 2002 in Gauteng and neighbouring provinces. All the corporations went insolvent and very many so-called investors received either much less than their promised huge returns or nothing at all. When the Commissioner for the SA Revenue Services demanded that the scheme’s operators pay tax on what they received, the liquidators of the scheme objected. When their objection was disallowed they appealed to the Tax Court and when the appeal failed they appealed to the Supreme Court of Appeal. The liquidators argued that what was paid to the scheme were not ‘amounts received’ with the meaning of ‘gross income’ as defined in the tax law. This was so, they said, because what is received in terms an illegal contract or scheme is, in law, immediately repayable to the payer. The SCA held that, although that argument correctly stated the position as between the investors and the scheme, it overlooked the position as between the scheme and the revenue. The scheme made its money by illegal means. That was its income. The operators took the money for their own benefit, not with the intention to comply with supposed contracts with the investors. The scheme never had that contractual intention in any of the tax years. The appeal was dismissed.

1467

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 39/2016 In the matter between: BRODSKY TRADING 224CC APPELLANT and CRONIMET CHROME MINING SA (PTY) LTD FIRST RESPONDENT CRONIMET CHROME SA (PTY) LTD SECOND RESPONDENT CRONIMET CHROME PROPERTIES SA (PTY) LTD THIRD RESPONDENT Neutral citation: Brodsky Trading 224CC v Cronimet Chrome Mining SA (39/2016) [2016] ZASCA 175 (25 November 2016) Coram: Cachalia, Petse, Swain, Mathopo and Mocumie JJA Heard: 7 November 2016 Delivered: 25 November 2016 Summary: Estate Agency Affairs Act 112 of 1976 – estate agent company converted to close corporation in terms of s 27 of the Close Corporations Act 69 of 1984 – Estate Agency Affairs Board not advised of conversion – fidelity fund certificate issued to non-existent company – certificate invalid – close corporation precluded from recovering commission. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Tolmay J sitting as court of first instance). The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT Swain JA (Cachalia, Petse, Mathopo and Mocumie JJA concurring): [1] The appellant, Brodsky Trading 224CC, instituted action for the recovery of estate agent‟s commission against the first respondent, Cronimet Chrome Mining SA (Pty) Ltd as fourth defendant, the second respondent Cronimet Chrome SA (Pty) Ltd as eighth defendant, the third respondent Cronimet Chrome Properties (Pty) Ltd as ninth defendant (collectively referred to as the respondents) together with six other defendants in the Gauteng Division, Pretoria (Tolmay J).1 [2] At the initial hearing before the court a quo two issues were separated for determination in terms of Uniform rule 33(4). The first issue was whether the appellant had complied with s 26 of the Estate Agency Affairs Act 112 of 1976 (the Act) and the second was whether it had complied with s 34A(1) and (2) of the Act. 1 The remaining defendants do not participate in the present appeal and will only be referred to where it is of relevance to the issues in the appeal. Section 26 prohibits any person from performing any act as an estate agent, unless a valid fidelity fund certificate (certificate) has been issued to him or her. In terms of s 34A read with the definition of „estate agent‟ in s 1, no estate agent is entitled to any remuneration for any work, unless at the time the work was performed a valid certificate had been issued to the estate agent concerned. [3] The court a quo issued a declaratory order to the effect that the appellant had „substantially complied‟ with these provisions, and then granted leave to the respondents to appeal against this finding. This court, however, decided that the issue was not appealable and the matter was struck from the roll. It would be a fruitless exercise if the court a quo ultimately decided that the Act and hence the need for a valid certificate did not apply to the transaction, or to a large part of it on the basis that it did not fall within the definition of „business undertaking‟ in s 1 of the Act. In the absence of a determination of this issue by the court a quo, the order was not definitive of the rights of the parties and would not dispose of a substantial part of the relief claimed.2 [4] At the resumed hearing the court a quo, after hearing evidence on the merits, decided that what was sold was indeed a „business undertaking‟. In the light of its previous conclusion that the appellant had substantially complied with the requirements of the Act regarding the validity of the certificates, it decided that the appellant was not precluded from recovering commission. However, on the merits of the claim, it found that the appellant had failed to prove that the first respondent had granted a mandate to it to sell the shares, property and permits and dismissed the action. Leave to appeal to this court was thereafter granted by the court a quo. 2 Cronimet Chrome Mining SA v Brodsky Trading 224CC (851/12) [2013] ZASCA 155 (22 November 2013) paras 15 and 17. [5] The appellant makes the following submissions with regard to its entitlement, to claim commission: (a) It supports the court a quo‟s finding that it substantially complied with the requirements of the Act regarding its possession of a valid certificate, but (b) Submits that the court a quo erred in finding that the sale of the shares held by the first, second and third defendants in the first respondent, to the second respondent, constituted the sale of a „business undertaking‟ as contemplated in s 1(a)(i) of the Act. [6] The respondents, however, contend that the court a quo erred in concluding that the appellant had substantially complied with the requirements of the Act. This remains an issue in the appeal as it was not dealt with by this court at the previous hearing. It is also submitted that the court a quo correctly concluded that what was sold, was indeed a „business undertaking‟ in terms of the Act. [7] The evidence of relevance to these issues is as follows. A certificate was issued on 6 May 2005 to a company Brodsky Trading 224 (Pty) Ltd, which was valid until 31 December 2005. According to Mr Brian Maree, a director, the company was converted in terms of s 27 of the Close Corporations Act 69 of 1984 (the CC Act) to the appellant, Brodsky Trading 224CC, a close corporation, as from 20 March 2006. No valid certificate was issued to the company or its directors, or to the close corporation or its members, for any period during 2006. On 6 May 2007 a certificate was issued to Brodsky Trading 224 (Pty) Ltd (the non-existent company), but not to the appellant, Brodsky Trading 224CC. On the same date a certificate was issued to Mr Maree in his former capacity as a director of Brodsky Trading 224 (Pty) Ltd and similarly not in his capacity as a member of the appellant, Brodsky Trading 224CC. [8] Mr Maree believed he did not receive a valid certificate for 2006 because, according to him, there were years when he did not receive certificates from the Estate Agency Affairs Board (the Board). It was possible, he speculated, that 2006 was one of those years and that if a valid certificate had been issued, it would have been among the documents he had discovered. He initially stated that he could not recollect whether he had informed the Board of the change in the nature of his business from a company to a close corporation. However, when cross-examined he conceded that it could be accepted that he did not tell the Board of the conversion. He also conceded that from the beginning of 2007 until 6 May 2007, there was no valid certificate in existence for the appellant. In addition, from that date until the end of 2007, the certificate was in respect of a company that no longer existed. He also accepted that from 6 May 2007 to the end of the year, the certificate was issued to him in his capacity as a director of this non-existent company. [9] According to the appellant‟s amended particulars of claim, the seller‟s mandate (including an entitlement to 10 per cent commission) was granted to the appellant and accepted by Mr Maree and Mr Hennie Human on behalf of the appellant, on 15 March 2007. In evidence Mr Maree stated that the mandate was in fact granted on 12 March 2007. The appellant alleged that pursuant to this mandate it commenced marketing the seller‟s interests to potential purchasers. It found the sixth defendant, Mr Niemöller, as a potential purchaser, and introduced him to the sellers. Mr Maree stated that the commission was earned on 14 May 2007, when the introduction took place. [10] It is clear that neither the appellant nor its director, Mr Maree, were in possession of a valid certificate when the mandate was allegedly granted to and accepted by it on 15 March 2007. The certificate that was issued two months later, on 6 May 2007, eight days before 15 May 2007 (when it is claimed the commission was earned) was, however, not issued to the close corporation, but to the non- existent company. In addition, no valid certificate was issued to Mr Maree in his capacity as a member of the close corporation; it was issued to him in his capacity as a former director of the non-existent company. [11] It is apparent that the conclusion of the court a quo that the appellant had substantially complied with ss 26 and 34A of the Act, was based primarily on the provisions of s 27(5) of the CC Act. This section provides for the vesting of the assets, rights, liabilities and obligations of the company in the corporation and s 27(5)(b) provides that „. . . any other thing done by or in respect of the company shall be deemed to have been done by or in respect of the corporation‟. Section 38(5)(d) provides that „the juristic person which prior to the conversion of a company into a corporation existed as a company, shall notwithstanding the conversion continue to exist as a juristic person but in the form of a corporation‟. [12] It is, however, vital to recognise that although the juristic person that existed before the conversion, in the form of a company, continues to exist in the form of a close corporation, the company ceased to exist as at the date of conversion. Section 29B of the Companies Act 61 of 1973 provides that: „When a company is converted into a close corporation in terms of the Close Corporations Act, 1984, the Registrar shall, simultaneously with the registration of the founding statement of the close corporation by the Registrar of Close Corporations in terms of the said Act, cancel the registration of the memorandum and articles of association of the company concerned.‟ [13] For a right to be transferred from the company to the close corporation, it must have been held by the company at the time of conversion. Likewise „any other thing done by or in respect of the company‟ would have to be done at a time when the company was in existence for it to be deemed to have been done in respect of the corporation. On 20 March 2006, being the date of conversion, the company, however, was not in possession of a valid certificate that could be transferred to the corporation. In addition, nothing had been done by, or in respect of the company before its conversion, with regard to an application for a certificate in terms of s 16 of the Act, which could be transferred to the appellant. [14] The court a quo accordingly erred in concluding that the non-existent company possessed any rights in and to a valid certificate that could be transferred to the appellant. The court a quo‟s decision was based in part upon this erroneous conclusion, but it also reasoned that: „. . . the fidelity fund certificates issued in the name of the company and Mr Maree as director will provide for the protection of the public‟s interest as envisaged by the Act. Seeing that the object of the Act is to protect the public from unscrupulous estate agents, the object of the Act has been fulfilled.‟ [15] The general object of the Act was described by this court in Rogut v Rogut 1982 (3) SA 928 (A) at 939C in the following terms: „The general object of the Act was to protect the public against some persons by requiring all estate agents, as defined, to take out a fidelity fund guarantee (which is not granted automatically); and to pay the levies and contributions; and by requiring all estate agents to keep necessary accounting records and to cause them to be audited by an auditor, and by obliging every estate agent to open and keep a separate trust account with a bank and forthwith to deposit therein the moneys held or received by him on account of any person.‟ [16] The objectives of the Act with regard to the issue and validity of certificates are encapsulated in several of its provisions, namely ss 1, 16, 26 and 34A which, in their relevant parts, provide as follows: „Section 1 “estate agent” – (a) means any person who for the acquisition of gain on his own account or in partnership, in any manner holds himself out as a person who, or directly or indirectly advertises that he, on the instructions of or on behalf of any other person – (i) sells or purchases or publicly exhibits for sale immovable property or any business undertaking or negotiates in connection therewith or canvasses or undertakes or offers to canvas a seller or purchaser therefor; or . . . (b) for purposes of section 3(2)(a), includes any director of a company or a member who is competent and entitled to take part in the running of the business and the management, or a manager who is an officer, of a close corporation which is an estate agent as defined in paragraph (a); (c) for purposes of sections 7, 8, 9, 12, 15, 16, 18, 19, 21, 26, 27, 30, 33 and 34B, includes – (i) any director of a company, or a member referred to in paragraph (b), of a close corporation which is an estate agent as defined in paragraph (a); and (ii) any person who is employed by an estate agent as defined in paragraph (a) and performs on his behalf any act referred to in subparagraph (i) or (ii) of the said paragraph. 16. Applications for and issue of fidelity fund certificates and registration certificates. (1) Every estate agent or prospective estate agent, excluding an estate agent referred to in paragraph (cA) of the definition of “estate agent” in section 1, shall, within the prescribed period and in the prescribed manner, apply to the board for a fidelity fund certificate, and such application shall be accompanied by the levies referred to in section 9(1)(a) and the contribution referred to in section 15. (2) . . . (3) Subject to sections 28(1), 28(5) and 30(6), if the board upon receipt of any application referred to in subsection (1) or (2) and the levies and contribution referred to in those subsections, is satisfied that the applicant concerned is not disqualified in terms of section 27 from being issued with a fidelity fund certificate, the board shall in the prescribed form issue to the applicant concerned a fidelity fund certificate or a registration certificate, as the case may be, which shall be valid until 31 December of the year to which such application relates. (4) No fidelity fund certificate or registration certificate shall be issued unless and until the provisions of this Act are complied with, and any fidelity fund certificate and registration certificate issued in contravention of the provisions of this Act shall be invalid and shall be returned to the board at its request. (5) . . . 26. Prohibition of rendering of services as estate agent in certain circumstances. – No person shall perform any act as an estate agent unless a valid fidelity fund certificate has been issued to him or her and to every person employed by him or her as an estate agent and, if such person is – (a) a company, to every director of that company; or (b) a close corporation , to every member referred to in paragraph (b) of the definition of “estate agent” of the corporation. 34A. Estate agent not entitled to remuneration in certain circumstances. – (1) No estate agent shall be entitled to any remuneration or other payment in respect of or arising from the performance of any act referred to in subparagraph (i), (ii), (iii) or (iv) of paragraph (a) of the definition of “estate agent”, unless at the time of the performance of the act a valid fidelity fund certificate has been issued – (a) to such estate agent; and (b) if such estate agent is a company, to every director of such company or, if such estate agent is a close corporation, to every member referred to in paragraph (b) of the definition of “estate agent” of such corporation. (2) No person referred to in paragraph (c)(ii) of the definition of “estate agent”, and no estate agent who employs such person, shall be entitled to any remuneration or other payment in respect of or arising from the performance by such person of any act referred to in that paragraph, unless at the time of the performance of the act a valid fidelity fund certificate has been issued to such person.‟ [17] A company or a close corporation may accordingly fall within the definition of an „estate agent‟ in terms of s 1(a) read with ss 1(b) and (c). In addition, a clear distinction is drawn in ss 26 and 34A between companies and close corporations that are estate agents and the requirement that directors of companies and members of close corporations, be in possession of valid certificates. [18] As regards the requirement in s 16(1) that every estate agent must within the prescribed period and in the prescribed manner apply to the Board for a valid certificate, Mr Maree stated that the Board sent out renewal notices for the following year to estate agents in October of each year. Indeed, Regulation 4 of the regulations published in terms of s 33 of the Act3 provides as follows: 3 Certificates, 1986, GN R1789, GG 10403, 29 August 1986 (as amended). „4. (1) Every estate agent to whom a fidelity fund certificate or a registration certificate has been issued in respect of a specific calendar year shall, unless he has ceased or will cease before the end of that year to operate as an estate agent and has advised the [B]oard of such fact in the prescribed manner, by not later than 31 October of that year, apply to the [B]oard for the issue to him of a fidelity fund certificate or registration certificate, as the case may be, in respect of the immediately succeeding calendar year.‟ [19] The certificates issued on 6 May 2007 contain the following endorsement: „This is to certify that subject to the provisions of Act 112 of 1976 the person whose name appears on this certificate has complied with the provisions of s 16 of Act 112 of 1976 and the regulations promulgated in terms of the said section.‟ (Emphasis added.) [20] Section 16(4) provides that no certificate shall be issued unless and until the provisions of the Act are complied with. As from the date of conversion, being 20 March 2006, the company no longer existed. When application was made for a renewal of the certificates in 2007 it must have been made in the name of the company, because Mr Maree conceded that he had not told the Board of the conversion. The application was accordingly made by a non-existent company, Brodsky Trading 224 (Pty) Ltd, which no longer qualified as an „estate agent‟ in terms of the Act. The certificate therefore purported to certify compliance with the requirements of the Act by a non-existent company, in the guise of an „estate agent‟. [21] Section 16(4) of the Act provides that any certificate issued in contravention of the Act shall be invalid. The issue of the certificate to the non-existent company was accordingly invalid. In addition, the issue of a certificate to Mr Maree in his capacity as a director of the non-existent company, and not in his capacity as a member of the appellant, did not comply with s 16 of the Act and was also invalid. In terms of s 26 of the Act, every director of a company and every member of a close corporation, is required to have a valid certificate. In their absence the company or close corporation concerned is not entitled to receive any remuneration in terms of s 34A of the Act. On this additional ground the appellant is precluded from recovering any remuneration. [22] This is not simply an issue of nomenclature, or a misdescription in the name of the certificate holder, but one of substance. The objectives of the Act are not fulfilled by the issue of invalid certificates by the Board as they play a central role in ensuring that estate agents comply with its provisions. There was accordingly no basis for the court a quo to conclude that the appellant had substantially complied with its requirements. [23] I turn to the issue of whether the sale of the shares held by the first, second and third defendants in the first respondent, to the second respondent, constituted the sale of a „business undertaking‟ as contemplated in s 1(a)(i) of the Act. If not, the appellant would only be precluded from receiving commission in respect of the sale of the immovable property, and not in respect of the sale of the shares and permits. [24] In Moodley v Estate Agents Board 1982 (4) SA 257 (D) at 261G the meaning of a „business undertaking‟ in the Act was described as follows: „But it is quite clear that the reference to “business undertaking” in the definition section must mean the entire undertaking of a business and not any transaction which a businessman may enter into or any individual transaction in the course of the business.‟ [25] The court a quo found that the appellant in its particulars of claim alleged that the seller‟s mandate was to „find a purchaser for their interests in the whole of the mining operation conducted by them‟ inclusive of their shareholding in the first respondent, as well as the immovable property described as Vlakpoort no 38, and the crushing permit. It was also alleged that the defendants were „desirous of acquiring mining rights in a chrome mining operation, which they intended pursuing and exploiting jointly‟. The court a quo concluded that the evidence was that „essentially the whole of the business of the sellers were sold‟. [26] Mrs Nel, one of the sellers, stated that up until 6 February 2008, income was earned from the sale of minerals. If they had not sold the shares in the company, Platinum Mile Investments 594 (Pty) Ltd, to the second respondent, they would have continued to mine and sell chrome. She agreed that it was a business with active bank accounts and auditors and that profits were made from the recovery of chrome. Together with the other shareholders in the company, they were the owners of a chrome mine business that they decided to sell. The manner in which the business was sold was to sell the shares in the company to the second respondent. One of the objects of the sale agreement was to sell the business and the purchase price was not only for the immovable property, but also included the business. She agreed with the proposition that the appellant claimed commission not only in respect of the sale of the land, but also for the sale of the business. [27] At the resumed hearing before the court a quo, Mrs Nel agreed that the initial global price of R270 million was calculated on the basis that what was sold and bought, was a business undertaking. Mr Gunther Weiss, the attorney representing the German company Cronimet Mining GmbH (Cronimet), which acquired a majority shareholding in the second respondent, stated that the shares in the first respondent were purchased in order to acquire the company that owned the mining permits. The permits were the core assets of the whole mining business. What was acquired were the shares in the first respondent, the immovable property and the crushing permit owned by the company Night Fire Investments 110 (Pty) Ltd. These three assets formed the mining business undertaking that the purchasers wished to acquire. Although the agreement included a share deal, it was a share deal with the object of acquiring a business. [28] The issue is placed beyond doubt by several provisions in the sale agreement. Paragraph G of the Recitals records that the purchasers are interested in completing the proposed transaction „in order to jointly establish a new, independent chrome mining and refining beneficiation site‟. Clause 2.2 provides that the sale of the shares includes „the right to receive profits for the current and all future financial years of the company (being Platinum Mile Investments 594 (Pty) Ltd) and the right to receive any profits of the company which have not yet been distributed‟. Under the heading „interim period‟ it is recorded that the sellers and or the company, shall ensure during the period between the signing date and the closing date, that „all necessary steps are taken to protect the assets and business prospects of the company and to preserve and retain the mining permits and the goodwill of the business‟. These clauses are consistent with the subject of the sale being a „business undertaking‟. [29] The court a quo was therefore correct to conclude that the sale of the shares fell within the ambit of a business undertaking as contemplated in s 1(a)(i) of the Act. In the result the appellant is not entitled to any remuneration in terms of s 34A of the Act with regard to the performance of the mandate, allegedly granted to it by the first respondent to sell the shares, immovable property and permits. This conclusion renders it unnecessary to determine whether the court a quo correctly concluded that the appellant had failed to prove the mandate upon which it relied. I shall, however, briefly deal with this aspect. [30] The cause of action originally pleaded by the appellant was of a mandate granted by the sellers to the appellant to find a purchaser with an obligation on the part of the sellers to pay commission of ten per cent upon the sale price on the conclusion of a valid sale. This cause of action was confirmed under oath by Mr Maree representing the appellant, in a subsequent application for summary judgment. It was alleged that a contract was concluded on 14 May 2007 at the meeting where Mr Niemöller and nine other persons (mostly German businessmen) representing the purchasers met with Mr Maree and Mr Herman Viljoen, representing the appellant and Mr and Mrs Nel, representing the sellers. It was alleged that the purchasers, represented by Mr Niemöller, confirmed that the appellant had been the effective cause of the introduction, had earned its commission and was entitled to payment. The purchasers would thereafter deal directly with the sellers and the purchasers agreed to pay, or procure payment of the commission directly to the appellant in the event of a sale of the sellers‟ interests to the purchasers (or any of them). It was also alleged that the sellers‟ mandate was orally amended in that instead of the appellant‟s commission being payable by the sellers, it would be payable directly by the purchasers. [31] On this pleaded cause of action the appellant relied upon an agreement concluded with the purchasers, represented by Mr Niemöller. After the defendants pleaded that this agreement constituted an unenforceable pre-incorporation contract vis-a-vis the second respondent, the appellant amended its particulars of claim to include a number of alternative causes of action that are set out below. The respondents submit that when regard is had to the original cause of action, based upon an agreement to pay commission on 14 May 2007, which was confirmed under oath, the alternative causes of action were based upon expediency and not on the true facts. The respondents submit that this conclusion is supported by the absence of any meaningful evidence, to support the causes of action. [32] The following questions arise regarding the various causes of action relied upon by the appellant: (a) Whether Niemöller was authorised to represent the purchasers at the meeting on 14 May 2007 and agreed to the payment of commission to the appellant? (b) If Niemöller possessed such authority, whether the agreement to pay commission constituted an unenforceable pre-incorporation contract vis-a-vis the second respondent? (c) Whether the joint venture between Niemcor Africa (Pty) Ltd (Niemcor) and Cronimet had been formed before the meeting on 14 May 2007 with the result that Mr Niemöller represented the joint venture at this meeting, which was accordingly bound by Mr Niemöller‟s acceptance of the liability to pay commission to the appellant? (d) If the joint venture was bound to pay commission to the appellant whether it was able to avoid this obligation by adopting a company structure in the form of the second respondent? If not, whether the second respondent is bound by the joint venture‟s contractual obligations including the obligation to pay commission to the appellant? (e) Whether Niemcor and Cronimet as members of the joint venture ratified the act of Mr Niemöller in agreeing to pay commission to the appellant? (f) Whether the joint venture passed the benefit of the purchase agreement to the second respondent which assumed the obligation to pay commission to the appellant? (g) Whether the joint venture conferred a benefit upon the second respondent by way of a stipulatio alteri in the form of the purchase of the mining venture that included the obligation to pay commission to the appellant, which was accepted by the second respondent? (h) Whether the second respondent is estopped from denying the liability for payment of the appellant‟s commission, because of representations by the joint venture partners? (i) And finally whether the second respondent is estopped from denying that Mr Herman Viljoen had authority to represent the second respondent? [33] It is quite clear on the evidence that Mr Niemöller was not authorised to represent Cronimet at the meeting on 14 May 2007. Ms Novak‟s evidence was that neither she nor her husband, Mr Pariser, attended the meeting as representatives of Cronimet, but were there to gather information about the chrome mining operation and to assess what was offered. This is consistent with the function of her company being to look for chrome mining opportunities worldwide, on behalf of clients. Her evidence that Cronimet did not know she was at the meeting and no representatives of Cronimet were present, is also consistent with this function of her company. That she would object to Mr Niemöller saying that Cronimet would buy the mine at this initial meeting, is supported by the lengthy negotiations that followed, before the successful sale was concluded. This evidence also refutes the submission made by the appellant, that because Ms Novak and Mr Pariser met with Mr Niemöller and Mr Herman Viljoen before the meeting, it can be inferred that a joint venture between Mr Niemöller‟s company, Niemcor, and Cronimet was informally agreed in principle. The only evidence led in this regard by the appellant was Mr Maree‟s that Mr Niemöller had said that he represented „die Duitsers‟. This evidence also refutes the appellant‟s alternative submission that Mr Niemöller, Ms Novak and Mr Pariser had informally agreed in principle at this stage to a joint venture between themselves. There is accordingly no basis for a finding that Mr Niemöller represented a joint venture at this meeting, or that it was bound by Mr Niemöller‟s acceptance of the liability to pay commission. [34] The conclusion that Mr Niemöller was not authorised to represent Cronimet and that he could not have been at the meeting as a representative of a joint venture as none had been formed, renders it unnecessary to consider whether any agreement to pay commission by Mr Niemöller, was an unenforceable pre- incorporation contract, vis-a-vis the second respondent. In addition, whether any joint venture was able to avoid an obligation to pay commission by adopting a company structure, does not have to be considered. The most probable conclusion on the evidence is that Mr Niemöller was only representing his own company, Niemcor, at the meeting. [35] Whether Niemcor and Cronimet as members of the subsequently formed joint venture ratified the act of Mr Niemöller in agreeing to pay commission, is determined by the evidence of Mr Weiss and Mr Heil that the first time Cronimet heard of the appellant‟s claim to commission, was when the summons was received. In addition, Mr Weiss, Cronimet‟s attorney stated that Mr Bayle, Niemcor‟s attorney, at no stage raised with him any undertakings made by Mr Niemöller with regard to the payment of estate agent‟s commission. Mr Weiss, Mr Heil and Ms Novak all stated that no mention was made during an earlier meeting in Dubai of any obligation to pay commission to the appellant. It is therefore clear that Cronimet as the other member of the joint venture never ratified the conduct of Mr Niemöller in agreeing to pay commission, because it was not aware of this undertaking. Therefore the joint venture could not have ratified the conduct of Mr Niemöller. [36] Whether any joint venture passed the benefit of the purchase agreement, including the obligation to pay commission to the second respondent, is also determined by the fact that no joint venture had been formed at the time of the meeting on 14 May 2007. That Cronimet was never aware of any undertaking made by Mr Niemöller to pay commission to the appellant, means that the joint venture between Cronimet and Niemcor, could never have conferred any benefit upon the second respondent, by way of a stipulatio alteri. [37] I turn to the issue of whether the second respondent is estopped from denying the liability to pay commission, because of representations made by the joint venture partners. In other words, whether the second respondent is estopped from denying representations made by Mr Niemöller as to the liability to pay commission to the appellant. It is trite that an estoppel can only operate against the person making the representation save where it is made through a duly authorised agent,4 or where that person negligently enabled another person, acting fraudulently, to make the representation to the person raising the estoppel. 5 In this case, the representations were allegedly made by Mr Niemöller on behalf of the joint venture and not of the second respondent. This would not justify an estoppel against the second respondent. In addition, there is no evidence to show that the second respondent negligently allowed Mr Niemöller or the joint venture, acting fraudulently to make such representations to the appellant. There is accordingly no basis for this submission. [38] The remaining issue is whether the second respondent is estopped from denying that Mr Herman Viljoen had the authority to represent the second respondent. It is alleged by the appellant that Mr Niemöller and Mr Herman Viljoen 4 Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) para 29. 5 Stellenbosch Farmers‟ Winery Ltd v Vlachos t/a Liquor Den 2001 (3) SA 597 (SCA). represented to and misled the appellant, that they were authorised to represent the second respondent and to bind the second respondent with regard to the second respondent‟s liability to pay commission to the appellant. It is clear, however, that a valid estoppel requires a representation by the principal regarding the agent‟s authority. A representation of authority by the agent is insufficient.6 [39] In the result the appeal fails and the following order is made: The appeal is dismissed with costs including the costs of two counsel. K G B Swain Judge of Appeal 6 Glofinco v Absa Bank t/a United Bank 2002 (6) SA 470 (SCA) paras 12 and 13. Appearances: For the Appellant: S J Bekker SC (with W J Bezuidenhout) Instructed by: Van Wyk Fouchee Inc c/o Louw Attorneys, Pretoria Symington & De Kok, Bloemfontein For the Respondent: A Kemack SC (with E Eksteen) Instructed by: Werksmans Attorneys c/o Friedland Hart Solomon & Nicolson, Pretoria Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 25 November 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Brodsky Trading 224CC v Cronimet Chrome Mining SA (39/2016) [2016] ZASCA 175 (25 November 2016) Media Statement The SCA held that a fidelity fund certificate issued by the Estate Agency Affairs Board in terms of s 16 of the Estate Agency Affairs Act 112 of 1976 (the Act) was invalid in terms of s 16(4) and the appellant was not entitled to the payment of commission in terms of s 34A of the Act. The certificate was issued to a non-existent company which had been converted into a close corporation in terms of s 27 of the Close Corporations Act 69 of 1984, before the application was made in the name of the non-existent company, for the issue of the certificate. The High Court had erred in concluding there had been substantial compliance with the Act. The issue was one of substance and not simply nomenclature, or a misdescription in the name of the certificate holder. The objectives of the Act were not fulfilled by the issue of invalid certificates by the board, as they play a central role in ensuring that estate agents comply with its provisions. The SCA also held that the High Court was, however, correct in concluding that the appellant had failed to prove the mandate upon which it relied. The appeal was therefore dismissed. --- Ends ---

2934

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 20508/2014 Reportable In the matter between: JIMMY SEBONE SEEMELA APPELLANT and THE STATE RESPONDENT Neutral citation: Jimmy Sebone Seemela v The State (20508/14) [2015] ZASCA 41 (26 March 2015) Bench: Ponnan, Maya, Mhlantla and Zondi JJA and Meyer AJA Heard: 16 March 2015 Delivered: 26 March 2015 Summary: Evidence – s 3(1)(c) – Law of Evidence Act 45 of 1988 – admissibility of hearsay evidence – murder – legal causation. _____________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (Claassen J, sitting as court of first instance): The appeal succeeds in part and the order of the court below is set aside and replaced with the following: „(a) The appeal is upheld to the following extent: (i) The conviction of the appellant on count 1, the murder of Jabu Heckson Mathebe, and the sentence of life imprisonment imposed pursuant to that conviction are set aside. (ii) The conviction of the appellant on count 2, the murder of Maggie Rapao, and the sentence of life imprisonment imposed pursuant to that conviction are set aside and replaced with the following: „On count 2, the accused is convicted of attempted murder and sentenced to imprisonment for a term of twelve years‟. (iii) The appeal in respect of count 3, the unlawful possession of a firearm, and count 4, the unlawful possession of ammunition, in each instance in contravention of the Arms and Ammunition Act 75 of 1969, and the sentences of imprisonment for terms of 5 and 3 years imposed respectively pursuant to those convictions, is dismissed. (iv) The sentences imposed on counts 3 and 4 are ordered to run concurrently with that imposed on count 2.‟ ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Ponnan JA (Maya, Mhlantla and Zondi JJA and Meyer AJA concurring): [1] The appellant, Jimmy Sebone Seemela, was indicted before the North Gauteng High Court (Claassen J, sitting on circuit at Polokwane), on two charges of murder, one of assault with intent to do grievous bodily harm and one each of being in unlawful possession of a firearm and ammunition in contravention of the Arms and Ammunition Act 75 of 1969. He was acquitted on the assault and, despite his denial that he was the perpetrator, convicted on the remaining charges. He was sentenced on each of the murder charges to life imprisonment and to imprisonment for terms of five and three years respectively in respect of the unlawful possession of a firearm and ammunition. His appeal to the North Gauteng High Court, Pretoria (per Ledwaba J, Makgoba J and Bam AJ concurring) against both conviction and sentence having failed, the further appeal is with the special leave of this court. [2] Much in this matter remains unexplained and this is perhaps an object lesson in how litigation, in particular criminal trials, should not be conducted. All of the offences were alleged by the State to have been committed on 24 February 1998 in Makgofe Village in the district of Seshego. However, the record is silent as to why the trial only commenced some 12 years later on 26 May 2010. In the interim, several crucial state witnesses died. [3] It is undisputed that the appellant, and Ms Maggie Rapao, the deceased on count 2, who was approximately 20 years his junior, had been involved in a relationship. According to the State, that relationship ended in 1997 when the appellant stabbed Ms Rapao with an okapi knife after learning that she had become involved in a relationship with Mr Jabu Heckson Mathebe (the deceased on count 1). As a result of that stabbing, the appellant was charged with the assault of Ms Rapao. On 24 February 1998 Ms Rapao testified against the appellant at the Seshego Magistrates‟ Court in support of that charge. At approximately 6 pm that very evening, so the State alleges, Mr Mathebe, a taxi driver, was busy offloading passengers when he was approached by the appellant, who shot him once in his back whilst he was seated in the driver‟s seat of his taxi. After the shooting of Mr Mathebe the appellant called on the home of Ms Rapao. In that regard the indictment reads: „2.2 The deceased was standing in front of her house and when he approached her, she ran into the house. He shot at her, but missed. He succeeded in forcing open the door which she had closed. When she fled he followed her and shot at her again and succeeded in shooting her in the back. 3.1 The accused also went into the room where the latter deceased‟s father, the complainant in count 3, was and hit him with the firearm on his head and hand. 3.2 The complainant grabbed an ashtray and assaulted the accused therewith. The firearm fell down and the accused ran away.‟ [4] After having been shot, Mr Mathebe was admitted to the Seshego Hospital. He was later transferred to the Pietersburg Provincial Hospital. On 12 March 1998 Mr Mathebe was discharged from the latter hospital and admitted to the Baragwanath Hospital, where he died on 16 May 1998. The medical records of Ms Rapao reveal that she was admitted to the Pietersburg Provincial Hospital after the shooting, where she was initially treated as an in-patient until her discharge on the 1st June of that year. She thereafter continued to visit the hospital until 4 August, which is her last documented treatment as an out-patient. She was re-admitted on 10 November 1998 and died some 10 months after the shooting on the 17th of that month. [5] The only witness called by the State in respect of count 1, the murder of Mr Mathebe, was Mr Lediwana Shadung. He testified: „Even though it is quite a long time ago I will start on that day, the date mentioned on 24 February 1998 I was on the day in question from town on my way to Motuong. I arrived in Bloodriver and found Sebone there as a person who was waiting for a taxi. Sebone you are referring to the accused? --- Yes. . . . I then picked him up, up until Motuong, that is where our routes end. Did you talk to one another the minute he boarded into your taxi? --- He greeted me and sat down. . . . „He alighted from the taxi at Motuong and then what happened? --- Yes, that is the spot where . . . the taxis ends, everybody alights there. I then made a U-turn. I came back to town. As I was busy leaving after having made a U-turn there was another vehicle which was approaching coming to drop people . . . (intervenes) You are referring to another taxi? --- Yes. Who was the driver? --- Jabu. That would be the deceased, the Jabu Mathebe, the deceased in count 1? --- Yes. Yes. --- After having left the spot having driven or travelled for quite some time, a number of metres I heard a gunshot. Yes. --- I looked into my rear view mirror, I saw Jabu‟s vehicle crossing the road slowly. I stopped. Did you drive back? --- Yes, I stopped and made a U-turn, I went back. You arrived there, what happened? --- I found Jabu seated between the two seats. Yes. --- Busy screaming. Did you talk to him? --- I was trying to talk to him, but he was not talking, he was just screaming. Yes okay, then what happened? --- Somebody else, another guy came running. Who is that? --- I have forgotten his name. Okay. --- It is a long time ago. The person arrived there and said lets take him to the hospital, he had been shot at. Yes. --- I just got into Jabu‟s motor vehicle, reversed and rushed him to the hospital. COURT: Ja. MR MUDAU: Did you see the accused when you drove back to the scene? --- No.‟ [6] Mr Kleinboy Rapao, the brother of Ms Rapao, was the only eye witness in respect of the remaining counts. Although aged 27 at the time of the trial, he was only 15 when his sister was shot. He testified: „Who were you with on that day at the particular time? --- I was in the company of my mother, Mmalehu Sarah Rapao who unfortunately passed away in the meantime as well as the deceased. One Mogale David was also present, but he also unfortunately passed away. Do you perhaps still remember around what time of the day did the incident took place? If you do not, it is okay. --- It was, it happened at night, but I cannot recall the time. . . . On the night in question we were seated outside. It was just after we had our supper. As we were seated there I heard a gunshot. Immediately after hearing that gunshot we all jumped and ran into the house. I then saw the accused coming into the house shooting my sister three times. (INTERPRETER: the witness is showing on her body). COURT: On the right chest. When he came into the house you say you saw the accused shooting your sister? --- Three times on her body as indicated. Right side of torso. Ja? --- I succeeded in pushing the door open, got out of the house and started shouting for help, calling for help. People came to the scene and helped. That is what happened. Can I just understand, you first heard a shot, you all jumped up and went inside and then you saw the accused shooting your sister three times, is that correct? --- Yes. . . . After the arrival of the community they were the ones who came to help, that is the community, my mother also succeeded in coming out of the house. She had a struggle with the accused, that is my mother up until she succeeded in taking the firearm from him. Okay. --- Mr Mogale also tried to help. During that he hit the accused with an ashtray. COURT: Ja. MR MUDAU: Where was the accused at that time? --- If I remember well he tried to get into the house in which Mr Mogale was, that is at that stage where Mr Mogale hit him with that ashtray. How did this accused leave the scene of the crime? --- In an ambulance. What was wrong with him? --- Because the community arrived after having been called and they were the ones who assaulted him, injured him that is why he was removed in an ambulance.‟ [7] For the rest, the State case rested on hearsay evidence adduced in terms of s 3 (1)(c) of the Law of Evidence Amendment Act 45 of 1988 (the Act). Counsel for the State had applied, during the course of the evidence of the investigating officer, Warrant Officer Matlala, for various statements to be received into evidence in terms of that section. In that regard the record reads: „MR MUDAU: Perhaps before he, before he even takes the oath there will be an application by the state during the testimony of this witness to bring an application for acceptance of hearsay evidence. COURT: To tender hearsay evidence? MR MUDAU: Yes, with regard to the statement that he took from the deceased in count 1 and the deceased in count 2 and with regard to the statement that he also took from the mother to the deceased in count 2 and also with regard to the statement that he took from Mr David Mogale, he is the initial investigator and he is the one who collected all these four statements from these four people who have since died. So I think it will be best M‟Lord, for me to first deal with that formal application.‟ [8] Warrant Officer Matlala‟s evidence then ran thus: „There is a statement before you there, can you quickly go to the last page. Who is the commissioner in that statement? --- Myself. Was it signed by . . . (intervenes) COURT: Anyone. MR MUDAU: The deponent. --- That is so. This honourable court has ruled that the reading of this statement will be accepted as evidence for these proceedings. Can you then go to the statement and read it for the record of these proceedings?‟ Warrant Officer Matlala then read the statement of Ms Rapao into the record. The same course followed in respect of the statement of Mr Jabu Mathebe, Mr David Mogale and Ms Sarah Rapao – the latter two being respectively the stepfather and mother of Ms Rapao. In respect of the statement of Ms Sarah Rapao, Warrant Officer Matlala added: „Ja, I see the handwriting of EXHIBIT L is different to that of H, J and K. Can you explain that? -- - That is true, it differs. Why would that be? --- Ja, the one handwriting which differs with the others is that of Warrant Officer Galane. Ja. --- The reason why I was the one who commissioned that statement is because I am the one who had send him to take down that statement. So you did not take it yourself? --- That is quite so. Ja, Mr Mudau, what do I make of that statement? It was not taken by him. It was . . . (intervenes) MR MUDAU: M‟Lord . . . (intervenes) COURT: It was presented as if it was his statement, but it is not. MR MUDAU: The state is well aware of that and we are still in the, in the state case and a gap to have that covered is not closed, M‟Lord. I interviewed him with respect to that. Perhaps my omission was not to make it clear to this court that he was the commissioning officer and the court can decide once the state has closed its case as to whether to take the statement as of any value or not, because Warrant Officer Galane is still a police officer in the police service and at any time he can clear that up for the purpose of these proceedings.‟ [9] The appellant testified in his defence and was rightly found by the trial court to be an unimpressive witness. The high court accepted that the appellant was in fact the perpetrator in both instances. It held: „From their statements it is very clear that it was the accused who came and shot them. Mr Mathebe says he was sitting in his taxi and the accused came up, pulled out a gun and shot him. The other statements referred to the incident at Maggie‟s place. They were all sitting inside just after dark. They heard a shot. Maggie and her brother Kleinboy ran into the house and the accused came in and shot the deceased 3 times. He was assaulted and the accused lost consciousness on the scene. Both were eventually taken to hospital. Mr Mathebe never left the hospital and he died there. Maggie Rapao was discharged at some stage but had to go back to hospital and died of septicaemia and bedsores, as [Dr D‟Souza] testified in his report, due to the gunshot wounds. . . ‟ . . . „The state witnesses all made a good impression on the court and especially so, Kleinboy Rapao. It is so that he was 15 years at the time of the incident. His statement for purposes of prosecution was only obtained a year ago. That apparently is because so many of the state witnesses died that the evidence of a young boy had to be relied on to get the prosecution going. He was very forthright in his evidence. He was well cross-examined and he answered these questions clearly and forthrightly. The other witnesses gave more neutral evidence and their evidence was not really challenged in any way. There is no reason not to accept their evidence.‟ [10] As I understood the case sought to be advanced on appeal it was that the trial court erred in: first, admitting and thereafter founding its conviction on inadmissible hearsay evidence; and, second, concluding on the facts that the wounding could be regarded as the juridical cause in each instance of such deceased‟s death for the purposes of a charge of murder. [11] In dismissing the appellant‟s appeal the full court stated: „[13] The legal position regarding the admissibility of hearsay evidence was articulated in S v Ndhlovu 2002 (2) SACR 325 SCA and S v Molimi 2008 (2) SACR 76 CC. The Constitutional Court said hearsay evidence in terms of the Law of Evidence Amendment Act 45 of 1988 (the Act), may be received only if interest of justice so require, (sec 3(d)). In considering the admission of such evidence the court must have regard to all the factors mentioned in sec 3(1)(c) and must also ensure respect for fair trial rights set out in sec 35(3) of the Constitution. The safeguards serve to ensure that the appellant experiences a fair trial in accordance with section 35 (3) of the Constitution See Molimi case at 95 par [36] And Ndhlovu case at 335 par [13] to par [17].‟ The full court added: „[20] The admissibility of the hearsay statements in casu was considered by the Hono[u]rable trial Judge in accordance with the provisions of section 3(c) of the Act. The main consideration, whether the admission of the hearsay evidence was in the interest of justice, was also, in my view, properly addressed by the trial court.‟ That conclusion, with respect to the full court, is not supported by the record. After hearing argument, and despite the obvious complexities of the matter, the trial judge ruled all too briefly I might add: „Taking the arguments of both sides into consideration and having said already that there is corroborating evidence of the evidence to be led by way of hearsay evidence. I am inclined to allow the statements to be introduced into evidence. It may then be given.‟ [12] For many years our law knew a rigid exclusionary rule which allowed specific exceptions but no relaxation. Now there is no exclusion as such. Hearsay evidence may now be accepted subject to the broad, almost limitless criteria set out in s 3(1). Of that section, Schutz JA (S v Ramavhale 1996 (1) SACR 639 (A) at 647d) had this to say: „. . . it is necessary to emphasise . . . that s 3(1) is an exclusionary subsection and that the touchstone of admissibility is the interest of justice, as is made clear by the words: “. . . hearsay evidence shall not be admitted as evidence . . . unless - . . . the court, having regard to (the considerations in ss (c)) is of the opinion that such evidence should be admitted in the interests of justice.”‟ The trial court did not consider any of the matters listed in s 3(1)(c), namely: (i) the nature of the proceedings; (ii) the nature of the evidence; (iii) the purpose for which the evidence is tendered; (iv) the probative value of the evidence; (v) the reason why the evidence is not given by the person upon whose credibility the probative value of such evidence depends; (vi) any prejudice to a party which the admission of such evidence might entail; and (vii) any other factor which should in the opinion of the court be taken into account. [13] Hearsay evidence has long been recognised to tend to be unreliable. It has thus been said that a judge should hesitate long in admitting or relying on hearsay evidence which plays a decisive or even significant part in convicting an accused, unless there are compelling justifications for doing so. To once again borrow from Schutz JA „an accused person usually has enough to contend with without expecting him also to engage in mortal combat with the absent witness‟ (Ramavhale at 648a). Hence the Court‟s intuitive reluctance to permit untested evidence to be used against an accused in a criminal case (Metadad v National Employers’ General Insurance Co Ltd 1992 (1) SA 494 (W)). [14] In respect of count 1, the murder of Mr Mathebe, the evidence of Mr Shadung plainly did not incriminate the appellant. For a conviction one had to thus rely solely on the statement of Mr Mathebe. Given the absence of any other incriminatory evidence, I instinctively baulk at founding a conviction solely on that statement. I consider that the trial judge seriously underestimated this factor and was too easily persuaded to place weight on this evidence for the purpose of convicting the appellant. It seems to me that the trial judge did not manifest a sufficient awareness of the perils of relying solely on that evidence to found a conviction. It follows, in my view, that the conviction on count 1, namely the murder of Mr Mathebe, as also the sentence imposed pursuant thereto cannot stand and accordingly falls to be set aside. [15] In as far as the remaining counts are concerned, the hearsay evidence took the form of statements by Ms Rapao and her parents. Ms Rapao‟s statement reads: „2. I was in love with Jimmy Seemela of Makgofe. I separate[d] with him during 1996. The suspect Jimmy Seemela stabbed me with a knife during 1997. I opened the case against him. 3. On the 24.02.1998 the case was heard at Seshego Magistrate [Court]. I testified. The case was further remanded to the 13.03.98. After the court I went home being with my uncle and mother. 4. At home I cooked and there later stood outside with my mother. It was at about something passed 19:00. I saw the suspect Jimmy Seemela at my place. I then stood up and ran away into the house. 5. The suspect shot one bullet which missed me. I got into the house and closed the door. The suspect pushed the door and g[o]t inside. I managed to get out of the house aiming to get into another one. 6. The suspect followed me up. He shot me twice on the back and I fell down. I was unable to stand up. My mother got hold of the suspect. More people gathered and the ambulance arrived and ferried me to the hospital. 7. The suspect did not say anything to me. He just fired at random. I suspect that the cause might be that of the court. I do not know what transpired there later. My witness is Sarah Rapao, Mokgadi Rapao and David Mogale.‟ [16] Despite counsel for the State intimating that Warrant Officer Galane would testify in respect of Exhibit L, the statement of Sarah Rapao, that did not happen. In those circumstances that statement ought not to have been admitted into evidence. Mr David Mogale deposed to three statements - the first on 17 April 1998, the second on 23 October 2003 and the third on 26 July 2005. And whilst those statements may have contained certain minor contradictions, they were consistent in identifying the appellant as the perpetrator. In his first statement Mr Mogale stated: „4. Then the suspect Jimmy Seemela burst into my room. He was having a gun in his hands. The suspect assaulted me with the firearm on my face and on the right hand. 5. I grabbed an ashtray and assaulted him with it. The firearm fell down and he ran away. I instructed Johannes Mogale to pick up the firearm. The complainant was lying down being unconscious. We called for assistance from the community. All the people came and arrested the suspect. He was beaten and the police arrived. The ambulance also arrived and took the complainant and the suspect to the hospital.‟ Mr Mogale‟s version finds corroboration in the evidence of: (a) the police who attended on the scene – in that regard Warrant Officer Galane testified: „After both the deceased and the accused were removed in ambulances one Mr Mogale approached me, gave me a firearm and said that that was the firearm used by the accused to shoot the deceased. . . .‟; and (b) the evidence of the appellant himself, who testified: „I was still walking, approaching her parental home, it was starting to be dark. I cannot tell in metres as to how far I was at that stage from her parental home when I heard a gunshot. I then took out my cell phone, started phoning my girlfriend, the deceased, still approaching her gate that is the stage where I heard the gunshot. I saw a certain young man coming out, running out of that premises. . . . . . . MR NONYANE: Where was he running from? --- Out of the girlfriend‟s premises. Mr Mogale was chasing him. Yes, proceed sir. --- After he ran past Mr Mogale said here he is, he then hit me with a stick . . . On the left jaw. . . . I fell to the ground as a result of the blow and everything was mixed up, I could not understand what was going on. I became unconscious as a result.‟ [17] Ms Rapao and her parents knew the appellant well. That being so, the possibility of a mistaken identification hardly enters into the reckoning. In any event on the appellant‟s own version, he was at their home that evening, where he was arrested, albeit in an unconscious state. The trial court rightly rejected his explanation for his presence there. No motive was advanced and none suggests itself as to why each of those persons would want to falsely implicate him at the expense of the real perpetrator. Whilst each of their statements, when taken individually may not have been sufficiently weighty, cumulatively they are decisive. To that must be added the testimony of Kleinbooy Rapao, who also identified the appellant. The trial court found him to be a good witness and that finding has not been assailed. It must follow that the trial court‟s conclusion that the appellant was the perpetrator of counts 2, 4 and 5 cannot be faulted. [18] There remains the question of causation in so far as the murder of Ms Rapao is concerned. The question, in essence, being whether Ms Rapao‟s shooting and subsequent death has been proven to be causally tied. As it was put in Blaikie and Others v The British Transport Commission 1961 SC 44 at 49: „The law has always had to come to some kind of compromise with the doctrine of causation. The problem is a practical rather than an intellectual one. It is easy and usual to bedevil it with subtleties, but the attitude of the law is that expediency and good sense dictate that for practical purposes a line has to be drawn somewhere, and that, in drawing it, the court is to be guided by the practical experience of the reasonable man rather than by the theoretical speculations of the philosopher.‟ [19] It is well established that a two-stage process is employed in our law to determine whether a preceding act gives rise to criminal responsibility for a subsequent condition (S v Tembani 2007 (1) SACR 355 para 10). In Minister of Police v Skosana 1977 (1) SA 31 (A) at 34E-G, albeit in the somewhat different context of delict, Corbett JA had this to say: „Causation in the law of delict gives rise to two rather distinct problems. The first is a factual one and relates to the question as to whether the negligent act or omission in question caused or materially contributed to . . . the harm giving rise to the claim. If it did not, then no legal liability can arise and cadit quaestio. If it did, then the second problem becomes relevant, viz. whether the negligent act or omission is linked to the harm sufficiently closely or directly for legal liability to ensue or whether, as it is said, the harm is too remote. This is basically a juridical problem, in which considerations of legal policy may play a part.‟ So, in respect of the second of the two considerations alluded to by Corbett JA, which presents as an issue of some complexity in this case, „the inquiry must go on to determine whether the act is linked to the death sufficiently closely for it to be right to impose legal liability‟ (per Cameron JA, Tembani (para 10)). [20] Neither Dr D‟Souza, the state pathologist, who performed the post mortem examination on Ms Rapao, nor Professor G Saayman, on whom the trial court and full court placed great store, were called as witnesses. The medico-legal post mortem report completed by Dr D‟Souza, which was admitted by the defence in terms of s 220 of the Criminal Procedure Act 51 of 1977, recorded the cause of her death as „septicaemia, disseminated intravascular coagulopathy‟. It added: „According to hospital records, deceased was discharged on 01/06/1998 and died on 1998, November 17th. She was earlier admitted on 24\02\98 with alleged gunshot. She became paraplegic after the said incident. This information is based on hospital records. Cause of death given on the basis of history hospital records and external examination of body.‟ Prof Saayman‟s conclusion was: „Neither patient at any stage recuperated from the initial injuries and their eventual demise represented the terminal outcome of a progressive clinical decline.‟ Prof Saayman, a Professor in Forensic Pathology at the University of Pretoria, had prepared a report at the request of the Director of Public Prosecutions. When it was intimated by counsel for the State that he will be called to testify, the trial judge made plain that as he had „said even in chambers‟, „it is not important for Professor Saayman to come and testify‟. The trial judge also swept aside protestations by counsel for the appellant, who wanted him to be called, because as counsel put it „we have got so many questions arising from that report‟. In the event the report was, without more, admitted into evidence. [21] To the extent here relevant, Prof Saayman‟s report reads: „a. . . . It appears that she may have improved initially and that she was discharged on 01/06/1998. It is however not clear from the available documentation whether she had already developed bedsores at that stage (although none such appear to be specifically reported in the clinical / nursing notes). b. She was followed up on an outpatient basis, but still had faecal and urinary incontinence. Several outpatient visits between 01/06/1998 and 04/08/1998 are documented in this docket, but no bedsores are recorded during these visits. It appears as if she had recurrent/constant urinary tract infection. c. No further notes are available for August and July 1998, until she was re-admitted on 10/11/1998 with the diagnosis of septicaemia due to septic wounds. She was severely ill at the time of this last admission and blood tests showed features consistent with septicaemia (systemic spread of the infection) and diffuse intravascular coagulation – a clotting abnormality sometimes seen as a complication associated with (amongst others) severe infection. At this stage she had severe bedsores, but the onset of the latter cannot be ascertained from the available documentation. The patient passed away on 17/11/1998. d. It is clear that a medico-legal autopsy should have been conducted on the deceased, in view of the medical history that she had sustained a gunshot wound. However, it appears that only an external viewing / examination (i.e. without formal dissection) of the body of the deceased was performed by dr MSR D/Souza, on 27/11/1998. Extensive decubitus ulcers (bedsores) were recorded, together with petechial haemorrhages all over the body. The cause of death was stated as septicaemia and disseminated intravascular coagulation. . . . f. It is indeed unfortunate, that a medico-legal post mortem examination was not conducted in this particular instance. If dr MSR D‟Souza can still be traced at this stage, it may be appropriate to obtain a statement as to why a full dissection of this body was not undertaken. Enquiries may be made with the Health Professions Council of South Africa, to establish the current whereabouts of dr D‟Souza. It is however, unlikely, that dr D‟Souza will retain (at this late stage), individual or specific recollection of this matter. g. The formulation of the cause of death, as supplied by dr D‟Souza (under Seshego Medico-legal post mortem report no 521/98), should be critically reviewed. Although the terminal mechanism of death was that of septicaemia with disseminated intravascular coagulopathy, due to underlying infection (pressure sores and/or renal tract infection), there is little doubt that the primary medical cause of death (being the gunshot injury), should also be incorporated in the final formulation of the cause of death. Unfortunately, the autopsy report makes no specific mention of external injuries or scars, suggestive of prior gunshot injury. It is therefore essential, that due cognizance be taken of the clinical history pertaining to this patient – the latter having been reasonably well documented.‟ [22] Precisely, on what basis, Prof Saayman‟s report (which he described as a „review . . . based on the available clinical documentation‟) was admitted into evidence does not emerge from the record. But, whether it was indeed admissible need not detain me because even if it was admissible it hardly assists the State in discharging the onus resting on it. Despite Prof Saayman‟s assertion that the clinical history of Ms Rapao was well documented, there was, as reflected in his report, a significant lacuna in respect of a critical period, namely 4 August to 10 November 1998. What is more is that he was sharply critical of Dr D‟Souza for not having conducted a proper post mortem examination. In his report, Dr D‟Souza records „not opened due to lack of electric saw‟. He thus contented himself with an external examination of Ms Rapao‟s body. In that, it would seem, that Prof Saayman‟s criticism is justified. In those circumstances, why it was thought by the trial judge that it was not necessary for him to testify is lost on me. For, in applying the applicable principles that I have set out earlier in this judgment to the evidence as it stands, it seems to me, that the learned trial judge ought to have entertained grave doubt as to whether the wounding of Ms Rapao by the appellant could have been regarded as the juridical cause of her death. [23] In S v Mokgethi en Andere 1990 (1) SA 32 (A), a gunshot rendered the deceased a paraplegic. Despite the injury he recovered well, and received instruction on the dangers of pressure sores and their prevention. But he unreasonably failed to apply proper self-care, and pressure sores developed that led to septicaemia from which he died six months later. The court held that his assailants could not be held responsible for his death. Although the wound was initially mortally dangerous in that without medical intervention the deceased would probably have died as a result of it, the threat to his life was eliminated by the proper medical care and instruction he received. The eventually fatal septicaemia was caused not by the original wound, but by the deceased‟s own unreasonable failure to follow medical instructions. Thus, although the gunshot wound was an indispensable precondition of the death, the trial court‟s conviction of murder was changed to attempted murder. A conclusion, I daresay, that one is inexorably driven to here as well. In the light of this conclusion the appellant‟s conviction on count 2, the murder of Ms Rapao, must be set aside and replaced with one of attempted murder. The sentence of life imprisonment imposed by the trial court pursuant to the conviction of murder must likewise be set aside. [24] As to sentence: There appears to be little to be said in favour of the appellant. He was 35 years old at the time of the commission of the offences in question with two minor children who were dependent on him. The appellant has an impressive array of previous convictions,1 many of which evidence a marked propensity to violence. His propensity for violence appears to have characterised his relationship with Ms Rapao as well. By stabbing and thereafter shooting her, because she dared to terminate their relationship, he acted in a manner that is unacceptable in any civilised society that ought to be committed to the protection of the rights of all persons including women. Intimate partner violence (IPV) is a serious social problem about which, fortunately, we are at last becoming concerned. This form of violence against women is generally understood to include physical, sexual, and psychological abuse by intimate male partners and in the last decade, IPV against women has finally come to be recognized as an important public health problem.2 IPV usually occurs within a broader context of relationships marked by controlling behaviours by men and a pervasive sense of fear in women. More women are killed by their current or ex-intimate male partner in South Africa than in any other country, with a rate of 8.8 per 100 000 women.3 In 1999 alone it is conservatively estimated that 1349 women died from IPV in South Africa, which is generally regarded as a leading cause of morbidity and mortality for South African women.4 In a nationally representative study of 1 229 married and cohabiting women, a 1 On 16 February 1987 he was convicted of assault with intent to do grievous bodily harm and sentenced to 7 cuts with a light cane. On 8 April 1987 he was convicted of robbery and sentenced to 6 cuts with a light cane. On 21 August 1987 he was convicted of theft and sentenced to 6 cuts with a light cane. On 3 May 1988 he was convicted of escaping or attempting to escape from custody and sentenced to 12 months‟ imprisonment. On 17 May 1988 he was convicted of assault with intent to do grievous bodily harm and sentenced to R180 or 5 months‟ imprisonment. On 22 August 1988 he was convicted of 2 counts of assault and sentenced on each count to 90 days‟ imprisonment. On 16 September 1988 he was convicted of 2 counts of theft and sentenced to 4 years‟ imprisonment on each count which was ordered to run concurrently. On 11 October 1988 he was convicted of robbery and sentenced to 8 months‟ imprisonment. On 7 September 1989 he was convicted of theft and sentenced to 4 years‟ imprisonment, 3 of which was suspended. On 16 February 1990 he was convicted of possession of dagga in contravention of the Drugs and Drug Trafficking Act and sentenced to 60 days‟ imprisonment. On 11 February 1991 he was convicted of 3 counts of theft and sentenced to an effective 4 years‟ imprisonment. On 10 August 1999 he was convicted of assault with intent to do grievous bodily harm and sentenced to 12 months‟ imprisonment. 2 N Abrahams et al „Intimate Partner Violence: Prevalence and Risk Factors for Men in Cape Town, South Africa‟ (2006) Violence and Victims Journal Vol. 21, No. 2 at 247. 3 N Abrahams et al „Mortality of women from intimate partner violence in South Africa: A National Epidemiological Study‟ (2009) Violence and Victims Journal Vol. 24, No. 4 at 549. 4 J D Gass et al „Intimate partner violence, health behaviours, and chronic physical illness among South prevalence of 31 per cent IPV was found, and a study on physical violence among South African men found that 27.5 per cent reported perpetration of violence in their current or most recent partnership.5 In some South African studies, more than 40 per cent of men have disclosed having been physically violent to a partner and between 40 to 50 per cent of women have also reported experiencing such violence.6 For the victim, it is a violation that is invasive and dehumanising. For some the consequences are severe and can, as many of the studies have shown, be permanent. And given its alarming prevalence, such mitigating factors as may exist in this case, pale into insignificance when viewed against the objective gravity of the offence. Plainly, for an offence such as this a long custodial sentence is imperatively called for. I consider that a period of 12 years will be appropriate for the attempted murder. As all of the offences were part of the same criminal transaction, the sentences of imprisonment for terms of 5 and 3 years imposed by the trial court on counts 3 (possession of a firearm) and 4 (possession of ammunition) respectively, should be ordered to run concurrently with that imposed on count 2. [25] In the result: (1) The appeal succeeds in part and the order of the court below is set aside and replaced with the following: „(a) The appeal is upheld to the following extent: (j) The conviction of the appellant on count 1, the murder of Jabu Heckson Mathebe, and the sentence of life imprisonment imposed pursuant to that conviction are set aside. African women‟ (2010) South African Medical Journal Vol. 100, No. 9 at 582. 5 K Peltzer and S Pengpid “The severity of violence against women by intimate partners and associations with perpetrator alcohol and drug use in the Vhembe district, South Africa‟ (2013) African Safety Promotion Journal Vol. 11, No. 1 at 13. 6 Dr L Langa-Mlambo and Dr P Soma-Pillay „Violence against women in South Africa‟ (2014) Obstetrics & Gynaecology Forum at 18. See also World Health Organization Understanding and addressing violence against women: Intimate partner violence (2012) and World Health Organization Global and regional estimates of violence against women: prevalence and health effects of intimate partner violence and non- partner sexual violence (2013). (ii) The conviction of the appellant on count 2, the murder of Maggie Rapao, and the sentence of life imprisonment imposed pursuant to that conviction are set aside and replaced with the following: „On count 2, the accused is convicted of attempted murder and sentenced to imprisonment for a term of twelve years‟. (iii) The appeal in respect of count 3, the unlawful possession of a firearm, and count 4, the unlawful possession of ammunition, in each instance in contravention of the Arms and Ammunition Act 75 of 1969, and the sentences of imprisonment for terms of 5 and 3 years imposed respectively pursuant to those convictions, is dismissed. (iv) The sentences imposed on counts 3 and 4 are ordered to run concurrently with that imposed on count 2.‟ _________________ V M Ponnan Judge of Appeal APPEARANCES: For Appellant: L M Manzini Instructed by: Legal Aid SA, Pretoria Bloemfontein Justice Centre, Bloemfontein For Respondent: M P Mudau Instructed by: Director of Public Prosecutions, Pretoria Director of Public Prosecutions, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 26 March 2015 STATUS Immediate Jimmy Sebone Seemela v The State (20508/2014) [2015] ZASCA 41 (26 March 2015) 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 Media Statement Today the SCA upheld in part an appeal by Mr Jimmy Seemela against his conviction on two counts of murder and the sentence of life imprisonment. The appellant and Ms Maggie Rapao (the deceased on count 2), who was approximately 20 years his junior, had been involved in a relationship. That relationship ended in 1997 when the appellant stabbed Ms Rapao with an okapi knife after learning that she had become involved in a relationship with one Mr Jabu Mathebe (the deceased on count 1). The appellant was charged with the assault of Ms Rapao. On 24 February 1998 Ms Rapao testified against the appellant at the Seshego Magistrates’ Court in support of that charge. At approximately 6:00 pm that very evening, so the state alleged, Mr Mathebe, a taxi driver, was busy offloading passengers when he was approached by the appellant, who shot him once in his back whilst he was seated in the driver’s seat of his taxi. After the shooting of Mr Mathebe the appellant called on the home of Ms Rapao, where she was shot by him. The SCA lamented the fact that the trial in this matter had only commenced some twelve years later, by which stage may crucial state witnesses had died. The state case against the appellant thus rested in the main on statements by those witnesses. The trial court convicted the appellant of both murders and he was sentenced to life imprisonment in respect of each. He was also convicted of the possession of an unlicenced firearm and ammunition. His appeal to a full court failed. In respect of the murder of Mr Mathebe, the SCA observed that the sole evidence implicating the appellant in the commission of that offence was the statement of the deceased and that the trial court did appear to appreciate the dangers of relying solely on that statement to found a conviction. It accordingly set aside that conviction. In respect of Ms Rapao: the SCA was satisfied that on all of the available evidence it had been established that, despite the appellant’s denial, he was indeed the perpetrator. The SCA however found that it had not been established beyond reasonable doubt that Ms Rapao’s death, which only occurred some nine months later, had been causally linked to the shooting. It accordingly altered the appellant’s conviction on that count to one of attempted murder. In sentencing the appellant to a term of imprisonment for twelve years the SCA referred to several studies that reflected an alarming incidence of intimate partner violence. The SCA observed that this is a serious social problem, about which, fortunately, we are at last becoming concerned. Of the appellant, the SCA remarked, that he acted in a manner that is unacceptable in any civilised society that should be committed to the protection of all persons, including women. --- ends ---

2451

non-electoral

2013

I THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 703/2012 Reportable In the matter between: HENRY MALGAS First Appellant SHON WILLIAMS Second Appellant JOHAN BEYERS Third Appellant ANDY JANSEN Fourth Appellant and THE STATE Respondent Neutral citation: Malgas v S (703/12) [2013] ZASCA 90 (31 May 2013) Coram: Navsa and Majiedt JJA and Willis AJA Heard: 22 May 2013 Delivered: 31 May 2013 Summary: Appeal against sentence imposed approximately ten years ago – where long delays attributable to the inertia of the appellants themselves this cannot justify interference by this court ─ appeal dismissed. ORDER On appeal from: Western Cape High Court, Cape Town (Olivier AJ, with Fourie J concurring, sitting as court of appeal); The appeal is dismissed. JUDGMENT WILLIS AJA (NAVSA and MAJIEDT JJA): Introduction [1] This appeal, with the leave of the court below, is against sentence only. The first appellant had been an inspector in the South African Police Service with a record of 16 years of service. The second appellant had been a constable. The third appellant had previously been a police officer. He had been discharged from the police service. The first, second and third appellants had been found guilty in the Regional court, Beaufort-West of housebreaking with intent to steal dagga from the exhibits storeroom of the Beaufort-West police station. The third and fourth appellants were found guilty of the theft of dagga from a motor vehicle that belonged to the police which had been parked on the premises of the same police station. [2] They were all convicted on 5 November 2002. Sentence was imposed on 6 March 2003. The first and second appellants were sentenced to ten years’ imprisonment each. The fourth appellant and Daniel Malgas were sentenced to eight years’ imprisonment each. The third appellant was sentenced to a period of imprisonment of eight years on count one and ten years on count three. Taking the cumulative effect of the sentences into account, the magistrate ordered that six years of the third appellant’s sentence on count three run concurrently with the eight years on count one. The effective sentence for the third appellant was therefore twelve years’ imprisonment. [3] The Western Cape High Court in Cape Town (per Olivier AJ, Fourie J concurring) heard the appeal against conviction and sentence on 3 June 2011. The court below dismissed the appeals against the convictions in respect of all the appellants on 24 January 2012. Concerning sentence, the court below dismissed the appeals of the third and fourth appellants but upheld the appeals of the first and second appellants, reducing their sentence from ten years to eight years imprisonment each. [4] None of the appellants has been in custody, after conviction, for more than a few months. At the time when the appellants were convicted they then had an automatic right of appeal to the High Court. After conviction and sentence the magistrate dismissed their application for bail pending the appeal. He did so on 6 March 2003. Although it does not appear from the record, it is common cause that all the appellants were nevertheless granted bail shortly after they had been convicted, pending the hearing of their appeal. This court knows neither who granted such bail nor the reasons that were given for doing so. The appellants’ bail was extended on various occasions, mutatis mutandis, on the same terms and conditions as before. The last occasion their bail was extended was on 27 January 2012. [5] On 17 February 2012 the court below dismissed the second, third and fourth appellants’ application for leave to appeal against their convictions, and, although reticent, granted them leave to appeal to this court against their sentences as freshly imposed and confirmed by the court below respectively. In the judgment of the court below granting leave to appeal to this court Fourie J said the following: ‘Wat die vonnisse van die appellante betref, word slegs een grond van appèl geopper, naamlik dat ons nie genoegsaam ag geslaan het op die benadeling en trauma wat appellante gely het weens die lang vertraging met die aanhoor van die appèlle nie. Dit is sekerlik so dat ’n lang vertraging van hierdie aard benadeling en trauma tot gevolg kan hê, maar onssou verwag het dat, as dit die geval is, die appellante dit by die aanhoor van die appèl voor ons sou geopper het. Dit word egter eers nou op hierdie laat stadium feitlik as nagedagte uit die mou geskud. Desnieteenstaande kan die potensiaal vir benadeling en trauma nie sondermeer uitgesluit word nie.’ (Emphasis added.) On 21 September 2012 the court below granted the first appellant leave to appeal to this court against sentence. His bail was extended on terms similar to those of the other appellants. The State did not oppose the application. [6] It appears from a ruling given in this matter by the regional magistrate on 10 November 2010 in relation to steps that were taken to reconstruct the record, that certain exhibits, documentary as well as actual physical items, had gone missing. These exhibits, it now turns out, were immaterial to the prospective appeal in the matter. The original docket went missing as did the magistrate’s notes taken during the trial. The Trial and the Relevant Factual Matrix [7] During the presentation of the State’s case, damning evidence of a direct and circumstantial nature, corroborated in fine detail, was given against the appellants. None of them testified in their own defence. The appellants were correctly convicted on the strength of the totality of the evidence. The offences in question were committed on 12 November 1999 and 10 January 2000. The Sentences [8] More than eight years passed before the appeal was heard in the court below. There is no affidavit on record by any of the appellants which explains the delay in the prosecution of their appeal. Their counsel conceded that there is no explanation at all on the record for the delay between 2003 and 2009, when the matter was enrolled again. This enrolment was not at the initiative of the appellants but, according to the record, occurred at the behest of the investigating officer who appears to have arranged its enrolment. At that stage there were a number of appearances in the regional court in an attempt to trace the missing exhibits and to reconstruct the record. The appellants have not taken the court into their confidence as to how this unsatisfactory state of affairs concerning the tardy hearing of their appeal may have come about. [9] It was only when the Registrar’s office filed a ‘notice for the filing of heads of argument’ that the prosecution’s attention was drawn to the delay. The appellants filed their heads of argument on 5 April 2011 and the State theirs on 12 May 2011. No allegation has been made by the appellants that, for example, they paid promptly for the transcription of the proceedings but that, through no fault of their own this was not timeously prepared. [10] When the magistrate gave his judgment refusing bail he observed, cogently, that ‘die vonnisse nie anders kan wees as gevangenisstraf nie. Dit is net ’n kwessie van hoe lank. Ek is dus van mening dat om borg te weier gaan nie julle benadeel nie’. Entirely correctly and with an almost eerie perspicacity he reasoned that ‘(I)nteendeel om vir u te laat uitgaan nou op borg en later die hele huis van kaarte inmekaar te laat val gaan vir u werklik ’n benadeling wees’. This case underlines the fact that bail after conviction should be approached with caution. [11] The first appellant was married. At the time that he was sentenced he had three minor children. Mrs Van Niekerk, the attorney then appearing for the second appellant, said during her argument in mitigation of sentence that ‘bo en behalwe die feit dat hy ‘n polisiebeampte was, is hy maar net ‘n doodgewone mens soos enige ander beskuldigde wat voor u verskyn’. After his discharge from the police service, the third appellant had had been persistently out of work. The first and second appellants had no previous convictions. The third and fourth appellants did have previous convictions. The third appellant’s previous conviction was for an assault committed in 1989. The fourth appellant had a previous conviction for possession of dagga in 1984 and another two for possession of stolen property in 1995, as well as a conviction for possession of an unlicensed firearm in 1997. [12] It has been submitted to this court by Mr Calitz, who appeared on behalf of the appellants, that this lengthy period of time is, in itself, an exceptional circumstance that should be taken into account in the evaluation of their sentence by this court. Mr Calitz submitted that the lengthy period of time which it took to construct the record necessitated a revisiting of the sentences which had been imposed. Mr Calitz conceded, however, that if it was clear that the appellants had adopted a supine attitude to the prosecution of the appeal, the ‘exceptional circumstance’ of the long delay could not fairly operate in their favour. [13] It is common cause that there is indeed only one ground that can be considered in this appeal; namely whether the eight year delay from the imposition of sentence by the magistrate to the hearing of the appeal in the court below, in and of itself, justifies a lighter sentence. [14] Mr Theron, who appeared on behalf of the State, submitted that if the appellants had been in custody all this time it is highly unlikely that their erstwhile attorney would have made no enquiries or taken no steps to expedite the appeal. The fact is that they had not been in custody. He drew attention to the fact that it nowhere appears that their attorney of record at all relevant times did anything to ensure a timeous hearing of the appeal. He also pointed out that, for all the appellants’ protestations about the difficulties in reconstructing the record, particularly in respect of the missing exhibits, they do not explain why their attorneys had no copies, as one would have expected. He submitted further that it was clear that the appellants had sought to manipulate the administration of justice. Mr Theron, with justification, enquired rhetorically whether the appellants had hoped that the whole question of their appeal would quietly go away. He submitted further that, in view of the extensive corruption in our country, the court should proceed with the utmost caution before interfering with the sentences imposed on these appellants. Conclusions [15] There have been instances where this court has interfered with sentence on the ground of the delay in the hearing of an appeal. In S v Karolia1 the court approved the following from The Queen v CNH2: ‘This court is always hesitant to return a respondent to prison’. In Karolia approximately four years passed before the appeal was heard in this court. This court substituted a suspended sentence and a fine for the custodial sentence originally imposed. [16] In S v Michele3 this court substituted a suspended sentence for the direct sentence of imprisonment that had previously been imposed. The court referred with approval to Karolia and said: ‘While an appeal court will generally only consider the facts and circumstances known when sentence was initially imposed, this court has recognised that in exceptional circumstances factors later coming to light may be taken into account where it is in the interests of justice to do so.’4 1S v Karolia 2006 (2) SACR 75; [2004] 3 All SA 298 (SCA) at para 38. 2The Queen v CNH Court of Appeal for Ontario, 19 December 2002, para 53. 3S v Michele and another 2010 (1) SACR 131 (SCA). 4At para 13. [17] In S v Jaftha5 Lewis JA, who delivered the judgment of the court, said: ‘Ordinarily, of course, only facts known to the court at the time of sentencing should be taken into account.’6 She referred to R v Verster,7R v Hobson8 and Goodrich v Botha and others.9Lewis JA went on to say that: ‘The State also accepts that the ten-year delay [between sentence in magistrates’ court and the hearing of the appeal in the Supreme Court of Appeal] is exceptional and that the sentence should be revisited. In my view, the sentence imposed ten years ago should be set aside and a new sentence considered.’10 In Jaftha this court substituted a fine of R10 000, or two years’ imprisonment, for a three-year custodial sentence which had been imposed for a conviction of drunken driving (a contravention of s 122(1)(a) of the Road Traffic Act 29 of 1989). [18] Rule 67 (10) of the Magistrates’ courts rules imposes a duty on the clerk of the court to prepare a copy of the record of the case. Contrasted against this, rule 51(3) of the Uniform rules provides that in criminal appeals: ‘The ultimate responsibility for ensuring that all copies of the record on appeal are in all respects properly before the court shall rest on the appellant or his or her legal representative: Provided that where the appellant is not represented by a legal representative, such responsibility shall rest on the director of public prosecutions.’ [19] If one reads subrule 66(7) of the Magistrates’ courts rules, together with subrules (3), 4(a) and (9), it is plain that it is the responsibility of accused persons to pay for and obtain the transcripts of the proceedings in their criminal trials unless they are unable to pay therefor – in which case they may apply to the magistrate for a reduced charge. There has been no suggestion that an application was made by the appellants to the magistrate for a reduced charge. The appellants were not 5S v Jaftha 2010 (1) SACR 136 (SCA). 6At para 15. 7R v Verster 1952 (2) SA 231 (A). 8R v Hobson 1953 (4) SA 464 (A). 9Goodrich v Botha and others 1954 (2) SA 540 (A) at 546A-D. 10At para 16. impecunious at the relevant time and they enjoyed the benefit of legal representation up to and including the time of their appeal in the court below. [20] There can be no automatic alleviation of sentence merely because of the long interval of time between the imposition of sentence and the hearing of the appeal for those persons fortunate enough to have been granted bail pending the appeal. The phenomenon whereby inertia descends upon an appeal, like a cloud from the heavens, once bail has been granted to an accused after conviction and sentence, has been recurring with increasing frequency, especially in certain parts of the land. Our own experience as judges indicate that the clouds have been accumulating ominously, like a storm which is gathering momentum. Although from time to time the long delay between the passing of a custodial sentence and the hearing of an appeal may justify interference with that sentence, it is only in truly exceptional circumstances that this should occur. Each case must be decided on its own facts. [21] The appellants have adopted a supine attitude to the hearing of their appeal. Their attitude to this case throughout has been to adopt the attitude of a nightjar in the veld: do as little as possible, hope that nobody will notice and expect that the problem will go away. Fortunately for the administration of justice, the appellants do not enjoy a nightjar’s camouflage. They may have hidden but they have not been invisible. [22] It will be hard on the appellants and their families that, ten years after their sentencing by the magistrate, they should now have to report to jail to commence serving their sentences. We have anxiously reflected upon the needs of justice in this case, including the requirement that this court should show mercy to and compassion for our fellow human beings. Having done so, the conclusion remains inescapable that, if this court were to regard this case as yet another ‘exception’, it would undermine the administration of justice. The appellants are to blame for the long delay in bringing this matter to finality. The predicament in which the appellants find themselves is largely of their own making. [23] The first and the second appellants may reflect on the fact that they were fortunate in having their sentences reduced on appeal to the court below. The magistrate correctly took into account the fact that it was an aggravating factor that they were police officers at the time of the commission of their crimes. It should not be forgotten that these were offences committed within the precincts of a police station which, in a democratic state, serves as one of the symbols of law and order. The crimes in question violated a national symbol that, alongside the town hall and the magistrate’s court, is especially important in the platteland. [24] The appeal is dismissed. _______________________ N P WILLIS ACTING JUDGE OF APPEAL APPEARANCES: For the Appellants: N M Calitz Instructed by: The Legal Aid Board, Cape Town The Legal Aid Board, Bloemfontein For the Respondent: J A Theron Instructed by: Director of Public Prosecutions, Cape Town The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 31 May 2013 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Malgas and Others v the State (703/12) [2013] ZASCA 90 (May 2013 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 Today the Supreme Court of Appeal (SCA) dismissed an appeal by four persons, several of whom had been police officers, against their sentences handed down more than ten years ago. They had been found guilty in the Beaufort West Regional Court of theft and housebreaking with intent to commit theft of dagga that had been in police custody. The appellants had been on bail since shortly after they had been convicted. In the appeal heard in the Western Cape High Court in Cape Town that court reduced the sentence of the first two appellants from ten years’ imprisonment to eight years each and confirmed the eight year sentences for each of the other appellants. That court granted leave to appeal against these sentences to this court. The appellants had themselves to blame for the delays in the hearing of the appeal by the Western Cape High Court. It was held in this court that there were no exceptional circumstances to justify interference with the sentences currently in question. The SCA dismissed their appeal.

2917

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT REPORTABLE Case no: 180/2014 In the matter between: KWA SANI MUNICIPALITY APPELLANT and UNDERBERG/HIMEVILLE COMMUNITY WATCH ASSOCIATION FIRST RESPONDENT AUBREY NGCOBO NO SECOND RESPONDENT Neutral citation: Kwa Sani Municipality v Underberg/Himeville Community Watch Association (180/2014) [2015] ZASCA 24 (20 March 2015) Coram: Mpati P, Lewis, Willis and Mbha JJA and Gorven AJA Heard: 25 February 2015 Delivered: 20 March 2015 Summary: Application to declare agreement invalid ─ Municipality alleging non-compliance with legislation and consequent invalidity ─ invalidity not made out ─ agreement endured for some four years before declaration sought ─ unexplained delay in approaching court ─ not necessary to deal with delay in light of finding of validity. ___________________________________________________________________________ ORDER ________________________________________________________________ On appeal from KwaZulu-Natal High Court, Pietermaritzburg (Koen J sitting as court of first instance): The appeal is dismissed with costs. ________________________________________________________________ JUDGMENT ________________________________________________________________ Gorven AJA (Mpati P, Lewis, Willis and Mbha JJA concurring): [1] Kwa Sani Municipality (the municipality) approached the KwaZulu-Natal High Court, Pietermaritzburg for an order declaring invalid and setting aside an agreement. The agreement was for the provision of disaster management services to the municipality by the first respondent (the association). It also sought consequential relief. The municipality contended that the agreement was invalid for want of compliance with s 217 of the Constitution,1 the provisions of the Local Government: Municipal Finance Management Act (the MFMA)2 and the regulations promulgated under that Act.3 This was disputed by the association. It denied any invalidity. It also raised an unexplained and undue delay on the part of the municipality in approaching the court for such relief. [2] The court below (Koen J) dealt primarily with two issues. The first issue was whether the agreement was invalid for want of compliance with s 217 of the Constitution. The court held that, on the evidence, it was „. . . by no means 1 The Constitution of the Republic of South Africa, 1996. 2 The Local Government: Municipal Finance Management Act 56 of 2003. 3 The Municipal Supply Chain Management Regulations, GN 868, GG 27636, 30 May 2005, which came into effect on 1 July 2005. persuaded that the process adopted was necessarily not in compliance with the Constitutional injunction‟. The second issue was whether the delay of the municipality in challenging the agreement non-suited it. The court below also found for the respondent on that issue. The application was dismissed with costs and leave to appeal was refused with costs. The appeal is with the leave of this court. [3] The factual background to the conclusion of the agreement is of some moment. The association was formed in 1998. It grew out of a Farm Watch which had been established in conjunction with the South African Police Services (SAPS), from which two members were assigned. Later, the association was established in consultation with the SAPS, the South African National Defence Force (SANDF), residents in Himeville and Underberg, and the farming community. A 24 hour emergency service was set up for the benefit of the whole community. Twenty one security cells were established with volunteer members from the community, a volunteer cell leader and constant radio communication with each cell. The association was funded by contributions from the community. [4] The role of the association was extended over the ensuing years. In addition to the initial focus, it fulfilled the following functions:  the supply of a 24 hour emergency service to the entire community within the magisterial district of Underberg;  the supervision and co-ordination of the 21 security cells within the district to be called upon by the association from time to time to respond to any emergency within the cell area;  from 2001 onwards, close co-operation with the SANDF, which was at that time deployed to the district to fulfil duties on the Lesotho border, primarily relating to the theft of livestock;  the inauguration of and participation in the Southern Berg Fire Protection Association;  the provision of radios in various vehicles in order to improve and maintain communications throughout the municipal area; and  from 2008 onwards, the supervision and management of a Working on Fire team. [5] During 2004 the municipality invited the association to base itself in the newly constructed municipal offices in Himeville. It was not required to pay rent or service charges. This situation was terminated approximately five years later. At some stage the municipality collected R20 per household per month on behalf of the association. However, when it was realised that the municipality was not entitled to act as a cash collection agent for other parties, this practice was terminated. During this period, the association became a member of the Disaster Management Institute of Southern Africa and remains such. Over the years, the association has established a sophisticated communications network which enables it to maintain communications with members of the community, SAPS, neighbouring farmers, the 21 cells and Ezemvelo KZN Wildlife. No comparable network systems exist or existed within the municipality. [6] In 2008 the association expressed its dissatisfaction with the existing arrangements for funding its activities. It called upon the municipality to conclude an agreement formalising the provision of the services it was rendering. The parties negotiated and concluded an agreement which the municipality undertook to reduce to writing. When it failed to do so, the association produced a draft. This was lost on two occasions, but was finally signed by both parties on 2 November 2010. The municipal manager signed on behalf of the municipality. He was authorised to do so by council resolution 117, taken on 28 October 2010.4 It is this agreement which formed the focus of the application. [7] The agreement provided for a contract period of three years with effect from 1 July 2008. It also provided for an extension, absent notice to the contrary, for a further three years. After that, it was to be terminable on six months‟ notice by either party. Neither party terminated it prior to 1 July 2011, when the agreement was automatically renewed. The second three year period was thus to elapse on 30 June 2014. On 23 May 2012, however, the council of the municipality resolved to terminate the agreement. Pursuant to that resolution, the municipal manager wrote to the association. The material part of the letter reads as follows: „This letter serves as official termination of services by the Kwa Sani Municipality. This notice is given in terms of the contract (section 4.2) held between yourselves and the Kwa Sani Municipality.‟ [8] The association responded to this letter. It pointed out that the municipality had not terminated the agreement before it was extended for the further three year period. Therefore, it said, the letter could only serve as notice that the agreement would terminate on 30 June 2014. This is what paragraph 4.2 of the agreement, on which the municipality said it relied, provided. It was clear that the basis for termination relied upon by the municipality in the letter was ill-founded. The municipality did not seek in the court below or on appeal to contend otherwise. When the municipality later claimed that it could and did terminate the agreement forthwith, the association responded again. It pointed out that the purported termination amounted to a repudiation of the agreement, that the association did not accept the repudiation and that it elected to abide by the agreement. On the papers it was common cause that the association 4 The resolution read as follows: „Council RESOLVED NO. 117, OCTOBER 2010 to authorise the Municipal Manager to sign the service level agreement with Community Watch.‟ continued to provide the services under the agreement and there is no indication that this ceased prior to 30 June 2014. The municipality has refused to pay the association for any services beyond June 2012. [9] The reason which was given in the founding affidavit for the decision to cancel is instructive: „. . . [D]uring 2012, the [municipality‟s] circumstances began to change such that it did not require the services which the [association] was to provide under the agreement. The monthly repayment under the agreement became an unnecessary expense and placed undue strain on the [municipality‟s] financial resources. The [municipality] had in place a permanent staff base allocated to disaster management and hence the service which the [association] was to provide under the agreement was not required and could be performed by the [municipality]. The [municipality] was also in financial distress and was required to implement cost cutting measures for the 2012/2013 financial year.‟ This provoked a response from the association to the effect that the expense had been budgeted for, that only one staff member was employed as the disaster management official and that he had been so employed since 2004. The response of the municipality in turn claimed that this official had been employed in that capacity since 2012. It then stated that the disaster management service was a district function, not one for which the municipality was responsible. In the next breath, however, it mentioned that the municipality had contracted for the provision of those services with KZN Rural Metro Emergency Management Services (Pty) Ltd. [10] The net effect of all of this is that the municipality claimed that it could perform the services itself. In addition it supposedly could not afford to contract them out. It then claimed that the services were not its responsibility. It finally said that it had contracted another body to perform the services. Accordingly, the claims that the municipality could itself provide the requisite services and that there were financial reasons for terminating the agreement were, on its own version, shown to amount to sheer sophistry. [11] The refusal of the municipality to continue paying for the services led to the association claiming payment in arbitration proceedings. The second respondent was appointed the arbitrator. Thereafter the municipality took the view that it was necessary for it to approach the court since its contention was that the agreement was invalid and the arbitration, based as it was upon the agreement, was therefore not appropriate. This was the first time that the municipality had claimed that the agreement was invalid. The second respondent has taken no part in the court proceedings. [12] On appeal, it was accepted that the decision to conclude the agreement amounted to administrative action. As Professor Hoexter points out: „. . . public bodies use contract as a method for exercising their powers and performing their duties‟.5 The starting point as to how to act if one contends that administrative action is invalid is found in Oudekraal Estates (Pty) Ltd v City of Cape Town & others.6 This court there held that, because administrative action often forms the basis for subsequent acts, it must be treated as valid until it is set aside even if it was actually invalid. This was explained as follows: „Until the Administrator's approval (and thus also the consequences of the approval) is set aside by a court in proceedings for judicial review it exists in fact and it has legal consequences that cannot simply be overlooked.‟7 This does not mean that the administrative act is valid, only that it must be treated as such. There is only one circumstance in which it can be ignored without being set aside. Thus: 5 Cora Hoexter Administrative Law in South Africa 2 ed (2012) at 444. 6 Oudekraal Estates (Pty) Ltd v City of Cape Town & others 2004 (6) SA 222 (SCA). 7 Paragraph 26. „It is in those cases - where the subject is sought to be coerced by a public authority into compliance with an unlawful administrative act - that the subject may be entitled to ignore the unlawful act with impunity and justify his conduct by raising what has come to be known as a “defensive” or a “collateral” challenge to the validity of the administrative act.‟8 [13] On appeal, the municipality submitted that the launch of the application was akin to its having raised a collateral challenge. It claimed that, because the association had attempted to enforce the agreement by way of the arbitration, the municipality was therefore in a position where it was entitled to resist that enforcement. The municipality sought to place itself in the position of the applicants referred to in a dictum of this court in Kouga Municipality v Bellingan & others:9 „In my view, the correct approach to the relief sought by the applicants would have been to recognise that the application was in form a direct challenge, but in substance a defensive or collateral challenge, to the validity of the by-law. The two are different‟. In Kouga, the respondents on appeal were the applicants in the court below. The municipality had sought to prosecute them under a by-law. They brought a review application to declare the by-law invalid. This court held they should not have done so since, in a review application, a court has a discretion to grant or refuse the relief. As it happened, the court a quo declared the by-law invalid but, applying s 172(1)(b) of the Constitution, suspended the invalidity for a certain period to afford the municipality the opportunity to rectify matters. As this court pointed out, there was no bar to the respondents being prosecuted during the period of suspension and said: „The problems associated with the relief sought by the applicants in their notice of motion and the order granted by the court a quo would be avoided if a declaratory order were to be granted that the by-law in question is invalid for the purposes of a prosecution of any of them 8 Oudekraal para 32. 9 Kouga Municipality v Bellingan & others 2012 (2) SA 95 (SCA) para 12. based thereon. A collateral challenge to the validity of a piece of legislation can be mounted at any time and a court has no discretion to disallow such a challenge‟.10 [14] In the present matter, it is the municipality which is the public authority, and not the association. The municipality is also not in the position of a subject being coerced by a public authority whose underlying administrative act is invalid. No collateral challenge is raised by way of the application. The application concerned a public authority claiming that its own administrative action was invalid. This submission of the municipality thus falls far wide of the mark. [15] When a public authority takes that view, it is obliged to approach a court to set it aside. This has been made clear by decisions of this court and the Constitutional Court, a few of which I shall briefly discuss. [16] In Municipal Manager: Qaukeni Local Municipality & another v FV General Trading CC,11 this court approved of this course of action, saying: „If the second appellant's procurement of municipal services through its contract with the respondent was unlawful, it is invalid and this is a case in which the appellants were duty- bound not to submit to an unlawful contract, but to oppose the respondent's attempt to enforce it. This it did by way of its opposition to the main application and by seeking a declaration of unlawfulness in the counter-application.‟12 In MEC for Health, Eastern Cape, & another v Kirland Investments (Pty) Ltd t/a Eye and Laser Institute,13 Plasket AJA, in rejecting an argument that what was claimed to be invalid administrative action can be ignored without an application to set it aside, said the following: 10 Kouga para 18. 11 Municipal Manager: Qaukeni Local Municipality & another v FV General Trading CC 2010 (1) SA 356 (SCA) para 26. 12 References omitted. 13 MEC for Health, Eastern Cape, & another v Kirland Investments (Pty) Ltd t/a Eye and Laser Institute 2014 (3) SA 219 (SCA) (Kirland SCA). „The answer to their dilemma lies in the hands of the MEC and the superintendent-general: if they want Diliza's decisions to be set aside, they must bring a proper application for that relief, and in all likelihood, their standing to do so will not be open to challenge.‟14 The dilemma referred to was that, if the court did not set aside the two impugned administrative decisions, this would „clothe the invalid approvals with the cloak of validity‟.15 This approach was upheld by the majority in the Constitutional Court in an appeal from Kirland SCA.16 Cameron J explained the position as follows: „When government errs by issuing a defective decision, the subject affected by it is entitled to proper notice, and to be afforded a proper hearing, on whether the decision should be set aside. Government should not be allowed to take shortcuts. Generally, this means that government must apply formally to set aside the decision. Once the subject has relied on a decision, government cannot, barring specific statutory authority, simply ignore what it has done. The decision, despite being defective, may have consequences that make it undesirable or even impossible to set it aside. That demands a proper process, in which all factors for and against are properly weighed.‟17 The Constitutional Court agreed with this court that, because the MEC had not formally applied to set aside the impugned decision, the administrative act in question could not be set aside. [17] Having arrived at the view that the agreement was invalid, the municipality was therefore obliged to approach the court to have the agreement declared invalid and set aside. Absent such a successful challenge, or another basis on which it was entitled to avoid its obligations thereunder, it was obliged to give effect to the agreement. The first question to resolve, therefore, is whether it made out a case that the agreement was invalid. In this, as the association correctly submitted, the municipality bore the onus. At the outset, 14 Paragraph 33, references omitted. 15 Paragraph 31. 16 MEC for Health, Eastern Cape, & another v Kirland Investments (Pty) Ltd t/a Eye and Laser Institute 2014 (3) SA 481 (CC) (Kirland CC). 17 Paragraph 65. the court below pertinently posed the question whether the municipality was prepared to argue the matter on the papers since certain factual disputes were apparent. The municipality elected to do so. [18] In application proceedings, the affidavits both define the issues between the parties and embody the evidence on which the issues must be adjudicated.18 The municipality relied on three grounds to found its assertion of invalidity. First, that because the municipality failed to prepare and implement a supply chain management policy as it was obliged to do under the MFMA, the agreement was invalid. Second, that the conclusion of the agreement did not meet the prescripts of s 217 of the Constitution which, the municipality contended, in this instance required a public process. Third, that certain processes and formalities provided for in the MFMA were not complied with. [19] With reference to the first ground, it is common cause that, in breach of its obligations, the municipality failed to adopt a supply chain management policy as was required by the MFMA. It only did so in 2011. This means that, at the time the agreement was concluded, whether initially or when reduced to writing, no supply chain management policy was in place. Section 111 of the MFMA reads: „Each municipality and each municipal entity must have and implement a supply chain management policy which gives effect to the provisions of this Part‟. There is no indication that any failure on the part of a municipality to do so would visit with invalidity agreements which would otherwise fall within the ambit of such a policy. The touchstone of validity remains s 217 of the Constitution and compliance with the provisions of the MFMA and regulations. Contrary to what was submitted in this first ground, therefore, this failure did not, in and of itself, render the agreement invalid. 18 MEC for Health, Gauteng v 3P Consulting (Pty) Ltd 2012 (2) SA 542 (SCA) para 28. [20] The second ground was based on s 217 of the Constitution, which provides as follows: „(1) When an organ of state in the national, provincial or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost- effective. (2) Subsection (1) does not prevent the organs of state or institutions referred to in that subsection from implementing a procurement policy providing for- (a) categories of preference in the allocation of contracts; and (b) the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination. (3) National legislation must prescribe a framework within which the policy referred to in subsection (2) must be implemented.‟ The MFMA was promulgated, inter alia, to give effect to s 217(3) of the Constitution. The regulations set out more detailed requirements based on the MFMA. [21] The primary point of attack by the municipality on this ground was that a public bidding process was necessary. The association submitted that, although a public bidding process admittedly did not take place, this did not necessarily mean that s 217 of the Constitution and the provisions of the MFMA and regulations had not been complied with. It pointed out that regulation 36 of the regulations clearly demonstrates that a public bidding process is not always necessary. In its material parts, this regulation provides as follows: „(1) A supply chain management policy may allow the accounting officer- (a) to dispense with the official procurement processes established by the policy and to procure any required goods or services through any convenient process, which may include direct negotiations, but only- . . . (ii) if such goods or services are produced or available from a single provider only; . . . or (v) in any other exceptional case where it is impractical or impossible to follow the official procurement processes‟. [22] The association submitted that it was a single provider of unique services at the time. As such, the association submitted, even if there had been a supply chain policy in place, this would have allowed the agreement to be concluded without a competitive bidding process. If this was the case, it could therefore not be said that the conclusion of the agreement transgressed the statutory precepts. There was no challenge that the provisions of regulation 36 fell foul of s 217 of the Constitution or the provisions of the MFMA. On the face of it, it is appropriate to provide an exception to a public bidding process where there is a single service provider offering a unique service. The factual situation is therefore determinative of the point. [23] The municipality averred in its founding affidavit that it was „unaware of the precise facts and circumstances in which the agreement was concluded.‟ The strong case made out by the association, by way of affidavits of people involved in the association and the provision of services in the area at the time, was that the association provided a unique service and that the services outlined in the agreement could not be provided by any other person or entity at the time. The only counter to this was a bald assertion, without any admissible evidence to support it, that two other service providers could have done so. Why I say that it was a bald assertion is because no affidavits were forthcoming from any persons who claimed to know of the capabilities of those two entities at the time, least of all from the service providers themselves. This was not admissible evidence of the fact contended for. Even if it was admissible, this raised a factual dispute which had to be resolved in favour of the association since the version of the association was not so clearly untenable that it could be rejected out of hand.19 19 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635D. [24] A remark made by Cameron J in Kirland CC applies with equal force to the present matter. That case, like this, was not a matter where there was any hint that the conclusion of the agreement could be „. . . impeached by political shenanigans.‟20 A resolution taken at a council meeting authorised the municipal manager to sign the agreement. The meeting was an ordinary one and was thus open to the public. The association was known in the area to have provided these services since 1998, initially on a voluntary basis funded by donations of time and money from the community it was serving. It continued to rely on the community to carry out its functions. During a certain period, contributions were collected on behalf of the association by the municipality. The services were provided for a period of time from a base within the municipal offices. The association was deeply embedded within the community. It had built up and maintained clear voluntary structures which enhanced the services provided by it as well as good working relationships with other entities involved in various aspects of disaster management. There was no evidence that anyone challenged either the conclusion of the agreement or the service rendered by the association until the municipality purported to cancel it without legal cause. [25] In support of its submission that s 217 of the Constitution had not been complied with, the municipality relied on Qaukeni.21 The facts in that matter were as follows. No supply chain management policy had been adopted. The respondent submitted a tender to collect refuse in both Lusikisiki and Flagstaff. This tender gave rise to an oral agreement for the period November 2005 to 30 June 2006. The validity of that agreement was not challenged. Thereafter, that municipality invited the respondent to present its budget for the following 12 month period. Instead of doing so, it submitted a quotation for its services amounting to in excess of R350 000 per month. The council resolved to contract 20 Kirland CC para 79. 21 Footnote 11, para 12. on that basis without obtaining other tenders and an agreement was drawn up and signed. Amongst other things, the agreement provided for a 20 percent annual increase in remuneration for the respondent and provided for the possibility that the agreement could endure for a number of years. Far from being a unique service, it related to refuse collection. There was also no evidence that other persons could not provide the same service. The terms of the agreement were clearly onerous as to annual escalation, even if the initial monthly remuneration of R350 000 was appropriate. [26] Qaukeni must be understood within the context in which it was decided. In addition, attention must be given to what was decided. This court did not hold that the consequence of a failure to adopt a supply chain management policy was to invalidate all agreements to which it would normally apply but said:22 „. . . [T]he second appellant's failure to implement a supply chain management policy cannot relieve it of its statutory obligation to act in a manner as summarised above, and it would be untenable to suggest that the second appellant was therefore not obliged to act openly, transparently and without following a fair, equitable, competitive and cost-effective process when contracting with an external service supplier to render a municipal service.‟ It went on to find that there had been a „failure to comply with these statutory precepts‟. In such circumstances, it held, a court has no discretion to enforce such a contract because the question is one of legality.23 It should be noted that the exceptions to a competitive bidding process provided by regulation 36 did not arise in Qaukeni and therefore did not excite comment from this court in that matter. [27] The facts in Qaukeni are clearly distinguishable from those in the matter at hand. That related to a routine contract for refuse disposal, not a multi-faceted 22 Paragraph 13. 23 Paragraph 14. operation requiring the co-operation and co-ordination of a number of entities and volunteers within a number of theatres of operation. There were multiple service providers rather than a single one which was integrated into the community after years of initiating and providing the service informally. Qaukeni is therefore not authority for the proposition that, in all instances where a municipality concludes an agreement with an outside body for the provision of services, a public bidding process is required. [28] I can find no basis for concluding that the agreement did not comply with „the statutory precepts‟. The substantive challenge to the validity of the agreement was therefore correctly found wanting by the court below, albeit that this finding was couched in somewhat diffident terms. [29] Turning to the third ground, the municipality submitted that s 116 of the MFMA was not complied with. This required agreements to be reduced to writing and that, if an agreement endured for longer than three years, it must be subject to review at least once every three years. The first aspect was satisfied. Even though the initial agreement was concluded verbally in 2008, it was subsequently reduced to writing and signed after the municipality so resolved in a council meeting. The association denied the assertion of the municipality that the agreement was given effect in 2008 and said that it was only complied with by the municipality after signature. Once again, it seems strange that, when the municipality disclaimed any knowledge of the circumstances at the time, it made such an assertion. At best, again, the assertion gives rise to a factual dispute which must be resolved in favour of the association.24 [30] As for the need to review the agreement, either party was entitled to terminate it after the initial three year period. Despite this provision, the 24 Plascon-Evans Paints Ltd above. municipality failed to do so. It was silent as to whether it in fact reviewed the agreement but the mechanism for this was clear and available to it. The third ground, based on a failure to comply with s 116 of the MFMA is accordingly found wanting. [31] The second defence raised by the association was that there had been an undue delay. The court below upheld this defence. It held that the award of a contract for services by an organ of state amounts to administrative action.25 It went on to hold that the Promotion of Administrative Justice Act 3 of 2000 (the PAJA) applied to the agreement in question. Therefore s 7 of the PAJA, requiring an application to be brought within 180 days of the impugned administrative act, meant that the application, which was tantamount to a review, was brought out of time. The court below went on to hold that, if the PAJA did not apply, the application amounted to a common law review and that there had been an undue delay. Because the parties had changed their positions to comply with its terms, it held that it would be highly prejudicial to review and set aside the agreement and that to do so would undermine the finality of administrative decisions.26 [32] For present purposes, the nature of such an application need not detain us. In Kirland CC, the process by which a public body would seek to have its own administrative decision set aside was characterised as a review.27 Cameron J motivated this on the basis that the public authority must explain „. . . the history of the decision, its shifting attitudes towards it and its delay in dealing with it.‟28 The party resisting such an application must then be entitled to „. . . be heard on 25 Steenkamp NO v Provincial Tender Board, Eastern Cape 2007 (3) SA 121 (CC) para 90. 26 In this regard the court below relied on the dictum of this court in Chairperson: Standing Tender Committee v JFE Sapela Electronics (Pty) Ltd 2008 (2) SA 638 (SCA) para 28 where potential prejudice and finality of administrative decisions were said to be the reason for the discretion to refuse a review application where there had been an unreasonable delay in bringing the review. 27 Paragraphs 64, 97 and 106. 28 Paragraph 67. whether it has been prejudiced and why it would be unfair to it to set the decision aside now.‟29 In Qaukeni, this court left open the precise nature of the application to be brought, saying that a public body may not need to proceed by review „when a municipality seeks to avoid a contract it has concluded in respect of which no other party has an interest.‟30 Regardless of the precise nature of such an application, which need not be decided here, what is clear is that, if any undue delay is not adequately explained, an invalid administrative act may be „insulated‟ against being set aside on that basis.31 [33] Of course, if the impugned administrative action is not so insulated and does not pass muster, a court is obliged to declare it invalid.32 However, s 172(1)(b)(ii) grants a discretion to the court which is obliged to make such a declaration to use „. . . its just and equitable remedial powers, [to] make an order “suspending the invalidity for any period and on any conditions”‟.33 But this discretion only arises after, and does not precede, a declaration of invalidity.34 In the present matter the issue of delay does not require decision since it has been found that the municipality failed to show that the agreement was invalid. [34] In summary, the following is the position. If a public body believes one of its administrative acts is invalid, it may not simply ignore it. This is because even invalid administrative acts are treated as valid until they are set aside. The public body contending for invalidity is thus duty bound to approach the court to have it set aside. Since it is administrative action which must be set aside, the delay rule applies. If there has been an undue delay, it must provide an 29 Ibid. 30 Paragraph 26. 31 Kirland CC para 97; Harnaker v Minister of the Interior 1965 (1) SA 372 (C) at 380B-381A; Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad 1978 (1) SA 13 (A) at 29H-30G. 32 Section 172(1)(a) of the Constitution; Kirland CC (minority decision) para 46. 33 Allpay Consolidated Investment Holdings (Pty) Ltd & others v Chief Executive Officer, South African Social Security Agency & others 2014 (4) SA 179 (CC) para 63. 34 Bengwenyama Minerals (Pty) Ltd & others v Genorah Resources (Pty) Ltd & others 2011 (4) SA 113 (CC) para 84. acceptable and adequate explanation. If this is not done, the invalid administrative act may be insulated against being set aside. In such a case, the administrative act will continue to have effect and be treated as valid, despite its invalidity. If the public body has not delayed unduly and shows that the act is invalid, a court is bound to make a declaration of invalidity. There is no discretion afforded a court not to do so. If a declaration of invalidity is made, a court is then granted a discretion under its just and equitable powers to suspend the invalidity for any period and on any conditions. In the present matter, the municipality did not even surmount the first hurdle of showing invalidity. [35] In the result, the appeal is dismissed with costs. ___________________ T R Gorven Acting Judge of Appeal Appearances For Appellant: K J Kemp SC (with him H Gani) Instructed by: Matthew Francis Inc. Attorneys, Pietermaritzburg Rossouws Attorneys, Bloemfontein For Respondent: A de Wet SC Instructed by: McCarthy & Associates Attorneys, Mount West Matsepes, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 20 March 2015 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. KWA SANI MUNICIPALITY v UNDERBERG/HIMEVILLE COMMUNITY WATCH (180/2014) [2015] ZASCA 24 (20 March 2015) The SCA today dismissed with costs an appeal by the Kwa Sani Municipality against the dismissal of an application in the KwaZulu- Natal High Court, Pietermaritzburg which sought to declare invalid and set aside an agreement signed on 2 November 2010. The basis of the application was that the decision to conclude it fell foul of the provisions of s 217 of the Constitution because the municipality had neglected to adopt a supply chain management policy and no public process had been undertaken. The SCA held that the facts of the matter had entitled the municipality to contract with the respondent as being the single supplier of the specialised services in question and the agreement was not invalid.

1475

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 523/2015 In the matter between: FLUXMANS INCORPORATED Appellant and LEVENSON STEVEN ZULLA Respondent Neutral citation: Fluxmans v Levenson (523/2015) [2016] ZASCA 183 (29 November 2016) Coram: Mpati AP, Theron, Zondi and Van Der Merwe JJA and Makgoka AJA Heard: 16 August 2016 Delivered: 29 November 2016 Summary: Prescription begins to run as soon as the creditor acquires knowledge of the minimum facts necessary to institute action: knowledge that the relevant agreement did not comply with the peremptory provisions of the Contingency Fees Act 66 of 1997 is not a fact needed to complete cause of action. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Local Division of the High Court, Johannesburg (Windell J, sitting as a court of first instance): 1. The appeal is upheld with costs. 2. The order of the High Court is set aside and is replaced with the following: „The respondent‟s special plea of prescription is upheld with costs.‟ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Mpati AP (Makgoka AJA concurring): [1] Until the introduction of the Contingency Fees Act 66 of 1997 (the Act), which came into operation on 23 April 1999, legal practitioners could not, in terms of the common law, conclude contingency fees agreements with their clients. As was said in Price Waterhouse Coopers Inc & others v National Potato Co-operative Ltd 2004 (6) SA 66 (SCA), the Act was enacted to legitimise contingency fees agreements between legal practitioners and their clients, which would otherwise be prohibited by the common law.1 The Act requires a contingency fees agreement to be in writing and in a prescribed form (s 3(1)) and that it be signed by the client and the attorney representing him or her (s 3 (2)). This appeal originates from an application brought by the respondent, Mr Steven Zulla Levenson, against the appellant, Fluxmans Incorporated, a firm of attorneys, in the Gauteng Local Division, Johannesburg (the High Court), for an order, amongst others, declaring a contingency fees agreement (the agreement) concluded between them to be invalid, void and of no force and effect. The agreement, which, it is common cause, did not comply with the requirements of the Act, was in relation to fees payable by the respondent to the appellant in respect of the former‟s claim against the Road Accident Fund (the Fund) 1 Paragraph 41. following a motor vehicle accident in which he was involved and sustained certain injuries. [2] The declaration of invalidity was sought on the basis that the agreement did not comply with the provisions of the Act. In addition to the order of invalidity, the respondent sought payment from the appellant of the sum of R844 994.57, being the amount by which he had allegedly been overreached, having paid costs in the amount of R1 119 625.62. The appellant denied that it had overreached the respondent or that the agreement was invalid. It alleged that the respondent‟s claim, „if legally sustainable, has been extinguished by prescription‟. The High Court came to the conclusion that the respondent‟s claim „has not become prescribed‟ and referred the issue of the quantum for trial. It also declared the agreement invalid. With the leave of the High Court, this appeal is only against the order that the respondent‟s claim has not become prescribed. [3] The facts are mainly common cause. On 1 February 2006 the respondent gave instructions to the appellant to institute action on his behalf for damages against the Fund in respect of injuries sustained in a motor vehicle collision that occurred on 8 October 2005. The appellant, represented by an experienced attorney, Mr Selwyn Perlman, accepted the instructions on a contingency fee basis. In terms of the agreement, which, according to the answering affidavit, was an „oral contingency fee agreement‟, the appellant would be paid a contingency fee of 22,5 per cent of the amount that would be recovered as damages on behalf of the respondent. The agreement was confirmed by Mr Perlman by letter sent to the respondent by telefax, dated 13 June 2006. The claim was subsequently settled. The terms of the settlement were made an order of court on 23 May 2008. In terms of the order, the Fund was to pay to the appellant, on behalf of the respondent, „the capital sum of R 4 862 561.40 . . . in delictual damages‟, with costs on the scale as between party and party, including the qualifying fees of four named medical practitioners. In addition, the Fund undertook to cover the respondent‟s future medical and hospital expenses. [4] On 22 June 2008 the respondent wrote a letter to the appellant addressed to Mr Perlman, the first two paragraphs of which read: „Regarding our discussion on Friday of my earlier request for a reduction in Fluxman‟s fee, I left the meeting feeling that I had not communicated clearly and that there was a need to put something in writing. You mentioned that I had stated, at the time of my request, that I had not understood the contract. Whilst I was aware when signing the letter of engagement, that Fluxman‟s would earn a fee of 22,5% of any settlement, I did not at the time, understand the nature or extent of my injuries.‟ It was alleged in the founding affidavit that the letter recorded a meeting held between the respondent and Mr Perlman „to discuss this issue amongst others‟. The „issue‟ that was discussed clearly related to the contingency fees charged by the appellant, because the respondent went further to allege that Mr Perlman assured him „that the fees charged were reasonable‟ and that he „had no reason to doubt [Mr Perlman‟s] word at that time‟. [5] It is not in dispute that in or about August 2008 the respondent received a statement of account from the appellant which reflected that he had been paid a total amount of R3 290 138.90, made up as follows: R3 103 449.39 in respect of capital and R186 689.51, being the costs recovered from the Fund. More than five years thereafter, on 9 April 2014, the respondent wrote a letter to the appellant in which he alleged that it had recently been brought to his attention that the contingency fees agreement entered into between him and the appellant, in February 2006, did not comply with the provisions of the Act. He referred to the judgment of the Gauteng Division in De La Guerre v Ronald Bobroff & Partners Inc & others [2013] ZAGPPHC 33 (delivered in February 2013), which was upheld, he said, by the Constitutional Court in February 2014.2 That decision found, amongst others, he wrote, that „any agreement outside the Act is invalid, null and void‟. The respondent accordingly 2 In Ronald Bobroff & Partners Inc v De La Guerre [2014] ZACC 2; 2014 (3) SA 134 (CC) the Constitutional Court dismissed an application for leave to appeal against the decision of the North Gauteng High Court. invited the appellant, on the basis that the agreement was unlawful, to advise, by no later than 30 April 2014, what its proposed revised fee was and of „the process that will be applied with regard to [his] reimbursement‟. In all, the respondent sought to be reimbursed for moneys that had been incorrectly debited against his account with the appellant. [6] In coming to the conclusion that the respondent‟s claim has not become prescribed, the High Court upheld the respondent‟s argument that he only acquired knowledge of the facts from which the debt arose „when the Constitutional Court‟s judgment on contingency fees agreements was delivered in 2014‟.3 The High Court held that the date upon which the respondent acquired the requisite knowledge was „when the minimum facts necessary to launch the present application came to his knowledge‟. This meant, in the view of the Court, that the „minimum facts necessary‟ for the debt to have become due was the respondent‟s knowledge that the agreement was unlawful and thus invalid. [7] The question to be determined in this appeal is, therefore, whether the High Court correctly found that the respondent‟s claim had not become prescribed. This, in turn, requires a consideration of the provisions of s 12 of the Prescription Act 68 of 1969 (the Prescription Act), the relevant parts of which read: „(1) Subject to the provisions of subsections (2) and (3), prescription shall commence to run as soon as the debt is due. (2) If the debtor wilfully prevents the creditor from coming to know of the existence of the debt, prescription shall not commence to run until the creditor becomes aware of the existence of the debt. (3) A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care.‟ 3 Paragraph 17 of the judgment. It has not been suggested that the appellant prevented the respondent from „coming to know of the existence of the debt‟. Section 12(2) is therefore of no application in the enquiry. [8] In its answering affidavit, deposed to by Mr Perlman, the appellant said: „The alleged debt asserted in this application would have become due on the date on which payment was made by the applicant to the respondent, upon which date (on the applicant‟s version) the amount was payable to the applicant. On the applicant‟s version he became aware (or should reasonably have so become aware) of his alleged cause of action and claim on 1 September 2008, the date from which interest is claimed. From that date (at the latest) the applicant had knowledge of the identity of the respondent as (alleged) debtor and of the facts from which his claim and the debt arises.‟ This court, therefore, has to determine whether the respondent indeed had actual or deemed knowledge of „the facts from which the debt arises‟ from 1 September 2008 as alleged by the appellant. That must have been the date on which the respondent became aware of the actual amount of the costs deducted from the money paid by the Fund in settlement of his claim, since the statement of account sent to him by the appellant was dated 20 August 2008. The respondent claimed interest on the sum allegedly due to him, calculated as from 1 September 2008. It is not in dispute that the identity of the debtor was known to him all along. The appellant, as a debtor who invoked the special defence of prescription, bore the onus of establishing „both the date of the inception and the date of the completion of the period of prescription‟.4 [9] In Truter & another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA), this court held that the term „debt due‟ means a debt, including a delictual debt, which is owing and payable, and that – 4 Gericke v Sacks 1978 (1) SA 821 (A) at 827H-828A; Van Staden v Fourie 1989 (3) SA 200 (A) at 216B; Santam Ltd v Ethwar 1999 (2) SA 244 (SCA) at 256G. „A debt is due . . . when the creditor acquires a complete cause of action for the recovery of the debt, that is, when the entire set of facts which the creditor must prove in order to succeed with his or her claim against the debtor is in place or, in other words, when everything has happened which would entitle the creditor to institute action and to pursue his or her claim.‟5 (Footnote omitted.) And „cause of action‟ for purposes of prescription was held to be- „every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary for the plaintiff to prove each fact, but every fact which is necessary to be proved.‟6 (Footnote omitted.) [10] As has been alluded to above, the High Court found that „[t]he invalidity of a common law contingency fee agreement is a fact and not a legal conclusion‟ and that the respondent was not aware that an Act prohibiting the agreement existed. It also found that the respondent had been overcharged. Two things need to be clarified. The first is that the Act does not prohibit a contingency fees agreement. As has been mentioned above, it legitimises an agreement otherwise prohibited at common law. The second is that counsel for the appellant submitted, correctly so, that the High Court erred in its finding that the invalidity of the agreement is a fact and not a legal conclusion. In Claasen v Bester [2011] ZASCA 197; 2012 (2) SA 404 (SCA) Lewis JA referred to Truter7 and Minister of Finance & others v Gore NO [2006] ZASCA 98; 2007 (1) SA 111 (SCA)8 as well as Van Staden,9 where this court had left open the question whether the nullity of a contract (a legal conclusion) was a fact for purposes of s 12 of the Act, and said: „These cases [Truter and Gore] clearly do not leave open the question posed and not answered in Van Staden. They make it abundantly clear that knowledge of legal conclusions 5 Per Van Heerden JA para 16. 6 Paragraph 19, quoting with approval from McKenzie v Farmers’ Co-operative Ltd 1922 AD 16 at 23. See also Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A) at 838D-H. 7 Paragraph 20. 8 Paragraph 17. 9 Footnote 4. is not required before prescription begins to run. There is no reason to distinguish delictual claims from others.‟10 Claasen was referred to by the High Court in its judgment, but regrettably, the court must have missed or misunderstood the authoritative statement just quoted. [11] The respondent‟s claim is based on enrichment. He claims repayment of money paid by him in terms of an illegal and invalid contract (condictio ob turpem vel iniustam causam). As has now been authoritatively decided, lack of knowledge of the invalidity of a contract does not postpone the running of prescription,11 which begins to run immediately after the payment was made.12 [12] But the respondent‟s case was not simply that he did not know that the agreement was invalid (which is a legal conclusion). It is set out as follows in his founding affidavit: „I have since ascertained and been advised by my present legal representatives that the percentage fee agreement for 22.5% plus VAT in the circumstances of my case and my dealings with Fluxmans, as set out more fully hereunder, is known as a “common law contingency fee agreement” and is illegal and unenforceable as it does not comply with the Contingency Fees Act 66 of 1997.’ (My emphasis.) And: „In the letter „SZL4‟ I informed Fluxmans that I had become aware of the Judgments of the Constitutional Court and that on consideration of my Statement of Account annexure “SZL2”, I was of the view that the agreement entered into between myself and Fluxmans was invalid as it did not comply with the Provisions of the Contingence Fees Act 66 of 1995.‟ (My emphasis.) The letter and statement of account referred to were annexed to the founding affidavit. The second paragraph of „SZL4‟ reads: 10 Paragraph 15. 11 Claasen para 15 and Yellow Star Properties 1020 (Pty) Ltd v MEC, Department of Development Planning and Local Government, Gauteng [2009] ZASCA 25; 2009 (3) SA 577 (SCA) para 37. 12 Van Staden, at 215B, where Grosskopf JA quotes with approval (see 215F) De Wet & Yeats Kontraktereg en Handelsreg 4de uitgawe 263. „It has recently been brought to my attention that the contingency fee agreement entered into between Fluxmans and myself in February 2006 did not comply with the Contingency Fees Act 66 of 1997 (the Act).‟ (My emphasis.) Further down in the letter, „SZL4‟, he states that the court (Constitutional Court) found that „at common law a contingency agreement between an attorney and client is unlawful‟. It therefore becomes necessary to consider the question: when did the debt arise (s 12(3) of the Act)? [13] In its answering affidavit the appellant alleged that the respondent‟s claim „is premised on an oral contingency fee agreement‟ concluded between the parties in February 2006. The deponent also alleged that at the time of the conclusion of the agreement he „did not understand the terms of the contingency fee agreement to be in contravention of the [Act]‟ and said that the agreement was concluded in good faith. It was conceded during argument before us that the agreement did not comply with s 3 of the Act, the terms of which are peremptory. The agreement was therefore invalid, hence the order declaring it as such. [14] In Van Staden the appellant (defendant) had, in terms of what was referred to as an „Offer to Purchase‟, sold to the respondent (plaintiff) a share block in a share block scheme for R28 000. The share block entitled the owner thereof to the right of use of a flat and parking area (the premises) in a certain building. The plaintiff took occupation of the premises on 1 November 1981. He paid the deposit and thereafter the monthly instalments and levies in terms of the agreement. Disputes arose as a result of the plaintiff‟s failure to sign „a proper deed of sale‟ which the parties had agreed would be drawn upon the fulfilment of a particular condition. That condition was fulfilled on 19 September 1982. The plaintiff vacated the premises more than three years after he had taken occupation. He thereafter issued summons in April 1985 claiming repayment, in terms of s 1813 of Share Block Control Act 59 of 1980 (Share Block Act), of the amounts he had paid to the defendant. The defendant, in 13 The relevant part of the section provides that „any purchaser or seller who has performed partially or fully under a contract for the acquisition of a share which does not comply with the provisions of section 16 or 17, shall be entitled to reclaim from the other party what he has performed under the contract . . . .‟ turn, counterclaimed, also in terms of s 18 of the same Act, for payment of reasonable compensation for the use of the premises which the plaintiff had enjoyed, as well as for damages he had caused to the premises. The parties were each partially successful in their claims. One of the defences raised by the defendant was prescription. It was alleged that the plaintiff‟s claim for repayment of moneys paid in respect of the months of December 1981 and January to March 1982, inclusive, had prescribed. This special defence of prescription was unsuccessful. [15] Section 17 of the Share Block Act provides that a contract for the acquisition of a share „shall state the matters required by Schedule 2 [to that Act] and be accompanied by the documents referred to in that Schedule‟. On appeal to this court it was argued on behalf of the defendant that because of non-compliance with the provisions of s 17 the agreement („Offer to Purchase‟) was void ab initio and that the plaintiff‟s claim for repayment of each instalment, that is the debt, arose immediately after payment of each such instalment. This court considered the provisions of s 12(3) of the Act and reasoned as follows (at 216B-E): „Die probleem in die onderhawige geval draai om die toepassing van die woorde “die feite waaruit die skuld ontstaan” in art 12(3) van die Verjaringswet. Die respondent was klaarblyklik bewus van die basiese feite. Hy het geweet wat die aard en inhoud van die kontrak was. Uiteraard was hy bewus daarvan dat feitlik geen van die besonderhede vereis deur art 17 van die Wet daarin opgeneem was nie. Ook het hy geweet dat die stukke waarna in die artikel verwys word, nie die kontrak vergesel het nie. Hy was dus bewus van die feite wat aangetoon het dat art 17 van die Wet nie nagekom is nie. Hy het geweet dat hy betalings kragtens die kontrak gemaak het. Myns insiens was hy dus van meet af aan ten volle bewus van al die feite wat aanleiding gegee het tot die spesiale remedies voorgeskryf deur art 18 van die Wet. „n Mens kan aanvaar dat hy eers later bewus geword het van watter vereistes deur art 17 van die Wet gesel word, en van watter regte hy verkry het toe die appellant nie hierdie vereistes nagekom het nie.‟14 14 Loosely translated the court said: „The problem in the instant matter is the application of the words “the facts from which the debt arises" in s 12(3) of the Prescription Act. The respondent was plainly aware of the basic facts. He was aware of the nature and content of the contract. Naturally, he was aware that virtually none of the particulars required by s 17 of the Act were contained therein. He also knew that the documents referred to in the section did not accompany (or were not attached to) the contract. He was therefore aware of the facts that indicated that the provisions of s 17 of the Act were not complied with. In my view he was therefore fully aware from the outset of all the facts which lead (or give rise) to the special remedies prescribed by s 18 of the Act. One can accept that he became aware of the requirements prescribed by s 17 only later and of what rights he acquired when the appellant failed to comply with these requirements.‟ This court accordingly held that the plaintiff had knowledge of the facts from which the debt arose when he made the first payment. The court therefore upheld the defendant‟s special plea of prescription. [16] In Claasen the respondent (Bester) issued summons on 14 December 2007 seeking a declarator that a deed of sale, in terms of which he had sold a farm to the appellant (Claasen), was void or voidable and that he was entitled to the return of the farm. He tendered a refund of the purchase price of R175 000. The contract of sale was concluded in or about September 2001. The parties had agreed - and this was reflected in the deed of sale – that Bester could buy the farm back. Bester had been in financial distress and the farm was about to be sold at a sale in execution. The price at which he could buy back the farm was, however, not reflected in the deed of sale. The relevant clause in the deed of sale provided that the purchase price and the terms and conditions of such sale would be determined by the parties when the right to repurchase was exercised. Bester claimed not to have read the provision and that he had relied on the attorney who drew up the deed of sale to include a provision that the price would be market-related. He testified at the trial that when the sale was discussed at a meeting in the attorney‟s office on 25 September 2001 he had insisted that the price at which he would buy back the farm „must be market- related‟. He only realised when he obtained a copy of the deed of sale on 3 March 2004 that such a provision had been omitted. Attempts to have the „right‟ to purchase back the farm registered against the title deed failed. Bester was informed on 11 January 2006 that the provision purporting to record the right to buy back the farm was a nullity. [17] Claasen‟s special plea of prescription failed before the trial court. His appeal to this court was upheld on the basis that prescription began to run as from 3 March 2004, when Bester knew that no provision had been made in the deed of sale in relation to the price at which he could buy back the farm from Claasen. Thus, when Bester issued summons on 14 December 2007 his claim had become prescribed. [18] It has been held, in the context of s 12(3) of the Act, that the appellant (in this case) must show what the facts are that the respondent was required to know before prescription could commence running and that it must also show that the respondent had knowledge of those facts on the date prescription is alleged to have commenced running.15 The respondent made the allegation, in his founding affidavit, that he „did sign a written fee agreement‟ confirming that the appellant would accept instructions from him „on a contingency on the basis that [he] would pay a fixed 22.5% plus VAT of the damages recovered‟ on his behalf. He also stated that he signed various documents on the day that he consulted at the appellant‟s offices – it appears this was on 1 February 2006. He was, however, unable to recall whether a copy of what he had signed was given to him, but said that despite a diligent search he was „unable to locate a copy of such written fee agreement‟. Although the appellant asserted in its answering affidavit that the respondent did not sign various documents on 1 February 2006, it was not suggested that he never signed any document. It is true, according to the answering affidavit, that Mr Perlman did furnish the respondent with a motor vehicle claim form which the latter had to complete. But, as early as 22 June 2008, the respondent, in a letter to the appellant to which he never received a response, mentioned that „when signing the letter of engagement‟ he was aware of the percentage fee that the appellant would earn. In my view, this clearly supports his version that he signed „a written fee agreement‟ confirming that the appellant would accept his instructions „on a contingency on the basis that [he would] pay a fixed 22.5% plus VAT of the damages recovered‟. [19] It was not argued or suggested in this court, nor could it be so argued, in my view, that the respondent knew, or must have known, at any stage before he stumbled across the Bobroff decision, that what he said he signed in the appellant‟s offices was some other document and not a written contingency fees agreement contained in a prescribed form as required by s 3(1)(a) of the Act, and that he therefore knew that the agreement was not in writing. It was also not suggested that the respondent knew, or must have known, that the document which he believed was the contingency fees agreement did not contain other information as required in 15 Links v Member of the Executive Council, Department of Health, Northern Cape Province [2016] ZACC 10; 2016 (4) SA 414 (CC) para 24. terms of any other provision of s 3 of the Act. Nor was it suggested that the respondent could not reasonably have believed that the document he signed contained a contingency fees agreement that complied with the provisions of the Act. A finding that a copy of the document which the respondent believed to be the written contingency fees agreement was made available to him cannot be made on the papers. And if the document he signed was not one confirming the terms of the contingency fees agreement as he said it was, it could, in any event, not be argued that he knew that the agreement was not in writing as required by s 3(1)(a) of the Act. It could not be suggested, therefore, that the respondent had knowledge from the inception, or at any time before February 2014, of the basic facts from which the debt arose. [20] I disagree, therefore, with the finding (in paragraph 41 of the judgment of the majority, which I have had the privilege to read) that the respondent knew that the fees which he paid to the appellant were calculated on the basis of „the oral contingency fees agreement which he concluded with the appellant (Perlman)‟. (My emphasis.) Stripped of all excesses, the appellant‟s case was that from 1 September 2008, at the latest, the respondent „had knowledge of the identity of the [appellant] as (alleged) debtor and of the facts from which his claim and the debt arises‟. No attempt was made in the answering affidavit to show what the facts are that the respondent was required to know, and in fact knew on or before 1 September 2008, before prescription could commence running.16 The general statement that the respondent‟s claim „is premised on an oral contingency fee agreement‟ does not assist the appellant in this regard. The respondent‟s claim was premised on an invalid written contingency fees agreement. [21] Counsel for the appellant only dealt, in their heads of argument and before us, with the issue relating to the invalidity of the agreement and ignored the second part of the respondent‟s case, namely, that the agreement did not comply with the provisions of the Act, that is, that the respondent was aware of facts that indicated 16 Ibid. that there was no compliance with the provisions of s 3 of the Act. This was probably because of the finding of the High Court that the invalidity of a common law contingency fees agreement is a fact and not a legal conclusion. The issue of non- compliance was, however, squarely raised in the founding affidavit. [22] There was some suggestion in the appellant‟s heads of argument that even if the law required knowledge of the invalidity or voidness of an agreement in order for prescription to commence running, the respondent would still not be able to rely on s 12(3) of the Prescription Act. It was submitted that on his own version the respondent would be „deemed to have such knowledge‟ as by the exercise of reasonable care he could have acquired it. The matter of Price Waterhouse Coopers Inc & others v National Potato Co-Operative Ltd 2004 (6) SA 66 (SCA) para 41, in which it was held that any contingency fees agreement that is not covered by the Act is illegal, was decided in 2004 and, so it was contended, the respondent could, by the exercise of reasonable care, have acquired knowledge of the fact of the invalidity of the agreement. Although a different finding has been made, I suspect that these submissions would still have been advanced. [23] In his founding affidavit the respondent averred that he is a lay person and that he relied on the appellant to represent his interests and to advise him properly and fairly. It is clear that he placed his trust in the appellant, who, he would have thought, were the experts on matters legal and would handle his claim professionally. He referred to Mr Perlman, who handled his claim, as „a very experienced attorney‟, and felt confident that he „would be properly advised and represented in all respects‟. There is nothing in the papers to suggest that he should at any stage have realised that there had been non-compliance with the provisions of the Act and which should have led him to believe that he should seek legal advice elsewhere. It is true that he was not happy with the amount of the fees that he paid in terms of the agreement, but that was no reason for him to even suspect that there had not been compliance with the provisions of the Act. He merely felt that, because of the nature and extent of his injuries, the percentage fees he was required to pay should be less than 22.5 per cent. There can be no basis, therefore, for a submission that the respondent could, by the exercise of reasonable care, have acquired knowledge, at an earlier stage, of facts that would indicate non-compliance with the Act. It follows that prescription did not begin to run until the respondent acquired knowledge, during February 2014, that the appellant had not complied with the provisions of the Act. I would accordingly dismiss the appeal. ________________________ L Mpati Acting President Zondi JA (Theron and Van der Merwe JJA concurring): [24] I have read the well reasoned judgment prepared by Mpati AP. However, I regret that I cannot agree with my learned colleague that the appeal should be dismissed. In the judgment (paras 18 and 19) Mpati AP concludes that the respondent‟s claim had not become prescribed because the respondent did not have knowledge from the inception, or at any time before February 2014, of the basic facts from which the debt arose. I disagree with his conclusion. It is based on the finding that the respondent‟s version that he concluded a written fees agreement, is correct. In my view, the appeal should succeed and the appellant‟s special plea of prescription should have been upheld by the High Court. [25] The background facts have been set out in detail in the judgment by Mpati AP, for which I am grateful and support his narration. It is common cause that on 2 February 2006 the appellant, a firm of attorneys, concluded a percentage-based contingency fees agreement with the respondent in terms of which the appellant agreed to represent the respondent in the institution and prosecution of an action against the Road Accident Fund (the RAF) for damages for personal injuries suffered by the respondent in a motor vehicle collision on 8 October 2005. The parties agreed that the appellant would charge the respondent a contingency fee of 22.5 per cent plus VAT of the damages that the respondent recovered from the RAF. This agreement did not comply with the requirements of the Act17 and neither were its provisions discussed prior to, and at the time that it was concluded. [26] The RAF subsequently settled the respondent‟s claim and the terms of the settlement were made an order of court on 23 May 2008. In terms of the order, the RAF, among others, was to pay to the appellant, on behalf of the respondent, the capital amount of R4 862 561.40. Upon receipt of the capital amount and legal costs from the RAF the appellant deducted from that amount a sum of R1 109 101.02 representing a contingency fee of 22.5 per cent plus 14 per cent VAT and paid the balance to the respondent on 20 August 2008. [27] More than 6 years later on 9 April 2014, the respondent wrote a letter to the appellant in which he claimed that he had recently became aware that the appellant had overcharged him because the contingency fees agreement, on the basis of which the fees were calculated, failed to comply with the Act and was therefore null and void. For this proposition the respondent referred to the judgment of the Gauteng Division in De La Guerre v Ronald Bobroff & Partners Inc & others unreported case no 22645/2011 delivered on 13 February 2013, which he said, was upheld by the Constitutional Court in February 2014.18 In that case the Gauteng Division found, on the authority of a decision of this Court in Price Waterhouse Coopers,19 that the contingency fees agreement which is not covered by the Act, is illegal. The respondent accordingly demanded that the statement of account rendered by the appellant to him on 20 August 2008 be debated or that the reasonable fees be agreed upon. 17 Section 3(2) of which provides as follows: „A contingency fees agreement shall be signed by the client concerned or, if the client is a juristic person, by its duly authorized representative, and the attorney representing such client and, where applicable, shall be countersigned by the advocate concerned, who shall thereby become a party to the agreement.‟ 18 Ronald Bobroff & Partners Inc v De La Guerre [2014] ZACC 2; 2014 (3) SA 134 (CC) para 14, in which the two applications for leave to were dismissed for having no prospect of success on appeal. 19 Price Waterhouse Coopers Inc and others v National Potato Co-Operative Ltd [2004] ZASCA 64; 2004 (6) SA 66 (SCA) para 41. [28] The appellant rejected the respondent‟s demand and contended that it had acted according to „both the spirit and requirements of the Contingency Act‟. [29] The appellant‟s refusal prompted the respondent to launch an application in the High Court seeking, among others, an order declaring that the common law contingency fees agreement concerned be declared invalid, void and of no force and effect and that the appellant be ordered to pay to him the sum of R844 994.57. The appellant opposed the application and contended among others that the respondent‟s claim had become prescribed. [30] The High Court dismissed the appellant‟s special plea of prescription holding that the respondent only acquired knowledge of the facts (that common law contingency fees agreements are unlawful) from which the debt arose when the Constitution Court‟s judgment20 on contingency fees agreements was delivered in February 2014 and that before that date the respondent was not aware that an Act, prohibiting such agreements existed and that he was overcharged. It held that the invalidity of a common law contingency fees agreement is a fact and not a legal conclusion. The appeal is with the leave of the High Court. [31] Before setting out my reasons for reaching a different conclusion, I must agree with Mpati AP that the issue before us is whether the High Court correctly found, when it did, that the respondent‟s claim had not become prescribed. That issue, in turn, requires a consideration of the provisions of s 12 of the Prescription Act 68 of 1969 (the Prescription Act). [32] I also agree with Mpati AP‟s conclusion that the High Court erred in finding first, that „the invalidity of a common law contingency fees agreement is a fact and 20 Ronald Bobroff & Partners Inc v De La Guerre (above). There the Constitutional Court was merely required to determine whether the Contingency Fees Act was unconstitutional and the questions of whether the common law contingency fees agreements were invalid, did not arise. not a legal conclusion‟ and secondly, that the Act prohibits contingency fees agreements. I am in full agreement with the reasons that Mpati AP advances in support of that conclusion. I wish to emphasise in relation to the High Court‟s second finding, that it is incorrect that the Act prohibits the conclusion of a „common law‟ contingency fees agreement. The Act permits the parties to conclude such agreement. It in fact allows them to do something that would otherwise be unlawful under the common law. In other words, the Act was enacted to overcome the prohibition which existed under the common law (Price Waterhouse Coopers Inc para 41), which is quite the opposite of the High Court‟s second finding. [33] The relevant parts of s 12 of the Prescription Act are set out fully in para 7 of Mpati AP‟s judgment and I consider it unnecessary to repeat them. But to the extent that it is necessary, s 12(1) provides that subject to the provisions of subsecs (2), (3) and (4) of s 12, extinctive prescription commences to run as soon as the debt is due. The term „debt‟ is not defined in the Prescription Act and the courts have held that it must be given a wide and general meaning.21 The courts have also held that the words „debt is due‟ must be given their ordinary meaning and that it is due when it is immediately claimable by the creditor and it is immediately payable by the debtor.22 [34] This court in Truter & another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA) para 16 said that: „For the purposes of the [Prescription] Act, the term “debt due” means a debt, including a delictual debt, which is owing and payable. A debt is due in this sense when the creditor acquires a complete cause of action for the recovery of the debt, that is, when the entire set of facts which the creditor must prove in order to succeed with his or her claim against the debtor is in place or, in other words, when everything has happened which would entitle the creditor to institute action and to pursue his or her claim.‟ (See, for example, Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A) at 838D-H; and Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd 1991 (1) SA 525 (A) at 532H-I. See 21 African Products (Pty) Ltd v Venter [2007] 3 All SA 605 (C) 612d. 22 Benson & another v Walters & others 1984 (1) 73 SA (A) at 82C, where Van Heerden JA quotes with approval the dicta in The Master v I L Back and Co Ltd & others 1983 (1) SA 986 (A) at 1004. further M M Loubser Extinctive Prescription (1996) para 4.6.2 at pp 80-81 and the other authorities there cited.) [35] In terms of s 12(3), a debt is not deemed to be due until the creditor has or ought to have had knowledge of the identity of the debtor and the facts from which the debt arises. In the founding affidavit, the respondent, in setting out the facts from which the debt (his claim) arises, alleges as follows: „9. I have since ascertained and been advised by my present legal representative that the percentage fee agreement for 22.5% plus VAT in the circumstances of my case and my dealing with Fluxmans, as set out more fully hereunder, is known as a “common law contingency fee agreement” and is illegal, invalid and unenforceable as it does not comply with the Contingency Fees Act 66 of 1997 (“the Act”). . . . 20. I am a layman and it was only after I read of the Constitutional Court Judgment of 20 February 2014 that I decided thereafter to write to Fluxmans to obtain clarity in regard to the basis upon which I had been charged in my case. . . . 24. After the handing down of the Judgments in the De La Guerre and SAAPIL [2013 (2) SA 583 (GSJ)] cases on 20 February 2014 I addressed a letter to Selwyn Perlman at Fluxmans dated 9 April 2014, a copy of which is annexed hereto marked “SZL4” . . . 25. In the letter “SZL4” I informed Fluxmans that I had become aware of the Judgments of the Constitutional Court and that on consideration of my Statement of Account annexure “SZL2” I was of the view that the agreement entered into between myself and Fluxmans was invalid as it did not comply with the Provisions of the Contingency Fees Act 66 of 1997”. [36] The respondent says the agreement he concluded with the appellant was in writing and that he was given a copy to sign, which he did. He alleges, however, that he is unable to produce a copy of the agreement as he cannot locate it after a diligent search. On the evidence, such agreement does not exist. The deponent to the appellant‟s answering affidavit denies that the agreement he concluded with the respondent was in writing and in substantiation of that denial refers to a letter he addressed to the respondent on 13 June 2006 embodying the terms upon which the appellant accepted the respondent‟s instruction. The letter reads: „This serves to confirm the arrangement that we have in regard to our fees is as follows:- We shall charge you 22½% plus VAT thereon on whatever amounts we recover from the Road Accident Fund alternatively R1 500.00 plus VAT for the time spent per hour by the writer on the matter, whichever of the two is the greater. . . . Obviously the above is on the contingency that we recover the moneys from the Fund.‟ The appellant‟s version that the agreement between the parties was a verbal one is not denied by the respondent in the replying affidavit. To the extent that there is a dispute on whether or not the agreement was in writing that dispute in accordance with the Plascon Evans principle23 must be resolved in the appellant‟s favour. [37] It is clear from the aforegoing that the agreement the parties concluded, did not comply with the peremptory requirements of s 3 of the Act which, among others, require a contingency fees agreement to be in writing and signed by the client and an attorney representing such client. The agreement, the parties concluded, is therefore invalid. [38] In respect of its defence of prescription the appellant avers that the debt asserted by the respondent became due on 20 August 2008, the date on which the respondent paid fees to the appellant. It contends that from that date the respondent had knowledge of the identity of the appellant and the facts from which his claim arose. 23 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C. [39] In its opposing affidavit the appellant did not rely upon the proviso to s 12(3) of the Prescription Act. But in the heads of argument the appellant submitted in the alternative that, to the extent that knowledge of the invalidity of a common law contingency fees agreement was a „fact‟ for the purposes of s 12(3), the respondent could, by the exercise of „reasonable care‟, have acquired knowledge of such „fact‟. In the light of the conclusion I have reached it is not necessary to decide on the appellant‟s alternative defence. [40] The respondent‟s case therefore is that prescription did not commence to run against its claim before 20 February 2014 because he did not by that date have knowledge of the facts from which the debt arose. He says he did not know that the percentage fee agreement he concluded with the appellant is a „common law contingency fees agreement‟ and is illegal and unenforceable as it does not comply with the Contingency Fees Act. . .‟ (My emphasis). [41] The question, therefore, is whether before February 2014 the respondent had knowledge of the facts from which his claim arose. In my view, the respondent did have knowledge of such facts. Immediately after he paid the fees to the appellant on 20 August 2008 the respondent knew all the facts even though he did not know the legal conclusion flowing from those facts. The respondent knew that fees which he paid to the appellant on 20 August 2008 were calculated on the basis of the oral contingency fees agreement which he concluded with the appellant (Perlman). On his own evidence, the respondent then also knew all the other facts that he relied upon in his founding affidavit for the conclusion that the contingency fees agreement was invalid. He knew that the appellant‟s fees were not limited to double their normal fee or 25 per cent of the amount awarded, whichever was the lower. He also knew that before the agreement was entered into; he was not advised of any other ways of financing the litigation and of their respective implications; he was not informed of the normal rule that in the event of him being unsuccessful in the proceedings he may be liable to pay the taxed party and party costs of the RAF in the proceedings; he was not advised that he would have a period of 14 days, calculated from the date of the agreement, during which he would have the right to withdraw from the agreement by giving notice to the appellant in writing. He knew that none of this formed part of the contingency fees agreement. Therefore, even if the contingency fees agreement should be regarded as a written agreement, by 20 August 2008 the respondent knew all the facts that he relied upon for his claim in his founding affidavit. According to him, what he did not know, however, was the legal conclusion flowing from these facts, namely that it was invalid because of its failure to comply with the Act. In para 20 of the judgment Mpati AP states that counsel for the appellant only dealt in their heads of argument and before us with the issue relating to the invalidity of the agreement and ignored the second part of the respondent‟s case, namely, that the agreement did not comply with the provisions of the Act. I disagree. [42] Knowledge that the relevant agreement did not comply with the provisions of the Act is not a fact which the respondent needed to acquire to complete a cause of action and was therefore not relevant to the running of prescription. This Court stated in Gore NO para 1724 that the period of prescription begins to run against the creditor when it has minimum facts that are necessary to institute action. The running of prescription is not postponed until it becomes aware of the full extent of its rights nor until it has evidence that would prove a case „comfortably‟. The „fact‟ on which the respondent relies for the contention that the period of prescription began to run in February 2014, is knowledge about the legal status of the agreement, which is irrelevant to the commencement of prescription. It may be that before February 2014 the respondent did not appreciate the legal consequences which flowed from the facts, but his failure to do so did not delay the date on which the prescription began to run. Knowledge of invalidity of the contingency fee agreement or knowledge of its non-compliance with the provision of the Act is one and the same thing otherwise stated or expressed differently. That the contingency fees agreements such as the present one, which do not comply with the Act, are invalid is a legal position that obtained since the decision of this court in Price Waterhouse Coopers Inc and is therefore not a fact which the respondent had to establish in order to complete his cause of action. Section 12(3) of the Prescription Act requires knowledge only of the material facts from which the prescriptive period begins to run – it does not require 24 Minister of Finance & others v Gore NO [2006] ZASCA 98; 2007 (1) SA 111 (SCA). knowledge of the legal conclusion (that the known facts constitute invalidity) (Claasen v Bester [2011] ZASCA 197; 2012 (2) SA 404 (SCA). [43] If the respondent‟s claim had become prescribed in the interim because of the lapse of the prescriptive period of three years, knowledge of invalidity of the common law contingency fees agreement allegedly acquired thereafter following the Constitutional Court judgment in Bobroff cannot revive such a prescribed claim. [44] In my view, the respondent‟s cause of action arose on 20 August 2008 when he paid fees to the appellant which he now contends were incorrectly calculated. The action should have been instituted in August 2011 which is three years from the date on which the cause of action arose. When the respondent therefore instituted these proceedings in July 2014 his claim had become prescribed. The High Court erred therefore by dismissing the appellant‟s special plea of prescription. The appeal must accordingly succeed. [45] With regards to costs, the appellant‟s counsel sought costs of two counsel to be awarded as the matter, according to him, involves a consideration of legal issues of utmost importance. Counsel for the respondent submitted that the matter does not warrant the employment of two counsel and that costs to be awarded should be limited to the costs of one counsel. The issue for determination, both in the High Court and in this Court, was a narrow one, namely whether the respondent‟s claim had become prescribed which in my view, despite its importance, was not complex. The matter did not therefore deserve the services of two counsel and in the circumstance costs of only one counsel should be awarded. [46] In the result, I make the following order: 1. The appeal is upheld with costs. 2. The order of the High Court is set aside and is replaced with the following: „The respondent‟s special plea of prescription is upheld with costs.‟ ________________ D H Zondi Judge of Appeal APPEARANCES For the Appellant: A Subel SC (with him S Stein SC) Instructed by: Fluxmans Inc, Johannesburg Lovius Block, Bloemfontein For the Respondent J J Bitter Instructed by: Norman Berger & Partners Inc, Johannesburg McIntyre & van der Post, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 29 November 2016 STATUS Immediate Fluxmans v Levenson (523/15) [2016] ZASCA 183 (29 November 2016) 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. Today the SCA upheld an appeal by Fluxmans Incorporated against the judgment of the Gauteng Local Division of the High Court dismissing with costs the special plea of prescription. The appeal originates from an application brought by the respondent against the appellant, his erstwhile attorneys for an order declaring a contingency fees agreement concluded on 1 February 2006 between them to be invalid,void and of no force and effect. The agreement was in relation to fees payable by the respondent to the appellant in respect of the respondent’s claim against the Road Accident Fund following a motor vehicle accident in which he was injured. The respondent’s claim was finalised in May 2008 and on 20 August 2008 the respondent issued him with a statement of account recording the fees it had charged him pursuant to the contingency fees agreement and the amount that was due to him. The contingency fees agreement did not comply with the provisions of the Contingency Fees Act (the Act). More than five years later the respondent brought the application seeking the setting aside an order of the contingency fees agreement and that he be reimbursed for moneys that had been debited against his account with the appellant. The appellant opposed the application, contended that the claim had become prescribed and asked for the dismissal of the claim. In response the respondent alleged that he did not know that the contingency fees agreement he concluded with the appellant did not comply with the provisions of the Act and was invalid. He maintained that he only became aware of that fact in 2014 following a Constitutional Court judgment in the Bobroff matter. The high court dismissed the special plea of prescription. It upheld the respondent’s argument that he only acquired knowledge of the facts from which the debt arose when the Constitutional Court’s judgment on contingency fees agreement was delivered in 2014. On appeal the SCA held that the high court erred in finding that invalidity of the agreement is a fact and not a legal conclusion. It also held that the prescription period began to run on 20 August 2008 when the respondent acquired facts necessary to institute a claim and that the claim had become prescribed by the time that the respondent brought the application in July 2014. ---ends---

3315

non-electoral

2006

REPUBLIEK VAN SUID-AFRIKA DIE HOOGSTE HOF VAN APPÈL VAN SUID-AFRIKA Rapporteerbaar Saaknommer : 353 / 2005 In die appèl van KARL GERBER APPELLANT en DIE STAAT RESPONDENT Regbank : FARLAM, CONRADIE ARR en CACHALIA Wnde AR Verhoordatum : 3 MAART 2006 Datum van Uitspraak : 23 MAART 2006 SAMEVATTING Eerste oortreder skuldig bevind aan motordiefstal - duikklopper - geld as verswarende omstandigheid - geen besondere versagtende persoonlike omstandighede - vonnis van tien jaar waarvan drie opgeskort treffend onvanpas in lig van huidige vonnisvlakke - vonnis vervang met een van sewe jaar gevangenisstraf waarvan twee jaar opgeskort. Neutral citation: This judgment may be referred to as Gerber v The State [2006] SCA 28 (RSA) __________________________________________________________________ _ U I T S P R A A K _________________________________________________________________ CONRADIE AR [1] Dit is nou amper drie en’n half jaar sedert Mnr Karl Gerber, die appellant, aan motordiefstal skuldig bevind en deur 'n streeklanddros te Benoni gevonnis is tot tien jaar gevangenisstraf waarvan drie jaar op paslike voorwaardes vir vyf jaar opgeskort is. [2] ’n Appèl teen die appellant se skuldigbevinding en vonnis na die Pretoria Hooggeregshof het misluk. Verlof om verder na hierdie hof te appelleer, is nie deur daardie hof toegestaan nie maar is, op petisie, slegs ten aansien van vonnis, deur hierdie hof verleen. [3] Die appellant is 'n duikklopper. Op ’n dag is die gesteelde voertuig, 'n wit Ford Colt bakkie met 'n blou onderkant na sy werkswinkel gebring, so sê hy, om iets aan die bakwerk te herstel en die blou onderkant daarvan rooi te spuitverf. Pleks dat hy die nuut oorgeverfte bakkie terugbesorg aan die persoon wat dit by hom aangebring het, gaan hy 'n ruiltransaksie aan met hom aan ingevolge waarvan hy 'n voertuig van sy eie, 'n opgeknapte 450 SLC Mercedes Benz en daarbenewens R30 000 verruil vir twee gesteelde voertuie, 'n Audi A4 en die betrokke Colt bakkie. [4] Die Audi A4 laat die appellant op sy verloofde se naam registreer. Die Colt bakkie verruil hy vir 'n Toyota Corolla wat aan die verloofde van 'n mnr Johan du Plessis, mev Phyllis Vorster, behoort. Wat hierdie transaksie so interessant maak, is dat die Toyota veel minder werd is as die Colt (presies hoeveel is nie klinkklaar duidelik nie), dat Du Plessis 'n vriend van die appellant is en dat hy as subkontrakteur by die papiervervaardiger Mondi in Richardsbaai werksaam is. Mondi in Richardsbaai gebruik wit Ford Colt bakkies, wat net soos die gesteelde Colt lyk behalwe dat hulle rooi is aan die onderkant en nie blou nie. [5] Toe daar deur die polisie op die gesteelde voertuig in mev Vorster se besit beslag gelê word, is die onderkant daarvan rooi geverf, dit vertoon 'n lisensieskyf (óf die oorspronklike óf 'n afdruk) van 'n egte Mondi Colt bakkie en die nommerplaat vertoon die nommer NRB 11691, 'n nommer wat die Colt nie gehad het toe dit by mnr Griffiths, die eienaar daarvan, se werknemer gekaap is nie. Niemand sou nou, sonder om die onderstelnommer en ander besonderhede na te gaan, weet dat die gesteelde Colt nie ’n Mondi bakkie is nie. [6] Die onvermydelike afleiding uit hierdie feite is dat die appellant en sy vriend, Du Plessis, saamgesweer het om die Colt bakkie so te verbloem dat dit vir 'n Mondi bakkie sou kon deurgaan. Du Plessis, wat vroeër aan besit van die gesteelde Colt skuldig bevind is, het getuig dat die Colt blou van onder was toe hy, kort voordat hy die Toyota daarvoor verrruil het, by die appellant in Kempton Park gekuier en die appellant die Colt aan hom gewys het. Klaarblyklik is dit eers ná Du Plessis se besoek rooi oorgespuit. Dit is nie redelik moontlik dat die bakkie per toeval in die Mondikleure geverf is en toe, weer toevallig, afgelewer is aan iemand wat by Mondi werk nie. Die appellant was dus aandadig daaraan om die diewe met die diefstal behulpsaam te wees. Sy skuld is nie geringer as hulle s'n nie. [7] Volgens die appellant was die oordrewe strengheid in die oplegging van vonnis wat die streeklanddros aan die dag gelê het die gevolg van die fundamentele wanopvatting dat die appellant reeds voordat hy die Colt aan Du Plessis gelewer het, geweet het dat dit ’n gesteelde voertuig was. As hy hierdie kennis eers later opgedoen het, sou dit, aldus die appellant, beteken dat hy aan diefstal skuldig is slegs omdat dit ’n voortdurende misdryf is en dat hierdie oorweging verdien om as strafverminderend aangemerk te word. Soos ek aangetoon het, ontbreek ’n feitelike grondslag vir hierdie betoog geheel en al. [8] Buitendien sê die appellant in sy waarskuwingsverklaring dat hy die Audi teruggegee het toe hy agterkom dat dié gesteel is. Daar is geen aanduiding dat die appellant die bakkie nie kon terugkry en op dieselfde wyse daarmee handel nie. In antwoord op 'n vraag van die ondersoekbeampte waarom hy die polisie nie daarvan verwittig het toe hy agterkom dat die voertuie gesteel is nie, verklaar die appellant dat hy Jannie en Moerat (die verskaffers van die gesteelde voertuie) nie in die moeilikheid wou bring nie. [9] Die beweerde latere bewuswording dat die Colt gesteel is, en die feit dat die appellant 'n eerste oortreder met betrekking tot 'n oneerlikheidsmisdryf was, was die enige twee strafversagtende faktore waarop die appellant se advokaat klem gelê het. Daarteenoor is daar verkeie strafverswarende omstandighede waarop die streeklanddros met reg klem gelê het. Hulle sluit in dat die appellant die misdryf gepleeg het op 'n wyse wat vernuftige beplanning geverg het. Hierdie 'vernuftige beplanning' sluit natuurlik in dat die appellant as duikklopper die fasiliteite tot sy beskikking gehad het om die Colt se herkoms te verdoesel. Die misbruik van sy vaardighede deur die appellant is 'n ernstige strafverswarende element van sy misdaad. Die appellant is nie van 'n misdryf met betrekking tot die Audi A4 aangekla nie, maar die registrasie daarvan op sy verloofde se naam sonder om die voertuig (wat hy op sy weergawe verkry by mense wat hy skaars ken) vir 'n polisieklaring te neem, was moreel bedenklik en werp 'n swak lig op die integriteit van een wat dag in en dag uit as deel van sy bedryf met motorvoertuie te doen het. [10] Die appellant het geen benul van die aard of erns van sy oortreding nie. Hy het tot die bitter einde volgehou dat hy nie aan diefstal skuldig is nie en in sy getuienis ter strafversagting gesê dat hy '...miskien besigheid gedoen het met 'n voertuig wat daar nie 'n lisensie of enigiets voor was nie...,' getuienis wat op 'n totale gebrek aan insig en derhalwe berou dui. Toe die polisie-ondersoek begin, het hy sy bes gedoen om die ander diewe uit die moeilikheid te hou. [11] Tereg lê die streeklanddros gewig op eenvormigheid by strafoplegging. Die wenslikheid van breë riglyne is voor die hand liggend. Dit is reg dat hierdie riglyne van tyd tot tyd aangepas word, maar dan moet die aanpassing ’n oorwoë en geleidelike proses wees sodat oortreders wat 'n besondere misdryf pleeg weet watter vonnis hulle te wagte is. [12] Soos die voorkoms van motordiefstal toegeneem en motors duurder geword het, het vonnisse vir motordiefstal dramaties strenger geword. Dit sou dus by 'n oorweging van die breë parameters vandag weinig nut hê om na die vlakke van ouer vonnisse te kyk. By die beoordeling daarvan of die opgelegde vonnis nie dalk treffend onvanpas is nie, is 'n vlugtige oorsig oor die vlak van hedendaagse vonnisse vir motordiefstal om enigsins 'n idee te kry van wat gangbaar is, egter nuttig. [13] In S v Koutandos & another 2002 (1) SASV 219 (HHA) het hierdie hof die eerste appellant, 'n man in sy laat twintigerjare, wat in samewerking met die tweede appellant 'n besigheid uit motordiefstal en bedrog gemaak het, se vonnis tot tien jaar gevangenisstraf verminder. Die tweede appellant wat aan 'n bykomstige twee bedrogaanklagte skuldig bevind is, se vonnis is tot vyftien jaar gevangenisstraf verminder. [14] S v Adendorff 2004 (2) SASV 185 (HHA) is 'n saak waarin 'n agt-en- veertigjarige duikklopper 'n gesteelde motor ter waarde van R75 000 vermom het. Van sy straf van vier en ‘n half jaar gevangenisstraf, is een en 'n half jaar opgeskort. Die appèl na hierdie hof was slegs teen die skuldigbevinding, maar die beslissing is van nut vir sover die Bloemfonteinse Hooggeregshof die vonnis van die streeklanddros bekragtig het. [15] Die appellant in S v de Ruiter 2004 (1) SASV 332 (W), iemand met 'n reeks vorige veroordelings vir oneerlikheidsmisdade, is weens diefstal van 'n luukse voertuig gevonnis tot tien jaar gevangenisstraf waarvan drie jaar op appèl voorwaardelik opgeskort is. [16] Mnr Sassman, die appellant in S v Sassman (A641/02 (T) 02.09.02), is 'n swaar vonnis van twaalf jaar gevangenisstraf opgelê vir die diefstal van 'n motorvoertuig waarmee hy die grens na Mosambiek wou oorsteek. Dit is duidelik dat die appèlregters van oordeel was dat hy deel van 'n diefstalsindikaat was en dus aandadig aan die kaping van die voertuig vier dae voordat hy aangekeer is. [17] Appellant Govender in S v Govender (A1127/03 (T) 03.05.04) se diefstal van 'n vragmotor en een duisend vyf hondered motorbande het hom in die streekhof 'n straf van 15 jaar op die hals gehaal wat op appèl na 12 jaar gevangenisstraf verminder is. [18] Die hoogste straf vir die diefstal van 'n enkele motor deur 'n eerste oortreder wat die verteenwoordiger namens die Staat kon opspoor, (en ek spreek my dank teenoor beide advokate uit vir die navorsing wat hulle op versoek van die hof gedoen het) was direkte gevangenisstraf van sewe jaar. Origens verskil die strawwe, soos mens trouens sou verwag, aanmerklik. Hulle wissel van drie tot vyf jaar, soms met 'n gedeelte of selfs die geheel daarvan opgeskort. [19] Die motordiefstal waaraan die appellant skuldig bevind is, vertoon verskeie strafverswarende faktore wat die streeklanddros tereg uitgelig het en wat ek hierbo aangestip het. Die appellant verdien beslis 'n straf wat aan die boonste grens van gangbare strawwe lê. Nietemin dink ek dat die opgelegde straf met inagneming van huidige vlakke van strafoplegging en die persoonlike omstandighede van die appellant, treffend onvanpas is. [20] Die vonnis van die hof a quo word ter syde gestel en vervang met 'n vonnis van sewe jaar gevangenisstraf waarvan twee jaar opgeskort word vir vyf jaar op voorwaarde dat die appellant nie skuldig bevind word aan diefstal, aan die ontvangs van gesteelde goed wetende dat dit gesteel is of aan 'n oortreding van a 36 of a 37 van die Algemene Regswysigingswet 62 van 1955, gepleeg gedurende die termyn van die opskorting nie. J H CONRADIE APPÈLREGTER SAMESTEMMEND: FARLAM AR CACHALIA Wnde AR

MEDIA STATEMENT – CASE HEARING IN SUPREME COURT OF APPEAL Karl Gerber v Die Staat Supreme Court of Appeal -353/2005 Hearing date: 03 March 2006 Judgment date: 23 March 2006 Eerste oortreder skuldig bevind aan motordiefstal - duikklopper - geld as verswarende omstandigheid - geen besondere versagtende persoonlike omstandighede - vonnis van tien jaar waarvan drie opgeskort treffend onvanpas in lig van huidige vonnisvlakke - vonnis vervang met een van sewe jaar gevangenisstraf waarvan twee jaar opgeskort. Media Summary of Judgment Die Hoogste Hof van Appèl het vandag 'n appèl teen die vonnis van 'n duikklopper op 'n aanklag van motordiefstal gedeeltelik gehandhaaf. Die vonnis van tien jaar gevangenisstraf waarvan drie jaar opgeskort is, is verminder na een van sewe jaar gevangenisstraf waarvan twee jaar opgeskort is. Die Hof wys daarop dat dit 'n verswarende omstandigheid is dat die appellant sy kundigheid as duikklopper gebruik het om die identiteit van 'n voertuig so te verdoesel dat dit vir 'n ander, wettig geregistreerde, voertuig aangesien sou word en van 'n vervalsing van die ander voertuig se lisensieskyf voorsien kon word. Die Hof gee 'n kort oorsig van huidige vonnisvlakke vir motordiefstal en kom tot die gevolgtrekking dat gangbare vonnisse vir hierdie soort oortreding dramaties toegeneem het.

3102

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case Number : 526 / 05 In the matter between CDA BOERDERY (EDMS) BPK FIRST APPELLANT WESTERN AREAS PROPERTY AND RESIDENT ASSOCIATION SECOND APPELLANT and THE NELSON MANDELA METROPOLITAN MUNICIPALITY FIRST RESPONDENT THE SPEAKER OF THE NELSON MANDELA METROPOLITAN MUNICIPALITY SECOND RESPONDENT THE PREMIER OF THE EASTERN CAPE PROVINCE THIRD RESPONDENT THE MEC FOR HOUSING AND LOCAL GOVERNMENT FOR THE EASTERN CAPE FOURTH RESPONDENT THE DIRECTOR OF VALUATIONS FIFTH RESPONDENT Coram : MPATI DP, CAMERON JA, MTHIYANE JA, CONRADIE JA et THERON AJA Date of hearing : 17 NOVEMBER 2006 Date of delivery : 6 FEBRUARY 2007 SUMMARY Local government - rating of property by Municipality - ambit of s 10G(6), (6A) and (7) of Local Government Transition Act - consent of Premier to impose property rate above two cents in the Rand - whether this provision of Municipal Ordinance 20 of 1974 impliedly repealed – Order in para 52 Neutral citation: This judgment may be referred to as : CDA Boerdery (Edms) Bpk and Others v The Nelson Mandela Metropolitan Municipality and Others [2007] SCA 1 (RSA) ___________________________________________________________________ J U D G M E N T ___________________________________________________________________ MINORITY JUDGMENT OF CONRADIE JA [1] The first appellant is a landowner and the second an association representing rural landowners. Each is aggrieved by the imposition by the local authority of assessment rates on immovable properties that were not rateable under the old dispensation when they fell within the jurisdiction of the since disestablished Western District Municipality. I shall call the first appellant and the members of the second appellant 'the landowners'. [2] The first respondent is a metropolitan municipality (the Municipality). It is the new local authority within whose jurisdiction the landowners now fall. The other respondents are bodies and persons who have or were thought to have an interest in the proceedings. Apart from the second respondent who protested at her joinder, they played no active part in the proceedings. [3] The litigation started with an interim application seeking an interdict against the Municipality to prevent it from prosecuting claims against the landowners for the recovery of rates and service charges it maintained were due. Interim relief was granted by consent pending the disposal of an application that was to be instituted shortly afterwards. The main application claimed, first, an order declaring service charges on the landowners' properties to be unlawful. Second, an order was sought declaring the valuation of their properties to have been unlawful, and, finally, an order was claimed that the landowners were not liable for rates in respect of the financial years 2002 - 2003 and 2003 - 2004. By the time the application came to be heard by Froneman J in the South Eastern Cape Local Division, the landowners had abandoned their objection to the service charges. On the other issues the high court found in favour of the Municipality, dismissed the application and discharged the earlier interdict. It granted the landowners leave to appeal. [4] When the transition to democracy came, local government had to be restructured. There were all manner of local authorities in existence at the time for various population groups that had been established under the old dispensation. Since the transformation was to be on a unified country-wide basis, national legislation was required to accomplish it. Over the coming years national legislation would gradually give local government a new face. [5] The validity of pre-constitutional legislation, ‘old order legislation’ as it is called in item 2 of Schedule 6 to the Constitution, is declared to continue in force subject to amendment or repeal and, naturally, consistency with the Constitution. In some cases the old order legislation required adaptation. One instance was the administration of the provinces of which there were now nine instead of four. Each of the new provinces would have to adopt, for its own area, provincial ordinances that had formerly applied over a wider area. So it was that the administration of the Municipal Ordinance 20 of 1974 was transferred to the Eastern Cape Province by proclamation 111 published in the Government gazette of 17 June 1994. [6] The first statute in the series restructuring local government was the Local Government Transition Act 209 of 1993 (the Transition Act). It set up transitional councils for the so-called pre-interim and interim phases of the restructuring. For those local government bodies that would not in any event have been subject to provincial legislation it made special provision in sections 15 and 16. Section 15(4) extended 'the provisions of any law applying to local authorities in the province concerned' to any body constituted under the Black Local Authorities Act 102 of 1982; s 16(2) did the same with certain transitional councils established by proclamation. The legislative scheme is clear: existing provisions would be used until others could be enacted. [7] Some three years after its commencement on 2 February 1994, the Transition Act was amended by the introduction in 1996 of a Part VIA (headed 'Interim Phase') in the statute. It comprised the new subsecs 10B - 10N of which 10G formed the most extensive component. The most important provisions, for present purposes, were contained in s 10G(6), (6A) and (7)(a) and (b): '(6) A local council, metropolitan local council and rural council shall, subject to any other law, ensure that— (a) properties within its area of jurisdiction are valued or measured at intervals prescribed by law; (b) a single valuation roll of all properties so valued or measured is compiled and is open for public inspection; and (c) all procedures prescribed by law regarding the valuation or measurement of properties are complied with: Provided that if, in the case of any property or category of properties, it is not feasible to value or measure such property, the basis on which the property rates thereof shall be determined shall be as prescribed: Provided further that the provisions of this subsection shall be applicable to district councils in so far as such councils are responsible for the valuation or measurement of property within a remaining area or within the areas of jurisdiction of representative councils. (6A) (a) Despite anything to the contrary in any other law, a municipality must value property for purposes of imposing rates on property in accordance with generally recognised valuation practices, methods and standards. (b) For purposes of paragraph (a)— (i) physical inspection of the property to be valued, is optional; and (ii) in lieu of valuation by a valuer, or in addition thereto, comparative, analytical and other systems or techniques may be used, including— (aa) aerial photography; (bb) information technology; (cc) computer applications and software; and (dd) computer assisted mass appraisal systems or techniques. (7) (a) (i) A local council, metropolitan local council and rural council may by resolution, levy and recover property rates in respect of immovable property in the area of jurisdiction of the council concerned: Provided that a common rating system as determined by the metropolitan council shall be applicable within the area of jurisdiction of that metropolitan council: Provided further that the council concerned shall in levying rates take into account the levy referred to in item 1 (c) of Schedule 2: Provided further that this subparagraph shall apply to a district council in so far as such council is responsible for the levying and recovery of property rates in respect of immovable property within a remaining area or in the area of jurisdiction of a representative council. (ii) A municipality may by resolution supported by a majority of the members of the council levy and recover levies, fees, taxes and tariffs in respect of any function or service of the municipality. (b) In determining property rates, levies, fees, taxes and tariffs (hereinafter referred to as charges) under paragraph (a), a municipality may — (i) differentiate between different categories of users or property on such grounds as it may deem reasonable; (ii) in respect of charges referred to in paragraph (a) (ii), from time to time by resolution amend or withdraw such determination and determine a date, not earlier than 30 days from the date of the resolution, on which such determination, amendment or withdrawal shall come into operation; and (iii) recover any charges so determined or amended, including interest on any outstanding amount.' [8] Until the introduction of s 10G(6), (6A) and (7) the Transition Act contained no rating provision. For the first three years after the implementation of the Transition Act local authorities must have exercised their rating powers in terms of old order provincial ordinances. In the case of the Eastern Cape Province, immovable property was rated under the authority of Part 2 of Chapter VIII of the Municipal Ordinance. The relevant provision in the Municipal Ordinance is s 82 which provides in subsec (1) that - '(1) Every council shall: (a) for every year make and levy on all rateable property within its municipal area a general rate not exceeding, except with the approval of the Administrator, two cents per rand…' [9] The introduction of s10G(6), (6A) and (7) by Act 97 of 1996 with effect from 1 July 1996 may have had something to do with the imminent commencement of the new Constitution from 4 February 1997. Section 229 of the Constitution provides that - '(1) . . . a municipality may impose - (a) rates on property . . . ; and (b) if authorised by national legislation, other taxes, levies and duties appropriate to local government or to the category of local government into which that municipality falls . . . (2) The power of a municipality to impose rates on property . . . or other taxes, levies or duties - (a) . . .; (b) may be regulated by national legislation.' [10] Item 26(1)(a) of the Constitution's sixth Schedule preserves the provisions of the Transition Act in force 'in respect of a Municipal Council until a Municipal Council replacing that Council has been declared elected as the result of the first general election of Municipal Councils after the commencement of the new Constitution.'1 [11] Section 229 is an empowering and not a charging section. National legislation was envisaged to regulate the considerable complexities involved in the rating of immovable property. The broad and general power afforded by s 229 accords with s 164 of the Constitution which provides: 'Any matter concerning local government not dealt with in the Constitution may be prescribed by national legislation or by provincial legislation within the framework of national legislation.' 1 The first general municipal elections after the commencement of the Constitution were held on 5 December 2000. [12] Section 10G(6), (6A) and (7) on its own is, however, far from adequate in serving as an instrument for imposing rates. It prescribes that valuations are to be undertaken without stating how these are to be conducted. It states that rates on immovable property are to be imposed by resolution of a municipal council; it states that differentiation between categories of property is permissible but it omits the detail of how properties are to be rated or which properties are to be rated.2 As was pointed out in Gerber v Member of the Executive Council for Development Planning and Local Government, Gauteng3, s 229 of the Constitution uses the expression ‘rates’ in its ordinary sense of a tax assessed on the value of buildings and land and s 10(G)(7) must be taken to use the expression in the same sense. [13] Traditionally, not all property within a municipality was regarded as rateable, or rather, it could escape being rated if it complied with certain criteria and the owner applied for an exemption from rates. There were many properties of this kind listed in s 81 of the Municipal Ordinance. These included immovable properties owned by religious bodies or used for public worship or hospitals or sports bodies or the Boy Scouts, the list 2 It for example does not provide which properties are not rateable. It does not state which properties are exempt from rates. Section 82(1)(a) of the Municipal Ordinance provides that rates are to be levied on rateable properties. The Municipality, by resolution imposed property rates on 'rateable property', a concept which is not employed by the Transition Act. It must have had regard to s 82(1)(a) of the Municipal Ordinance. 3 2003 (2) SA 344 (SCA) para 23. is a long one. It was not suggested that the Municipality was not bound to consider exemptions in terms of s 81. The point is that s 10G(7) was not intended as a rating mechanism that was complete in itself and could be applied without reference to the provisions of the Municipal Ordinance. [14] Section 10G(6) of the Transition Act which dealt with valuations, acknowledged the Municipal Ordinance by providing that a municipality should, subject to any other law, ensure that properties within its area were valued or measured at intervals prescribed by law. Moreover, ‘all procedures prescribed by law regarding the valuation or measurement of properties’ had to be complied with. In the case of the Eastern Cape this was the Valuation Ordinance of 1993 or the Valuation Ordinance of 1944. There was a dispute between the parties as to which of these laws applied but that is unimportant. The point is that s 10G(6) in express terms envisaged the incorporation of existing provincial laws into the Transition Act in the sense that they were to be taken into account in the rating scheme. Section 10G(7) does not have such an express incorporation provision. It seems to me to have been a legislative oversight that must be adjusted by interpretation. Valuation of immovable property is an integral part of rating property: The imposition of a rate envisages a levy of so many cents in the Rand of the value of property. Rating without valuation is impossible. [15] The Municipality, of course, realised the practical complexities of rating very well. The summonses to recover arrear rates and other charges that served as the trigger for the urgent application to interdict the Municipality, were drawn in the realisation that the landowners' immovable properties could not have been assessed on the strength of s 10G(6), (6A) and (7) alone. The formulation of the claims (only the rates claim is still relevant) relied, correctly in my view, on the provisions of s 82(1)(a) of the Municipal Ordinance: Claim 2 demanded payment of 'arrear general municipal rates levied in terms of sect 82 and payable in terms of sect 87 of the Municipal Ordinance 20 of 1974 for the year 2002/2003 the plaintiff having complied with all the provisions of the said Ordinance.' [16] By resolution of the Municipal Council taken on 10 June 2002 the landowners' properties were assessed to tax for the financial year commencing 1 July 2002. The council's resolution read as follows: 'That the Council, in terms of Section 30(2) of the Local Structures Act No. 177 of 1998 (as amended) read with Section 10G(7)(a)(i) of the Local Government Transition Act, Second Amendment Act No. 97 of 1996, and by resolution taken by majority of its full number, levies the following general rate on all rateable property within the municipal area for the period 1 July 2002 to 30 June 2003: Port Elizabeth Unit 5,5843 cents in the Rand Uitenhage Unit 8,38 cents in the Rand Despatch Unit 1,85 cents in the Rand (c) That the Council, in terms of Section 30(2) of the Local Government : Municipal Structures Act No.. 117 of 1998 (as amended) read with Section 10G(7)(b)(i) of the Local Government Transition Act, Second Amendment Act No. 97 of 1996, and by resolution taken by majority of its full number, grants the following rebates for the period 1 July 2002 to 30 June 2003: . . . . . . . . . . . Erstwhile Western District Municipal areas Properties in the erstwhile WDM areas now valued and rated for the first time: A rebate of 67% of the general rate on all rateable properties, resulting in the following rates being levied on the following categories of properties: All rateable properties rates being 2,3713cents in the Rand.' [17] The Municipality's contention is that the assessment rates of which the landowners complain were validly imposed under the authority conferred on it '. . . pursuant to Section 229(2)(a) of the Constitution and Section 10G(6) of the Local Government Transition Act No 209 of 1993. Said charges were in all instances lawfully raised.' The reference to s 10G(6) of the Transition Act is wrong. There is no reason to suppose that the proposed resolution was adopted in any but the terms suggested by the executive mayor, that is to say, in terms and in reliance on s 10G(7) of the Transition Act. [18] At the time the rates were imposed the Municipality had become a fully-fledged Municipality under the provisions of s 12 of the Municipal Structures Act 117 of 1993 (the Structures Act) which obliged the MEC for local government in a province, by notice in the Provincial Gazette, to establish a municipality in each municipal area demarcated by the Demarcation Board in the province in terms of the Local Government: Municipal Demarcation Act 27 of 1998. The necessary proclamation by the MEC establishing the Municipality was published on 2 December 2001. From that date it was, therefore, no longer an interim structure. The provisions of the transition Act nevertheless continued to apply to it until 2 December 2000 when the first general municipal elections after the Constitution were held.4 4 Item 26(1)(a) of the Constitution provides that the provisions of the Transition Act would remain in force until the first election of a municipal council after the commencement of the Constitution. [19] Once, however, the Municipality was governed by a council duly elected as a result of the first general election after the Constitution, it could no longer lawfully levy assessment rates on landowners within its jurisdiction in terms of s 10G(7)(a)(i). The section under which the Municipality was now entitled to levy rates was s 93(4) of the Structures Act5 which reads as follows: '(4) Despite anything to the contrary in any other law and as from the date on which a municipal council has been declared elected as contemplated in item 26(1)(a) of Schedule 6 to the Constitution — (a) section 10G of the Local Government Transition Act, 1993 (Act 209 of 1993), read with the necessary changes, apply to such a municipality; and (b) any regulation made under section 12 of the Local Government Transition Act, 1993 (Act 209 of 1993), and which relates to section 10G of that Act, read with the necessary changes, apply to such a municipality.' [20] Section 93(4) is framed in such a way that it incorporates the duly modified provisions of s 10G(6), (6A) and (7) of the Transition Act, but it is s 93(4) of the Structures Act that henceforth conferred the power to tax on a duly elected municipality council. I need say no more about it; the point was not raised on the papers or argued before us on appeal. The point was evidently not argued in Howick District Landowners 5 The Structures Act came into force on 1 February 1999. Association v uMngeni Municipality [2006] SCA 107 (RSA) either for it is not discussed in the judgment. [21] The high court found that the requirement of permission by the Premier was incompatible with the original powers enjoyed by the new order municipalities. The learned judge formulated his reasons as follows: 'Die vereiste van toestemming kom nie in die tersaaklike bepalings van die Grondwet of die Oorgangswet voor nie. Die begrensing van nuwe munisipale owerhede se belastingsbevoegdheid in die Grondwet of die Oorgangswet sluit nie beperkings, of gegradeerde beperkings, op die belastingkoers self in nie. In die konteks van die vorige bedeling, naamlik dié van gedelegeerde wetgewingsbevoegdhede van plaaslike regeringsinstansies, was sulke beperkings en toesig deur hoër regeringsvlakke verstaanbaar en noodsaaklik, maar in die nuwe plaaslike regeringsbestel van oorspronklike wetgewingsbevoegdhede is daar geen grondwetlike of wetgewende noodsaak daarvoor nie. Ek kan geen rede vind waarom die bepalings van vorige provinsiale wetgewing in die vorm van die Munisipale Ordonnansie voorrang moet geniet bo latere grondwetlike en nasionale wetgewende bepalings wat op die oog af volledig met die onderwerp handel nie.' [22] Before us the Municipality, in supporting the findings of the learned judge a quo, argued that s 82(1) 'offends the scheme of authority sanctioned inter alia by s 229 of the Constitution and the provisions of the Local Government Transition Act' and should be treated as pro non scripto or as impliedly repealed by the later legislation.' [23] I am unable to agree with these contentions. The argument places greater emphasis on the concept of 'original powers' than appears to me to be warranted. The Constitutional Court in Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council6 decided no more than that a local authority in resolving to impose rates exercised an original and not a delegated power with the consequence that its action was not subject to administrative law review. It seems to me that the Municipal Ordinance read with whatever Valuation Ordinance was applicable, formed a coherent construct for the imposition of rates which had stood the test of time. This legislation was employed for the first three years of the transition, and it does not seem to me reasonable to suppose that the Transition Act intended to abolish their relevant provisions in favour of an incomplete and therefore unworkable system of rating. Counsel for the Municipality did not support that outcome. What he did contend was that once municipalities had been given constitutionally derived power to impose such rates as were authorised by national legislation, the Premier no longer had the power to decide whether rates might exceed two cents in the Rand. It is only 6 1999 (1) SA 374 (CC). this one power of the Premier that was supposed to have been lost in the transition. Apart from this competence the Premier had several other powers that were necessary or desirable to the orderly rating of properties. It was not suggested that they should also be treated as pro non scripto. [24] It is more consonant with the gradual and sometimes painful development of new municipal structures to regard Part 2 of Chapter VIII of the Municipal Ordinance, including the requirement of the Premier's approval of a rates level above two cents in the Rand, as complementary to the rating provisions of the Transition Act. The alternative would be to treat the requirement of the Premier's consent as having been impliedly repealed. Implied repeal is not lightly inferred, and here it seems to me that the necessities of practical administration argue strongly against it. [25] If the Premier’s power of approval in s 82(1)(a) of the Municipal Ordinance were indeed impliedly repealed by the Transition Act (read with the Constitution) it would mean that from the date of the introduction of s 10G into the Transition Act in 1996, there would have been no limitation on the power of a municipality to levy property rates. This situation would have persisted for almost a decade until the legislature in 2005, through the Local Government: Municipal Property Rates Act 6 of 2004 granted the Minister more extensive control over municipal rating powers than s 82(a)(i) of the Municipal Ordinance had given to the Premier, a sure indication that municipalities were never intended to have unrestricted rating powers.7 The mechanism of property valuations by independent experts is a mechanism to control a local authority's power to tax its residents; but if it were empowered to impose unlimited rates on those valuations, all control would be lost. I do not subscribe to the notion that the lawgiver envisaged that the original power of local authorities to levy rates was, since the introduction of s 10G(6), (6A) and (7), untrammelled by any restrictions other than those set out in 229(2)(a) of the Constitution. [26] When s 10G was with effect from 1 July 2005 repealed by the Local Government: Municipal Finance Management Act 56 of 2003 the provisions of subsecs (6), (6A) and (7) of s 10G (the rating provisions) were kept in force until the legislation envisaged by s 229(2)(b) of the Constitution would be enacted. It is significant that Part 2 of Chapter VIII of the Municipal Ordinance was also not repealed at that time. These two complementary pieces of legislation, once they had served their purpose, were repealed together by s 95 of the Local Government: 7 The Local Government: Municipal Property Rates Act 6 of 2004 was brought into force on 2 July 2005. Municipal Property Rates Act 6 of 2004 which made comprehensive provision for the valuation and rating of immovable property by municipalities. [27] The position taken by the appellants in Howick District Landowners Association v uMngeni Municipality8 was that the Local Authorities Ordinance (Natal) 25 of 1974 did not apply to the immovable properties sought to be rated since they were not located within a ‘borough’. This court found that the contention was correct and that the Ordinance did not apply. Although the court a quo in that matter seems to have held that rating could proceed under the Natal Ordinance and under the Transition Act - that the two measures were, in other words, complementary - this finding was not open to the court on appeal. It therefore held that the properties could have been rated under s 10G(7)(a)(i) of the Transition Act without reference to the Ordinance but did not say how this might have been done. [28] In the present case the appellants argue the contrary, namely that all the provisions of Part 2 of Chapter VIII of the Municipal Ordinance 20 found application. As has been noted above, the counter-argument by the Municipality is that although the rating provisions of the Municipal 8 [2006] SCA 107 (RSA). Ordinance did find application, the Premier no longer had any say over the level of rates imposed. Although, from a theoretical perspective, there may be something to be said for this argument, I think that the practical effects of it would be so unpalatable that they could not have been intended by the legislature. The legislature must be taken to have incorporated all the rating provisions of the Municipal Ordinance in s 10G(7) of the Transition Act (as indeed it did in s 10G(6)) so as to establish a workable interim rating system. [29] It is trite law that statutes imposing a burden on the subject are construed in such a way that the subject is least burdened. Revenue statutes fall into this category. The rating provisions in the Transition Act were revenue measures. If there is the least doubt about their interpretation, it should be resolved by holding that the Premier's consent to the imposition of a rate greater than two cents in the Rand on the ratepayers' properties ought to have been sought by the Municipality. [30] Since preparing this judgment I have had the benefit of considering the views of Cameron JA. I agree with most of what he says. The left- over provision in the Municipal Ordinance for obtaining the Premier's consent did not fit tidily into the new local government structure. However, I shrink from the boldness of the leap from untidiness to implied repeal. I would prefer to find the legislative intention in what the legislature decrees. I do not consider that a statutory provision loses its force simply because its derivation can be said to be suspect. Our disagreement, it seems to me, involves no more than this: In the process of constructing the new edifice and before it could stand on its own, some of the essential transition measures (among them the Premier's consent provision) were legislatively imperfect. They were makeshifts, intended to remain in force, messy as they were, until they were repealed by the Act that completed the design of the new structure, the Local Government: Municipal Property Rates Act. But before the structure was finished, all the provinces in the new South Africa were, temporarily, intended to make do with what they had inherited from the provinces in the old South Africa. The enhanced status of municipalities in the new dispensation was not accompanied by an advance in administrative or financial acumen that might lead one to think that the Premier's control over the rating powers of municipalities was considered not to be necessary for the transition period. In view of this I am inclined to think that the omission of a limiting provision in s 10G(7) signifies no more than that the lawgiver felt secure in the knowledge that the Municipal Ordinance (which, we must not forget, was specifically introduced into the laws of the Eastern Cape) took care of the situation. [31] In view of my conclusion, it is not necessary to consider the appellants' other objections to the rates. The order I would suggest is that the appeal be upheld with costs and the judgment of the high court altered accordingly. J H CONRADIE JUDGE OF APPEAL MAJORITY JUDGMENT OF CAMERON JA: [32] I am indebted to my colleague Conradie JA for his judgment which sets out the main statutory provisions and the parties' contentions; but I am unable to agree with his conclusion that the appellant landowners' appeal must succeed. Our main point of difference is whether the Cape Municipal Ordinance 20 of 1974 obliged the respondent municipality to obtain the Premier's approval for the new rates it sought to impose on the landowners. Conradie JA considers that it did. I respectfully differ. I endorse the reasoning and conclusion of Froneman J in the court below. The old-order subordination of the local authority's power to levy rates of more than 2 cents in the Rand to the Administrator's9 [Premier’s] 9 Municipal Ordinance 20 of 1974 (Cape) s 82(1): 'Every council shall – (a) for every financial year make and levy on all rateable property within its municipal area a general rate not exceeding, except with the approval of the Administrator, two cents per rand …'. approval was impliedly repealed when the Constitution took effect. It did not survive the transition. The municipality was therefore free of any obligation to obtain that approval, and the rates are valid. [33] In my respectful view my colleague's approach does not afford sufficient credence to the independent status and power the new constitutional order accorded to municipalities. Under the pre- constitutional dispensation, municipalities owed their existence to and derived their powers from provincial ordinances.10 Those ordinances were passed by provincial legislatures which themselves had limited law-making authority, conferred on them and circumscribed by Parliamentary legislation. Parliament's law-making power was untrammelled,11 and it could determine how much legislative power provinces exercised. The provinces in turn could largely determine the powers and capacities of local authorities.12 Municipalities were therefore at the bottom of a hierarchy of law-making power: constitutionally unrecognised and unprotected, they were by their very 10 The South Africa Act of 1909 (a statute of the British Parliament, 9 Edw c 9), which created the Union of South Africa, entrusted ‘municipal institutions, divisional councils and other local institutions of similar nature’ to provincial councils: see Johan Meyer 'Local Government' in the first edition of WA Joubert (ed) The Law of South Africa (1981) (LAWSA) vol 15 para 301. 11 Subject only to extremely limited 'entrenched provisions' that are not relevant here. 12 Section 84(1)(f)(i) of the Republic of South Africa Constitution Act 32 of 1961 in terms similar to the South Africa Act gave provincial councils power to make ordinances in relation to 'municipal institutions, divisional councils and other local institutions of a similar nature'. nature 'subordinate members of the government vested with prescribed, controlled governmental powers'.13 [34] The requirement to which Conradie JA would subject the municipality's rating power emanated from this general conception of municipal power. And the Administrator's role in approving or disapproving rates must be understood in that specific pre-constitutional setting. The Administrator was the presidentially-appointed chief governmental executive in the province.14 He (and it was always a he) convened and prorogued the provincial council and participated in its proceedings.15 Most pertinently, in terms of various provincial ordinances in the Cape and other provinces he had 'wide-ranging powers' over local authorities,16 including powers of control, investigation and intervention over local government administration.17 To a significant extent, he policed the municipalities and functioned as their overseer. [35] The provision, embedded as it was in a 1974 Ordinance, when the 1961 Constitution was in force, thus subjected rates assessments over two cents in the Rand to the province's chief executive official, who 13 LAWSA (1 ed, 1981) vol 15 para 303. 14 Republic of South Africa Constitution Act 32 of 1961, s 66. 15 See Republic of South Africa Constitution Act 32 of 1961, sections 72 and 78. 16 G Carpenter 'Provincial Government' LAWSA vol 21 para 249 and para 252(d), (f) and (i). 17 LAWSA vol 15 paras 514-518. functioned in a legislature from which the local authority derived its powers, and to which it was entirely subordinate. The approval requirement was a specific product of the old-order constitutional scheme, tailored to its hierarchy and matched to the Administrator's supervisory control over municipalities and his executive role in relation to them. [36] None of this, or barely any of it, accords with the new constitutional dispensation. It is correct, as the landowners emphasised in argument, that the new Constitution gives provincial government powers in relation to local government. Provincial legislation must determine the different types of municipality to be established in the province, and it is the responsibility of each provincial government to establish municipalities in accordance with national legislation.18 Provincial government must also, by legislative or other measures, provide 'for the monitoring and support of local government in the province'.19 Subject to the obligation of national and provincial government not to compromise or impede a municipality's ability or right to exercise its powers or perform its functions,20 a municipal by-law that conflicts with national or provincial 18 Constitution s 155(5). 19 Constitution s 155(6)(a). 20 Constitution s 151(4). legislation is invalid.21 And where a municipality cannot or does not fulfil an executive obligation in terms of the Constitution or legislation, a provincial executive may take appropriate steps to intervene.22 [37] But these provisions do not change the fact that the new constitutional order conferred a radically enhanced status on municipalities. Under the interim Constitution, each level of government (national, provincial and local) derived its powers direct from the Constitution (though local government's powers were subject to definition and regulation by either the national or provincial governments). The constitutional status of local government was therefore 'materially different' from the pre-constitutional era.23 [38] The advent of the final Constitution has taken us even further from the constitutional structure in which the Ordinance was embedded. The new Constitution has enhanced, rather than diminished, the status of local government. As under the interim Constitution, municipalities are no longer merely creatures of statute that enjoy only delegated or subordinate legislative power derived exclusively from ordinances or parliamentary legislation. The Constitution has moved away from a 21 Constitution s 156(3). 22 Constitution s 139(1). 23 Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council 1999 (1) SA 374 (CC) paras 35-38. hierarchical division of governmental power in favour of a new vision, in which local government is interdependent, and (subject to permissible constitutional constraints) inviolable and has latitude to define and express its unique character.24 [39] Can the Ordinance's requirement that the Administrator (now the Premier) must approve rates over 2 cents in the Rand survive this radically different and enhanced realisation of local government powers? In my view, the answer must be No. Under the old dispensation, it was both natural and appropriate that central government’s superior position over municipalities, and the province's role as the source of local government's power, should find expression in the power of government's chief provincial executive official, the Administrator, to approve rates. [40] Under the Constitution both the province generally and the Premier specifically have an entirely different role in relation to local authorities. Though provincial government has important functions in relation to municipalities, its role is constitutionally described and circumscribed. Nothing in the Constitution suggests that the Premier of a province 24 City of Cape Town v Robertson 2005 (2) SA 323 (CC) paras 58-60, endorsing the coordinate statements in Fedsure. enjoys special supervisory powers over the exercise of local government functions, or special duties in relation to the determination of rates. [41] This case does not require us to decide whether a statute of Parliament, enacted under power expressly conferred by the Constitution,25 can permissibly require that the Premier should approve municipal rates. And the conclusion that the obligation under the Ordinance to obtain the Administrator’s approval was impliedly repealed does not pre-judge the different question whether the enactment of such a requirement within the new constitutional framework would be constitutionally valid. The question before us is much narrower: it is whether a requirement to approve rates that was embedded in a dispensation fundamentally different in the position and powers it accorded local authorities has survived the constitutional transition. It is in answering that narrow question that the conspicuous absence of any special supervisory role for the Premier under the new Constitution takes on a special significance.26 [42] It is also telling that the curbs on municipalities' rating powers that Parliament has enacted in the Local Government: Municipal Property 25 Constitution s 229(2)(b) – the power of a municipality to impose rates on property 'may be regulated by national legislation'. 26 An absence noted by Froneman J in para 11 of the judgment appealed from, and quoted by Conradie JA in par 21 of his judgment. Rates Act27 bear no relation at all to the Ordinance's requirement that the Administrator must approve that is sought to be enforced in this case. [43] A further indication that the approval requirement in s 82(1)(a) of the Ordinance was impliedly repealed is that s 10G(6) of the Local Government Transition Act 209 of 1993 (the LGTA) requires that municipalities perform valuations of properties ‘subject to any other law’.28 By contrast, s 10G(7), which empowers municipalities to levy and recover property rates, has no parallel allusion to ‘any other law’. This suggests that s 10G(7) confers a free-standing rate-levying competence on municipalities. I therefore respectfully differ from the suggestion in the judgment of my colleague Conradie JA (para 14) that the omission in s 10G(7) to subordinate the rate-levying power to requirements in ‘any other law’ is a legislative oversight that we must adjust by interpretation. In my view, it is doubtful whether the Ordinance is applicable to s 10G(7) at all, and this strengthens the conclusion that that portion of the 27 Act 6 of 2004, s 16 (which confers limited and carefully defined powers of supervision and limitation regarding rates on the Cabinet member responsible for local government). 28 Section 10G(6) was at issue in Howick District Landowners Association v uMngeni Municipality [2006] SCA 107 (RSA) and in City of Cape Town v Robertson 2005 (2) SA 323 (CC). As Conradie JA points out in para 27 of his judgment, the appellant landowners in Howick expressly contended that the Natal Ordinance there in issue did not apply at all. In the light of the particular definitions in the Natal Ordinance (which defined rateable property as being property within a 'borough', whereas the newly rated properties were by common cause outside any 'borough'), this Court held that the landowners' contention was correct and that the Natal Ordinance was entirely inapplicable. Contrast the position in City of Cape Town v Robertson 2005 (2) SA 323 (CC) para 44, where the Constitutional Court held that in the legislative setting of the Western Cape province a 1993 valuation ordinance constituted 'any other law' subject to which valuations had to be performed. In contrast to Howick, the municipality here makes common cause with the landowners that the Cape Ordinance does in general apply, though it contends that the approval requirement in s 82(1)(a) has suffered implied repeal. Ordinance was impliedly repealed when the constitutional order was established. (As Conradie JA points out in para 17 of his judgment, nothing turns on the municipality's incorrect allusion in its affidavits to s 10G(6) of the LGTA – the provision it invoked in approving the rates was in fact s 10G(7).) [44] I therefore conclude that the pre-constitutional requirement that the Administrator approve rates above 2 cents in the Rand was impliedly repealed when the constitutional order was established and that it was thus inoperative when s 10G of the LGTA was enacted after the interim Constitution took effect (and when s 10G was re-enacted after the Constitution took effect).29 There is in my respectful view a clear repugnancy between the scheme of the pre-constitutional distribution of power, which gave rise to the requirement of the Administrator’s approval, and the scheme under the Constitution. That repugnancy must lead to the conclusion that the requirement was abolished when the relevant provisions of the LGTA were inserted in 1996.30 The landowners’ other challenges to the new rates 29 The statutory genesis is set out in paras 7 and 19-20 of the judgment of Conradie JA, though I cannot endorse the significance he attaches in paras 19-20 to the re-enactment of s 10G of the LGTA in s 93(4) of the Structures Act: in my view s 93(4) extended the life and force of s 10G, without substituting itself for that provision. 30 Only the approval requirement in s 82(1)(a) of the Ordinance was in issue before us, and I consider it unnecessary (in contrast to Conradie JA in para 23 of his judgment) to express any view on any other provisions of the Ordinance relating to the Premier. [45] The landowners complained that the rates sought to be levied violated s 229(2)(a) of the Constitution, which prohibits the exercise of the municipal rating power 'in a way that materially and unreasonably prejudices national economic policies, economic activities across municipal boundaries, or the national mobility of goods, services, capital or labour'. Froneman J31 expressed reservations about whether this requirement was justiciable: first, because the primary remedy for any alleged breach of s 229(2)(a) lay in the hands of national and provincial government, and not in aggrieved litigants taking direct recourse to the courts; and, second, because the courts are not best placed to decide the questions of economic policy at issue in the provision. But he found in any event that the court could not decide the issue because the landowners had failed to join the relevant organs of national government as parties to the litigation. He also observed that the landowners had failed to specify which of their rights the alleged breach of s 229(2)(a) had violated. [46] In the papers the landowners made some allusion in this context to arbitrary deprivation of property in violation of s 25 of the Bill of Rights. But in argument before us, counsel for the landowners expressly abandoned reliance on this alleged violation. Instead, the landowners 31 Judgment a quo para 12. claimed that the expert evidence they included in their affidavits – which the municipality did not counter with opposing expertise – established that the rates sought to be imposed violated s 229(2)(a) and that this entitled them to impugn the rates. I share Froneman J's reservations about the justiciability of s 229(2)(a), but like him I find it unnecessary to express any final view on this issue. This is because of the palpable non-joinder. It would be quite wrong to decide that municipal rates 'materially and unreasonably' prejudice 'national economic policies, economic activities across municipal boundaries, or the national mobility of goods, services, capital or labour' without hearing national government’s view on the issue. That alone makes it impossible in this litigation to uphold the landowners' complaint. [47] The landowners objected also that the rates, as sought to be imposed, were arbitrary because the Municipality stated that it arrived at the general rate by ascertaining the total funds required, then dividing this figure by the total valuation of properties within all areas sought to be rated ([total funds required] ÷ [total valuation] = [general rate]). But, the landowners say, what the Municipality in fact did was to levy rates of 7% and higher in their areas, while in others the rates were much lower. In some areas, for instance, only the land valuations were taken into account – without improvements – thus resulting in much lower rates, of between 2.096% and 3.666%. This, they contended, constituted arbitrary conduct. [48] The Municipality however explained that it inherited a differential system of rates from its previous local authority components, and that, in introducing the rates for the first time, it was constrained to make use of previous interim valuations. The rates admittedly do differentiate between landowners, to the benefit of some. But the municipality’s explanation in my view establishes that the new rates are not arbitrary. On the contrary, despite the benefit some landowners reap from the continuing use of old interim valuations, it was perfectly rational for the municipality to use those valuations in introducing the rates. [49] And as Froneman J pointed out, s 10G(7)(b)(i) of the LGTA licenses differentiation between different categories of property on such grounds as a municipality may deem reasonable. In my view it is impossible to conclude that the municipality’s approach, which for the reasons proffered gave some landowners temporary relief from the full 7c rate, while exacting it of the appellants, was not reasonable. [50] Froneman J also found that the complaint of discrimination was insufficiently evidenced in the landowners' founding papers since the probability existed that the properties the landowners were comparing in fact had different uses. These conclusions seem to me to be clearly correct. In my view the complaint of arbitrary and discriminatory conduct on the part of the Municipality cannot be sustained. [51] Finally, the landowners complained that, in conflict with the notification requirements set out in the Valuation Ordinance 26 of 1944 the Municipality had failed to inform them of the rates change. But the Municipality asserted in its answering affidavit that it had validly despatched notices to all affected ratepayers, and undertaken publication in accordance with all requirements. In argument counsel for the landowners conceded that only CDA Boerdery, the first appellant, had established that it had not received proper notice. I agree with counsel for the municipality that the purpose of section 56 of the Valuation Ordinance 26 of 1944 – which sets out the notice requirements – was to ensure that persons affected by a valuation and possible rates assessment are afforded adequate opportunity to object to such valuation and to have such objection adjudicated by the valuation court. It is common cause that all the appellants, including CDA Boerdery, availed themselves of this opportunity and indeed appeared at the Valuation Court. There is no suggestion on the papers that CDA Boerdery was not aware of the new valuations and rates assessments. The proviso to s 56 (inserted by s 4 of Ordinance 13 of 1945) in any event states that 'non-receipt of such a notice shall not invalidate the valuation roll or the proceedings of the valuation court.' It was not in dispute before us that CDA Boerdery participated in the proceedings of the valuation court. In my view its non-receipt of the required notice did not invalidate the new valuation requirement in respect of it. Order [52] The appeal is therefore dismissed with costs. E CAMERON JUDGE OF APPEAL CONCUR: MPATI DP MTHIYANE JA THERON AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA STATEMENT – CASE HEARING IN SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: Wednesday 7 February 2007 Status: Immediate 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 On 6 February 2007 in CDA Boerdery (Edms) Bpk v The Nelson Mandela Metropolitan Municipality [2007] SCA 1 (RSA), the Supreme Court of Appeal dismissed an appeal by a group of Port Elizabeth-area landowners who had objected to new rates the Nelson Mandela Metropolitan Municipality imposed for the financial years 2002–3 and 2003–4. The landowners failed in their bid before the Grahamstown High Court, where Froneman J dismissed their application. Now the SCA has, by a majority, dismissed their appeal and confirmed the validity of the rates. The landowners’ principal argument on appeal was that the municipality had failed to obtain prior approval for the new rates from the Premier of the Eastern Cape Province. The requirement that consent be obtained from the Premier’s predecessor, the Administrator, was contained in Cape Municipal Ordinance 20 of 1974. The majority of the SCA, in a judgment by Cameron JA (with whom Mpati DP, Mthiyane JA and Theron AJA concurred) held that the consent requirement was impliedly repealed when the new constitutional dispensation took effect. The majority based its finding on the constitutionally different and enhanced role municipalities enjoy under the Constitution. The municipality was therefore not obliged to seek the approval of the Premier. In a dissenting judgment, Conradie JA held that the approval requirement still applied, and that the municipality’s failure to obtain the Premier’s consent invalidated the rates. The majority of the SCA, like the Grahamstown High Court, dismissed also the landowners’ other objections to the rates. These were that the rates sought to be levied violated s 229(2)(a) of the Constitution (which prohibits the exercise of the municipal rating power 'in a way that materially and unreasonably prejudices national economic policies, economic activities across municipal boundaries, or the national mobility of goods, services, capital or labour'); that the rates unlawfully discriminated against them, because some landowners were temporarily exempted from their full effect; and that proper notice had not been given to them. The SCA found that these objections were without substance and could not be upheld. -- ends --

1479

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 370/2016 In the matter between: LEBOGANG PHILLIPS APPELLANT and THE STATE RESPONDENT Neutral Citation: Phillips v The State (370/2016) [2016] ZASCA 187 (1 December 2016) Coram: Leach, Tshiqi, Zondi JJA and Schoeman and Schippers AJJA Heard: 11 November 2016 Delivered: 1 December 2016 Summary: The Prevention and Combating of Corrupt Activities Act 12 of 2004 does not limit the penal discretion of the sentencing court: sentence of a fine not appropriate for a public officer convicted of contravening s 4(1)(a)(i)(aa) of the Act: failure by the trial court to have regard to all relevant considerations constitutes a misdirection warranting interference with the sentence imposed. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from Gauteng Division of the High Court, Pretoria (Kubushi J and Masango AJ, sitting as a court of appeal). The appeal against sentence succeeds. The sentence imposed by the trial court is set aside and substituted with the following: ‘The accused is sentenced to four years’ imprisonment, ante-dated to 20 June 2012.’ ______________________________________________________________ JUDGMENT ______________________________________________________________ Zondi JA (Leach, Tshiqi JJA and Schoeman and Schippers AJJA concurring): [1] The appellant, a constable in the South African Police Service, was convicted in the regional court, Pretoria of soliciting and accepting a bribe of R900 in contravention of s 4(1)(a)(i)(aa) read with ss 1, 2, 4(2), 24, 25 and 26(1)(a) of the Prevention and Combating of Corrupt Activities Act, 12 of 2004 (the Act). He was sentenced to seven years’ imprisonment, two years of which were conditionally suspended for five years. The appellant unsuccessfully appealed against this sentence to the Gauteng Division (Kubushi J and Masango AJ). This appeal against sentence only is with special leave of this Court. [2] On 16 July 2010 at about 01h00 near Hatfield Square, Pretoria the appellant arrested one John Carlisle (the complainant), a student at the University of Pretoria for allegedly drinking in public. The complainant was placed in the back of a police van and driven about 200 metres to the Brooklyn Police Station. There he was left locked in the back of the police van for a while before the appellant came to him and demanded payment of R2000 in cash which the appellant said was a fine the complainant had to pay in order to avoid going to jail. [3] The complainant informed the appellant that he did not have such an amount on him and said that he could raise only R1200. The appellant then took the complainant to the nearest ATM to withdraw cash, but the complainant was only able to withdraw R900 in cash. The appellant accepted the R900 from the complainant and released him. Thereafter the appellant conveyed the complainant to his girlfriend’s residence. Later that day the complainant, feeling aggrieved by the appellant’s conduct, opened a case of bribery against the appellant at the Brooklyn Police Station. The appellant was arrested and subsequently charged with corruption. [4] The trial court accepted the version of the complainant that he indeed did not consume alcohol in public and that the charge against him was unfounded, and convicted the appellant. It appeared that the appellant was a first offender in relation to the offence of corruption, was 35 years old at the time and had had nine years’ flawless service in the South African Police Service. He is married and has three children. As a result of the conviction he lost his employment. It appeared further that the appellant admitted to the correctional supervision officer during the interview to have committed the offence. The trial court found that the appellant’s personal circumstances in the light of the gravity of the offence did not constitute mitigating factors. The court below endorsed the findings of the trial court and dismissed the appeal against sentence. [5] It is trite that a court exercising appellate jurisdiction cannot, in the absence of material misdirection by the trial court, assess the appropriateness of the sentence as if it were the trial court and then alter the sentence arrived at by that court, simply because it disagrees with it. To do so, would be to usurp the sentencing discretion of the trial court. But where material misdirection has been demonstrated, an appellate court is not only entitled, but is duty-bound to consider the question of sentence afresh to avoid an injustice. [6] At the hearing of the appeal it was submitted by the appellant that s 26(1)(a)(ii) of the Act, unlike s 3 of the repealed Corruption Act 94 of 1992 (Corruption Act), limits the trial court’s sentencing discretion by prescribing as a first option a fine and a second one, imprisonment. The effect of that limitation, argued the appellant, is that the sentencing court should consider first imposing a fine rather than direct imprisonment. He argued that under the old Corruption Act, the sentencing court enjoyed a wide penal discretion and for that reason it is unhelpful to rely on cases such S v Mahlangu & another [2011] ZASCA 64; 2011 (2) SACR 164 (SCA) which were considered under the Corruption Act. [7] Section 4(1)(a)(i)(aa) which deals with offences in respect of corrupt activities relating to public officers is contained in Chapter 2, Part 2 of the Act. It reads: ‘(1) Any─ (a) public officer, who directly or indirectly, accepts or agrees or offers to accept any gratification from any other person, whether for the benefit of himself or herself or for the benefit of another person; or (b) . . . in order to act, personally or by influencing another person so to act, in a manner─ (i) that amounts to the─ (aa) illegal, dishonest, unauthorised, incomplete, or biased; or (bb) . . . exercise, carrying out or performance of any powers, duties or functions arising out of a constitutional, statutory, contractual or any other legal obligation; . . . is guilty of the offence of corrupt activities relating to public officers.’ [8] Section 26 deals with penalties. Subsection (1) provides as follows: ‘(1) Any person who is convicted of an offence referred to in─ (a) Part 1, 2, 3 or 4, or section 18 of Chapter 2, is liable─ (i) . . . (ii) in the case of a sentence to be imposed by a regional court, to a fine or to imprisonment for a period not exceeding 18 years; or’ (My emphasis) (iii) . . . [9] The question is whether s 26(1)(a)(ii) has the effect contended for by the appellant. That question turns on a proper interpretation of the relevant section of the Act. The interpretative exercise must be conducted in accordance with the established approach set out in Natal Joint Municipal Pension Fund v Endumeni Municipality1 para 18, This exercise involves ascertaining the proper meaning and effect of the statutory language used, viewed in context and with reference to the apparent purpose to which it is directed, and having regard to the material known to the lawmaker. [10] The Act repealed the Corruption Act and, with exception of s 34(2), came into operation on 27 April 2004. The purpose of the Act, among others, is ‘[T]o provide for the strengthening of measures to prevent and combat corruption and corrupt activities; to provide for the offence of corruption and offences relating to corrupt activities; . . .’. There is no doubt that corruption and corrupt activities undermine constitutional rights and further ‘endanger the stability and security of societies, undermine the institutions and values of democracy and ethical values and morality, jeopardise sustainable development, the rule of law and credibility of governments. . .’.2 Milton South African Criminal Law and Procedure Vol III Statutory Offences3 states that the preamble to the Act specifically provides that part of the rationale for replacing the 1992 formulation of the offence of corruption with the 2004 version, is that it was deemed ‘desirable to unbundle the crime of corruption, in terms of which, in addition to the creation of a general, broad and all-encompassing offence of corruption, various specific corrupt activities are criminalized.’ [11] In my view, having regard to the legislative history, context and the purpose of the Act, by enacting the Act the legislature did not intend to restrict the sentencing discretion of the trial court. On the contrary, the provision of the section makes it clear that the legislature intended that public officers who are convicted of corruption may be dealt with harshly. That objective could be frustrated if one were to read s 26(1) in a manner contended for by the 1 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA). 2 Long title of the Act. 3 At D3 3-4. appellant. It is clear that the provision of s 26 leaves the sentence in the hands of the sentencing court to impose either a fine or a period of imprisonment. [12] It was further submitted by the appellant that the trial court misdirected itself by failing to consider other sentencing options, such as periodical imprisonment in terms of s 285 of the Criminal Procedure Act 51 of 1977 (the CPA) or a correctional supervision sentence in terms of s 276(i)(h). However, the trial court carefully considered other sentencing options and concluded that because of the seriousness of the crime and interests of society, direct imprisonment was an appropriate sentence. Based on the consideration of all the relevant facts, this conclusion cannot be faulted. [13] In the case of S v Narker & another 1975 (1) SA 583 (A) Holmes JA (Muller JA and Corbett JA concurring) observed at 586B: ‘1. Bribery is a corrupt and ugly offence striking cancerously at the roots of justice and integrity, and it is calculated to deprive society of a fair administration. In general, courts view it with abhorrence; . . . see R. v Chorle, 1945 A. D. 487 at pp. 496 - 7; and Limbada v Dwarika, 1957 (3) SA 60 (N).’ [14] This Court in S v Mahlangu para 26 held: ‘Corruption has plagued the moral fibre of our society to an extent that, to some, it is a way of life. There is a very loud outcry from all corners of society against corruption which nowadays seems fashionable. Some even go as far as stating that corruption is rendering the State dysfunctional. It is the courts that must implement the penalties imposed by the legislature. It is also the courts that must ensure that justice is not only done, but also seen to be done. The trial court considered all the aggravating and mitigating factors and came to the conclusion that an effective imprisonment of four years was appropriate. In the circumstances of this case, I agree.’ I fully agree with these sentiments. [15] In the present case the appellant’s conduct was egregious. He manufactured a case against the complainant for the purposes of soliciting a bribe. The appellant used threats to inspire fear in the complainant’s mind in order to induce the complainant to pay him R900. He abused his position as a public officer and, as if this was not enough, he pleaded not guilty and advanced a defence which he knew was hopeless. He showed no remorse. The appellant violated the complainant’s constitutional right4 to freedom and security under s 12(1) and the right to have his inherent dignity respected and protected under s 10. In the circumstances, having regard to the serious nature of the offence, direct imprisonment was called for. There is also no merit in the appellant’s submission that if the State had intended to argue for a heavy sentence it should have charged him with extortion which is more serious than corruption. [16] It was further submitted by the appellant that an effective term of seven years’ imprisonment is disproportionate to the crime, the personal circumstances of the appellant and the interests of society. In contending for a lesser sentence, counsel referred us to cases of S v Newyear 1995 (1) SACR 626 (A); S v Mtsi 1995 (2) SACR 206 (W); S v Mogotsi 1999 (1) SACR 604 (W). It is unnecessary to analyse these decisions, the facts of which are materially different to the present. Each case must be decided on its own relevant facts and circumstances. What these decisions do show, however, is that law enforcement officers who abuse their positions for corrupt benefits can expect little sympathy from the courts. After all, s 205(3) of the Constitution records that the objective of the police service is ‘to prevent, combat and investigate crime, to maintain public order, to protect and secure the inhabitants of the Republic and their property, and to uphold and enforce the law’. In order to ensure that these objectives are reached, it is necessary to deal firmly with police officials who are in breach of their obligations under this section, and to warn their colleagues that actions of the sort the appellant committed will not be tolerated. [17] The issue therefore is whether it can be said that the trial court exercised its judicial discretion improperly or whether the sentence it imposed, is disturbingly inappropriate. In my view, the trial court placed undue emphasis on deterrence. It held that ‘in this type of an offence that deterrence 4 F v Minister of Safety and Security & others [2011] ZACC 37; 2012 (1) SA 536 (CC). must also be strongly considered and will come to the fore . . . because of the fact that . . . everyone must be made aware of the consequences of an offence . . .’. [18] While that is no doubt true, for the reasons I have just mentioned, deterrence is indeed one of the objects and purpose of criminal punishment, the three other aspects of sentencing, namely prevention, rehabilitation and retribution are also important. Offenders should not be sacrificed on the altar of deterrence. [19] As I have mentioned in para [4] of this judgment the appellant was 35 years old at the time of the commission of the offence concerned, and married with three children. The appellant has a National Diploma in Education (Commerce) which he obtained before he joined the South African Police Service. When these facts are looked at cumulatively, they serve to demonstrate that the appellant does have prospects of rehabilitation and correction, and becoming a useful member of society and a sentence to be imposed, must also be informed by these considerations. [20] It is therefore clear that in the determination of what an appropriate sentence would be, the trial court misdirected itself by over-emphasizing the factor of deterrence and thereby failed to give adequate weight to all other relevant considerations. This is a factor which justifies this Court to interfere with the sentence. Furthermore the sentence of seven years’ imprisonment, albeit two years of which was suspended, is unduly severe. In my view, I consider a sentence of four years’ imprisonment to be appropriate, and would be an adequate deterrence to other police officers who may be tempted to supplement their income by corrupt activities. There is sufficient disparity between that sentence and the sentence imposed to oblige this Court to interfere.5 5 S v Berliner 1967 (2) SA 193 (A) at 200E-H. [21] Although the appellant is currently free on bail, the altered sentence should be ante-dated under s 282 of the Criminal Procedure Act 51 of 1977 to 20 June 2012, the date he was sentenced in the trial court, for him to enjoy the benefit of imprisonment already served. [22] In the result, the following order will issue: The appeal against sentence succeeds. The sentence imposed by the trial court is set aside and substituted with the following: ‘The accused is sentenced to four years’ imprisonment, ante-dated to 20 June 2012.’ ________________ D H ZONDI JUDGE OF APPEAL APPEARANCES: For appellant: A B Booysen Instructed by: Du Toit Attorneys, Capital Park SMO Seobe Attorneys Inc, Bloemfontein For respondent: G C Nel Instructed by: Director of Public Prosecutions, Pretoria Director of Public Prosecutions, Bloemfontein

SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 1 December 2016 STATUS Immediate Phillips v The State (370/16) [2016] ZASCA … (1 December 2016) 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. Today the SCA upheld an appeal by Lebogang Phillips against sentence of 7 years’ imprisonment, two years of which were suspended on a charge of contravening section 4(1)(a)(i)(aa) of the Prevention and Combating of Corrupt Activities Act, 2004 (Corruption). The evidence revealed that in the early hours of 16 July 2010 near Hatfield Square, Pretoria, Mr Phillips, the then police officer, arrested the complainant, a student at the University of Pretoria, for allegedly drinking in public. Despite his denial of wrong doing the complainant was placed in the back of a police van and driven to the Brooklyn Police Station. There he was left locked in the back of the police van for a while before Mr Phillips came and demanded payment of R2000 in cash, which he said was a fine the complainant had to pay in order to avoid going to jail. As the complainant did not have such an amount immediately available on him. Mr Phillips took him to the nearest ATM to withdraw cash. The complainant managed to withdraw R900 and gave it to Mr Phillips. Mr Phillips accepted it and released the complainant. Later that day the complainant opened a case of bribery against Mr Phillips at the Brooklyn Police Station. Mr Phillips was arrested and subsequently charged with corruption. The trial court found that the charge against the complainant was unfounded and convicted Mr Phillips. It sentenced him to seven years’ imprisonment which was confirmed on appeal by the Gauteng Division of the High Court, Pretoria. In a further appeal, the SCA reduced the sentence to four years’ imprisonment. It found that the trial court had misdirected itself by over-emphasising the factor of deterrence. The SCA considered that the sentence of four years’ imprisonment was appropriate and would be an adequate deterrence to other police officers who may be tempted to supplement their income by corrupt activities. ---ends---

478

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 770/2015 In the matter between: MFUNDO NONTSHINGA APPELLANT MZWEKHAYA ZAGANA MANDLA MAZWI DUMISANI SIKAKANA and THE STATE RESPONDENT Neutral citation: Mfundo Nontshinga v S (770/2015) [2016] ZASCA 76 (27May 2016) Bench: Leach, Saldulker and Dambuza JJA Heard: 04 May 2016 Delivered: 27 May 2016 Summary: Criminal Procedure: Appeal against the refusal of a petition for leave to appeal by High Court before the commencement of the Superior Courts Act 10 of 2013 – No leave sought from the court refusing the petition – special leave to appeal granted against conviction by the Supreme Court of Appeal – order a nullity – Supreme Court of Appeal having no jurisdiction. _____________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Eastern Cape Division of the High Court (Somyalo J.P sitting as court of appeal). The following order was made on 4 May 2016: The matter is struck from the roll. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Saldulker JA (Leach and Dambuza JJA concurring): [1] On 4 May 2016, this court struck this matter off the roll, with reasons to follow. These are the reasons. The appellants together with a co-accused, Mr Vusumzi Bolo, were each charged with nine counts, namely: one count of housebreaking with the intention to rob and robbery, six counts of kidnapping, one count of unlawful possession of a fire arm and one count of unlawful possession of ammunition. At the end of the trial, on 6 August 2010 the Regional Court in Port Elizabeth (the trial court) convicted them on all nine counts and sentenced them to an effective 17 years’ imprisonment. Their application for leave to appeal against their convictions and sentences was dismissed by the regional magistrate on 9 August 2010. [2] Aggrieved, the appellants lodged a petition for leave to appeal to the Eastern Cape Division, Grahamstown (the high court), against their convictions and sentences. Their petitions were refused on 12 March 2011. Subsequently, their co - accused, Mr Bolo, relying on s 309C of the Criminal Procedure Act 51 of 1977, also petitioned the high court, for leave to appeal against his convictions. His petition was granted, but only in respect of the convictions for unlawful possession of the firearm and ammunition, that is counts eight and nine. In the event, his appeal on these counts was upheld by Plasket J with Brooks J concurring (Bolo v S [2014] ZAECGHC 99), and his convictions on counts eight and nine were set aside. Plasket J directed that the appellants be informed of this judgment. [3] Following from that the appellants lodged an application to this court for special leave to appeal against their convictions on counts eight and nine being the unlawful possession of a firearm and ammunition, and resulting sentences. This court granted the appellants special leave. In this way the appellants came before us purportedly on an appeal against the refusal of a petition by the high court. [4] Before us, the parties were agreed that the appellants’ trial, their convictions and sentences, and the subsequent refusal of their petitions by the high court on 12 March 2013 took place prior to the promulgation of the Superior Courts Act 10 of 2013. As a result, this matter must be determined in terms of the Supreme Court Act 59 of 1959. In S v Khoasasa [2002] ZASCA 113; 2003 (1) SACR 123 (SCA) it was held that a refusal of leave to appeal by the high court, is an order as contemplated in ss 20(1) and 20(4) of the Supreme Court Act, and was appealable to the Supreme Court of Appeal only with the leave of the high court, (being the court against whose order the appeal was to be made) or, where leave was refused, with the leave of this court. This judgment has consistently been followed in this court: See S v Matshona [2008] ZASCA 58; 2013 (2) SACR 126 (SCA), S v Tonkin [2013] ZASCA 179; 2014 (1) SACR 583 (SCA); S v Robert Brown (SCA) unreported case no: 988/2013 (17 March 2015); Johannes Windvogel v S [2015] ZASCA 63 (SCA). In the matter before us, no such leave was sought from the high court against the refusal of their petitions before the appellants proceeded to this court for special leave. That being the case, the order of this court granting special leave to the appellants is a nullity as this court had no jurisdiction to hear the application. Accordingly leave had not validly been granted to appeal to this court. When this was pointed out to the parties, both sides acknowledged that the appeal was not properly before us and cannot now be heard. [5] In the light of the outcome in Bolo, there should be little difficulty in the appellants obtaining the necessary leave to appeal from the high court. But without that step having yet being taken, this court lacks jurisdiction to hear the matter. For these reasons the matter was struck from the roll. ________________ HK Saldulker Judge of Appeal APPEARANCES: For Appellant: L Crouse (and H Charles) Instructed by: Port Elizabeth Justice Centre, Port Elizabeth Bloemfontein Justice Centre. Bloemfontein For Respondent: M Stander Instructed by: Director of Public Prosecutions, Grahamstown Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 27 May 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Mfundo Nontshinga v S (770/2015) [2016] ZASCA 76 (27 May 2016) MEDIA STATEMENT Today, the Supreme Court of Appeal (SCA) gave reasons for an order given on 4 May 2016, in terms of which an appeal by Mr Mfundo Nontshinga and three others was struck from the roll. The issue before the SCA was whether it could hear an appeal against a refusal by a Division of the High Court of a petition for leave to appeal, where (i) the appellants had not first sought leave to appeal against the refusal from that Division, and (ii) the procedure was governed by the Supreme Court Act 59 of 1959. The appellants were all convicted on a number of counts by the Regional Court in Port Elizabeth, including counts of unlawful possession of a fire arm and unlawful possession of ammunition. The appellants petitioned the Eastern Cape Division, Grahamstown, for leave to appeal against their convictions and sentences, which petition was refused. The appellants then applied to the SCA for special leave to appeal against their convictions on the unlawful possession charges, which special leave was granted. The SCA held that, in terms of the procedure applicable at the time (which was governed by the Supreme Court Act 59 of 1959), the refusal of the petition for leave to appeal by the Eastern Cape Division was only appealable to the SCA with the leave of that court, or (where leave was refused) with the leave of the SCA. In the absence of any application to the Eastern Cape Division for leave to appeal against its refusal, the SCA had no jurisdiction to grant special leave to appeal to it, and accordingly its prior order was a nullity. Accordingly, the SCA struck the matter from the roll. --- ends ---

2758

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 519/2011 In the matter between: ANDRIES VISSER First Appellant YOLANDE VISSER Second Appellant and EREKA KOTZE Respondent Neutral Citation: Visser v Kotze (519/2011) [2012] ZASCA 73 (25 May 2012) Coram: Heher, Van Heerden, Mhlantla, Leach JJA and Ndita AJA Heard: 30 April 2012 Delivered: 25 May 2012 Summary: Application for summary judgment – defence of duress raised – requirements for summary judgment and for defence of duress – bona fide defence of duress not disclosed – summary judgment granted ORDER On appeal from: Western Cape High Court, Cape Town (Bozalek and Goliath JJ sitting as a court of appeal): 1 The appeal is upheld with costs on the scale as between attorney and client. 2 The order of the court below is set aside and replaced with the following: ‘1. The appeal is dismissed with costs on the scale as between attorney and client. 2. The magistrate’s order is amended to the extent reflected in the substituted order set out hereafter. 3. Summary judgment is granted against the first and third defendants, jointly and severally, the one paying the other to be absolved, as follows: 3.1 payment of the sum of R178 500; 3.2 interest on the said sum at the rate of 15.5 per cent per annum from 4 August 2009 to date of payment; 3.3 costs on the scale as between attorney and client.’ JUDGMENT _______________________________________________________________ VAN HEERDEN JA (HEHER, MHLANTLA, LEACH JJA and NDITA AJA concurring): [1] In this case, the appellants sued a close corporation by the name of Asapi 1046 CC t/a PFC Durbanville, as the first defendant, in the Bellville Magistrates’ Court for moneys due and owing under a loan agreement. The second and third defendants, Ms Noleen van den Bergh and Ms Ereka Kotze, the latter being the present respondent, were also sued as sureties under a ‘Deed of Suretyship’, signed by them for the debts of the close corporation. To avoid confusion, I shall refer to the parties as they were in the Magistrates’ Court. [2] The plaintiffs applied for summary judgment against the first and third defendants. This was opposed by them on the ground that the loan and suretyship agreements had been entered into under duress. The magistrate was unimpressed with this defence. He held that the defendants had not established a bona fide defence to the plaintiffs’ claim, and granted summary judgment against them. The first and third defendants then noted an appeal to the Western Cape High Court. However, the first defendant (the close corporation) was subsequently liquidated and the liquidators did not proceed with the appeal. [3] The third defendant’s appeal to the high court against the summary judgment order was successful. The high court held that, although the third defendant’s affidavit opposing summary judgment fell short of being comprehensive, it succeeded in establishing a bona fide defence of duress sufficient to ward off summary judgment. The third defendant was granted leave to defend the action. The high court refused leave to appeal, and the present appeal by the plaintiffs is before us with the leave of this court. [4] The material facts are as follows. On 11 November 2008, the plaintiffs and the first defendant concluded a written agreement of loan, in terms of which the plaintiffs agreed to lend the first defendant an amount of R425 000. It was noted that this amount had already been paid to the first defendant. No interest was payable on the loan, but the first defendant was obliged to repay the capital amount on demand. The first defendant consented to the jurisdiction of the relevant magistrates’ court in respect of all proceedings connected with the agreement. [5] On the same day, the second and third defendants signed a document titled ‘Deed of Suretyship’, in terms of which they bound themselves as sureties and co-principal debtors with the first defendant for all and any debts owed by the first defendant to the plaintiffs. The second and third defendants also consented to the jurisdiction of the magistrates’ court. Furthermore, the suretyship provided that the amount of any debt of the first defendant for which the sureties were liable to the plaintiffs would be established by a certificate signed by the plaintiffs, which would be proof of the amount of the indebtedness and valid for the purpose of obtaining summary judgment. [6] According to the plaintiffs, the defendants paid a total amount of R96 000, leaving an outstanding balance of R329 000, as set out in a certificate by the plaintiffs. By means of a letter dated 27 July 2009, addressed to the defendants by the plaintiffs’ attorneys, the plaintiffs demanded payment of the sum of R329 000 within 7 days. Neither this nor any other amount was paid by the defendants, giving rise to the action in the magistrate’s court referred to above. [7] The first and third defendants entered appearance to defend and the plaintiffs then applied for summary judgment against them. This was opposed. In her affidavit opposing summary judgment on behalf of both herself and the first defendant, the third defendant stated the following: ‘In and during October 2008, the Plaintiffs submitted the Defendants with documents to be signed in replacement of the existing Agreements. The Plaintiffs related that the first agreements already signed were not worth the paper it was written on. As a result, the Defendants consulted with their previous Attorney, Mr JP Van Niekerk of Smit Kruger Inc in Durbanville, who advised us against signing such documentation for various reasons, most important of which was the fact that the capital amount in the Loan Agreement was incorrect as per paragraph 6 hereunder. After attending a meeting with Mr Van Niekerk on or about the 30th October 2008 in Durbanville, both Second Defendant and I were accosted by the Plaintiffs in their double-cab LDV, who pulled their vehicle in front of us preventing us from being able to move forward and in the process, nearly driving over my foot. The First Plaintiff then started attacking my character, accusing me of being a thief, and further threatening that if Second Defendant and I did not sign the documentation which they had presented to us, they would report us to the Commercial Unit of the SAPS, and also inform my husband. The First Plaintiff was well aware of the fact that I am petrified of my husband who previously held a high position within the Directorate of Special Operations (Scorpions), and that I would do anything to prevent the Plaintiffs from making contact with him to inform him of the First Defendant’s precarious financial position. As a consequence of the coercion and fear which was installed upon the Second Defendant and I, we reluctantly signed the new Loan Agreement which is marked Annexure “B” to the Plaintiffs’ Particulars of Claim, as well as the Deeds of Suretyship marked Annexure “C” thereto.’ [8] As recorded earlier, this reliance on duress as a defence to avoid summary judgment did not succeed in the magistrates’ court. It did, however, succeed on appeal to the Western Cape High Court which refused summary judgment and gave the third defendant leave to defend the action. Which of these approaches is correct is the subject of the present appeal. [9] Magistrates’ court rule 14 deals with summary judgment. In terms of rule 14(3)(c), as it was at the time of this case: ‘Upon the hearing of an application for summary judgment, the defendant may – . . . . (c) satisfy the court by affidavit delivered not later than noon of the day preceding the hearing of the application (which affidavit may by leave of the court be supplemented by oral evidence) that he has a bona fide defence to the claim on which summary judgment is being applied for or a bona fide counterclaim against the plaintiff. Such affidavit and evidence shall disclose the nature and grounds of the defence or counterclaim.’1 The new rule 14(3)(b), the successor to rule 14(3)(c), provides that ‘such affidavit or evidence shall disclose fully the nature and grounds of the defence and the material facts relied on therefor’ (emphasis added), which is the wording used in the equivalent Uniform rule 32(3)(b). As the case law shows, however, the difference in wording makes no difference to the requirements for an affidavit opposing summary judgment. 2 [10] The remedy of summary judgment has for many years been regarded as an extraordinary and stringent one in that it closes the doors of the court to the defendant and permits a judgement to be given without a trial. However, in 1 The Magistrates’ Court Rules were subsequently amended by GN R740 in GG 33487 dated 23 August 2010. 2 See, eg, Van Eeden v Sasol Pensioenfonds 1975 (2) SA 167 (O) at 177E-178C. See also Breitenbach v Fiat SA (Edms) Bpk 1976 (2) SA 226 (T) at 228C-E; Maharaj v Barclays National Bank Ltd 1976 (1) SA 418 (A) at 426A-E. Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture,3 Navsa JA, in holding that the time has perhaps come to discard labels such as ‘extraordinary’ and ‘drastic’, stated:4 ‘The rationale for summary judgment proceedings is impeccable. The procedure is not intended to deprive a defendant with a triable issue or a sustainable defence of her/his day in court. After almost a century of successful application in our courts, summary judgment proceedings can hardly continue to be described as extraordinary. Our courts, both of first instance and at appellate level, have during that time rightly been trusted to ensure that a defendant with a triable issue is not shut out. In the Maharaj case5 at 425G-426E, Corbett JA was keen to ensure, first, an examination of whether there has been sufficient disclosure by a defendant of the nature and grounds of his defence and the facts on which it is founded. The second consideration is that the defence so disclosed must be both bona fide and good in law. A court which is satisfied that this threshold has been crossed is then bound to refuse summary judgment. Corbett JA also warned against requiring of a defendant the precision apposite to pleadings. However, the learned judge was equally astute to ensure that recalcitrant debtors pay what is due to a creditor. Having regard to its purpose and its proper application, summary judgment proceedings only hold terrors and are “drastic” for a defendant who has no defence. Perhaps the time has come to discard these labels and to concentrate rather on the proper application of the rule, as set out with customary clarity and elegance by Corbett JA in the Maharaj case at 425G-426E.’ [11] As already indicated, one of the ways in which a defendant can avoid summary judgment, is to satisfy the court by affidavit that he or she has a bona fide defence to the claim on which summary judgment is being applied for. The word ‘satisfy’ does not mean ‘prove’. What the rule requires is that the defendant must set out in his or her affidavit facts which, if proved at the trial, will constitute an answer to the plaintiff’s claim. The classic and much-quoted 3 Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture 2009 (5) SA 1 (SCA). 4 Paras 32-33. 5 Referred to in fn 2 above. formulation of the approach to an affidavit opposing summary judgment is that set out by Corbett JA in the Maharaj case6 as follows: ‘Accordingly, one of the ways in which a defendant may successfully oppose a claim for summary judgment is by satisfying the Court by affidavit that he has a bona fide defence to the claim. Where the defence is based upon facts, in the sense that material facts alleged by the plaintiff in his summons, or combined summons, are disputed or new facts are alleged constituting a defence, the Court does not attempt to decide these issues or to determine whether or not there is a balance of probabilities in favour of the one party or the other. All that the Court enquires into is: (a) whether the defendant has “fully” disclosed the nature and ground of his defence and the material facts upon which it is founded, and (b) whether on the facts so disclosed the defendant appears to have, as to either the whole or part of the claim, a defence which is both bona fide and good in law. If satisfied on these matters the Court must refuse summary judgment, either wholly or in part, as the case may be. The word “fully”, as used in the context of the Rule (and its predecessors), has been the cause of some Judicial controversy in the past. It connotes, in my view, that, while the defendant need not deal exhaustively with the facts and the evidence relied upon to substantiate them, he must at least disclose his defence and the material facts upon which it is based with sufficient particularity and completeness to enable the Court to decide whether the affidavit discloses a bona fide defence . . . At the same time the defendant is not expected to formulate his opposition to the claim with the precision that would be required of a plea; nor does the Court examine it by the standards of pleading.’7 [12] As is evident from the extract from her affidavit set out above, the third defendant’s defence to the plaintiffs’ claim under the loan agreement and the suretyship agreement was one of duress. Allegations were also made about the capital amount reflected in the loan agreement, the payments made by the first defendant and the balance owing by the first defendant to the plaintiffs. We need not concern ourselves with these latter allegations in that, during the hearing before the magistrate, the plaintiffs confined their claim to an amount of 6 At 426A-E,cited by Navsa JA in Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture para 24 fn 11. 7 See also Tesven CC & another v South African Bank of Athens 2000 (1) SA 268 (SCA) paras 22-23. R178 500, an amount conceded by the third defendant (in her opposing affidavit) as indeed being due by the first defendant to the plaintiffs. The third defendant’s opposition to the summary judgment proceedings thus stands or falls by her reliance on duress. [13] The elements necessary to set aside a contract on the ground of duress were described by Corbett J in Arend & another v Astra Furnishers (Pty) Ltd8 as follows: ‘[I]t is clear that a contract may be vitiated by duress (metus), the raison d’etre of the rule apparently being that intimidation or improper pressure renders the consent of the party subtracted to duress no true consent. . . Duress may take the form of inflicting physical violence upon the person of a contracting party or of inducing in him a fear by means of threats. Where a person seeks to set aside a contract, or resist the enforcement of a contract, on the ground of duress based on fear, the following elements must be established: (i) The fear must be a reasonable one. (ii) It must be caused by the threat of some considerable evil to the person concerned or his family. (iii) It must be the threat of an imminent or inevitable evil. (iv) The threat or intimidation must be unlawful or contra bonos mores. (v) The moral pressure used must have caused damage.’9 [14] To assess the third defendant’s defence of duress, it will be useful at this stage to repeat the material part of her affidavit opposing summary judgment: ‘The First Plaintiff then started attacking my character, accusing me of being a thief, and further threatening that if Second Defendant and I did not sign the documentation 8 Arend & another v Astra Furnishers (Pty) Ltd 1974 (1) SA 298 (C). 9 At 305 in fin – 306C. See also Paragon Business Forms (Pty) Ltd v Du Preez 1994 (1) SA 434 (SE) at 439A-E; BOE Bank Bpk v Van Zyl 2002 (5) SA 165 (C) para 36; Shoprite Checkers (Pty) Ltd v Jardim 2004 (1) SA 502 (O) paras 10-11. See also Schalk van der Merwe, LF van Huyssteen, MFB Reinecke & GF Lubbe Contract General Principles 3 ed (2007) at 117ff; RH Christie & GB Bradfield Christie’s The Law of Contract in South Africa 6 ed (2011) at 313ff and the other authorities cited by these authors. which they had presented to us, they would report us to the Commercial Unit of the SAPS, and also inform my husband. The First Plaintiff was well aware of the fact that I am petrified of my husband who previously held a high position within the Directorate of Special Operations (Scorpions), and that I would do anything to prevent the Plaintiffs from making contact with him to inform him of the First Defendant’s precarious financial position.’ (Emphasis added.) [15] Reliance on the highlighted part of the affidavit set out in the preceding paragraph is misplaced. It does not even approximate a defence that the agreements are vitiated by duress. The threat is not unlawful – it appeared to be common cause that the first defendant was in a precarious financial position and the communication of this fact to anyone could hardly be considered unlawful. The third defendant does not dispute the fact that the first defendant was indebted to the plaintiffs or that she signed the two agreements. The concern that she expresses is that her husband will come to know of the first defendant’s financial position. That her husband might react badly to learning of the first defendant’s financial position can hardly be regarded as duress on the part of the plaintiffs. [16] The crux of the third defendant’s asserted duress is that it was the fear of communication to or contact with her husband on that aspect that drove her to signing the agreements. There is no direct allegation in the affidavit referred to the preceding paragraph and in para 7 above that it was fear or pressure in respect of the other aspects mentioned that caused the third defendant to sign the agreements. In any event, a report to the Commercial Unit of the SAPS would not, to any right-minded person not guilty of any criminal wrongdoing, have constituted a threat. A loan agreement and a suretyship agreement were in issue. There is no discernable link to any criminal conduct deserving the attention of the police. [17] It must also be remembered that, although the confrontation between the plaintiffs and, inter alia, the third defendant took place on 30 October 2008, the loan agreement and deed of suretyship were signed only on 11 November 2008. The third defendant made no allegation that she had any contact whatsoever with the plaintiffs during this 12-day period. It is also not stated in her affidavit whether, during this 12-day period, either plaintiff made any attempt to carry out any of their alleged ‘threats’ by contacting either the SAPS or the third defendant’s husband. She also did not indicate whether, during this period, she sought legal advice or in any other way attempted to avert the evil which she allegedly feared. This lapse of time makes the defence of duress even more implausible. [18] In light of the above, it is clear that the third defendant’s affidavit opposing summary judgment has not disclosed a bona fide defence of duress to the plaintiffs’ claim. [19] Counsel for the third defendant contended that, even if it be found that third defendant’s affidavit lacks particularity regarding the material facts relied upon and falls short of the requirement of the sub-rule, the court may still, in an appropriate case, exercise its discretion in favour of the third defendant and refuse summary judgment if there is doubt as to whether the plaintiffs’ case is unanswerable.10 He argued that this was such a case and that the court below should have exercised its discretion in the third defendant’s favour. [20] As was pointed out in Breitenbach v Fiat SA (Edms) Bpk11 the court’s discretion in this regard ‘should not be exercised against a plaintiff on the basis of mere conjecture or speculation. It should be exercised on the basis of material before the Court.’ In this case, the material before the court is such that there is simply no basis for the exercise of a residual discretion against the plaintiffs and in favour of the third defendant. [21] The plaintiff sought an an award of costs on an attorney and own client scale, at all the relevant levels. This type of cost order had been foreshadowed in the provisions of both the loan agreement and the suretyship agreement. 10 At the time of this case, this discretion was to be found in Magistrates’ court rule 14(6), the relevant part of which provided that ‘the court may, if the defendant does not so. . . satisfy the court, give summary judgment for the plaintiff.’ The same provision is to be found in the new rule 14(5), the wording of which is almost identical to that of Uniform rule 32(5). Magistrates’ court rule 14(5) provides that ‘[i]f the defendant does not . . . satisfy the court as provided in subrule (3), the court may enter summary judgment in favour of the plaintiff.’ 11 At 229F. However, when questioned as to the difference (if any) between attorney and own client costs, on the one hand, and attorney and client costs, on the other,12 counsel indicated that he was prepared to formulate the relief sought by the plaintiffs so as to claim attorney and client costs throughout. [22] The following order is therefore made: 1 The appeal is upheld with costs on the scale as between attorney and client. 2 The order of the court below is set aside and replaced with the following: ‘1. The appeal is dismissed with costs on the scale as between attorney and client scale. 2. The magistrate’s order is amended to the extent reflected in the substituted order set out hereafter. 3. Summary judgment is granted against the first and third defendants, jointly and severally, the one paying the other to be absolved, as follows: 3.1 payment of the sum of R178 500; 3.2 interest on the said sum at the rate of 15.5 per cent per annum from 4 August 2009 to date of payment; 3.3 costs on the scale as between attorney and client.’ ______________________ B J VAN HEERDEN JUDGE OF APPEAL 12 See Thoroughbred Breeders’ Association v Price Waterhouse 2001 (4) SA 551 (SCA) para 92; L & P Plant Hire Bpk & others v Bosch & others 2002 (2) SA 662 (SCA) para 41. APPEARANCES: APPELLANTS: A D MAHER Instructed by Johnston Cornelius Attorneys, Cape Town Webbers, Bloemfontein RESPONDENT: R RANDALL Instructed by Abrahams & Gross Inc, Cape Town Lovius-Block, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 25 May 2012 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Visser v Kotze (519/2011) [2012] ZASCA 73 (25 May 2012) Media Statement 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 Today the Supreme Court of Appeal (SCA) delivered judgment upholding the appeal against an order of the Western Cape High Court, Cape Town. The SCA granted summary judgment in favour of the appellant and dismissed the appeal of the high court with costs on the scale as between attorney and client. The issue on appeal was whether the high court was correct in refusing summary judgment in favour of the appellants, having found that the respondent’s reliance on duress, as a defence, was sustainable. The facts and history of the matter can be summarised as follows: The appellant and the first defendant close corporation – Asapi 1046 CC t/a PFC Durbanville - concluded a written loan agreement whereby the appellant agreed to lend the close corporation an amount of R425 000. The first defendant consented to the jurisdiction of the relevant Magistrates’ Court in respect of all proceedings associated with the agreement. The present respondent, Ms Ereka Kotze (the third defendant in the Magistrates’ Court) and one other, Ms Noleen van den Berg (the second defendant in the Magistrates’ Court), signed a written ‘Deed of Suretyship’ in terms of which they bound themselves as sureties and co-principal debtors with the first defendant for all debts owed by the first defendant to the appellant. The appellants, arising out of the defendants’ failure to honour its debt, applied for summary judgment in the Magistrates’ Court against the defendants, who in turn opposed the application on the basis that the loan and the suretyship agreements had been entered into under duress. The magistrate rejected the defence of duress and granted summary judgment. The defendants then noted an appeal to the Western Cape High Court. The close corporation was subsequently liquidated and the liquidators elected not to proceed with the appeal. The appeal to the high court by the third defendant against the summary judgment order of the Magistrates’ Court was successful. The high court found that the respondent successfully established a bona fide defence of duress and refused the appellants’ leave to appeal. The appellants then successfully applied to the SCA for leave to appeal against the order of the high court. The appellants affirmed that the defendants paid a total amount of R96 000 towards the principal debt, however a balance of R329 000 remained outstanding culminating in the legal action undertaken by the appellant for the satisfaction of the debt owing. The SCA stated that one of the ways in which a defendant can avoid summary judgment, is to satisfy the court by affidavit that he or she has a bona fide defence to the claim on which summary judgment is being applied for. The SCA held that the respondent’s affidavit opposing summary judgment had not disclosed a bona fide defence of duress to the appellant’s claim, as the evidence disclosed that the requirements of duress had not been satisfied. The SCA held further that the court’s discretion should not be exercised against the appellant on the basis of mere conjecture or speculation and found that the material before the court was such that there was simply no basis for the exercise of a residual discretion against the appellant in favour of the respondent. --- ends ---

4102

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 577/2022 In the matter between: MINISTER OF AGRICULTURE, LAND REFORM AND RURAL DEVELOPMENT FIRST APPELLANT CHIEF LAND CLAIMS COMMISSIONER SECOND APPELLANT DIRECTOR-GENERAL OF THE DEPARTMENT OF AGRICULTURE, LAND REFORM AND RURAL DEVELOPMENT THIRD APPELLANT REGIONAL CLAIMS COMMISSIONER: KWAZULU-NATAL FOURTH APPELLANT and BONGANI CYPRIAN NDUMO (obo EMDWEBU COMMUNITY) RESPONDENT Neutral Citation: Minister of Agriculture, Land Reform and Rural Development and Others v Ndumo (obo Emdwebu Community) (Case no 577/2022) [2023] ZASCA 136 (19 October 2023) Coram: ZONDI, CARELSE, MOTHLE and MATOJANE JJA and SIWENDU AJA Heard: 15 August 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives via e-mail, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down is deemed to be 19 October 2023 at 11h00. Summary: Land claim – Restitution of Land Rights Act 22 of 1994 – whether family or community claim – whether the second and fourth respondents impliedly granted condonation to receive the claim form as a community claim and whether they by law can do so. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Land Claims Court, Randburg, (Potterill J sitting as court of first instance). The appeal succeeds with no order as to costs. The order of the Land Claims Court dated 8 February 2021 is set aside and substituted by the following: ‘The application is dismissed with no order as to costs.’ JUDGMENT Mothle JA (Zondi, Carelse and Matojane JJA and Siwendu AJA): [1] This appeal arises from a mandamus1 application, heard on 29 March 2021, by way of urgency in the Land Claims Court, Randburg (LCC), to compel the Land Claims Commission (Commission) officials to sign the accepted offer of settlement of a land restitution claim. The crisp issue in this appeal is whether it is legally permissible for a claim for restitution of rights in land, lodged by a person or family, to be converted into a community claim by the Commission. [2] The respondent, Mr Bongani Cyprian Ndumo (Mr Ndumo), acting as chairperson of the Emdwebu Community, sought a mandamus and consequential relief in the LCC, against the first appellant, Minister of Agriculture, Land Reform and Rural Development (the Minister); the second appellant, the Chief Land Claims Commissioner (the Chief Commissioner); the third appellant, the Director-General of the Department of Agriculture, Land 1 A mandamus is a form of relief seeking to compel an official to perform certain obligations. Reform and Rural Development (the DG of the Department) and the fourth appellant, the Regional Land Claims Commissioner: KwaZulu-Natal (RLCC). The appellants, mainly the second and fourth appellants will collectively be referred to as the Commission, in this judgment. [3] The mandamus sought by Mr Ndumo was for a court order compelling the appellants to ‘settle the Applicants’ claim for monetary compensation within 14 days of the granting of the order’. The LCC granted the order as per the notice of motion. The appellants, aggrieved by the decision of the LCC, successfully applied for leave to appeal. In granting leave to appeal to this Court, the LCC formulated the grounds of appeal, limiting the issue on appeal as follows: ‘1. Leave granted to the SCA on compelling reasons as to whether the second and fourth respondents with their actions granted condonation to receive the claim form as a community claim and whether they by law can do so. 2. Costs of the Application is costs in the appeal.’ [4] The background facts are that on 31 December 1998, Mr Bongani Cyprian Ndumo (Mr Ndumo) lodged a claim for restitution of rights in land, in respect of ‘Emdwebu-Ntabamhlophe, Estcourt Ukhahlamba’ in the province of KwaZulu- Natal. The claim was lodged with the RLCC in terms of the Restitution of Land Rights Act 22 of 1994 (the Act). In his founding affidavit deposed to on 27 November 2020, and filed in support of the application before the LCC, Mr Ndumo avers that he duly represents the Emdwebu Community (the community), having been appointed chairperson of the community on 5 June 2017. [5] In 2017, the Project Manager in the RLCC’s office, after investigating the land claim in terms of s 12 of the Act, read with Rule 5 of the LCC Rules (Rule 5 report), submitted a Rule 5 report which described Mr Ndumo’s claim as ‘a community claim for the Emdwebu Community’. The RLCC signed the Rule 5 report as a community claim on 13 October 2019. The following year the RLCC published a notice in the Government Gazette 43015 of 14 February 2020 (the gazette), describing the claimant as ‘Bongani Cyprian Ndumo, on behalf of the Emdwebu Community (the community).’ [6] After publication of the gazette, the Commission made an unsigned settlement offer for monetary compensation to the community. On 6 March 2020, 289 members of the community signed the offer for payment, with each member of the community to receive R321 140, as monetary compensation for restitution of land rights. The Commission was yet to sign. I digress to state that during the hearing of the appeal, counsel for Mr Ndumo made a submission that he had in his possession a copy of ‘a settlement agreement’, signed by the Commission, including the Minister. He undertook to submit the said document to the Court, within two days. I will revert to this aspect later in this judgment. [7] The Commission avers that when the memorandum recommending settlement and a total payment of R92 million in terms of s 42D of the Act,2 was being prepared for submission to the LCC, it was subjected to an audit by the Legal Unit and Quality Assurance (Legal Unit). The audit revealed that the information on the claim form lodged by Mr Ndumo in 1998, did not make any reference to the claim being lodged as ‘a community claim on behalf of the Emdwebu Community’. Consequently, on June 2020, the Chief Commissioner issued a letter to Mr Ndumo, which reads as follows: ‘I wish to advise that it has been an oversight on my office to convert your individual family claim to a community claim. In terms of the case law, I am bound by the claim form that was submitted and I don’t have an authority to substitute one claim for another or expand on the claim form.’ Having reached that conclusion, the Commission informed Mr Ndumo that the matter would be referred to the LCC in terms of s 14(1)(b) of the Act. Section 14(1)(b) authorises a regional land claims commissioner to issue a 2 Section 42D of the Restitution of Land Rights Act 22 of 1994, allows the Minister to enter into an agreement of settlement with the claimants for a suitable form of restitution, including alternative land, payment of compensation award or both. certificate that ‘it is not feasible to resolve any dispute arising from such claim by mediation and negotiation’ and then refer the matter to court.3 On 6 October 2020, the LCC’s Registrar received a notice of referral of the claim to the LCC in terms of s 14(1)(b), but the hearing was overtaken by the urgent application which resulted in this appeal. [8] The LCC in the urgent application dealt with the questions, first, whether the claim was a family claim or a community claim. Second, whether the referral notice in terms of s 14(1)(b) of the Act was appropriate in this case. Since the appeal is limited to the first question, the referral in terms of s 14(1)(b) will not be dealt with in this judgment, save to state that the appropriate referral to court should have been in terms of either s 14(3A) or a review in terms of s 33 of the Act. In the latter case, the Commission would have to set out the grounds supporting a review of its own decision. However, the Commission raised the invalidity of the gazette as a collateral challenge in defence of the urgent application before the LCC.4 [9] At the hearing, the LCC found and concluded in para 26, thus: ‘Twice the authority to act on behalf of the community was requested by the Respondents and received. Requesting the authority to act from Ndumo has only one inference: the Respondents needed the authority for the claim that they were processing as a community claim. It is gazetted as a community claim, it is settled as a community claim and there are lists setting out who is to receive monetary compensation. There is no prejudice to any party, there are no competing rights, it is not the wrong land or “new claimants” “piggybacking” on the claim. Most importantly, all the acceptance criteria in the Act and Rules were complied with. This application must be granted.’ [10] Before dealing with the question posed in this appeal, it is apposite to return to the issue of the ‘settlement agreement’ I intimated earlier in this 3 The LCC correctly found that s 14(1) was not applicable in this case. No dispute had arisen between the parties. The RLCC had erred in converting a family claim into a community claim. 4 Merafong City Local Municipality v AngloGold Ashanti Limited (CCT106/15) [2016] ZACC 35; 2017 (2) SA 211 (CC); 2017 (2) BCLR 182 (CC) para 22 et seq. judgment. During the hearing of the appeal, counsel for Mr Ndumo submitted that he had in his possession a settlement agreement that had been concluded and signed by both parties. However, he was unable there and then to produce it. He could only do so two days after the hearing of the appeal. The submission concerning the existence of a ‘settlement agreement’ ignited a spectre of mootness, looming large over the fate of the appeal. [11] The document which counsel for Mr Ndumo referred to as a ‘settlement agreement’, turned out to be a copy of a signed route form, with an internal memorandum attached thereto. The route form, we were informed by the Commission, is a means of internally circulating a document to a hierarchy of officials of the Department and the Commission, in this instance including the Minister and her Deputy for approval or disapproval. The explanation from the Commission is that these were confidential internal documents, which were leaked by a former member of the Commission staff, who had since resigned. [12] It appears from the reading of the document that it is an internal recommendation to the hierarchy of officials, ending with the Minister, and duly signed by all officials, to authorise the RLCC to conclude and sign the settlement offered to Mr Ndumo and the Emdwebu Community. It further recommends to the Minister to make funds available to pay the compensation, after the settlement has been submitted to the LCC in terms of s 42D of the Act. In addition, that it should authorise the RLCC to sign the settlement offer. The Commission’s Legal Unit in conducting an audit, objected to the implementation of the recommendation to settle, which objection resulted in the RLCC not signing the settlement offer. Consequently, the community instituted the mandamus application. For the purpose of this appeal, it became clear that the matter is not settled as no agreement was concluded in terms of s 42D of the Act . The appeal is therefore not moot. [13] Returning to the issue in this appeal, in Gamevest (Pty) Ltd v Regional Land Claims Commissioner: Mpumalanga and Others5 (Gamevest), this Court identified four procedural phases in the processing of claims for restitution of land rights. Stated in sequence, each phase refers to the applicable sections of the Act. Briefly stated, these phases are: the first phase, which deals with the lodgement of a claim for restitution of land rights (completion of the claim form, in terms of s 10, on a form prescribed in terms of s 16 of the Act; the second phase deals with acceptance and publication of the claim in the gazette by the RLCC in terms of s 11(1) applying the jurisdictional requirements stated in s 2 of the Act; the third phase involves the investigation of the claim and filing the report in terms of ss 11(6), (7), (8), 11A, 12 and 13; and the fourth phase involves the referral of the claim to court in terms of s 14 and s 42D. [14] The claim filed by Mr Ndumo was not dealt with in accordance with the sequence of the four phases identified in Gamevest. After the claim was lodged in December 1998, there was an inordinate delay of 22 years, before the RLCC accepted and published it in the gazette in 2020 as envisaged in phase two. During this period of delay, the claim was researched and investigated prior to it being gazetted. This process did not follow the sequence as outlined above. Thereafter the Project Officer filed a Rule 5 report. Therefore, in exercising his powers in terms of s 11(1) of the Act as in phase two, the RLCC had the benefit of the phase three Rule 5 report at his disposal. Significantly, during the period of delay, in 2014 an amendment to the Act was effected, allowing new claims to be lodged between 2014 and 2019, while Mr Ndumo’s claim was pending. The community did not lodge a separate claim. [15] Three sections of the Act are relevant in determining whether Mr Ndumo’s claim for restitution of land rights could be converted into a community claim through condonation. These are ss 2, 10 and 11 of the Act. 5 Gamevest (Pty) Ltd v Regional Land Claims Commissioner: Mpumalanga and Others 2003 (1) SA 373 (SCA) at 374D-H. Section 2(1) which deals with the jurisdictional requirements for ‘Entitlement to restitution’, provides: ‘A person shall be entitled to restitution of a right in land if- (a) he or she is a person dispossessed of a right in land after 19 June 1913 as a result of past racially discriminatory laws or practices; or (b)… (c)… (d)… (e) the claim for such restitution is lodged not later than 30 June 2019.’ In the original version of the Act, the cut-off date for lodgement of claims was 31 December 1998. In 2014, Parliament provided for a new cut-off date, being 30 June 2019, through an amendment in terms of s 1 of Act 15 of 2014. A distinction should be drawn between the old claims (1998) and the new claims (2019). (Own emphasis.) [16] Section 10 of the Act provides for the details required to be filled on the prescribed form, at the time the claim for restitution of rights in land, is lodged. Most importantly, it requires the claimant to indicate the capacity in which the claim is lodged, that is whether the claim is for an individual, or in a representative capacity for a family, community, or a trust. In particular, s 10(3) of the Act provides: ‘If a claim is lodged on behalf of a community the basis on which it is contended that the person submitting the form represents such community, shall be declared in full and any appropriate resolution or document supporting such contention shall accompany the form at the time of the lodgement: Provided that the regional land claims commissioner having jurisdiction in respect of the land in question may permit such resolution or document to be lodged at a later stage.’ [17] Section 11(1), which provides for the procedure after lodgement of the claim, reads: ‘(1) If the regional land claims commissioner having jurisdiction is satisfied that- (a) the claim has been lodged in the prescribed manner; (b) the claim is not precluded by the provisions of section 2; and (c) the claim is not frivolous or vexatious; He or she shall cause notice of the claim to be published in the Gazette . . .and shall take steps to make it known in the district in which the land in question is situated.’ [18] Mr Ndumo completed a claim form on 31 December 1998, claiming the restitution of his rights in land, belonging to his late father, Nokhenke Ndumo. The information contained in the claim form is at the centre of this appeal. For that reason, it is necessary to refer to the relevant parts of the claim form as they appear in the original text, a copy of which was attached to Mr Ndumo’s founding affidavit. The answers Mr Ndumo provided in the claim form are stated in this judgment in italics, and itemized titles of the claim form in bold, as follows: ‘1. Property description: Rural/Urban (Delete which is not applicable) 1.1 If it is rural land, the portion(s), name(s) and number(s) of the farm and district in which it is situated EMDWEBU-NTABAMHLOPHE, ESCOURT UKHAHLAMBA … 2.3 Was any land/housing allocated as compensation R60.00 Rand Remarks (additional information) Buildings only. The land was last through land act (1924), Under the chieftan of “Chief Faku Mabaso Though the land was lost but was still developed by generation until 1964 whereby “forced removals/relocations applied” 3. Full particulars of person who lost the right in land: -Name/Community/Trust: NOKHENKE NDUMO -ID number of individual claimant: -Male/Female (Delete which is not applicable) 4. Full particulars of applicant, if not the person who lost the right in land: Name/Community/Trust BONGANI CYPRIAN NDUMO Male/Female (Delete which is not applicable) If you are acting on behalf of a community/Trust, please give your: Name: BONGANI CYPRIAN NDUMO ID Number: 5208125791081 Male/Female Delete which is not applicable) In what capacity are you acting? DESCENDANT (SON) OF THE LATE NOKHENKE NDUMO 5. Do you know about any other family member that might have an interest or Claim on the land? YES 5.1 If so, please give details MR MICHAEL ISRAEL NDUMO 50 EUGENE-MARAIS STREET PIETERMARITZBURG 3200 TEL: (033) 452841’ [19] Apart from the fact that some questions in the claim form, such as those requiring an indication whether the claimant is male or female were not responded to, Mr Ndumo only mentioned ‘Emdwebu’ in item 1.1 in response to the request for location or description of the property he claimed. There is no reference at all to the ‘Emdwebu Community’ in the claim form. The language of s 10(3) of the Act is explicit. ‘If a claim is lodged on behalf of a community the basis on which it is contended that the person submitting the form represents such community, shall be declared in full…’. In response to item 4 of the claim form, Mr Ndumo stated that he is acting in his capacity as a ‘Descendant (son) of the Late Nokhenke Ndumo’, significantly, not as a representative of the ‘Emdwebu Community’. [20] Attached to the Rule 5 report of investigation, as Annexure D is a letter from Mr Ndumo to the Commission dated 7 August 2013, in which he allegedly told Ms Mfeka of the Commission in 2012, that the claim must be called Emdwebu Community Land Claim instead of Ndumo claim. Also attached in Annexure D is a copy of a hand-written affidavit, deposed to by Mr Ndumo in 2013, before a member of the South African Police Service, with an illegible date stamp. In the affidavit Mr Ndumo stated thus: ‘I made a land claim in 1998 December for compensation on forceful removal by Apartheid Government. Since we suffered damages and a loss of cattle during removal for [Ma]khenke Ndumo my late father. And it was called “Ndumo Land Claim”. Now it should be “Emdwebu Claim.” In 2013 I thought it was to include all people [A] Emdwebu who also suffered forceful[l] removal. As a result it should not only for ‘Ndumo Claim’ I should be called “Emdwebu Land Claim” so that all people of Emdwebu should be compensated.’ (Own emphasis.). [21] The documents attached in Annexure D support the Rule 5 investigation report, which recommended to the RLCC to condone the conversion of the Ndumo Land Claim to Emdwebu Community Land Claim. Section 11(2) of the Act empowers or authorises the RLCC thus: ‘The regional land claims commissioner concerned may, on such conditions as he or she may determine, condone the fact that a claim has not been lodged in the prescribed manner.’ [22] In considering whether he was satisfied that the claim meets with the jurisdictional factors in s 11(1) of the Act, the RLCC had before him Mr Ndumo’s claim form lodged in December 1998 and the Rule 5 report. On the face of it, the claim for Mr Ndumo, apart from not providing a clearer description of the location of his late father’s farm, was lodged as a family claim in the prescribed manner. [23] In the present case, the LCC held that it was permissible for the RLCC acting in terms of s 11(2) of the Act, to condone the conversion of the claim. However, in Minaar N.O. v The Regional Land Claims Commissioner: Mpumalanga (Minaar) which was confirmed by a line of similar cases in the LCC,6 the LCC held that it was not permissible to condone a conversion of a claim. What transpired in Minaar is that the claimant, Mr Nkosi Menzani 6 Minaar N.O v Regional Land Claims Commissioner, Mpumalanga (LCC 42/2006) [2006] ZALCC 12 (8 December 2006); Bouvest 2173 CC & Others v Commission on Restitution of Land Rights and Others (LCC 68/2006) [2007] ZALCC (7 May 2007); and Shongwe N.O & Others v Regional Land Claims Commissioner, Mpumalanga (LCC 46/2009), an unreported case where judgment was delivered on 27 July 2012 by Meer AJP; Illovo Sugar Ltd and Another v Regional Land Claims Commissioner and Others (LCC 122/2014) para 18 and 21: Mahlangu Family v Minister of Rural Development and land reform and Others (LCC 48 /2011) para 27. Rainslee, had completed a claim form in which he indicated that he was acting in his capacity as a family representative. A project officer had prepared a report for the RLCC in which he stated that the claimant had lodged a claim on behalf of the Community of Daisy Kopje. The reason advanced was that he found evidence of the graves of the claimant’s relatives ‘scattered’ in the area. He therefore recommended that that claim be published in the Gazette as a community claim. The RLCC accepted the recommendation and stated in the gazette that the claim had been lodged by ‘Mr Nkosi Menzani Rainslee … acting in his capacity as a Chairperson of Daisy Kopje Community’. [24] The applicants (owners of the property) in that case objected to the report which conveyed a wrong statement that the claim covered a wider area. The applicants further contended that the graves referred to, were confined to a Portion of the land referred to in the report. After all internal representations were unsuccessful, the matter was taken on review. The LCC in paras 27 and 28 stated thus: ‘As I have indicated, there is no rational connection between the information available to the first respondent (the RLCC) and the administrative act he performed by concluding that the restitution claim is a claim for the entire farm Daisy Kopje, and that it is a claim made by the fourth respondent (the Community) ….’ …In the present case, the first respondent (the RLCC) was not authorised under the Act to add additional subdivisions of Daisy Kopje to the single subdivision claimed, nor to replace the third respondent (Nkosi family) by the fourth respondent (the Community).’ [25] The facts in Minaar strikingly resemble those in the present case. Mr Ndumo’s claim form remained as it was completed on 31 December 1998, even though 15 years later he requested by letter and affidavit that it be changed from ‘Ndumo claim’ to ‘Emdwebu Community’ claim. This request found favour with the researcher and Project Officer, who in the report, requested the RLCC to condone the manner in which the claim was lodged. The reason advanced for the condonation, arose from an allegation by the Project Officer that there were documents missing in the file, including a Rule 5 report that was approved in 2015 and followed by a name verification report in 2018. The Project Officer recommended that in that regard, the claim be condoned as a community claim. The RLCC accepted the claim as recommended by the Project Officer and published the claim as a community claim in the Gazette in 2020, 22 years after it was lodged. The Gazette stated that the claim was lodged by ‘Bongani Cyprian Ndumo on behalf of Emdwebu Community,’ which does not appear in the claim form. [26] The allegation in the report that there are documents in the file which went missing, is not satisfactorily explained. The Project Officer writes in the last two sentences of para 2.3 of the Rule 5 report thus: ‘Upon reading the records of the Regional Land Claims Commission it appeared that the claim is called Ndumo Claim instead of Emdwebu claim. Hence it was regarded as a family claim although he had submitted an affidavit with the claim form (see Annexure 2)’. Such ‘Annexure 2’ is not referred to in, nor attached to, the claim form. It is also not attached to the Rule 5 report. The only affidavit attached to the Rule 5 report is the one deposed to by Mr Ndumo in 2013. It could not have been attached to the claim form in December 1998. [27] The LCC erred in finding that at the time Mr Ndumo lodged the claim in 1998, he intended it to be a community claim. The LCC failed to consider Mr Ndumo’s affidavit of 2013, which conveys that the idea to include the community only came to him in 2013. Further, Mr Ndumo claims that in item 1.1 of the claim form, reference to ‘Emdwebu-Ntabamhlophe, Estcourt, Ukahlamba’ as the location of the land that is claimed is proof that it was for the community. If indeed it is so, this statement is contradicted by the response to para 3 of the claim form, where Mr Ndumo states that the person who lost the right in land is Nokhenke Ndumo, his father, and not the community. His late father could not have owned the community land described in the claim form. [28] These inherent contradictions are at the heart of the RLCC’s contention that the gazetting of the claim as a community claim was not in terms of s 11(1) of the Act. The conversion of the claim occurred in 2013. On Mr Ndumo’s version, 15 years after lodging a Ndumo family claim, a rather noble manifestation of intent, belatedly came to him to include people of Emdwebu Community in the claim. The benevolent idea of converting a family claim to a community claim was for all intents a belated inclusion of people who had not met the cut-off date, in the Ndumo family claim. In Re Former Highlands Residents7, the LCC held thus: ‘The Restitution Act limits the benefit of restitution to persons who have lodged their claims with the Commission by 31 December 1998. The intervening claimants endeavoured to ride home on the fact that other claimants have timeously lodged claims with the Commission in respect of the same property. I fail to appreciate how the fortuitous circumstances of other claimants in respect of the same property can relieve the intervening claimants from complying with the threshold requirements of the Restitution Act. Late demands cannot gain validity just because other lodged timely claims for restitution in respect of the same property. I conclude that the intervening claimants do not have a right to restitution and that their statement of claim must be struck out.’ [29] The RLCC’s decision to accept and gazette the Ndumo family claim as a community claim was not authorised by the Act. That is so because there was no rational connection between the contradictory information made available to the RLCC, and the administrative act he performed in terms of s 11(1) of the Act. Thus, on the facts of this case, the conversion of a family claim to a community claim after the cut-off date, could not have been effected through condonation in terms of s 11(2). The appeal must therefore succeed, with no order as to costs. 7 In RE: Former Highlands Residents (LCC116/98) 2000 (1) SA 489 LCC at para 11. [30] In the result, I make the following order: The appeal succeeds with no order as to costs. The order of the Land Claims Court dated 8 February 2021 is set aside and substituted by the following: ‘The application is dismissed with no order as to costs.’ __________________________ SP MOTHLE JUDGE OF APPEAL APPEARANCES: For appellant: MS Khan SC and GZ Gumede Instructed by: State Attorney, Durban State Attorney, Bloemfontein. For respondent: WS Gabela Instructed by: Gabela Wilson & Associates, Westville Ponoane Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 19 October 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Minister of Agriculture, Land Reform and Rural Development and Others v Ndumo (obo Emdwebu Community) (Case no 577/2022) [2023] ZASCA 136 (19 October 2023) Today the Supreme Court of Appeal (SCA) handed down judgment upholding, with no order as to costs an appeal against the decision of the Land Claims Court, Randburg (the LCC). The respondent, Mr Bongani Cyprian Ndumo (Mr Ndumo), acting as chairperson of the Emdwebu Community, sought an order against the Land Claims Commission (the Commission) in the LCC, compelling the appellants to finalise what he referred to as ‘a community claim’ for restitution of land rights, in terms of the Restitution of Land Rights Act 22 of 1994 (the Act). Mr Ndumo and the community had accepted monetary compensation, within 14 days of the granting of the order’. The LCC granted the order. The Commission, aggrieved by the decision of the LCC, successfully applied for leave to appeal. In granting the Commission leave to appeal to this Court, the LCC formulated the grounds of appeal, limiting the issue on appeal as follows: ‘Whether the second and fourth respondents (the Commission) with their actions granted condonation to receive the claim form as a community claim and whether they by law could do so.’ The Commission contended that when the memorandum recommending settlement and payment was being prepared for submission to the LCC in terms of s 42D, it was subjected to an audit by the Legal Unit and Quality Assurance (Legal Unit). The audit revealed that the information on the claim form lodged by Mr Ndumo in 1998, did not make any reference to the claim being lodged as ‘a community claim on behalf of the Emdwebu Community’. Mr Ndumo was then informed through a letter from the Chief Commissioner that there was an oversight regarding the conversion of his individual family claim to a community claim. The Chief Commissioner further explained that, by law he was bound to the form that was originally submitted by Mr Ndumo and was not authorised to substitute one claim for another or expand on the claim form. The SCA held that Mr Ndumo completed a claim form on 31 December 1998, claiming the restitution of land rights belonging to his late father, Nokhenke Ndumo. Furthermore, it found that some questions in the claim form were not responded to, and that he (Mr Ndumo) only mentioned ‘Emdwebu’ in item 1.1 of the form in response to the request for location or description of the property he claimed for. The SCA could not find any reference at all to the ‘Emdwebu Community’ in the claim form. Section 10(3) of the Act explicitly provided: ‘if a claim was lodged on behalf of a community the basis on which it was contended that the person submitting the form represented such community, shall be declared in full’. Additionally, in response to item 4 of the claim form, Mr Ndumo stated that he was acting in his capacity as a ‘Descendant (son) of the Late Nokhenke Ndumo’, significantly, not as a representative of the ‘Emdwebu Community’. The Court further found that on the face of it, Mr Ndumo’s claim for restitution of land rights, apart from not providing a clearer de scription of the location of his late father’s farm, was lodged as a family claim in the prescribed manner. In Minaar N.O v Regional Land Claims Commissioner, Mpumalanga (LCC 42/2006) [2006] ZALCC 12 (8 December 2006) (Minaar), the LCC in that matter held that it was not permissible to condone a conversion of a claim. The SCA concluded that the facts of this case resembled those of Minaar, and therefore that the LCC erred in its findings that at the time Mr Ndumo lodged the claim in 1998, he in fact intended it to be a community claim. The SCA also held that the LCC should have considered Mr Ndumo’s affidavit of 2013, which conveyed that the idea to include the community only came to him in 2013.Therefore, the Regional Land Claims Commissioner’s (RLCC) decision to accept and gazette the Ndumo family claim as a community claim was not authorised by the Act. That was so because there was no rational connection between the contradictory information made available to the RLCC, and the administrative act he performed in terms of s 11(1) of the Act. Thus, on the facts of this case, the conversion of a family claim to a community claim after the cut-off date, could not have been effected through condonation in terms of s 11(2). The appeal must therefore succeed, with no order as to costs. ~~~~ends~~~~

2618

non-electoral

2014

SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 623/2013 Reportable In the matter between: LEPOGO CONSTRUCTION (PTY) LTD APPELLANT and THE GOVAN MBEKI MUNICIPALITY RESPONDENT Neutral citation: Lepogo Construction (Pty) Ltd v The Govan Mbeki Municipality (623/13) [2014] ZASCA 154 (29 September 2014). Coram: Ponnan, Shongwe, Pillay JJA, Fourie et Mathopo AJJA Heard: 22 August 2014 Delivered: 29 September 2014 Summary: Contract – Municipality invitation to tender – Contract documents prescribing procedure for entering into a valid contract- Prescribed formalities not complied with – No vinculum juris created. ORDER On appeal from: North Gauteng High Court, Pretoria (Fabricius J sitting as court of first instance) The appeal is dismissed with costs. JUDGMENT Ponnan JA (Fourie and Mathopo AJJA Concurring) [1] This is an appeal by the appellant, Lepogo Construction (Pty) Ltd (Lepogo) against the dismissal of its claim for payment of the sum of R4 822 084.96 against the Govan Mbeki Municipality (the Municipality) by the North Gauteng High Court (per Fabricius J). The appeal is with the leave of the high court. [2] On 11 February 2008 Bigen Africa Services (Pty) Ltd (Bigen Africa) was appointed by the Municipality as the consulting engineer for the construction of a 10ML Post Tensioned Water Reservoir with a dome. The Municipality, in consultation with Bigen Africa, then invited tenders for the construction of the reservoir. Lepogo submitted two tenders - an original as well as an alternative tender. Contending that its alternative tender had been accepted by the Municipality and that: (a) a binding and enforceable agreement had come into existence between them; and (b) the Municipality had subsequently repudiated that agreement, Lepogo issued summons against the Municipality for damages. [3] Lepogo‟s particulars of claim alleged: „3.1 On or about 29 January 2009 and at Pretoria the plaintiff and defendant entered into a written contract (being contract no. 8/3/1-62/2007 and hereinafter referred to as “the construction contract”) for the construction of a 10ML Post Tensioned Reservoir with a Dome Roof. 3.2 In entering into the construction contract the plaintiff was represented by J. de Jong and the defendant by Bigen Africa Services (Pty) Ltd (“Bigen Africa”). Bigen Africa was in terms of paragraph 1.4 of the „tender data‟ appointed by defendant as its duly authorised agent and acted in this capacity at the time when the construction contract was entered into and at all material times thereafter. The provisions of the aforementioned paragraph 1.4 appear from paragraph 4.1 below. 3.3 The terms of the construction contract were embodied in: 3.3.1 A “Contract Document” prepared by or on behalf of the defendant. This document included inter alia: 3.3.1.1 Defendant‟s tender notice and invitation to tender; 3.3.1.2 The tender data; 3.3.1.3 The standard conditions of tender; 3.3.1.4 The contract data; 3.3.1.5 The pricing data; 3.3.1.6 The scope of work; 3.3.1.7 Site information. The contract document is voluminous and it is impractical to attach a copy thereof hereto. Defendant is already in possession of a copy thereof and a true copy thereof will be made available to this Honourable Court at the hearing of this action. 3.3.1 bis A document generally referred to as “General Conditions of Contract for Constructions Works (2004)”. This document (hereinafter referred to as “the General Conditions of Contract”) is voluminous and it is impractical to attach a copy thereof hereto. . . . 3.3.2 A letter dated 17 October 2008 under cover of which plaintiff‟s original tender was submitted to defendant. A copy of this letter is attached hereto marked “A”. . . . 3.3.3 A letter dated 17 October 2008 under cover of which plaintiff submitted an alternative tender to defendant. A copy of this letter together with the annexures thereto is attached hereto marked “B”. 3.3.4 A letter dated 24 October 2008 addressed by plaintiff to Bigen Africa (acting on behalf of defendant) in terms of which plaintiff‟s alternative tender was amended in the respects as set out in the letter and certain information supplied to defendant. A copy of this letter together with its annexures is attached hereto as annexure “C”. . . . 3.3.6 A letter dated 29 January 2009 addressed by Bigen Africa (acting on behalf of defendant) to plaintiff in terms of which plaintiff‟s alternative tender was accepted by defendant and plaintiff was appointed the contractor for the construction of the 10ML Post Tensioned Reservoir in Embalenhle. A copy of this letter is attached hereto marked “E”. Plaintiff relies on all the provisions of the construction contract. The following provisions of the construction contract are, however, in particular relevant to this action: . . . . . . The total contract sum payable by defendant to plaintiff in terms of the construction contract for the construction of the reservoir . . . amounted to R10.545 797.00. On 30 January 2009 and in the offices of Bigen Africa in Pretoria plaintiff (represented by J. de Jong) and defendant (represented by Bigen Africa) orally agreed that the site would be handed over to plaintiff on 9 February 2009 to enable plaintiff to commence with the construction of the 10ML Post Tensioned Reservoir. Defendant failed to hand the site over to plaintiff on 9 February 2009 or thereafter to enable it to commence with the construction of the 10ML Post Tensioned Reservoir . . . 9.1 On or about 20 April 2009 Bigen Africa, acting as agent on behalf of defendant, informed the plaintiff in writing that it had been instructed by defendant to withdraw the awarding of the construction contract to plaintiff. . . . 9.2 The aforementioned letter, . . . constitutes a repudiation of the construction contract by defendant. 9.3 The plaintiff has elected to accept the repudiation and to cancel the construction contract subject to its right to claim all damages suffered by it as a result of defendant‟s breach of contract from defendant. This election was conveyed by plaintiff to defendant by letter dated 23 April 2009. 10.1 As a result of defendant‟s aforementioned breach of the construction contract plaintiff suffered damages in a total amount of R4.374 834.96 and [that amount came to be amended at the trial to R4.822 084.96]. The amount of R4.374 834.96 is calculated as will more fully appear from annexure “J” hereto. [4] The defendant‟s plea to Lepogo‟s particulars of claim is not a model of clarity. In essence the Municipality denied that a valid and binding contract had come into existence between it and Lepogo, inter alia, because one of its former employees, through his fraudulent conduct, purported to appoint Lepogo when he lacked the authority so to do. [5] Insofar as the procurement of services is concerned, s 217(1) of the Constitution requires that when an organ of state such as the Municipality contracts for goods or services it must do so „in accordance with a system which is fair, equitable, transparent, competitive and cost effective‟. Section 217(3) of the Constitution provides that national legislation must prescribe a framework within which that policy must be implemented. In this instance, the legislation contemplated by s 217(3) is the Local Government: Municipal Finance Management Act 56 of 2003 (the Act), which according to s 110(1)(a), applies to the procurement by the Municipality of, inter alia, the goods and services to be supplied in this case. Section 111 of the Act obliges each Municipality to have and implement a supply chain management policy which, in terms of s 112, must be fair, equitable, transparent, competitive and cost effective and comply with a prescribed regulatory framework for municipal supply chain management. [6] Here the Municipality had implemented a supply chain management policy (the policy) pursuant to s 111 of the Act. In terms of clause 3.2 of the policy, the council of the Municipality had delegated all its powers and duties to the accounting officer (in this instance the municipal manager) to enable him to discharge the supply chain management responsibilities conferred by the Act and the policy. Clause 3.3 of the policy provides: „3.3.1 The Accounting Officer may in terms of Section 79 of 106 of the MFMA sub-delegate any supply chain management powers and duties, including those delegated to the Accounting Officer in terms of this policy, but any such sub-delegation must be consistent with subparagraph 3.2 of this policy.‟ Clause 3.3.2(a), however, specifically provided that in respect of „any amount above R10 million (VAT included)‟ that power may not be sub-delegated by the accounting officer. [7] Clause 9 of the policy headed „Evaluation of and allocation of bids/quotations‟ provides for a Bid Evaluation Committee (BEC) and Bid Adjudication Committee (BAC). The former is tasked with evaluating all bids received and submitting a report and its recommendations regarding the award of the bid to the BAC (clause 9.3). The latter according to clause 9.5 must: „(a) accept the bid which in all the circumstances appears to be the most advantageous to the municipality, taking into consideration the objectives and stipulations of the preferential procurement policy; or (b) reject all bids.‟ [8] In its tender evaluation report, Bigen Africa recorded that it had received two tenders from Lepogo Construction and a third from Lubbe Construction and Veza Musa Civils JV. It is noteworthy that Lubbe ranked first on Bigen Africa‟s tender evaluation report. [9] On 28 November 2008 the BEC recommended: „That Lepogo Construction be appointed on Offer B for Bid: 8/3/1 – 62/2008: Construction of 10ML reservoir in Embalenhle for an amount of R12,859,264. That the Department of Technical and Engineering Services must source the shortfall of approximately R4,8m from MIG.‟ The primary motivation as recorded in the minutes of the BEC for that recommendation was that: „Lepogo Construction has extensive related experience in the construction of reservoirs.‟ [10] On 15 January 2009 the BAC met to inter alia consider the recommendation of the BEC. The minutes of that meeting record: „Resolved There seems to be a problem with figures mentioned (R4.5 Million) is much lower than the amount on Bid. The item be sent back to Department Technical Services to provide with vote for verification of funds availability.‟ [11] On 20 January 2009 a memorandum was despatched by the chairperson of the BAC, Ms N Ndlovu, to the chairperson of the BEC, Mr EN Muanza. That memorandum, which was copied to the municipal manager read: „Kindly be advised that the Bid Adjudication Committee at its meeting held on 15 January 2009 has resolved as follows: . . . That, Lepogo Construction be appointed on offer B for the above mentioned Bid for an amount of R12 859 264.00 on condition the department provide this committee with vote numbers as proof that the amount of R12 859 264.00 is budgeted for this project.‟ The Municipal Manager added in manuscript at the foot of the memorandum: „Approved. The department (TES) (Department of Technical and Engineering Services) to handle the issue of the budget with the CFO.‟ The memorandum was thereafter signed by the Municipal Manager and dated 21 January 2009. [12] On 26 January 2009, and without being authorised to do so, Mr Muanza faxed that memorandum to Mr Koos Bultman of Bigen Africa. The latter then wrote to Lepogo on 27 January 2009: „fax as received yesterday from Govan Mbeki DM, a proper letter of appointment will follow‟. Two days later Mr Bultman informed Lepogo: „On behalf of our client The Govan Mbeki Municipality, Lepogo Construction (Pty) Ltd is herewith appointed for the Construction of a 10ML Reservoir in Embalenhle for the sum of R12 859 264-00 (Twelve million eight hundred and fifty nine thousand two hundred and sixty four Rand) inclusive of vat, all as per tender documentation offer B dated 17 October 2008.‟ [13] On 5 February 2009 Mr Muanza wrote to Mr Bultman: „Please take note of the attached Memorandum received from the Municipal Manager of Govan Mbeki Municipality.‟ The attached memorandum which was dated 4 February 2009 read: „Please be informed that I am currently investigating the processes followed in the finalization of the bid for the Construction of 10ML Reservoir for eMbalenhle (Bid 8/3/1 – 62/2008). I therefore instruct you as Head of Department, and the consultant (Bigen Africa Services (PTY) LTD); to henceforth halt processing or disposing of any document related to the execution of the said project to any bidder until further notice.‟ On 27 February 2009 and in response to the memorandum from the municipal manager, Lepogo wrote to Bigen Africa: „1) We have received our letter of appointment dated 29/1/09 for the above contract. 2) Our Mr. de Jong had a meeting with yourselves in your offices on 30/1/09 regarding this contract. One of the items discussed was the date for the site handover which was subsequently set as 9/2/09. 3) On 5/2/09 we were telephonically informed by yourselves that this meeting will be postp[h]oned indefinitely as a result of an e‟mail dated 4/2/09 that you received from the Govan Mbeki Municipality. This said e‟mail you forwarded to us on 5/2/09. 4) Subsequent to the e‟mail of 5/2/09 we have been in telephonic communication on a regular basis to enquire as to when the site handover would take place, but to date Bigen Africa has not been able to confirm a date for this. 5) We have therefore no alternative but to notify you, as we hereby do, that in terms of clauses 41; 42; 47; 48 of the G.C.C. we reserve the right to claim for any and all costs (direct and indirect) associated with the delay of the site handover as well as the delayed start of the contract.‟ That letter was followed on 6 March 2009 with the following: „We take note of your e‟mail dated 2/3/09 which had attached the memo from the office of the municipality manager of Govan Mbeki Municipality dated 24/2/09. We are unclear as to the intention of the municipality, or the implications that this memo may have for Lepogo Construction. We deem it prudent however to notify you as we hereby do, that should this action by the municipality result in costs of whatever nature to our company in the present or the future, we shall claim these from the client as per the G.C.C.. These costs will include but are not limited to : a) standing time b) squardered costs c) loss of profit, etc.‟ [14] On 24 February 2009 the municipal manager wrote: „Pursuant to my memo dated the 4th February 2009, regarding my intentions to investigate processes and circumstances leading to the awarding of the said bid, please be informed that I have decided to withdraw the awarding of the bid 8/3/1 – 62/2008 – Construction of 10ML Reservoir, and instead opt to re-start the tender process. All the necessary and due processes are being taken care of to safeguard the best interest of Council.‟ On 20 April 2009 Bigen wrote to Lepogo: „As an agent acting on behalf of the Govan Mbeki Municipality we have been instructed to withdraw the awarding of bid 8/3/1 – 62/ 2008 – Construction of a 10ML Reservoir.‟ [15] The undisputed evidence adduced on behalf of the Municipality is that only after a bid specification committee decides on specifications for a bid and the consultant, who has been appointed to the project has done the necessary designs and specifications, will the tender issue inviting bids for the construction work. Bids are advertised in the newspaper and on the Municipality‟s website and notice board. Once the tenders are received, the consultant consolidates them and preforms a pre-evaluation assessment. Thereafter, the consultant submits a pre-evaluation report to the Municipality, which serves before the BEC. The BEC is tasked with the evaluation of the various bids and it then makes recommendations to the BAC. That committee, in turn, makes a recommendation to the municipal manager. That is the procedure that was followed in this instance. [16] When the BAC sat on 15 January 2009 to consider the recommendation of the BEC, it resolved that it could not deal with the matter until the shortfall between the bid amount and the budgeted amount for the project had been addressed. The BAC accordingly resolved that the BEC recommendation not be endorsed until the issue of the shortfall had been addressed. That resolution notwithstanding, Mr Johan van der Merwe, who was then serving as the acting chairperson of the BAC, subsequently had the minutes of the BAC altered to reflect that Lepogo had been recommended for appointment as the contractor to the project. The altered minutes, after having been signed by Mr van der Merwe, were thereafter forwarded to the municipal manager. At a meeting of the BAC on 3 February 2009 Mr Merwe admitted that he had „wrongfully recommended Lepogo‟. Mr van der Merwe by way of explanation thereafter despatched the following letter to the municipal manager: „I hereby would like to report to you that the recommendation letter issued to you on the 21st January 2009 for your approval was wrong. On the 19th January 2009 I asked the secretary of the Adjudication Committee to do all the recommendation letters for our meeting of 15th January 2009. I said to her she must do it the same as the evaluation committee meetings recommendations. After she brought it to me for signatures I forgot to take the letter out of Bid 8/3/1 – 62/2008. It was sent to you for approval and then it was sent to Technical Services. On the 2nd February I realized that this letter went out wrongly. I discussed the matter with the director Technical Services. He informed me that the appointment letter was already given to Lepogo Construction and there is no way to stop the process.‟ [17] According to the municipal manager, Dr Mathunyane, his approval of Lepogo‟s bid was conditional. The condition, so he testified, was that the user department had to ensure that the money for the completion of the project could be sourced before they could proceed with the tender. He explained: „You cannot appoint a contractor when you do not have the money so the approval was conditional. After the internal memo which is copied to various persons it is necessary for the relevant department to prepare an appointment letter which I must sign.‟ He testified that in dispatching the memorandum - which was an internal one – to Mr Bultman, Mr Muanza had breached confidentiality. The Municipality instituted disciplinary charges against both Mr van der Merwe and Mr Muanza for their role in the debacle. The former resigned before the disciplinary process could be finalised. The latter was charged with misconduct for communicating an internal memorandum. He was found guilty at a disciplinary enquiry and dismissed. [18] Lepogo‟s case depends upon the establishment of a contractual relationship between it and the Municipality. Relying on the letter of appointment from Mr Bultman of 29 January 2009 as having given rise to a contract between it and the Municipality, Lepogo, in accordance with its earlier threat, instituted the action, the subject of the present appeal, against the Municipality during June 2009. Lepogo alleged in its particulars of claim that „the terms of the construction contract were embodied in “A Contract Document”‟. That document was incorporated in the Municipality‟s invitation to tender and stipulated from the outset the procedure to be followed for the coming into existence of a binding agreement between the Municipality and the successful tenderer. [19] In terms of the contract document a „contract’ means „the agreement that results from the acceptance of a bid by an organ of state‟. The contract document further provided that: „3.13 Acceptance of tender offer Accept the tender offer only if the tenderer complies with the legal requirements, if any, stated in the tender data. Notify the successful tenderer of the employer‟s acceptance of his tender offer by completing and returning one copy of the form of offer and acceptance before the expiry of the validity period stated in the tender data, or agreed additional period. Provided that the form of offer and acceptance does not contain any qualifying statements, it will constitute the formation of a contract between the employer and the successful tenderer as described in the form of offer and acceptance. . . . 3.16 Issue final contract Prepare and issue the final draft of the contract documents to the successful tenderer for acceptance as soon as possible after the date of the employer‟s signing of the form of offer and acceptance (including the schedule of deviations, if any). Only those documents that the conditions of tender require the tenderer to submit, after acceptance by the employer, shall be included.‟ The form of offer and acceptance annexed to the contract document, provided: „[t]he employer . . . has solicited offers to enter into a contract for the procurement of . . .‟; „[t]he tenderer . . . has examined the documents listed in the tender data and addenda thereto and by submitting this offer has accepted the conditions of tender‟; . . . „[t]his offer may be accepted by the employer by signing the acceptance part of this form of offer and acceptance and returning one copy of this document to the tenderer . . ., whereupon the tenderer becomes the contractor in the conditions of contract . . .‟. . . . ACCEPTANCE By signing this part of this form of offer and acceptance, the employer . . . accepts the tenderer‟s offer. . . . Acceptance of the tenderer‟s offer shall form an agreement, between the employer and the tenderer upon the terms and conditions contained in this agreement and in the contract that is the subject of this agreement. . . . Notwithstanding anything contained herein, this agreement comes into effect on the date when the tenderer receives one fully completed original copy of this document, including the schedule of deviations (if any). Unless the tenderer (now contractor) within five days of the date of such receipt notifies the employer in writing of any reason why he cannot accept the contents of this agreement, this agreement shall constitute a binding contract between the parties.‟ [20] It is undisputed that the form of offer and acceptance had not been completed by the parties. It is the completion of that form, according to clause 3.13, that constitutes the formation of a contract between the Municipality and the successful tenderer. And, in terms of clause 3.16, the agreement only comes into effect on the date when the tenderer receives a fully completed version of the contract document. Even then, according to clause 3.16, a contractor has five days after the signing and issuance of the final version of the contract document by the Municipality to notify the Municipality of his non-acceptance of the contents of the agreement. Only thereafter, in the words of clause 3.16, does a „binding contract‟ come into existence between the parties. Thus, what clause 3.13 does is to stipulate the procedure to be followed for the conclusion of an agreement and clause 3.16 goes further in stipulating when a binding contract comes into existence. [21] It was, however, argued on behalf of Lepogo that the words employed in the contract document are obscure and that it lacks clarity. In my view the contract does not admit of any doubt. The manner in which the contract was to be concluded was clearly prescribed in the Municipality‟s invitation to tender. Thus whatever was done prior thereto was simply preliminary to the conclusion of and did not give rise to a binding agreement between the parties. It must therefore follow that in relying on the letter of appointment from Mr Bultman of 29 January 2009 as having given rise to a contract between it and the Municipality, Lepogo misconceived the position, because there was in truth no decision on the part of the municipality to approve (let alone accept) its tender. That being so, there is also no room for Lepogo to rely on the doctrine of quasi mutual assent (see Pillay & Another v Shaik & Others 2009 (4) SA 74). [22] In an endeavor to avoid what on the face of it was an insuperable difficulty, counsel submitted that because Lepogo had been appointed pursuant to its alternative tender the general conditions in the contract document did not apply to it. Two factors, however, militate against that submission. First, clause 2.12 of the contract document requires an alternative tender to be submitted „strictly in accordance with all the requirements of the tender documents‟. And, second, Lepogo‟s alternative tender specifically provided that the: „[c]onditions of the original tender as far as not contrary to this letter will apply‟. The alternative tender was concerned with an alternative schedule of quantities and works. There was thus nothing in the alternative tender that contradicted the offer and acceptance provisions in the contract document. Counsel was ultimately constrained to concede as much. [23] It follows that the appeal must fail and in the result it is dismissed with costs. V M PONNAN JUDGE OF APPEAL Pillay JA (Shongwe JA concurring) [24] I have had the benefit of reading the judgment of Ponnan JA. I agree with his conclusion but I have taken a different view in arriving at it. [25] „. . . a binding contract is as a rule constituted by the acceptance of an offer.‟1 The offer and the acceptance are two of the fundamental formalities required to establish a binding contract. This appeal is, with the leave of the court below, directed at the order of the North Gauteng High Court (Fabricius J) dismissing the claim of the appellant with costs. It concerns the question of whether there existed a contract on which Lepogo Construction (Pty) Limited, the appellant, could rely to found a claim for damages against the Govan Mbeki Municipality, the respondent, an organ of state. [26] In 2008, the respondent, decided to have a „10ML Post Tensioned Reservoir with Dome Roof‟ constructed. It appointed Bigen Africa Services (Pty) Ltd, an engineering company, as its authorised agent („the agent‟) to source a construction company, on its behalf, to construct the required reservoir by way of tender, and to monitor the design and construction thereof. [27] A call for tenders, a process the respondent is bound to employ, is a mere request to potential service providers (in this case contractors) to submit offers capable of being accepted or rejected at the discretion of the offeree. If accepted, a contract between the offeror and offeree comes into existence. [28] An invitation to tender from an organ of state and the processing thereof is governed by s 3 of the Promotion of Administrative Justice Act 3 of 2000, s 2(1) of the Preferential Procurement Policy Framework Act 5 of 2000, Local Government: Municipal Finance Management Act (56/2003): Municipal Supply Chain Management Regulations2 and its preferential procurement policy. This system is intended to provide for a fair, equitable, transparent, competitive and cost effective process as contemplated in s 217(2) of the Constitution of the Republic of South 1 Watermeyer ACJ in Reid Bros (SA) Ltd v Fischer Bearings Co Ltd 1943 AD 232 at 241. 2 Published in GN R868, GG 27636, 30 May 2005. Africa, 1996 so as to award contracts upon tender. [29] It is common cause that the agent advertised for tenders for this project and would deal with tenderers on behalf of the respondent in regard to the tendering processes which, with the conditions of the proposed construction agreement, were embodied in the following contract documents: 5.1 Defendant‟s tender notice and invitation to tender; 5.2 The tender data; 5.3 The standard conditions of tender; 5.4 The contract data; 5.5 The pricing data; 5.6 The scope of work; 5.7 Site information and 5.8 General Conditions of Contract for Construction Works (2004). [30] On 17 October 2008, the appellant responded to the invitation and submitted two tenders – a main tender for R16 676 790.13 and an alternative one for R12 859 264.00 – through the authorised agent.3 The main tender was accompanied by a covering letter from the appellant. The alternative tender was attached to a separate letter which dealt mostly with technical matters related to the construction of the reservoir. Of importance however, is that it included a paragraph which read as follows - „conditions of the original tender as far as not in contrary (sic) to this letter will also apply‟. These were not the only tenders for this particular contract. After the agent had sieved through the tenders, it sent them on to the respondent municipality with a recommendation as to who it thought would be the appropriate contractor to be awarded the contract. Hence a proper offer to build the 10 ML reservoir was made to the respondent. [31] In terms of the supply chain management regulations, the tender bids served before a Bid Specification Committee, a Bid Evaluation Committee and a Bid Adjudication Committee,4 before being presented to the municipal manager for consideration and approval. 3 In terms of paragraph 1.4 of the Standard Conditions of Tender, communications between the respondent, as employer, and tenderer(s) had to be through the agent only. 4 All of these are independent internal committees. [32] After the Bid Specification Committee had considered the tenders, the appellant‟s tenders, together with another, served at the Bid Evaluation Committee meeting on 17 December 2008. It recommended that the appellant be appointed as the contractor to construct the reservoir as undertaken in its alternative tender. However it qualified the recommendation and directed the respondent‟s Department of Technical and Engineering Services (TES) to source a shortfall of R4,8 million to make up the required tender amount of R12 859 264.00. It sent a memorandum to that effect to the Bid Adjudication Committee. [33] According to the minute of the meeting of the Bid Adjudication Committee of 15 January 2009, that particular tender was indeed discussed but was left unresolved because the question of the R4,8 million shortfall was still outstanding. The committee returned the item to the TES to confirm the availability of funds to cover the shortfall. However a memorandum allegedly from this committee, dated 20 January 2009, found its way to the municipal manager for approval. This memorandum contained a resolution and motivation supporting the appointment of the appellant in respect of the alternative tender. (There was evidence on behalf of the respondent that at some stage the Bid Adjudication Committee may have decided to recommend another construction company.) It is unclear how or why this memorandum was sent to the municipal manager in the form that it arrived on his desk. It is, however, not necessary to investigate that aspect in this judgment. The municipal manager approved the appointment of the appellant as „resolved‟ subject to the TES sourcing the budgetary requirements for the project through the respondent‟s chief financial officer. He endorsed the memorandum to that effect and it was sent to the TES to deal with the budget since it was the department which would oversee the project and ultimately operate the reservoir. [34] Mr Bultman, who represented the agent, testified that he dealt only with Mr Muanza in regard to the reservoir project and on 26 January 2009 he received a facsimile copy of the endorsed memorandum. It was sent by Mr Muanza, the director: Technical Engineering Services. On 27 January 2009, Mr Bultman communicated with the appellant by sending it a copy of the same memorandum under a cover letter wherein he promised that a proper letter of appointment would follow and enquiring as to when they could have their first meeting. On 29 January 2009, the agent addressed a letter to the appellant. It read as follows – „On behalf of our client The Govan Mbeki Municipality, Lepogo Construction (Pty) Ltd is herewith appointed for the Construction of a 10 Mℓ Reservoir in Embalenhle for the sum of R12 859 264-00 (Twelve million eight hundred and fifty nine thousand two hundred and sixty four Rand) inclusive of vat, all as per tender documentation offer B dated 17 October 2008 The items shown as rate only are not approved and should only be incorporated into your design and construction if approved in writing by ourselves Congratulations, and we are looking forward to a successful project.‟ [35] On or about 30 January 2009, the municipal manager was informed that the process in respect of which he approved the appointment of the appellant to construct the reservoir had been compromised. He requested those who had told him about the alleged compromise to put this in writing. He then directed a letter to Mr Muanza informing him that he was investigating the processes followed in the finalisation of the bid for the construction of the reservoir and instructed him, as head of the department, and the agent to stop processing or disposing of any document related to the execution of the project until further notice. Upon receipt hereof, Mr Muanza dispatched a copy of this letter to the agent who in turn sent a copy thereof to the appellant. [36] At a meeting of 6 March 2009 attended by the agent and municipal officials, the status regarding this project and its processes were discussed and the agent was instructed to urgently cancel the appellant‟s appointment as the contractor in respect of the construction of the reservoir. [37] On 20 April 2009 the agent sent a letter to the appellant. It read as follows: „Construction of a 10Mℓ Post Tensioned Reservoir As an agent acting on behalf of the Govan Mbeki Municipality we have been instructed to withdraw the awarding of bid 8/3/1-62/2008 – Construction of a 10Mℓ Reservoir.‟ The appellant then sued the respondent for damages in an amount of R4822 084.96. [38] In his testimony, Mr de Jongh who testified on behalf of the appellant, said that he regarded the letter of appointment as acceptance of the offer by the respondent and as far as he was concerned, a contract between the appellant and respondent had thereby been brought into existence. He further testified that he regarded the withdrawal of the „awarding of the bid‟ as constituting repudiation of the contract and the appellant accepted this. He explained that as a result, the appellant suffered damages in respect of direct costs for standing time of labour and the plant and loss of profit. It is on this basis that it sued the respondent. [39] The respondent pleaded that the process of approval for the appointment of the appellant for this project was tainted by fraud by one of the members of the Adjudication Committee and consequently there was no animus contrahendi between it and the appellant. It further pleaded that the approval of the appointment was not lawful, and maintained that no contract between them existed. The crisp issue to be decided therefore is whether a contract was properly concluded by the parties. [40] When the matter was dealt with in the court below, the claim was dismissed on the basis that the process and in turn the agreement lacked legality and consequently could not be enforced. Mr Delport, who appeared for the respondent, submitted that the approach was incorrect and that the court below should have at least applied the principles of estoppel or the Turquand Rule. [41] I do not consider it necessary to deal with this appeal on the basis adopted by the court below or as suggested by Mr Delport since the matter can be disposed of on a much simpler basis. [42] The conditions as set out in the contract document(s) clearly prescribe the processes to be followed in order to conclude a contract upon which one of the parties could rely to found a proper claim. Of relevance to this appeal is the contract condition relating to the mode of acceptance of the offer. In the Preferential Procurement Regulations5 „contract‟ means „the agreement that results from the acceptance of a bid by an organ of state‟. In the Standard Conditions of Tender6 certain undertakings relating to the mode of acceptance, for 5 Which is attached to Portion 1 of the tender document. 6 Another section of the tender document. the respondent to complete are listed. These subsections are clear and unambiguous and read as follows: „3.13 Acceptance of tender offer. 3.13.1 Accept the tender offer only if the tenderer complies with the legal requirements, if any, stated in the tender data. 3.13.2 Notify the successful tenderer of the employer‟s acceptance of his tender offer by completing and returning one copy of the form of offer and acceptance before the expiry of the validity period stated in the tender data, or agreed additional period. Provided that the form of offer and acceptance does not contain any qualifying statements, it will constitute the formation of a contract between the employer and the successful tenderer as described in the form of offer and acceptance. 3.14 Notice to unsuccessful tenderers After the successful tenderer has acknowledged the employer‟s notice of acceptance, notify other tenderers that their offers have not been accepted. 3.15 Prepare contract documents If necessary, revise documents that shall form part of the contract and that were issued by the employer as part of the tender documents to take account of a) addenda issued during the tender period, b) inclusions of some of the returnable documents, c) other revisions agreed between the employer and the successful tenderer, and d) the schedule of deviations attached to the form of offer and acceptance, if any. 3.16 Issue final contract Prepare and issue the final draft of the contract documents to the successful tenderer for acceptance as soon as possible after the date of the employer‟s signing of the form of offer and acceptance (including the schedule of deviations, if any). Only those documents that the conditions of tender require the tenderer to submit, after acceptance by the employer, shall not be included.‟ The above sets out how the contract is concluded and the formalities to be followed thereafter. [43] The standard forms of offer and acceptance referred to in the Standard Conditions of Tender make provision for basic details of the agreement and signatures of the representatives of the respective parties as well as witnesses. [44] It is trite that where, in a proposed contract, the mode of acceptance is stipulated, it is that mode that must be followed before a contract is concluded.7 In Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) 555 (A) at 573F it was stated that an offeror may always prescribe the mode of acceptance of his offer in order that a vinculum juris should be created. In Driftwood Properties (Pty) Ltd v McLean 1971 (3) SA 591 (A) at 597D it was stated that „It is trite than an offeror can indicate the mode of acceptance whereby a vinculum juris will be created‟. In Withok Small Farms (Pty) Ltd & others v Amber Sunrise Properties 5 (Pty) Ltd 2009 (2) SA 504 (SCA) at 508 para 10, it was held that „It is a trite principle of the common law that, unless the contrary is established, a contract comes into being when the acceptance of the offer is brought to the notice of the offeror. It is also trite that an offeror may indicate, whether expressly or impliedly, the mode of acceptance by which a vinculum juris will be created‟. However in this case,this stage of the process had not yet been reached since the bid had not been accepted by the organ of state – the respondent. Significantly neither party had signed the offer and acceptance forms and neither were any of the conditions which were supposed to follow the acceptance of the offer, in particular the issue of the final contract, complied with. In my view there is simply no contract that had come into existence and that would be the end of the matter. [45] When these conditions of the contract were pointed out to Mr Delport he accepted the position as correct and in the light thereof, chose to rather argue that because the appellant had been appointed in respect of the alternative tender, the general conditions and processes as set out in the contract documents did not apply (as it would if appointed for the primary tender). He accepted that if it was found that the general conditions of the contract were applicable to the alternative offer, then proper acceptance could only have been effected in the prescribed manner. In support of that submission, he referred to a condition in the appellant‟s covering letter to the alternative tender viz „conditions of the original tender as far as not in contrary to this letter will also apply‟. (It is clear that it was intended to read „. . . as far as it is not contrary to this letter will also apply‟) He further argued that in that event, the conduct of the respondent from the time he received the letter of appointment from its agent, was sufficient reason to infer that the contract had 7 This was the position as early as 1924 - see Laws v Rutherfurd 1924 AD 261. been concluded. He specifically referred to the fact that the appellant was afforded the opportunity to conduct a site inspection and also that he was given to understand that the site would be handed over to the appellant on 9 February 2009. He was however unable to point out anything in the letter which was „contrary‟ to the general contract conditions that could possibly render them inapplicable to the alternative tender. Moreover it is doubtful that there could have been a situation in which the general contract conditions would not have been applicable to the alternative tender. [46] Absent anything contrary in the conditions, it follows that the general body of the conditions indeed applies to the alternative offer. There is consequently no contract between the parties and the appellant has no basis on which to base a claim for damages. [47] The appeal is accordingly dismissed with costs. R PILLAY JUDGE OF APPEAL APPEARANCES: FOR APPELLANT: Adv P P Delport SC Instructed by: Pennells Attorneys, Pretoria Phatsoane Henney Attorneys, Bloemfontein FOR RESPONDENT: Adv P L Mokoena SC Instructed by: Ramathe MJ Attorneys c/o Maoumakoe Attorneys, Pretoria M O Seobe Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 29 September 2014 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Lepogo Construction (Pty) Ltd v The Govan Mbeki Municipality (623/13) [2014] ZASCA MEDIA STATEMENT Today the Supreme Court of Appeal (SCA) furnished its reasons for dismissing the appeal by the appellant, Lepogo Construction (Pty) Ltd and upholding an order of the North Gauteng High Court. The issue before the SCA was whether a valid contract had been entered into between the appellant and the respondent. On 11 February 2008 Bigen Africa Services (Pty) Ltd (the agent) was appointed by the respondent as the consulting engineer for the construction of a 10ML Post Tensioned Water Reservoir with a dome. The respondent, in consultation with the agent, then invited tenders for the construction of the reservoir. The appellant responded to the invitation and submitted two tenders – an original and an alternative tender - through the agent. The appellant’s alternative tender was conditionally approved by the municipal manager. Thereafter the appellant received a letter of appointment from Bigen in respect of the alternative bid. On or about 30 January 2009, the municipal manager was informed that the process in respect of which he approved the appointment of the appellant to construct the reservoir had been compromised. He then ruled that the award of the bid be withdrawn. The appellant then instituted action against the respondent arising from the withdrawal alleging that a contract had come into existence between it and the respondent when he received the letter of appointment. The respondent denied that a valid and binding contract had come into existence contending that the tender process had been tainted by fraud. On appeal the SCA held that the appellant’s case rested upon the establishment of a contractual relationship between it and the respondent. The SCA found that the reliance by the appellant on the letter of appointment as having given rise to a binding contract was ill-conceived. It held further that the form of offer and acceptance had not been completed by the parties in the manner prescribed. The court stated that the contract documents stipulated the procedure to be followed for the formation of a contract and went further in prescribing when a binding contract came into existence. None of these stipulations were fulfilled. --- ends ---

3988

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1305/2021 In the matter between: I M M APPELLANT and A M M RESPONDENT Neutral citation: M v M (1305/2021) [2023] ZASCA 33 (31 March 2023) Coram: DAMBUZA AP and MOCUMIE, MBATHA and MABINDLA- BOQWANA JJA and NHLANGULELA AJA Heard: This appeal was, by consent between the parties, disposed of without an oral hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: 31 March 2023 Summary: Matrimonial law – sections 7 and 9 of the Divorce Act 70 of 1979 – division of joint estate – claim for forfeiture of pension interest – substantial misconduct not established – appeal upheld. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Mazibuko AJ and Wright J, sitting as court of appeal): The respondent’s application for condonation of the late filing of heads of argument is granted. The appeal is upheld with each party to pay their own costs. The high court’s order is set aside and replaced with the following: ‘The appeal is dismissed with each party to pay their own costs.’ JUDGMENT Mabindla-Boqwana JA (Dambuza AP and Mocumie and Mbatha JJA and Nhlangulela AJA concurring): Introduction [1] The appellant, Mr I M, and the respondent, Mrs A M, were married in community of property on 4 December 1995. The appellant instituted divorce proceedings on 15 September 2015 in the Springs Regional Court (the regional court) against the respondent. As part of the initial relief, he sought an order of forfeiture of benefits arising from the marriage in community of property by the respondent based on an alleged extramarital affair. [2] The respondent denied the allegation in her plea and filed a counter-claim alleging extramarital affairs between the appellant and other women, and physical and verbal abuse by the appellant on her, among other acts of misconduct. However, the order she sought at that stage did not include forfeiture of benefits but merely division of the joint estate. [3] During 2017, the appellant amended his particulars of claim by asserting entitlement to 50% of the respondent’s pension interest in the Government Employees Pension Fund (GEPF). In her plea to the amended particulars of claim, the respondent pleaded that her interest in the GEPF should not form part of the joint estate. This was because, approximately 12 months prior to the date of institution of the divorce proceedings, the appellant had withdrawn his pension interest from the GEPF in the sum of R2 429 265. 50 and from that amount utilised R500 000 towards household debts and needs. He however refused to account for the balance approximating R2 million. [4] The respondent pleaded further that since the withdrawal of his pension benefits from the GEPF, the appellant engaged in extramarital affairs. In addition she would only receive a projected amount of R1 154 266, on retirement, which was less than the amount for which the appellant refused to account. As a result, the appellant would unduly benefit and she would be prejudiced, should the court grant an order entitling him to the portion of her pension interest in the GEPF. For that reason, she prayed for forfeiture of the appellant’s pension interest. [5] In the alternative she pleaded that, should the court find that the appellant was entitled to the pension interest, he should only be awarded the difference between the sum he had refused to account for and the amount due to him as at the date of dissolution of marriage. [6] Since the appellant had abandoned his forfeiture prayer, the only issue for determination in the regional court was whether the appellant would unduly benefit from the alleged failure to account and should forfeit his 50% portion of the respondent’s pension interest. The regional court ruled that the respondent bore the onus on this issue and should testify first. [7] It is common cause that the appellant was employed by the Department of Education and Training (the department) as the head of department at Hluwasi Secondary School, thereafter at Etwatwa Secondary School as the school principal. He resigned from the department, but the respondent did not know the reason as he did not discuss anything with her. He told her that he had received R2.4 million from the pension fund and would use R300 000 to pay the outstanding mortgage bond for the house. He also promised to pay their debts; buy some furniture; and invest the rest. [8] He bought the furniture, renovated the house and paid off his vehicles, which altogether with payment of the outstanding mortgage bond, amounted to R500 000. They agreed that he would pay off her debts and in turn, she would register him in her medical aid. He however paid only between R50 000 and R55 000 of her debts and refused to sign documents for his inclusion in her medical aid. [9] The respondent testified further that she was responsible for groceries and gardening maintenance costs. After the appellant resigned, she had to include their two major children in her medical aid. The children were studying at tertiary institutions and she had to pay their fees. The appellant only paid the fees for one child after being forced to do so by a maintenance order. She confirmed that the appellant was responsible for paying the mortgage bond instalments of their common home. She however paid rent for the place she resided in with the children (at the time of the trial). She later heard that the appellant found employment but she did not know where that was. [10] For his part, the appellant testified that when he received the pension fund money, he paid R800 000 towards the settlement of the mortgage bond owed to ABSA in respect of the house and the loan owed to Nedbank which they had used to extend the house. He had been on chronic medication and when he stopped earning a salary, he struggled financially. He had to take loans for his upkeep, including one from the respondent, to pay rates, taxes, phone costs and medication. He also helped with groceries. So when he was eventually paid the pension money in August 2014, he paid back the loan of around R25 000 to the respondent. He also had to pay an amount of approximately R45 000 for the vehicles. [11] He testified further that for the renovations of the house, he paid the electrician R80 000 and the approximate amounts: for the roof R25 000, for guttering R12 000 and for the swimming pool R25 000. He also had ongoing legal fees involving a labour dispute he had with his previous employer, for which he had to pay not less than R40 000 for consultation. He accepted that these were incurred after he had filed for the divorce. He also had to pay tuition fees for his son’s education, as per the maintenance order. Tuition fees cost about R80 000 whilst accommodation fees were around R70 000. He also had to pay for his son’s flights and subsistence of R1000. He subsequently moved his son from Cape Town to Pretoria. The tuition cost increased to about R90 000 and the residence to R65 000 per annum. He did not have documents to prove these expenses. According to him, the respondent was not interested in what was being done with the renovations, which is why he went ahead on his own without involving her. [12] In cross-examination, he testified that he spent almost all his retirement fund money towards the joint estate. At the time of the trial, the South African Council of Educators employed him on a contract basis, which was renewable annually. [13] In rejecting the contention of undue benefit, the regional court found that: ‘There was no evidence of the nature or the extent of the benefit that [the respondent] sought to have [the appellant] forfeit. The court is thus not in a position to make a finding as to the patrimonial benefits [themselves]. If the court is wrong in this conclusion that the nature and extent of the benefit was not proved then it must consider the next leg of the inquiry. . . . The only factor argued was that the [appellant] misconducted himself by not disclosing the details of any investment of his pension payout. I am not convinced that this amounts to a misconduct let alone a substantial misconduct. There are avenues open in the law to obtain information of the investments, if any made by the [appellant]. There is no evidence that if an order for forfeiture of the benefit is not made [the appellant] would unduly benefit.’ [14] As a result, the regional court granted the decree of divorce, division of the joint estate, an order that 50% of the pension interest due or assigned to the respondent be paid to the appellant, up to the date of divorce and other ancillary orders. It further ordered each party to pay their own costs. [15] Aggrieved by this order, the respondent appealed to the Gauteng Division of the High Court, Johannesburg (the high court). In the appeal, she contended that the regional court erred in holding that she bore the onus to prove and quantify the nature and extent of the benefit, while it was the appellant who wished to claim 50% of her pension fund interest. She submitted further that the regional court failed to consider that withholding financial information from a spouse amounted to substantial misconduct as defined in s 9 of the Divorce Act 70 of 1979 (the Divorce Act). [16] The respondent further argued that the regional court should not have accepted the appellant’s testimony regarding estimated payments and the allegation that all his funds were utilised for the benefit of the joint estate, which allegations were never pleaded. Not only was the respondent taken by surprise, the court accepted ‘new evidence’ without any corroboration or documentary proof of any alleged expenditure. [17] Lastly, the respondent contended that the regional court misdirected itself in finding that avenues existed for the respondent to obtain information regarding any investments. According to the respondent, this could not be sustained in light of the fact that the appellant never disclosed the estimated and actual breakdown of his expenditure ‘as a defence’ in his pleadings. The respondent could not guess what the defence would be. [18] The high court did not deal with the issue of undue benefit and forfeiture of pension interest. Its judgment was brief and dealt with an issue not contested by the parties. It made the following findings: ‘Due to the fact that [the respondent] gave credible, unchallenged and uncontested evidence about infidelity and domestic violence it is indisputable that [the appellant] has to forfeit benefits. Such conduct, particularly the domestic violence is wholly unacceptable and attracts forfeiture. There was some debate during the hearing about alleged lack of pleading and insufficient discovery concerning the patrimonial benefits, particularly the pension fund. These issues pale to insignificance when compared to something as serious as domestic violence. Adv Mokgawa presented able oral argument in this appeal. Despite two opportunities during the appeal hearing to find evidence in the transcript where [the appellant] had challenged the evidence of [the respondent] about infidelity and domestic violence was understandably unable to do so.’ [19] That is the sum total of the high court’s reasoning, which resulted in the alteration of the order granted by the regional court. It gave the following substituted order: ‘1. A decree of divorce is granted with division of the joint estate subject to [the appellant] forfeiting all patrimonial benefits. 2. [The appellant] is not entitled to any interest in the pension fund of [the respondent]. 3. [The appellant] is to pay the costs of the action, including those of the claim and counterclaim.’ [20] The appeal is before us with the special leave of this Court. The parties agreed that the appeal should be determined without oral argument, in terms of s 19(a) of the Superior Courts Act 10 of 2013. It is pursued on the narrow ground that the high court misdirected itself: (a) when it substituted the regional court’s decision with forfeiture of all patrimonial benefits on an issue that did not form the basis of the relief sought by the respondent; and (b) by making a costs order against the appellant. The respondent applied for condonation for the late filing of her heads of argument, which is not opposed. Having regard to the good cause shown, there is no reason not to grant condonation. [21] Entitlement to a portion of pension interest of one party against the other is governed by sections 7(7) and 7(8) of the Divorce Act, which prescribe: ‘7(a) In the determination of the patrimonial benefits to which the parties to any divorce action may be entitled, the pension interest of a party shall, subject to paragraphs (b) and (c), be deemed to be part of his assets. (b) The amount so deemed to be part of a party’s assets, shall be reduced by any amount of his pension interest which, by virtue of paragraph (a), in a previous divorce – (i) was paid over or awarded to another party; or (ii) for the purposes of an agreement contemplated in subsection (1), was accounted in favour of another party. . . . (8) Notwithstanding the provisions of any other law or of the rules of any pension fund – (a) the court granting a decree of divorce in respect of a member of such a fund, may make an order that – (i) any part of the pension interest of that member which, by virtue of subsection (7), is due or assigned to the other party to the divorce action concerned, shall be paid by that fund to that other party when any pension benefits accrue in respect of that member; (ii) the registrar of the court in question forthwith notify the fund concerned that an endorsement be made in the records of that fund that that part of the pension interest concerned is so payable to that other party and that the administrator of the pension fund furnish proof of such endorsement to the registrar, in writing, within one month of receipt of such notification.’ (My emphasis.) [22] From the above, it is clear that in the determination of the patrimonial benefits the pension interest is deemed to form part of the joint estate. It is therefore, the party seeking forfeiture thereof that must prove that the other party is not entitled to the portion of the pension interest. In this case, therefore, the respondent did indeed bear the onus to prove that the appellant had to forfeit his entitlement to a portion of her pension interest. [23] Section 9 of the Divorce Act, dealing with forfeiture of patrimonial benefits of marriage, provides that: ‘(1) When a decree of divorce is granted on the ground of the irretrievable break-down of a marriage the court may make an order that the patrimonial benefits of the marriage be forfeited by one party in favour of the other, either wholly or in part, if the court, having regard to the duration of the marriage, the circumstances which gave rise to the break-down thereof and any substantial misconduct on the part of either of the parties, is satisfied that, if the order for forfeiture is not made, the one party will in relation to the other be unduly benefited.’ (My emphasis.) [24] A court must therefore consider the claim for forfeiture having regard to three factors, namely, the duration of marriage, the circumstances which gave rise to the breakdown thereof and any substantial misconduct on the part of either of the parties. These factors must not be considered cumulatively and the presence of any one of them would entitle a court to grant an order of forfeiture.1 [25] The parties had been married for over 23 years prior to their divorce, which is a long period. They lived together until 2015, when the appellant instituted divorce proceedings. While the pleadings had contained allegations of extramarital affairs from both sides, not much evidence was led on this issue, apart from the sketchy details given by the respondent. Furthermore, the appellant did not persist with forfeiture on this basis. While the respondent mentioned the extramarital affairs in her pleadings, she did not rely on this ground as the basis for forfeiture. Her complaint was that the appellant was not entitled to his 50% portion of her pension interest because of the fact that he had failed to account for the balance of his pension money that he withdrew when he left employment. The high court accordingly erred 1 Botha v Botha 2006 (4) SA 144 (SCA); [2006] 2 All SA 221 (SCA) para 6. See also Wijker v Wijker 1993 (4) SA 720 (A) at 729E-F. in granting an order that was not sought (which is the forfeiture of all patrimonial benefits – as opposed to only 50% pension interest of the respondent’s pension fund) and basing it on evidence that was not placed as the basis for forfeiture. On this basis alone, the high court misdirected itself and its order cannot stand. [26] The issue that remains is whether substantial misconduct was established. The bulk of the evidence was focused on what the appellant did with his pension interest of over R2 million, which he received from GEPF 12 months prior to instituting the divorce proceedings. By law the respondent was entitled to R1.2 million thereof. From that amount would be deducted half of the common household expenses paid by the appellant from his pension payout. According to the respondent, the appellant only used R500 000 towards the household, whilst the estimated figures he gave suggested an amount of at least R1.4 million. [27] The regional court was criticised in the high court for having allowed the appellant to tender evidence on estimated payments he allegedly made for the benefit of the joint estate, when these were not pleaded. In terms of Rule 21(2) of the Magistrates’ Court Rules: ‘(2) No replication or subsequent pleading which would be a mere joinder of issue or bare denial of allegations in the previous pleading shall be necessary, and issue shall be deemed to be joined and pleadings closed in terms of rule 21A(b). (3)(a) Where a replication or subsequent pleading is necessary, a party may therein join issue on the allegations in the previous pleading.’ [28] Whether or not replication was necessary in this case is not an issue that we need to determine because on a proper reading of the regional court’s judgment, it decided the case on the basis that no evidence was led as to the nature or the extent of the benefit that the respondent sought to have the appellant forfeit. In other words, she did not discharge the onus to prove that the appellant would unduly benefit if an order of forfeiture of the pension interest were not made. [29] If one has regard to the respondent’s evidence, her cross-examination revealed that the amount used by the appellant for the benefit of the joint estate was over and above the R500 000 she had pleaded. She testified that the appellant paid an amount of approximately up to R55 000 for ‘her debts’. She could not dispute that he paid R2000 a month for chronic medication since he was no longer on medical aid. She also did not dispute that he had taken a personal loan of approximately R25 000 from her during the time he was not working while waiting for his payout. Even this alleged loan was taken for the benefit of the joint estate. It became common cause that the appellant became responsible for the tertiary fees of their son, in terms of the maintenance order. The respondent did not state how much this was, something that could have been established from the relevant tertiary institution, if the appellant was not forthcoming with the information. She conceded that this payment of fees was continuous: ‘Who is paying for your son’s education? --- He is. He does. He is paying for our son’s tuition. And it is just tuition.--- Yes. [Indistinct] he live[s] at home?---Pardon? Does your son live at home with you?--- No, at a res. He is also paying for that, yes.’ (My emphasis.) [30] She further testified that the appellant was responsible for the upkeep and maintenance of the marital home. All this she did not plead or state in her evidence in chief. It does appear, therefore, that the amount the appellant used towards the joint household, on her version alone, was more than R500 000 and was ongoing. More concerning, the amounts that the respondent volunteered in her evidence kept changing. Some of the figures, which she said she was uncertain about, were not necessarily only in the appellant’s peculiar knowledge. They could have been verified from the banks, which she would have been entitled to as the co-owner of the joint household. The difficulty that the trial court had in coming to a conclusion on the actual patrimonial benefits to be forfeited was understandable. [31] Additionally, apart from the son’s tertiary fees, which were ongoing and had to be paid on an annual basis, it is common cause that the appellant was not employed for a substantial number of months whilst he had to pay for the maintenance and upkeep of the household and for his medication on an ongoing basis. While the evidence appears to be imprecise as to the balance after the renovations, payment of the bond, the loan and vehicles, it could not be concluded that there was total lack of accounting to the level of substantial misconduct. As observed by the regional court, it appears that ‘a not insignificant portion of the pension payout the [appellant] received was put into the house’ in which the respondent will benefit as part of the division of the joint estate. Therefore, even without taking into account the appellant’s evidence, the respondent failed to meet the threshold, disentitling the appellant to 50% of her pension interest. [32] The assessment of the facts by the regional court could not be faulted. The basis upon which an appeal court may interfere with the factual findings of the trial court are confined. This principle is well established. Aside from the fact that the regional court committed no misdirection in its assessment of the facts, its judgment was rooted in the exercise of discretion. That would apply to whether any adjustment had to be made to the patrimonial benefits. There is no basis to interfere with its discretion in this regard too. [33] Something must be said about the manner in which this case was conducted on behalf of both parties. Attorneys and advocates have the responsibility to do their best in preparing the pleadings and presenting the necessary evidence before court. They do so to render the best legal service to their clients and to assist the courts to reach the best decision in resolving the disputes that serve before them. More could have been done in this case to present comprehensive evidence of the income and expenditure by the parties. By all accounts, theirs is not a complex joint estate. A more detailed and complete account of expenditure by the parties’ could have been pleaded and proper evidence tendered in court. [34] It remains to determine the issue of costs. Section 10 of the Divorce Act provides that ‘. . . the court shall not be bound to make an order for costs in favour of the successful party, but the court may, having regard to the means of the parties, and their conduct in so far as it may be relevant, make such order as it considers just, and the court may order that the costs of the proceedings be apportioned between the parties’. In my view, having considered the facts of this case, it is appropriate to maintain the order granted by the regional court that each party pays their own costs. [35] Accordingly, the following order is made: The respondent’s application for condonation of the late filing of heads of argument is granted. The appeal is upheld with each party to pay their own costs. The high court’s order is set aside and replaced with the following: ‘The appeal is dismissed with each party to pay their own costs.’ ____________________________ N P MABINDLA-BOQWANA JUDGE OF APPEAL Written Submissions For the appellant: M Manala and M Rasekgala Instructed by: Moumakoe Attorneys, Pretoria Matsepes Attorneys, Bloemfontein For the respondent: S Pooe Instructed by: C Kgope Attorneys, Benoni Duba Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 March 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal M v M (1305/2021) [2023] ZASCA 33 (31 March 2023) Today, the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against a decision of the Gauteng Division of the High Court, Johannesburg (the high court). The issue before the SCA was whether the high court misdirected itself: (a) when it substituted the regional court’s decision with forfeiture of all patrimonial benefits on an issue that did not form the basis of the relief sought by the respondent; and (b) by making a costs order against the appellant. The appellant, Mr I M, and the respondent, Mrs A M, were married in community of property on 4 December 1995. The appellant instituted divorce proceedings on 15 September 2015 in the Springs Regional Court (the regional court) against the respondent. As part of the initial relief, he sought an order of forfeiture of benefits arising from the marriage in community of property by the respondent based on an alleged extramarital affair. The respondent denied the allegation in her plea and filed a counter-claim alleging extramarital affairs between the appellant and other women, and physical and verbal abuse by the appellant on her, among other acts of misconduct. However, the order she sought at that stage did not include forfeiture of benefits but merely division of the joint estate. During 2017, the appellant amended his particulars of claim by asserting entitlement to 50% of the respondent’s pension interest in the Government Employees Pension Fund (GEPF). In her plea to the amended particulars of claim, the respondent pleaded that her interest in the GEPF should not form part of the joint estate. This was because, approximately 12 months prior to the date of institution of the divorce proceedings, the appellant had withdrawn his pension interest from the GEPF in the sum of R2 429 265. 50 and from that amount utilised R500 000 towards the joint household’s debts and needs and told her that he would invest the rest. He however refused to account for the balance approximating R2 million. The respondent pleaded further that since the withdrawal of his pension benefits from the GEPF, the appellant engaged in extramarital affairs. In addition, she would only receive a projected amount of R1 154 266, on retirement, which was less than the amount for which the appellant refused to account. As a result, the appellant would unduly benefit and she would be prejudiced, should the court grant an order entitling him to the portion of her pension interest in the GEPF. For that reason, she prayed for forfeiture of the appellant’s pension interest. The SCA held that the high court erred in granting an order that was not sought (which is the forfeiture of all patrimonial benefits – as opposed to only 50% pension interest of the respondent’s pension fund) and basing it on evidence that was not placed as the basis for forfeiture. Therefore, the high court misdirected itself and its order could not stand. Furthermore, the SCA found that the amount the appellant used for the benefit of the joint estate, on the respondent’s version alone, was more than R500 000 and was ongoing. In this respect it held that even without taking into account the appellant’s evidence, the respondent failed to meet the threshold, disentitling the appellant to 50% of her pension interest. On the issue of costs, the SCA held that, having considered the facts of this case, it was appropriate to maintain the order granted by the regional court that each party pays their own costs. ~~~~ends~~~~

4033

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 109/22 In the matter between: MEDIA 24 (PTY) LTD APPELLANT and NKOSINATHI NHLEKO FIRST RESPONDENT DR NONCEBO MTHEMBU SECOND RESPONDENT Neutral citation: Media 24 (Pty) Ltd v Nhleko & Another (Case no 109/22) [2023] ZASCA 77 (29 May 2023) Coram: NICHOLLS, GORVEN, HUGHES and GOOSEN JJA and UNTERHALTER AJA Heard: This appeal was disposed of without an oral hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: 29 May 2023 Summary: Civil procedure - application for leave to amend plea - dismissal based on wrong principles of law - appeal upheld. _____________________________________________________________ ORDER _____________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Thulare J, sitting as court of first instance): 1 The appeal is upheld. 2 The order of the high court is set aside and replaced with the following: ‘1 The applicant is granted leave to amend its plea within ten days of this order. The respondents are liable to pay the costs on an attorney client scale.’ _____________________________________________________________ JUDGMENT _____________________________________________________________ Nicholls JA (Gorven, Hughes and Goosen JJA and Unterhalter AJA concurring) [1] This appeal concerns the dismissal of an application to amend a plea. On 27 November 2016, Media 24 (Pty) Ltd (Media 24) published an article on the front page of the City Press Newspaper, under the heading ‘Nhleko’s R30 m blessing.’ The article stated that Mr Nkosinathi Nhleko (Mr Nhleko), who was the Minister of Police at the time, had been ‘implicated for signing off millions of rands for work done by his love interest – and for going all out to reinstate charges against Ipid head Robert McBride.’ The love interest was a reference to his partner, Dr Nomcebo Mthembu (Dr Mthembu), who according to the article, ‘scored more than R30 million for providing services which the police ministry officials claim that they could have received for free.’ The article stated that the police ministry paid R30.8 million to Indoni, the non-profit organisation run by Dr Mthembu. [2] Mr Nhleko and Dr Mthembu sued for defamation claiming R15 million each, for damages which they allegedly suffered. Media 24 admitted the publication of the article but denied the meaning attributed to it, and that it was defamatory. In the alternative, Media 24 pleaded that it had established the defences of (a) truth in the public interest; (b) protected comment; and (c) reasonable publication. [3] In response to the plea, Mr Nhleko and Dr Mthembu filed a rule 30A notice, in terms of the uniform rules of court, objecting to the plea on the grounds that it constituted a bare denial, it was evasive, and did not clearly and concisely state the material facts on which Media 24 relied for its defence. It was further alleged that the plea did not answer the point of substance and did not comply with the uniform rules of court. In order to address some of the objections, Media 24 filed a notice of intention to amend its plea. Again, an objection was raised in which it was asserted that the proposed amendment was an ‘elaborate lie with the sole purpose of misleading the court’ and was an ‘insult to the integrity and intelligence’ of Mr Nhleko and Dr Mthembu. It was contended that Media 24 had failed to justify statements in the article. This led Media 24 to bring an application for leave to amend. This was opposed. [4] The Western Cape Division of the High Court, Cape Town (high court), per Thulare AJ, after an extensive analysis of the pleadings and the objection, stated that the case was premised on two points, namely the role, if any, played by Mr Nhleko in regard to the payment of more than R30 million, and the payment itself. The court then went on to conclude that ‘[t]his mast of direct involvement of [Mr Nhleko] hoisted in the article, in giving Indoni the work, appear to have been blown away by the winds of a change of front by [Media 24] in its plea.’ The high court found that the ‘bleeding edge’ of the article was the payment to his love interest, whilst the ‘chase’ was the payment and Media 24 had failed ‘to cut to the chase’. [5] The high court gave the following order: ‘(a) Leave to effect the amendment to the Applicant’s plea on the furnished particulars of amendment as envisaged in this notice of motion is not authorized. (b) The Applicant is granted leave to make consequential adjustments to the furnished particulars of amendment of the plea as envisaged in this notice of motion. (c) The Applicant is granted leave to deliver its consequential adjusted particulars of amendment of the plea within twenty (20) days of this order. (d) The Applicant to pay the costs, including costs occasioned by any consequential adjusted particulars of the plea.’ [6] The high court granted leave to appeal to this Court. Mr Nhleko and Dr Mthembu have not participated in the appeal. Their attorneys, as did those of Media 24, indicated that they had no objection to the matter being disposed of in terms of s 19(a) of the Superior Courts Act 10 of 2013, without an oral hearing. [7] In its judgment granting leave to appeal to this Court, the high court stated that the substantive issue was whether Media 24 could plead a bare denial in a defamation case involving an admitted publication of an alleged payment in the first page headline of a leading Sunday paper. It explained its reasoning thus in paragraphs 11 and 12: ‘In my view, a bare denial should not be a form of gatekeeping by the applicant, a mass media player in the arena of public communication. In the circumstances, there is a duty to publicly justify a mass publication, for the applicant to remain a trusted and legitimate source of public information and an authoritative source of information. Media 24 should not be allowed to be a fundamental problem for society by being what appears to be a springboard and source for the scope, spread and reach of misinformation, especially against the State or its functionaries. There is no doubt that reports about corruption, especially by our political leaders, affect the confidence of our people in the political system and our democracy. Fake news about our democratic institutions and players are a threat to the stability of our nation and should not be tolerated by all peace loving South Africans and their friends. It is necessary that it becomes clear whether Media 24 is not party of any group who thrive on fake news for ideological purposes and the advancement of a political campaign and agenda, as the respondents harbour. When the time to account for its headlines comes, Media 24 cannot become voiceless in substance. Media 24 cannot be a utility that control the view of the people [of] South Africa by facilitating what appears to be misinformation and play dumb when confronted. To curb fake news and misinformation, transparency is not only a need but a mandate. Those reported on, and those reported to, have a legitimate expectation to the data upon which the applicant relied when it reported on the country’s leader. This is simply because democracy envisages engaged participation by informed and thoughtful voters. The applicant cannot evade judicial scrutiny by refusing the judicial light to streak in its dark corner of fact checking.’ [8] The high court misunderstood what a defendant in a defamation action is required to plead. In the first instance, it should be understood that it is not the article itself which has to be justified, but the defamatory statements that are alleged to have been published. The first hurdle a defendant has to overcome is whether the words attributed to it are defamatory, and then only those portions of the article that are alleged to be defamatory need to be dealt with in the plea. A defendant has no duty to plead to allegations that do not form part of the pleaded defamation. Once a publication is shown to be defamatory, a presumption of wrongfulness then arises and the onus is on the defendant to rebut it by showing that its publication was justified. A media defendant who cannot establish the truth of a defamatory statement, may rely on the reasonableness of the publication as a defence.1 The defendant must allege and prove that it had reason to believe the truth of the statement and took reasonable steps to verify its correctness. Therefore, its publication was reasonable in the circumstances. [9] Whether a plea constitutes an impermissible bare denial will depend upon what averment is being dealt with. A plea to what is alleged to be defamatory will require no more than a denial unless a special meaning or sting is alleged. A defence of justification may require some elaboration because where the onus rests on a party it must allege the facts on which the defence rests. [10] In its unamended plea, Media 24 denied that the statements had the defamatory meaning attributed to them; alternatively it put up the justification 1 National Media Ltd and Others v Bogoshi 1998 (4) SA 1196 (SCA); [1998] 4 All SA 347 (A). that the article was true or substantially true; that the publication thereof was in the public interest; that the article was published in the good faith belief of its truthfulness; and, that it was reasonable to do so. Media 24 was satisfied that no more was required, but introduced the amendment in order to obviate any interlocutory skirmishes that may arise as a result of the notice of objection. It therefore sought to amend its plea by amplifying the denials and fleshing out its original plea. [11] The high court characterised the inquiry as one in which Media 24 had to justify the allegations in the article and whether it had run a front page story relying on ‘false Ministry corridors’ gossip’ regarding an alleged payment. The high court formulated the question thus: ‘Are you a gossip monger driving publicity stunts or a professional news reporter?’2 It concluded that from Media 24’s plea ‘. . . one does not know if it had or did not have any money trail to ground its truth.’ Therefore, it held that Media 24’s case was ambiguous, vague, evasive and lacking clarity and the amended plea did not facilitate the proper ventilation of the true dispute between the parties. [12] Media 24 was required to plead to allegations made in the particulars of claim. It was not obliged to verify or justify the allegations made in the article that were not pleaded to constitute the defamation. The amended plea made various admissions as well as providing details of the denials and the basis for them, where appropriate. Where the particulars of claim contained allegations which were irrelevant to the main issue, a bare denial of these was not objectionable. 2 This was a translation in the high court judgment of the Setswana expression: ‘O Maratahelele kgotsa o Mmegadikgang’. [13] Instead of focusing on the pleaded case before it, the learned judge based his findings on his personal interpretation of the article and what he believed the issue should be, namely the role of the media in a democratic society. He concluded that the judiciary has ‘a responsibility to seek solutions which enhance a conversation, or information exchange between equals, in pleadings before them . . .’. This being so, ‘a bare denial should not be a form of gate keeping a mass media player in the arena of public communication’. To grant the amendment would therefore be ‘highly prejudicial’ to Mr Nhleko and Dr Mthembu whose position would be made worse by the proposed amendment as they would be no closer to determining what role Mr Nhleko played in facilitating the R30 million payment to Indoni. [14] It is difficult to understand how there could be any prejudice to the plaintiffs by the proposed plea, which merely sought to amplify the denials in the original plea. Again, this finding was based on an incorrect understanding of the defences to a defamation action and the nature of a plea. The allegations concerning Mr Nhleko’s role in facilitating the payment to Indoni, are not allegations in the particulars of claim to which Media 24 was obliged to respond. [15] The far reaching utterances of the high court on the role of the media and the judiciary are completely misplaced. By pleading a bare denial to the allegation of defamation, in these circumstances, the litigant was not attempting to ‘evade judicial scrutiny’. It is at the trial that these denials will be tested, not in the pleadings. [16] In coming to its conclusion to refuse the application for amendment, the high court paid scant regard to the purpose of pleadings, which is to define the issues between the parties. Because the primary role of pleadings is to ensure that the real dispute between litigants is adjudicated upon, courts are loathe to deny parties the right to amend their pleadings, sometimes right up until judgment is granted. An exception is made when the amendment is mala fides or will result in an injustice which cannot be cured by a costs order.3 Thus, the power of a court to refuse amendments is confined to considerations of prejudice or injustice to the opponent. [17] Even where an amendment has led to the re-opening of a case, this has been allowed where the reason was the state of the pleading rather than deliberate conduct on the part of an applicant.4 Prejudice has been found to occur only in situations where the opponent is worse off than he was at the time of the amendment, for example the withdrawal of an admission can have a detrimental effect in certain circumstances. The fact that an amendment may lead to the defeat of the other party is not the type of prejudice to be taken into account.5 Here the court refused the amendment because it did not go into sufficient detail. That could only be a ground for objection if it fails to comply with the rules as to pleadings or is otherwise excipiable. 3 Moolman v Estate Moolman 1927 CPD 27 at 29. This principle has been confirmed in numerous cases including the constitutional court in Affordable Medicines Trust and Others v Minister of Health and Another [2005] ZACC 3; 2006 (3) SA 247 (CC); 2005 (6) BCLR 529 (CC) para 9. 4 Myers v Abramson 1951(3) SA 438 (C) at 450A-B. 5 GMF Konstrakteurs EDMS (BPK) and Another v Pretoria City council 1978 (2) SA 219 (T) at 226D; [1978] 2 All SA 407 (T) at 411; Trans Drakensberg Bank Ltd (Under Judicial Management) v Combined Engineering (Pty) Ltd and Another 1967 (3) SA 632 (D). [18] It is not for the courts to impose their views as to the true nature of the case. It is the pleadings, and the pleadings alone, that define and determine the issues upon which the court will adjudicate. The sole requirement of the application for amendment was to ensure that the plea advanced encapsulates the defence to the particulars of claim, not to the article itself. As has often been stated by our courts, it is the facta probanda that must be pleaded, not the facta probantia. A litigant is not required to prove its case in the pleadings, nor to describe the evidence to be led, but to state the material facts on which it relies and which it intends to prove at the trial. [19] Trial courts are reminded that an adherence to the fundamental principles of pleadings should be observed and parties should be allowed to ventilate their case as they determine, within the bounds of these well understood principles. [20] It is necessary to comment on the appealability of the order. In the first place, this order is predicated on entirely incorrect principles of law and cannot be allowed to stand. In the second place, it is not clear whether the order is enforceable or indeed what would constitute compliance with the order. The order requires Media 24 to answer a different case from that which was pleaded and to address allegations which were contained in the article rather than the particulars of claim. To refuse the application to amend would deprive Media 24 of the opportunity of advancing its defence and as such would be final in effect. Such an outcome would be entirely at odds with parties’ right to litigate on the issues as they see them, and not those identified by the court. [21] As regards the costs of the application for amendment, these are usually borne by the applicant. In this matter, Media 24 sought punitive costs on an attorney own client scale on the basis that the objection was reckless and vexatious. It is evident that some of the allegations in the notice of objection went beyond what is reasonably acceptable. For example, it was alleged that the application to amend had been sought to mislead the court, the public and the plaintiffs; that Media 24 had lied to the court and was using the amendment to defeat the ends of justice and was using the rules of court as a ‘cover up’ for its unlawful conduct and ‘dirty tricks campaign’; it was an attempt to ‘bully the plaintiffs into abandoning their claim’. The proposed amendments were described as ‘a desperate attempt to clutch on straws’ in an attempt to justify its unlawful conduct. These intemperate and ill-founded remarks are deserving of censure. That they appear to have secured some unwarranted endorsement from the high court does not render the conduct any less problematic. In the circumstances, a punitive costs order is justified against the respondents in the high court application. Since the respondents did not oppose the appeal, it is appropriate that no costs order be made in respect of the appeal. [22] The following order is made: 1 The appeal is upheld. 2 The order of the high court is set aside and replaced with the following: ‘1 The applicant is granted leave to amend its plea within ten days of this order. 2 The respondents are liable to pay the costs on an attorney client scale.’ ________________________ C HEATON NICHOLLS JA JUDGE OF APPEAL Appearances For appellant: S Budlender SC Instructed by: Willem De Klerk Attorneys, Johannesburg Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 May 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Media 24 (Pty) Ltd v Nhleko & Another (Case no 109/22) [2023] ZASC 77 (29 May 2023) Today the Supreme Court of Appeal (SCA) handed down judgment upholding, with costs on an attorney client scale, an appeal against the decision of the Western Cape Division of the High Court of South Africa, Cape Town (the high court). This appeal concerned the dismissal of an application to amend a plea. The appellant published an article under the heading ‘Nhleko’s R30 m blessing.’ The article stated that the first respondent, who was the Minister of Police at the time, had been ‘implicated for signing off millions of rands for work done by his love interest – and for going all out to reinstate charges against Ipid head Robert McBride.’ The love interest was a reference to his partner, the second respondent, who according to the article, ‘scored more than R30 million for providing services which the police ministry officials claim that they could have received for free.’ The respondents sued for defamation claiming R15 million each, for damages which they allegedly suffered. The appellant admitted the publication of the article but denied the meaning attributed to it, and that it was defamatory. In the alternative, the appellant pleaded that it had established the defences of (a) truth in the public interest; (b) protected comment; and (c) reasonable publication. In response to the plea, the respondents filed a rule 30A notice in terms of the uniform rules of court, objecting to the plea on the grounds that it constituted a bare denial, it was evasive and did not clearly and concisely state the material facts on which the appellant relied for its defence. In order to address some of the objections, the appellant filed a notice of intention to amend its plea. Again, an objection was raised in which it was asserted that the proposed amendment was an ‘elaborate lie with the sole purpose of misleading the court’ and was an ‘insult to the integrity and intelligence’ of the respondents. The high court ruled in favour of the respondents but granted the appellant leave to appeal to the SCA. The SCA held that the appellant was required only to plead to allegations made in the particulars of claim, and not to verify or justify the allegations made in the article that were not pleaded to constitute the defamation. The amended plea, according to the SCA, made various admissions and provided details of the denials, and the basis for them. Thus, there could be no prejudice to the respondents by the proposed plea. The high court in coming to its conclusion to refuse the application for amendment, paid scant regard to the purpose of pleadings, which is to define the issues between the parties, and not to or to provide details of the facts in dispute between the parties. Because the primary role of pleadings is to ensure that the real dispute between litigants is adjudicated upon, courts are loathe to deny parties the right to amend their pleadings. The exception is when an amendment is mala fides or would result in an injustice which could not be cured by a cost order. Here, the sole purpose of the application for amendment was to ensure that the plea advanced encapsulated the defence to the particulars of claim, not to the article itself. The SCA held further that a litigant is not required to prove its case in the pleadings, or to describe the evidence to be led, but to state the material facts on which it relies and which it intends to prove at the trial. The SCA reminded trial courts that an adherence to the fundamental principles of pleadings should be observed and parties should be allowed to ventilate their case as they determine, within the bounds of these well understood principles. It was upon those findings that the appeal was upheld. The punitive costs were awarded against the respondents because of the intemperate and ill-founded accusations in the notice of objection. ~~~~ends~~~~

3271

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No: 647/06 REPORTABLE In the matter between: QUALIDENTAL LABORATORIES (PTY) LTD APPELLANT and HERITAGE WESTERN CAPE FIRST RESPONDENT THE HERITAGE INSPECTOR SECOND RESPONDENT Coram: Howie P, Navsa, Van Heerden, Mlambo JJA et Malan AJA Heard: 16 November 2007 Delivered: 30 November 2007 Summary: National Heritage Resources Act – demolition permit with condition – whether provincial heritage resources authority has the power to impose conditions when granting demolition permit in respect of structure enjoying no formal protection in terms of the Act – condition not in conflict with principle of legality. Neutral citation: This judgment may be referred to as Qualidental Laboratories v Heritage Western Cape [2007] SCA 170 (RSA). ___________________________________________________________ MLAMBO JA [1] This appeal concerns the powers of a provincial heritage resources authority established in terms of the National Heritage Resources Act 25 of 1999 (the Act). [2] The appellant sought, on an urgent basis, the review and correction of a demolition permit issued by the first respondent, a provincial heritage resources authority; the review and setting aside of a stop works order issued by the second respondent, a senior heritage inspector; and certain ancillary relief. In turn the first respondent, in a counter application, sought to interdict the appellant from continuing with certain building work pending inter alia the finalisation of the application. The matter came before Davis J sitting in the Cape High Court who dismissed the application but granted the appellant leave to appeal to this court. The judgment of the court a quo has been reported: see Qualidental Laboratories (Pty) Ltd v Heritage Western Cape and another 2007 (4) SA 26 (C). [3] The facts giving rise to the litigation are largely common cause. The appellant is the owner of immovable property situated at erf 4953 (also known as 6 Marsh Street), Mossel Bay, Western Cape (the property). On the property was built a cottage (called an annex by the parties) and a villa both of which the appellant wanted demolished to make way for an apartment block development on the property. It applied to the first respondent for a permit for the total demolition of the villa and the annex as these buildings were older than 60 years and in terms of the Act could not be demolished without a permit. [4] Upon receipt of the application and after consideration the first respondent requested the appellant to file a heritage statement from a heritage practitioner containing information in terms of which the proposed demolition could be considered. That statement having been filed by the appellant’s heritage consultant, Mr Christopher Snelling, the first respondent issued a permit approving the demolition of the annex but not the villa and attached a condition to the demolition. The condition is to the effect that the plans for the intended development on the property were to be submitted to it for final approval. The full record of decision reads as follows: ‘• The committee decided not to approve the application for total demolition, but has approved the demolition of the annex building. • The committee feels that the building has intrinsic quality and contextual value and sites it in a Grade 3 area. • Plans for any new development on the property must be submitted to HWC [the first respondent] for approval. • The new development must be subsidiary to the main building in terms of massing, scale, sighting and location. • The building will be put on the Heritage Register.’ [5] The record of decision also mentioned that the decision was subject to a general appeal period of 14 working days and could be suspended, should an appeal against the decision be received by the first respondent within 14 days from the date the record of decision was issued. It is the imposition of the condition that plans for any new development on the property be submitted to the first appellant for final approval that is at the centre of the litigation. I return to this aspect later. [6] After receiving the permit the appellant submitted its building plans for the proposed development to the Mossel Bay Municipality which approved them subject to the proviso that the appellant comply with any condition imposed by the first respondent. The building plans were thereafter submitted to the first respondent by the Mossel Bay Municipality for approval but were found inappropriate and were as a result not approved. The first respondent’s reasons for not approving the building plans were essentially that (a) as the envisaged apartment blocks were to be constructed in the vicinity of the villa, part of the development would obscure the most important aspect and view of the villa from Marsh Street; and (b) that the proposed development was intrusive and out of keeping with the context created by the villa and other buildings in the surrounding area, such as the St Blaize Terraces. It was felt that the development would, in fact, make a mockery of the villa’s landmark status. [7] The appellant thereafter proceeded to demolish the annex and, despite the lack of final approval for its building plans by the first respondent, commenced the construction of the apartment blocks on the property. News of the construction soon reached the first respondent and Mr Bewin September, a senior heritage inspector and the second respondent herein, accompanied by another heritage officer, decided to investigate. On arrival at the property they observed that the annex had been demolished and that an excavation had taken place, that concrete footings and a slab had already been laid with the principal external walls already up to ground level including what appeared to be a basement. Steel reinforcements for concrete columns were already in place. The second respondent entered into discussions with the appellant’s contractor and officials from the Mossel Bay Municipality’s Planning Department in an attempt to resolve the situation. As construction continued unabated without final approval of the building plans, the second respondent issued and served a stop works order on Mr Roy Freedman, a director of the appellant, stating that it had come to the first respondent’s attention that he was ‘responsible or is partly responsible for alleged illegal alteration to a structure older than 60 years, without fulfilment of Permit conditions (Permit no 2005/03/015) dated 2005/03/07 in terms of s 48(2)(c) as per the National Heritage Resources Act’ and that he was therewith ‘formally ordered’ in terms of the Act to immediately cease all works until further notification and that failure to comply with the order could result in the criminal prosecution of Mr Freedman and/or the owner of the property. [8] It was the threat of a criminal prosecution rather than the stop works order that appears to have had the desired effect and to have been the catalyst that galvanised the appellant into launching its ill-fated application before Davis J in the court a quo. Central to the matter is the competence of the first respondent to impose the condition regarding the submission of building plans to it for final approval. [9] Any entity like the first respondent exercising public power is confined to exercising only such powers as are lawfully conferred upon it – this is the principle of legality. See Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council 1999 (1) SA 374 (CC) at 399 para 56 and Pharmaceutical Manufacturers Association of SA: In re Ex Parte President of the Republic of South Africa 2000 (2) SA 674 (CC) at 699 para 50. [10] It is prudent at this stage to consider the statutory framework. In broad outline the scheme of the Act encompasses general principles underpinning the management of heritage resources; the establishment of heritage resources authorities and their functions, responsibilities and powers; the protection and management of heritage resources including formal and general protection as well as general provisions incorporating the competence of provincial heritage resources authorities to grant or refuse permits. An overview of the Act shows that its overarching objective is the identification, protection, preservation and management of heritage resources for posterity.1 This objective also finds resonance in clause 24(b) of the Constitution. [11] The first respondent was established in accordance with s 23 of the Act in terms of Provincial Notice 336 dated 22 October 2002, published in the Provincial Gazette, by the Member of the Executive Council responsible for cultural affairs in the Western Cape. In terms of s 8 the first respondent, as a provincial heritage resources authority, is responsible for the identification and management of heritage resources in the Western Cape that have special qualities making them significant within a provincial context. A heritage resource is defined in s 1 as a place or object of cultural significance. In terms of s 5 heritage resources management should recognise that heritage resources have lasting value and are finite, non-renewable and irreplaceable. In view of this, heritage resources have to be carefully managed to ensure their survival to be preserved for succeeding generations. [12] Section 34(1) is the section in terms of which the appellant was obliged to apply for a permit for the authority to demolish the villa and annex. This section reads: 1In this regard the preamble to the Act is of relevance. It reads: ‘This legislation aims to promote good management of the national estate, and to enable and encourage communities to nurture and conserve their legacy so that it may be bequeathed to future generations. Our heritage is unique and precious and it cannot be renewed. It helps us to define our cultural identity and therefore lies at the heart of our spiritual well-being and has the power to build our nation. It has the potential to affirm our diverse cultures, and in so doing shape our national character. . . .’ ‘34. Structures (1) No person may alter or demolish any structure or part of a structure which is older than 60 years without a permit issued by the relevant provincial heritage resources authority.’ It is evident that s 34(1) contains a general protection against the alteration or demolition of any structure or part thereof which is older than 60 years without a permit issued by the relevant provincial heritage resources authority. In turn s 34(2) provides that in the event of the refusal of a provincial heritage resources authority to issue a permit regarding the demolition or alteration of a generally protected structure it must consider bringing the structure concerned within any of the formal protections set out in the Act. [13] It is common cause that neither the property nor the villa is a declared national or provincial heritage site as contemplated in s 27. They also do not enjoy provisional protection in terms of s 29, nor are situated within a designated protected area within the meaning of s 28. They are, furthermore, not listed in a heritage register in terms of s 30, nor designated as a heritage area in terms of s 31, nor declared heritage objects as contemplated in s 32. The property does, however, fall within an area proposed by the Municipality’s consultants as being worthy of consideration as an urban conservation area in terms of the local zoning scheme. [14] The granting or refusal of demolition permits is regulated by s 48. Section 48(2) is relevant for present purposes and reads: ‘(2) On application by any person in the manner prescribed under subsection (1), a heritage resources authority may in its discretion issue to such person a permit to perform such actions at such time and subject to such terms, conditions and restrictions or directions as may be specified in the permit, including a condition– (a) that the applicant give security in such form and such amount determined by the heritage resources authority concerned, having regard to the nature and extent of the work referred to in the permit, to ensure the satisfactory completion of such work or the curation of objects and material recovered during the course of the work; or (b) providing for the recycling or deposit in a materials bank of historical building materials; or (c) stipulating that design proposals be revised; or (d) regarding the qualifications and expertise required to perform the actions for which the permit is issued.’ It is evident that in terms of s 48(2) the first respondent has a discretion insofar as the granting or refusal of a permit is concerned. The first respondent also has a discretion regarding the imposition of any terms, conditions, restrictions or directions when granting a permit. [15] The appellant’s stance in the court a quo and before us is that, properly construed s 34, providing as it does for general protection against alteration or demolition, does not clothe the first respondent with the power to impose the condition and particularly not in relation to the villa for which permission to demolish was refused. In the appellant’s view the full extent of the first respondent’s power in the circumstances of this case was only to authorise the demolition of the annex and impose conditions in that regard and nothing further. [16] It was further submitted in relation to the villa that the only power which the Act confers upon the first respondent is to protect it from alteration or demolition but that the first respondent enjoys no power to regulate any other construction on the property. Counsel submitted that the imposition of the condition in the demolition permit was thus beyond the first respondent’s powers. Counsel labelled the condition as one the objective of which was to control development which he submitted was not authorised by s 48 and was beyond the first respondent’s power. It was further submitted that the powers contained in s 48(2) (in terms of which the condition was imposed) which entitle the first respondent to impose a condition that design proposals be revised, are exercisable only in the context of control by a heritage resources authority over the alteration or development of heritage resources which enjoy formal protection in terms of the Act through the provisions referred to in paragraph 13 above. In so far as the stop works order is concerned, it is sought to be set aside on the basis that its validity is predicated upon the effectiveness of the condition the validity of which is impugned. [17] It is common cause that the appellant’s application for a permit, though specifying the villa and the annex, envisaged a single structure whose total demolition was sought. The sketch plan submitted with the application depicts a single structure even though in actual fact only the roof overlapped between the two buildings which were at least a metre apart. The annex was built directly adjacent to the villa with its flat roof effectively a continuation of the lean-to roof of the villa’s kitchen and pantry. It is also apparent that the first respondent treated the application in the same light. It is clear from the stance adopted by the first respondent that when it approved the demolition of the annex and not of the villa it was in effect approving the partial demolition of a single structure. [18] The first respondent clearly considered the villa, in respect of which permission to demolish was refused, to be a building of considerable cultural significance and worthy of preservation in its particular context. In this regard the aesthetic importance of the villa was emphasized in the appellant’s heritage report compiled by its heritage consultant, Mr Snelling. The report inter alia records: ‘The aesthetic/contextual value of the building is considered to be high in terms of its local content. It is however felt that this significance has been compromised by the annex addition. Given the urban feel of much of Mossel Bay, resultant from what Fransen describes as its restricted layout, 6 Marsh Street presents an interesting and elegant departure from the established building pattern that indicates the building had once enjoyed some considerable status. Indeed the building and site could be considered to be of landmark quality . . .. The Landmark quality is further enhanced by the placement of the main gables to the building, positioned to address the street and be visible from all approaches. This is a building that was designed in order to be noticed . . ..’ Therefore any new development that would detract from the villa and its surrounds would be contrary to the first respondent’s obligation to protect and conserve the villa’s landmark status. [19] The condition imposed by the first respondent therefore accords with its conservation mandate in terms of the Act and is directly in line with the principles of heritage resources management set out in ss 5 and 6. The imposition of the condition is also within the parameters, not only of the Act but is consonant with the overall scheme of the Act. The first respondent’s power to impose conditions in my view is not as narrowly circumscribed as contended for by the appellant. [20] I may add that the purpose and effect of the condition is designed to enable the first respondent to exercise a power vested in it in terms of the Act and which, as pointed out, is consonant with the overall objective of the Act ie the conservation of a heritage resource. Therefore the condition, rather than being one aimed at controlling development, as contended by the appellant, was in actual fact a condition with a conservation objective. It must also follow that, the condition having been validly imposed, the stop works order is also unimpeachable. [21] The court a quo was therefore correct in dismissing the application and this appeal must fail. [22] Having come to this conclusion it becomes unnecessary to consider the other two issues raised by the first respondent regarding the failure of the appellant first to exhaust its internal remedies as set out in s 49 before launching its court application, as well as its failure to bring the application within the prescribed time limit, both as required by s 7 of the Promotion of Access to Justice Act 3 of 2000. [23] In the circumstances the following order is made: The appeal is dismissed with costs including the costs consequent upon the employment of two counsel. ________________ D MLAMBO JUDGE OF APPEAL CONCUR: HOWIE P NAVSA JA VAN HEERDEN JA MALAN AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 November 2007 Status: Immediate 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 QUALIDENTAL LABORATORIES v HERITAGE WESTERN CAPE 1. The Supreme Court of Appeal today dismissed an appeal against a decision of the Cape High Court which had upheld a condition imposed by Heritage Western Cape. 2. The appellant, the owner of certain immovable property in Mossel Bay, had applied to Heritage Western Cape for a permit for the total demolition of an annex and a villa situated on the property, to make way for an apartment block development. Heritage Western Cape granted the permit for the demolition of the annex building but not the villa. Heritage Western Cape had in addition imposed a condition that the appellant was to submit its building plans for the envisaged apartment block development to it for final approval. 3. The appellant had contended in the high court that the Heritage Resources Management Act did not empower Heritage Western Cape to impose the condition in respect of the villa as same was not formally protected in terms of the Act. 4. The Supreme Court of Appeal found that the objective of the condition imposed by Heritage Western Cape was the conservation of the villa which it had identified as culturally significant and worthy of protection. In this regard the SCA found that the condition was consonant with the overall scheme of the Act and the Constitution. The SCA further found that Heritage Western Cape was empowered by the Act to issue the condition, in the circumstances of this case, even though the villa did not enjoy any of the formal protections in the Act.

492

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 367/2015 In the matter between: DR H C AVENANT APPELLANT and THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE RESPONDENT Neutral citation: Avenant v CSARS (367/2015) [2016] ZASCA 90 (1 June 2016) Coram: Ponnan, Theron, Saldulker, Swain and Mbha JJA Heard: 23 May 2016 Delivered: 1 June 2016 Summary: Paragraphs 2, 3(1), 4(1) and 9 of the First Schedule to the Income Tax Act 58 of 1962 – „produce held and not disposed of‟ – grapes delivered by wine farmer to a co-operative – pressed into pulp and mixed with pulp of other members of co-operative – identity of natural product retained – resultant pulp „produce‟ – ownership of pulp retained by members of co-operative – produce „not disposed of‟. ORDER On appeal from: Tax Court, Cape Town (Allie J sitting as court of first instance). The appeal is dismissed with costs. JUDGMENT Swain JA (Ponnan, Theron, Saldulker and Mbha JJA concurring): [1] The issue in this appeal is whether harvested grapes delivered by a farmer to a co-operative winery, which is pressed into pulp and then mixed with the pulp of other members of the co-operative, for processing into wine, constitutes „produce held and not disposed of‟ at the end of a tax year for the purposes of para 2 of the First Schedule to the Income Tax Act 58 of 1962 (the Act). The appellant, Dr H C Avenant, who conducts agricultural operations as contemplated in s 26(1) of the Act, contends that it does not. The view of the respondent, the Commissioner for the South African Revenue Service that it did, resulted in the appellant being assessed to tax in the 2009 tax year. As a result an amount of R789 338 was included as taxable income in respect of „closing stock from farming operations‟ in terms of paras 2, 3(1) and 9 of the First Schedule to the Act. [2] The appellant unsuccessfully objected to the assessment and thereafter appealed to the Tax Court, Cape Town (Allie J). The court a quo held that the grapes delivered to Namaqua Wines Ltd (the co-op) at the end of February 2009 was „produce on hand that was not disposed of as at the end of the 2009 year of assessment that should have been included‟ as income being the value of wine grapes. As regards the assessed amount of R789 338 the court a quo concluded that it was „manifestly erroneous, unfair and unreasonable‟ set it aside and referred it for re-assessment to the Commissioner. Leave to appeal to this court was granted by the court a quo in terms of s 135(1) of the Tax Administration Act 28 of 2011. [3] The relevant statutory provisions are as follows: (a) Section 26(1) of the Act provides that: „The taxable income of any person carrying on pastoral, agricultural or other farming operations shall, in so far as it is derived from such operations, be determined in accordance with the provisions of this Act but subject to the provisions of the First Schedule.‟ (b) Para 2 of the First Schedule to the Act provides that: „Every farmer shall include in his return rendered for income tax purposes the value of all livestock or produce held and not disposed of by him at the beginning and the end of each year of assessment.‟ (c) Para 3(1) of the First Schedule to the Act provides that: „Subject to the provisions of subparagraphs (2) and (3), the value of livestock or produce held and not disposed of at the end of the year of assessment shall be included in income for such year of assessment and there shall be allowed as a deduction from such income the value of livestock or produce, as determined in accordance with the provisions of paragraph 4, held and not disposed of at the beginning of the year of assessment.‟ (d) Para 4(1)(a) of the First Schedule to the Act provides that: „The values of livestock and produce held and not disposed of at the beginning of any year of assessment shall . . . be deemed to be – (a) in the case of a farmer who was carrying on farming operations on the last day of the year immediately preceding the year of assessment, the sum of – (i) the values of livestock and produce held and not disposed of by him at the end of the year of assessment. . .‟ (e) Para 9 of the First Schedule to the Act provided at the time that: „The value to be placed upon produce included in any return shall be such fair and reasonable value as the Commissioner may fix.‟ (f) Section 3(4) of the Act provides inter alia that: „Any decision of the Commissioner under . . . paragraphs . . . 9 . . . of the First Schedule . . . shall be subject to objection and appeal.‟ [4] The respondent submits that the provisions of paras 2, 3(1) and 4(1) of the First Schedule to the Act, perform a similar function to the provisions of s 22 of the Act, which pertains to the determination of the value of trading stock. Trading stock is defined in s 1 of the Act as follows: „“Trading stock” includes anything produced, manufactured, constructed, assembled purchased or in any other manner acquired by a taxpayer for the purposes of manufacture, sale or exchange by the taxpayer or on behalf of the taxpayer.‟ [5] The relevant portions of s 22 of the Act provide as follows: „(1) The amount which shall, in the determination of the taxable income derived by any person during any year of assessment from carrying on any trade (other than farming), be taken into account in respect of the value of any trading stock held and not disposed of by him at the end of such year of assessment, shall be – (a) in the case of trading stock other than trading stock contemplated in paragraph (b), the cost price to such person of such trading stock, less such amount as the Commissioner may think just and reasonable as representing the amount by which the value of such trading stock, not being, has been diminished by reason of damage, deterioration, change of fashion, decrease in the market value or for any other reason satisfactory to the Commissioner; . . . . (2) The amounts which shall in the determination of the taxable income derived by any person during any year of assessment from carrying on any trade (other than farming), be taken into account in respect of the value of any trading stock held and not disposed of by him at the beginning of any year of assessment, shall – (a) if such trading stock formed part of the trading stock of such person at the end of the immediately preceding year of assessment be the amount which was, in the determination of the taxable income of such person for such preceding year of assessment, taken into account in respect of the value of such trading stock at the end of such preceding year of assessment; or (b) if such trading stock did not form part of the trading stock of such person at the end of the immediately preceding year of assessment, be the cost price to such person of such trading stock.‟ (Emphasis added). [6] In Richards Bay Iron & Titanium (Pty) Ltd & another v Commissioner for Inland Revenue [1995] ZASCA 81; 1996 (1) SA 311 (A) at 316F-317D the rationale for provisions such as s 22 read with the extended definition of „trading stock‟ in s 1 of the Act, was described in the following terms: „The South African system of taxation of income entails determining what the taxpayer‟s gross income was, subtracting from it any income which is exempt from tax, subtracting from the resultant income any deductions allowed by the Act, and thereby arriving at the taxable income. It is on the latter income that tax is levied . . . Where a taxpayer is carrying on a trade, any expenditure incurred by him in the acquisition of trading stock is deductible in terms of s 11(a) of the Act because it is expenditure incurred in the production of income, and it is not of a capital nature. Income generated by the sale of such stock is of course part of the trader‟s gross income. Where in his first year of trading a trader has bought, and thereafter sold, all the stock which he acquired during that year, no problem arises. There will be a perfect correlation between the trading income earned and the expenditure incurred in that particular year in purchasing and selling the stocks sold, and the difference between the two sums will give a true picture of the result of the year‟s trading. There will be no stock on hand at the close of the year of which account need be taken. Contrast with that situation a situation in which the trader, having sold all the stock acquired earlier during that year at a substantial profit, purchases large quantities of stock just prior to the close of his tax and trading year. If he were permitted to deduct the cost of purchasing that stock from the income generated by his sales, without acknowledging the benefit of the stock acquired, he would be escaping taxation in that year on income which otherwise would have been taxable by the simple expedient of converting it into trading stock of the same value. That process could be repeated every year ad infinitum. It is true that there would ultimately have to be a day of reckoning when trading finally ceases, but the fact remains that the taxpayer will have been enabled to avoid liability for tax until that point is reached. Where the trader is an individual who is subject to rising marginal tax rates as his trading profit increases, he would be enabled to so regulate his apparent profit that he immunised himself from them indefinitely.‟ [7] As pointed out by Silke, if the trading stock is not sold in the same year it was acquired, a taxpayer who only deducts the costs of acquiring the stock without taking into account the value of the stock, will not include a „balancing‟ amount in gross income. Section 22(1) of the Act therefore requires „the value of the trading stock held and not disposed of‟ at the end of the year of assessment, to be taken into account in the calculation of taxable income. The value of the closing stock is added to taxable income to „balance‟ the tax calculation.1 [8] In Richards Bay at 319D Marais JA referred to Australian tax law and the decision in Federal Commissioner of Taxation v St Huberts Island (Pty) Ltd (in liquidation) (1978) 78 Australian Tax Reports 452 where Mason J stated that: „The recognition by accountants and commercial men that raw material used for the purpose of manufacture in a manufacturing business and partly manufactured goods form part of the trading stock of the business was an almost inevitable development. It enabled the value of raw materials and partly manufactured goods to be included in the value of trading stock at the beginning and end of an accounting period and by this means it led to the making of a more accurate calculation of the profit earned or the loss sustained in that period. It is not easy to see how an accurate calculation of profit or loss could be made unless the value of raw materials and partly manufactured goods was taken into account. Of course the value might be taken into account, even though by different means. Partly manufactured goods may be dealt with as “work in progress”, as indeed they are sometimes, but this expression is no more than an alternative description except in so far as it is intended to introduce different methods of valuation. In this respect I agree with Aickin J that the House of Lords in Ostime (Insp of Taxes) v Duple Motor Bodies Ltd [1961] 1 WLR 739 did not treat work in progress as being essentially different from trading stock. Their Lordships used the expression “work in progress” as an 1 A P De Koker & R C Williams Silke on South African Income Tax (Service 57, 2016) para 21.2. alternative description for partly manufactured goods which, like raw materials and completed goods, form part of the trading stock of a business and which, as that case illustrates, give rise to special problems of valuation. At 751, Lord Reid, with whose judgment Lord Tucker and Lord Hodson agreed, said: “Suppose that the manufacture of an article was completed near the end of an accounting period. If completed the day before that date the article, if not already sold, has become stock-in-trade, if completed the day after that date it was still work in progress on that date.”‟ (Emphasis added). [9] Consequently, in CSARS v Foskor [2010] ZASCA 45; [2010] 3 All SA 594 (SCA) para 21 it was stated that: „Historically, trading stock denoted goods acquired by a trader or dealer and held for sale. Both in Australia and South Africa the narrower view of what constituted trading stock gave way to the wider view to include raw materials acquired for purposes of manufacture, components and partly manufactured goods.‟ [10] Trading stock for the purposes of s 22(1) of the Act therefore includes partly manufactured goods, also referred to as „work-in-progress‟. In addition, as pointed out in Richards Bay at 325 B-F the definition of trading stock which includes: „. . . anything produced, manufactured, purchased or in any other manner acquired by a taxpayer for purposes of manufacture . . . by him or on his behalf‟ means that: „. . . in order to fall within the definition, what the taxpayer produces, manufactures, purchases or otherwise acquires need not be intended to be disposed of in the state in which it then is. It suffices that it is intended to be used for the purposes of manufacturing something. Nor does it matter whether or not that which is intended to be used is capable of realisation or sale in the state in which it then is. Whether it is so realisable or not, there will be no contemplation of receiving any quid pro quo for it in the state in which it then is. The fact that it may be saleable in its then state and have an ascertainable market value is not what brings it into the first part of the definition, because it was not produced, manufactured, purchased or in any other manner acquired for sale or exchange. What brings it into the definition notwithstanding that its sale or exchange was not contemplated is its intended use for purposes of manufacture.‟ (Emphasis added). [11] Although s 22 of the Act excludes from its ambit taxable income derived by a taxpayer from the activity of „farming‟, s 26 provides that the taxable income of any person carrying on „pastoral, agricultural or other farming operations‟ shall be determined in accordance with the Act, but „subject to the provisions of the First Schedule‟. Paragraphs 2, 3(1), 4(1) and 9 of the First Schedule, which have as their object the valuation of „livestock and produce held and not disposed of‟ by a taxpayer at the end of the year, accordingly form part of the Act. It would be anomalous if the meaning attributed to „trading stock held and not disposed of‟ in terms of s 22 of the Act differed from the meaning to be attributed to „livestock and produce held and not disposed of‟ in terms of paras 2, 3(1), 4(1) and 9 of the First Schedule to the Act.2 „Trading stock‟ has been construed for the purposes of s 22 as work-in-progress and stock which need not be in a saleable form. [12] The following facts are common cause, or not in dispute: (a) The appellant carried on „pastoral, agricultural or other farming operations‟ in terms of s 26(1) of the Act and filed tax returns which showed a portion of his overall taxable income, being derived from his farming operations, which were described as „wingerd boerdery‟. The farming income consisted mainly of what was described in his personal financial statements as „Verkope Produkte‟. (b) The farming income consisted of payments that the appellant received from the co-op, of which he was a member, in respect of grapes that he delivered to the co-op for the purpose of being made into wine. (c) On delivery, the grapes of the appellant were pressed into a pulp and mixed with the pulp from pressing grapes of the same cultivar and class delivered by other 2 „There is at least a reasonable supposition, if not a presumption, that the legislature, in using a particular term. . .intended it to bear the same meaning throughout. . .‟ a particular enactment. Durban City Council v Shell and B.P. Southern Africa Petroleum Refineries (Pty.) Ltd. 1971 (4) SA 446 (A) at 457A-B. farmers, who were also members of the co-op. These common pools consisting of individual cultivars and classes of grapes such as Sauvignon Blanc, Chenin Blanc, Merlot and Chiraz were operated by the co-op on behalf of its members. (d) As at midnight on 28 February 2009, (the end of the appellant‟s 2009 year of assessment) all of the appellant‟s harvested grapes had been delivered to the co-op and had been pressed into pulp to begin the process of wine making. The co-op thereafter bottled or packaged the wine and marketed and sold it. (e) Each farmer who participated in a pool received payment from the co-op of his or her pro rata share of the net proceeds of the sale of the wine, after the deduction of the co-op expenditure incurred in making and marketing the wine. The pro rata share was calculated by reference to the ratios in which each individual farmer delivered grapes to the pool. (f) Three payments were made to the appellant by the co-op. A „voorskot‟ was paid in July (after each February to April harvest), a „middelskot‟ and an „agterskot‟ was paid respectively in March and November of the following year. The „voorskot‟ was paid by the co-op out of borrowed money before any income was earned from the sale of wine and the „middelskot‟ was based upon ongoing estimates. The final amount owed to the appellant was only calculated when the „agterskot‟ was paid. (g) The members of the co-op did not sell their produce, or transfer ownership to the co-op accordingly the co-op did not become the owner of the produce. [13] Regard being had to the statutory context and the factual background, the following issues arise for determination: (a) Whether the income received by the appellant, which is generated by the sale of wine, constitutes income „derived from such operations‟ for the purposes of s 26(1) of the Act? (b) Whether the pressing of the grapes delivered by the appellant to the co-op results in the pulp no longer constituting „produce‟ as contemplated by para 2 of the First Schedule to the Act? (c) Whether the pressing into a pulp of the appellant‟s grapes and its subsequent mixing with the pulp of other members of the co-op, results in what was delivered by him no longer being „produce held and not disposed of by him‟, in terms of para 2 of the First Schedule to the Act? [14] With regard to the first issue, the transformation of the grapes into wine, does not result in the income earned from the sale of wine, being removed from the ambit of income derived from the appellant‟s agricultural operation. As stated in Ko- Operatiewe Wynbouers Vereniging van Zuid-Afrika Bpk v Industrial Council for the Building Industry 1949 (2) SA 600 (A) at 614: „Wine farming consists of a number of different operations, such as cultivation of vineyards, pruning of the grape vines, rendering the vines free from disease, gathering the crop, pressing the grapes into wine and probably delivering the finished product to the “first buyer”.‟ [15] As regards the second issue, the essence of the appellant‟s argument was as follows: After the grapes were pressed they no longer existed at midnight on 28 February 2009 and once the resultant pulp was mixed with the pulp from other farmers‟ grapes, the mixture was work-in-progress in a process of manufacture, namely the manufacture of wine by the co-op and therefore not the appellant‟s produce at all. It was submitted that the appellant‟s harvested grapes, being a natural product, constituted his produce, whereas the mixed pulp, treated with chemicals to aid the fermentation process, did not. [16] The appellant relies upon the decision in R v Giesken and Giesken 1947 (4) SA 561 (A) at 567, in relation to dairy farming where the following, was stated: „The exemption does not exclude farmers or their employees, but farming operations. If Bryant’s case is correctly decided, it would be part of such operations if the milk sold and distributed were milk produced by the appellant‟s own farming operations. . . Once they are engaged in respect of milk which is not the product of the appellant‟s farming operations, whether it be mixed with such product or not, the exemption no longer applies. The sale or distribution of milk obtained from other sources by purchase is not a farming operation, even if milk produced by the seller is added. The position is that, though they are engaged in farming operations, the sale and distribution of the milk is not a farming operation, and this is the case whether what is being delivered consists of 70 per cent of milk purchased and 30 per cent of milk produced by their farming operations, or vice versa.‟ The appellant submits that whilst it may be accepted that it is a part of dairy farming to pasteurise, sell and distribute a dairy farmer‟s milk, the moment the farmer‟s milk is mixed with milk from other sources ie other farmers, what is done thereafter ceases to be part of a „farming operation‟. On parity of reasoning, once the pulp resulting from the appellant‟s grapes was mixed with the pulp from other farmer‟s grapes, no part of the resultant mixture was „produce‟. [17] Giesken is not authority for this proposition. In issue was a statutory exemption from regulations pertaining to the „dairy trade‟ if the activity was part of a „farming operation‟. The appellant conducted a dairy farming operation, but also bought milk from other producers which was sold and distributed with the appellant‟s own milk. It was held that the sale and distribution of milk from other sources was not a farming operation. Once purchased milk from other sources was introduced to the appellant farmer‟s distribution business it lost the character of farming operations, whether the milk was mixed or not. The ratio of the case therefore concerned the introduction of purchased goods into a sale and distribution chain and not the mixing of produce. [18] In further support of the appellant‟s contention that the growing of grapes was not a farming activity giving rise to „produce‟, but that the process of taking the grapes and making wine from them was a „process of manufacture‟, reliance was placed upon the decision in Secretary for Inland Revenue v Safranmark (Pty) Ltd 1982 (1) SA 113 (A) at 122B where it was held that the transformation of raw chicken into Kentucky Fried Chicken was a „process of manufacture‟. The hallmark of manufacturing was that „there must have been a “substantial or essential change of the character of the materials” out of which the “manufactured” article was made‟. In the present case it was argued that there was a „substantial or essential change of the character of the materials‟ out of which the wine was made. The grapes and chemicals, the material used and processed by it to make wine were very different from bottled wine. Harvested grapes are to wine what livestock in the form of chickens were to Kentucky Fried Chicken. There was accordingly a major qualitative difference between the raw materials that went into making wine and the finished product, which suggests a process of manufacture rather than a farming operation. [19] Safranmark is not authority for this proposition. The court had to decide whether what the taxpayer was engaged in was a „process of manufacture‟ being the language of the statute in issue. It was not called upon to decide whether the fried chicken constituted „produce‟ of a farming operation. The taxpayer was never a farmer and purchased the raw chicken pieces from a supplier. The respondent submits that the outcome of the process in Safranmark was a new compound substance, the ingredients of which were chicken, milk, egg mixture and breading mixture, which had ceased to retain their individual qualities. What is left after the wine making process is fermented grape juice, not compounded with any other ingredients to create a compound substance. The harvested grapes are not to wine, what livestock in the form of chickens were to Kentucky Fried Chicken. At the end of the day wine is grape juice albeit in a fermented form. [20] The respondent correctly submits that the concept of „wine in process‟ falls comfortably within the concept of the „produce‟ of a wine grape farmer as envisaged by the First Schedule to the Act. The fact that the grapes have been pressed into a pulp and the process of fermentation begun, does not mean that the appellant‟s produce has disappeared. It is still there albeit in a different form. [21] The extent to which the identity of a natural product may be transformed by some form of treatment until it no longer exists as produce, must depend upon the product as well as the nature and extent of the processing, or treatment, to which it is subjected. Each case must be decided upon its own facts, but an important consideration is that: „. . . the raw product may conceivably in certain instances be subjected to extensive processing and be mixed up with numerous other commodities, to such an extent that it loses its identity by confusion and survives only as an inseparable portion of a factory product.‟3 [22] The physical processing that the appellant‟s grapes had undergone by being pressed into a pulp and the natural fermentation process that had begun (even if chemicals had been added at that stage) by midnight on 28 February 2009, did not make them essentially different from the produce of the harvest. They could not be said to have lost their identity by being „mixed up with numerous other commodities‟ and to „survive‟ only as an inseparable portion of a „factory product‟. [23] The word „produce‟ in para 2 of the First Schedule must be interpreted in the context in which it appears, as well as the apparent purpose to which it is directed.4 Because „produce‟ as in the case of „trading stock‟ includes work-in-progress and does not need to be in a saleable form to qualify as such, it is clear that the pulp produced by pressing the grapes falls within the definition of „produce‟. If this were not so, the purpose of including „produce‟ as part of the closing stock of a farmer at the end of the tax year, would not be achieved. The deduction by the appellant of the costs of producing the grapes will not be „balanced‟ unless the value of the grapes (albeit in the form of pulp) is added to „balance‟ the tax calculation for that tax year. Because of the delay between the harvesting of grapes and the sale of the wine, and the consequent delay between when expenses are incurred in producing trading stock and realising the proceeds thereof, no balancing can take place unless the existence of the pulp is taken into account in that tax year. 3 R v Bade 1951 (3) SA 218 (T) at 221D-F. See also Variawa v R 1936 NPD 540; R v Sarang 1947 (3) SA 620 (N). 4 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18. [24] I turn to the third issue, namely, what was delivered no longer being classified as „produce held and not disposed of by him‟. [25] According to Silke5 „held‟ encompasses ownership or dominium although it is wide enough to include „possession without legal ownership‟. Trading stock is „held and not disposed of‟ if the taxpayer has dominium in it, that is if he is the owner of it.6 The respondent accordingly submits that „disposed of‟ connotes conduct by which a trader has parted with ownership of the goods. Meyerowitz is of the view that „hold‟ is not synonymous with owned and is wide enough to include occupation or possession without legal ownership, 7 but that a disposal occurs when goods are sold unconditionally but not yet delivered. In the present case where ownership is retained by the appellant but possession is not, the produce is clearly „held‟ for the purposes of para 2 of the First Schedule. [26] Faced with the problem of ownership of the produce delivered to the co-op, the appellant advanced an argument which sought to diminish the nature and extent of the ownership held by him in the pulp. Because the pulp of the grapes delivered by the appellant was immediately mixed with the pulp from grapes delivered by other farmers, it was impossible, so the argument went, to identify who had contributed which pulp as a result of confusio, with the result that all of the farmers were co- owners in undivided shares of the pulp. The appellant accordingly only retained fractional ownership of the pulp resulting from the grapes delivered by him. This was drastically curtailed ownership. In addition, the resultant fractional ownership retained by the appellant had as a consequence that the mixture did not qualify as the appellant‟s produce. Furthermore, because the appellant had „authorised‟ the co- op to sell the wine once it had been manufactured from the mixture of pulp and was 5 Paras 8.111 and 15.10. 6 Silke at 8.111. 7 D Meyerowitz Meyerowitz on Income Tax (2007 – 2008) paras 20.24 and 20.26. entitled to nothing more than a pro rata share of the proceeds of the sale of wine, he had „disposed of the pulp‟. The pulp was not in the appellant‟s possession, nor was it held by the co-op for him, but was held by the co-op „for the purpose of sale by itself‟. [27] A complete answer to the submissions of the appellant lies in the fact that the appellant retained joint ownership, in an undivided share, of the pooled pulp and at a later stage the pooled wine, pro rata to the extent of his contribution of grapes to the pool. This is the effect of mixing or the mingling of the pulp with the pulp of other members without the intention of transferring ownership, where identification of the pulp contributed is not possible.8 That ownership was retained by the appellant means that the pulp could never have been held by the co-op for the purpose of sale by itself. The pulp had to have been held by the co-op for the appellant. As regards the appellant‟s contention that the resulting mixture of pulp could not be regarded as „own produce derived from his or her farming operations,‟ Silke points out that para 2 of the First Schedule requires a farmer to include „all . . . produce held and not disposed of “at the end of the tax year”‟. The reference to „all produce‟ suggests that the Schedule: „is concerned not only with a farmer‟s own produce but also with produce acquired from others for farming purposes. If the legislature intended that “produce” be restricted to that grown or produced by the farmer, it would have used appropriate language to convey this intention‟.9 I agree. The fact that the appellant owned an undivided share in the resultant pulp, would not absolve the appellant from having to account for this produce. If this were not so, farmers could mix their produce together before the year end to avoid having to account for closing stock. 8 Andrews v Rosenbaum & Co 1908 22 EDC 419 at 425; P J Badenhorst, Juanita M Pienaar and Hanri Mostert Silberberg and Schoeman’s The Law of Property 5 ed (2006) para 8.5. 9 Silke Para 15-9. [28] An interpretation of clauses 2 and 3(1) of the First Schedule that includes fractional ownership of pooled produce, gives effect to the purpose of the legislation, is in accordance with the language used and achieves sensible and business-like results. The appellant therefore had „produce on hand and not disposed of‟ in the form of an undivided share in the pulp. [29] I turn to the issue of whether the pulp had a value as at midnight on 28 February 2009 and if so, how that value should be calculated? The appellant submits that based on the provisions of s 22(1) of the Act, for the purposes of paras 2, 3(1), 4(1) and 9 of the First Schedule, „value‟ means market value and the pulp had no market value. However, para 9 of the First Schedule does not prescribe the method of fixing a value for the purposes of para 2 and simply provides that the value must be „fair and reasonable‟. The respondent is not bound to apply a market value to the pulp, but may adopt another method, provided that it is fair and reasonable. [30] The appellant submits that the costs incurred by the co-op for which the appellant and other members were liable once they had delivered their grapes, had to be taken into account in arriving at a value for the pulp. Because some 50 per cent of the fixed and variable costs of the co-op had been incurred before the first grapes had been delivered by any farmer, the pulp had a negative value at the end of February 2009. The costs already incurred exceeded the value, if any of the pulp at that date. [31] The cross-examination of the appellant‟s witnesses before the court a quo focussed on two potential ways of valuing the pulp: (a) The application of the distilling wine price; and (b) A determination of the cost of production. The respondent submits that on either basis, the value of the pulp was greater than zero. [32] As regards the issue of whether the pulp had any value, Messrs Van den Heever (the manager of the co-op) and Niewoudt (the owner and winemaker of Cederberg Wines) testified before the court a quo. They expressed the view that the pulp that existed at the end of February 2009 was without value and there was no market for it. They conceded in cross-examination that although the pulp may have had a theoretical value to the winemaker, there was no market for it which would have a negative value once the co-op‟s costs, which were already incurred, were taken into account. They were also of the view that even theoretically the pulp could never have been dealt with commercially, as no winemaker would tamper with it before the fermentation process had been completed. They both acknowledged, however, that they would not have allowed somebody to take away the pulp for free. The co-op insured the pulp up to the full value of the wine it was expected to produce. Mr Van den Heever agreed that it would be possible to determine a value of the pulp, by reference to the future price expected to be achieved by making wine from it, taking into account the risks and costs required to get it to that point. [33] I agree with the respondent that when regard is had to the fact that the pulp represents the accumulated work and cost of a year of farming activities, the wine to be produced is intended to be sold at a profit and in each year the appellant had received positive returns from the pool, to say the pulp is entirely valueless is unrealistic. In Richards Bay Iron & Titanium (Pty) Ltd & another v Commissioner for Inland Revenue [1995] ZASCA 81; 1996 (1) SA 311 (A) at 326A-B the following was said concerning the difficulty of valuing an unfinished product: „The suggested difficulty in identifying and ascribing a value to things in the process of being manufactured on the last day of the tax year does not entitle the Court to disregard the plain language of the definition. Moreover, the difficulty strikes me as being more apparent than real. Certainly in other tax jurisdictions the legislators and the courts have not baulked at the concept of valuing work-in-progress and there is no reason to suppose that the South African Parliament was daunted by the prospect. As has been noted, appellants themselves encountered no great difficulty in doing so when required by respondent to do so.‟ [34] The appellant submits that either method of valuing the pulp involves inexact conjecture rather than a fair and reasonable value, because the pulp was unlikely to have finished the process of fermentation by the end of February. The evidence, however, established that the distilling wine price was an ascertainable value, reflected in wine statistics and publications and a known concept in the industry. This method was employed by the appellant‟s accountant, Mr Vos, when he completed the appellant‟s 2007 and 2008 income tax returns. The calculation used the volume of grapes harvested and delivered by the appellant to the co-op before the year end, converted into litres (using an estimated juice yield) multiplied by that year‟s distilling wine price. He had used this method of valuation, because it was reflected as an alternative permissible method in the draft guideline issued by the respondent at the time. The guideline was based upon paras 2 and 3 of the First Schedule. In 2009 a similar calculation was initially included in the return to reflect produce held and not disposed of, but these accounting entries were then reversed by Mr Vos to reflect the value of produce on hand as zero. An error, however, was made by the respondent in assessing the appellant, because an „estimated distilling wine price per litre‟ of R1.52 was used when the correct distilling wine price for 2009 was 97.84 cents per litre. The respondent submits that although the amount was incorrect, it was clear to the appellant what methodology was used by the assessor and what the correct amount should have been. [35] The use of the distilling wine price as a minimum price operates to the advantage of the taxpayer, as most of the wines destined to become wine are of far superior quality than distilling wine. Because distilling wine attracts no real costs save for transport, the danger that it will return a negative value after cellar costs have been deducted, is not real. The evidence showed that in 2008-2009 „D‟ quality grapes used for distilling wine realised a positive return for the farmer of R450 per ton. This method is practical, workable and realises a positive value for the stock. It places a fair and reasonable value upon the stock. [36] As regards the method based upon production costs, Mr Vos had advised the respondent that the appellant‟s average production costs were R580 per ton. Although this was an industry average, from his evidence the appellant‟s costs in relation to his wine farming activities were objectively ascertainable and this exercise could be carried out by the respondent. [37] An issue initially advanced by the appellant was that the court a quo erred in referring the matter back to the respondent for further consideration and re- assessment. At the hearing the appellant, however, properly conceded that if the appeal failed on the merits the court a quo correctly referred the re-assessment to the respondent. It follows that the Commissioner would be entitled to re-assess the appellant to tax in accordance with the principles set out in this judgment. [38] The appellant also submits that if the appeal fails, he should not be liable for the payment of interest on the amount as originally assessed by the respondent. It is clear, however, that the court a quo found that the respondent was not entitled to levy interest on the assessed amount until it was revised. [39] The court a quo made no order as to costs. The appellant requests an award of costs in the tax court in his favour, on the basis that the respondent‟s grounds of assessment were unreasonable. However, the appellant did not include a prayer for costs in his grounds of appeal, to the court a quo. To seek this order after the proceedings before the court a quo have been finalised, is impermissible. The respondent was never alerted to the fact that the appellant would seek an order of costs and may have approached the matter differently if forewarned. There is no basis to interfere with the exercise by the court a quo of its discretion in this regard. [40] It is ordered that The appeal is dismissed with costs. K G B Swain Judge of Appeal Appearances: For the Appellant: T S Emslie SC Instructed by: Spamer Triebel Incorporated, Bellville Symington & De Kok, Bloemfontein For the Respondents: M W Janisch SC Instructed by: The State Attorney, Cape Town The State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 1 June 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Avenant v CSARS (367/2015) [2016] ZASCA 90 (1 June 2016) Media Statement The SCA dismissed an appeal in which the appellant had unsuccessfully challenged a tax assessment by the respondent, before the Tax Court. It was decided that the delivery of grapes by the appellant to a co-operative winery of which he was a member, which had been pressed into a pulp, as the first step in making wine and thereafter mixed with the pulp of other members of the co-operative, as at the end of the tax year, qualified as ‘produce held and not disposed of’ by the appellant, for the purposes of paragraphs 2, 3(1), 4(1) and 9 of the First Schedule to the Income Tax Act 58 of 1962. --- Ends ---

3958

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1333/2021 In the matter between: MODIKWA PLATINUM MINE, AN UNINCORPORATED JOINT VENTURE BETWEEN RUSTENBURG PLATINUM MINES LIMITED AND ARM MINING CONSORTIUM LIMITED APPELLANT and NKWE PLATINUM LIMITED FIRST RESPONDENT GENORAH RESOURCES (PTY) LIMITED SECOND RESPONDENT THE REGIONAL MANAGER, LIMPOPO REGION, DEPARTMENT OF MINERAL RESOURCES AND ENERGY THIRD RESPONDENT THE DIRECTOR-GENERAL: MINERAL REGULATION, DEPARTMENT OF MINERAL RESOURCES AND ENERGY FOURTH RESPONDENT THE MINISTER OF MINERAL RESOURCES AND ENERGY FIFTH RESPONDENT THE MINISTER OF AGRICULTURE, LAND REFORM AND RURAL DEVELOPMENT SIXTH RESPONDENT Neutral citation: Modikwa Platinum Mine, an unincorporated joint venture between Rustenburg Platinum Mines Limited and Arm Mining Consortium Limited v Nkwe Platinum Limited and Others (1333/2021) [2023] ZASCA 08 (06 February 2023) Coram: PONNAN, MOLEMELA, CARELSE, and HUGHES JJA and CHETTY AJA Heard: 17 November 2022 Delivered: 06 February 2023 Summary: Application – disputes of fact – respondent’s version cannot be rejected on the papers – application correctly dismissed by court a quo. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Limpopo Division of the High Court, Polokwane (Makgoba JP, sitting as a court of first instance): The appeal is dismissed with costs, including those of two counsel. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Carelse JA (Ponnan, Molemela, and Hughes JJA and Chetty AJA concurring): [1] The main issue in this appeal is whether the court a quo correctly dismissed an application by the appellant, Modikwa Platinum Mine (Modikwa), an unincorporated joint venture between Rustenburg Platinum Mines (Pty) Limited (RPM) and Arm Mining Consortium Limited (ARM MC)1, against the first respondent, Nkwe Platinum Limited (Nkwe). [2] On 4 June 2021, Modikwa launched an urgent application in the Limpopo Division of the High Court, Polokwane against Nkwe, and the second respondent, Genorah Resources (Pty) Limited (Genorah), in which the following relief was sought: ‘1 . . . that a Mandament van Spolie is granted ordering the First and Second Respondents to restore possession to the Applicant of the spoliated area, spoliated by the First and Second Respondents from the Applicant, on the Farm Maandagshoek 254 KT, as defined on the plan marked “LM 3” annexed hereto, and the Applicant’s rights in respect of the spoliated area, to the Applicant, free of any restriction or constraint, alternatively; 1 Modikwa is made up of the following parties: RPM and ARM MC. ARM MC is further made up of the following parties: African Rainbow Minerals Platinum (Pty) Ltd, a majority black-owned company; the Mampudima Community Company Incorporated (Mampudima), a company incorporated in terms of s 21 of the Companies Act 61 of 1973; and the Matimatjatji Community Company (Matimatjatji). Mampudima comprises of several communities. Matimatjatji compromises of the Matimatjatji community under the traditional leadership of Kgoshi Joseph Nkosi. Both the Mampudima and the Matimatjatji communities reside on several farms, including Maandagshoek, where Modikwa has a mining right. Each community has five elected directors with four members from both communities who sit on the board of ARM MC and are also members of the Executive Committee of Modikwa. The ownership in Modikwa is made up as follows: RPM 50%, ARM MC 41.5%, Mampudima 6% and Matimatjatji with a 2.5% interest. ejecting the First and Second Respondents and anyone occupying Maandagshoek through or under them, from Maandagshoek 254 KT and ordering them to remove all property which they may have, or have control over, on the Farm Maandagshoek 254 KT including, without limiting the generality of the aforegoing, fencing, vehicles, plant and temporary structures; further, alternatively to prayers 2 and 3 above, an order directing First and Second Respondents and/or their employees, agents and/or subcontractors to vacate Maandagshoek 254 KT and take down and remove from the Farm Maandagshoek 254 K[T] any property, including, without limiting the generality of the aforegoing, any fencing, plant, equipment, structures and vehicles belonging to them, or any contractor under their control from the Farm Maandagshoek 254 KT; and that the First and Second Respondent[s] to pay the costs of this application, jointly and severally, the one paying the other to be absolved, including the costs of two counsel.’ The application was dismissed by Makgoba JP, who subsequently granted leave to Modikwa to appeal to this Court. [3] The State owns farms in Limpopo Province known as Maandagshoek and Garatouw that in part share a common boundary. The State has granted Modikwa, a platinum mining company, mining rights over Maandagshoek, which is valid until 2043. Modikwa currently operates three mine shafts and employs 5 000 people. Nkwe and Genorah are ‘joint holders’ of a mining right in undivided shares (74% held by Nkwe and 26% by Genorah) in respect of several farms, including that of a farm known as the Remaining Extent of the farm Garatouw 282 KT (Garatouw), which was issued by the Minister of Mineral Resources and Energy (the fifth respondent). This right was granted in 2014, but Nkwe only commenced with the physical development of its mine at or about the beginning of 2021. [4] By reason of the locality and available geological data, for Nkwe and Genorah to exercise their mining right, they had built infrastructure on Maandagshoek. To this end, Nkwe and Genorah sought and obtained the requisite permission from the authorities to build the necessary infrastructure on Maandagshoek, which was to be built a considerable distance away from the area where Modikwa was exercising its mining rights. [5] In the founding affidavit filed in support of the application, it was stated on behalf of Modikwa: ‘3 SPOLIATION, ILLEGAL AND UNLAWFUL CONDUCT OF THE FIRST AND SECOND RESPONDENTS 3.1 The First and Second Respondents have invaded and occupied Maandagshoek 254KT with equipment and fencing, having fenced off an area in extent of 89.6 hectares, and having cleared a further 321 hectares to be fenced off (the “spoliated area”), a total of approximately 411 hectares. 3.2 On Friday, 14 May 2021, through media reports (the relevant annexures are identified and marked below) the Applicant first became aware that First and Second Respondents were about to embark upon box cut mining development on Garatouw 282KT by 28 May 2021. 3.3 On Monday, 17 May 2021, Applicant saw for the first time that First and Second Respondents erected extensive fencing and certain temporary structures on Maandagshoek 254KT. That is also when Applicant became aware that these Respondents intend to use the spoliated area as a staging area for the purposes of firstly doing box operations and then, if appropriate, sinking a mine decline shaft. . . . 3.11 It has only very recently come to the Applicant’s attention that on 2 March 2021, the South African Broadcasting Company (“SABC”) reported concerns raised by residents of the “Maandagshoek Community” with reference to the Maandagshoek Village and the surrounding area. The report makes reference to the “Maandagshoek Community” leaders being disgruntled because the First Respondent has fenced off a portion of their ploughing fields for purposes of establishing mining operations without consulting the “Maandagshoek Community” . . . . . . 3.15 Mr Fan states that the mine will uplift communities, however neither First Respondent nor the Second Respondent appear to have obtained the consent of the landowner who is the Government or the relevant Community structures or Communities who reside there, to carry out any activity on the farm Maandagshoek 254KT. For this reason alone, such operations would be unlawful. . . . . . 3.18 It is apparent from the articles referred to above that the First and Second Respondents intend on wrongfully using a portion of Maandagshoek 254KT as a staging area for the box cut development on Garatouw 282KT. The box cut it appears will traverse both farms.’ At para 5.10 in its founding affidavit, Modikwa states that: ‘5.10 First and Second Respondents do not have a mining right, approved MWP, EA, SLP or any of the other consents and authorizations required under the MPRDA to commence, or carry out, mining or incidental activities on Maandagshoek 254KT.’ [6] In its answering affidavit, Nkwe responded to those allegations as follows: ‘10.1 The contents hereof are denied. Nkwe is carrying out lawful activities as described supra. 10.2 The contents hereof constitute inadmissible hearsay evidence and if allowed, demonstrates the lack of urgency or self-created urgency in the extreme and the crux of the complaint relating to the box cut issue, which is a non-event as described supra. 10.3 Insofar as any of the remarks that I may have made during media briefings concur with the factual information and evidence presented herein, it is admitted, otherwise it is media reports and nothing more. 10.4 Contrary to any allegations relating to the lack of consent or consultation, respectively of and with Government and relevant community structures, irrefutable evidence, proving proper and due process and authorizations that are valid and existing are annexed. 10.5 None of the surface related activities constitute invasive mining activities such as alluded to or inferred by Modikwa. 10.6 I am advised that the MPRDA, on a proper construction of inter alia Section 1 thereof (the definitions part) distinguishes between invasive and non-invasive actions. Furthermore, the Environmental Authorization is certainly not contradictory to the provisions of the MPRDA. It will be argued, nonetheless, that the activities authorized in terms of the Environmental Authorization do not constitute invasive mining. It is carried out on virgin land (thus the de- vegetation, with the necessary permission) and far away from any of Modikwa’s invasive and non-invasive activities and area where the shafts are situated, which extends to underground workings at approximately 450m and more. 10.7 Nkwe’s activities and the related machinery and equipment mentioned are by its nature used for and authorized activities in terms of the Environmental Authorization and with the necessary consent by the landowner and occupiers, as evidenced supra.’ [7] Nkwe further alleged in its answering affidavit that: ‘3.3 Nkwe furthermore has the consent and written permission of the landowner of Maandagshoek, the Sixth Respondent to carry out Nkwe’s activities on Maandagshoek. The parties (the sixth Respondent and Nkwe) are in the process of concluding the formal land use agreement which has been agreed in principle. The written authority and permission of the landowner is annexed hereto, marked “GF2.3(a)”. The consent from informal land rights holders of the relevant land is annexed hereto, marked “GF2.3(b & c)”. Nkwe also attached a written consent from the 185 occupants of Maandagshoek agreeing to the infrastructure being built on a part of Maandagshoek. In this regard, it was stated in the answering affidavit: ‘3.4 Nkwe has concluded and signed 185 compensation agreements with occupants of Maandagshoek who either reside there or conduct farming operations on the said farm. 3.4.1 In support of the above, independent supporting affidavits of Kgoshi Ralph Kgoete, Kgoshi Bethuel Mohlala and Kgoshi Emmanuel Mpuru are annexed hereto, marked “GF2.4(a- b)” and “GF2.5”, who confirm the essence and substance of the contents of this affidavit). 3.4.2 These traditional leaders represent the Mamphahlane, Tswako Mohlala and Mpuru communities which are the only relevant and affected communities in respect of the area where Nkwe is carrying out activities on Maandagshoek. They confirm the relevant permissions in terms of their community structures. The permissions are aligned with the Environmental Authorization in that they relate to the fenced off and demarcated area of Maandagshoek where Nkwe’s activities are carried out. 3.4.3 In support of the above, independent supporting affidavits of directors from the referred section 21 company M. Ronicah, S. Brian, P. Mpuru and M. Thami, are annexed hereto, marked “GF2.5(a-d)”, who confirm the essence and substance of the contents of this affidavit). The supporting affidavit of Mr. Klaas Mpuru in his capacity of General Secretary of the Kone Phuti tribal council is also attached hereto, marked “GF2.5(e)”.’ [8] Modikwa does not dispute the documents recording the consent of the 185 occupants referred to above. It, however, states in its reply that it is surprised that they ‘support the spoliation . . . and the unlawful activities of [Nkwe]’. [9] As should be apparent from the relevant portions of the founding affidavit quoted above, Modikwa placed a great deal of reliance on media reports, but that, as the respondents correctly argued, was not admissible evidence. In any event, as stated in National Director of Public Prosecutions v Zuma:2 ‘[26] Motion proceedings, unless concerned with interim relief, are all about the resolution of legal issues based on common cause facts. Unless the circumstances are special they 2 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; [2009] 2 All SA 243 (SCA); 2009 (2) SA 277 (SCA) para 26. cannot be used to resolve factual issues because they are not designed to determine probabilities. It is well established under the Plascon-Evans rule that where in motion proceedings disputes of fact arise on the affidavits, a final order can be granted only if the facts averred in the applicant's (Mr Zuma's) affidavits, which have been admitted by the respondent (the NDPP), together with the facts alleged by the latter, justify such order. It may be different if the respondent's version consists of bald or uncreditworthy denials, raises fictitious disputes of fact, is palpably implausible, far-fetched or so clearly untenable that the court is justified in rejecting them merely on the papers. The court below did not have regard to these propositions and instead decided the case on probabilities without rejecting the NDPP's version.’ [10] Here, it cannot be said that a court would be justified in rejecting the version advanced in the answering affidavit, merely on the papers. It follows that the application had to fail and the court a quo cannot be faulted for dismissing the application. [11] Insofar as costs are concerned: In its notice of motion, Modikwa sought relief against Nkwe and Genorah. On appeal it was accepted on behalf of Modikwa that no case whatsoever was made out against Genorah. Genorah was a party to the appeal. It opposed the appeal. Costs must follow the result both in this Court and the one below. [12] In the result, the following order is made: The appeal is dismissed with costs, including those of two counsel. _________________ Z CARELSE JUDGE OF APPEAL Appearances For appellant: T Bruinders SC with K Dewey Cliffe Dekker Hofmeyr, Sandton Mayet & Associates, Bloemfontein For first respondent: J Roux SC with L J Pretorius Boshoff Smuts Incorporated, Centurion Van Wyk & Preller Attorneys, Bloemfontein For second respondent: J Oschman Malan Scholes Attorneys, Johannesburg Claude Reid Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 06 February 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Modikwa Platinum Mine, an unincorporated joint venture between Rustenburg Platinum Mines Limited and Arm Mining Consortium Limited v Nkwe Platinum Limited and Others (1333/2021) [2023] ZASCA 08 (06 February 2023) The Supreme Court of Appeal (SCA) dismissed with costs, including those of two counsel, an appeal by the appellant, Modikwa Platinum Mine (Modikwa), an unincorporated joint venture between Rustenburg Platinum Mines (Pty) Limited (RPM) and Arm Mining Consortium Limited (ARM MC), against the judgment of the Limpopo Division of the High Court, Polokwane (the court a quo). The main issue in the appeal was whether the court a quo correctly dismissed an application by Modikwa against the first respondent, Nkwe Platinum Limited (Nkwe), and the second respondent, Genorah Resources (Pty) Limited (Genorah), in which, inter alia, the following relief was sought: a mandament van spolie ordering Nkwe and Genorah to restore possession to Modikwa of the spoliated area, being the Farm Maandagshoek 254 KT (Maandagshoek). The background facts of the matter were as follows. The State-owned farms in Limpopo Province known as Maandagshoek and Garatouw that in part share a common boundary. The State had granted Modikwa, a platinum mining company, mining rights over Maandagshoek. Nkwe and Genorah were ‘joint holders’ of a mining right in undivided shares in respect of several farms, including that of a farm known as the Remaining Extent of the farm Garatouw 282 KT (Garatouw), which was issued by the Minister of Mineral Resources and Energy (the fifth respondent). By reason of the locality and available geological data, for Nkwe and Genorah to exercise their mining right, they had built infrastructure on Maandagshoek. To this end, Nkwe and Genorah sought and obtained the requisite permission from the authorities to build the necessary infrastructure on Maandagshoek, which was to be built a considerable distance away from the area where Modikwa was exercising its mining rights. The SCA found that since the matter was brought in motion proceedings and there were clearly disputes of fact, the Plascon-Evans rule applied. In this regard, the SCA held that, in this case, it could not be said that a court would be justified in rejecting the version advanced in Nkwe’s answering affidavit merely on the papers. It followed that the application had to fail and the court a quo could not be faulted for dismissing the application. ~~~~ends~~~~

3115

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT CASE NO: 409/06 Reportable In the matter between MARK CORNICK First Appellant LEONARD KINNEAR Second Appellant and THE STATE Respondent Coram: LEWIS, PONNAN JJA, THERON AJA Heard: 2 MARCH 2007 Delivered: 20 MARCH 2007 Summary: Appeals against convictions and sentences for rapes committed 19 years before charges were laid by complainant dismissed. Complainant’s evidence proved guilt of appellants beyond reasonable doubt. Sentences confirmed. Neutral citation: This case may be cited as CORNICK & KINNEAR v THE STATE [2007] SCA 14 (RSA) LEWIS JA [1] This appeal is against the convictions and sentences imposed on the two appellants, Mr Mark Cornick and Mr Leonard Kinnear for rape. Both pleaded not guilty to two counts of rape. Cornick was convicted on both charges and Kinnear on one. They were sentenced to five and four years’ imprisonment respectively. [2] The case is an unusual one, for the rapes for which the appellants were convicted occurred in 1983 some 19 years before the complainant, Mrs Belindie Van Niekerk (to whom I shall refer as Belindie), laid charges against them. Belindie was then a child of 14 and the appellants some four years older. Belindie did not tell her parents or her grandparents (with whom she was staying at the time) of the rapes at all. She told no one but a couple of friends and even then she did not tell them much. She kept quiet about the incident until, in 2002, she fortuitously met Cornick at his sister’s home. By then she was married and had a child. She had not told her husband that she had been raped until the evening she met Cornick. The meeting revived memories of her ordeal, such that she became hysterical and had to tell her husband what had happened. It was then that she laid the charges and that Cornick and Kinnear were arrested, charged in the Wynberg Regional Court, Cape Town, convicted and sentenced. Their appeal to a full bench of the Cape High Court (Mitchell and Potgieter AJJ) was dismissed. It is with the leave of that court that this further appeal lies. [3] The evidence of Belindie, accepted as credible by the regional magistrate, was in essence this. Her parents had divorced when she was very young and her mother had moved away from the area in which they had lived in Cape Town, to Parow. For a year she had lived with her paternal grandparents, in Kenwyn, seeing her father on a regular basis. She had continued to attend primary school in the Kenwyn area. She went to live with her mother some time in 1981. But she regularly visited her grandparents and stayed with them over school holidays. Her mother then remarried and she and her husband had built a house in Parow. Not long after they had moved in to their new home in 1982, Belindie went to spend the December and January school holidays in Kenwyn with her grandparents. [4] One Tuesday evening in January 1983 (Belindie was certain of the time period because it was after her mother had moved into the new house and at the start of her Standard 8 school year) she was invited to spend the night with a former primary school friend, Louise Meyer. While Louise, her mother, Belindie and a third girl whom Belindie did not know, were watching an episode of the television show ‘Dallas’ five youths arrived at the house. Belindie knew three of them, Cornick, Kinnear and Michael Kinnear. She had met them previously at the home of a friend, Zelna Albertyn. The other two youths were the older brother of Cornick, Raymond, and Clive, neither of whom Belindie had met before. Michael was apparently Louise’s boyfriend. [5] When the episode of Dallas was finished Louise’s mother went to bed. The girls and the five youths went to Louise’s bedroom since Louise was concerned that the noise they were making would disturb her mother. Unbeknown to Belindie, after they went in the bedroom door was locked. Louise and the other girl became sexually intimate with Michael and Clive respectively as soon as they were in the room. Belindie went to sit on the bed where she was supposed to sleep. [6] Cornick came over to the bed, pushed her down so that she lay flat on the bed and began to kiss her. He pushed his tongue into her mouth. She was so naive, she maintained, that she did not even know that she was being kissed. Cornick also forced his hand under her blouse and when she tried to resist him he became aggressive. He then took hold of both her hands with one of his, holding her hands above her head, and with his free hand forcibly removed her jeans and pants. She objected and called out to the others to help her, but they ignored her. Cornick overcame her resistance and raped her. When he was finished his brother Raymond also raped her, and when she screamed he held a knife to her throat and threatened to hurt her. She was then raped by Kinnear, and a second time each by Cornick and his brother Raymond. All three of them lay on the bed with her at the same time. [7] She kept pleading for help and weeping but the other people in the room continued to ignore her. When she was raped a second time by Raymond Cornick she became hysterical. The pain was searing. She no longer cared that there was a knife held to her throat. Her crying alerted Louise’s mother, who knocked on the door and asked about the noise. The men dressed hastily and Louise opened a window for them to leave the room. She then unlocked the door. Her mother stood at the door and did not come into the room. Louise spoke for Belindie when asked what the trouble was. She said Belindie wanted to go home. The mother replied that it was too late at night for her to leave and that she could go only in the morning. Belindie had no opportunity to say anything and in any event was in too distressed a state to speak. The mother went away, having apparently accepted the explanation. Belindie said that the mother was an alcoholic but did not claim that she was drunk at the time. [8] Louise told Belindie to wash herself. She was bleeding and her clothes and the bedlinen were stained. After washing Belindie lay on the bed, sleepless, until morning when she went back to her grandparents’ home. She said not a word to them about her ordeal. She had been ignorant about sex and felt embarrassed, humiliated and ashamed at what had been done to her. [9] That afternoon she was sent by her grandparents to the local shop to buy something for them. There she encountered Cornick who told her that if she ever said anything about the incident to anyone he would tell her grandparents what she had done. Not only did this frighten her, but it also reinforced her fear that she had done something wrong. While she felt abused and traumatized, she did not realize that she had been raped. She felt demeaned and humiliated and did not understand that she was in no way to blame. [10] The result was that she threw away her bloodstained jeans and pants, lying to her mother later as to what had happened to them. And she remained almost completely silent about her ordeal for some 19 years. She did tell two friends some of what had happened soon afterwards: she spoke to a girl named Yolanda Duddy over the phone, and had seen and spoken to Zelna Albertyn. I shall return to the evidence of the conversation with Zelna. [11] Belindie’s distress was such that she decided to return to her mother’s home in Parow prematurely. She phoned her mother and asked to be fetched to return home earlier than planned. Her mother confirmed when testifying that this had happened, and that Belindie had explained her wish to return early on the basis that her friends were not around and that she was lonely. [12] Belindie did not tell her mother about the rapes. She felt unable to do so. She and her mother did not have a close relationship and she had effectively been brought up by her grandparents since she was about four. She had never been told about sex by her mother, nor about female physiology. Indeed she knew nothing of menstruation until she began her periods. She said that she did not realize, until her mid-twenties, that she had been raped. She attempted to bury the ordeal in the back of her mind, though she said that she had become even more withdrawn a child than she had been before. [13] In due course Belindie matriculated, and enlisted in the army. Subsequently she joined the department of correctional services and worked in various capacities, ultimately as a prison warder in a men’s prison. She married Mr Albertus van Niekerk and they have one child, also named Belindie. She did not tell Van Niekerk that she had been raped. She pretended, when they married, that she was a virgin. In court she said that in doing this she had ‘lived a lie’. [14] When working as a prison warder Belindie suffered from depression. She had difficulties with her superiors, and found it unpleasant to deal with rapists in the prison. She consulted a psychiatrist and eventually confided in him that she had been raped as a child. But she still told no one else. She was eventually medically ‘boarded’ as a result of her depression. [15] In February 2002 Belindie went to pick up her daughter who had been visiting a friend. She encountered Cornick for the first time since January 1983, and recognized him immediately. Although shaken she managed to speak to the mother of her daughter’s friend, and discovered that she was Cornick’s sister. She also spoke to the father of the friend about building a carport, before leaving the house with her daughter. [16] By the time she reached home she was hysterical as memories of her ordeal in 1983 came flooding back to her. She had to explain her state to her husband, and told him about the rapes in 1983. He was supportive and empathetic. He took her to a police station and they tried to lay a charge. But the officers on duty were unsympathetic and uncooperative. They left without laying a charge and the following day, a Monday, Belindie was hospitalized because of the emotional distress she was feeling as a result of the encounter with Cornick. [17] When she was discharged she ascertained where Cornick lived and his phone number. How she ascertained it is disputed and I shall return to the issue when considering her credibility. Belindie, in the presence of her husband then phoned Cornick, who immediately knew who she was. She testified that she had asked him whether he knew that he had raped her. He responded that he did not deny it, but that it had happened years ago. When she told him that she was going to lay a charge, he asked why she had not done it at the time. Her husband corroborated this exchange. [18] Shortly after the telephone conversation with Cornick, Belindie was phoned by his sister, the mother of her daughter’s friend, who verbally abused her and threatened her. Belindie nonetheless then laid a charge against the appellants. [19] Three other witnesses testified for the State: Belindie’s mother, Mrs Alida Driedijk, Mrs Zelna Brown (formerly Albertyn), and Belindie’s husband, Mr Albertus van Niekerk. Mrs Driedijk could add very little and her evidence was not regarded as completely reliable by the trial court. But she did confirm that Belindie had asked to be fetched earlier than arranged from her grandparents’ home in January 1983, and that Belindie was a quiet, withdrawn child. She was hazy on where Belindie had gone to school and when, but she was adamant about the period when Belindie had returned early from her grandparents’ home. She testified that Louise had spent a weekend with Belindie in Parow, and that she had not liked Louise. She told Belindie that Louise was not an appropriate friend and that Belindie should end the friendship. [20] Zelna confirmed that Belindie had told her that she had been hurt by Raymond Cornick, and that Mark Cornick had been present, but could not recall mention of Kinnear. She acknowledged that at the time of their conversation her chief reaction to what Belindie had said was anger with Belindie for going to Louise Meyer’s house. Louise, Zelna said, had a ‘bad reputation’, and she had warned Belindie not to go there. She said that the appellants were friends of hers and that she found it difficult to believe that they had raped Belindie. However, she also admitted that as a young teenager she too had been naive about sexual matters and might not have comprehended what Belindie was telling her. [21] Albertus van Niekerk confirmed that Belindie had not told him of the multiple rapes until February 2002 when she returned home from fetching her daughter. He slapped her to stop her hysteria. Subsequently he heard the telephone conversation between her and Cornick, and confirmed what was said. He also overheard the abusive and threatening call from Cornick’s sister. [22] The appellants testified in their own defence. They are cousins, and for some time Cornick had lived in the Kinnear home. The cousins, including Michael Kinnear, were good friends. Both denied that they had ever raped Belindie. Yet both acknowledged that they had known her as a child in Kenwyn, and had met her at Zelna’s home. Both recalled an evening when they had gone to Louise Meyer’s home and met Belindie there. They said that Michael, Louise’s then boyfriend, had been with them as had Gary. (It is not clear whether Gary is the same person to whom Belindie referred as Clive.) But they denied that Raymond Cornick, or a third girl, had been present. They claimed simply to have sat in Louise’s bedroom and chatted. They both said that they had left Louise’s house by the front door, as they had come in, thus denying that they had climbed out of a window. And they insisted that this had happened earlier than 1983: they did not go out in the evenings during the week, they said, because they were supposed to study for school exams. But they did not explain why this would be so during a school holiday, which it was in January 1983. They also claimed that they had met Belindie several times at Zelna’s house after they had encountered her at Louise’s home one evening. This accords neither with Belindie’s evidence that she did not see them again after January 1983, nor with Zelna’s evidence that she had not seen Belindie since that time. [23] The regional court, as I have said, found that Belindie was an entirely credible witness. Mindful of the fact that Belindie was a single witness to the rapes, the regional magistrate looked for corroboration in the evidence of Driedijk and Zelna, and examined the evidence of Belindie herself carefully, finding no inconsistencies. It is worth setting out in full her description of Belindie as a witness. ‘The complainant to my mind, clearly testified about a very traumatic experience. The evidence that she gave, the nature thereof and the charge is not only of a traumatic experience, but it was quite clear that talking about it, even 20 years later, made it no easier for the complainant. The Court adjourned on numerous occasions. The complainant was crying, sobbing in court and I cannot agree with the defence’s contention that this was antics or a show. In fact it never appeared rehearsed or anything but genuine anguish. She was honest about her own feelings of shame, embarrassment, feelings of having done something wrong herself, feelings that at the end of the day fits in with what the court would expect of a child at that stage, given her circumstances and that she was the victim of rape. She was completely honest about the fact that she lied to her grandparents and her mom as to why she wanted to cut her holiday short. She was honest about it that she destroyed the evidence, if one could call it that, the blood on her clothing. She was honest that she never told her husband about this, that she pretended her virginity. She was honest to say I probably would never have laid the charges if I did not run into accused 1 and all the memories came flooding back.’ . . . ‘The Court also finds the complainant to be a credible witness. There were no inconsistencies in the complainant’s version, but more importantly no improbabilities.’ [24] The appeal court considered this evaluation to be correct. Mitchell AJ said that he was mindful that a trial court may have the advantage of seeing and hearing the witnesses in court, but that it is nonetheless the duty of an appeal court to consider the record of the proceedings in order to ascertain whether the credibility findings are supported by the evidence or by the probabilities. A credibility finding may well be held to be wrong.1 An examination of the record persuaded the appeal court that the trial court had not erred in its assessment of Belindie’s evidence. [25] The appellants argue, however, that the regional court misdirected itself in several respects. First, they contend that the learned magistrate made findings of fact that are inconsistent with the evidence. So, for example, she did not take into account the conflict between the evidence of Belindie, that she had encountered Zelna once after she had left Kenwyn, and that of Zelna who said that after January 1983 she had not seen Belindie again, until the trial. The conflict does not relate to the facts in issue and is in my view immaterial. [26] Secondly, Zelna’s evidence was that Belindie, when she told her of the incident, had mentioned only Raymond Cornick and not Mark Cornick as an assailant, although Belindie had mentioned his presence. She had not mentioned Kinnear to Zelna, according to the appellants, although Belindie testified that she had. As the learned regional magistrate found, these discrepancies are insignificant in context. Both Belindie and Zelna were testifying about a conversation held some 20 years previously. Moreover, Zelna said that she could not remember mention of Kinnear: she did not deny that mention was made of him. Zelna admitted that she had not fully comprehended what Belindie was telling her at the time. She admitted also that her reaction to what was said was one of anger towards Belindie for not heeding her advice about Louise. It is thus not surprising that there are some inconsistencies in the recounting of the conversation. This was the view too of the court below, and I consider that the regional court did not misdirect itself on these questions of fact. It correctly regarded Zelna’s evidence as corroborative at least of the fact that Belindie had been sexually assaulted by Raymond Cornick in January 1983. [27] Another misdirection argued for by the appellants is that Belindie, when giving evidence on her reaction to seeing Cornick in 2002, said that she told her husband that she had seen her ‘rapist’. Van Niekerk, on the other hand, testified 1 R v Dhlumayo 1948 (2) SA 677 (A); Munster Estates (Pty) Ltd v Killarney Hills (Pty) Ltd 1979 (1) SA 621(A) at 623H-624A); Santam Bpk v Biddulph 2004 (5) SA 586 (SCA) para 5 and Medscheme Holdings (Pty) Ltd v Bhamjee 2005 (5) SA 339 (SCA) para 14 . that she said she had seen her ‘rapists’. The trial court did not take this inconsistency into account. This complaint cannot be afforded any weight in the light of the uncontested evidence of Belindie that she had seen only Cornick, and had telephoned only him. [28] The appellants argue further that the trial court misdirected itself when it found that Zelna’s evidence corroborated that of Belindie when the latter said that Louise had a bad reputation. In fact Belindie did not use those words. But she did testify that Zelna had warned her not to go to Louise’s house. It is reasonable to assume that Belindie knew of Zelna’s view of Louise. In the context of the evidence the complaint is trivial and the finding certainly does not amount to a misdirection. [29] The appellants contend that the trial court misdirected itself in finding that Belindie’s mother corroborated her evidence that Belindie would not, after January 2003, visit her grandparents on her own. Belindie, however, testified that she had visited them after school on occasions, taking the train to Kenwyn. This is indeed an incorrect finding of fact, but again, it is of no significance and is explicable by the 20 years that had lapsed between 1983 and the trial. Belindie would probably have had a better recollection than did her mother, and the error is of no relevance to the events at issue. [30] There is only one respect in which I consider that Belindie’s evidence was puzzling: this is her account of how she ascertained the telephone number of Cornick. She testified that she had gone to a public phone and phoned the directories enquiry number, 1023. She had been given both his telephone number and his address. Much was made of this by the appellants’ attorney in the trial court. Why use a public phone when she had a phone at home? And why say that she was also given Cornick’s address when such information is not given on the enquiries line? No good explanation for this was proffered. She also testified that she had asked Cornick’s niece, her daughter’s friend, for the address. But why do that when she already had it? The court below considered that these implausible features were of a minor nature and did not impact on Belindie’s credible account of the rapes. That is correct. [31] Finally, and most importantly, the appellants argue that Belindie’s version is improbable. They contend that it was not possible for Belindie to have been so inexperienced and naive as not to know about sex or not to realize (until in her mid-twenties) that she had been raped. The story that she was raped in the presence of her ‘friends’ without their intervening was also improbable, as was the conduct of Louise’s mother in taking no note of an apparently hysterical girl. [32] Yet Belindie gave plausible explanations for all these apparent anomalies. She had been brought up by elderly and conservative grandparents. They had never discussed matters of an intimate nature. She had a distant relationship with her mother who had also not spoken to her ever about sex or physiology. She had never had a boyfriend. It seems to me quite likely that in these circumstances she did not realize what was happening to her when three youths took turns forcibly to have sexual intercourse with her, despite her pleas and protestations. She knew that she was being hurt, but she did not appreciate that she was being raped. It does not seem to me improbable that a young woman who has tried to bury memories of a traumatic event for many years would not appreciate until her mid-twenties, at a time when discussion and publicity about rape had become common, the full extent of what had happened only later. [33] The argument that it was improbable that none of Belindie’s friends came to her rescue if her version were true is equally not convincing. It was Belindie’s view that she had been ‘set up’ by her so-called friend, Louise. Indeed Zelna confirmed that Belindie told her that Louise had instigated the attack on Belindie, encouraged the youths, and urged them on. She did not know any of the youths, although she had encountered three of them at Zelna’s house previously, and she did not know the third girl. They were not friends and they ignored her pleas. When Louise’s mother knocked on the door Louise had first let the men escape through the window and only then opened the door. It may be hard to understand the motives of the others given the vile manner in which they behaved, but that does not make Belindie’s account of their conduct improbable. They were on her version complicit in their friends’ conduct. [34] Belindie’s account of Louise’s mother’s behaviour is also said to be improbable. Why would a mother who saw a hysterical girl, bleeding and in a state of semi-undress, take no action? Belindie’s explanation is entirely plausible. Mrs Meyer stood at the door of Louise’s bedroom. The bed on which Belindie sat was at the far end of the room. When she wanted to speak out Louise kept her quiet by saying that Belindie wanted to go home. In any event, Belindie was unable to speak because of her hysterical state. There appears to be no reason why the mother would not accept such an explanation. And it is likely that, standing at the door, she did not see the blood that Belindie said was on her clothing and the bedlinen. Moreover, why would Belindie fabricate the appearance of Louise’s mother and her failure to speak out when this might weigh against her? [35] The appellants argue also that it is improbable, if the rapes occurred, that Belindie would not have told her grandparents or her mother about the rapes. They point out also that she gave various answers about why she had not laid charges: that she could not tell anyone, that she did not know where the appellants lived and that she did not know that she had been raped. However, none of these is inconsistent with the others. In my view, Belindie’s explanation is credible. She did not appreciate the magnitude of what had happened to her. She did not realize that she had been raped. She knew only that something terrible had happened to her, and felt in some way responsible, complicit. She had let it happen and was therefore ashamed. The threat by Cornick the following day exacerbated her feelings of shame and humiliation. She was not in a position to discuss personal matters with her elderly and very conservative grandparents. She also felt she could not tell her mother. Sex was not openly spoken about in the community in which she lived. Rapes were not reported and discussed daily by the media as they are now. The only people in whom she could confide were friends, and she had spoken to two of them, though she had not been explicit. The trial court and the court below accepted these explanations, as do I. In my view it is highly likely that a young girl who goes to sleep over at the home of a person against whom she had been warned, both by a friend and her own mother, and then spends time in a locked bedroom with five youths whom she barely knows, would believe that she was at fault. In her naive mind Belindie had done wrong. The situation was partly of her own making. She would clearly then not want to relate her ordeal to her mother or to her conservative, strict grandparents. [36] Related to the misdirections alleged is the appellants’ complaint that the regional magistrate did not heed the cautionary rule. Counsel for the appellants concedes that there is no longer a special cautionary rule relating to sexual offences. In S v J2 this court held that when evaluating the evidence of an alleged victim in rape or sexual assault cases a court need do no more than exercise the caution that is necessary when there is only one witness to the offence alleged. But he argues that the trial court did not take into account sufficiently that, because she was a single witness, Belindie’s account had to be treated with particular care, especially in light of her history of depression. She is argued to fit the ‘psychological profile’ of the complainant in S v F3 who was disbelieved. I fail to see any analogy, for in that case the appellant admitted to sexual intercourse with the complainant but claimed it was consensual. It is in any event a decision that precedes that of this court in S v J4 and the finding was made on the basis that the trial court had not heeded the cautionary rule specific to sexual offences. The point that is sought to be made is that because Belindie suffered from bouts of depression (the extent of which was not established), she ‘deviated’ from the norm such that her evidence should be treated with additional caution. This submission is made without any factual basis and thus must be rejected. [37] In my view the trial court was very careful in assessing the evidence. The regional magistrate expressly stated that it was incumbent on her to approach Belindie’s evidence with caution. It is for this reason that she sought to find corroboration in the evidence of other witnesses, such as Zelna and Van Niekerk. She also found some of the evidence of the appellants to be corroborative: thus, for example, they confirmed that Michael was Louise’s boyfriend; that they had spent an evening at Louise’s house when Belindie was present and that they had met Belindie at Zelna’s house previously. As the court below found, the regional magistrate exercised all the caution that was required. 2 1998 (2) SA 984 (SCA). 3 1989 (3) SA 847 (A). 4 See also S v M 2006 (1) SACR 135 para 272. [38] There is additional reason for rejecting the argument that Belindie’s version was a fabrication. She was, as the trial court found, frank about having lied to her mother about her stained clothes and the reason for her early return to Parow, and to her husband about being a virgin. She was also frank about her failure to say anything to Mrs Meyer when she came to find out about the noise in Louise’s room. And, most significantly, she did not implicate Kinnear in a second rape. If her version were a fabrication, why invent the appearance of Mrs Meyer, and why not say that Kinnear too had raped her a second time? I consider that these are features of a genuine and credible account of the appellants’ conduct. [39] It remains to consider whether the appellants’ versions, weighed against Belindie’s credible account, were reasonably possibly true. They both denied guilt. They both claimed that on the one evening when they had met Belindie at Louise’s home they had done nothing more than chat to Louise and Belindie. But neither could explain why Belindie, 19 years after the alleged rapes, had laid a charge against them. It was put to Belindie that Louise and her mother would deny her version. Yet neither was called. Nor were Michael and Gary called although they were at court when the trial commenced and the attorney appearing for the appellants put to Belindie that they would testify that nothing had happened and that her account was a complete fabrication. Yet they did not, in the end, testify. At the close of the defence case the attorney representing the appellants said only that other witnesses were not available. Of course it is not for the appellants to establish their innocence. And acceptance of the State’s evidence does not in itself establish the guilt of an accused.5 But there was a case for them to meet. [40] Kinnear’s evidence as to his arrest is also of note. He testified that he had received a telephone call from Cornick who had been arrested and asked him to come to the police station where he was being held. Kinnear did not ask why Cornick had been arrested: he simply drove to the station to ‘hand himself over’. Why do that if he did not know that he too would be arrested and what the probable charges were? Moreover, when questioned by the regional 5 S v Van Aswegen 2001 (2) SACR 97 (SCA). magistrate, Kinnear’s version of why he had gone to the police station and what he had said was entirely different. [41] The trial court was not impressed by the appellants. Their version of events was scanty and they could not explain the improbability of Belindie fabricating a complex story about their raping her some 19 years after the offences were committed. Accepting that the evidence of Belindie was credible and consistent, and corroborated in several respects, the appellant’s conflicting version, unsupported by any evidence but their own, cannot stand. In S v Van der Meyden6 Nugent J said ‘It is difficult to see how a defence can possibly be true if at the same time the State’s case with which it is irreconcilable is “completely acceptable and unshaken”. [The quotation is from S v Munyai,7 a case the learned judge said was to be regarded with circumspection.] The passage seems to suggest that the evidence is to be separated into compartments, and the “defence case” examined in isolation, to determine whether it is so internally contradictory or improbable as to be beyond the realm of reasonable possibility, failing which the accused is entitled to be acquitted. If that is what was meant , it is not correct. A court does not base its conclusion, whether it be to convict or to acquit, on only part of the evidence. The conclusion which it arrives at must account for all the evidence. . . . The proper test is that an accused is bound to be convicted if the evidence establishes his guilt beyond reasonable doubt, and the logical corollary is that he must be acquitted if it is reasonably possible that he might be innocent.’ [42] This is a case where the State evidence is so convincing that it excludes the possibility that the appellants are innocent ‘no matter that [their] evidence might suggest the contrary when viewed in isolation’.8 I consider that the State proved the appellants’ guilt beyond reasonable doubt. [43] I turn then to the appeals against the sentences imposed. Belindie gave evidence in aggravation of sentence, repeating her testimony about the anguish that she had suffered during and after the rapes, and the way in which her life had been detrimentally affected. In cases such as these a heavy sentence is 6 1999 (1) SACR 447 (W) at 449f-450a, cited and approved in S v Van Aswegen at 101a-f. 7 1986 (4) SA 712 (V). 8 S v Van der Meyden above at 449d-e. warranted. At the time of the rapes the jurisdiction of the regional court was limited to the imposition of a maximum term of imprisonment of ten years. [44] Sentencing in this matter is particularly difficult given that the appellants were charged 19 years after they had committed the offences and convicted more than a year later. Evidence was led, and reports handed in by a correctional supervision officer, and by a clinical psychologist, which showed that both appellants have led apparently exemplary lives since 1983. Both men were 39 at the time of sentencing. They both have stable jobs, a regular income, wives and children. They are regarded as decent people by the communities in which they live. [45] The trial court did take these factors into account in imposing sentence. It also had regard to the fact that the appellants were only 18 at the time they raped Belindie. But the regional magistrate considered that correctional supervision in terms of s 276A(1) of the Criminal Procedure Act 51 of 1977 was not appropriate despite the recommendation of the correctional supervision officer. She considered that the punishment of the appellants should send a serious message to the public about the horror of rape. She regarded it as aggravating that the appellants showed no remorse; that they had taken advantage of a girl whom they knew, and that Cornick had threatened her the day after he had brutalized her. They had both raped her despite her pleas, her suffering, her weeping. They took turns in participating in this savage conduct. In the words of the regional magistrate, they were ‘cruel, callous and contemptible’. Their savagery had an impact on the life of Belindie which cannot be undone. The serious nature of the crime thus persuaded the trial court that correctional supervision was not an appropriate sentence for either of the appellants. [46] In the absence of any misdirection on the part of the trial court an appeal court should not interfere with the sentence imposed. In any event, in my view, sentences of five years’ imprisonment for Cornick (who raped Belindie twice) and four years’ imprisonment for Kinnear, are entirely appropriate. While there is some cogency in the argument that men who have for twenty years led decent lives should not be sent to prison, I consider that the extreme cruelty of their behaviour warrants more than correctional supervision. Only direct imprisonment is sufficiently serious to constitute a deterrent and retributive sentence. [47] The appeals of both appellants against both convictions and sentences are dismissed. C H Lewis Judge of Appeal Concur: Ponnan JA and Theron AJA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL PRESS RELEASE 20 March 2007 STATUS: Immediate C and K v The State 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 In January 1983 the appellants, then 18, participated in a gang rape of a 14 year old girl, B. B, who was staying with her elderly and conservative grandparents in Kenwyn, Cape Town, at the time, had gone to spend the night with a friend, L. There three youths including the appellants had raped her despite the presence in the room of L and three other teenagers. One of the youths had also threatened her with a knife. L had encouraged the youths, and lied to her mother, who came to find out why B was crying hysterically, about what was happening. B had not told her parents or her grandparents about the gang rape: she had not appreciated what had actually happened to her and felt ashamed and humiliated. She also felt complicit as she had been warned by another friend, Z, not to go to L’s house, and B’s mother had asked her to end her friendship with L. Indeed when she told Z about what had happened, Z’s reaction had been one of anger with B for going to L‘s home when she had warned her against it. B also did not tell her husband, when she married years later, about the rape. She remained silent until she fortuitously encountered C at the home of his sister 19 years later. The encounter revived memories of her ordeal and she became hysterical on her return home. After telling her husband what had happened years previously, she broke down and had to be hospitalized. On her discharge she laid charges against the two appellants. C and K both pleaded not guilty to the two charges of rape laid against each of them. They testified in the regional court, Wynberg, that although they had spent an evening with B at L’s home about 20 years previously, nothing had happened. The regional magistrate rejected their evidence. She found that B’s detailed, consistent account of what had happened was entirely credible. She also accepted the explanations of B as to why she had told no one but a friend, and she accepted that B had been naïve and ignorant of sexual matters such that she had not appreciated that she had been raped until she was in her mid-twenties. C, who was convicted on two counts of rape, was sentenced to five years’ imprisonment. K, who was convicted on one count, was sentenced to four years’ imprisonment. The trial court considered that correctional supervision was not an appropriate sentence for either of them, given the cruelty of their behaviour, and the impact that it had had on B’s life. An appeal to the Cape High Court failed. The court considered that the appellants had been rightly convicted and that the trial court had not misdirected itself in the imposition of sentences. The SCA today dismissed the further appeal against both convictions and sentences. It found (per Lewis JA, Ponnan JA and Theron AJA concurring) that B’s evidence in the trial had been consistent and credible, and was corroborated in various respects. She had provided plausible explanations for her failure to tell her family about the rapes, and for remaining silent for so many years. The court accepted her explanation that she had not appreciated exactly what had happened to her, and that she had felt complicit because she had disregarded warnings against L. It considered that the conflicting evidence of the appellants could not be believed in the light of the compelling State case. The SCA also regarded the sentences as appropriate and held that it could not in any event interfere in the absence of a misdirection on the part of the trial court. - - - -

3480

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 116/2020 In the matter between: KURT ROBERT KNOOP NO FIRST APPELLANT JOHAN LOUIS KLOPPER NO SECOND APPLELLANT and CHETAALI GUPTA RESPONDENT MAHOMED MAHIER TAYOB INTERVENING PARTY Neutral citation: Knoop and Another NNO v Gupta (No 2) (Case No 116/2020) [2020] ZASCA 163 (9 December 2020) Coram: WALLIS, MBHA and MOCUMIE JJA and EKSTEEN and MABINDLA-BOQWANA AJJA Heard: 6 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09h45 on 9 December 2020 Summary: Removal of business rescue practitioners – s 139(2) of Companies Act 71 of 2008 – grounds – whether grounds for their removal established. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Ledwaba DJP, Janse van Nieuwenhuizen J and Senyatsi AJ concurring, sitting as court of first instance) reported sub nom Gupta v Knoop NO and Others 2020 (4) SA 218 (GP); [2019] ZAGPHC 960: The appeal is upheld with costs, such costs to include those consequent upon the employment of two counsel. The order of the high court is set aside and replaced with: 'The application is dismissed with costs, such costs to include those consequent upon the employment of two counsel.' The costs occasioned to the appellants by the application to intervene by Mr Tayob, including those consequent upon the employment of two counsel, are to be paid by Mr Tayob in his personal capacity. JUDGMENT Wallis JA (Mbha and Mocumie JJA and Eksteen and Mabindla-Boqwana AJJA concurring) [1] The respondent, Mrs Chetali Gupta, her husband, Mr Atul Gupta, and his brothers Messrs Rajesh and Arti Gupta (collectively 'the Guptas'), are the sole shareholders in equal shares, in two companies, Islandsite Investments One Hundred and Eighty (Pty) Ltd (Islandsite) and Confident Concept (Pty) Ltd (Confident Concept). On 16 February 2018 Islandsite and Confident Concept were both placed under voluntary business rescue in terms of resolutions taken by their respective boards of directors under s 129(1), read with s 129(2), of the Companies Act 71 of 2008 (the Act). Acting on the recommendation of their attorneys, the board of directors of Islandsite appointed the appellants, Messrs Kurt Knoop and Johan Klopper, as business rescue practitioners (BRPs) and the board of Confident Concept appointed Mr Knoop as BRP. [2] Less than a year later, in November 2018, Mrs Gupta launched an application in the Gauteng Division of the High Court, for the removal of Messrs Knoop and Klopper as BRPs of these two companies. A full court (Ledwaba DJP, Janse van Nieuwenhuizen J and Senyatsi AJ) was specially constituted to hear the application. On 13 December 2019, in a judgment by Ledwaba DJP concurred in by his colleagues, it granted an order for the removal of the BRPs.1 An application for leave to appeal against that order was lodged and leave to appeal to this court was granted on 7 February 2020. [3] On the same day that it granted leave to appeal the full court granted an order that the noting of an appeal would not suspend the operation of the removal order ('the execution order'). The execution order was itself the subject of an extremely urgent appeal in terms of s 18(4)(ii) of the Superior Courts Act 10 of 2013. Both appeals were set down for hearing in this court on 6 November 2020. The circumstances in which that occurred are set out in the judgment already delivered upholding the urgent appeal.2 In this appeal Mr Tayob, the intervening party, applied for leave to intervene and submit evidence to the court. That application was abandoned, but we need to deal with the costs it occasioned. The issues it raised were disposed of in the judgment in the urgent appeal. 1 Gupta v Knoop NO and Others 2020 (4) SA 218 (GP); [2019] ZAGPHC 960 (Full court). 2 Knoop and Another NNO v Gupta (No 1) [2020] ZASCA 149 ('Gupta 1'). [4] That judgment also dealt with and disposed of issues raised in this appeal concerning the purported withdrawal of this appeal, the locus standi of Messrs Knoop and Klopper to pursue the appeal and whether it had been rendered moot by the actions of persons purportedly appointed to replace them as BRPs. For the reasons there given the contentions on behalf of Mrs Gupta in regard to these issues in this appeal are rejected. This appeal has not been withdrawn; Messrs Knoop and Klopper have locus standi to pursue it; and, it has not been rendered moot. The only issue we now need to deal with is whether the order for their removal as BRPs was correct. The background [5] The business affairs of the Guptas have come to public attention through media reports; the 'State of Capture' report by the then Public Protector, Ms Thuli Madonsela; and the activities and daily public hearings of the Commission of Inquiry into Allegations of State Capture, known eponymously as the Zondo Commission after the commissioner, Deputy Chief Justice Raymond Zondo. The Commission was appointed in fulfilment of the remedial action determined by the Public Protector in her report. [6] In consequence of allegations made about the Guptas, a number of companies in the group through which the Guptas conducted their business activities became 'unbanked', because the major banks in South Africa were not prepared to afford them banking facilities. This precluded them from continuing with their business operations and very probably rendered them commercially insolvent.3 That was why Islandsite and 3 Murray and Others NNO v African Global Holdings (Pty) Ltd and Others [2019] ZASCA 152; 2020 (2) SA 93 (SCA); [2020] 1 All SA 64 (SCA). Confident Concept were placed under supervision and went into voluntary business rescue. For the same reason, six other companies in the group were placed under business rescue at the same time, namely: Tegeta Exploration and Resources (Pty) Ltd (Tegeta); Optimum Coal Mine (Pty) Ltd (OCM); Koornfontein Mines (Pty) Ltd (Koornfontein); Optimum Coal Terminal (Pty) Ltd (OCT); Shiva Uranium (Pty) Ltd (Shiva) and VR Laser Services (Pty) Ltd (VR Laser). [7] All of these companies are controlled by the Guptas. They are directly or indirectly subsidiaries of Islandsite through Oakbay Investments (Pty) Ltd (Oakbay), which controlled the operations of all the other companies in business rescue. Forty percent of the shares in Oakbay are owned by Islandsite and the balance by Mr and Mrs Gupta. It is convenient to refer to these companies generally as the Oakbay Group. Its acting Chief Executive Officer (CEO) is Ms Ronica Ragavan. [8] The present appellants, Messrs Knoop and Klopper, were not only appointed as the BRPs in respect of Islandsite and Confident Concept, but they also held appointments as BRPs in respect of some of the other companies in the Oakbay Group. Sometimes these were held jointly, sometimes only one of them was appointed, and sometimes they were appointed in conjunction with other BRPs. The relevance of these appointments will become apparent later. [9] Although appointed at the instance of the directors, Ms Ragavan and Mr Ashu Chawla in the case of Islandsite, and Mr Chawla in the case of Confident Concept, disputes arose between the BRPs, Ms Ragavan and other employees in the Oakbay Group shortly after the business rescue commenced. These will be described in greater detail later, but suffice for the present to say that they led to Mrs Gupta making this application on 28 November 2018. She did so on the basis of an affidavit deposed to by Ms Ragavan. The latter's authority to institute these proceedings on behalf of Mrs Gupta and the authenticity of the latter's signature on certain affidavits was challenged on the basis of discrepancies between the dates on the affidavits and the dates of attestation shown by the commissioners of oaths in the South African consulate in Dubai before whom they were attested. There is no reason to believe that Mrs Gupta did not appear before these consular officials and depose to the affidavits so the point was not pursued. [10] Ms Ragavan summarised Mrs Gupta’s complaints against the BRPs in the following four paragraphs of her founding affidavit: '16.1 the staff appointed by the First Respondent (who is the sole business rescue practitioner of Confident Concept and who is the lead business rescue practitioner, in the sense that the Second Respondent hardly seems to be involved at all, in respect of Islandsite) to attend to the affairs of Confident Concept and Islandsite are simply not up to the task; 16.2 the approved business plans (which are binding as a matter of law) are being ignored and undermined by the respective business rescue practitioners in various respects; 16.3 the respective business rescue practitioners are totally ignoring very competitive third party offers which are made in respect of various of the very valuable assets in question and have insisted, across the board, on sales by way of auctions; 16.4 the First Respondent has in writing instructed that quotations are issued instead of VAT invoices in circumstances where I am advised and respectfully submit VAT invoices should properly be issued. This instruction is most disturbing.' [11] In addition to these specific allegations Ms Ragavan said that the conduct of the BRPs in various unspecified respects was not in good faith; amounted to a failure by them to perform their duties; involved a failure to exercise a proper degree of care in the performance of their duties; evidenced a conflict of interest or lack of independence and was consistent with neither the conduct of an officer of the court nor the responsibilities of a director of the companies in question. This was merely a recitation of the provisions of the section, with the addition of references to ss 140(3)(a) and (b). She did not identify any conduct by either Mr Knoop or Mr Klopper that fell short of what was required of an officer of the court. Nor was reference made to any breach of a provision in ss 75 to 77. [12] The factual allegations against the BRPs quoted above in para 10 needed to be substantiated by evidence. In the light of the requirements of s 139(2) factual findings needed to be made and considered to determine whether a case for their removal had been made out. The general recitation of some of the provisions of the Act added nothing to the factual allegations in para 10. In order for the BRPs to know what it was they were charged with doing, or omitting to do, and in what respects their conduct of the business rescue was said to be deficient, specific facts needed to be set out in the founding affidavit to which they could respond in order to defend their administration. Knowledge of the allegations with which one is confronted and an opportunity to rebut or explain them is central to the fair conduct of legal proceedings. [13] It is unfortunately necessary to restate these basic propositions because the judgment under appeal contains no analysis of the factual case made by Mrs Gupta and no factual findings in respect of the alleged conduct of the BRPs. There are no findings of fact: (a) in regard to the competence of their staff; (b) that they ignored and undermined the approved business rescue plans; (c) that they ignored very competitive third party offers in respect of various valuable assets or that they insisted across the board on sales by way of auction; (d) in regard to alleged breaches of the Value-Added Tax Act 89 of 1991 (the VAT Act). The absence of factual findings on these issues necessitates a fuller treatment of the facts than would ordinarily be necessary. It is not possible to determine from the full court's judgment whether it thought that these factual allegations had been established and justified removal of the BRPs, or whether its judgment rests on a wholly different factual foundation. Both possibilities must therefore be addressed. A court of first instance is obliged to set out clearly in its judgment the factual findings and reasons upon which the judgment rests, in order for the appeal court to perform its functions, which is to examine whether on those facts and for those reasons the claim for relief was correctly determined. Regrettably that was not done in this case. [14] An application for the removal from office of a BRP requires the facts relied on by the applicant to be measured against the circumstances in which the court is empowered to remove the BRP. It is therefore helpful to deal at the outset with the provisions of s 139(2) of the Act and the circumstances in which a court may order the removal of a practitioner. As the full court laid great stress on the provisions of ss 140(3)(a) and (b) the proper application of those sections in business rescue and the duties they impose on BRPs will also be addressed. Section 139(2) of the Act [15] In a voluntary business rescue the BRPs are appointed by the board of directors of the company,4 but they can only be removed by a court order under s 130 of the Act, or under the provisions of s 139.5 The relevant provision for present purposes is s 139(2), which provides: 'Upon request of an affected person, or on its own motion, the court may remove a practitioner from office on any of the following grounds: (a) Incompetence or failure to perform the duties of a business rescue practitioner of the particular company; (b) failure to exercise the proper degree of care in the performance of the practitioner’s functions; (c) engaging in illegal acts or conduct; (d) if the practitioner no longer satisfies the requirements set out in section 138(1); (e) conflict of interest or lack of independence; or (f) the practitioner is incapacitated and unable to perform the functions of that office, and is unlikely to regain that capacity within a reasonable time.' The full court relied on subsecs (a) and (e), although potentially sub-secs (b) and (c) might be thought to have been engaged. The focus is therefore on these provisions. [16] Proceedings under s 139(2) may be brought by affected persons. That expression is defined in s 128 as meaning a shareholder or creditor of the company; a registered trade union representing employees of the company; and, if any employees are not so represented, each of those employees or their representatives. Mrs Gupta is a shareholder of both Islandsite and Confident Concept, so she has locus standi to bring an application under s 139(2). She did so in her own right. The papers do not indicate the attitude of her co-shareholders to the application, although it seems inevitable that they are aware of it. Not only the familial 4 Sections 129(1) and (3)(b) of the Act. 5 Section 139(1) of the Act. relationship, but also the fact that the principal affidavits on behalf of Mrs Gupta were executed by Ms Ragavan, whose position as acting CEO of the Oakbay Group means that she is responsible to the shareholders of Islandsite for her actions in that capcaity, make it apparent that the three Gupta brothers must be aware of this litigation. However, they were not joined and have not sought to intervene or depose to affidavits. Their silence is puzzling, but no inference can be drawn from it. What is before us is an appeal against an order granted at the instance of someone to whom the Act gives locus standi to bring this type of application. [17] The court has a discretion either to grant or to refuse an order for the removal of a BRP. The discretion is exercisable if one or more of the grounds for removal set out in s 139(2) has been established on a balance of probabilities. However, proof of a ground for removal alone does not dictate that an order for removal must follow. The power of removal is not combined with a duty to exercise that power, of the type referred to in Schwartz v Schwartz.6 The range of actions by BRPs that might fall within these sub-sections and the degree of seriousness and varying implications they may have for the business rescue process, is such that it cannot be said that proof of one or more of these grounds will necessitate removal, or even give rise to a presumption or inclination to order removal. Whether they do is a matter for judgment on the facts of the particular case. In that sense it involves what is loosely called a discretion, meaning only that the court must take into account a number of disparate and incommensurable features.7 However, that does not afford the decision any special immunity on appeal, where the appeal 6 Schwartz v Schwartz 1984 (4) SA 467 (A) at 473-474. 7 Mahomed v Kazi's Agencies (Pty) Ltd and Others 1949 (1) SA 1162 (N) at 1168; Knox D'Arcy Ltd and Others v Jamieson and Others 1996 (4) SA 348 (A) at 360F-362E; Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another [2015] ZACC 22; 2015 (5) SA 245 (CC) paras 83-88. court is in as good a position as the high court to determine the case.8 The question before the court of first instance was whether the BRPs should be removed. It was not choosing among two or more different but permissible options, as a court does on questions of sentence, or costs, procedural issues, or the quantum of general damages. It was providing the correct or incorrect answer to the question of removal. On appeal this court is therefore free to interfere if it concludes that the high court erred. [18] Before turning to the various grounds upon which the full court ordered the removal of the BRPs, it may be helpful to make some general remarks, as this is not a question that has previously engaged the attention of this court. The power now given to the court is not novel. Under our common law the court has always had and exercised the power to remove trustees and administrators of deceased estates on the ground that their continuation in office would prejudicially affect the proper administration of the estate entrusted to them and prejudice the beneficiaries of that estate.9 That power extends to the removal of executors,10 liquidators of companies11 and trustees in insolvency.12 Cases dealing with these situations will be instructive in regard to the approach to be adopted to removing BRPs. Two general principles will be that removal is not something to be ordered lightly and that the primary reason justifying removal will be actual or potential prejudice or harm to the interests of the estate, trust or company, and those in whose interests the 8 Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd ('Perskor') 1992 (4) SA 791 (A) at 797D-H; Gaffoor and Another v Vangates Investments (Pty) Ltd and Others [2012] ZASCA 52; 2012 (4) SA 281 (SCA) para 39; Giddey NO v JC Barnard and Partners [2006] ZACC 13; 2007 (5) SA 525 (CC) para 19 fn 17. 9 The Master v Edgecombe's Executors and Administrators 1910 TS 263; Sackville West v Nourse and Another 1925 AD 516. 10 The power is contained in statute. Section 54(1)(a) of the Administration of Estates Act 66 of 965. 11 Under s 379 of the Companies Act 73 of 1963 the court may remove a liquidator for good cause. 12 Fey NO and Whiteford NO v Serfontein and Another 1993 (2) SA 605 (A) and s 59 of the Insolvency Act 24 of 1936 as amended by s 18 of Act 99 of 1965. administration was established, such as heirs in an estate or creditors in circumstances of insolvency. [19] The general nature of the grounds for removal is such that they cannot be established directly. They are factual conclusions or inferences drawn from other proven facts. It is necessary for the applicant for removal to specify and establish by evidence the conduct on the part of the BRP that they say justifies an order for removal. Only if there is proper proof of the primary facts can the question of drawing an inference properly arise. The drawing of inferences from the facts must be based on proven facts and not matters of speculation. As Lord Wright said in his speech in Caswell v Powell Duffryn Associated Collieries Ltd: 13 'Inference must be carefully distinguished from conjecture or speculation. There can be no inference unless there are objective facts from which to infer the other facts which it is sought to establish … But if there are no positive proved facts from which the inference can be made, the method of inference fails and what is left is mere speculation or conjecture.' [20] The first ground relied on in this case was incompetence or a failure to perform the duties of a BRP of the particular company. Reliance on this ground required evidence of specific instances of incompetence, or failure to perform the BRPs duties, in relation to the company under business rescue. Incompetence suggests that the BRP lacked the necessary skills to perform their duties. It may be established by proof that the BRP is 'of inadequate ability or fitness; lacking the requisite capacity or qualifications'.14 That is a reasonably high bar. 13 [1939] 3 All ER 722 (HL) at 733E-F, cited in Motor Vehicle Assurance Fund v Dubuzane 1984 (1) SA 700 (A) at 706B-D; MV Pasquale della Gatta: MV Filipppo Lembo; Imperial Marine Co v Deiulemar Compagnia di Navigazione Spa [2011] ZASCA 131; 2012 (1) SA 58 (SCA) para 24. See also Great River Shipping Inc v Sunnyface Marine Limited 1994 (1) SA 65 (C) at 75I-76C and particularly the statement that ‘evidence does not include contention, submission or conjecture.’ 14 Shorter Oxford English Dictionary, 6 ed (2007), Vol 1 at 1355, sv 'incompetent', meaning 2. Merely moderate ability does not amount to incompetence. Nor does the failure to meet the standards that the affected party would like to see achieved, whether that relates to the time taken to complete the business rescue process, or the prices at which assets are sold, or the manner in which the BRP approaches their task. The alleged incompetence must relate directly to the performance of the task of a BRP. An inability to perform the role of BRP properly in relation to the circumstances of the particular company must be demonstrated. [21] Where a failure to perform the duties of a BRP is relied on it is essential to identify the duties that the affected party says should have been performed and to show the respects in which they were not performed. A failure to convene meetings as required by the statute and the business rescue plan, or a failure to report to the creditors and other affected parties, come to mind as fairly obvious examples. A general neglect of the duties of a BRP, where the BRP simply fails to deal with matters requiring attention in a regular and timeous fashion, may suffice, but a BRP who is attending to matters in a manner which the affected party does not approve of is not failing to perform their duties. [22] A failure to exercise a proper degree of care in the performance of their functions will in most instances require proof of negligence. It is difficult to see how that could be shown by way of general allegations without reference to specific instances of negligence. While proof of harm to the company, whether in the implementation of an approved business plan or from the perspective of its future operations after business rescue is terminated, may not be a prerequisite to proof of a failure to exercise a proper degree of care, in the absence of harm it may be difficult for a court to conclude that the BRP has not exercised a proper degree of care. At the very least the potential for harm to have been caused by the actions of the BRP must be considered even if that harm was averted or did not materialise. [23] Lastly, a conflict of interest or a lack of independence are also reasons for the removal of a BRP. There is little difficulty with the notion of a conflict of interest, a concept that has over many years received the attention of our courts. The classic statement of the principle is in the judgment of Innes CJ in Robinson v Randfontein Estates:15 'Where one man stands to another in a position of confidence involving a duty to protect the interests of that other, he is not allowed to make a secret profit at the other's expense or place himself in a position where his interests conflict with his duty.' Examples of the principle in action are provided by cases such as Barnett v Estate Beattie16 and Grobbelaar v Grobbelaar,17 which involved the removal of executors who had claims against the estate that were disputed. In the latter case Van Blerk JA said:18 'It is clear that a substantial conflict arises between the personal interests of the respondent and those of the estate, in consequence of which a situation is created where the respondent's position as executor is rendered intolerable. He finds himself in the impossible position that on the one hand, as a creditor of the estate, he must fight for his claim, and on the other hand, in his capacity as executor of the estate, he must defend against the same claim. In this role he would be compelled to choose sides. He cannot remain neutral or impartial.' (My translation.). 15 Robinson v Randfontein Estates Gold Mining Company Ltd 1921 AD 168 at 177-178. 16 Barnett v Estate Beattie 1928 CPD 482 at 485. 17 Grobbelaar v Grobbelaar 1959 (4) SA 719 (A) at 724F-G. C/f Webster v Webster en ń Ander 1968 (3) SA 386 (T) at 388C-D. 18 At 725G-H. The judgment was in Afrikaans and the original passage read: 'Dit is duidelik dat hier wesenlike botsing bestaan tussen die persoonlike belange van die respondent en die van die boedel waardeur toestand geskep is wat respondent se posisie as eksekuteur vir hom onhoudbaar maak. Hy bevind hom in die onmoontlike posisie dat hy enersyds as skuldeiser van die boedel sal moet veg vir sy eis en andersyds in sy hoedanigheid as eksekuteur die boedel sal moet verdedig teen dieselfde eis. In hierdie rol sal hy genoodsaak wees om kant te kies. Hy kan nie onsydig of onpartydig bly nie.' In Van Niekerk v Van Niekerk19 the conflict arose because the executrix and sole heir to the estate had a substantial interest in excluding or diminishing the claim by the widow to half the estate or substantial maintenance and acted accordingly. [24] The requirement that the BRP be independent is likewise well- established in related contexts such as the appointment of liquidators, where the general rule is that the liquidator should be independent of the company in liquidation.20 That has been held to disqualify from appointment as liquidators shareholders, directors, creditors and the attorney acting for the company. Once appointed they are required to be independent and to carry out their duties without partiality.21 Independence requires that they do not have a relationship, direct or indirect with the company, its management or any person concerned in its affairs that may place them in a position of conflict of interest,22 or prevent them from exercising an independent judgment on the affairs under their control. Whilst in a voluntary business rescue the BRP owes their appointment to the directors of the company, they must not allow themselves to be dictated to by the directors or shareholders or any third party. They must at all times exercise an independent judgment taking into account the potentially conflicting interests of different affected parties. [25] An extreme case of the absence of independence on the part of the BRP came before this court in African Bank of Botswana v Kariba 19 Van Niekerk v Van Niekerk and Another 2011 (2) SA 145 (KZP). See also Bagnall NO and Others v Acker NO and Others [2020] ZAWCHC 161 paras 67 to 112. 20 In Re Greatrex Footwear (Pty) Ltd (II) 1936 NPD 536. 21 Standard Bank of South Africa v The Master of the High Court (Eastern Cape Division) [2010] ZASCA 4; 2010 (4) SA 405 (SCA) paras 124 to 128. 22 Hudson and Others NNO v Wilkins NO and Others 2003 (6) SA 234 (T) para 13 Furniture.23 The board, consisting of its only two shareholders, a husband and wife, appointed an attorney as BRP. The company had not been operational for some five years, yet the BRP presented a business rescue plan without the benefit of any current financial statements. An amount of R5 million that the shareholder had said on oath was available to fund the business rescue was not included or accounted for. The BRP said it had been consumed in the costs of certain litigation, but was unable to furnish details of those costs. The money simply vanished. The bank that was the principal creditor objected to the business rescue, but the BRP ignored their objections. The business rescue plan presented to the creditors fell 'woefully short' of compliance with the requirements of s 150 of the Act and did not provide information from which an assessment of reasonable prospects of the business rescue succeeding could be made. The BRP relied entirely on information furnished to him by the shareholders and his own unsubstantiated assessment. The justified impression gained by the bank was that he was acting as a representative of the company. [26] Matters came to a head at the meeting where the business rescue plan was rejected by the creditors. An offer was presented on behalf of the shareholders in terms of s 153(1)(b)(ii) of the Act and the BRP ruled that it was not open to the bank to respond to the offer because it was binding. In terms of the offer he transferred the bank's voting interest to the shareholders, thereby giving the latter a 95 percent interest. They then voted to approve the rescue plan. The offer did not disclose who was making it, the price, or where, when and how payment was to be made. This court held that it was not an offer at all. In the ensuing litigation the BRP acted as attorney for both the company and himself, and deposed to 23 African Banking Corporation of Botswana Ltd v Kariba Furniture Manufacturers (Pty) Ltd and Others [2015] ZASCA 169; 2015 (5) SA 192 (SCA). the principal answering affidavit for himself and the shareholders. At the appeal he sought to represent himself and the company, until the manifest impropriety of this was pointed out. [27] This court was faced not only with the appeal, in which the bank sought to set aside the BRP's acceptance of the 'binding offer', but also with an appeal against the high court's refusal to set aside the resolution placing the company in business rescue and to set aside the appointment of the BRP. Having upheld the appeal on the merits and set aside the resolution placing the company under business rescue, it held that it was unnecessary to deal with the BRPs appointment, but went on to make certain comments about his conduct preparatory to ordering him to pay the costs jointly and severally with the shareholders. These comments were relied on by the full court in this case to justify the removal of the BRPs, so it is necessary to deal briefly with them. [28] There are three passages appearing in para 35 and paras 37 and 38 of the judgment of Dambuza JA that are relevant. They read as follows: '[35] … However, the conduct of the practitioner in this case raises serious concerns. This is because of the responsibility he had, as a business practitioner under the Act, which he does not seem to have appreciated. A business rescue practitioner must be held to a high professional and ethical standard. In addition to the powers and duties specifically conferred on business rescue practitioners by ch 6, they are also officers of the court (s 140(3)(a)) and have the responsibilities, duties and liabilities of a director as set out in ss 75 – 77 (s 140(3)(b)). It was the duty of the practitioner in this case to conduct a careful assessment of Kariba's affairs and to prepare a plan that adequately reflected the prospects of Kariba's rescue. Against this standard, and the standard expected of the practitioner as an attorney, the attitude displayed by the practitioner, in regard to serious concerns expressed by the bank regarding what it considered to be the shortcomings in Kariba's affairs and the rescue plan, is disturbing. [37] … He ignored, and was even hostile to, inquiries by the bank's representatives when such inquiries related to aspects which were the core of his function as a business rescue practitioner. The impression gained by the bank's representatives that he acted as a representative of Kariba, rather than as an independent practitioner, was justified. The apparent lack of appreciation, by the practitioner, of the seriousness of the office he held is unacceptable. [38] In addition the practitioner was expected to act objectively and impartially in the conduct of the business rescue proceedings. So too, when it came to the institution of legal proceedings, was an objective and impartial attitude to be expected. This was lacking in the extreme.' (Footnotes omitted.) [29] Against the background of the facts of that case it will be apparent that these comments were directed very specifically at the particular conduct of the BRP. They did not state any new principle of law, but criticised the BRP's conduct against the background of established principle. As Leach JA said in his concurrence, it was no surprise that the bank applied for his removal.24 Whether they have any relevance to the conduct of Messrs Knoop and Klopper depends upon the proven conduct in this case. However, the full court stressed the references to ss 140(3)(a) and (b) of the Act and much play was made in Ms Ragavan's affidavit of alleged failures to meet the standards of officers of the court and directors of companies, so it is necessary to consider the implications of these provisions for BRPs. Section 140(3)(a) and (b) of the Act [30] Section 140(3)(a) of the Act, says that during the business rescue proceedings the practitioner: 'is an officer of the court, and must report to the court in accordance with any applicable rules of, or orders made by, the court'. 24 Ibid para 56. This is a somewhat mystifying provision. In Gupta 125 it was pointed out that a voluntary business rescue 'is an entirely private process involving the company, the BRP and all affected persons'. Unless the court is approached for some reason, for example, to set aside the resolution to commence business rescue or the appointment of the BRP, or the BRP applies to place the company in provisional liquidation, the process takes place without any engagement at all with the court. In those circumstances it is difficult to ascribe any meaning to a provision that says they are officers of the court. [31] The obligation to report to the court in accordance with any applicable rules of the court is equally mystifying. There are no rules of court imposing an obligation on BRPs to report to it. Nor are there any orders by a court requiring reports. In a voluntary business rescue the only occasion on which the BRP is required to inform the court of anything is under s 141(2)(a) of the Act when they conclude that there is no reasonable prospect that the company can be rescued and apply for its liquidation.26 The mere fact that they are applying for the company's liquidation is information enough that they do not believe that it is capable of being rescued. If the court disagrees and refuses a liquidation order there are no apparent consequences for the BRP. [32] Section 141(2)(b) says that if the BRP concludes that there are no longer any reasonable grounds for thinking that the company is financially distressed they are obliged to inform the court, the company and all the affected parties in the prescribed manner. With a voluntary business rescue, it is unclear how the court is to be informed or what it is 25 Op cit, fn 1, para 41. 26 Section 141(2(a) of the Act. to do with this information. A judge faced with an unopposed, and probably ex parte, application in the motion court, in which no relief was asked and no order could be made, would rightly question whether it was properly before the court. The BRP merely has to file a notice of termination of business rescue with the CIPC.27 This brings the business rescue to an end.28 Section 141(2)(b) seems inapplicable in the case of a voluntary business rescue. There is no other provision of the Act that requires them to report to the court as envisaged in s 140(3)(a). In my view, whatever relevance the description of a BRP as an officer of the court may have in the context of business rescue ordered by the court under s 131 of the Act, it has no application to a voluntary business rescue and these provisions should be construed accordingly. [33] In any event, I do not think that describing a BRP as an officer of the court adds anything to their duties or responsibilities. The expression 'officer of the court' is most commonly used to refer to advocates or attorneys who are admitted by the courts and ethically owe special duties to the court that may at times conflict with the interests of their clients. Its origins in the present context appear to lie in England where certain processes such as insolvency administration were functions of the Court, but delegated to and performed by specific officers of the court designated as such by statute.29 The Admiralty Registrar, who had responsibility for the sale of ships arrested in proceedings in rem in the Admiralty Court, appears to have been in much the same position. There are no similar officers in our jurisprudence, where these functions are discharged by the Master and trustees or liquidators appointed by the Master, or chosen by creditors and subject to the direction of creditors 27 Section 141(2)(b)(ii) of the Act. 28 Section 132(2((b) of the Act. 29 Gilbert v Bekker and Another 1984 (3) SA 774 (W) at 777E-778A. and the overriding supervision of the Master. The nearest comparison might be with the Registrar or the Sheriff. To say that someone is an officer of the court conveys little practical meaning. It 'is a vague term without legal content'.30 At most it conveys that a fairly high standard of personal integrity is called for from the person so described. But that flows in any event from the duty of good faith and as there was no attack on the personal integrity of Messrs Knoop and Klopper this was not a relevant consideration. [34] I turn then to s 140(3)(b) of the Act that provides that BRPs have 'the responsibilities, duties and liabilities' of a director of the company as set out in ss 75 to 77 of the Act. Like the previous provision this is an unfortunate legislative shortcut, given that the directors of the company remain in office and perform their duties subject to the authority of the BRP.31 The BRP does not become a director of the company for the purposes of the sections in question.32 Section 75 deals with the personal financial interests of a director and their duties of disclosure in relation to matters coming before the board of directors. It is difficult to see how this is to operate in relation to the BRP. For the reasons dealt with above, they are already precluded from placing themselves in a position where their personal interests conflict with those of the company or persons interested in it. That would generally preclude them from contracting with the company, other than to agree further remuneration in terms of s 143(2) of the Act. Assuming there can be contracts or decisions by the company that actually or potentially affect their financial interests or those of related persons, to whom are they obliged to make disclosure? Who can sanction the arrangement after such disclosure, given that the directors 30 Ibid at 781D. 31 Section 137(2)(a) of the Act. 32 See the definitions of 'director' in s 75(1)(a) and s 76(1) of the Act. can only act subject to the authority of the BRP? These and other conundrums arise from any endeavour to make s 75 applicable to BRPs. [35] Section 76(2) enacts in statutory form the basic principle of our common law that has existed since the seminal decision in Robinson v Randfontein Estates.33 It is already part of the duties of BRP. Similarly, the requirements of s 76(3) that a director must act in good faith for a proper purpose and in the best interests of the company are already implicit in the fact that failing to do so constitutes grounds to remove the BRP. It might be thought that s 76(3)(c) is of assistance in setting the standard of care that the BRP must display, but applying it in any particular case is frustrated by the inability of the BRP to invoke the provisions of ss 76(4) and (5) describing the circumstances in which the duty is fulfilled. [36] Section 77 contains a number of provisions dealing with the potential liability of a director to the company arising out of their conduct as a director. Some of its provisions are manifestly inapplicable to a BRP and others are difficult to apply, but it is unnecessary to discuss these any further. The fact that in certain circumstances the BRP may incur liability to the company for actions performed in the course of the business rescue, says nothing about the scope and extent of the duties of the BRP, nor does the possibility that such liability may arise – including as a result of perfectly honest conduct by the BRP34 – affect a decision on an application for the BRPs removal. 33 Op cit fn 15. See also Bellairs v Hodnett and another 1978 (1) SA 1109 (AD); Gross and Others v Pentz 1996 (4) SA 617 (A); Phillips v Fieldstone Africa (Pty) Ltd and Another 2004 (3) SA 465 (SCA); Breetzke and Others NNO v Alexander NO and Others [2020] ZASCA 97; 2020 (6) SA 360 (SCA). 34 See ss 77(9) and (10) of the Act. [37] In the light of these considerations ss 140(3)(a) and (b) are generally unhelpful in determining whether in a particular case the court should order the removal of a BRP. They should not be invoked by way of a ritual incantation to justify removal, when the reasons advanced by the applicant seeking removal do not rely on the breach of any express provision by the BRP. Only where there is reliance on specific provisions of ss 75 to 77 will it be necessary to consider whether these provisions may be relevant to the decision whether to remove the BRP. There was no such reliance in this case. I turn then to consider the basis upon which the application was brought by reference to the founding affidavit of Ms Ragavan. The application [38] Ms Ragavan sought to provide evidence to support her specific allegations. She summarised the provisions of the two business rescue plans and emphasised those on which she placed reliance. She then set out under three headings what she described as 'Detailed aspects pertaining to Islandsite' and under a further three headings 'Detailed aspects of Confident Concept'. She then advanced specific complaints under the headings 'Attempts to obtain reports', 'The attitude of the first and second respondents', 'No compliance with statutory obligation to submit reports and updates' and 'Westdawn Investments'. [39] Mr Knoop filed a detailed opposing affidavit dealing with these broad allegations and the detail furnished by Ms Ragavan, and Ms Ragavan delivered a reply. She applied to strike out certain portions of the opposing affidavit. A supplementary affidavit was then delivered by Mr Knoop to, as he put it, update the court with events that had transpired since the filing of his opposing affidavit and to inform the court of the current status of the business rescue. This affidavit was admitted notwithstanding opposition on behalf of Mrs Gupta. It is unclear from the full court's judgment what happened in regard to the application to strike out, which was included in the appeal record but not referred to in argument. It appears to have gone the way of most such applications. [40] The case was argued on the papers and there was no application for it to be referred to oral evidence. It follows that in considering the evidence the Plascon-Evans rule applied and the application fell to be determined on the version of Messrs Knoop and Klopper, together with any undisputed evidence in the affidavits of Ms Ragavan and the supporting affidavits on behalf of Mrs Gupta. There was no suggestion that any of the evidence of Mr Knoop, or the other witnesses on behalf of the BRPs, was so unworthy of credence that it could safely be rejected on the papers. The appeal requires us to consider the evidence on both sides and determine whether on the facts a case was made that the BRPs had in any respect acted in a manner bringing them within the purview of s 139(2). Any question of discretion only arises if that case was established on the papers on a balance of probabilities. [41] The first complaint that the staff employed by Mr Knoop were not competent can be disregarded. It was not supported by chapter and verse. No-one was identified as not performing adequately. The response by Mr Knoop was that the team supporting the BRPs were all competent administrators having many years of financial experience who had managed or administered many entities. In a fairly characteristic reply Ms Ragavan said that she had no personal knowledge of the team or their experience, but denied that the BRPs had competently administered Islandsite and Confident Concept. Counsel did not persist with the complaint. [42] In order to place the remaining matters in context a brief synopsis of the business rescue plans presented to meetings of creditors in respect of both Islandsite and Confident Concept and adopted by the creditors is desirable. The conduct of the BRPs can only be assessed in the light of their duties in terms of those plans. The business rescue plans Islandsite [43] The Islandsite plan was presented at a meeting of creditors and adopted on 17 April 2018. There had been an earlier meeting of creditors on 5 March 2018 at which the BRPs reported that the company had debtors of approximately R48 million and assets substantially exceeding that amount. The principal source of the company's income was rentals and the cause for it being in financial distress was that the company and related entities were unbanked. The plan recorded that there had been numerous unsuccessful approaches to financial institutions to obtain banking facilities. There were said to be two possibilities open to the BRPs in order to rescue the companies and avoid liquidation. The one was the sale of the business as a going concern and the other was to enter into a management contract at arms-length with a third party. Either of those was said to be a course of action that would maintain the continued trading status of Islandsite. [44] The more immediate proposal was to pay the pre- and post-commencement creditors from trading income, that is, rental receipts and 'arms-length sales by private treaty (as a preference) and/or public auction'. The shareholders, that is, the Guptas, were given a right of first refusal to match any offer. The creditors voted to mandate estate agents and auctioneers to market the immovable properties that were a major asset and authorised the BRPs to proceed with a sale of the largest property, over which the Bank of India held a mortgage, in terms of a sale agreement tabled at the meeting. This property was occupied by Sahara Computers (Pty) Ltd (Sahara), another business controlled by the Guptas. The intention was to settle post-rescue debts and sums due to the Bank of India in respect of unspecified credit agreements. The secured assets being those held by the Bank of India were to be realised either by private treaty or public auction within 30 days of the sanction of the plan. If this all occurred as planned the Bank of India would be paid in full within six to nine months and the preferent and trade creditors would likewise be paid in full within the same period. [45] A number of conditions attached to the plan. It contemplated the company trading as a going concern during the period of business rescue. Lease agreements were annexed that reflected that much of the rental income needed to come from related companies. Some of these were occupying premises in the building that was to be sold in terms of the sale agreement. Another lease related to a Cessna Sovereign 680 aeroplane, which was burdened by an unspecified security in favour of Cessna Finance Corporation. Yet another related to the lease of mining equipment to Westdawn Investments (Pty) Ltd (Westdawn), which was not in business rescue, but was a direct subsidiary of Oakbay. SARS imposed four conditions including an undertaking that the company would ensure that all future tax obligations be met until proceedings had been terminated. The condition said that any deviation from this would constitute a material breach of the plan and 'proceedings will in such instance be deemed to have terminated'. It is unclear what the effect of this provision would be if invoked by SARS for whose benefit it was included in the plan. It cannot have meant that the business rescue would in fact terminate because that can only occur in terms of s 132 of the Act. At most it would give SARS a ground for escaping from the restrictions of the plan. VAT liability was payable in full. [46] There were several areas where the plan was silent. It did not deal at all with the fact that the company was owed nearly R695 million by other companies in the Oakbay Group, or companies connected to the Oakbay Group. It made no assessment of the likelihood of rentals being paid by these related companies. It did not identify specific properties to be sold to pay the one secured creditor and the preferent and trade creditors. There was no assessment of who the debtors were or the recoverability of these debts. It left two secured creditors unpaid and made no provision for the disposal of any movable property, in particular the aeroplane. Lastly, it did not set out a plan for the sale of the business as a going concern or for the conclusion of a management contract in order to restore access to banking facilities. Nonetheless, it was approved by the creditors. [47] Ms Ragavan contended that the intention behind this plan was to make use of the moratorium on pursuing claims against Islandsite to realise sufficient funds to pay the Bank of India and the preferent and trade creditors and then to end the business rescue proceedings forthwith. However, she did not say how the company was going to be able to secure banking facilities. Nor did she deal with the inter-company loans, beyond saying that they were not to be repaid in terms of the business rescue. She did not say whether this was the general intention behind the plan or Islandsite's intention, but in his answering affidavit Mr Knoop did not join issue with her statement. It is safest to accept that in general this may have been the general aim in preparing the plan. [48] Achieving this general aim was necessarily subject to whether it was practically achievable. The plan aimed for the identified creditors to be paid within six to nine months. At the time of its adoption the BRPs had not yet undertaken a complete investigation of the company's affairs as mandated by s 141(1) of the Act and in any event the BRPs remained under an obligation, if at any time they concluded that there was no longer a reasonable prospect of the company being rescued, to inform the court, and all affected persons, and apply for it to be placed in liquidation. In other words, while the BRPs were obliged to try to implement the plan, whether they could do that, or do it within the contemplated timeframe depended on matters not within their control. One cannot treat a business rescue plan as being writ in stone or having the same status as the Laws of the Medes and Persians. Confident Concept [49] An initial plan for Confident Concept was withdrawn and a revised plan presented at a meeting of creditors on 9 May 2018. That meeting was further postponed to 16 May 2018 for further revisions to the plan. The outcome of the meeting was summarised in a letter addressed to all affected parties and creditors on 18 May 2018. The plan was adopted subject to certain further amendments. Islandsite did not vote on the adoption of the plan, which was potentially significant as it was, according to the information then available to Mr Knoop, the largest creditor of Confident Concept, with a claim of R119 million. [50] An objection to the plan was lodged by a Mr Nath, who claimed to be present as the representative of the shareholders, that is, the Guptas. Ms Ragavan identified him as the Chief Financial Officer of Tegeta. He contended that it was unnecessary to sell any assets, as the debts could be discharged by collecting outstanding debtors. Mr Knoop responded that the majority of the debtors were companies in the same group all of which were in business rescue35 and, whilst he then thought the prospects of recovery were good, it would not occur in the immediate future. It is significant that only six days earlier Messrs Knoop and Klopper had instructed a forensic auditor to analyse and confirm the money flows between the various companies in business rescue and the position with the inter-company loans. [51] Mr Nath then suggested that the BRP should have liquidated Shiva, which was shown as owing R54 million, but it was pointed out that it was also under business rescue and subject to a statutory moratorium on legal proceedings. He then indicated that he wished to represent Islandsite at the meeting on the authority of its shareholders, but this was rejected as it was for the BRPs to represent Islandsite. [52] The approach of the BRP in Confident Concept to resolving the problem of the company being unbanked was slightly different from the approach in Islandsite. It was either to sell the immovable properties and movable assets – the latter consisting largely of mining equipment and fourteen luxury motor vehicles36 – or to sell the business as a going concern. In regard to the movable mining equipment the intention was to 35 Islandsite, Shiva, VR Laser and Tegeta. 36 The list of assets included a Range Rover, a Porsche, two Land Cruisers, a Mercedes Benz SLS, a Lamborghini, a Jeep Grand Cherokee, a Lexus LX, an Audi Q7 TDI Quattro, a Rolls Royce, an S60 D4 Volvo, a Land Rover, an S65 AMG Mercedes Benz and an armoured Nissan QX80 5.6 SUV. engage with the respective mines using it with a view to their acquiring it at market related values, after having regard to the offers tabled for that equipment. The proposed plan was formulated against a backdrop of seeking authority to continue the trading activities of the business, whilst as a first preference selling all encumbered movables and collecting book debts. Authority would also be sought to accept offers and negotiate the sale of immovable and movable assets, alternatively the sale of the business as a going concern by private treaty or, failing that, by open tender. [53] The creditors eventually voted for approval on a preliminary basis for the BRP to have authority to: '2.1 Immediately sell all encumbered movable assets, at the best price, on the basis that every offer received shall be distributed to all registered/affected creditors, allowing them an opportunity of 10 calendar days after the date of distribution to provide a better offer, failing which the business rescue practitioner shall be entitled to accept such offer and dispose of the equipment, subject to the prior consent of the affected secured creditor and the practitioner shall use his best endeavours to complete the process by 30 June 2018. 2.2 Immediately institute action for the collection of debtors; 2.3 Immediately mandate estate agents and/or auctioneers to market and sell the immovable properties (subject to the prior written consent of the secured creditors), with such process to be facilitated (with guarantees) within four (4) months of the adoption of the plan; 2.4 To accept and do all things necessary to give effect to the transfer of such immovable properties. 2.5 To market and sell such mining equipment in the open market, as contemplated in Part B, 2.1 herein above. 2.6 settle post rescue debt as a first charge inclusive of sums due in respect of credit agreements in favour of the secured creditors (pertaining to accruing post rescue interest/debt). 2.7 To, against realisation and registration of assets (as applicable), settle the creditors pursuant to the creditors ranking attributed thereto.' [54] Unlike the Islandsite plan, the Confident Concept plan provided for all creditors, including related party creditors, to be paid. It is unclear how this was to be achieved, given that the total amount said to be owing to all creditors exceeded the value of the assets. Furthermore, the BRP undertook to sell only those assets that were necessary to pay the secured, preferent and trade creditors. If that could be achieved it would leave the company with the residual assets and claims against it by related parties. At what stage it could be disposed of as a going concern was not clear. [55] Ms Ragavan's allegation that the BRPs in the case of Islandsite and Mr Knoop in regard to Confident Concept ignored and undermined the approved business rescue plans must be measured against the plans as summarised above. She alleged that the BRPs 'embarked upon and are continuing to carry out very different activities', an allegation that Mr Knoop denied. She relied on a passage from the proposal section of the plan that referred to sales by private treaty being a first option, but the proposal adopted by the creditors, set out above in para 53, contained no such constraint. The same was true of the Islandsite plan. The areas of complaint [56] Three areas were identified as giving rise to the allegations of non- compliance with the business rescue plan of Islandsite. The first was the manner in which the BRPs dealt with issues concerning the insurance of the Cessna Sovereign 680 aircraft, an endeavour to re-register it in the Isle of Man and its maintenance. The second related to offers to purchase the Cessna and offers to purchase three properties owned by Islandsite. The third concerned an instruction given in regard to accounting for VAT. [57] Three issues were raised in regard to Confident Concept. The first related to the amount realised by the sale of equipment. The complaint was that there was a discrepancy between the amount for which it had been sold and the amount available for distribution to creditors. The second related to Mr Knoop's dealing with Mr Nath, the representative of the shareholders in both companies, that is, the Guptas, and his endeavours to assist the BRPs in identifying properties that could be sold by private treaty. Ms Ragavan said that the BRPs insisted on proceeding by public auction and that this attitude was 'inflexible', contrary to the business rescue plans and not in the best interests of the two companies. The third issue arose from the distribution of the proceeds of the sale that formed the subject of the first complaint. An amount was paid to Sahara and nothing to Islandsite even though it was the largest creditor. It was said both that this was a departure from the business rescue plans and that it demonstrated an irresoluble conflict of interest between Islandsite and Confident Concept. [58] Only one of Ms Ragavan's general complaints related to non- compliance with and undermining of the business rescue plans. This was that the BRPs in Islandsite were disregarding the right of first refusal given to the shareholders when selling immovable property and effect was being given to sales by public auction instead of the preferred method of sales by private treaty. The broader complaints related to a failure to provide reports and information to Mrs Gupta. In what follows the nature and basis for each complaint is examined in the light of the response by the BRPs. Dealings with the aircraft [59] The first complaint in regard to insurance cover for the Cessna turned out to be a storm in a teacup. This started as a complaint that the BRPs had not renewed the insurance on the aircraft. The invoices for March and April 2018 for the insurance were forwarded to Mr Knoop's office on 9 May 2018. On receipt, confirmation was sought that the aircraft was grounded and not currently being used. Instead of providing the information asked for, Ms Ragavan's response was that the BRPs had placed the aircraft at risk as it was uninsured 'at the moment'. Then followed a complaint about other requests for payment not being authorised and a suggestion that Islandsite was vulnerable and various assets were uninsured. Ten minutes later a further email was sent by Ms Ragavan saying that the fact that the aircraft was grounded did not affect the liability to ensure that it was comprehensively insured and asking that approval for payment be provided urgently. The person dealing with the matter then asked Mr Knoop to approve payment and payment was made on 14 May 2018. Emails were sent to Ms Ragavan by Mr Knoop's assistant asking whether the aircraft was grounded and its current location. These attracted the reply that she had 'no knowledge of the status of the aircraft and you may liaise with the curator.' Presumably that was a reference to Mr Knoop. [60] The second complaint arose from the endeavour to change the registration of the aircraft to the Isle of Man. It arose on 8 June 2018, at a stage when Mr Knoop had not yet ascertained the whereabouts of the aircraft. Mr Nel from Continued Airworthiness Maintenance Organisation - South Africa (CAMOSA) sent Mr Knoop an email asking for authorisation for the registration to be changed from the South African registry to the Isle of Man. He explained that this had been put in train in January 2018, shortly before Islandsite was placed under business rescue, and that the reason for the change was to enable the aircraft to operate in Europe and the Middle East. Mr Knoop forwarded this to Ms Ragavan asking for her input. The response, from Ms Reshma Moopanar, the Oakbay Group Head of Legal, was that this commenced prior to business rescue and it should proceed. [61] Mr Knoop said that the BRPs found the request to alter the registration of the aircraft alarming. He explained that Islandsite was a South African company with South African directors and the expenses of maintaining the aircraft were being incurred in South Africa and paid by Islandsite. Yet until receipt of an email from Mr Nel on 13 June 2018 saying that the aircraft was parked at DC-Aviation in Dubai, the BRPs did not know its whereabouts or what it was being used for. The BRPs suspected that it was being used by the Guptas for their private affairs, not for the benefit of Islandsite. Registering it in the Isle of Man would place it even further beyond the control of the BRPs. [62] These concerns led the BRPs to ask Mr Nel for further information about the aircraft. On 18 June 2018 Mr Knoop asked at whose instance the aircraft was to be deregistered and exported and for all relevant information and documents. The response was that the aircraft was not being exported, but needed to be registered in the Isle of Man because it was based in Europe and the Middle East and it was not practical legally to operate a South African registered aircraft in that area with limited maintenance support for regulatory reasons. This caused the BRPs further concern because there was no basis for the aircraft to be operating in those areas. The endeavours to change its registration seemed to coincide with the Guptas' departure from South Africa to reside in Dubai. Its whereabouts had been concealed from the BRPs. For those reasons they were not prepared to agree to the change in registration. It is not clear from the papers whether this decision was clearly communicated to Mr Nel or Ms Ragavan. [63] A claim by Mr Nel to be paid for maintenance work on the aircraft emerged in July 2018. However, the work had not been authorised by the BRPs and they did not pay for it. Again, it is unclear whether this was clearly communicated to Mr Nel and Ms Ragavan. [64] More information emerged from Mr Knoop's supplementary affidavit. He said that the BRPs learned from Mr Nel that there was maintenance on the aircraft outstanding from January 2018 and the logbooks could not be located. He and the BRPs' attorney consulted with the pilots to obtain information with a view to retrieving the aircraft. They also used the services of two other individuals, Messrs John Taylor and Ian Greenwood, to make enquiries about the aircraft, assist in tracing the logbook, ascertain its current condition and what needed to be done to 'get it up and running'. The information obtained indicated that the costs would run to millions of Rand and the company did not possess those funds. [65] It is convenient at this stage to deal with the offer to purchase the aircraft and the BRPs' endeavours to sell it. The offer to purchase was transmitted by Mrs Gupta's then attorney, a Mr Pieter van der Merwe. While it was dated 16 October 2018, it was forwarded to the BRPs on 27 October 2018 with no information as to its provenance. There was no indication that Mr van der Merwe had found the purchaser or how it came to be in his possession. It is an interesting document. It emanated from a broker based in Muscat, Oman. It did not identify the buyer, saying only that the buyer would be introduced to the seller after the acceptance of the offer. The offer, in an amount of US$1.2 million, was subject to the endorsement and approval of an agreeable Aircraft Sales Agreement between 'the seller, the seller's administrator and/or liquidator' within ten weeks. Upon 'initial approval' of the offer the buyer would make an immediate site visit to see the aircraft inside and out and to collect a copy of all its documents including all technical data and aircraft documents, which would presumably have included the logbook. At this stage a deposit of US$100 would be paid to an escrow agent. [66] The sale was subject to the seller delivering the aircraft at its sole cost. Delivery was subject to a number of conditions. The aircraft's airworthy systems and avionics were to be functioning normally. Its maintenance program was to be up to date without deferments or extensions. All its records, logbooks, flight manuals and accessories in the owner's possession were to accompany delivery. All relevant authority approvals and clearances had to be provided. Lastly it was to be free and clear of all encumbrances, which was significant as according to the business rescue plan Cessna Finance Corporation was owed R22 million and was a secured creditor. Payment of the price would be made ten days after delivery of the aircraft and no security for payment was offered. [67] Mr van der Merwe claimed that this was an extremely good offer. The BRPs took a different view. They believed that they could not accept an offer from an unknown source, subject to onerous conditions. They did not know the precise whereabouts or condition of the aircraft, beyond the fact that it was in Dubai in the possession of DC Aviation. In reply Ms Ragavan accused them of lacking the appropriate negotiating skills and knowledge of international sales of aircraft and said that it had been stored in a hangar since August 2018 in desperate need of maintenance and at increasing cost. It is a curious feature of this reply that in her earlier exchange with Mr Knoop she had said that she had no knowledge of the status of the aircraft, but it was apparent that she was in communication with the company storing it. [68] When the replying affidavit was delivered it foreshadowed the possibility of an offer to purchase the aircraft and Mr Knoop indicated that the BRPs would consider any offer that was forthcoming. He said Ms Ragavan was aware of the offer. This was not disputed. When the supplementary affidavit was delivered, two offers in excess of the earlier offer had been made. One was for US$4,5 million thereby dispelling the notion that the earlier offer was a 'good' one. Endeavours were then made between July and September 2019 to obtain information from DC Aviation concerning the aircraft. It is unnecessary to rehearse these attempts beyond saying that DC Aviation's responses to perfectly simply enquiries was wholly obstructive. That is where the matter stood when the case was argued before the full court. The offers to purchase immovable properties [69] With the letter conveying the offer to purchase the aircraft, Mr van der Merwe also enclosed two offers to purchase immovable properties owned by Islandsite. One was in respect of 106A, 16th Road, Midrand, for an amount of R27 million and the other for units 70 and 80 in SS Thiebault House jointly for R8 855 000. Mr van der Merwe again did not explain how these offers had been obtained or why he was the vehicle through which they were being submitted. He had asked Mr Stephan Nel, an employee of Sahara, to follow up on the offers. Mr van der Merwe's view was that if these transactions could be consummated it would be necessary to arrange the documentation to 'uplift' the business rescue, by which he presumably meant that it should be terminated. Why Mrs Gupta's attorney would think that it was for him acting on behalf of his client to attend to this is not clear. [70] Be that as it may, the BRPs did not accept this offer. Their reasons, as explained by Mr Knoop, were that the offer was conditional on the purchaser's bank returning a favourable valuation on the property; the purchaser completing a due diligence to its satisfaction on the property; and the bank agreeing to provide the purchaser with a bond of R30.5 million on the security of the property. The BRPs did not consider it appropriate to accept an offer on the basis that the contract would be subject to such conditions. They also were not happy with the warranties in regard to defects that they would be required to give to the purchaser. Ms Ragavan's response was that this was an unduly passive approach to have taken and that she regarded the conditions as common in agreements of this type. [71] Ms Ragavan did not comment on the offer in respect of the two units in SS Thiebault House and it is unnecessary to consider it further. The BRPs pointed out that it had lapsed by the time it was presented to them and enquiries addressed to Mr van der Merwe as to whether it had been renewed received no response. VAT [72] This issue arose from an instruction to the Accounts Executive of Oakbay, Ms Remona Govender, when dealing with invoices to parties leasing premises or equipment from the two companies. A number of them were not paying rent or hire charges either timeously or at all, and were substantially in arrears. On 26 June 2018 the BRPs instructed that in respect of all clients a quotation for the rental or hire charges should be issued, and not a tax invoice reflecting a charge for VAT. The reason for this instruction was that Islandsite and Confident Concept would be obliged to include VAT on invoices as output VAT in its VAT returns in circumstances where it was not in receipt of payment. If payment was received a tax invoice would be issued and the VAT received would be included in the returns to SARS. [73] After an exchange of emails Mr Knoop wrote to Ms Govender, copying the email to Ms Ragavan, saying: 'We are authorised to raise a quotation invoice. Upon payment the tax invoice will be issued. The Companies are in rescue and although recoverable it is a timing issue.' Ms Ragavan's response to this in her founding affidavit was that the instruction tied her hands, but that she knew of no authority to act in this way. She complained that this was tantamount to a fraud on the fiscus. [74] Mr Knoop's response was that the companies in question were not paying rent and Islandsite did not have the resources to pay VAT on issue of an invoice before receiving payment. If it issued an invoice it would have to write the debt off as bad in order to claim a VAT credit. He went on to say: 'The only commercially practical way to approach the problem in the circumstances was on a quotation basis. If payment was forthcoming, a VAT invoice would be issued immediately, and payment of the VAT processed. However, the payments were never received. It is common practice in financially distressed companies under business rescue for quotations to be issued rather than VAT invoices because of the cash flow problems being experienced.' In reply Ms Ragavan denied that this was in accordance with the VAT Act. The sale of Confident Concept's equipment [75] This related to the sale of certain equipment by Confident Concept. Mr Knoop arranged for offers to be submitted for this equipment. Immediately after the bids had been received and considered Mr Knoop wrote to all known affected parties and creditors advising that the combined highest bids totalled R68 651 999 exclusive of VAT. This figure was confirmed by the auctioneer and liquidity service company that had processed the offers. On 3 October 2018 Mr Knoop wrote to Mr Nath, who had represented the Guptas at the meeting of creditors in Confident Concept, informing him that the sum available for distribution from these sales was R53 086 199.59. He also set out the way in which that amount would be distributed among creditors. Three creditors, among them Sahara, were paid in full while four others received a pro rata dividend. Nothing was paid to Islandsite. [76] The explanation for the difference between these two amounts was that, after the publication of the prices offered by purchasers, disputes arose, the resolution of which resulted in a reduction of the amount available for distribution. Sahara and Shiva claimed that certain of the equipment sold was in Shiva's possession and owned by it. In response to this claim the disputed equipment was excluded from the sale and the price adjusted accordingly. The resultant figure was R57 222 699. From this amount some R650 000 was paid to Sahara to settle its claim, thereby removing it as an affected party in relation to Confident Concept. A little over R600 000 was used to settle a claim to a lien over tyres fitted to some of the mining equipment. The final deduction related to the BRPs' fee. Mr Knoop said that Ms Ragavan was aware of this. That seems probable from the fact that Mr van der Merwe, the attorney acting for Mrs Gupta and, according to some of the correspondence, the shareholders of the two companies, was in possession of the letter sent to Mr Nath as well as a similar letter sent to him in relation to Islandsite. Ms Ragavam annexed this letter to her founding affidavit. [77] While dealing with this distribution, it is convenient to point out that the payment to Sahara in settlement of its claim was said to be a breach of the business rescue plan and illustrative of a conflict of interest because one related party creditor was paid in preference to Islandsite. Mr Knoop's answer was that it was neither, as it was a commercial settlement for practical business reasons. Public auction not private treaty [78] It is a little difficult to ascertain the precise basis for this complaint. According to Ms Ragavan Mr Nath was authorised to represent the Guptas in their capacity as shareholders of Islandsite. She said that she asked Mr Nath to meet with Mr Knoop to obtain feedback on the total amount outstanding to the respective creditors of the two companies and to assist him in identifying properties owned by the companies that could be sold in order to pay the creditors who were to be paid in terms of the business rescue plans. It is not clear what qualified Mr Nath to perform this latter task, but nothing was made of it. According to Ms Ragavan a meeting was arranged with Mr Knoop for 16 October 2018 but it did not take place. [79] On the strength of these allegations Ms Ragavan alleged that Mr Knoop was not interested in even considering private offers at competitive prices for the respective immovable properties and was insisting on proceeding by way of sales by public auction. She said that this was contrary to the approved plans and showed a rigid and unyielding approach that was not in the best interests of the companies. She also complained that the right of first refusal given to shareholders in Islandsite was disregarded. [80] Mr Knoop denied these allegations. He said that no valid private offers had been rejected by the BRPs, and that the sales that had taken place by public auction were authorised by the business rescue plans. In his supplementary affidavit he furnished details of a number of sales, some by public auction and some by private treaty, that had been concluded by the BRPs. In each case he said that the affected parties and creditors were informed of the sales and no-one sought to exercise a right of first refusal. Ms Ragavan did not point to any occasion when one of the shareholders wished to exercise the right of first refusal and was precluded from doing so. The absence of reports [81] Apart from these specific complaints Ms Ragavan said that attempts to obtain information and reports from the BRPs through enquiries by attorneys met with no or an inadequate response. She complained separately that the statutory reports required by s 132(3) of the Act had not been furnished. All of this was said to be irregular and highly prejudicial to the two companies, although there was no attempt to explain the nature of that prejudice. It was said to demonstrate a conflict of interest, a lack of independence, a failure to perform their duties as BRPs, a failure to exercise the requisite degree of care and a lack of bona fides. [82] Some of these complaints arose from correspondence between an attorney, Mr Pieter van der Merwe, and the BRPs between August and October 2018. It started with a letter from Mr van der Merwe saying that he acted on behalf of the shareholders of both companies, that is, the Guptas. When asked to furnish proof of his authority he produced a document signed by Mrs Gupta. On 3 October 2018 he was furnished with copies of two letters addressed to Mr Nath, who it will be remembered said he represented the Guptas. The one dealt with the distribution of the proceeds from the sale of Confident Concept's mining equipment and set out in terse terms the amounts owing to three specific creditors and the general body of concurrent creditors. Ms Ragavan said that this did not furnish the information requested. That was incorrect. As to the other document, although Ms Ragavan said it would be annexed it was not in the record. [83] On 5 October 2018 Mr van der Merwe replied and grumbled about the information furnished, without being specific as to its alleged shortcomings, and requested a meeting 'to discuss viable options to take these companies out of business rescue'. He said that: '… it seems at this stage as if there exists a strong possibility that our clients might be in a position to repay these debts, therefore resuscitating these companies.' It is apparent that the letter was written on behalf of the Guptas, not Mrs Gupta alone. No indication was given of the viable options or how the debts were to be paid. The BRPs did not respond. On 11 October Mr van der Merwe wrote on behalf of the Guptas to the auctioneers who had notified Mr Nath, Ms Moopanar and him of a sale of one of Confident Concept's properties, insisting that all future correspondence be addressed to him. He said in the letter that his clients were 'considering on an urgent basis to provide financial means/plans to get both these companies out of business rescue'. [84] The insistent drumbeat of the further correspondence from Mr van der Merwe was that the companies were to be taken out of business rescue as soon as possible, with demands for further information about sales, although it was plain that he was aware of the proposed sales and did not require further information. The objection was to any sales taking place 'if our client's funding is accepted'. Whether this referred to Mrs Gupta alone, or the Guptas collectively as in the earlier correspondence, was unclear. What is clear is that there was no evidence of either the Gupas collectively, or Mrs Gupta on her own, providing any details of possible funding that could be used to pay creditors and would avoid further sales. [85] On 25 October 2018 Mr van der Merwe wrote on a different tack suggesting, without providing any detail, that the BRPs might not have been keeping Islandsite's documents up to date and threatening claims against the BRPs 'once the business rescue proceedings have terminated'. The apparent reason for his not writing on behalf of Confident Concept emerged four days later when a different firm of attorneys, Mayet Vittee Inc, wrote on behalf of the shareholders of that company, that is, the Guptas, asking for a stay of the public auction of a property known as Alanda Lodge. The purpose of the sale was to enable their clients to obtain 'post-commencement finance'. This did not appear to contemplate finance in terms of s 135 of the Act, but simply procuring funds to pay off creditors. [86] The response to this new line of approach was a letter from the BRPs' attorney pointing out that the sales were sanctioned in terms of the business rescue plan and had the support of the secured creditor in respect of one of the properties. The letter also displayed a wariness on the part of the BRPs about accepting funding from the Guptas. It said: 'In addition, our clients are of the opinion that it will not be in the best interests of the company to allow your clients – members of the Gupta family – to supply the company with post-commencement finance, as this may cast aspersions over the legitimacy of the process, as the perception may be created that our clients are relying on post-commencement finance obtained from a family that may have raised such finance in an illegitimate manner.' [87] Mr Knoop respond to this correspondence saying that the affected parties were informed about the sales through the monthly status reports, which alerted them to forthcoming auctions. These were conducted in terms of the authority given by the business rescue plans. After auctions the successful bids were circulated to affected parties to enable the right of first refusal to be exercised. No shareholder ever sought to exercise that right. The complaint about the statutory reports in terms of s 132(3) of the Act was dealt with by providing copies of the statutory reports. Mr Knoop pointed out that he did not have an address for Mrs Gupta in Dubai and, although she claimed to be resident in the family home in Saxonwold, neither she nor her husband were in fact living there. They appeared to be living in Dubai where Mrs Gupta deposed to her affidavits. [88] Ms Ragavan's reply was by way of a general denial that the statutory reports were adequate or satisfied the requirements of the Act in regard to reporting to affected persons and creditors. There was no indication of what they should have contained and what was omitted. They deal with the sale of properties and the progress being made with each sale and the transfer of the properties. Ms Ragavan denied that Mrs Gupta or herself had received the reports, but did not say how they should have been sent to Mrs Gupta. Westdawn [89] The issue of a possible conflict of interest was raised again in relation to Westdawn, which leased mining equipment from Islandsite. (Mr Knoop described it as labour broker.) Its business involved what Ms Ragavan described as 'front to back mining services' for various mining companies. It appears that this involved performance of the actual mining operations for these mines. One of the mines was OCM, another of the eight companies in business rescue, of which Messrs Knoop and Klopper, together with two others were the BRPs. Westdawn was placed in final liquidation on 3 October 2018 at the instance of a third party and Oakbay launched an application on 16 November 2018 to rescind that order. On 14 November 2018 the BRPs of OCM caused a letter to be sent to the liquidators of Westdawn, terminating the mining contracts with it, on the basis of a clause in those contracts that required Westdawn to certify that it was not trading in insolvent circumstances. Ms Ragavan contended that Westdawn was not insolvent and the liquidation order should not have been granted. She said that the letter was written in a contrived attempt to avoid the mining contracts and was highly prejudicial to Islandsite. [90] Ms Ragavan proffered no explanation for the BRPs doing this if that was indeed the case. On her version this was a profitable agreement generating a substantial cash flow for Islandsite. The BRPs were aware that a final liquidation order had been granted, but could not have been aware of Oakbay's application for the rescission of that order as that had not yet been launched. Mr Knoop said that the four BRPs of OCM had taken advice on what to do in the light of the liquidation of Westdawn and their actions flowed from that advice. The suggestion that the letter was a contrived attempt to avoid the mining contracts was denied. In reply Ms Ragavan suggested that the BRPs were obliged in the interests of Islandsite to oppose the provisional liquidation of Westdawn, without saying how they would have had knowledge of it, and that they should have applied for the order's rescission. No ground for doing this was suggested. Discussion of the complaints [91] The first contention based on these complaints was that the BRPs ignored and undermined the business rescue plans. The second which was closely related to the first was that the BRPs were ignoring competitive third party offers in respect of valuable assets and insisted across the board on sales by auction. Reliance was placed on the fact that in both plans a preference was expressed for private treaty sales rather than sales by public auction. [92] The final contention related to the instruction not to issue VAT invoices to parties defaulting on their obligations in respect of the payment of rental or hire charges. Ms Ragavan described this as 'most disturbing' but did not link it specifically to any of the provisions of s 139(2). In that sense it is a 'standalone' issue largely separate from the other complaints. It is convenient to deal with it at the outset. The VAT instruction [93] Although the affidavits promised legal argument on this issue, we received no detailed argument with reference to the provisions of the VAT Act. In strict law Ms Ragavan may be correct that the instruction given by Mr Knoop was inconsistent with the obligations of the companies in regard to the payment of VAT. My starting point is s 15(1) of the VAT Act, which requires vendors to account for tax on an invoice basis, save in certain special circumstances. Although we had no direct evidence on this, I assume from the nature of the correspondence over this issue, that the companies were obliged to account on an invoice basis. Under s 16(3) the vendor is obliged to account for VAT by deducting from all output tax for the period, as determined under s 16(4), the amounts specified in the various sub-paragraphs of that section. Under s 16(4)(a)(i) the standard basis of accounting for output VAT is the amount chargeable when a taxable supply is made during that period. That amount should be reflected in a tax invoice issued when the supply is made. Section 20(1) requires that a tax invoice be issued within 21 days of making a taxable supply. [94] These requirements undoubtedly create cash flow problems where the vendor is not expecting to receive payment from the recipient of the taxable supplies. Provision is made in s 22 for the recoupment of VAT already paid where a debt becomes irrecoverable, but it is not directly helpful where the supply is made in circumstances where there is little or no expectation of payment. There is a further potential difficulty when the taxable supply is made to another vendor that is a member of the same group of companies as the vendor liable to account for the tax. In terms of s 22(6) it is impermissible to make a deduction on the basis that the debt has been written off as irrecoverable for as long as the two companies remain members of the same group of companies. It seems likely that this provision would also be of application in the present case. [95] For those brief reasons, I am prepared to accept that Ms Ragavan may be correct in saying that in strict law the instruction to issue quotations and not tax invoices was inconsistent with the provisions of the VAT Act. But where does that take the case that the BRPs should be removed? Mr Knoop said, and this was not controverted, that it was common practice in financially distressed companies to act in this fashion in order to address the cash flow problems that would otherwise arise from issuing tax invoices for supplies to parties where there was no expectation of receiving payment. He did not say whether this was known to SARS, but it would be surprising were it not. [96] There are a few notable features of the VAT issue. The first is that Ms Ragavan does not suggest that as a director of Islandsite she raised the issue with SARS. Instead she claimed that her hands were tied. But they were not. She remained a director of the company and there was no obligation on her to accept an unlawful instruction from Mr Knoop. Why then did she not simply contact her local SARS office dealing with the company's VAT returns and check whether Mr Knoop was correct in claiming, as he did, that the BRPs were authorised to operate on this basis? Insofar as she suggested that Mr Knoop's instruction was a breach of the obligations of a director under s 140(3)(b) of the Act, her failure to report it must likewise have been a breach of her obligations as a director. [97] The second feature is that while the instruction may not have been permissible it does not appear to have caused any loss to the fiscus. There is nothing to suggest that issuing tax invoices would have resulted in the tax being paid either by the beneficiaries of the supplies or by either company. The beneficiaries were in default and neither company had the resources to pay large amounts of VAT in respect of non-existent receipts. To give one example, Islandsite was leasing mining equipment to Westdawn and the hire charges payable in terms of the lease in the documents relating to the business rescue plan was in excess of R7.5 million per month. The VAT payable on that would be of the order of R1.25 million per month. There is no evidence to show that Islandsite could have paid that. [98] That brings me to the third feature, which is that Mr Knoop gave the instruction in the interest of the companies in business rescue to preserve their financial position and to avoid incurring further expenses and causing their financial position to deteriorate. He explained that this was the only commercially practical way of addressing the problem. That was consistent with the approach outlined at the first meeting of creditors in Islandsite that the rescue would depend on a careful management of the cash flow structure. Nothing suggests that he and Mr Klopper were not acting in good faith in adopting this approach. They may have been wrong in law in doing so, something I have been prepared to assume for the purposes of discussing this issue, but an erroneous approach on their part does not provide grounds for their removal from office. [99] The VAT issue was stressed in the heads of argument on behalf of Mrs Gupta. Assuming that the instruction involved an illegality, something that is by no means clear, it might have fallen under s 139(2)(c), but there is no reason to think that the BRPs did not bona fide believe that their approach was permissible. That would undoubtedly be the case if, as Mr Knoop says, this is a common practice in dealing with distressed companies. This was not a ground on which to remove the BRPs. Ignoring the business rescue plans and competitive offers [100] It is convenient to deal with these issues together. I start with whether any actions by the BRPs were in conflict with the business rescue plans. Four of the specific complaints dealt with above might be thought to support this allegation. They relate to the sale of the aircraft; the failure to accept the offers furnished through the attorney, Mr van der Merwe; the alleged insistence on selling by public auction instead of private treaty; and the payment to Sahara out of the proceeds of the sale of equipment by Confident Concept. [101] Nothing was said in the Islandsite plan about the sale of the aircraft or any other movable. The plan proceeded on the basis that the immovable properties would, if sold, generate sufficient to pay the Bank of India and the preferent and trade creditors. It said nothing about selling the aircraft or about satisfying the secured claim of Cessna Finance Corporation. Nor did the refusal to sell it in response to the offer emanating from an undisclosed purchaser represented by a broker in Oman undermine the plan. Mr Knoop's reasons for not accepting the offer must be accepted on an application of the Plascon-Evans rule. The fact that Ms Ragavan did not regard them as sufficient is neither here nor there. In the absence of any evidence that the decision would undermine the achievement of the aims of the plan this factor was irrelevant. I will revert to it when dealing with the general allegations. I can find no trace in the full court's judgment that this played a role in its conclusions. [102] In regard to the offer presented by Mr van der Merwe for the units in SS Thiebault House, Ms Ragavan said nothing and it is unnecessary to address them further. That leaves the offer in respect 106A, 16th Road, Midrand. Mr Knoop explained why that offer was not accepted. Ms Ragavan accused him of undue caution, but the refusal was not in breach of the business rescue plan. The offer was conditional and there was no evidence that the conditions would be fulfilled. The BRPs were under no obligation to accept it. [103] The complaint that the BRPs were not willing to accept private offers is belied by the history of sales of immovable properties. The first sale of the Sahara property was a private sale as a result of an introduction by Mr Nel from Sahara. That was registered on 31 August 2018 and the proceeds distributed to creditors. Of the five subsequent sales of immovable properties owned by Islandsite, three were by public auction and two by private treaty. The sale of equipment by Confident Concept was by a public tender process, which was consistent with the plan. Three properties owned by Confident Concept were sold by public auction, but two of those sales were cancelled. One of them has now been sold by private treaty. In the founding affidavit it was said that Mr Nath wanted to meet with Mr Knoop to help to identify properties that could be sold to satisfy claims. No properties were mentioned in the affidavit and there was no indication that Mr Nath had identified any that were especially appropriate to be sold. And if the matter was so important to the Guptas, whom he represented, why did he not write a simple letter to Mr Knoop containing his suggestions? There was no merit in this complaint. [104] The final issue under this head was the payment to Sahara from the proceeds of the sale of equipment by Confident Concept. Mr Knoop demonstrated that Sahara was causing difficulties in proceeding with the sale for the general benefit of creditors. A settlement of its claim was reached for commercial reasons. The error underpinning the complaint was that this payment stood on the same footing as a dividend to related creditors. It did not. It was a settlement to remove an obstacle to the recovery of over R50 million for creditors. It stood on the same footing as the payment to release the lien claimed over vehicle tyres. The necessary conclusion is that there was no merit to any of the complaints about the sale of assets. They were made in accordance with the plans. No competitive offers were produced. Some were by public auction and some by private treaty. All this was in accordance with the plans and did not undermine them. Conflict of interest [105] The Sahara payment was also relied on to contend that there was a conflict of interest on the part of Mr Knoop as BRP in respect of Confident Concept and as BRP of Islandsite. It was based on the same erroneous view that the payment to Sahara was by way of a dividend to a related creditor. It was therefore factually ill-founded. The full court relied on a potential conflict of interest as a reason for removing Mr Knoop as BRP of both companies, but it is unclear whether this was based on the specific issue raised on behalf of Mrs Gupta, or on the more general basis that it is undesirable for a person to be the BRP for two companies that may have claims against one another. This will be explored when I come to deal with the full court judgment. The remaining specific complaints [106] These can be disposed of shortly. The complaint about the distribution of the proceeds of the sale of Confident Concept's mining equipment was, at best for Ms Ragavan, attributable to a lack of understanding of the claims made after the completion of the public tender. Mr Knoop said that there was no room for misunderstanding as she was fully informed. We do not need to resolve this issue. The factual basis of the claim was wrong and it provided no support for concluding that any of the requirements of s 139(2) were satisfied. The same is true of the alleged absence of the statutory reports that must be provided if the business rescue lasts longer than three months.37 It will be recalled that Mr Nath identified himself as representing the Guptas and Ms Ragavan confirmed this. The reports were sent to him and Mr Knoop produced the reports and alleged that they had been sent to all affected persons. Mrs Gupta's complaint that she had not received the reports rang a little hollow, given that she has steadfastly failed to furnish an address to which they could be sent while she was in Dubai. There had been no direct interaction between her and the BRPs, to the extent that they legitimately doubted whether she had authorised Mr van der Merwe to act on her behalf or the bringing of these proceedings. That correspondence may not always have been responded to immediately, but the issues it raised were unfounded and the BRPs were entitled in the light of certain matters to which I will refer when dealing with the full court's judgment to be cautious about the endeavours to provide funds to secure the termination of the business rescue proceedings. [107] Finally, there was the complaint about the cancellation of the Westdawn contract. Its relevance was not apparent from the founding affidavit and the reply did nothing to clarify the position. The assertion in the heads of argument that it was not in the best interests of Islandsite was an assertion and nothing more. Conclusion on the specific complaints 37 Section 132(3) of the Act. [108] It is apparent from this regrettably lengthy analysis of the allegations made by Ms Ragavan on behalf of Mrs Gupta and the responses by Mr Knoop, that none of the specific complaints advanced on behalf of Mrs Gupta were established on a balance of probabilities. We cannot tell whether this was also the conclusion by the full court because it did not engage with or seek to analyse the evidence. It made no factual findings on these issues in favour of Mrs Gupta. In my view none could properly be made on the evidence before the court. [109] Where does that leave the application for the removal of the BRPs? They were brought to court to face specific allegations about their actions as BRPs and those were not proved on a balance of probabilities. These allegations were the basis for Mrs Gupta's contentions that the court should infer that the requirements of s 139(2) were present and justified an order for the removal of the BRPs. Her failure to prove them meant that she failed to prove that there was a proper basis for their removal in terms of s 139(2). The stage was not even reached where the court would have had to exercise a discretion whether or not to remove them. The application should on ordinary principles have been dismissed, but as we know it was not. It is therefore necessary to examine the basis upon which the full court ordered the removal of the BRPs. The full court's judgment38 [110] After setting out a little of the background to the business rescue the judgment quoted the general allegations made by Ms Ragavan that recited the provisions of ss 139(2) and 140(3).39 It did not quote the specific allegations against the BRPs as set out in paras 16.1 to 16.4 of 38 Full court, op cit fn 1. 39 See para 11 ante. Ms Ragavan's affidavit.40 After reciting the definition of business rescue in s 128(1)(b) of the Act and s 139(2), the question before the court was summarised in the following terms:41 'What is vital is for this court to therefore determine whether the BRPs in casu executed their duties in accordance with the standard set not only by the Act but also by the courts as judicial officers or whether the applicant has successfully made out a case demonstrating that the BRPs acted in a manner short of the required standard in terms of the Act.' [111] I pause here to point out that BRPs are not and were not judicial officers. The Act says that they are officers of the court, an expression that was discussed earlier in this judgment.42 There appears to have been some confusion, because the description of them as judicial officers was repeated twice more in subsequent paragraphs of the judgment. There there were also two references to them as officers of the court. This was unfortunate as it may have affected the full court's approach to assessing the standard of conduct required of a BRP. I have already explained why the description of the BRP as an officer of the court was inappropriate and added nothing to their statutory obligations. A judicial officer's obligations are not comparable with those of a BRP. [112] Reverting to the judgment, one would have expected that after identifying the question as being whether the applicant had made out a case for the BRPs removal, the court would have had regard to the case advanced in the founding affidavit and the answer to that case and weighed the evidence accordingly. Had that been done, there could only have been one conclusion, namely that Mrs Gupta had not discharged the 40 See para 10 ante. 41 Gupta 1 para 25. 42 See paras 30 to 33 ante. onus of proving her allegations and the requirements of s 139(2) were not satisfied. Regrettably the judgment did not deal with the evidence and whether it was sufficient to discharge the onus resting on Mrs Gupta. Instead it contains a number of general statements and adverse findings concerning the BRPs without reference to the evidence. This was not the correct approach. The issue of fees [113] At an early stage a theme emerged that appeared to have weighed heavily with the full court. It said:43 'As an officer of the court, it is an uncompromising requirement that a BRP execute his/her duties in good faith, bearing in mind that the benefit of earning fees should never outweigh the duty to act in good faith.' The authority44 cited for this latter proposition did not support it. More to the point there had been no accusation against the BRPs that they were abusing their position in order to sustain or increase the fees they would earn from it.45 However, the full court returned to this in the following paragraph of its judgment, when saying:46 'The sale of the companies' assets seemed to be a frequent feature in the argument raised by the first and second respondents in response to the question regarding the execution of their duties. The first and second respondents argued that in the execution of their duties they had overseen the sale of numerous properties belonging to the companies. However, we find this argument to be untenable. It cannot be that the first and second respondents can unabatedly continue to sell off the assets of the respective companies and earn fees and commissions without having a plan regarding how the respective businesses are going to operate moving forward once the creditors have been paid.' 43 Full court op cit, fn 1, para 26. 44 Murgatroyd v Van den Heever NO and Others 2015 (2) SA 514 (GJ); [2014] ZAGPJHC 142. 45 A situation considered in the context of removing liquidators in Standard Bank of South Africa v The Master of the High Court (Eastern Cape Division) [2010] ZASCA 4; 2010 (4) SA 405 (SCA). 46 Full court op cit para 27. That this was a fundamental consideration in the full court's judgment is apparent from the following paragraph:47 'We therefore find the first and second respondents' continual earning of fees and commissions, despite their failure to timeously conclude the business rescue proceedings in respect of both companies, to be wholly at odds with their mandate in terms of the Act.' [114] Ms Ragavan had not raised this issue in the founding affidavit or the reply. She did not suggest that the BRPs were dragging out the process of business rescue in order to continue to earn fees from unnecessary sales of property. The BRPs had not been called upon to respond to allegations of this type. In raising them, without the benefit of evidence, the full court took into account irrelevant considerations and misdirected itself in a very material respect. The full court made the point that business rescue proceedings are not intended to last indefinitely. It said that the BRPs had not timeously concluded the business rescue proceedings. It is unclear on what this conclusion was based. The period of three months referred to in s 132(3) is not a cut-off date for business rescue. It is merely a date after which the BRPs are obliged to prepare and circulate to affected parties a progress report in regard to the proceedings. The Islandsite plan said that the process would take some six to nine months and this had barely expired by the time the application was launched. The BRPs had been hampered in their efforts by the extensive litigation referred to below and the general lack of co-operation of Ms Ragavan and her colleagues. On the papers the BRPs were not unduly delaying the business rescue process. 47 Full court op cit para 28. [115] The importance of this misdirection is apparent from the stringent terms in which the full court expressed its condemnation of the BRPs' conduct. It said that:48 '… we find the BRPs' conduct in casu to be at odds with the requirements as set out in the Act. As judicial officers, the first and second respondents failed to execute their duties with the highest level of good faith, objectivity and impartiality on several fronts, the sale of the assets of the companies being the first.' This criticism was wholly unsupported by anything in the evidence. It was not a charge levelled against the BRPs by Ms Ragavan, who showed no reluctance to level other complaints against them and who consistently accused them of acting in breach of their obligations. Yet on this she was silent. The heads of argument on behalf of Mrs Gupta were likewise silent on this issue. Given the seriousness of the imputations against the BRPs, it is necessary to say that these findings were entirely unjustified. Prospects of business rescue succeeding [116] The next matter raised by the full court was that the BRPs had 'failed to make out a cogent case to support their opinion that reasonable prospects of rescue existed'.49 The short answer to this is that they were never called upon to do so. It was not an issue in the case. If one peruses the correspondence, Mrs Gupta and the other shareholders adopted the stance that the companies should be taken out of business rescue and restored to the shareholders and directors. When Mr van der Merwe sent the offers to purchase the aircraft and certain properties to the BRPs attorneys on 27 October 2018 he said that the aim was to 'uplift' the business rescue proceedings. On 5 October 2018 he had written to the BRPs' attorney saying that if information could be provided about the debts of the companies 'there was a strong possibility that our clients [the 48 Full court op cit para 27. 49 Full court op cit para 29. Guptas] might be in a position to repay these debts, therefore resuscitating these companies'. On 3 October 2018 he had written suggesting that post-commencement finance could be obtained that would 'bring these businesses out of business rescue'. Far from there being no reasonable prospect of rescue, the approach of Mrs Gupta, as expressed through her representatives, was that there was no longer a need for business rescue and every prospect of bringing them out of business rescue as operating entities. [117] The full court's concern was that there was no proposal to secure a bank account for the companies to enable them to continue with their business. No such concern is to be found anywhere in the affidavits on behalf of Mrs Gupta, or the correspondence annexed to the papers. It was a matter addressed specifically in both business rescue plans. In the case of Islandsite the plan proposed the sale of the business as a going concern or entering into a management contract at arms-length with a third party. In the case of Confident Concept the proposal was either to sell the immovable properties and movable assets or to sell the business as a going concern. This was the basis upon which the business rescue plans had been proposed to and accepted by creditors. It was not an issue in the removal proceedings. The BRPs were under no obligation to deal with it any further. Failure to report criminality [118] The third issue relied upon by the full court needs to be set out in extenso. It read:50 '[30] The first and second respondents' lack of good faith in conducting the affairs of the companies is again demonstrated in their contention that there exists an element of 50 Full court op cit paras 30 – 32. criminal unlawfulness in the manner in which the board and shareholders have conducted the affairs of the companies. As judicial officers, the first and second respondents bore the onus of reporting such suspicions to the relevant authorities. Their failure to do so, in this court's view, is dispositive. Not only does this mean that the first and second respondents' investigation into the affairs of the companies has been tainted as a result of their potential failure to be forthcoming regarding any dubious activities on the part of the board and shareholders, the first and second respondents' failure to report their findings to the relevant authorities in turn also taints their impartiality as officers of the court. Given the nature of the office of a BRP and that the ability to execute one's duties as a BRP requires a high level of impartiality and independence, the conduct of the first and second respondents in failing to report such findings is critical and speaks to whether the respondents are indeed fit and proper to execute the duties of a BRP. [31] In the answering affidavit the respondents contend that, although the initial reason for the commencement of business rescue proceedings was the un-banking of the Gupta-linked companies, it later emerged that the entire group was in financial turmoil due to the gross and reckless mismanagement of the affairs of the companies. The respondents further submit that both Islandsite and Confident Concept form part of the Gupta empire through which billions of rands were channelled under the direction and control of the board of directors, management and shareholders. We, however, find the unsubstantiated nature of the first and second respondents' allegations in this regard particularly vexing. Again, if the first and second respondents were so aggrieved at the alleged mismanagement of the companies and the unsavoury and criminal activities that the companies were being subjected to at the hands of the board and shareholders, as an integral part of their judicial duty the first and second respondents could have and should have reported their findings to the appropriate authorities. Raising such allegations at this stage appears to be a grossly disingenuous litigation tactic that again does not put the first and second respondents' conduct as officers of the court in the best of light. [32] It is in turn both intriguing and troubling that the first and second respondents have filed papers vilifying the companies' board and shareholders, alleging that they have mismanaged the affairs of the companies, and in the same breath want to rescue the companies for the ultimate benefit of the same board and shareholders. This again speaks to the credibility of the first and second respondents and begs the question whether the accusations levelled at the board and shareholders are truly being raised in good faith. Lastly, this court cannot overlook the position of conflict that the first respondent may potentially find himself in as a BRP for both companies. This court finds that the gravity of the position held by a BRP requires the utmost level of impartiality and independence and in the event that such impartiality and independence may potentially be compromised, intervention is warranted.' (Emphasis added, footnotes omitted.) [119] The full court was not justified in condemning the BRPs conduct on these grounds, or in harsh terms that reflected so adversely on their credibility, their integrity and their bona fides. As with the issue of fees the alleged failure to report criminal conduct to the relevant authorities was not raised as a ground of complaint or dealt with in the papers. The likelihood of it having been a ground of complaint by Mrs Gupta, speaking through Ms Ragavan, was nil, inasmuch as any such criminal conduct would have been by the Guptas and directors and employees of companies in the Oakbay Group, such as Ms Ragavan and Mr Chawla. It transpired that it was also factually incorrect. Mr Knoop set the record straight in his answering affidavit in the application for an execution order, explaining that the BRPs had reported their suspicions of potentially criminal conduct to the SAPS, the National Prosecuting Authority, the Special Investigations Unit, the Asset Forfeiture Unit, SARS and the Zondo Commission. [120] Not reporting potential criminal conduct to the relevant authorities was not raised in the papers, and the judgment did not address the difficulties that confronted the BRPs in managing and operating the companies under business rescue. They were working against a background of public controversy about the business practices of the Guptas and their possible involvement in what was commonly referred to as 'state capture'. Under s 141 of the Act the BRPs were required to investigate the affairs of the companies under business rescue. Under s 142 the directors were obliged to co-operate with and assist the BRPs. The evidence showed that the efforts of the BRPs to do the former was at all times obstructed by the directors non-compliance with their statutory obligation, co-ordinated as far as could be seen by Ms Ragavan. This conduct appeared to the BRPs to be furthering the interests of the Guptas and had nothing to do with the successful management of the business rescue. The barrage of litigation [121] The lack of co-operation manifested itself within six weeks of the companies going into business rescue and the appointment of the BRPs, when Ms Ragavan refused the BRPs access to the premises of the businesses without first making an appointment and refused access to documents and business records. Early in April 2018 the BRPs, together with the other two BRPs appointed in relation to OCM, brought proceedings to interdict and restrain Ms Ragavan and various other individuals connected to the Oakbay Group, from obstructing or refusing them or their nominated agents access to the premises from which the various businesses under business rescue operated. An order was granted on 13 April 2018 by Fisher J. On 18 April 2018 she refused leave to appeal and granted an execution order in terms of ss 18(1) and (3) of the Superior Courts Act. The urgent appeal against the execution judgment was dismissed on 3 May 2018. [122] The BRPs also wanted access to the computer servers located on the premises and access to all information thereon relating to the various companies under business rescue. An order compelling Ms Ragavan and the other respondents to afford such access to the BRPs was granted as a matter of urgency on 4 May 2018. It was joined with the issue of an order threatening Ms Ragavan and the other respondents with contempt of court. [123] One might have thought that this would suffice to impress upon Ms Ragavan and her colleagues the need to discharge their statutory duty to co-operate with the BRPs. Far from it. What followed between then and the launch of this application was a barrage of litigation directed at opposing whatever the BRPs sought to do, whether in relation to these two companies, or in relation to the other six companies under business rescue. Ms Ragavan played a major role in this litigation. Sometimes it was brought in her own name and sometimes she deposed to the principal affidavit. In a few instances her role was merely supporting. Others involved were Ms Pushpaveni Govender, the financial manager of the Oakbay Group, the sole director of OCM and a director of OCT and VR Laser; Ms Moopanar; and Mr George van der Merwe, a director of Shiva and OCT and the CEO of OCM, Koornfontein and Shiva. The following litigation ensued, all of which was either directly or indirectly aimed at Messrs Knoop and Klopper in their capacities as BRPs in these and other companies in the Oakbay Group. [124] Ms Govender launched two applications on 9 April 2018 where the founding affidavits were deposed to by Ms Moopanar. One sought the removal of Messrs Knoop and Klopper as BRPs of OCM and replacing them with the intervening party, Mr Mahier Tayob, and Mr Jeremy Mashaba. The second application sought an interdict against the other two BRPs of OCM from holding themselves out to have been duly appointed as such and purporting to exercise any powers flowing from that office and interdict against all four BRPs from implementing certain agreements concluded by them in their capacity as BRPs. The removal application was subsequently withdrawn and the urgent application was dismissed on the grounds that Ms Govender did not have locus standi and that it was not urgent. [125] Mr van der Merwe had been at court when Ms Govender's application came before Kollapen J. On 24 April 2018 he launched a similar application to remove the BRPs in respect of OCM, Koornfontein and OCT. On 26 June 2018 that application was struck from the roll. Ms Ragavan and other members of the pre-existing management of the companies under business rescue and the Oakbay Group either deposed to affidavits in support of these applications, or were signatories to resolutions purporting to authorise the intended litigation. It is plain that their actions were collective. [126] Further litigation at this time, involved the diversion of some R90 million by way of a VAT refund from OCM to a company called In House Wages (Pty) Ltd, the director of which, Mr Maharaj, was appointed two days after OCM was placed in business rescue. The BRPs brought an urgent application on 16 April 2018 and the funds were retrieved. Mr Maharaj explained that the refund was diverted from SARS to his company on the specific instructions of Ms Ragavan and that this was not the first occasion on which such a diversion had occurred. He also informed the BRPs' attorney that he had been instructed by Ms Ragavan to oppose their application. Ms Ragavan did not deal with these statements in her replying affidavit. [127] On 30 April 2018 Oakbay launched proceedings aimed at interdicting the BRPs for Koornfontein from convening a meeting in terms of s 151(1) of the Act. Ms Ragavan supported the application, but it was withdrawn on 4 May 2018. On 30 April 2018 Centaur Ventures Ltd (Centaur), a company registered in Bermuda, brought an urgent application to restrain the BRPs in OCM from attempting to convene a meeting in terms of s 151(1) of the Act, alternatively postponing any meeting sine die. The BRPs of OCM regarded Centaur as a company controlled by the Gutpas. Their allegations to that effect have never received a response. One of the shareholders and directors of Centaur, is a relative by marriage of the Gupta brothers, having married their niece. His wedding at Sun City arranged by the Gupta brothers caused controversy and the BRPs suspected that it had been financed by funds intended for the development of the Estina Dairy Farm in the Free State. The application by Centaur, like many others was withdrawn. It concerned coal supply agreements concluded between Centaur and OCM where the BRPs had been advised that OCM was not in a position to produce the quantity of coal allegedly ordered or purchased by Centaur. Money received from Centaur was not retained by OCM but, according to Mr Knoop (and not challenged by Ms Ragavan) 'the money received from Centaur was not retained by OCM for its benefit but was channelled through OCM to the Guptas and the other companies within the group.' [128] On 2 May 2018 Oakbay launched proceedings to restrain the BRPs in Tegeta from attempting to convene a meeting in terms of s 151 of the Act. On the same day a foreign company, Charles King SA, brought an urgent application against the BRPs and Tegeta for an order declaring it to be an independent creditor of Tegeta, alternatively to postpone a meeting scheduled for 9 May 2018 pending the finalisation of urgent arbitration proceedings to determine the lawfulness of the cancellation of a sale of shares agreement. That claim was dismissed, but it is the subject of an appeal. [129] The focus then shifted to Shiva. Westdawn sought an order against the BRPs requiring it to amend its business plan, which reflected Westdawn's claim against Shiva as disputed. The following day Oakbay launched proceedings against the BRPs to interdict and restrain a proposed meeting of creditors of Shiva. In October 2018 the BRPs and Shiva issued an application out of the Companies Tribunal in order to prevent the unlawful appointment by Mr George van der Merwe of Messrs Tayob and January as substitute BRPs in respect of Shiva. That was challenged and very specific allegations were made that Mr van der Merwe was party to endeavours by the Guptas to disrupt and frustrate the business rescue process of the eight companies in the Oakbay Group. These allegations were not denied and the attempt to appoint Messrs Tayob and January failed. They then tried to interdict the implementation of the tribunal decision. Their application was dismissed on 21 December 2018 and their subsequent application for leave to appeal was dismissed on 22 February 2019. [130] Lastly, in the latter stages of 2018 Oakbay brought an application to procure the removal of Messrs Knoop and Klopper as BRPs of Tegeta. The application was unsuccessful. Leave to appeal against that judgment was refused by Potterill J, but an application for such leave has been referred for oral argument to this court. [131] The present proceedings were said to be a continuation of this tsunami of litigation against the BRPs in the various companies. Whilst the identity of the applicants may have varied and the target of the litigation may have changed from time to time, the picture painted by Mr Knoop was of a campaign of litigation directed at the BRPs and aimed at disrupting the process of business rescue. None of this evidence was disputed. It was not a matter of 'vilifying the companies' board and shareholders' as suggested by the full court. It was no more and no less than a description by the BRPs of the background circumstances against which they asked the court to view the present application. Their case was that these proceedings were a further endeavour to hijack the business rescue process because the Guptas, represented by Ms Ragavan and her colleagues, disliked the direction it was taking. Concerns over financial mismanagement and inter-company transfers [132] The full court described the BRPs' allegations that the entire group of Gupta-linked companies was in financial turmoil due to gross and reckless mismanagement, and that Islandsite and Confident Concept form part of the Gupta empire through which billions of rands were channelled under the direction of the shareholders, directors and management, as 'unsubstantiated' and 'particularly vexing'. It said they were 'a grossly disingenuous litigation tactic' that did not show them in the best of light. [133] This criticism was entirely unjustified. Apart from the background of non-cooperation by Ms Ragavan and other staff at the Oakbay Group and the failure to provide information to the BRPs, there was clear evidence that amply justified the concerns of the BRPs. From the outset it was apparent in both companies that there were major inter-company transactions involved in the network of the Oakbay Group so that the viability of one company depended on the viability of the others. The rentals that formed the principal source of income of Islandsite emanated to a substantial extent from other companies in the group. The hire charges that formed the major source of income to Confident Concept came from Shiva and Westdawn, the latter a subsidiary of Islandsite. In turn the revenue of Westdawn came substantially, if not entirely, from contracts to undertake mining activities in respect of OCM, Koornfontein and Shiva. By way of illustration of the inter-connected state of the finances of the companies, Westdawn claimed that Shiva owed it some R52 million; according to the business rescue plan, inter-company loans in Islandsite show a total of some R673 million in relation to Oakbay, Sahara and Westdawn; the plan in respect of Confident Concept showed that all its debtors were persons or companies linked to the Gupta family totalling over R70 million, while its largest creditor was Islandsite in an amount of over R119 million. [134] Given this web of transactions, there was manifestly a real risk that the entire corporate edifice could collapse like a house of cards. The BRPs were perfectly entitled to be concerned about this. Their concern would have been exacerbated by the report they obtained from the forensic auditor Mr Harcourt-Cooke in May 2018. This showed that some R2.3 billion rand had been transferred from OCM to Tegeta between May 2016 and January 2018. In the same period Tegeta transferred some R1.2 billion rand to OCM and some R2.7 billion was transferred from Koornfontein to Tegeta. Tegeta's bank accounts with the Bank of Baroda for the period from 28 February 2017 to 21 February 2018 showed that R366.4 million was paid to Oakbay and Oakbay paid Tegeta some R36 million. [135] One of the claims that the BRPs in Islandsite were confronted with involved an amount of R200 million paid to it by Westdawn and described as a 'security deposit'. According to a tax invoice issued by Islandsite to Westdawn this was security for the leasing of equipment to Westdawn. On the face of it this amount needed to be retained against the possibility that it would have to be repaid. On 8 June 2018 the BRPs asked Ms Govender, the accounts executive, where these funds were being held. The answer was that the information was being collated and would be sent shortly. The only explanation by Ms Ragavan in her replying affidavit was that by October 2018 the services of all the staff of Islandsite had been terminated. There was silence on the question of where the R200 million paid as a deposit was held. [136] Finally, when dealing with whether there was a factual basis for the concerns of the BRPs in regard to the business operations of the Oakbay Group and the inter-company loans that featured so prominently in the accounts, the BRPs had obtained from Bank of Baroda the bank accounts of Islandsite for the period from 23 February 2017 to 10 January 2018. The picture painted by these would alarm any BRP and it is surprising that it had not attracted the attention of the bank's compliance officers. They showed that money was transferred between the different companies in the group with bewildering rapidity. A few examples of many will suffice. On 1 March 2017 R28 million was received from Oakbay and transferred on the same day to Sahara. On 6 March 2017 Oakbay deposited R711 000 and it was transferred the same day to Confident Concept. On 14 March the process was repeated save that the amount was R8.5 million. On 16 March Oakbay transferred R25.25 million to Islandsite and this amount was immediately transferred to Coalcor Mining. On the same day another transfer from Oakbay of R199 638 was immediately repaid. On 17 March Oakbay deposited R2 736 000 and a payment of the same amount was made to Confident Concept. On 23 March Oakbay deposited R25 million and R20 million was paid to Sahara, R480 000 to Confident Concept and R674 000 to Oakbay. [137] These examples appeared on a single page of the bank statements. The same picture was repeated on the following sixteen pages. The image of a washing machine or spin dryer springs to mind when looking at these bank statements, with money coming in from group companies and going out almost immediately to other group companies in enormous quantities on virtually a daily basis. This was plainly something of legitimate concern to the BRPs and on 4 October 2018 an email was addressed by the BRPs' attorney to Mr van der Merwe asking for an explanation of these payments. The request was simple: 'Kindly explain why this was done. What were the relationships between these parties?' Despite a follow-up email on 29 October 2018 there was never a response to this enquiry. A month later the application for the removal of the BRPs was launched. Mr Knoop said this enquiry had 'touched a nerve' and led to the institution of the present proceedings. [138] There was no factual response by Ms Ragavan to this simple and direct question. Instead she referred to a number of leases and said that the suggestion that the application had been launched because of these enquiries was 'replete with sound and fury but, in the end, signifying nothing'. The quotation showed a closer acquaintance with the works of Shakespeare51 than with the realities of litigation and the fact that 51 Macbeth Act 5, scene 5, lines 24-28: 'Life's but a walking shadow, a poor player, That struts and frets his hour upon the stage, And then is heard no more; it is a tale Told by an idiot, full of sound and fury, Mrs Gupta needed to respond to these serious allegations. Ms Ragavan, as a director of Islandsite and the acting CEO of the Oakbay Group, should have been able to explain these transfers if there was a satisfactory explanation for them, but none was forthcoming. Conclusion on failure to report criminality [139] The full court said that this 'failure' was dispositive of the application. It was not. The complaint, like others that were referred to in the judgment, appears to have been raised by the court mero motu. For that reason alone, the judgment cannot stand. However, given the stringent criticism of the BRPs the basis for this finding advanced by the full court had to be examined in detail. For the reasons set out above it was without foundation. Conflict of interest [140] The allegations of conflict of interest made by Ms Ragavan related to the payment to Sahara from the proceeds of the sale of Confident Concept's equipment and the Westdawn contract termination. Neither complaint was justified. Neither involved a true conflict of interest. There was no suggestion that either Mr Knoop or Mr Klopper would benefit personally from either of these decisions. They were the type of decision that have to be made on an everyday basis when dealing with the financial problems of a group of companies in financial difficulties, where there are significant overlapping relationships between the companies, both in terms of active business relationships, as with the leases and hiring of equipment, and in terms of inter-company loans. Signifying nothing.' [141] It has long been the practice in liquidations of a number of companies in the same group for the Master to appoint one or two lead liquidators and some others to ensure that there is an ongoing working relationship between all the liquidators, to enable information to be shared and to enable the liquidators to build a clear picture of the overall position in the group. This facilitates the winding-up process and is generally beneficial to the winding-up process.52 The fact that one company in the group may be indebted to another does not normally present a problem. Where there is a genuine dispute about the claim this may give rise to a problem, but in the ordinary course that should not be the case. There was an obvious advantage to the creditors for the investigation into the affairs of the companies under business rescue to be undertaken by someone having access to the books and records of all of them. That was far and away the best way in which to untangle the web of inter-company loans and determine whether these were genuine or whether they might involve transactions falling within s 141(2)(c) of the Act. [142] It is unclear whether the full court adopted the view that appointing the same BRP in two companies in the same group, where there was a debtor and creditor relationship between the two, was inevitably a situation giving rise to a conflict of interest on the part of the BRP. If that was its view it erred. It equally erred if its view was that the potential for a conflict of interest to arise, alone sufficed to warrant the removal of the BRPs and presumably should have precluded their appointment.53 The existence of a disqualificatory conflict of interest under s 139(2) must be determined on the facts of a particular case and what is required is an 52 Pellow NO and Others v The Master of the High Court and Others 2012 (2) SA 491 (GSJ) paras 33 - 34. 53 Section 138(1)(e) of the Act. actual conflict of interest not a notional one. In this case the facts revealed no such conflict of interest. No conflict of interest or lack of independence was proved in relation to either Mr Knoop or Mr Klopper. Conclusion in relation to the full court's judgment [143] In the result all of the grounds advanced by the full court in support of its conclusion that the BRPs should be removed were unfounded. Had it confined itself to a consideration of the factual allegations advanced on behalf of Mrs Gupta it should have concluded that they failed to make out a case for the BRPs' removal. The grounds relied on in its judgment should not have been relied on, as they dealt with matters not in issue between the parties. They were in any event unsustainable on the facts and the applicable legal principles. For those reasons the judgment cannot stand. Result [144] The appeal must succeed. In regard to the costs occasioned to the BRPs by Mr Tayob's attempt to intervene, his counsel conceded that they had to follow upon the result of his intervention. It was without merit for the reasons set out in Gupta 1 so he must pay those costs, including the costs occasioned by the employment of two counsel. I did not understand Mr Tsatsawane SC to suggest that any additional costs incurred by his client as a result of the abortive intervention should be paid by Mr Tayob. [145] Before concluding it is appropriate to remark that the application papers in this matter reflect little credit on the legal practitioners responsible for their preparation. They were replete with allegations in emotive terms not borne out by any of the evidence. Ms Ragavan's allegations against the BRPs did not stand up to scrutiny and the charges of incompetence, conflict of interest, lack of independence, a failure to live up to the high professional standards expected of BRPs and the like, were unwarranted. It should not be necessary to remind legal professionals who draft affidavits for their clients that they bear a responsibility for the contents of those documents and may not use them for the purpose of abusing their client's opponents. Such allegations should only be made after due consideration of their relevance and whether there is a tenable factual basis for them. This aggressive tone was likewise reflected in the affidavits of Mr Knoop where he described Ms Ragavan and others as 'Gupta acolytes', an expression more appropriate to a newspaper report than an affidavit. On many points, he would have been better advised to set out greater detail and less rhetoric. As to some of the correspondence between the attorneys, the less said the better. It was marked by aggression, hostility and accusations but little of great relevance to the case and little that reflected well on the authors. [146] The following order is made: The appeal is upheld with costs, such costs to include those consequent upon the employment of two counsel. The order of the high court is set aside and replaced with: 'The application is dismissed with costs, such costs to include those consequent upon the employment of two counsel.' The costs occasioned to the appellants by the application to intervene by Mr Tayob, including those consequent upon the employment of two counsel, are to be paid by Mr Tayob in his personal capacity. _________________ M J D WALLIS JUDGE OF APPEAL Appearances For appellant: P Stais SC (with him GD Wilkins SC) Instructed by: Smit Sewgoolam Inc, Johannesburg; McIntyre Van der Post, Bloemfontein For respondent: NK Tsatsawane SC (with him J Snijder) Instructed by: BDK Attorneys, Johannesburg; Honey Attorneys Inc, Bloemfontein. For Mr M M Tayob: NA Cassim SC (Heads of Argument by MA Chohan and L Kutumela):

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 9 December 2020 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Knoop and Another NNO v Gupta (116/2020) [2020] ZASCA 163 (9 December 2020) The SCA today upheld an appeal by the business rescue practitioners (BRPs) of two companies owned by the Gupta family, consisting of the three Gupta brothers and the respondent, Mrs Chetali Gupta, the wife of Mr Atul Gupta. The companies were Islandsite Investments One Hundred and Eighty (Pty) Ltd (Islandsite) and Confident Concept (Pty) Ltd (Confident Concept), both of which had been placed in business rescue on 16 February 2018. Disputes arose between the BRPs and Mrs Gupta, represented by various employees of companies owned or controlled by the Guptas, and in November 2018 Mrs Gupta applied for the removal of the BRPs. The full court of the Gauteng Division of the High Court, Pretoria, upheld her claim and ordered the removal of the BRPs. It gave leave to appeal against that order, but at the same time ordered that its removal order could be executed upon. An appeal against that order was upheld after argument on 6 November 2020. (See Knoop and Another NNO v Gupta (No 1) [2020] ZASCA 149.) In the main appeal the court analysed the allegations by Ms Ragavan, on behalf of Mrs Gupta, against the BRPs. It held that these allegations were, with one exception, not proved and none of them provided grounds for the removal of the BRPs. The SCA analysed the reasons given by the full court for ordering the removal of the BRPs. It held that none of the grounds relied on by the full court had been raised in the affidavits on behalf of Mrs Gupta and on that ground alone the appeal had to succeed. However, after considering each of these grounds, it held that none of them were established on the facts and that accordingly none of them provided grounds for removing the BRPs. In the circumstances, the appeal was upheld with costs, including the costs consequent upon the employment of two counsel, and the order of the high court was altered to one dismissing the application with costs, including the costs of two counsel.

565

non-electoral

2016

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1121/2015 In the matter between: JOHANNES GEORGE KRUGER APPELLANT and JOINT TRUSTEES OF THE INSOLVENT ESTATE OF PAULOS BHEKINKOSI ZULU FIRST RESPONDENT THE REGISTRAR OF DEEDS, PIETERMARITZBURG SECOND RESPONDENT Neutral Citation: Kruger v Joint Trustees (1121/2015) [2016] ZASCA 163 (10 November 2016). Coram: Mpati AP, Willis, Saldulker, Dambuza JJA and Potterill AJA Heard: 15 September 2016 Delivered: 10 November 2016 Summary: Banking Law: unregistered person conducting the business of a bank in contravention of certain provisions of the Banks Act 94 of 1990: appointment of a repayment administrator in terms of s 84 of Banks Act to recover and take possession of assets of the unregistered person: extent of powers of repayment administrator: unregistered person subsequently sequestrated and trustees appointed: effect of powers of trustees on those of repayment administrator. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Radebe J sitting as court of first instance): The appeal is upheld and the order of the court a quo is set aside and replaced with the following: ‘1 The points in limine are dismissed. 2 The costs shall be costs in the sequestration.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Dambuza JA (Mpati, Willis, Salduker JJA and Potterill AJA concurring): [1] This appeal concerns the interpretation of certain provisions in Chapter VIII of the Banks Act 94 of 1990, (the Banks Act) relating to repayment of money obtained by unregistered persons who conduct the business of a bank. The central issue is the extent of the powers of a repayment administrator under s 84(1A)(b)(i) of the Banks Act when recovering and taking possession of assets belonging to the unregistered persons in managing the repayment process. The appeal is against an order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (Radebe J) (the high court), dismissing an application in which the registrar of banks (the registrar) sought to take possession of assets in the estate of Mr Paulos Bhekinkosi Zulu, the first respondent before the court a quo, pursuant to a direction issued by the registrar of banks in terms of s 83(1) of the Banks Act. The appeal is with leave of the high court. [2] Following an inspection conducted in terms of s 12 of the Reserve Bank Act 90 of 1989,1 the registrar concluded that an entity known as Travel Ventures 1 The section deals with inspection of affairs of a persons and businesses, by the registrar of banks, at the direction of the governor or deputy governor, where there is a suspicion that the person or Marketing Agency (Newcastle) or Travel Ventures Institution (TVI), controlled by Mr Zulu, had engaged in the business of obtaining money by conducting the business of a bank without being registered as such in terms of s 17 of the Banks Act or being authorised to conduct such a business under s 18A(1) of the Banks Act.2 TVI was described on its website as: ‘an International Direct Selling Company having Alliances and Channel partners all across the world’ and as ‘one of the fastest growing companies in the Network Marketing Industry today’. It claimed to operate in over 160 countries across the globe and that its head office was in London. [3] The business entailed the marketing and sale of a travel voucher, mostly in electronic form. The voucher purportedly gave members significant discounts for international travel and accommodation with ‘travel partners’ including the Hilton Hotels, Lufthansa, Swissair, South African Airways and many other reputable companies. It had to be bought electronically at USD2503 via TVI’s website. Each had a unique number and a member purchasing it was accorded a particular status, such as an ‘Associate’ or ‘Distributor’. The member would be granted certain rewards such as a seven day holiday at a partner’s three to five star hotel or resort, a free companion flight and a lifetime access to TVI’s promotions and discounts in relation to air travel, accommodation, car hire and travel insurance. [4] The structure of the institution and its business was that of a typical pyramid scheme. A member had to traverse two boards, the ‘traveller’ and the ‘express’ boards. Upon joining, members were initially given positions at level one of the traveller board and would thereafter travel across four levels until they exited the first (traveller) board. On exiting the first board they received a reward of USD250 in cash and USD250 in vouchers (‘double your investment’!). But to qualify for the rewards they had to ‘sponsor’ two new entrants. A member exiting the traveller board would then go on to the first level of the express board where the exit reward was USD10 000. Thereafter the member could go on to the next express board, ad business not registered in terms of the Banks Act is carrying on the business of a bank or mutual bank. 2 In terms of s 17 of the Banks Act the Registrar of Banks considers and grants an application made under s 16 of the Banks Act to register a business as a Bank where an applicant has been authorised under s 13 of the Banks Act to establish an institution as a bank. In terms of s 18 the registration under s 17 of an institution as a bank shall be subject to the prescribed conditions and to such further conditions, if any, as the Registrar may determine. 3 United States Dollars. infinitum. A member would also earn five to ten per cent of sales made by his or her ‘downline’ (those that he sponsored and those sponsored by them), and be eligible for numerous other prizes. As a marketing gimmick, TVI’s presentation displayed endorsements of network marketing companies by Messrs Warren Buffet, Bill Clinton, Robert Kiyosaki and Donald Trump. [5] Unsurprisingly, TVI was declared an illegal scheme in various jurisdictions throughout the world.4 In this country, the institution had brutally taken advantage of the informal communal savings structures (the stokvels) through distributors, some of whom were religious ministers, politicians, and civil servants, including magistrates and prosecutors. The total investment into the institution, within the country, was estimated at R1,6 billion. Mr Zulu, was one of the distributors. He had opened bank accounts in the name of TVI. [6] On 18 March 2011 the registrar appointed, amongst others, the appellant, Mr Johannes George Kruger, as a temporary inspector in terms of s 11 (1), read with s 12(1), of the South African Reserve Bank Act 90 of 1989, to conduct an inspection into the business practices of, amongst others, TVI. After his appointment, Mr Kruger identified numerous investments of R2 700 each, or multiples thereof, as possible investment deposits in Mr Zulu’s bank accounts opened in the name of TVI. He also identified certain assets owned by Mr Zulu, including four immovable properties situated in Kwazulu-Natal and three motor vehicles registered in his name. Mr Kruger established that some of the investment funds received were used to purchase Mr Zulu’s assets. [7] As a result of the inspection, the registrar was satisfied that TVI and Mr Zulu had obtained money by conducting the business of a bank without being registered as such in terms of s 17 of the Banks Act, or without being authorised in terms of the provisions of s 18A(1) of the same Act, to conduct the business of a bank. On 28 November 2012 the registrar issued a repayment direction in terms of s 83(1) of the Banks Act and appointed Mr Kruger as a repayment administrator in terms of s 4 These countries, according to the appellant, include Hungary, the United States of America and Canada, to name a few. 84(1), to ‘manage and control’ repayment of all the moneys obtained by Mr Zulu in contravention of the Banks Act. [8] Mr Kruger then brought an urgent, ex parte application in the high court, for an order authorising him to recover and take possession of all of Mr Zulu’s assets, including certain identified fixed properties, in terms of the provisions of s 84(1A)(b)(i) of the Banks Act. He also sought to have the title deeds of the identified immovable properties endorsed by the registrar of deeds with caveats. On 18 January 2013 a rule nisi was granted and a search warrant was issued in terms of s 5(1)(b) of the Inspection of Financial Institutions Act 80 of 1998, authorising Mr Kruger to search Mr Zulu’s premises at 16 Mountford Street, Pioneer Park, Newcastle Extension 63 in Newcastle. [9] In opposing the application, Mr Zulu contended that it constituted an abuse of court process and was unnecessary. He raised three points in limine. The first was lack of urgency. The second was that he should have been given notice of the application. The third was non-joinder of interested parties. With regard to lack of urgency, Mr Zulu argued that, given that Mr Kruger had the powers he relied on as far back as 22 March 2012, about nine months prior to approaching the court a quo, there was no urgency in the matter. On that date Mr Kruger, as a temporary inspector appointed in terms of ss 11(1) and 12 of the Reserve Bank Act, had obtained another warrant in terms of s 5(1)(b) of the Inspection of Financial Institutions Act which, for all intents and purposes, was in the same terms as the one subsequently issued on 18 January 2013. Further, Mr Zulu highlighted that he had readily made himself available previously, when requested to do so. He had previously attended an inquiry held at the offices of Mr Kruger’s attorneys. The special pleas of a failure to give notice and an unwarranted failure to observe the prescribed filing periods were based on this previous interaction. Mr Zulu contended that the failure to disclose the previous interaction constituted non-disclosure of material information and, therefore, an abuse of court process. The non-disclosure was fatal to the ex parte application, so it was contended. [10] With regard to non-joinder, the contention was that seven people (Mr Zulu’s wife and her siblings), each of whom held a 14 per cent interest in three of the cited immovable properties, should have been joined in the proceedings. Further, the financiers of the motor vehicles should also have been joined in the application. In any event, so it was argued, Mr Zulu had sold one of the vehicles as far back as 2005, but transfer of ownership had not been registered with the relevant licencing authorities. [11] On the merits of the application, Mr Zulu’s argument was that, the provisions of s 84(1A)(b)(i) of the Banks Act were limited to assets acquired from proceeds obtained in contravention of the Banks Act or through activities performed in contravention of the Act. The contention was that Mr Zulu’s wife and her siblings had inherited the immovable properties from their parents who had acquired them prior to the contravention of the Banks Act. And, he had bought the fourth immovable property in 2007, prior to the contravention of the provisions of the Banks Act. Therefore, all these assets were not liable to attachment under s 84. It was not in dispute, however, that Mr Zulu and his wife were married in community of property to each other. [12] On the return date, in November 2013, the court a quo discharged the rule nisi on the basis of the three points in limine. The court found that each point in limine was, on its own, fatal to the application. However, the discharge of the rule nisi was founded, largely, on Mr Kruger’s failure to disclose certain material information. The learned judge reasoned that because Mr Kruger had already obtained some of the information he sought from Mr Zulu, without any resistance, pursuant to the search warrant issued in parallel proceedings (on 22 May 2012,under case no 4178/2012), the matter had not been urgent. The learned judge also found that there had been non-joinder of the co-owners of the immovable properties. The court found that Mr Kruger had been ‘highhanded’ in the manner in which he handled the matter and awarded punitive costs against him. [13] By the time the appeal came before us Mr Zulu’s estate had been sequestrated and the trustees of his insolvent estate had been substituted in his stead. The trustees had filed a notice to abide by the decision of this court. Mr Kruger’s legal representative was invited to make submissions as to whether, in the light of the trustees having assumed authority over the assets in Mr Zulu’s insolvent estate, it would be competent for this court, on appeal, to reverse the order of the court a quo and thus also authorise Mr Kruger to (also) take the same assets into his possession. [14] Mr Kruger accepts that the assets over which he seeks authority are now correctly in the hands of the trustees of the insolvent estate. However, it was submitted, on his behalf, that although the issues, in this appeal, had become moot, confirmation of the rule nisi remained competent and appropriate because of the incorrect findings made by the court a quo. It was submitted further that it was necessary for this court to consider the appeal because if the findings of the court a quo were allowed to stand, the implications would be disastrous for future attempts, by repayment administrators, to take possession of assets under s 84(1A)(b)(i) of the Banks Act. [15] Section16(2)(a)(i) of the Superior Courts Act 10 of 20135 provides that where, at the hearing of an appeal, the issues are of such a nature that the decision sought will have no practical effect or result, the appeal may be dismissed on this ground alone. The underlying principle is that courts of law exist for settlement of concrete disputes and infringement of rights rather than pronouncing upon abstract questions or advising on differing contentions.6 However, where questions of law, which are likely to arise frequently, are in issue, the court of appeal has a discretion, and may hear the merits of an appeal and pronounce upon it. The test is whether, notwithstanding that the issues between the parties have become moot, there remains a discrete legal issue of public importance that will affect matters in future. Where the decision contested on appeal will influence future litigants, this court has generally exercised its discretion in favour of considering the appeal even when consideration of the issues will have no practical effect. See: Centre for Child Law v Hoërskool Fochville7 in which this court examined a number of cases in which appeals were considered in similar circumstances. 5 See also the predecessor to this section, s 21A(1) to (3) of the now repealed Supreme Court Act 59 of 1959. The position as interpreted in case law in respect of s 21(A) still obtains: see for instance, Legal Aid South Africa v Magidiwana & others [2014] ZASCA 141; 2015 (2) SA 568 (SCA). 6 D E van Loggerenberg Erasmus; Superior Courts Practice (Loose-leaf) 2 ed vol 1 at A2-49. 7 Centre for Child Law v Hoërskool Fochville & another [2015] ZASCA 155; 2016 (2) SA 121 (SCA). [16] In this case, it is apparent that when considering the points in limine the court a quo ignored the purpose of the application, which was, essentially, to enable the exercise by the repayment administrator, of powers bestowed under s 84(1A)(b)(i) of the Banks Act. This erroneous approach and the consequent findings of the court a quo will, in all probability, influence how litigants view the issues attendant in this appeal and similar matters in the future. [17] Therefore, although Mr Zulu’s assets can no longer be placed in Mr Kruger’s possession, it is, in my view, still necessary for this court to consider the appeal to clarify the powers and obligations of a repayment administrator under s 84(1A)(b)(i) of the Banks Act and to set out the correct approach when considering similar matters. For a proper understanding of these powers a comprehensive examination of other provisions of the Banks Act, which regulate the conduct of the banking business, is required. The following are the relevant provisions. [18] Section 11 of the Banks Act provides an entry point to companies wishing to conduct business as banks. The section stipulates that companies must register with the office of the registrar of banks.8 The process is rigorous. The section prescribes, as the first step, an application by the company concerned, to the registrar, for authorisation to establish a bank.9 Section 13(2) sets out numerous factors which the registrar must take into account in considering the application. Upon satisfaction of the requirements the application is approved under s 13(1). A company to whom authorisation has been granted under s 13 of the Act may then apply to the registrar for registration as a bank. This application must, in terms of s 16(1), be made within the 12 month period following the granting of authorisation (computed from the date of the granting of authorisation). The application for registration of a bank may be granted in terms of s 17, subject to conditions that may be set in terms of s 18. The company may then commence to conduct business as a bank. 8 The section provides: ‘Subject to the provisions of section 18A, no person shall conduct the business of a bank unless such person is a public company and is registered as a bank in terms of this Act.’ 9 Section 12 of the Banks Act. [19] In s 1 of the Banks Act the definition of ‘business of a bank’ includes: (a) the acceptance of deposits from the general public (including persons in the employ of the person so accepting deposits) as a regular feature of the business in question; (b) the soliciting of or advertising for deposits; (c) the utilisation of money, or of the interest or other income earned on money, accepted by way of deposit as contemplated in paragraph (a)- (i) for the granting by any person, acting as lender in such person's own name or through the medium of a trust or a nominee, of loans to other persons; (ii) for investment by any person, acting as investor in such person's own name or through the medium of a trust or a nominee; or (iii) for the financing, wholly or to any material extent, by any person of any other business activity conducted by such person in his or her own name or through the medium of a trust or a nominee; (d) the obtaining, as a regular feature of the business in question, of money through the sale of an asset, to any person other than a bank, subject to an agreement in terms of which the seller undertakes to purchase from the buyer at a future date the asset so sold or any other asset; or (e) any other activity which the Registrar has, after consultation with the Governor of the Reserve Bank, by notice in the Gazette declared to be the business of a bank’. [20] For obvious reasons, the conduct of a business of a bank is subject to stringent supervision of the registrar. Strict audit requirements are in place.10 Section 70 stipulates maintenance of a minimum share capital and unimpaired reserve funds requirements. Section 72 sets minimum liquid asset requirements. Section 75 provides for the filing of returns to enable the Registrar to determine whether ss 70 and 72 are complied with. [21] Unregistered institutions which conduct the business of a bank evade supervision by the registrar, always with catastrophic results. Hence the powers granted to the registrar to conduct investigations where there is suspicion of unauthorised conduct of the business of a bank. Obviously, where investigations reveal a contravention of the provisions of the Banks Act, swift intervention is necessary to limit the damage. 10 Section 64 of the Banks Act. [22] Chapter V111 of the Banks Act, entitled ‘Control of Certain Activities of unregistered persons’, empowers the registrar to deal with contraventions of the Act. Section 83(1) provides that: ‘83 Repayment of money unlawfully obtained (1) If as a result of an inspection conducted under s 12 of the South African Reserve Bank Act, 1989 (Act 90 of 1989), the Registrar is satisfied that any person has obtained money by carrying on the business of a bank without being registered as a bank or without being authorized, in terms of the provisions of s 18A(1), to carry on the business of a bank, the Registrar may in writing direct that person to repay, subject to the provisions of section 84 and in accordance with such requirements and within such period as may be specified in the direction, all money so obtained by that person in so far as such money has not yet been repaid, including any interest or any other amounts owing by that person in respect of such money.’ [23] Section 84 regulates the repayment of the money pursuant to the direction issued under s 83(1). The relevant portions provide that: ‘84 Management and control of repayment of money unlawfully obtained (1) Simultaneously with the issuing of a direction under section 83 (1), or as soon thereafter as may be practicable, the Registrar shall by a letter of appointment signed by him or her appoint a person (hereinafter in this section referred to as the repayment administrator) to manage and control the repayment of money in compliance with the direction by the person subject thereto: Provided that the Registrar may afford the person subject to the directive a reasonable period of time to devise and implement an alternative plan of action that is in the interests of the investors and to which the Registrar has no objection. (1A) (a) The repayment administrator shall at the request of the Registrar, as soon as may be practicable report to the Registrar whether or not the person subject to the relevant direction is, in the repayment administrator's opinion, solvent, and if the repayment administrator finds that the person subject to the direction is insolvent, the repayment administrator shall comment on whether such person is technically or legally insolvent. (b) On appointment of a repayment administrator and whilst the person is subject to the relevant direction as contemplated in this section- (i) the repayment administrator shall recover and take possession of all the assets of the person subject to the relevant direction’. (My emphasis.) [24] Section 84(1A) regulates two steps in the management and control, by the repayment administrator, of repayment of money obtained in contravention of the Banks Act. Firstly, as set out in s 84(1A)(a), as soon as possible after appointment, and at the request of the registrar, she must report to the registrar whether the person who is subject to the directive is solvent or not. Secondly, as provided in s 84(1A)(b)(i), she must recover and take possession of all the assets of the person subject to the direction. This appeal relates to the second of the two functions. [25] It is also important to note that once the Registrar serves the letter of appointment of the repayment administrator on the person subject to the directive, as she is obliged to do so under s 84(2) of the Act, the latter is prohibited from dealing with any assets specified in the letter of appointment without the permission of the repayment administrator. [26] In terms of s 84(4)(a) it is the duty of the repayment administrator to conduct such further investigations into the affairs of the person subject to the direction as he or she may deem necessary, to establish the ‘true amount of money unlawfully obtained’ by the person under direction, the identities of the persons from whom the money was obtained, where such money or assets into which it was converted are kept, and any other fact which, in the opinion of the registrar or the repayment administrator, needs to be established in order to facilitate repayment. It is important to note that up to this stage the steps taken by the repayment administrator are aimed at investigating and collating information necessary to facilitate the actual repayment. [27] Once the necessary information is to hand, s 84(4)(b)(i) then obliges the repayment administrator to: ‘. . . take all reasonable steps (including the liquidation of assets into which money unlawfully obtained as contemplated in section 83 (1) has been converted) which may serve to expedite and ensure the repayment of money in accordance with the requirements of and within the period specified in the relevant direction.’ [28] Turning to the facts of this case, in his founding affidavit Mr Kruger correctly contended that he is generally entitled to exercise the powers bestowed on him under s 84(1A)(b)(i) and that he did not need a court order to do so. He explained that his decision to approach the court was motivated by an expectation that some of the assets he sought to attach might not be in Mr Zulu’s possession. He also asserted that he had learnt from previous experience that individuals under a directive seldom willingly handed over their assets for purposes of attachment. He reasoned that if need were to arise for him to approach a court after attempting to use his powers, the provisions of s 84 were likely to be defeated. For this reason he sought a declarator that he was empowered to take possession of the specified assets, and an order that Mr Zulu be directed to declare, under oath, the whereabouts of all his assets and to identify them with sufficient particularity to enable him to recover them. [29] As already stated, the court a quo was of the view that because of previous interaction between Mr Kruger and Mr Zulu, there was no basis for approaching the court on an urgent basis. The court ignored the purpose of the application and the underlying concern that the assets might be dissipated. The court erred in this regard and also in ignoring the fact that, generally, the risk of dissipation of assets increases after the wrongdoing or guilt of a person has been established, particularly as Mr Kruger had explained that this had been his experience in previous similar matters. The fear he entertained, that Mr Zulu could dissipate the assets if given notice, was well-founded. [30] The fact that Mr Kruger had previously interviewed Mr Zulu was irrelevant to the attachment of assets under s 84(1A)(b)(i) of the Banks Act to facilitate investigations in preparation for repayment of money in terms of s84. It must have been the intention of the legislature that, once a contravention of the Banks Act has been established, the process of repayment be executed promptly. It is for that reason that the person subject to the directive is immediately prohibited from dealing with the assets listed in the letter of appointment from the date she is served with the letter of appointment of the repayment administrator. For the same reason the duty on the repayment administrator to recover and take possession of the assets of a person who is the subject of a directive comes into existence on appointment. To require the repayment administrator to approach a court on notice to the person subject to the directive and to require adherence to normal filing times would defeat the purpose of the repayment process. [31] It was submitted, on behalf of Mr Kruger, that the relief he sought was comparable to preservation orders provided for under s 38 of the Prevention of Organised Crime Act 121 of 1998 (POCA), rather than the common law anti- dissipation relief. This comparison was made to illustrate that the law provides for applications for anti-dissipation orders of this nature to be made on an urgent, ex parte basis. I agree with this analogy insofar as it demonstrates the intrinsic urgency in attachments made in terms of s 84(1A)(b)(i). However, it seems to me that for a full appreciation of the basic nature of the powers and duties of the repayment administrator under that section a further analogy must be made. The powers and duties of a repayment administrator are comparable with those of trustees or liquidators of insolvent estates. These powers and obligations arise by operation of the law (ex lege), rather than as a result of a court order. Just as the assets in an insolvent estate vest in the Master immediately on sequestration or liquidation and thereafter on the trustees or liquidators11, by operation of law, the assets of a person who is the subject of the registrar’s directive vest in the repayment administrator immediately on his or her appointment. In the same manner that a trustee, on appointment, assumes control of an insolvent estate, the repayment administrator, on appointment, forthwith takes control and possession of the assets of a person under a directive. [32] Whilst caution is generally advised when considering applications brought ex parte, courts should be mindful that recommended precautionary safeguards, such as notice to the other party, are intended to limit abuse of court process and not meant for ritualistic imposition as a matter of routine. The court has a discretion even when considering urgent ex parte applications. The purpose of the application remains central to the exercise of that discretion. [33] Was there an obligation to join the co-owners of the immovable properties and the creditors in Mr Zulu’s estate? Mr Zulu alleged that Mr Kruger had failed to disclose the co-ownership. That allegation was improperly made. In his founding affidavit Mr Kruger listed four properties in respect of which he sought a caveat. He 11 Section 20 of the Insolvency Act 24 of 1936. stated, in respect of three, that they were: ‘jointly registered in the name of the first respondent (Mr Zulu) and six others’.12 The title deeds of these properties, which show the names of the co-owners, formed part of the founding papers. [34] It is apparent from the title deeds that each co-owner holds a 14 per cent interest in each of the three properties. The legal implications are that because Mr and Mrs Zulu are married in community of property to each other, their shares in the property are combined and indivisible, and may be attached and realised in respect of Mr Zulu’s transgressions. Mrs Zulu (assuming that she is an innocent party) will be given her proportionate share of the proceeds if the interest is realised to raise funds for repayment. As to the rest of the co-owners, the relevant principle is that ordinary co-ownership rights are capable of being separated because they are held separately by the owners.13 Our law in this regard is settled. Recently, in Mazibuko v National Director of Public Prosecutions14, this court considered the effect of a preservation order made in terms of s 38(2) of the POCA on the estate of the innocent spouse who was married in community of property to the guilty spouse. The court distinguished between divisible and indivisible co-ownership and found that whereas ordinary rights of co-ownership are capable of being separated from one another, because they are held separately by the co-owners, the co-ownership rights of spouses who are married in community of property (‘tied co-ownership) are not divisible.15 [35] In this case the record only reveals that Mr Kruger sought an order that the title deeds of the relevant properties be endorsed with a caveat. The exact terms of the caveat are not set out. The correct position is that only the indivisible interest of Mr and Mrs Zulu should have been attached. Further, although it does not necessarily follow that third parties, whose rights and obligations are affected by an order sought, must invariably be joined as parties to the application, the general practice is that in cases such as this, where a party or spouse has a direct and substantial interest in the matter, the court will decline to hear the matter until the 12 It seems that the number stated excludes Mr Zulu’s wife. See para 61 of the founding affidavit. 13 See Mazibuko & another v National Director of Public Prosecutions [2009] ZASCA 52; 2009 (6) SA 479 (SCA) para 47. 14 See Mazibuko supra. 15 Para 48. joinder has been effected.16 Mrs Zulu should, therefore, have been joined as a respondent in the application and the rule nisi should have been served on her. However, her non-joinder was not fatal to the application. The court has an inherent power to order joinder of further parties in an action which has already begun in order to ensure that persons interested in the subject-matter of the dispute and whose rights may be affected by the judgment are before the court.17 The financiers of the motor vehicles are essentially creditors of Mr and Mrs Zulu’s estate. It was not necessary to join them. They would be served with a copy of the order in the same manner as in insolvency proceedings.18 [36] Regarding the contention, by Mr Zulu, that only assets acquired through the operation of the illegal scheme were liable to attachment, this argument flies in the face of the provisions of s 84(1A)(b)(i) of the Banks Act. The dictionary meaning of ‘all’ is: ‘The whole amount, extent, substance, or compass of; all that is possible; [t]he entire number of, without exception’.19 The use of the words ‘all assets’ in s 84(1A)(b)(i) is conclusive on the issue. There is no basis for distinguishing between assets acquired through the operation of the unlawful banking business and those acquired innocently. The source and manner of acquisition is immaterial. In fact, it seems to me that even s 84(4)(b) does not exclude honestly acquired assets from consideration for realisation for purposes of raising repayment funds. The section merely sets out, as one of the duties of the repayment administrator, the taking of reasonable steps to expedite repayment of money. Such steps may include liquidation of the assets into which money unlawfully obtained had been converted. But such a step may not be necessary where repayment funds are readily available. [37] The court a quo therefore erred in discharging the rule nisi. Mr Kruger had made out a proper case for the relief he sought. In fact he had been entitled, even without the court order he sought, to take the steps in respect of which he sought the court’s pronouncement. However, in the light of Mr Zulu’s sequestration and the consequent appointment of trustees to assume control of his estate, it is not open to this court to grant an order the effect of which would be to authorise Mr Kruger to 16 .Van Loggerenberg Erasmus; Superior Courts Practice (supra) at B1-96. 17 SA Steel Equipment Co (Pty) Ltd v Lurelk (Pty) Ltd 1951 (4) SA 167 (T) 18 Regard may be had to ss 83 and 84 of thee Insolvency Act 24 of 1936 19 The Shorter Oxford English Dictionary; vol 1. also take control of the assets in Mr Zulu’s estate. The role of a repayment administrator is essentially different from that of a trustee. The functions of the former are limited to repayment of money unlawfully obtained in the conduct of an unregistered banking business. The role of a trustee is much wider. It entails the administration of all different facets of an insolvent estate. In this case, therefore, once the order of sequestration or liquidation was granted, the powers of the trustees, upon appointment, took precedence over those of the repayment administrator. [38] Consequently, the following order is made: The appeal is upheld and the order of the court a quo is set aside and substituted with the following: ‘1 The points in limine are dismissed. 2 The costs shall be costs in the sequestration.’ ___________________ N DAMBUZA JUDGE OF APPEAL APPEARANCES: For appellants: A R Bhana SC and A Friedman Instructed by: Baker & McKenzie Attorneys, Johannesburg c/o, Lovius Block Attorneys, Bloemfontein For first respondent: Usher Attorneys, Pietermaritzburg c/o, McIntyre & Van Der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 10 November 2016 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Kruger v Joint Trustees of the insolvent Estate of Zulu (1121/2015) [2016] ZASCA 163 (10 November 2016). MEDIA STATEMENT Today the Supreme Court of Appeal handed down a judgment overturning an order of the Natal Division of the High Court, dismissing an application by Mr Kruger, a repayment administrator appointed in terms of the Banks Act, to take possession of assets of Mr Paulos Bhekinkosi Zulu, subsequent to a finding, by the Registrar of Banks, that Mr Zulu had conducted the business of a bank without being registered or authorised to do so under the Banks Act. Mr Zulu had been a ‘distributor’ for an entity known as Travel Venture Institute (TVI) or Travel Ventures Marketing Agency (Newcastle), which conducted the business of obtaining money by marketing and selling electronic travel vouchers. The vouchers purportedly entitled members to discounts for international travel and accommodation with ‘travel partners’ such as the Hilton Hotels, Lufthansa, Swissair, South African Airways and other reputable companies. The business was structured along the lines of a typical pyramid scheme. Members joined by paying an amount of USD250. On joining the business they became ‘Associates’ or ‘Distributors’. Members had to traverse levels drawn on two boards, whilst recruiting new entrants. On exiting each board they received rewards (USD250 for the first board and USD10 000 for the second) but had to sponsor two new entrants to qualify for the rewards. TVI was declared an illegal scheme in many jurisdictions throughout the world. In South Africa it had brutally taken advantage of the informal communal savings structures (stokvels) through distributors, some of whom were ministers, politicians, and civil servants, including magistrates and prosecutors. The total investment in TVI within the country was estimated at R1.6billion. Mr Zulu, as one of the distributors, had opened a bank account in the name of TVI wherein he deposited moneys obtained by him from sales of the travel vouchers. Following an investigation, the Registrar of Banks concluded that Mr Zulu had obtained money by conducting the business of a bank without being registered as such or authorised to do so under the Banks Acts. The Registrar issued a repayment direction in terms section 83 of the Banks Act, in terms of which moneys paid to Mr Zulu would be repaid to the persons from whom they had been obtained. The Registrar also appointed Mr Kruger as a repayment administrator to manage and control the repayment process. In terms of section 84(A)(b)(i) of the Banks Act part of Mr Kruger’s duties, as a repayment administrator, was to take recover and take possession of all Mr Zulu’s assets. Mr Kruger brought an urgent application in the KwaZuluNatal Division of the High Court seeking a declarator that he was empowered to take possession of certain assets and that Mr Zulu be ordered to declare the whereabouts of all his assets. In opposing the application, Mr Zulu contended that Mr Kruger’s powers to take possession of his assets were limited to assets which had been acquired through the conduct of the unlawful banking business. He argued that Mr Kruger had no authority to attach fixed property which he co-owned with his wife and six other persons. He also contended that there had been no reason for Mr Kruger to approach the High Court as a matter of urgency and without giving him notice of his intention to approach the court because the two of them had previously interacted on the matter and he had co-operated with Mr Kruger during the earlier interaction. He contended that there was no reason to fear that he would dissipate the assets. The high court agreed with the argument based on previous interaction and dismissed Mr Kruger’s application on the basis thereof. In overturning the order of the high court the Supreme Court of Appeal held that a court considering urgency of a matter and whether notice should be given to the respondent must be mindful of the nature and purpose of the application. In this case, because Mr Kruger sought an anti-dissipation order and had explained the reasons why he anticipated resistance, the matter was urgent and notice to Mr Zulu would have defeated the purpose of the application. The court also found that Mr Kruger could have exercised his powers under section 84(A)(b)(i) of the Banks Act without obtaining a court order as his powers derived from legislation. Regarding the non-joinder of the co-owners of the fixed properties, the court found that because Mr and Mrs Zulu were married in community of property to each other their joint interest in the fixed assets was indivisible. Therefore it had been properly attached. But Mrs Zulu should have been joined as a respondent in the application. On the other hand, the interests of the other co-owners were divisible from that of Mr and Mrs Zulu and were not liable to attachment. Further the court found no merit in Mr Zulu’s argument that Mr Kruger’s powers were limited to assets acquired through the conduct of the unlawful business as the wording of section 84(A)(b)(i) was clear in this regard. Finally, the Supreme Court of Appeal found that because Mr Zulu’s estate had since been sequestrated and the trustees were in control of the insolvent estate it was not open to the court to grant an order that Mr Kruger take possession of all Mr Zulu’s assets. The court held that the powers of the trustees took precedence over those of the payment administrator. --- ends ---

4136

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1272/2022 In the matter between: CITY OF CAPE TOWN APPELLANT and NQULELWA MTYIDO RESPONDENT Neutral citation: City of Cape Town v Mtyido (Case no 1272/2022) [2023] ZASCA 163 (1 December 2023) Coram: GORVEN, WEINER and GOOSEN JJA and KOEN and KATHREE- SETILOANE AJJA Heard: 20 November 2023 Delivered: 1 December 2023 Summary: Delict – widening of pleadings – wrongfulness and negligence – respondent injured as a result of open manhole under control of appellant – open manhole previously reported to an employee of the appellant. ORDER On appeal from: Western Cape Division of the High Court, (Erasmus J, Salie-Hlophe and Papier JJ concurring, sitting as a full court of appeal). The appeal is dismissed with costs, such costs to include the costs of two counsel where so employed. JUDGMENT Koen AJA (Gorven, Weiner and Goosen JJA and Kathree-Setiloane AJA concurring) Introduction [1] The respondent, Ms Nqulelwa Mtyido, alleges that on 17 October 2013 while walking along Khwezi Street, in Bardale, Mfuleni, a public road within the municipal area of the appellant, the City of Cape Town, she fell into an open manhole which resulted in her sustaining injuries to her right ankle. She sued the appellant in the Western Cape Division of the High Court1 (the trial court) for damages arising from her injuries. The trial court separated the issue of liability from damages. It found that employees of the appellant wrongfully and negligently failed to take steps to prevent the respondent from being injured by the open manhole. It declared the appellant liable for the damages, if any, that the respondent had suffered in consequence of the incident, and also directed that it must pay her costs. 1 Dolamo J. [2] The appellant appealed2 against the whole of the judgment of the trial court to the full court of the Western Cape Division of the High Court (the full court). The full court3 dismissed the appeal with costs. This appeal is against the decision of the full court.4 The appeal turns on an evaluation of the pleadings, the evidence and the probabilities in the light of the pleadings. Requirements for liability [3] The respondent’s action is founded on the actio legis Aquilia. The issue of liability required the respondent to establish conduct which was wrongful and negligent, on the part of employees of the appellant, which caused her to be injured. The respondent bore the onus of proving these requirements. The evidence [4] The respondent testified that around 20h00 on 17 October 2013 she was walking along Khwezi Street, Mfuleni, a road perpendicular to Ukubetana Street where she had resided from December 2009, to fetch water from a tap at a nearby informal settlement, as she was without water at her home. She had never been to that area before and was unaware of any manhole in Khwezi Street. It was becoming dark, but there was a floodlight on a high mast in an adjoining settlement, which provided some light. She walked on the tar road as the pavement was covered with sand and plant growth and she feared she might step on some glass. Suddenly she felt that she was falling and realized her right leg had stepped into a ‘drain’, which turned out to be an open manhole without a cover. She called for help, and two ladies who she had come across earlier, came to her assistance. They alerted her husband, who brought his vehicle and took her to the Delft hospital. 2 Leave to appeal was dismissed by the trial court with costs. On petition leave to appeal was granted to the full court of the Western Cape Division of the High Court. 3 Per Erasmus J, with Salie-Hlophe and Papier JJ concurring. 4 Special leave to appeal was granted by this court on 10 November 2022. The costs of the application for leave to appeal to the SCA were directed to be costs in the appeal. [5] The respondent pointed out the location of the manhole in Khwezi Street to representatives of the appellant during an inspection during November 2019. She also identified the location of the manhole on a series of photographs introduced by the appellant (the appellant’s photographs). These photographs show a manhole with a cover in place fitted, in the tarred road, flush with the tarred surface. She testified that ‘at that stage of the incident . . . this hole was not in this fashion it shows here today’ and ‘that there is a difference today . . .’ She was also referred to three photographs (the respondent’s photographs) in respect of which her attorneys had provided written notice in terms of rule 36(10)5 as ‘depicting the scene of the incident.’ No objection was raised to this notice thus entitling the respondent to produce the photographs without formal proof thereof. Although she did not know who had captured the respondent’s photographs, she was clear that ‘these photos depict the area and how it was during that period of this incident’.(Emphasis added) [6] The respondent’s photographs show ‘an object’ a short distance from the intersection of Ukubetana and Khwezi Streets, which she said ‘is the same like this one’, referring to a close up photograph of the open manhole she said resulted in her injury. She concluded by stating, ‘So hence I say it’s the same manhole.’ The close-up photograph of the ‘object’ shows a manhole partially covered by what appears to be two concrete kerbing stones, similar to those forming the border of the pavement in that area, but still leaving about half of the open manhole exposed. During the trial the appellant conceded that the area shown on the respondent’s photographs is the area concerned. [7] The respondent testified that there were no people staying on the opposite side of Khwezi Street, where the storm water pipes are positioned on the respondent’s photographs, during October 2013; that ‘nothing else happens further down’ from the spot where she was injured; that workers were busy preparing that area; that people started staying there only from 2018; and that the tarred road (in Khwezi street) ended at a point somewhere between the manhole and the tap where she was going to fetch the water. A 5 The notice in terms of rule 36(10) was served on 4 February 2019, that is more than one year prior to the trial commencing. comparison of the appellant’s and respondent’s photographs also suggest that Khwezi Street was subsequently extended and tarred beyond the point indicated by the respondent. A witness called by the appellant, Mr Welman disputed this, and said the road was already complete in 2013, but simply obscured by sand covering it. However, this was not put to the respondent in cross examination. [8] The respondent also called the evidence of Mr Barnabas Zwehile Xwayi (Mr Xwayi). He previously lived across the road from the respondent in Ukubetana Street, but has since retired to the Eastern Cape. His return for the trial was the first time he returned to the area since 2018. He had become aware that the respondent had suffered an injury when he saw her after she was discharged from hospital. He had previously found an open manhole in Khwezi Street which he reported to an employee of the appellant. As this evidence is significant, it is set out verbatim: ‘The year was 2013, but unfortunately I cannot assist the court by giving the specific month because this was quite a while back. I saw these workers who were busy performing the duties on the road so I approached them and asked them how can I be assisted by having this hole closed. So one these gentlemen who were busy working pointed to somebody and said to me: there is the boss, go and put your complaint to him about this hole. And then I approached this one gentleman, I took him to the hole and showed him the hole. He promised me that the hole will be closed. Now as time went by, like approximately two months now I got word that somebody had fallen into that whole.’ When questioned about the person he spoke to, he said: ‘When I looked at this gentleman I noticed they had the emblem of City of Cape Town on their chests, whatever they had on, on their tops, on their hard hats as well as on the bakkie.’ He also said that he took three poles with some ‘pellets’,6 placed the poles into the hole and the pellets around them or over the poles, and used a red-and-white tape in order to warn people about the open hole. However, the people living in the nearby shacks removed these, probably to make fire or use them in some other way. According to the respondent on her return to the area after her hospitalisation, she inspected the area where she had been injured and saw the open manhole with some wood inside it. This 6 Presumably Mr Xwayi meant ‘pallets.’ observation confirms that Mr Xwayi’s report related to the same manhole as the one which caused the injury to the respondent. [9] Mr Xwayi could not name the person he reported to. He also did not make any further reports. He initially had some difficulty when testifying, to point to the location of the manhole on an aerial photograph of the area, but after some prompting and having orientated himself somewhat, pointed to the same location identified by the respondent in her evidence. [10] The appellant adduced the evidence of three of its employees: Mr Ian Quintus Welman, a project manager in the Human Settlements Department of the appellant; Mr Pierre Maritz, the Manager of Reticulation, of the Engineering Department of the appellant responsible for the maintenance of manholes; and Mr Shafodien Hussein Jaffer, an administrative assistant employed by the appellant. [11] Mr Welman’s evidence related to lighting in the area from the high mast in the adjoining settlement known as Garden City. This evidence was relevant mainly to the issue of contributory negligence on the part of the respondent, an issue not persisted with in this appeal. As a project manager in the Human Settlements Department of the appellant he was involved with the housing development in that area: he testified that the location where the respondent and Mr Xwayi lived in Ukubetana Street was in phase 3B of the development; Khwezi Street marked the boundary of phase 3B; phase 3B was completed in 2009 with, to the best of his recollection, municipal services having been installed shortly before completion; and the area on the other side of Khwezi Street opposite to phase 3B was phase 5A, which had not been fully developed at that stage. This evidence is consistent with what appears from the respondent’s photographs showing some storm water pipes lying on the far side of Khwezi Street, and an aerial photograph of the area dated 19 October 2013 (two days after the respondent’s accident) included with the appellant’s photographs, showing the area of phase 5A as vacant. [12] Mr Welman could not provide exact details of the services installed as he had not brought the relevant documents with him. Furthermore, much of the development handover was attended to by consultants on behalf of the appellant. Mr Welman confirmed that car traffic in that area, especially Khwezi Street ‘would be minimal’ and not ‘congested at any point in time during a day.’ In contrast, Mr Maritz testified it was a ‘high travelled road’, but his observation might have related to the traffic position at the time of the trial and not October 2013. [13] Mr Martiz testified that there were roughly 192 000 manholes under the appellant’s control during 2013. The appellant’s C3 system is used to record reports of missing manhole covers, whether reported by the public or when discovered by its employees. This system reflected that nine missing covers were recorded for the Mfuleni area during the period from 1 August 2013 to 31 October 2013. A manhole cover cannot be replaced without it being recorded on the system with a reference number. Where a complaint of a missing manhole cover is received, the appellant endeavours to replace the missing cover within three hours. There was no record of a manhole cover missing in Khwezi Street during 2013, or thereafter on the system. [14] Mr Maritz inspected the manhole in question in Khwezi Street on 11 February 2020. The appellant’s photographs show the condition of the manhole around that time. He identified the cover on the appellant’s photographs as the heavier 2A type installed on roads as they are able to carry the load of vehicles. It has an additional hinge feature which would make it difficult to remove the lid, as it requires specialised knowledge of the workings of the hinge mechanism. If this type of manhole cover is required to be replaced, then the frame of the manhole in which the cover sits would also need to be replaced. That would result in the tarred surface around the manhole being disturbed as the new frame has to be set in concrete. The concrete would be clearly visible if the frame of the manhole had been replaced. He opined that as this manhole as it existed at the time of his inspection, had a fitted cover in situ, and the tar around the manhole appearing on the appellant’s photographs had seemingly never been disturbed, that it could not have been left open without a cover since it was first installed. He did however state in re- examination, in response to the question whether one can replace ‘that manhole without – with simply replacing a cover in a manner that you cannot see’, that ‘it is highly unlikely that you will get the perfect fit . . .’ (Emphasis added). [15] He testified, with reference to an aerial photograph of Khwezi Street dated 22 February 2014, that an open manhole at the point indicated by the respondent and Mr Xwayi, would cause severe problems within hours due to the volume of sand in the area which would fill up the manhole and block the sewerage flow. In his view it was therefore unlikely that the manhole in Khwezi Street was uncovered for months.7 [16] Mr Jaffer testified that he had examined the C3 system records and could not find a record of a missing manhole cover in Khwezi Street being reported, or a missing cover being replaced, during the whole of 2013, or during the period from 2014 until 2020. There was only one report of a missing manhole cover in Ukubetana Street during September 2014. The findings of the trial court and full court [17] The trial court accepted the evidence of the respondent and that of Mr Xwayi as credible and probable. Mr Xwayi was viewed as independent and not showing any bias. [18] With regards to the appellant’s witnesses, the trial court found that Mr Maritz’s opinion that the manhole cover had never been missing, as the manhole found there at the time of the trial was the original one because the tar around the manhole was homogenous with the rest of the surroundings, was inadmissible. This was because Mr Maritz had not been qualified as an expert, and the provisions of Uniform rule 36(9) had not been complied with. In the alternative it found that Mr Maritz’s evidence would in any event be irrelevant, because he was simply giving evidence on an issue the Court had to decide. 7 There was however no evidence whether the sewerage flow had been blocked or not, or whether the sewerage service was indeed in place and used yet. [19] It further concluded that Mr Maritz’s reliance on the records drawn from the C3 system to substantiate the point that no cover was reported missing or was replaced in Khwezi Street during 1 January 2013 to 31 December 2013, was dependent on human intervention. This implied that it is fallible, and that whatever was sought to be inferred from the records on the C3 system did not negate the direct credible evidence of Mr Xwayi that he had reported the missing manhole cover to an employee of the appellant. It concluded that the only reasonable explanation why there was no record of the missing manhole cover on the C3 system was either because the appellant’s employee to whom Mr Xwayi made the report never forwarded the complaint to the relevant department, or that it was possibly incorrectly recorded on the C3 system. [20] As to when the cover examined by Mr Maritz on 22 February 2020 was installed, the trial court concluded that it was any time after 31 December 2013. The records of missing and replaced covers in Khwezi or Ukubhethana Streets after 31 December 2013 were not made available, and Mr Jaffer was not clear and certain in his evidence, as he said that he thought that he had looked at the records ‘from 2013 up until the current.’ The trial court observed that the appellant’s witnesses testified without having the facts ‘to back up their bald assertions’, and that this could have been avoided if, with all the resources available to it, the relevant records were available for reference to be made thereto. Finally, it concluded that the version of the respondent was not ‘equipoised’ with that of the appellant but was more probable than that of the appellant. [21] The full court concluded that the trial court had not misdirected itself in any manner, including its findings on the facts, credibility and the reliability of the witnesses, which would justify it interfering with its findings. It concluded that the respondent’s version was materially corroborated, reliable and not characterized by contradictions and improbabilities. Whatever contradictions there were, were raised and considered by the trial court in a fully reasoned judgment and dismissed. It concluded that even if the ‘expert opinion evidence’ of Mr Maritz was not excluded,8 that this evidence would nevertheless 8 This issue can be disposed of briefly as follows: Rule 36(9) was not complied with. However, the evidence that a manhole, if replaced, would show the concrete surround was factual. What inference was to be drawn ‘not trump’ the evidence of the respondent and Mr Xwayi. Accordingly, there was no basis to interfere with the trial court’s findings and its acceptance of the respondent’s version. [22] The appellant contends that the full court erred by not finding that the trial court: failed to have regard to the evidence in its totality; failed to ensure that the conclusions reached accounted for all the evidence; failed to distinguish probabilities and inferences from conjecture and speculation; failed to properly consider the probabilities; failed to draw inferences only from objectively proven facts; and failed to follow the approach to factual disputes as stated in Stellenbosch Farmers Winery Group Ltd and Another v Martell Et Cie and Others9 (Martell) in regard to irreconcilable versions. Analysis [23] A court of appeal will generally not interfere with findings of credibility made by a trial court, because the trial court would have had the benefit of observing the witnesses when testifying, unless those finding are clearly wrong. Similarly, an appeal court will not from the manhole at the time of the trial not having such concrete surround was for the trial court to decide - not isolated to that fact, but in the light of all the circumstances of the case. The conclusion of both courts that it is irrelevant what inference Mr Martiz drew from the facts because that is what the trial court had to decide, is correct. 9 Stellenbosch Farmers Winery Group Ltd and Another v Martell Et Cie and Others 2003 (1) SA 11 (SCA) para 5 held: ‘On the central issue, . . .there are two irreconcilable versions. So, too, on a number of peripheral areas of dispute which may have a bearing on the probabilities. The technique generally employed by the courts in resolving factual disputes of this nature may conveniently be summarised as follows. To come to a conclusion on the disputed issues a court must make findings on (a) the credibility of the various factual witnesses; (b) their reliability; and (c) the probabilities. As to (a), the court’s findings on the credibility of a particular witness will depend on its impression about the veracity of the witness. That in turn will depend on a variety of subsidiary factors, not necessarily in order of importance, such as (i) the witness’ candour and demeanour in the witness – box, (ii) his bias, latent and blatant, (iii) the internal contradictions in his evidence, (iv) external contradictions with what was pleaded or put on his behalf, or with established fact or with his own extra-curial statements or actions, (v) the probability or improbability of particular aspects of his version, (vi) the calibre and cogency of his performance compared to that of other witnesses testifying about the same incident or events. As to (b), a witness’ reliability will depend, apart from the factors mentioned under (a)(ii), (iv) and (v) above, on (i) the opportunities he had to experience or observe the event in question and (ii) the quality, integrity and independence of his recall thereof. As to (c), this necessitates an analysis and evaluation of the probability or improbability of each party’s version on each of the disputed issues. In the light of its assessment of (a), (b) and (c) the court will then, as a final step, determine whether the party burdened with the onus of proof has succeeded in discharging it. The hard case, which will doubtless be the rare one, occurs when a court’s credibility findings compel it in one direction and its evaluation of the general probabilities in another. The more convincing the former, the less convincing will be the latter. But when all factors are equipoised probabilities prevail.’ lightly interfere with the factual findings made by a trial court. As was said in Mashongwa v Passenger Rail Agency of South Africa (Mashongwa):10 ‘It is undesirable for this court to second-guess the well-reasoned factual findings of the trial court. Only under certain circumstances may an appellate court interfere with the factual findings of a trial court. What constitutes those circumstances are a demonstrable and material misdirection and a finding that is clearly wrong. Otherwise trial courts are best placed to make such findings.’11 [24] The full court correctly concluded that there was no basis to interfere with the trial court’s findings on credibility. During argument before us the appellant’s counsel conceded that the credibility of the respondent and Mr Xwayi could not be impugned.12 The concession was correctly made. The respondent and Mr Xwayi were both single witnesses in regard to the issues on which they testified,13 but they gave their evidence in a clear and satisfactory manner, without hesitation, and without exaggeration. They did not contradict themselves and there were no contradictions between their evidence and the established facts. Their evidence was reliable. 10 Mashongwa v Passenger Rail Agency of South Africa [2015] ZACC 36; 2016 (3) SA 528 (CC). 11 Ibid para 45. See also S v Hadebe and Others 1997 (2) SACR 641 (SCA) 645E-F; Santam Bpk v Biddulph 2004 (5) SA 589 (SCA) para 5; Minister of Safety and Security & Others v Craig and Others NNO [2009] ZACC 97; 2011 (1) SACR 469 (SCA) para 58. 12 This was part of a more general concession that no adverse credibility finding should be made against any of the witnesses. 13 The respondent was criticised, because her evidence that she stepped into the manhole in Khwezi Street was disputed, for not calling the evidence of the two ladies who had come to her assistance, or her husband who came to collect her there, as she bore the onus of proving the incident, and there was no suggestion on the record that they were not available to testify. But, as has been held in Rand Cold Storage and Supply Co Ltd v Alligianes [1968] 2 All SA 241 (T) at 243: ‘It is axiomatic that a party need not, and cannot be blamed if he does not, call all the witnesses who may give pertinent evidence; he is entitled to take the risk of offering less than all the evidence available to him if he is of the opinion that what he has offered would suffice to one. He may of course in the result be shown as having been too confident but that is something different from being found to have deliberately suppressed evidence unfavourable to him – which is the conclusion sought to be drawn here. In Brand v Minister of Justice and Another, 1959 (4) SA 712 (AD), it is said at p 715: “this statement does not, however, mean any more than that, if, in the absence of the testimony of the witness in question, the evidence is otherwise equally balance, the onus will come into effect of operation. The statement in question does not mean that any greater obligation to call the witness rests upon the onus – bearing party: it merely means that, if he does not call the witness, he runs the risk of the onus of proving decisive against him. “’ In this matter, the evidence was not evenly balanced, but it favoured the respondent. [25] The appellant however argued, accepting that the respondent and Mr Xwayi were credible and reliable witnesses, that their evidence was nevertheless improbable, and that they might be mistaken. It argued that the more probable inference to be drawn from the evidence that the tar around the manhole as it existed at the time of the trial did not show any disruption or a concrete inlay, and that the C3 system did not contain any record of a manhole cover being reported missing and/or being replaced in Khwezi Street during October 2013, or thereafter, is that the manhole in Khwezi Street had not been open and without a cover in October 2013. [26] That conclusion firstly, would contradict the direct evidence of both the respondent and Mr Xwayi and reflect negatively on their credibility, which is not only beyond reproach, but has been accepted to be such by the appellant. Second, it is dependent on that inference being the most probable inference to be drawn from what is circumstantial evidence relating to the frame of the manhole not being set in concrete, and the C3 system not containing any reference to a missing manhole cover in Khwezi Street in 2013 or beyond. [27] The inference sought to be drawn by the appellant is not the most probable inference that could be drawn. There are also other equally probable inferences that could be drawn. The probability of the inference which the appellant wishes to draw, was also not established, as the trial court had found. Other inferences could include that the manhole as it existed at the time of the trial, was fitted after December 2013, as the trial court concluded, when the roads for phase 5A were completed or tarred/retarred, some of which seemingly occurred in the five months subsequent to the respondent having sustained her injuries. The detail of whether the manhole, which was in situ at the time of the trial, is the original manhole, or how it came to exist in the condition shown on the appellant’s photographs, is not within the knowledge of the respondent, but peculiarly within the knowledge of the appellant. As the trial court remarked, the appellant would have the records. This should include when the road infrastructure was finally put in place as part of the civil construction work. The appellant had an evidentiary onus to place this evidence before the trial court if it wished it to infer, as the most probable inference, that the frame of the manhole cover in Khwezi Street had never been replaced, and if it wished to negate the respondent’s direct credible evidence that she had suffered her injuries at that manhole.14 [28] Much of the evidence was not seriously disputed.15 What ultimately remained in dispute for resolution, was which one of two mutually conflicting versions should prevail: the version of the respondent that her injuries were caused when she stepped into the open manhole in Khwezi Street, after the open manhole had previously been reported to the appellant; or the version of the appellant that it had no knowledge of an open manhole in Khwezi Street, and, that as a matter of probability, the manhole pointed out by the respondent in Khwezi Street did not have a missing cover during October 2013. [29] The test to be applied in deciding between mutually destructive versions was stated, amongst others in National Employers’ General v Jagers16 (Jagers) as follows: ‘. . . in any civil case . . . the onus can ordinarily only be discharged by adducing credible evidence to support the case of the party on whom the onus rests. . . . [W]here there are two mutually destructive stories, he can only succeed if he satisfies the Court on a preponderance of probabilities that his version is true and accurate and therefore acceptable, and that the other version advanced by the defendant is therefore false or mistaken and falls to be rejected. In deciding whether that evidence is true or not the Court will weigh up and test the plaintiff’s allegations against the general probabilities. The estimate of the credibility of a witness will therefore be inextricably bound up with the consideration of the probabilities of the case and, if the balance of probabilities favours the plaintiff, then the Court will accept his version as being 14 The evidence of Mr Jaffer suggested that a situation could arise where workers ‘reserved the stock from their store but it is not specific that it is – what will happen if say for instance they draw 10 drain covers or sorry 10 manhole covers it is not always specific to a specific job they would then ja replace those covers.’ As much as Mr Welman said it was the original manhole, he had no records with him and did not express any basis for coming to that conclusion. 15 This included: that the respondent suffered an injury to her ankle when she stepped into an open manhole; that the manhole pointed out by the respondent, as corroborated by Mr Xwayi, is the one situated in Khwezi Street; that the respondent’s photographs of the manhole shows it as having been left open and still being open when photographed; that the manhole cover in the same area, depicted on the appellant’s photographs, shows a manhole with a cover as it existed more than six years after the incident, on an undisturbed tar surface in Khwezi Street; and that some further infrastructural work was carried out after October 2013 in the general area in respect of Khwezi Street in respect of phase 5A of the development. 16 National Employers’ General v Jagers National Employers’ General v Jagers National Employers’ General v Jagers 1984 (4) SA 437 (E) at 440D – 441A. probably true. If however the probabilities are evenly balanced in the sense that they do not favour the plaintiff’s case any more than they do the defendant’s, the plaintiff can only succeed if the Court nevertheless believes and is satisfied that his evidence is true and that the defendant’s version is false. . . I would merely stress however that when in such circumstances one talks about the plaintiff having discharge the onus which rested upon him on a balance of probabilities one really means that the Court is satisfied on the balance of probabilities that he was telling the truth and that his version was therefore acceptable. It does not seem to me to be desirable for a Court first to consider the question of the credibility of the witnesses as the trial Judge did in the present case, and then, having concluded that enquiry, to consider the probabilities of the case, as though the two aspects constitute separate fields of enquiry. In fact, as I have pointed out, it is only where a consideration of the probabilities fails to indicate where the truth probably lies, that recourse is had to an estimate of relative credibility apart from the probabilities.’ [30] In reaching a conclusion on the contradictory versions, the trial court, following Martell and Jagers, made findings on the credibility of the various factual witnesses, their reliability, and the probabilities. Its approach cannot be faulted. It found that the probabilities based on credible evidence, favoured the respondent’s version. Even if the probabilities could be said to be evenly balanced, then based on the credibility of the respondent and Mr Xwayi, the respondent still discharged the onus17 of proving that her injuries resulted from her having stepped into the open manhole in Khwezi Street, which previously had been reported to the appellant. [31] There is no basis to find that the full court erred in accepting the trial court’s findings of fact, and in endorsing its conclusion. Wrongfulness [32] Accepting the factual findings made by the trial and full court, the appellant then confined its argument to the legal issue whether the respondent had established wrongfulness. 17 National Employer General v Jagers (supra). [33] The appellant argued that the finding of the full court that the appellant owed ‘a legal duty to protect the public from suffering any physical harm by the infrastructure through which it provides services’, and its reliance on Democratic Alliance and Another v Masondo and Another18 as authority for that proposition, were incorrect. It pointed out that Mashongwa19 held that wrongfulness does not flow from a breach of a public duty alone, but that a breach of a public duty is simply one of the factors that a court must consider in order to ascertain wrongfulness. The appellant also drew attention to the caution expressed in Municipality of Cape Town v Bakkerud20 that: ‘It is tempting to construct such a legal duty on the strength of a sense of security endangered by the mere provision of a street or pavement by a municipality but I do not think one can generalise in that regard. It is axiomatic that man-made streets and pavements will not always be in the pristine condition in which they were when first constructed and that it would be well – nigh impossible for even the largest and most well-funded municipalities to keep them all in that state at all times. A reasonable sense of proportion is called for. The public must be taken to realise that and to have a care for its’ own safety when using the roads and pavements.’ The appellant also argued that the respondent had not ‘lead any evidence relevant to the discreet element of wrongfulness’ as pleaded, and that it would be unreasonable21 to impose liability for the respondent’s injuries on the appellant, given the facts and circumstances of the case. [34] It would be wrong however to confine the respondent’s case as regards wrongfulness to what was pleaded. The allegations in the respondent’s particulars of claim22 regarding wrongfulness, and also negligence, can rightly be criticised as being of 18 Democratic Alliance and Another v Masondo and Another 2003 (2) SA 413 (CC) para 17 19 Mashongwa para 28. 20 Municipality of Cape Town v Bakkerud [2000] ZASCA 174; [2000] 3 All SA 171 (A) paras 28 and 29. 21 This was with reference inter alia to Minister of Safety and Security v Van Duivenboden 2002 (6) SA 341 (SCA) para 12. 22 As regards wrongfulness it was alleged that the appellant owed a legal duty to members of the public and to her in particular: to ensure that areas within its jurisdiction and/or under its control and to which members of the public had unrestricted access were free of any dangers and/or potential dangers; to ensure that adequate measures were taken in all areas within its jurisdiction and/or under its control to which members of the public had unrestricted access to safe guard members of the public against any dangers and/or potential dangers; and to take reasonable precautions to warn members of the public of any dangers and/or potential dangers in all areas within its jurisdiction and/or under its control to which the members of the public had unrestricted access. As regards negligence, the respondent alleged that the appellant breached the duty of care alleged. a general nature, terse, not fact specific and unhelpful. The respondent’s case, both as regards wrongfulness and negligence, became more specific during the evidence, when it emerged that she would contend that the open manhole had been reported, some two months prior to her being injured, to an unidentified employee of the appellant who promised to have it covered, but that nothing was done to do so, resulting in her suffering injury.23 [35] This evidence by Mr Xwayi was introduced without any objection from the appellant. The evidence was fully canvassed during cross examination. The issues for adjudication accordingly came to be widened24 beyond what was contained in the particulars of claim, to include inter alia: whether the appellant had prior knowledge of the potentially dangerous situation posed by an open manhole in Khwezi Street; whether that knowledge gave rise to a duty of care owed to the respondent to prevent her from being injured; and whether the appellant negligently breached that duty by failing to close the manhole. [36] It is trite law that a legal duty may arise where a defendant has prior knowledge of a potentially dangerous situation.25 In casu, it is not suggested that a legal duty arose simply because the open manhole was under the control of the appellant. The respondent’s case was that a legal duty of care arose specifically because the appellant had knowledge of the existence of the open manhole which was reported to its employee, and did nothing to cover the manhole. 23 It was wrongly argued by the respondent before the trial court that these further grounds of wrongfulness and negligence, were not required to be pleaded because they constitute evidence and ‘one does not plead evidence.’ It should have been pleaded. It is the how and when and to whom the open manhole was reported to result in the appellant having knowledge thereof and allegedly giving rise to a duty of care, that would constitute evidence that need not be pleaded. But that it will be contended that such a duty existed and that the breach thereof would be relied upon as constituting wrongfulness, should be pleaded. 24 Shill v Milner 1937 AD 105. 25 Van Vuuren v Ethekwini Municipality 2018 (1) SA 189 (SCA) para 21 and 24. [37] Ultimately, whether a duty of care arises, a breach of which would constitute wrongfulness, depends on the legal convictions of the community. As it was put in Le Roux v Dey:26 ‘. . . what is meant by reasonableness . . . concerns the reasonableness of imposing liability on the defendant for the harm resulting from that conduct.’ [38] The appellant relied on Du Plessis v Nelson Mandela Metropolitan Municipality27 where numerous complaints of a hole which posed a danger had been made to the municipality, and ignored. It argued by contrast, that in this appeal, the single report by Mr Xwayi of the open manhole to an unknown employee of unknown authority, on an unknown occasion, was insufficient for prior knowledge of the dangerous situation posed by the exposed manhole to be ascribed to the appellant, to give rise to a duty of care. [39] Every case will depend on its own facts. The date when the report was made might not be a specific date, but it is not indeterminate. Mr Xwayi said it was just more than two months before the respondent returned home from hospital after she had been treated for her injuries. The person to whom he reported might not be identified by name, but he was clearly an employee of the appellant, of some seniority, as he wore a shirt and hat and drove a bakkie with the appellant’s emblem displayed thereon, and was acknowledged by the team of workers as ‘the boss’ and the one to whom Mr Xwayi should make such a report. Mr Xwayi spoke to this person. This person did not refer him to anyone else, nor did he decline to assist. Instead, he assumed responsibility for the situation and undertook to close the hole. As much as one has an appreciation for the difficult task the appellant has, to manage processes to replace missing manhole covers, the process can only be improved by allowing members of the public to report missing covers to a responsible employee of the appellant, for remedial steps to be initiated. 26 Le Roux v Dey (Dey) [2011] ZACC 4; 2011 (3) SA 274 (CC) para 122. 27 Du Plessis v Nelson Mandela Metropolitan Municipality [2009] ZAECGHC 54 paras 11 and 12. [40] The present is not a case, as the appellant suggested, of unreasonably extending delictual liability simply because the respondent might be deserving of some sympathy.28 Ultimately, wrongfulness depends on considerations of public and legal policy in accordance with constitutional norms and the reasonableness of imposing liability on the appellant.29 The legal convictions of the community require that where the appellant had knowledge of an open manhole, the failure to cover the hole within a reasonable time, resulting in possible injury to a member of the public, would be wrongful. [41] Whether the appellant had knowledge of the open manhole, or not, is a question of fact. Obviously, the possibility for false claims always exists, but the legal convictions of the community do not dictate that because some claims might be fraudulent, therefore genuine claims should for that reason alone be disallowed. In the present instance, where the credibility of the respondent is not impugned, difficulties in deciding whether the claim might be false and contrived do not arise. [42] The appellant was critical during argument of Mr Xwayi not following up on his initial report, that he had not complained more than the one time that he did, and that he had not advised his neighbours, including the respondent, of the danger posed by the open manhole. But why should he? Mr Xwayi did not present as a sophisticated person well versed in matters of municipal administration. He completed a standard 4. In the spirit of discharging a self-imposed public duty, he took the trouble of reporting a dangerous situation to an employee, designated by the workers working in the area as the ‘boss’. This person did nothing to dispel the belief harboured by Mr Xwayi that he was a person to whom he could report. As a matter of legal policy, the legal convictions of the community would view what Mr Xwayi did as sufficient to bring the existence of this danger to the attention of the appellant. If an employee in authority chooses not to give adequate attention to such reports, or fails to escalate such report to the appropriate persons through the correct channels, then the issue is one of better education and 28 South African Hang and Paraglyding Association and Another v Bewick [2015] ZASCA 34; 2015 (3) SA 544 (SCA) para 3. 29 Dey para 122. ongoing training of the appellant’s employees being required. That is, if such education is in fact required, because on the facts of this matter, what happened cannot be ascribed to a lack of knowledge of procedures. The workers referred Mr Xwayi to their ‘boss’ and the ‘boss’ did not try to avoid the complaint but promised to deal with it. Either he simply neglected to do so, or having done so, there was a breakdown in communication elsewhere. [43] Counsel argued that if liability was imposed on the appellant that it would open the floodgates to open ended claims, and that this court should place a ‘brake on liability.’30 I disagree with that argument. Every claim must obviously be scrutinised carefully and dealt with on its own facts. Mr Xwayi’s evidence that he reported the open manhole is either true or not – there is no scope for a mistake. The appellant has accepted that Mr Xwayi was a credible witness. That he made the report can therefore be accepted as the truth. [44] To summarise, the legal convictions of the community dictate that liability should be conferred on the appellant. The fear of endless liability is misplaced. It has not been established that the full court was misdirected in upholding the finding of the trial court that the omission to take steps to have prevented injury being occasioned to the respondent by her stepping into the open manhole, was wrongful. Negligence [45] As regards negligence, following on the finding that Mr Xwayi had reported the existence of the danger posed by the open manhole cover to an employee of the appellant who was obliged to act on such report, the fact that the employee apparently did not do so, or alternatively having reported it, an unknown employee failed to record it on the C3 system and failed to react thereto appropriately, constitutes negligence. The well know 30 Country Cloud Trading CC v MEC, Department of Infrastructure Development [2014] ZACC 28; 2015 (1) SA 1 (CC) par 20. The facts in the present appeal are also distinguishable from what prevailed in BE obo JE v Minister of the Executive Council for Social Development, Western Cape [2021] ZACC 23; 2021 (1) BCLR 1087 (CC) paras 1, 2, 10 and 25 as to whether there could be a legal duty to ensure the safety of each and every childcare facility. In the present appeal, the legal duty is confined to one manhole that was uncovered which had been reported to the appellant. test for negligence in Kruger v Coetzee31 is satisfied. The appellant’s employees simply failed to do what objectively was reasonably required. The appellant is directly alternatively vicariously liable for their negligence. Conclusion [46] An appeal is not a fresh rehearing of the disputed issues. It is for the appellant to show that the full court had committed a material misdirection affecting the outcome it reached - only then could this court interfere. No basis has been advanced before the full court or this court to support the conclusion that the trial court had been guilty of any misdirection which would affect the outcome of the trial. [47] The full court also confirmed the trial court’s judgment that there was no basis for finding contributory negligence on the part of the respondent. Before us the appellant did not argue for a finding of contributory negligence. According to its notice of appeal it simply sought an order replacing the order of the trial court with an order that the appellant is not liable for the damages that the respondent suffered in consequence of the accident which occurred on 17 October 2013, with no alternative of an order determining contributory negligence on the part of the respondent, should it be unsuccessful. The conclusion in the appellant’s heads of argument asked that the appeal against ‘the whole of the judgment (except the finding as to contributory negligence) of the Full Court’ be upheld. There was however no such finding of contributory negligence by the full court, or the trial court. [48] The appeal against the judgment of the full court accordingly falls to be dismissed. There is no reason why the costs of the appeal should not follow the result. Both parties 31 Kruger v Coetzee 1966 (2) SA 428 (A) at 430E held that. ‘For the purpose of liability, culpa arises if – (a) A diligens paterfamilias in the position of the defendant – (i) would foresee the reasonable possibility of his conduct injuring another in his person or property and causing him patrimonial loss; and (ii) would take reasonable steps to guard against such occurrence; and (b) the defendant failed to take such steps.’ employed two counsel. It is appropriate that the costs should include the costs of two counsel where so employed. Order [49] The appeal is dismissed with costs, such costs to include the costs of two counsel where so employed. ________________________ P A KOEN ACTING JUDGE OF APPEAL Appearances For appellant: P Botha SC with A du Toit Instructed by: MHI Attorneys, Bellville. Webbers Attorneys, Bloemfontein. For respondent: H McLachlan with L Gabriel Instructed by: Kruger & Co Attorneys, Goodwood. Phatshoane Henney Inc, Bloemfontein.

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 1 December 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgment of the Supreme Court of Appeal. City of Cape Town v Mtyido (Case no: 1272/2022) [2023] ZASCA 163 (1 December 2023) __________________________________________________________________ Today the Supreme Court of Appeal handed down judgment dismissing an appeal from the full court of the Western Cape Division of the High Court. The respondent in the appeal, Ms Nqulelwa Mtyido, alleged that while walking along a public road within the municipal area of the appellant, the City of Cape Town, she stepped into an open manhole. This resulted in her sustaining injuries to her right ankle. She sued the appellant in the Western Cape Division of the High Court (the trial court) for damages arising from her injuries. The trial court separated the issue of liability from damages. It found that employees of the appellant wrongfully and negligently failed to take steps to prevent the respondent from being injured by the open manhole. It accordingly declared the appellant liable for the damages, if any, that the respondent had suffered in consequence of the incident, and also directed that it must pay her costs. The appellant appealed against the judgment of the trial court to the full court of the Western Cape Division of the High Court (the full court). That appeal was dismissed with costs. The appellant then appealed to the SCA against the judgment of the full court. The SCA held that the full court had not erred in dismissing the appeal from the high court, that the respondent was injured when she stepped in to the open manhole, and that her injuries were caused by the wrongful and negligent conduct of employees of the appellant who had failed to take steps to prevent such injury to the respondent after the existence of the open manhole had previously been reported to a responsible employee of the appellant and he had undertaken to have the hole closed, but this was not done. The appellant was also directed to pay the costs of the appeal, such costs to include the costs of two counsel where employed.

2724

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 265/2011 In the matter between: ADCOCK INGRAM INTELLECTUAL PROPERTY (PTY) LTD First Appellant ADCOCK HEALTHCARE (PTY) LTD Second Appellant and CIPLA MEDPRO (PTY) LTD First Respondent THE REGISTRAR OF TRADE MARKS Second Respondent Neutral citation: Adcock Ingram v Cipla Medpro (265/2011) [2012] ZASCA 39 (29 March 2012) Coram: Farlam, Nugent, Malan and Wallis JJA and Petse AJA Heard: 8 March 2012 Delivered: 29 March 2012 Summary: Trade mark – removal of – s 10(14) of Trade Marks Act 194 of 1993 – marks ‘likely to deceive or cause confusion’ – prescription medication – whether patient part of enquiry as to notional consumer – generic substitute – s 22F of Medicines and Related Substances Act 101 of 1965. _________________________________________________________________________ ORDER On appeal from: the North Gauteng High Court, Pretoria (Prinsloo J sitting as court of first instance): The appeal is upheld with costs. The order of the court below is set aside and replaced with the following order: ‘(a) The second respondent is directed to remove trade mark 2004/05322 ZEMAX in class 5 from the register of trade marks in respect of the goods for which it is registered; (b) The first respondent is ordered to pay the costs of the application.’ _________________________________________________________________________ JUDGMENT MALAN JA (Farlam, Nugent and Wallis JJA and Petse AJA concurring): [1] This is an appeal, with the leave of Prinsloo J, against his dismissal with costs of an application by the appellants to remove from the register of trade marks the trade mark ZEMAX with registration number 2004/05322, dated 5 April 2004, in class 5 of Schedule 3 to the regulations under the Trade Marks Act 194 of 1993 (the Act) in respect of – ‘Pharmaceutical and veterinary preparations, sanitary preparations for medical purposes, dietetic substances adapted for medical use, food for babies, plasters, materials for dressings; material for stopping teeth, dental wax, disinfectants; preparations for destroying vermin; fungicides, herbicides.’ [2] ZEMAX is registered in the name of the first respondent (Cipla). The second respondent, the Registrar of Trade Marks, who was cited in his official capacity, did not oppose the application. [3] The first appellant is the proprietor of the trade mark ZETOMAX with registration number 1998/14391, dated 13 August 1998 and subsequently extended, in class 5 in respect of – ‘Pharmaceutical, veterinary and sanitary preparations; dietetic substances adapted for medicinal use, food for babies; plasters, materials for dressings; disinfectants.’ The second appellant is a licensee of the first appellant and manufactures and distributes pharmaceutical products. I shall refer to both appellants as Adcock. Adcock contends that the trade mark registration ZEMAX is an entry wrongly made on the register by virtue of the provisions of s 24, read with ss 10(12) and 10(14), of the Act. [4] ZETOMAX is a generic medicine. Its active ingredient is Lisinopril, an angiotensin-converting-enzyme inhibitor that is used for the treatment of moderate hypertension and certain cardiac conditions. ZETOMAX is sold in dosages of 5mg, 10mg and 20mg in three blister strips of ten tablets each per pack. The medicine was sold under the name ZESTOMAX until 2001, when its name was changed to ZETOMAX. [5] ZEMAX is also a generic medicine, containing Lisinopril as its active ingredient, and is used for the treatment of the same conditions. [6] Cipla was originally granted registration in terms of the Medicines and Related Substances Act 101 of 1965 by the Medicines Control Council for its generic medicine under the name Prilosin, in 5mg and 10mg dosages, but applied in April 2004 for a change from the name Prilosin 5 to ZEMAX 5 and Prilosin 10 to ZEMAX 10. The name change was approved on 29 July 2004. The approval of the Council is required for the name under which a medicine is registered.1 ZEMAX is sold in blister strips of 10 tablets packed in three strips per pack in dosages of 5mg and 10mg. 1 Section 15(5) of the Medicines and Related Substances Act 101 of 1965. [7] Infringement proceedings were instituted against Cipla in the Cape High Court. Judgment in favour of Adcock was given on 9 February 2009 but an appeal to the full bench is pending. These proceedings for expungement were brought because the registration of the ZEMAX was only discovered after judgment was delivered in the infringement proceedings.. [8] Section 24 of the Act permits an interested party to apply for an order removing ‘an entry wrongly made in or wrongly remaining on the register’, in this case for the removal of the trade mark ZEMAX from the register of trade marks. For reasons that will become apparent, I need deal only with s 10(14), which prohibits the registration of – ‘a mark which is identical to a registered trade mark belonging to a different proprietor or so similar thereto that the use thereof in relation to goods or services in respect of which it is sought to be registered and which are the same as or similar to the goods or services in respect of which such trade mark is registered, would be likely to deceive or cause confusion, unless the proprietor of such trade mark consents to the registration of such mark.’ [9] The court below correctly accepted that the onus rested on Adcock to establish a ‘reasonable probability’ of confusion amongst a substantial number of purchasers.2 It came to the conclusion that Adcock failed to discharge this burden. It relied primarily on the 1983 judgment in Adcock-Ingram Laboratories Ltd v Lennon Ltd.3 [10] That case concerned the alleged passing off of a medicinal tablet (Stilpane) as if it was another (Stopayne). The question whether ‘the alleged similarity of the trade marks, the colour of the tablets and their formulation’ was likely to cause confusion was considered by the court with reference to the specialised market in which prescription drugs are sold. It said that the provision of a prescription drug by a medical practitioner is a ‘definitive, deliberate act’ with full knowledge of the contents 2 SmithKline Beecham Consumer Brands (Pty) Ltd (formerly known as Beecham South Africa (Pty) Ltd) v Unilever plc 1995 (2) SA 903 (A) at 910B. 3 Two separate appeals were heard together, and are reported under the names Adcock-Ingram Laboratories Ltd v SA Druggists Ltd & another; Adcock-Ingram Laboratories Ltd v Lennon Ltd 1983 (2) SA 350 (T) at 362-364; [1983] 4 All SA 68 (T) at 79-81. Only the second appeal is relevant to this case. See also Triomed (Pty) Ltd v Beecham Group plc & others 2001 (2) SA 522 (T) at 550-1. of the medicine and its pharmacological action. The medical practitioner will not rely on a vague recollection of the medication. Nor will the pharmacist be confused since he may sell only on prescription. When he is in doubt he would refer to the script or back to the medical practitioner. Sales to institutions are usually made on tender, with detailed specifications of the product tendered for, leaving little room for confusion. Moreover, in these institutions, such as hospitals, medication is dispensed on prescription of medical practitioners by pharmacists. [11] Furthermore, as far as the patient was concerned, it was said that although he or she may well know the name of the product he or she was using – ‘he may know that it emanates from some particular source – he may even know that it is a product from the appellant’s laboratories, but he can make no use of such information. The patient cannot go to his chemist and insist on being supplied with [the product], he must first go to the doctor – and even here he cannot insist upon being prescribed [the product]. It is the doctor’s responsibility as to what the patient should have, and his alone. It follows that the only sphere in which confusion could arise is on the prescription by the medical practitioner, and that probability I have eliminated.’ 4 [12] The court below also disposed of the argument advanced by Adcock that for the purposes of s 10(14) of the Act a comparison should be made of all the goods in respect of which the competing trade marks were registered. The enquiry, it was argued, was not limited to a comparison between ZEMAX and ZETOMAX as prescription medicines, but involved a consideration whether there could be confusion among a substantial number of notional consumers of ‘pharmaceutical, veterinary and sanitary preparations; dietetic substances adapted for medicinal use, food for babies; plasters, materials for dressings; disinfectants’, in respect of which ZETOMAX was registered. The case Cipla had to meet, the court below found, was confined to a comparison between hypertensive pharmaceutical products. Since there was no suggestion in the evidence that Cipla was manufacturing or distributing any of the other products within the ZETOMAX registration under the ZEMAX trade mark or that it had ‘the slightest inclination to do so in the future’ the application was rejected on this basis as well. 4 1983 (2) SA 350 (T) at 363C; [1983] 4 All SA 68 (T) para C11 at 80. [13] Although Adcock relied on the wider enquiry in its notice of application for leave to appeal it indicated in its heads of argument in this court that it was not proceeding on this ground. However, the approach to be taken in determining the question whether a trade mark is precluded from registration by s 10(12) or s 10(14) is a matter of law. [14] Section 10(14) prohibits the registration of a mark which is identical to a registered trade mark belonging to a different proprietor or ‘so similar thereto that the use thereof in relation to goods or services in respect of which it is sought to be registered and which are the same as or similar to the goods or services in respect of which such trade mark is registered, would be likely to deceive or cause confusion, unless the proprietor of such trade mark consents to the registration of such mark’. [15] The trade marks ZEMAX and ZETOMAX were both registered in class 5 in respect of partly the same goods. The registration of neither was limited to pharmaceutical preparations, least of all prescription medicines. Section 10(14) prohibits the registration of a mark that is so similar to a registered trade mark belonging to a different proprietor that the use thereof in relation to goods or services in respect of which it is or is sought to be registered and which are the same as or similar to the goods or services in respect of which such trade mark is registered, would be likely to deceive or cause confusion. The class in respect of which ZEMAX is registered is not limited to ‘pharmaceutical preparations’ but includes a host of other goods. In particular, a pharmaceutical preparation under that name could be made available to the public otherwise than on the basis of a prescription by a medical practitioner. It was stated in Bristol Laboratories Inc v Ciba Ltd:5 ‘The appellant has applied for the registration of his mark in respect of all goods in Class 3. It could therefore place on the market a preparation which might also be readily procurable without prescription. It may be that the goods in respect of which it intends to use the mark . 5 Bristol Laboratories Inc v Ciba Ltd 1960 (1) SA 864 (A) at 871C-E. Section 17(1) of the Trade Marks Act 62 of 1963, the precursor of s 10(14), provided: ‘Subject to the provisions of subsection (2), no trade mark shall be registered if it so resembles a trade mark belonging to a different proprietor and already on the register that the use of both such trade marks in relation to goods or services in respect of which they are sought to be registered, and registered, would be likely to deceive or cause confusion.’ See G C Webster and N S Page Webster and Page South African Law of Trade Marks, Unlawful Competition and Trading Styles (1997) 4 ed by C E Webster and G E Morley paras 6.6.5 and 6.12 for a comparison of the two sections. . . are ethical preparations which can only be dispensed on a doctor’s prescription, but this factor is in no way conclusive. The question is not what the appellant says it intends doing, but what it will be permitted to do if its application is granted in respect of all goods in Class 3. In my opinion it is correct to say, as Romer, J., held in Jellinek’s Application, 63 R.P.C. 59 at p. 78, that “The onus must be discharged by the applicant in respect of all goods coming within the specification applied for, and not only in respect of those goods on which he is proposing to use (the mark) immediately, nor is the onus discharged by proof only that any particular method of user will not give rise to confusion; the test is: What can the applicant do?”’ (My emphasis). The reason for the rule embodied in s 10(14) is, as was stated by Lord Macnaghten in Eno v Dunn,6 the protection of the public: ‘The question is one between Mr Dunn and the public, not between Mr Eno and Mr Dunn. It is immaterial whether the professed registration is or is not likely to injure Mr Eno in his trade.’ [16] The court below was of the view that Adcock had not made out a case for the purposes of s 10(14) calling for a comparison of all the goods in the specification of ZEMAX. I do not agree. It is difficult to understand what else should have been pleaded or what other evidence could have been presented to address this issue. So far as both trade marks are registered in respect of goods that are obtainable without prescription, the market is the ordinary consumer. I have no doubt that there is likely to be confusion when the marks are applied to such goods. This was never seriously challenged by Cipla. Its entire argument was based on a restricted use confined to prescription medication. [17] However, under s 24(1) of the Act the court or the Registrar rectifying entries in the register of trade marks, ‘may make such order for making, removing or varying the entry as it or he may deem fit’. A court or the Registrar exercising a discretion under s 24(1) may, thus, excise some of the goods in respect of which the trade mark under attack was registered.7 Counsel for Cipla submitted that in those circumstances we should expunge the trade mark for all but ‘pharmaceutical 6 Eno v Dunn (1890) 15 App Cas 252 (HL (E)) at 264 and see the discussion in Webster and Page para 6.12. 7 Century City Apartments Property Services CC & another v Century City Property Owners’ Association 2010 (3) SA 1 (SCA) para 50 and cf Arjo Wiggings Ltd v Idem (Pty) Ltd & another 2002 (1) SA 591 (SCA) paras 13 ff. preparations containing Lisinopril’. I will assume for present purposes that this is a proper case in which to limit the registration to only those goods if, indeed, there is no likelihood of confusion when applied to those goods. On the assumption that this is a proper case for the limitation of the registration of ZEMAX to the goods referred to I will consider whether the two marks are so similar as to be likely to deceive or cause confusion. [18] Cipla’s case in that regard is that there is no probability of confusion or deception arising between the marks when they are compared in the context of the specialized pharmaceutical market in which the two marks would then be employed. [19] Cipla relied on the approval of the name ZEMAX by the ‘naming committee’ of the Medicines Control Council. Section 9 of a document issued by the Council for general information deals with its ‘proprietary name policy’. In considering the safety of a product the Council is obliged to consider whether a proposed name ‘could potentially pose public health and safety concerns or if it may be misleading’. Public health considerations are said to be paramount ‘in determining whether a particular proprietary name may be used for a medicinal product’ (section 9). In section 9.1.6 it is provided that the proposed proprietary name ‘should not be liable to cause confusion in print, handwriting or speech with the proprietary name of another product.’ Where the name proposed is identical to or too similar to a name already approved the applicant must be advised. Any dispute, however, must be resolved between the parties and not by the Council (section 9.1.8). Cipla argued that, because no objection was made to registration of the name ZEMAX by the Council, it could be concluded that neither the ‘naming committee’ nor the Council considered that ZEMAX would be confused with ZETOMAX. This may well have been the view of the Council but its view is irrelevant and inadmissible for the purpose for which it was tendered. It is the function of the Registrar or the court to consider whether the trade marks ZEMAX and ZETOMAX are ‘so similar’ that their use ‘would be likely to deceive or cause confusion’. Section 9.3.1 of the document, in any event, recognises that ‘[t]he issue of whether a particular proprietary name may constitute an infringement of another entity’s intellectual property rights cannot be one of the Medicines Control Council’s concerns and is, therefore, not taken into account during consideration of the acceptability of a proposed proprietary name’. [20] Although some weight may be given to the fact that the Registrar of Trade Marks raised no objection to the registration of ZEMAX, a court is at large to exercise its own discretion concerning the registration of trade marks.8 [21] Both ZEMAX and ZETOMAX are products that fall under Schedule 3 of the Medicines and Related Substances Act and may be sold only by pharmacists, a pharmacist’s intern or assistant acting under the personal supervision of the pharmacist, manufacturers and wholesale dealers, medical practitioners and dentists, veterinarians, practitioners and nurses or persons registered under the Health Professions Act 56 of 1974 and then only under strict conditions.9 Generally, only a medical practitioner may prescribe a Schedule 3 substance and a pharmacist may dispense it only on prescription. [22] In the replying affidavit Adcock sought to extend the market to pharmaceutical wholesalers, hospitals and state hospitals alleging that there was no guarantee that persons at these institutions responsible for buying products were either practising pharmacists or doctors. With regard to pharmaceutical wholesalers s 22A of Medicines and Related Substances Act requires a qualified pharmacist to oversee and control the buying and selling of pharmaceutical drugs. Large orders from, for example, private hospital groups and tender boards from the Department of Health, are negotiated with the pharmaceutical companies directly. Section 22C, in addition, requires wholesalers and distributors to be in possession of permits to carry out their functions, and the permits are to be issued only on such conditions ‘as to the application of such acceptable quality assurance principles and good manufacturing and distribution practices as the council may determine’ (s 22C(1)(b)). Regulation 19 of the General Regulations under Act 101 of 1965 imposes further limits by requiring the distributor or wholesaler to ‘appoint and designate as such a pharmacist who will control the manufacturing or distribution of medicines, Scheduled substances or medical devices’. The Medicines Control Council has also distributed a document ‘Good Wholesalers Practice for Wholesalers, Distributors and Bonded Warehouses’ 8 Judy’s Pride Fashions (Pty) Ltd v Registrar of Trade Marks 1997 (2) SA 87 (T) at 92C-E. 9 The conditions under which a Schedule 3 substance may be sold, prescribed, possessed etc are set out in Medicines and Related Substances Act 101 of 1965, ss 22A ff. dated 6 June 2003 requiring key personnel to have the education, training and experience to discharge their duties, inter alia, the ‘handling and storage of medicine … to prevent confusion of products’. These control measures, no doubt, lessen the likelihood of confusion or deception. [23] The conditions regulating the sale and prescription of prescribed medicines significantly reduce the likelihood of confusion between marks associated with these pharmaceuticals.10 Two approaches seem possible. These emerge from the following passage in a European case – ‘In some Member States the view is taken that a likelihood of confusion should be accepted more readily in the case of medicines on account of the serious consequences that can ensue if the patient takes the wrong product. In other countries the view is taken that pharmaceutical trade marks will not be confused so easily because the consumer has the assistance of qualified professionals and is particularly attentive to differences between marks for pharmaceutical products because of the importance of taking the right drug.’11 The court below followed the second approach. However, in Organon Laboratories Ltd v Roche Products (Pty) Ltd12 Botha J said: ‘It seems to me, however, that in the cases quoted the Courts were mainly concerned with drawing a distinction between products freely available to the public and products which could only be dispensed on a doctor’s prescription. In the latter case, the possibility of errors is substantially lessened by the various safeguarding circumstances, such as the fact that the product can be sold only on the written authorisation of a doctor, and the fact that the nature of the product requires the exercise of particular care on the part of both the doctor and the dispensing pharmacist. (But even in this type of case, assuming that a differentiation will be made between the various products as such, it occurs to me that the possibility of confusion as to the origin of similar products having common features in their marks might yet require scrutiny).’ 10 Adcock-Ingram Laboratories Ltd v SA Druggists Ltd & another; Adcock-Ingram Laboratories Ltd v Lennon Ltd 1983 (2) SA 350 (T) at 362 ff; [1983] 4 All SA 68 (T) at 79 ff; Organon Laboratories Ltd v Roche Products (Pty) Ltd 1976 (1) SA 195 (T) at 200A-F. 11 Choay SA v Boehringer Ingelheim International GmbH [2001] ETMR 64 para 19 and see Jeremy Phillips Trade Mark Law A Practical Anatomy para 16.32 ff. 12 Organon Laboratories Ltd v Roche Products (Pty) Ltd 1976 (1) SA 195 (T) at 200D-G and cf the remarks of Jeremy Phillips Trade Mark Law A Practical Anatomy para 16.32 ff. [24] The remark in Adcock-Ingram Laboratories Ltd v Lennon Ltd, referred to above, that it is the ‘doctor’s responsibility as to what the patient should have, and his alone’, has a sense of unreality in modern circumstances, where patients play, and are expected to play, an active role in relation to their own health. It reduces the patient to a passive bystander in the process of providing him or her with treatment and medication. Such an approach is hardly reconcilable with s 8 of the National Health Act 61 of 2003 which gives the patient the right to participate ‘in any decision affecting his or her personal health and treatment’. Patients often discuss their medication among themselves and with their doctors. They exchange information on which product they find most efficacious. This information may then be discussed with their doctors or pharmacists when the issue of substituting a medicine for a generic or the more expensive innovator product is raised. Often they provide the names of their medicines, particularly chronic medication, to the medical practitioners treating them. They discuss the advantages and disadvantages with them. They consider different options. In a case of emergency a Schedule 3 medicine may be sold, for use during a period not exceeding 30 days in accordance with the original prescription, if the pharmacist is ‘satisfied that an authorised prescriber initiated the therapy’13 – clearly on information provided by the patient. Whatever the position may have been in 1983, the patient is no longer a passive bystander when treated and receiving prescribed medication. [25] The provisions of s 22F of the Medicines and Related Substances Act widen the scope of the enquiry to be made. Section 22F deals with generic substitution or interchangeable multi-source medicines, and, it was submitted, envisages a situation where the patient forms part of the decision-making process thereby increasing the likelihood of deception or confusion. It provides as follows: ‘Generic substitution.— (1) Subject to subsections (2), (3) and (4), a pharmacist or a person licensed in terms of section 22C (1) (a) shall — (a) inform all members of the public who visit the pharmacy or any other place where dispensing takes place, as the case may be, with a prescription for dispensing, of the benefits of the substitution for a branded medicine by an interchangeable multi-source 13 Section 22A(6)(l) of the Medicines and Related Substances Act. medicine, and shall, in the case of a substitution, take reasonable steps to inform the person who prescribed the medicine of such substitution; (b) dispense an interchangeable multi-source medicine instead of the medicine prescribed by a medical practitioner, dentist, practitioner, nurse or other person registered under the Health Professions Act, 1974, unless expressly forbidden by the patient to do so. (2) If a pharmacist is forbidden as contemplated in subsection (1) (b), that fact shall be noted by the pharmacist on the prescription. (3) When an interchangeable multi-source medicine is dispensed by a pharmacist he or she shall note the brand name or where no such brand name exists, the name of the manufacturer of that interchangeable multi-source medicine in the prescription book. (4) A pharmacist shall not sell an interchangeable multi-source medicine — (a) if the person prescribing the medicine has written in his or her own hand on the prescription the words “no substitution” next to the item prescribed; (b) if the retail price of the interchangeable multi-source medicine is higher than that of the prescribed medicine; or (c) where the product has been declared not substitutable by the council.’ [26] An ‘interchangeable multi-source medicine’ is defined as ‘medicines that contain the same active substances which are identical in strength or concentration, dosage form and route of administration and meet the same or comparable standards, which comply with the requirements for therapeutic equivalence as prescribed’. Section 22F requires a pharmacist to inform members of the public visiting the pharmacy with a prescription for a ‘branded medicine’ (which, it seems to me, can be both the innovator product or a generic substitute) of the benefits of a generic substitute for the ‘branded’ product. He must then substitute the generic for the prescribed medicine unless he is forbidden to do so by the patient. The pharmacist, however, may not do so if the person prescribing the medicine has written on the prescription the words ‘no substitute’. [27] It was submitted that the effect of s 22F was to extend the notional consumer to people beyond the prescribing doctor and pharmacist to include also the patient or ultimate consumer. Support for this view is found in the Canadian judgment in Ciba- Geigy Canada Ltd v Apotex Inc; Ciba-Geigy Canada Ltd v Novopharm Limited,14 a 14 [1992] 3 SCR 120; 1992 CanLII 33 (SCC); 95 DLR (4th) 385, indexed as Ciba-Geigy Canada Ltd v Apotex Inc. passing-off matter where similar legislation was considered. The question that arose in that case was whether the customers of pharmaceutical laboratories consisted only of physicians, dentists and pharmacists ‘or are the patients to whom the drugs are dispensed also included?’ The court there dealt with the provisions of the Prescription Drug Cost Regulation Act, 1986 dealing with an ‘interchangeable product’ which is ‘a drug or combination of drugs identified by a specific product name or manufacturer and designated as interchangeable with one or more of such products’. The Act gives both the pharmacist and the patient the choice to dispense or obtain the interchangeable drug, as the case may be, and requires of the dispenser to inform the patient accordingly (see s 4(2) and (3). The prescribing doctor may also indicate that no substitutions may be made (in which event the patient would have no choice (other than to refuse the prescribed drug) to select a substitute) (s 4(6)). The court (per Gonthier J) concluded:15 ‘The foundations of this right to choose and the reasons for patients’ choices do not have to be discussed at length here. Whether the choice is great or small, easily exercised or not, does not change anything in the case at bar. All that is significant, and beyond question, so far as the reasoning is concerned is that the patient has a choice. In my opinion, therefore, excluding patients from the customers covered by the passing-off action on the pretext that they have no choice as to the product brand is quite wrong. The physician’s opinion as to the brand of drug to be taken may of course influence the patient and most prescriptions do in fact indicate the product brand. That information may sometimes come from the patient. It should not be forgotten that in cases like the one before the Court, the medical treatment generally extends over a long period. Hypertension is often treated for several years, if not a lifetime. Patients taking a drug for some time can become accustomed to it and insist on a particular brand. Generally when a person is satisfied with a product, he tends to remain faithful to it. This is especially true in the health field where – understandably – patients are not very willing to experiment and perhaps still less so when they are suffering from conditions such as hypertension. There are thus grounds which I would characterize as psychological for insisting on a particular brand of drug. There are certainly also physiological reasons. It is entirely conceivable that excipients, the non- medicinal part of the drug surrounding the active ingredient, may not have the same characteristics or not produce the same ingestive, digestive and other effects in the case of all manufacturers. The shape of the tablet may also play a part in the patient’s preferences: it 15 At 95 DLR (4th) 385 at 406b-h. may be another reason why the patient insists on a particular brand and asks his physician to put it on the prescription. Moreover, quality control may not be identical from one laboratory to another or the quality itself may not be perceived as such.’ Elsewhere the court said:16 ‘Not including [the patient] in the clientele covered by the passing-off action in my opinion divests him of part of his rights as an individual. He is deprived of the means of protecting himself as an informed person.’ [28] The Canadian legislation gives both the pharmacist and the patient a choice in relation to dispensing or obtaining a generic drug. Section 22F, on the other hand, allows the patient on being informed of the availability of a generic medicine as a substitute for the branded medicine to choose between the two. The patient is in fact required to stipulate whether he or she would prefer a generic over a more expensive other generic or the innovator drug. The court below accepted the evidence of Dr S A Gregory, both a medical practitioner and a qualified patent attorney, who also happens to have been Cipla’s attorney’s Pretoria correspondent, that s 22F has made medical practitioners and pharmacists even more acutely aware of the different brand names of pharmaceutical products so that the likelihood of confusion had become even more remote. This approach disregards the importance of the choice given to the patient by s 22F. The patient is not a passive bystander but plays an active role in the dispensing of his or her medication. [29] Despite the difference in wording between s 17(1) of the repealed Trade Marks Act 62 of 1963 and s 10(14) of the present Act, the words ‘likely to deceive or confuse’ are retained in the latter section and should be given the same meaning. In Cowbell AG v ICS Holdings Ltd17 Harms JA remarked: ‘Section 17(1) creates an absolute bar to registration provided the jurisdictional fact is present, namely that the use of both marks in relation to the goods or services in respect of which they are sought to be registered, and registered, would be likely to deceive or cause confusion. The decision involves a value judgment and 16 95 DLR (4th) 385 at 408c-d. 17 Cowbell AG v ICS Holdings Ltd 2001 (3) SA 941 (SCA) para 10. See Bata Ltd v Face Fashions CC & another 2001 (1) SA 844 (SCA) paras 8 and 9. “[t]he ultimate test is, after all, as I have already indicated, whether on a comparison of the two marks it can properly be said that there is a reasonable likelihood of confusion if both are to be used together in a normal and fair manner, in the ordinary course of business”. (SmithKline Beecham Consumer Brands (Pty) Ltd (formerly known as Beecham South Africa (Pty) Ltd) v Unilever plc [1995 (2) SA 903 (A)] at 912H). “Likelihood” refers to a reasonable probability (ibid at 910B), although the adjective “reasonable” is perhaps surplusage. In considering whether the use of the respondent’s mark would be likely to deceive or cause confusion, regard must be had to the essential function of a trade mark, namely to indicate the origin of the goods in connection with which it is used . . . . Registered trade marks do not create monopolies in relation to concepts or ideas.’ Harms JA approved of the statement in Sabel BV v Puma AG, Rudolf Dassler Sport18 where it was said that the likelihood of confusion must ‘be appreciated globally’, and that the – ‘global appreciation of the visual, aural or conceptual similarity of the marks in question, must be based on the overall impression given by the marks, bearing in mind, in particular, their distinctive and dominant components.’ [30] The question whether ZEMAX is ‘likely to deceive or cause confusion’ as s 10(14) requires must be answered with reference, not to the specialised market of prescription medication only, but with reference to the patient as well. The patient is the ultimate consumer whose wishes may not be disregarded and who has a right to participate in any decision concerning his health and treatment. It may well be that there is little likelihood of the medical practitioner or pharmacist being deceived or confused but the enquiry does not end there. [31] Both ZEMAX and ZETOMAX are meaningless words and there can be no confusion based on meaning or concept or idea.19 But the two words are similar, confusingly so.20 ZEMAX consists of two syllables and five letters. ZETOMAX comprises three syllables and seven letters. The difference between the two marks arises out of the middle syllable TO in ZETOMAX which extends the word and 18 Cowbell AG v ICS Holdings Ltd at 948B-D referring to Sabel BV v Puma AG, Rudolf Dassler Sport [1998] RPC 199 (ECJ) at 224. 19 Laboratoire Lachartre SA v Armour-Dial Incorporated 1976 (2) SA 744 (T) at 747A-C. 20 The approach to determine whether use of a mark is likely to deceive or cause confusion in infringement cases (eg Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 640 E ff) is with the required adaptation also followed in expungement proceedings (SmithKline Beecham Consumer Brands (Pty) Ltd (formerly known as Beecham South Africa (Pty) Ltd ) v Unilever plc 1995 (2) SA 903 (A) at 910GH). breaks the connection between the first and last syllables. When MAX is excluded from both marks ZE and ZETO must be compared. They are different but this difference becomes less pronounced when MAX in both is considered. ZE and MAX are indeed the dominant elements of the two names. ZE is often found in Lisinopril products on the market eg ZESTORETIC, ZESTOZIDE AND ZESTRIL, which are markedly different from both ZEMAX and ZETOMAX not least because the prefix ZE is pronounced differently. In the case of the other names mentioned it is pronounced with a short ‘e’, whereas in ZEMAX and ZETOMAX the ‘e’ is long. The latter two are markedly similar with both having the same prefix, ZE, and the same suffix, MAX. ZEMAX and ZETOMAX are indeed the only two marks of the 128 on the register beginning with ZE and ending in MAX. There is also a similarity in the appearance of the two marks. When their sounds are compared there is also a likelihood of confusion. Their pronunciation is similar, the TO in ZETOMAX being pronounced softly. [32] A patient, and perhaps also a professional, who knows only the one word and has an imperfect recollection of it is likely to be mistaken. One must make allowance for imperfect recollection and the effect of careless pronunciation rather than comparing the two words letter by letter or syllable by syllable.21 But looking at the two marks globally and appreciating their similarities the overall impression is that they are so similar as to be confusing. To my mind Adcock has succeeded in showing that a substantial number of consumers would be likely to be confused and deceived by the similarity between the marks ZEMAX and ZETOMAX. [33] It follows that the appeal should succeed. The following order is made: The appeal is upheld with costs. The order of the court below is set aside and replaced with the following order: ‘(a) The second respondent is directed to remove trade mark 2004/05322 ZEMAX in class 5 from the register of trade marks in respect of the goods for which it is registered; 21 Aristoc Ltd v Rysta Ltd & another 1945 AC 68 (HL) at 85-86; [1945] 1 All ER 34 (HL) at 38-9 (per Viscount Maughan). (b) The first respondent is ordered to pay the costs of the application.’ __________ F R MALAN JUDGE OF APPEAL APPEARANCES: For Appellant: R Michau SC Instructed by: Spoor & Fisher Pretoria Naudes Attorneys Bloemfontein For Respondent: M C Seale Instructed by: Brian Bacon & Associates Inc Cape Town Webbers Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 March 2012 Status: Immediate 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. Adcock Ingram v Cipla Medpro The Supreme Court of Appeal today upheld an appeal by Adcock Ingram Intellectual Property (Pty) Ltd and Adcock Healthcare (Pty) Ltd against the dismissal of their application in the Pretoria High Court to remove the trade mark of Cipla Medpro (Pty) Ltd, ZENEX, from the register of trade marks. Adcock Ingram is the owner of the trade mark ZETOMAX. Both ZENEX and ZETOMAX are pharmaceutical products used in the treatment of hypertension and certain cardiac conditions. ZETOMAX was registered as a trade mark in 1998 and ZEMAX in 2004. Both are generic medicines having as its active ingredient Lisinopril. The appellants applied for the removal of the trade mark ZENEX from the register because it argued that, although the name ZENEX is not identical to ZETOMAX, it is nevertheless so similar so as to be likely to deceive or cause confusion. The SCA held that in order to determine whether there is such similarity not only the specialised pharmaceutical market for prescription drugs had to be considered but also the patient. The patient has to be informed of the availability of a generic substitute for a branded medicine in terms of s 22F of the Medicines and Related Substances Act 101 of 1965 and the generic product must be dispensed unless the patient forbids it. The patient is thus given a choice. Quite apart from this s 8 of the National Health Act 61 of 2003 gives a patient the right to participate in any decision affecting his or her health and treatment. The SCA held that the marks were so similar that the patient could well be deceived or confused, and ordered the removal of the trade mark ZENEX from the register of trade marks.

3058

non-electoral

2015

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 20580/2014 In the matter between: THE CITY OF TSHWANE METROPOLITAN MUNICIPALITY First Appellant THE CITY MANAGER OF THE CITY OF TSHWANE METROPOLITAN MUNICIPALITY Second Appellant DUMISANE J OTUMILE NO Third Appellant THE EXECUTIVE DIRECTOR SUPPLY CHAIN MANAGEMENT OF THE CITY OF TSHWANE Fourth Appellant THE CHAIRPERSON OF THE BID EVALUATION COMMITTEE OF THE CITY OF TSHWANE METROPOLITAN MUNICIPALITY Fifth Appellant THE CHAIRPERSON OF THE BID ADJUDICATION COMMITTEE OF THE CITY OF TSHWANE METROPOLITAN MUNICIPALITY Sixth Appellant and NAMBITI TECHNOLOGIES (PTY) LTD Respondent Neutral citation: City of Tshwane v Nambiti Technologies (Pty) Ltd (20580/2014) 2015 ZASCA 167 (26 November 2015) Coram: MAYA DP, BOSIELO, WALLIS, PETSE and DAMBUZA JJA Heard: 17 November 2015 Delivered: 26 November 2015 Summary: Tender – cancellation thereof – terms of tender authorising its withdrawal – cancellation not administrative action – cancellation set aside by High Court as unfair and municipality ordered to adjudicate tender – no grounds for holding cancellation unfair – relief granted by High Court impinging on municipality’s powers and obligations in regard to procurement – such impermissible as infringing the doctrine of the separation of powers. . ORDER On appeal from: Gauteng Division, Pretoria (Kganyago AJ, sitting as court of first instance): The appeal is upheld with costs, such costs to include those consequent upon the employment of two counsel. The order of the High Court is set aside and the following substituted therefor: ‘The application is dismissed with costs.’ JUDGMENT Wallis JA (Maya DP, Bosielo, Petse and Dambuza JJA) Introduction [1] From 1 August 2009 until 31 December 2012, the respondent, Nambiti Technologies (Pty) Ltd (Nambiti) was contracted to the first appellant, the City of Tshwane Metropolitan Municipality (the City), to provide it with SAP support services. On 12 October 2012 the City published an invitation to submit tender CB204/2012, for: ‘The provisioning of on-site and off-site SAP support services for the City of Tshwane.’ Nambiti, along with a number of other parties, submitted a tender to supply these services. On 11 December 2012 it was informed that the tender would be cancelled and a new tender issued. In the meantime on 20 December 2012 its services were effectively terminated and a new contractor EOH Mthombo Limited (EOH), which was the fifth respondent in the high court but has played no role in the litigation, was employed to provide those services. It is accepted in these proceedings that EOH lawfully provided SAP support services to the City until 31 December 2013. The papers do not reveal what occurred after that date. [2] Nambiti was dissatisfied with this course of events. After an exchange of correspondence it launched proceedings on 1 March 2013 in which it claimed the following relief: ‘2. The decision of the First alternatively Second alternatively Third alternatively Fourth respondent to appoint the Fifth Respondent as service provider to the First Respondent in respect of on- and off-site SAP support services for the period 1 January to 30 June 2013 is reviewed and set aside. 3. The decision of the First alternatively Second alternatively Third alternatively Fourth Respondent to cancel tender CB204/2012 for the provision of on- and off-site SAP support services to the First Respondent for a three year period with effect 1 January 2013 is reviewed and set aside. 4. The First Respondent is ordered without delay to invite new tenders in respect of the provision of on- and off-site SAP support services to the First Respondent.’ [3] Subsequently there was an amendment to the notice of motion and the relief sought was varied. After the application was argued, the high court held that, while the award of the contract to EOH was deficient, it should not be set aside. There is no challenge to that decision. But the high court granted relief in relation to the cancellation of tender CB204/2012. [4] The net effect of the high court’s order was to resuscitate the cancelled tender and compel the City to adjudicate and award the tender within two months of this order. Tenderers were permitted to adjust their tariffs upwards or to withdraw their tenders, but otherwise the process was to continue as if the tender had never been cancelled. Leave to appeal against the order was refused but granted by this Court. Mootness [5] The immediate question is whether the appeal still raises a live dispute. Counsel were at one that the order granted by the high court could not be implemented at this stage. The contract period of the tender the City was ordered to adjudicate will expire at the end of next month. The original contract with EOH has also expired. Presumably the City has made fresh arrangements in respect of SAP support services. When asked about this counsel for Nambiti said that they were not here to defend the order, but to defend the judgment. But that is a classic indication that the outcome of this appeal will have no practical effect or result and the appeal has become moot. Why then should it not be dismissed in terms of s 16(2)(a)(i) of the Superior Courts Act 10 of 2013? [6] There is no need to rehearse the jurisprudence that developed around section 21A(1) of the Supreme Court Act 59 of 1959, which jurisprudence is equally applicable under section 16(2)(a)(i) of the Superior Courts Act. The court has a discretion notwithstanding that an appeal has become moot, to hear and dispose of it on its merits. The usual ground for exercising that discretion in favour of dealing with it on the merits is that the case raises a discrete issue of public importance that will have an effect on future matters.1 1 Qoboshiyane NO & others v Avusa Publishing Eastern Cape (Pty) Ltd & others 2013 (3) SA 315 (SCA) para 5. [7] In my view there is such an issue in this case. This is the first occasion in the reported cases where a decision by a public authority to cancel a tender has been challenged by way of judicial review. Not only is this the first such case, but the review succeeded and the court ordered the City to adjudicate and award the cancelled tender. That was a far- reaching order impinging as it did on the power of a municipal council to determine for itself what goods and services it needed and would procure by a process complying with s 217 of the Constitution. Whether such a decision is administrative action bringing the case within the purview of PAJA2 is central to the case. Furthermore the terms of the order granted by the high court had the potential to infringe upon the constitutional powers and obligations of a municipal council. Accordingly the mootness of the appeal should not bar the court from addressing the merits. The facts [8] A brief exposition of the facts surrounding the disputed tender and its cancellation is called for. The call for tenders was issued in the ordinary course and Nambiti and various other parties submitted tenders. These were opened on 13 November 2012. [9] On 5 November 2012, the City appointed the third appellant, Mr Dumisane Otumile, as its Group Chief Information Officer. Mr Otumile’s responsibilities extended to oversight of all matters relating to information systems used by the City. As such he had a material interest in the basis upon which SAP support services were provided to the City. His first intervention in relation to this tender came on 23 November 2012, when he, on behalf of his department, placed a 2 The Promotion of Administrative Justice Act 3 of 2000. motivation before the Executive Acquisition Committee, a Supply Chain Committee chaired by the Municipal Manager, asking that it approve an effective extension of the existing contracts of Nambiti and Baraka, another contractor providing similar services, until September 2013. [10] This proposal did not find favour with the committee. Instead it resolved to refer the matter back to Mr Otumile’s department on one of two bases. The first was that it should consider the use of other SAP entities used by different organs of state for support and maintenance and appoint them in line with regulation 32 of the regulations published in terms of the Local Government: Municipal Finance Management Act 56 of 2003.3 The second option was to fast-track and finalise tender CB204/2012. The municipal manager signed a resolution to this effect on 30 November 2012. Fast-tracking the tender was the option that Mr Otumile and his department decided to explore, but first they reviewed the terms of the tender in the light of the needs of the City as determined by Mr Otumile. [11] The results of that review were unfavourable. It concluded that the tender as published was seeking services inconsistent with the City’s needs and for a longer period than the policy of the City permitted. In part, at least, these conclusions flowed from Mr Otumile’s re-evaluation of the City’s technological needs since his appointment. He identified three issues. They were that:  The City had outsourced its requirements in respect of SAP support services without building its own internal capacity. 3 The resolution referred to regulation 36, but Mr Otumile said, without dispute, that this was an error and should refer to regulation 32.  The arrangements in place for the provision of SAP support services provided that such support be given both on-site and off- site, and in the case of the latter it was not possible to monitor the work and assess whether it was being done and the value of the services being rendered.  The City had decided that it was undesirable to have contracts of this type extend over a period of three years in the light of the rapidity with which technological change can occur. It had accordingly taken a decision that it would no longer contract on that basis. [12] These conclusions appear to have been reported to the Bid Adjudication Committee of the City (BAC), because on 7 December 2012 it took a decision to cancel tender CB204/2012. The resolution recorded that the tender would be re-advertised, with a changed specification addressing the current needs of the City. [13] There was some debate on the papers whether the decision to cancel the tender was in fact taken on 7 December 2012. However, the debate appears to be academic as it is plain that the City proceeded on the basis that a firm decision had been taken on that date. On 11 December 2012 Mr Otumile met with Mr Paul and Ms Easton, representing Nambiti. The minute of the meeting prepared by Nambiti reflected in its conclusion that tender CB204/2012 would be cancelled and a new tender released. So by that date a decision had been taken and appropriate steps were being pursued in consequence of that decision. Principal among these was the appointment of a new service provider to provide SAP support services. [14] In view of the imminent expiry of Nambiti’s contract Mr Otumile was to advise it by no later than 21 December whether their contract would be further extended. On 18 December 2012 a letter was addressed to Nambiti informing it formally of the cancellation of the tender. On the following day Mr Otumile sent an email to Mr Paul advising him that Nambiti’s contract would be expiring at the end of the month and that it was unnecessary, with effect from 20 December 2012, for it to continue rendering services to the City. It is common cause on the affidavits that from 20 December 2012 Nambiti’s representatives were excluded from the municipal offices. At the same time employees of EOH started to render SAP support services to the City. [15] In the light of these events there was an exchange of letters on 18 and 19 December 2012, and on 27 December 2012 attorneys representing Nambiti wrote to the City Manager requesting written reasons in terms of s 5(1) of PAJA4. The ‘decisions’5 in respect of which reasons were sought were the appointment of a new service provider, in the form of EOH, and the cancellation of the tender CB204/2012. The City responded to this request on 18 January 2013. It took the attitude that these were contractual matters and that they did not fall within the category of decisions subject to PAJA, but nonetheless certain reasons were proffered, presumably in the interests of open and transparent government. [16] In regard to the termination of Nambiti’s contract it was pointed out that this terminated by effluxion of time on 31 December 2012. As to 4 The Promotion of Administrative Justice Act 3 of 2000. 5 The definition of administrative action in PAJA relates to decisions as defined in s 1 of that Act. its complaint that insufficient was done to provide for an orderly handover, the City’s approach was that it did not require Nambiti’s assistance in that regard. Finally in regard to the cancellation of the tender and the appointment of a new contractor the letter said: ‘Please note that a number of factors arose that have made the COT [City of Tshwane] reconsider the way it would procure its IT services going forward, not the least of which was the recent appointment of a Chief Information Officer (CIO) within the COT. Unfortunately, the CIO was not appointed at the time the renewal of IT services tender was dispatched. Since his appointment, the CIO was authorised to review the specifications of any tender that would serve his portfolio. It is for this reason that the tender that was in progress was abandoned, with certain provisional ensure continued business operation. We advise that the new service provider has been appointed in terms of Regulation 32 to Municipal Supply Chain Management Regulations. The regulations are in terms of the Municipal Finance Management Act 56 of 2003. The service provider was the IT service provider at the City of Johannesburg. You will appreciate that in order to procure prudently within the present circumstances, a sensitive balance of the rights and obligations, as well as procurement procedures had to be weighed by the COT. We assure your client that legal advice has been taken every step of the way and the COT is committed to good governance and legal compliance in its operations. The COT therefore denies that any laws have been side-stepped in the present circumstances.’ [17] Nambiti did not accept this response and on 1 March 2013 it launched review proceedings directed at challenging both EOH’s appointment and the cancellation of tender CB204/2012. After the delivery of further affidavits and the production, in a somewhat sporadic fashion, of the record, Nambiti delivered a supplementary founding affidavit and an amended notice of motion. It continued to challenge the appointment of EOH, but added a challenge to any extension of the latter’s contract on a month to month basis after the expiry of the initial period. It also sought an order preventing the City from continuing with a fresh tender CB107/2013 for SAP services issued on 10 May 2013. The Review [18] The review was eventually heard by Kganyago AJ. On 1 November 2013 judgment was handed down with the following order: ‘1. The decision of the respondent to cancel tender CB204/2012 for the provision of on- and off-[site SAP] support services to first respondent of a three year period with effect from 1st January 2013 is hereby reviewed and set aside. 2. The City of Tshwane must give written notice within ten days of this order to all the short-listed tenderers in respect of CB204/2012. The said notice must inform the tenderers that they are only allowed to adjust their tariffs upwards (to make provision for inflation) or withdraw their tenders should they wish to do so and to give notice to the City of Tshwane of their decision within ten days of receiving such notice. 3. The City of Tshwane must proceed to adjudicate tender CB204/2012 within two months after the expiry of the ten days period. 4. The fifth respondent to be allowed to honour the contract until the 31/12/13 when it expires.’ [19] Some explanation of the basis for this order is necessary. The judge held that the award of the contract to EOH was flawed, rendering it liable to be set aside, but decided that, as it only had two more months to run, it should not be set aside. That explains para 4 of the order. That order was unnecessary and it has in any event long since expired. In the heads of argument of Nambiti’s counsel it was accepted that during the year from 1 January to 31 December 2012, SAP services were lawfully rendered to the City by EOH. We do not know what happened thereafter, but that is not a concern in these proceedings. [20] The remaining portions of the order relate to the cancelled tender CB204/2012. They required the City to proceed to adjudicate that tender after allowing tenderers to withdraw or to adjust their prices upwards to make provision for inflation. The order was silent about the fresh tender CB107/2013. Presumably that was because there was an interim order in place prohibiting the City from proceeding with that tender pending the outcome of the review. [21] The high court concluded that there were no justifiable reasons for the cancellation of tender CB204/2012 and that it was unfairly cancelled. The judge appears to have been greatly influenced by the resolution taken on 30 November 2012 referred to in para 10 above. He said that it provided for the fast tracking of the tender process in respect of CB204/2012. He described the reasons given for the cancellation of the tender as flimsy. In his view the revised tender CB107/2013 was only marginally different from that under CB204/2012. Accordingly he said that the earlier tender could have been proceeded with and minimal changes negotiated with the successful tenderer after the award of the contract. Was this administrative action? [22] PAJA gives effect to the right to just administrative action in section 33 of the Constitution. It provides for judicial review of administrative action. What constitutes administrative action is the subject of a lengthy and somewhat convoluted definition, which was consolidated and abbreviated by Nugent JA in Grey’s Marine,6 in the following terms: ‘Administrative action means any decision of an administrative nature made … under an empowering provision [and] taken … by an organ of State, when exercising a power in terms of the Constitution or a provincial constitution, or exercising a public power or performing a public function in terms of any legislation, or [taken by] a natural or juristic person, other than an organ of State, when exercising a public power or performing a public function in terms of an empowering provision, which adversely affects the rights of any person and which has a direct external legal effect …’ [23] The Constitutional Court,7 citing Grey’s Marine with approval, has broken the definition into seven components, namely that ‘there must be (a) a decision of an administrative nature; (b) by an organ of State or a natural or juristic person; (c) exercising a public power or performing a public function; (d) in terms of any legislation or an empowering provision; (e) that adversely affects rights; (f) that has a direct, external legal effect; and (g) that does not fall under any of the listed exclusions.’ [24] Whether the cancellation of a tender before adjudication is administrative action in terms of these requirements depends on whether it involves a decision of an administrative nature and whether it has direct, external legal effect. I do not think that the decision in this case satisfied either of these criteria. [25] To determine if action by an organ of State is administrative action requires an analysis of the nature of the action in question and a positive 6 Grey’s Marine Hout Bay (Pty) Ltd & others v Minister of Public Works & others [2005] ZASCA 43; 2005 (6) SA 313 (SCA) para 21. 7 Minister of Defence and Military Veterans v Motau & others [2014] ZACC 18; 2014 (5) SA 69 (CC) (Motau) para 33. decision that it is of an administrative character.8 Here the decision related to a matter of procurement. The issue of a tender indicated that the City wished to procure certain services. But its desire to procure them was always provisional. That follows from the terms of the advertisement of the tenders, which contained the caveat that ‘the lowest or any tender will not necessarily be accepted’. In the standard conditions of tender, which counsel agreed applied to both tenders, clause F.1.5.1 provided even more explicitly that the City ‘may cancel the tender process and reject all tender offers at any time before the formation of a contract’. In cancelling tender CB204/2012 the City was doing no more than exercising a right it reserved to itself not to proceed to procure those particular services on the footing set out in that tender. [26] It is possible that these express reservations merely made explicit what would in any event have been the position, namely, that it is always open to a public authority, as it would be to a private person, to decide that it no longer wishes to procure the goods or services that are the subject of the tender, either at all or on the terms of that particular tender. (I stress that there is no allegation in this case that the decision was tainted by impropriety such as improper political influence, fraud, bribery or corruption, where different considerations may apply.) [27] In saying this I am aware that regulation 10(4) of the Procurement Framework Regulations 20119 provides that prior to awarding a tender an organ of state may cancel a tender in three circumstances, namely if: 8 Sokhela & others v MEC for Agricultural and Environmental Affairs (KwaZulu-Natal) & others [2009] ZAKZPHC 30; 2010 (5) SA 574 (KZP) para 60 quoted with approval in Motau para 34 and Minister of Home Affairs & others v Scalabrini Centre & others 2013 (6) SA 421 (SCA) para 52. 9 Published in Government Gazette 34350 of 8 June 2011 in terms of s 5 of the Preferential Procurement Policy Framework Act 5 of 2000.  Due to changed circumstances there is no longer a need for the services, works or goods requested;  Funds are no longer available to cover the total envisaged expenditure;  No acceptable tenders are received. [28] In Trencon10 it was said that this regulation constrained the discretion afforded an organ of state by the terms of the tender and that a tender could only be cancelled if one of the grounds set out in the regulations existed. It is unclear what is meant by ‘changed circumstances’ in this regard. Would it be a changed circumstance if the organ of state concluded that the terms of the tender were detrimental to its interests? What if the goods or services were still required, but the terms of the tender were no longer thought to be favourable? Why should an organ of state be constrained by the necessity to demonstrate a change of circumstances, in order to cancel a tender for goods or services that it had decided it no longer needed? A change in control of a municipality could easily lead to a change in priorities. Is it suggested that the incoming council would be forced to go ahead with procurement decisions with which it did not agree? Take the simple example of a tender to purchase a new mayoral car. That the mayor needed a car might not be in dispute. But the outgoing council might have issued a tender for the acquisition of a luxury vehicle, while the incoming council might believe that something more modest would be appropriate. Would that be a sufficient change of circumstances? 10 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd & another [2015] ZACC 22 para 68. [29] These are difficult questions. Trencon was not concerned with the cancellation of a tender. It was concerned with whether the court should have made a substitution order that a tender awarded to one company unlawfully be awarded to the tenderer whose bid had been unlawfully excluded. It is not clear in what context the argument was advanced that the public body concerned was not obliged to award any contract at all. That was not the factual situation with which the court was confronted. Assuming that to have been correct, the reality was that a contract had been awarded and it was the intention to proceed with the work. So cancellation was not an issue. Furthermore the statement in question was based on a concession by counsel that was accepted as correct without explanation. [30] The regulation is couched in permissive, not mandatory, terms. There is nothing to show that it is intended to be restrictive in regard to an organ of state’s powers to cancel a tender. In addition the organ of state is equally obliged to conduct the tender process strictly in accordance with the tender conditions, which also have a statutory provenance. But there is no need to resolve these questions because in this case there was a change in circumstances. The needs of the City had been reviewed and it no longer required that SAP support services be provided to it for the period stipulated in CB 204/2012 or on the same terms as those in that tender. Its requirements changed and that is why it cancelled the tender. In terms of the regulation it was entitled to do so. No contrary argument was advanced in Nambiti’s heads of argument. [31] Until the tender was issued the City was entirely free to determine for itself what it required by way of SAP support services. The evidence showed that it had decided that it did not want those services on the conditions set out in CB204/2012. In other words it decided to deal with its requirements for SAP support services on a different basis. That was a decision it could have reached at the very outset and Nambiti would have had no grounds for complaint. I cannot think that because it thought initially that a fresh contract on the basis of CB204/2012 was desirable and then, on reconsideration changed that view, the decision to cancel CB204/2012 constituted administrative action. While there are instances where a decision not to do something may constitute administrative action, as in the case of a failure to issue a passport or an identity document, inaction is not ordinarily to be equated with action. Even less so is it administrative in nature. Administration is concerned with the implementation of the policies and functions of government after those policies and functions have been determined, usually through the political process or as a result of actions by the executive. A decision not to procure certain services does not fit easily into that framework. [32] But the second aspect seems to me, if anything, clearer. A decision not to procure services does not have any direct, external legal effect. No rights are infringed thereby. Disappointment may be the sentiment of a tenderer, optimistic that their bid would be the successful one, but their rights are not affected. There can be no legal right to a contract and counsel did not suggest that there was. When asked to identify the direct, external, legal effect of cancelling tender CB204/2012 his sole submission was that his client had a reasonable expectation that its tender would be considered by the Bid Evaluation Committee (BEC) and thereafter by the BAC. But that expectation was dependent on there being an ongoing tender process, where principles of just administrative action are of full application. Once the entire tender was cancelled any expectation that the tenders submitted by tenderers would be adjudicated by the BEC and the BAC fell away. [33] No other direct external legal effect was suggested to us and I can think of none. Nambiti’s legal entitlement to provide SAP support services to the City would expire at the end of December 2012. Thereafter it had no right to provide those services. It had a right to a fair adjudication of tender CB204/2012, but only so long as that tender remained extant. Once it was cancelled none of the tenderers had any rights in relation to, or arising from, it. In the words of King Lear ‘Nothing will come of nothing.’11 There is no scope in that situation for the King’s injunction to think again. [34] It follows that the decision by the City to cancel the tender was not administrative action and was not susceptible of review in terms of PAJA. As that was the sole basis upon which the review was brought it should have failed on this ground. But even if the decision had been susceptible to judicial review on the grounds of unfairness advanced by Nambiti it should not I think have succeeded. It is appropriate briefly to state my reasons for saying that. The fairness of the cancellation [35] The judge’s reasoning that led him to the conclusion that the decision to cancel the tender was unfair has been summarised in para 21 above. Three factors were identified as leading to that conclusion. They were the resolution to fast-track tender CB204/2012; that the reasons given for cancelling the tender were ‘flimsy’; and that CB204/2012 and 11 William Shakespeare King Lear Act 1, scene I, line 92. CB107/2013 were so similar that the City could easily have proceeded with the earlier tender and, after awarding it, negotiated with the successful bidder to adjust the terms of the contract to fit its concerns. [36] There are a number of difficulties with these reasons. In regard to the resolution they overlooked the fact that the resolution included an alternative of appointing a fresh service provider under regulation 32(1). No preference was expressed between these two options. What Mr Otumile did was, in the first instance, to review CB204/2012 with a view to fast-tracking it. Once he had done so and concluded that it was not suitable the BAC agreed that it should be withdrawn and steps were taken to appoint EOH in terms of regulation 32(1). So the resolution had been followed and no significance could be attached to the fact that the cancellation occurred only a week after the resolution was taken. There was in fact no obligation at all on Mr Otumile to consider fast-tracking CB204/2012. [37] Turning to the reasons for cancelling the tender advanced by Mr Otumile in his affidavit, the judge did not analyse those reasons. He simply said that they were flimsy. Why he did so is unclear, because he did not explain his conclusion. It is not suggested that Mr Otumile did not genuinely entertain the views expressed by him in advancing those reasons. Nor was it suggested that those were not the reasons that motivated the decision by the BAC not to proceed with the tender, but to appoint EOH on a short term contract, while preparing and then issuing a revised tender. Furthermore, Mr Otumile’s reasons related to the technical requirements of the City in regard to information technology and support for its existing systems. Judges do not ordinarily have the qualifications, in the absence of expert testimony to assist them, to make judgments on the weight to be attached to reasons for taking technical and strategic decisions in the field of technology. [38] The first reason was that it was necessary to develop the City’s own capacity to deal with issues around SAP and the support that the SAP system required. On the face of it this was a reasonable desire on the part of the City and it was something provided for in Nambiti’s original contract. The minutes prepared by Nambiti of the meeting on 11 December, when it was told that the tender was to be withdrawn, reflected that there had been a problem in this regard. Nambiti’s representative attributed this to the City’s failure to ‘up skill’ and retain staff rather than to any deficiency in the training they had received. Right or wrong this was an issue and it was legitimate for Mr Otumile to form his own view on how it could be addressed and whether simply proceeding with CB204/2012 would resolve the problem. We were referred to a passage from a recording of that meeting in support of the submission that Mr Otumile always intended to continue outsourcing SAP support services, but this was beside the point. The concerns related to oversight functions and the ability to account internally for the performance of these services, as well as dealing with changing circumstances. [39] Mr Otumile’s second reason relating to the fact that the support services were furnished both on-site and off-site was not addressed in the judgment. The affidavits did not suggest that it was not a real concern. Finally there was the point that the tender was for three years and the City had decided that contracts involving technology should not be for longer than two years in view of the rate at which technology was changing. As I understand the judgment, the judge’s approach was that this was a minor matter that could be adjusted after the tender had been awarded by way of negotiations with the successful bidder. I am unable to agree. First, there would be no reason why a contractor appointed for three years would be willing to reduce the contractual period to two years. Second, this would be a material, not an insignificant, alteration to the contract. And it is, at its lowest, doubtful whether it is open to an organ of State to make such a substantial change to a contract secured by way of public tender after letting the contract. That would possibly expose it to legal challenges on the grounds that it thereby subverted the procurement process and rendered it unfair. [40] The judge’s conclusion that the reasons given by the City for cancelling the tender were flimsy was not therefore justified. His last ground related to the differences between CB204/2012 and CB107/2013. He regarded these as inconsequential. But he did not have the two tenders before him, as CB204/2012 was not included in the application papers. On what basis he compared the two is therefore unclear. In any event these were tenders dealing with a technical subject and the affidavits did not contain a detailed analysis of the similarities and differences between the two. In those circumstances this was not a conclusion that could be reached on these papers. [41] It follows that there were no grounds upon which the judge was entitled to come to the conclusion that the decision to cancel the tender CB204/2012 was unfair, even if one assumes that this was a ground on which the court was entitled to intervene. On that ground as well the appeal must succeed. But before concluding it is desirable that I say something about the relief granted by the high court. The relief [42] I have already set out the terms of the order granted by the high court. It effectively compelled the City to consider and award a tender that it had decided should not be proceeded with. The fact that the tender, on its own terms, reserved the City’s right not to accept any of the tenders was ignored. Instead the court took it upon itself to order the City to procure SAP support services in terms of a contract concluded after a tender process on the terms stipulated by the high court. [43] That this was the effect of the order should have given pause for thought. A decision as to the procurement of goods and services by an organ of State is one that lies within the heartland of the exercise of executive authority by that organ of State. We live in a country of finite resources at every level of government. Decisions by organs of State on how their limited resources will be spent inevitably involve painful compromises.12 A decision to spend money on support systems for computer technology will divert those resources from other projects such as the construction of roads or the provision of rubbish collection in residential areas. The Constitution entrusts these decisions to elected bodies at all three tiers of government. In turn the elected representatives at every tier select the executive that is required to carry out the chosen programme of government. It is an extremely serious matter for a court to intervene in such decisions. But for it to do so by compelling the organ of State to enter into contracts and acquire goods and services that it has determined not to acquire, or at least not to acquire on the terms of a specific tender, is something that, if open to a court to do at all, should 12 None more so than that in Soobramoney v Minister of Health. KwaZulu-Natal [1997] ZACC 17; 1998 (1) A 765 (CC). only be done in extreme circumstances. These issues are among those comprehended by the broad doctrine of the separation of powers. But the court here does not appear to have been alive to them or to the impact of its orders. That should not have been the case. Result [44] In the result the appeal must succeed. The following order is granted: The appeal is upheld with costs, such costs to include those consequent upon the employment of two counsel. The order of the High Court is set aside and the following substituted therefor: ‘The application is dismissed with costs.’ M J D WALLIS JUDGE OF APPEAL Appearances For appellant: Vuyani Ngalwana SC (with him Khaya Mnyandu) Instructed by: Dlamini Attorneys, Sandton Honey Attorneys, Bloemfontein For respondent: Q Pelser SC (with him C J Welegemoed) Instructed by: Thapelo Kharametsane Attorneys, Pretoria Symington & De Kok, Bloemfontein.

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 26 November 2015 Status: Immediate 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. City of Tshwane v Nambiti Technologies (Pty) Ltd The Supreme Court of Appeal (SCA) today upheld an appeal by the City of Tshwane against an order compelling it to evaluate a tender that it had cancelled, and award a contract in accordance with that evaluation. The SCA held that the decision to cancel the tender was not administrative action susceptible of judicial review in terms of Promotion of Administrative Justice Act 3 of 2000 (PAJA). It also held that there were no grounds for saying that the municipality acted unfairly in cancelling the tender. The respondent in the appeal, Nambiti Technologies (Pty) Ltd, had held a contract for the provision of SAP support services to the Tshwane Municipality. That contract was due to expire on 31 December 2012. In October 2012 the municipality advertised a tender for the provision of SAP support services from 1 January 2013 for a period of three years. Nambiti, among others, submitted a tender. Before the tender could be adjudicated, the City reviewed its needs in respect of information technology and SAP support services. It concluded that it did not need such services on the basis or for the period set out in the advertised tender. It accordingly cancelled the tender and indicated that in due course it would publish a revised tender. In the meantime it appointed another contractor to provide SAP support services in terms of the applicable procurement regulations. Early in 2013 it advertised a fresh tender for the provision of SAP support services. Nambiti Technologies contended that the cancellation of the original tender was unfair and the appointment of the new contractor was unlawful. It brought review proceedings in the Gauteng Division, Pretoria of the High Court to challenge these decisions. At the same time it obtained an interdict against the City preventing it from evaluating and adjudicating upon the fresh tender. The review succeeded. The court declined to set aside the contract appointing the new contractor as, by the time of the hearing, it was about to expire. It held that the cancellation of the original tender was unfair. It set aside the cancellation of that tender. It ordered the City to afford the parties who had submitted tenders an opportunity to revise those tenders in order to take account of inflation, or to withdraw them. The City was ordered once that process was complete to adjudicate the tenders and award a contract pursuant to that adjudication. The SCA held that the cancellation of the tender was not administrative action and accordingly could not be reviewed under PAJA. On the facts it held that there were no grounds for saying that the City's cancellation of the tender was unfair. Furthermore it pointed out that the effect of the court's order was to compel the municipality to acquire services on the terms of a tender, when it had decided that it no longer wanted those services on those terms. The procurement of services is fundamentally a matter for the decision of the organ of State concerned and not the court. For a court to order a municipality to procure services that it has decided it does not want to procure, or does not want to procure on particular terms, infringes the municipality's constitutional powers and is contrary to the doctrine of separation of powers. The appeal was accordingly upheld and the order of the high court altered to one dismissing the application with costs.

3788

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1044/2020 In the matter between: COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE APPELLANT and SASOL CHEVRON HOLDINGS LIMITED RESPONDENT Neutral citation: Commissioner, South African Revenue Service v Sasol Chevron Holdings Limited (Case no 1044/2020) [2022] ZASCA 56 (22 April 2022) Coram: PETSE DP and ZONDI, MOCUMIE and HUGHES JJA and MEYER AJA Heard: 09 March 2022 Delivered: This judgment was handed down electronically by circulation to the parties' legal representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 09H45 on 22 April 2022. Summary: Administrative law – Promotion of Administrative Justice Act 3 of 2000 (PAJA) – application for review of administrative action – delay in instituting application – s 7(1) of PAJA – no agreement between the parties under s 9(1) for extension of period prescribed in terms of s 7(1) – nor application to court under s 9(2) for extension of the prescribed 180 day period. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (A J Louw AJ, sitting as court of first instance): The appeal is upheld with costs, including the costs of two counsel. The order of the court below is set aside and in its place is substituted the following order: 'The application is dismissed with costs, including the costs of two counsel where so employed.' JUDGMENT Petse DP (Zondi, Mocumie and Hughes JJA and Meyer AJA concurring): Introduction [1] This is an appeal by the Commissioner for the South African Revenue Service (the Commissioner) against a decision of the Gauteng Division of the High Court, Pretoria (the high court) in favour of Sasol Chevron Holdings Limited (Sasol Chevron), the respondent in this appeal, delivered on 20 December 2019. In terms of its decision, the high court (per A J Louw AJ) reviewed and set aside the Commissioner's decision of 6 December 2017, namely that Sasol Chevron was not entitled to a refund of the Value Added Tax levied on the supply of the goods sold to Sasol Chevron as envisaged in s 11(2)(a)(ii)(bb) of the Value Added Tax Act 1 (the VAT Act) read with regulation 6, Part One of the Export Regulations.2 In addition, the high court remitted the dispute between the protagonists to the Commissioner for reconsideration. Costs followed the event. Factual background [2] The background facts are briefly as follows. Sasol Chevron is an incorporated joint venture company registered in accordance with the laws of Bermuda. In 2014, Sasol Chevron purchased certain movable goods3 from Sasol Catalyst, a division of Sasol Chemical Industries (Pty) Ltd for exportation from South Africa to Nigeria. In line with the applicable statutory and regulatory framework,4 the goods were supplied to Sasol Chevron on what is known as an 'ex-works' and 'flash title' basis.5 Consequently, the goods were delivered by Sasol Catalyst to a warehouse at the Durban Harbour, from where they were sold to Sasol Chevron and then immediately on-sold to Escravos Gas-to-Liquids Project (EGTL) for export to Nigeria. The goods were specially manufactured for EGTL and could not be used in any other application. [3] Regulation 15(1) of the Export Regulations requires that goods sold for exportation must be exported within 90 days of the date of sale. The relevant tax invoices for the sale of the goods concerned were dated 20 August 2014, 1 Value Added Tax Act 89 of 1991. 2 Regulations promulgated under Government Notice No R316, Government Gazette 37580 of 2 May 2014. 3 The goods comprised catalyst of a specific nature and make-up manufactured for the Gas to Liquid Plant in Nigeria. 4 See the Value Added Tax Act 89 of 1991 and Regulations promulgated under Government Notice No R.316, Government Gazette 37580 of 2 May 2014 pursuant to s 74(1) of the Value Added Tax Act. 5 The term 'Flash title' is defined in the export regulations as a supply of movable goods by a vendor to a qualifying purchaser contemplated in paragraph (f) of the definition of 'qualifying purchaser' and that qualifying purchaser subsequently supplies the movable goods to another qualifying purchaser and ownership of the goods vests in the first mentioned qualifying purchaser only for a moment before the goods are sold to such other qualifying purchaser. 22 September 2014 and 22 October 2014. Sasol Catalyst, the seller of the goods, elected as the vendor6 to supply the goods to Sasol Chevron and levy tax at the zero rate in terms of s 11(1)7 of the VAT Act. [4] For reasons not germane for present purposes, Sasol Chevron did not export the movable goods within 90 days of the date of the tax invoice as required by regulation 15(1). The goods were ultimately exported on 24 April 2015. Accordingly, Sasol Catalyst was, by operation of regulation 8(2)8 of the 6 The Value Added Tax Act defines a vendor as: 'any person who is or is required to be registered under this Act: Provided that where the Commissioner has under section 23 or 50A determined the date from which a person is a vendor that person shall be deemed to be a vendor from that date.' 7 Section 11(1) of the Value Added Tax Act reads, ‘Where, but for this section, a supply of goods would be charged with tax at the rate referred to in section 7(1), such supply of goods shall, subject to compliance with subsection (3) of this section, be charged with tax at the rate of zero per cent where– (a) the supplier has supplied the goods (being movable goods) in terms of a sale or instalment credit agreement and– (i) ... (ii) the goods have been exported by the recipient and the supplier has elected to supply the goods at the zero rate as contemplated in Part 2 of the regulation referred to in paragraph (d) of the definition of “exported” in section 1: Provided that– (aa) where a supplier has supplied the goods to the recipient in the Republic otherwise than in terms of this subparagraph, such supply shall not be charged with tax at the rate of zero per cent; and (bb) where the goods have been removed from the Republic by the recipient in accordance with the regulation referred to in paragraph (d) of the definition of “exported” in section 1, such tax shall be refunded to the recipient in accordance with the provisions of section 44 (9); or ...’ 8 Regulation 8(2) reads: 'The vendor may only elect to levy tax at the zero rate where– (a) the vendor ensures that the movable goods are delivered (irrespective of the contractual conditions of delivery) to any of the harbours or airports listed in the definition of "designated commercial port" from where the movable goods are to be exported by the qualifying purchaser. The export of movable goods as well as the declaration of such goods at ports other than those ports listed in the definition of "designated commercial port", may be allowed in exceptional circumstances on application to and after approval by the Commissioner; (b) the movable goods are exported by means of a pipeline or electrical transmission line; (c) the vendor supplies the goods to a qualifying purchaser on a flash title basis; (d) the vendor supplies the movable goods to a qualifying purchaser and– (i) the time of supply is regulated by sections 9(1) or 9(3)(b)(i) or (ii) of the Act; (ii) the movable goods are subject to a process of repair, improvement, manufacture, assembly or alteration by a vendor other than the vendor who supplied the goods in the Republic; (iii) the vendor ensures that the movable goods are delivered to the premises of the vendor responsible for further processing, repair, improvement, manufacture, assembly or alteration for such further processing, repair, improvement, manufacture, assembly or alteration; and (iv) the vendor responsible for the further processing, repair, improvement, manufacture, assembly or alteration ensures that the movable goods are subsequently delivered to any of the harbours or airports listed in the definition of "designated commercial port"; or (e) the vendor supplies movable goods to a qualifying purchaser or registered regulations, required to levy value added tax at the standard rate on the supply of the goods to Sasol Chevron as prescribed in terms of s 7(1)9 of the VAT Act. [5] Cognisant of the fact that value added tax would be payable in respect of the goods, Sasol Catalyst then addressed a letter to the South African Revenue Service (SARS) on 30 January 2015 in which it sought from SARS that the latter should issue a ruling in accordance with s 11(1)(a)(ii)10 of the VAT Act read with regulation 15(1) extending the prescribed 90 day period within which the goods sold to Sasol Chevron were required to be exported to ECTL in respect of the tax invoices issued by the former during August, September, October, November and December 2014. [6] In support of its application, Sasol Catalyst stated: 'The delay in the exportation of the goods is as a result of various factors, including the delay in obtaining the required tax import clearance certificates from the Nigerian authorities; industrial action in Nigeria during November and December, delays in finalising contracts between the Nigerian entity and the freight forwarders.' vendor and the movable goods are– (i) situated at the designated harbour or airport; (ii) delivered to either the port authority, master of the ship, a container operator, the pilot of an aircraft or are brought within the control area of the airport authority; and (iii) destined to be exported from the Republic.' 9 Section 7(1) provides: 'Subject to the exemptions, exceptions, deductions and adjustments provided for in this Act, there shall be levied and paid for the benefit of the National Revenue Fund a tax, to be known as the value-added tax– (a) on the supply by any vendor of goods or services supplied by him on or after the commencement date in the course or furtherance of any enterprise carried on by him; (b) on the importation of any goods into the Republic by any person on or after the commencement date; and (c) on the supply of any imported services by any person on or after the commencement date, calculated at the rate of 15 per cent on the value of the supply concerned or the importation, as the case may be.' 10 Section 11(1)(a)(ii) reads: 'the goods have been exported by the recipient and the supplier has elected to supply the goods at the zero rate as contemplated in Part 2 of the regulation referred to in paragraph (d) of the definition of "exported" in section 1.' [7] And elaborating on this, it asserted in its founding affidavit, in support of the relief sought in the high court, that: 'The delay in exporting the goods from South Africa was mainly due to a delay in obtaining the required import clearance certificates from the Nigerian authorities which in turn caused delays in finalizing contracts between EGTL and the freight forwarders as well as industrial action being experienced in Nigeria during November and December 2015.' Sasol Chevron amplified this in its replying affidavit and stated that: 'The industrial action referred to in the applicant's founding affidavit paragraph 19, and which was a contributing cause in the delay of the exportation of the goods, was experienced during November and December 2014, and not 2015 as stated therein.' [8] In the interim, and presumably in anticipation that its request for an extension would be acceded to, Sasol Catalyst issued new and revised tax invoices in substitution of those previously issued in August, September, October, November and December 2014 thereby substituting the initial zero-rated tax invoices with new tax invoices in which value added tax was levied at the standard rate of 14% that was operational at the time. Sasol Chevron, in turn, duly paid the value added tax levied by Sasol Catalyst in respect of the latter's replacement tax invoices. [9] On 6 July 2015, Sasol Catalyst applied to SARS for the extension of the period within which to submit an application to the Vat Refund Authority (VRA) for a refund of the value added tax paid in respect of Sasol Catalyst's revised tax invoices. In a comprehensive letter of 7 November 2016 to Sasol Catalyst's attorneys, SARS responded to Sasol Catalyst's request and declined the application for an extension of the 90 day period for the exportation of the goods sold in terms of the tax invoices issued in August, September and October 2014. However, SARS acceded to Sasol Catalyst's request in relation to the tax invoices issued in November and December 2014. [10] Undaunted by this setback, Sasol Catalyst made further representations to SARS to 'reconsider the application by Sasol Chevron to submit the application for a refund of the South African VAT paid by Sasol Chevron on the goods sold by Sasol Catalyst'. However, in a letter dated 6 December 2017, SARS was not prepared to budge and reiterated its unwavering stance that Sasol Chevron was not entitled to a refund of the value added tax levied on the supply of the movable goods sold to Sasol Chevron. SARS' response seemingly failed to convince the non-fatigable Sasol Catalyst that SARS too was unrelenting. Further correspondence was exchanged between the parties, culminating in a letter dated 26 March 2018 from SARS to Sasol Chevron in which SARS reaffirmed its previous stance, consistent with what it had earlier communicated to Sasol Catalyst's attorneys in its letter of 7 November 2016. Before the high court [11] Some five months later, on 21 September 2018, and with a stalemate having arisen, Sasol Chevron instituted a review application under PAJA seeking, inter alia, an order to review and set aside SARS' decision of 6 December 2017.11 11 The relief sought by Sasol Chevron in terms of its notice of motion was for an order in the following terms: '1. That the decision by the Respondent dated 06 December 2017 to the effect that the Applicant ". . . is not entitled to a refund of the VAT levied on the supply of the goods, as envisaged in section 11(1)(a)(ii)(bb) read with Regulation 6 of Part I of the Export Regulation" be reviewed and set aside; 2. That a declaratory order be issued in terms whereof it is declared that in respect of the movable goods (catalysts) purchased by the Applicant from Sasol Catalyst, a division of Sasol South Africa (Pty) Ltd (previously Sasol Chemical Industries (Pty) Ltd) in terms of the latter's tax invoices dated 20 August 2014 and 22 September 2014 (referred to in and attached to the Applicant's founding affidavit), in respect of which goods the Applicant was responsible for the exporting thereof from the Republic of South Africa: 2.1 The Applicant qualifies for submission to the Respondent of a request for extension of the period within which the Applicant may submit an application for a refund of the value-added tax paid by the Applicant as [12] It is common cause between the parties that the review application papers were served on SARS on 25 September 2018. Thus, SARS asserted that by then the 180 day period provided for in s 7(1) of PAJA, reckoned either from 7 November 2016 or 6 December 2017, had long expired. Accordingly, in argument before the high court, SARS contended that absent an application for an order that the 180 day period be extended in terms of s 9(2) of PAJA, the review application fell to be dismissed on that ground alone without consideration of the merits of the review application itself. I pause here to observe that it is common cause between the parties that Sasol Chevron did not bring any application for the extension of the 180 day period in terms of s 9(2) of PAJA. [13] In the event, the high court dismissed the preliminary objection raised by SARS and thereafter proceeded to determine the substantive merits of the review. The high court then upheld the application and, in the result, granted an order in the terms foreshadowed in paragraph 1 above. The present appeal, with the leave of the high court, is directed against that order. provided for on the aforementioned tax invoices, in accordance with the provisions of Regulation 6(6)(b) of the Regulations, issued in terms of section 74(1) read with paragraph (d) of the definition of "exported" in section 1(1) of the Value-Added Tax Act 89 of 1991 (as amended), and that all the other requirements prescribed in Part 1 of the said regulations were complied with; 3. Alternatively to the relief sought in prayer 2 above, that: 3.1 The Respondent be ordered to reconsider the Applicant's written request that an extension be granted to it to submit an application for a refund to the VAT Refund Administrator in accordance with the provisions of Regulation 6(6)(b) (of the Regulations referred to in prayer 2 above) (a copy of which earlier written request is referred to in and attached to the Applicant's founding affidavit) on the basis that the Respondent has to consider whether "all the other requirements prescribed in this Part" were complied with, as contemplated in Regulation 6(6)(b) in Part 1 of the Regulations referred to in prayer 2 above alternatively that the Respondent be ordered to reconsider the Applicant's written request that an extension be granted to it to submit an application for a refund to the VAT Refund Administrator in accordance with the provisions of regulation 6(6)(b) (of the Regulations referred to in prayer 2 above); 4. That the Respondent be ordered to pay the costs of this application only in the event of Respondent opposing any of the relief sought herein.' The remaining two paragraphs sought costs and further or alternative relief. [14] Insofar as the issue of delay is concerned, the high court, in essence, held that as the Commissioner provided his reasons for his decision of 6 December 2017 only on 26 March 2018, this meant that the 180 day period commenced to run from 27 March 2018. And, having regard to the fact that the 'review application was issued on 21 September 2018 . . . [on] the 179th day after the reasons were provided on the 26th March 2018', it followed that 'the review application was timeously instituted within the prescribed 180 day period' as required in s 7(1) of PAJA. With this procedural obstacle now out of the way, the high court then – as stated above – proceeded to consider the merits of the review application. The high court's conclusion on the issue of delay raises the question whether the high court was right to reach such a conclusion. Therefore, it is necessary to first determine this antecedent question, for if it is answered against Sasol Chevron, that result would be determinative of the outcome of this appeal, thus rendering it unnecessary to enter into the substantive merits of the review application. Statutory framework [15] Section 7(1) of PAJA provides as follows: 'Any proceedings for judicial review in terms of section 6(1) must be instituted without unreasonable delay and not later than 180 days after the date– (a) subject to subsection (2)(c), on which any proceedings instituted in terms of internal remedies as contemplated in subsection 2(a) have been concluded; or (b) where no such remedies exist, on which the person concerned was informed of the administrative action, became aware of the action and the reasons for it or might reasonably have been expected to have become aware of the action and the reasons.' Self-evidently, with a view to ameliorate the position of a litigant hit by the time limitation provision in s 7(1), s 9(1) of PAJA provides that the 180 day period may, either by agreement between the parties or absent such agreement, by a court on application, be extended for a fixed period. And a court may grant an extension of the 180 day period referred to in s 7(1) if, in terms of s 9(2) of PAJA, the interests of justice so require. [16] What the interests of justice will demand in any given situation will largely depend on the facts of each case. In Camps Bay Ratepayers and Residents Association and Another v Harrison and Another,12 this court put it thus: '[A]nd the question whether the interests of justice require the grant of such extension depends on the facts and circumstances of each case: the party seeking it must furnish a full and reasonable explanation for the delay which covers the entire duration thereof and relevant factors include the nature of the relief sought, the extent and cause of the delay, its effect on the administration of justice and other litigants, the importance of the issue to be raised in the intended proceedings and the prospects of success.' (Footnote omitted.) [17] In Mulaudzi v Old Mutual Life Assurance Company (South Africa) Limited,13 this court said that in applications for condonation (extension of time in the context of s 9(2) of PAJA), the substantive merits of the principal case may be relevant. The court proceeded to say that in circumstances where the merits are considered to be relevant, they are not necessarily decisive. In Opposition to Urban Tolling Alliance and others v The South African National Roads Agency Limited and Others14 this court stated that absent an extension, 'the court has no authority to entertain the review application.' However, this 12 Camps Bay Ratepayers’ and Residents’ Association v Harrison [2010] ZASCA 3; [2010] 2 All SA 519 (SCA) para 54. 13 Mulaudzi v Old Mutual Life Assurance Company (South Africa) Limited and Others, National Director of Public Prosecutions and Another v Mulaudzi [2017] ZASCA 88; [2017] 3 All SA 520 (SCA); 2017 (6) SA 90 (SCA) para 34. 14 Opposition to Urban Tolling Alliance and Others v The South African National Roads Agency Ltd and Others [2013] ZASCA 148; 2013 (4) All SA 639 (SCA) (OUTA) para 26. statement was qualified in South African National Roads Agency Limited v City of Cape Town,15 in which Navsa JA said that this dictum 'cannot be read to signal a clinical excision of the merits of the impugned decision, which must be a critical factor when a court embarks on a consideration of all the circumstances of a case in order to determine whether the interests of justice dictates that the delay should be condoned.'16 [18] However, it is necessary to emphasise that in this case, as already indicated above, Sasol Chevron did not bring any application for the extension of the 180 day period as contemplated in s 9(2) of PAJA. Accordingly, the fate of this appeal hinges entirely on the question whether or not Sasol Chevron's review application was instituted within the 180 day period prescribed in s 7(1) of PAJA. If not, that will be the end of the matter, and the appeal would fall to be dismissed without further ado. [19] In OUTA,17 this court held that: '. . . after the 180 day period the issue of unreasonableness is pre-determined by the legislature; it is unreasonable per se. It follows that the court is only empowered to entertain the review application if the interest of justice dictates an extension in terms of s 9. Absent such extension the court has no authority to entertain the review application at all. Whether or not the decision is unlawful no longer matters. The decision has been "validated" by the delay.' [20] The rationale for what has come to be known as the delay rule under s 7(1) of PAJA, whose roots are embedded in common law, was reiterated by Brand 15 South African National Roads Agency Limited v City of Cape Town [2016] ZASCA 122; [2016] 4 All SA 332 (SCA); 2017 (1) SA 468 (SCA) para 81. 16 See also: Asla Construction (Pty) Limited v Buffalo City Metropolitan Municipality and Another [2017] ZASCA 23; [2017] 2 All SA 677 (SCA); 2017 (6) SA 360 (SCA) para 12. 17 OUTA para 26. JA in Associated Institutions Pension Fund and Others v Van Zyl and Others18 as follows: 'Since PAJA only came into operation on 30 November 2000 the limitation of 180 days in s 7(1) does not apply to these proceedings. The validity of the defence of unreasonable delay must therefore be considered with reference to common law principles. It is a longstanding rule that courts have the power, as part of their inherent jurisdiction to regulate their own proceedings, to refuse a review application if the aggrieved party had been guilty of unreasonable delay in initiating the proceedings. The effect is that, in a sense, delay would "validate" the invalid administrative action (see eg Oudekraal Estates (Pty) Ltd v City of Cape Town and others [2004] 3 All SA 1 (SCA) 10b-d, para 27). The raison d'etre of the rule is said to be twofold. First, the failure to bring a review within a reasonable time may cause prejudice to the respondent. Second, there is a public interest element in the finality of administrative decisions and the exercise of administrative functions (see eg Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad 1978 (1) SA 13 (A) 41). The scope and content of the rule has been the subject of investigation in two decisions of this court. They are the Wolgroeiers case and Setsokosane Busdiens (Edms) Bpk v Voorsitter, Nasionale Vervoerkommissie en 'n Ander 1986 (2) SA 57 (A). As appears from these two cases and the numerous decisions in which they have been followed, application of the rule requires consideration of two questions: (a) Was there an unreasonable delay? (b) If so, should the delay in all the circumstances be condoned? (See Wolgroeiers 39C-D.) The reasonableness or unreasonableness of a delay is entirely dependent on the facts and circumstances of any particular case (see eg Setsokosane 86G). The investigation into the reasonableness of the delay has nothing to do with the court's discretion. It is an investigation into the facts of the matter in order to determine whether, in all the circumstances of that case, the delay was reasonable. Though this question does imply a value judgment it is not to be 18 Associated Institutions Pension Fund and Others v Van Zyl and Others [2004] ZASCA 78; [2004] 4 All SA 133 (SCA) paras 46 - 48. equated with the judicial discretion involved in the next question, if it arises, namely, whether a delay which has been found to be unreasonable, should be condoned (See Setsokosane 86E- F).' [21] In Gqwetha v Transkei Development Corporation Ltd and Others, 19 Nugent JA elaborated on this theme and said the following regarding the delay rule: 'Underlying that latter aspect of the rationale is the inherent potential for prejudice, both to the efficient functioning of the public body, and to those who rely upon its decisions, if the validity of its decisions remains uncertain. It is for that reason in particular that proof of actual prejudice to the respondent is not a precondition for refusing to entertain review proceedings by reason of undue delay, although the extent to which prejudice has been shown is a relevant consideration that might even be decisive where the delay has been relatively slight . . .' [22] What an application for an extension of the 180 day period in terms of s 9 contemplates – just like any other application for condonation for that matter – is that the applicant must, in general, proffer a reasonable and satisfactory explanation for the delay. This entails that the explanation proffered must not be bereft of particularity and candour and that a full explanation must be proffered not only for the nature and extent of the delay,20 but also for the entire period covered by the delay. And the explanation proffered for the delay must also be reasonable. It is as well to bear in mind that in considering whether the court should come to the aid of the applicant, the substantive merits of the review application will also be a critical factor in determining whether the interests of 19 Gqwetha v Transkei Development Corporation Ltd and Others [2006] 3 All SA 245; 2006 (2) SA 603 (SCA) para 23 (Gqwetha). 20 See, for example Aurecon South Africa (Pty) Ltd v City of Cape Town [2015] ZASCA 209; [2016] 1 All SA 313 (SCA); 2016 (2) SA 199 (SCA) para 17. See also: Van Wyk v Unitas Hospital and Another [2007] ZACC 24; 2008 (2) SA 472 (CC); 2008 (4) BCLR 442 (CC) para 20 and eThekwini Municipality v Ingonyama Trust [2013] ZACC 7; 2013 (5) BCLR 497 (CC); 2014 (3) SA 240 (CC) para 28. justice dictate that the delay should be condoned.21 But in the present matter, there is no application such as is contemplated in s 9(2) of PAJA. Thus, these considerations do not arise in this case. [23] Where no application for the extension of the 180 day period in terms of s 9(2) has been made – as in this instance – a court has no authority to enter into the substantive merits of a review application brought outside the 180 day period prescribed in s 7(1). In Mostert NO v Registrar of Pension Funds and Others22 it was stated that: 'Section 7(1) of PAJA provides that proceedings for judicial review must be instituted without unreasonable delay and not later than 180 days after the dates specified in subsections (a) and (b). In Opposition to Urban Tolling Alliance Brand JA said (para 26): "At common law application of the undue delay rule required a two stage enquiry. First, whether there was an unreasonable delay and, second, if so, whether the delay should in all the circumstances be condoned . . . Up to a point, I think, s 7(1) of PAJA requires the same two stage approach. The difference lies, as I see it, in the legislature's determination of a delay exceeding 180 days as per se unreasonable. Before the effluxion of 180 days, the first enquiry in applying s 7(1) is still whether the delay (if any) was unreasonable. But after the 180 day period the issue of unreasonableness is pre-determined by the legislature; it is unreasonable per se. It follows that the court is only empowered to entertain the review application if the interest of justice dictates an extension in terms of s 9. Absent such extension the court has no authority to entertain the review application at all." ' [24] As already indicated above in this case Sasol Chevron adopted the stance that the review application was instituted within 180 days after the dates 21 Asla Construction (Pty) Ltd v Buffalo City Metropolitan Municipality [2017] ZASCA 23; 2017 (6) SA 360 (SCA). 22 Mostert NO v Registrar of Pension Funds and Others [2017] ZASCA 108; 2018 (2) SA 53 (SCA) para 34. stipulated in paragraphs (a) and (b) of s 7(1). It, therefore, elected to argue the case on the footing that an application for an extension of the 180 day period was wholly unnecessary. Counsel's submissions [25] The diametrically opposing contentions advanced by counsel on behalf of the parties in this court may broadly be summarised as follows. On behalf of SARS, it was submitted in the heads of argument that the Commissioner declined the application made by Sasol Chevron in response to the latter's application made in July 2015 on 7 November 2016. Accordingly, so the argument went, SARS' response – communicated to Sasol Chevron in writing on 7 November 2016 – constituted its written decision supported with reasons underpinning such decision. Before us, and to meet the counter-argument advanced on behalf of Sasol Chevron – counsel for the Commissioner accepted for purposes of the appeal that SARS' decision was taken on 6 December 2017. Indeed, this is the very decision that Sasol Chevron sought to have reviewed and set aside in its notice of motion. [26] Counsel for the Commissioner went on to highlight that as the application for review was instituted only on 21 September 2018 – some 22 months after the decision was taken and reasons therefor provided – the fact that even on Sasol Chevron's own account, the decision was taken on 6 December 2017 meant that the high court was not empowered to enter into the substantive merits of the review application. Instead, so the argument went, the high court should have dismissed the application simply on the basis that it was instituted outside the 180 day period without an application for the extension of that period as required in terms of s 9(2). [27] Whilst accepting the submissions advanced on behalf of the Commissioner as to the factual backdrop against which this appeal should be considered, counsel for Sasol Chevron embraced the reasoning that prevailed in the high court. In essence, the high court held that although SARS took its decision on 6 December 2017, it provided its reasons in support of that decision only on 26 March 2018. Therefore, as the review application was instituted on 21 September 2018 (and served on 25 September 2018), this meant that it was still within the 180 day period prescribed by s 7(1). Hence, it concluded that it was not necessary to apply for an extension of time under s 9(2). [28] However, the counter-argument advanced by counsel for Sasol Chevron and the reasoning of the high court on this score must be tested with reference to the following fundamental considerations. First, as was submitted on behalf of the Commissioner, SARS' letter of 26 March 2018 was no more than a recapitulation of the position that SARS had consistently adopted since 2016. The letter itself makes explicit reference to the earlier decision – termed the ruling – made on 6 December 2017, as are virtually all the subsequent letters from SARS to Sasol Chevron. SARS' letter of 6 December 2017, in turn, makes reference to the ruling made on 7 November 2016 in which the background facts are comprehensively set out, Sasol Chevron's request summarised, the relevant statutory framework set out and, finally, the decision (ruling) – supported with comprehensive reasons – is articulated. [29] In contending that the impugned decision was not taken on 26 March 2018, counsel for the Commissioner called into his aid the decision of this court in Aurecon South Africa (Pty) Ltd v City of Cape Town,23 in which Maya ADP said the following: 'The decision challenged by the City and the reasons therefor were its own and were always within its knowledge. Section 7(1) unambiguously refers to the date on which the reasons for administrative action became known or ought reasonably to have become known to the party seeking its judicial review. The plain wording of these provisions simply does not support the meaning ascribed to them by the court a quo, ie that the application must be launched within 180 days after the party seeking review became aware that the administrative action in issue was tainted by irregularity. That interpretation would automatically entitle every aggrieved applicant to an unqualified right to institute judicial review only upon gaining knowledge that a decision (and its underlying reasons), of which he or she had been aware all along, was tainted by irregularity, whenever that might be. This result is untenable as it disregards the potential prejudice to the respondent (the appellant here) and the public interest in the finality of administrative decisions and the exercise of administrative functions. Contrary to the court a quo's finding in this regard, the City far exceeded the time frames stipulated in s 7(1) and did not launch the review proceedings within a reasonable time. In that case, it clearly needed an extension as envisaged in s 9(1)(b) without which the court a quo was otherwise precluded from entertaining the review application.' [30] Aurecon was cited with approval by the Constitutional Court in City of Cape Town v Aurecon South Africa (Pty) Ltd, 24 in which the following was stated: 'On a textual level, the City's contention confuses two discrete concepts: reasons and irregularities. Section 7(1) of PAJA does not provide that an application must be brought within 180 days after the City became aware that the administrative action was tainted by irregularity. On the contrary, it provides that the clock starts to run with reference to the date 23 Aurecon South Africa (Pty) Ltd v City of Cape Town [2015] ZASCA 209; [2016] 1 All SA 313 (SCA); 2016 (2) SA 199 (SCA) para 16 (Aurecon). 24 City of Cape Town v Aurecon South Africa (Pty) Ltd [2017] ZACC 5; 2017 (6) BCLR 730 (CC); 2017 (4) SA 223 (CC) para 41. on which the reasons for the administrative action became known (or ought reasonably to have become known) to an applicant.' Thus, s 7(1) explicitly provides that the proverbial clock begins to tick from the date on which the reasons for the administrative action became known (or ought reasonably to have become known) to the applicant, in this instance, Sasol Chevron. [31] There is, to my mind, considerable force in the contentions advanced on behalf of the Commissioner. On this score, it is instructive to keep at the forefront of one's mind that the fact that the parties continued to exchange further correspondence beyond 6 December 2017 cannot detract from the truism that SARS' impugned decision was taken on 6 December 2017. What is more, is that this is the very decision that Sasol Chevron sought to have reviewed and set aside. And yet no attempt was made by Sasol Chevron in its founding papers to explain any correlation between the decision of 6 December 2017 and SARS' letter of 26 March 2018 to support its belated contention that in instituting its review application on 21 September 2018, it was still within the time frame prescribed by s 7(1) of PAJA. [32] During argument, there was some debate about whether the word 'institute' in s 7(1) of PAJA ought to be construed to mean that the court process initiating legal proceedings – in this instance the review application – in a court must not only be issued by the court concerned but must also actually be served on the respondent. Counsel for the Commissioner embraced this proposition and contended that this is the sense in which the word 'institute' should be understood. I did not understand counsel for Sasol Chevron to contest this proposition. Rather, he was content to argue that on the facts of this matter, and having regard to the fact that it was common cause that the review application was served on SARS on 25 September 2018 – that is, on the 179th day of the 180 day period – the requirements of s 7(1) were satisfied. In the circumstances, argued counsel, no application in terms of s 9(2) of PAJA was necessary. [33] On the facts, counsel's argument cannot be sustained. Taking as one's logical point of departure, the requirement in s 7(1) that 'any proceedings for judicial review . . . must be instituted without unreasonable delay and not later than 180 days' after either of the dates referred to in paragraphs (a) and (b) of s 7(1), it must ineluctably follow that the word 'institute' when considered contextually and purposively,25 as it must be, means to commence the review proceedings by issuing the process and effecting service thereof on the decision- maker whose administrative action is impugned. [34] Thus, any argument to the contrary would be untenable. This can be tested with reference to the following considerations. If it were otherwise, one may rhetorically ask, what would be the virtue in issuing the review application and thereafter remain supine for months on end without effecting service of the application on the respondent? Could that be said to meet the requirements of s 7(1) of PAJA, which decree that 'any proceedings for judicial review in terms of s 6(1) must be instituted without reasonable delay and not later than 180 days' 25 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) para 28. See also Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd and Others [2013] ZACC 48; 2014 (3) BCLR 265 (CC) at paras 84-6 and Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (6) SA 199 (CC); 2007 (10) BCLR 1027 (CC) at para 5 for purposive interpretation. In addition, see North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd [2013] ZASCA 76; 2013 (5) SA 1 (SCA) at para 24; KPMG Chartered Accountants (SA) v Securefin Ltd and Another [2009] ZASCA 7; 2009 (4) SA 399 (SCA) at para 39 and Bhana v Dőnges NO and Another 1950 (4) SA 653 (A) at 664E-H for proper contextualisation; Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18 (Endumeni). of the occurrence of either of the events referred to in paragraphs (a) and (b) thereof. And, more fundamentally, would a mere issuing of the review application that is not followed by immediate service thereof on the respondent without unreasonable delay not undermine the legitimate purpose that the delay rule is designed to serve? To my mind, the answer must ineluctably be Yes. To contend otherwise would, as indicated above, undermine the raison d'être of the delay rule as aptly articulated by Millar JA in Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad.26 And, as already observed above, the underlying rationale for the rule lies in the 'inherent potential for prejudice, both to the efficient functioning of the public body and to those who rely upon its decision, if the validity of its decisions remains uncertain.'27 [35] There can be no doubt that s 7(1) is a time limitation provision. Thus, its object and purpose would not be served if the decision-maker is not made aware, by service of the process impugning the decision, that his or her or its decision is being challenged and, whilst at the same time, the beneficiaries of the decision arrange their affairs on the acceptance that the decision concerned is beyond question because they are completely oblivious to the pending challenge. [36] In ABM Motors v Minister of Minerals and Energy and Others,28 Ploos van Amstel J had occasion to consider whether an application which has been issued but not served on the respondent can be taken to have been made. After 26 Wolgroeiers Afslaers (Edms) Bpk v Munisipaliteit van Kaapstad [1978] 1 All SA 369 (A); 1978 (1) SA 13 (A) at 375. 27 Gqwetha para 23. 28 ABM Motors v Minister of Minerals and Energy and Others 2018 (5) SA 540 (KZP) paras 13-18 (ABM Motors). making reference to various decisions of our courts,29 the upshot of which is that not only must the application be issued by the Registrar but must also be served on the affected parties, the learned Judge concluded as follows: 'I do not consider that this approach [issue and service of the process] will place an undue burden on applicants for judicial review in terms of PAJA.'30 [37] Before leaving this topic, I consider that it will be useful to make reference to certain dicta of our courts that bear repeating. The first of these is the oft- quoted passage from the judgment of Wallis JA in Endumeni.31 The learned Judge of Appeal had occasion to explain the import of what he had said some eight years earlier in Endumeni in Commissioner for the South African Revenue Service v United Manganese of Kalahari (Pty) Ltd32 and stated: 'It is an objective unitary process where consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. . .' [38] The learned Judge then went on to say: 'The difference in the genesis of statutes and contracts provides a different context for their interpretation. Statutes undoubtedly have a context that may be highly relevant to their interpretation. In the first instance there is the injunction in s 39(2) of the Constitution that statutes should be interpreted in accordance with the spirit, purport and objects of the Bill of Rights. Second, there is the context provided by the entire enactment. . . Fourth, the legislative history may provide useful background in resolving interpretational uncertainty. Finally, the 29 Tladi v Guardian National Insurance Co Ltd [1992] 1 All SA 168 (T); 1992 (1) SA 76 (T); Taboo Trading 232 (Pty) Ltd v Pro Wreck Scrap Metal CC and Others; Joubert v Pro Wreck Scrap Metal CC 2013 (6) SA 141 (KZP); Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Ltd and Others [2012] ZASCA 49; 2013 (2) SA 204 (SCA). 30 ABM Motors para 19. 31 Footnote 25 above para 18. 32 Commissioner for the South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020] ZASCA 16 (25 March 2020) para 8. general factual background to the statute, such as the nature of its concerns, the social purpose to which it is directed and, in the case of statutes dealing with specific areas of public life or the economy, the nature of the areas to which the statute relates, provides the context for the legislation.' [39] There is also the judgment of Rumpff JA in Republikeinse Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies (Edms) Bpk 33where it was said that the purpose of a summons or notice of motion is to implicate or involve a respondent into a lawsuit. Thus, it goes without saying that one can only implicate or involve a respondent or defendant in a lawsuit by bringing the summons or notice of motion to his or her notice by effecting service of the process.34 [40] Finally, I must also refer to Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Ltd and Others35 in which this court interpreted the word 'initiate' used in a court order granting an interim interdict pending certain review proceedings to be initiated by no later than a certain date, to mean not only the filing of the review application papers with the registrar and the issue thereof, but crucially also service thereof. In reaching that conclusion this court inter alia relied on Mame Enterprises (Pty) Ltd v Publications Control Board36 wherein Nicholas J held that it was manifest from uniform rule 6 and from the contents of Form 2(a) that the giving of notice to the respondent in a case in 33 Republikeinse Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies (Edms) Bpk 1972 (1) SA 773 (A) at 780E-F. 34 See Marine Trade Insturance Co Ltd v Reddlinger 1966 (2) SA 407(A) at 413 in which the following was stated: 'Although an action is commenced when the summons is issued the defendant is not involved in litigation until service has been effected, because it is only at that stage that a formal claim is made upon him.' 35 Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Ltd and Others [2012] ZASCA 49; 2013 (2) SA 204 (SCA) paras 14 - 20. 36 Mame Enterprises (Pty) Ltd v Publications Control Board 1974 (4) SA 217 (W) at 220B. which relief is claimed is an essential first step in an application on notice of motion; and on Tladi v Guardian National Insurance Co Ltd.37 In Tladi, Botha J held that an application that was required to have been made within a period of 90 days as contemplated in s 14(3) of the Motor Vehicle Accidents Act 48 of 1986, could not be considered to have been made if it had merely been issued but not served. [41] Although I have derived much assistance from reading the cases referred to in ABM Motors, I do not propose to analyse and discuss all of them in detail in this judgment, for to do so would render this judgment unduly prolix. Suffice it to say that all of them underscore the obvious point in a case such as the present that an application for review in terms of s 6(1) of PAJA must be issued and served on the affected parties in order to satisfy the prescripts of s 7(1) of PAJA. [42] It therefore follows that Sasol Chevron's review application was instituted outside the 180 day period prescribed in s 7(1). Thus, in the words of Brand JA in OUTA 'after the 180 day period the issue of unreasonableness is predetermined by the legislature; it is unreasonable per se.' The inevitable consequence of this is that absent an application in terms of s 9(2) of PAJA, the high court should have dismissed the review application for want of compliance with the prescripts of s 7(1) as it had no power to enter into the substantive merits of the review. Therefore, whether or not the impugned decision is unlawful 'no longer matters.' Rather, it became 'validated' by the unreasonable delay. 38 Consequently the Commissioner's preliminary point ought to have been upheld. 37 Tladi v Guardian National Insurance Co Ltd 1992 (1) SA 76 (T) at 80B (Tladi). 38 See OUTA footnote 14 above paragraph 26. [43] The conclusion reached above in relation to s 7(1) of PAJA renders it unnecessary to determine the interesting questions of law, namely whether it is permissible for a vendor as defined in s 1 of the VAT Act once such a vendor has made an election to supply goods at a zero rate in terms of s 11(1)(a)(ii) read with Part Two – Section A of the export regulations to migrate to Part One of the self-same export regulations in respect of the same supply of goods by issuing fresh tax invoices at the standard rate of value added tax in terms of s 7 of the VAT Act. I, therefore, refrain from expressing any opinion on those issues. Indeed, as the Constitutional Court cautioned in Albutt v Centre for the Study of Violence and Reconciliation, and Others,39 '[s]ound judicial policy requires us to decide only that which is demanded by the facts of the case and is necessary for its proper disposal.' Thus, those questions, interesting as they appear to be, should be left for another day when the opportunity presents itself again. [44] Before making the order, it is necessary to express our disquiet at one disturbing feature of this appeal. It is this: the judgment of the high court was handed down on 20 December 2019. On 3 February 2020, the Commissioner filed an application for leave to appeal the high court's judgment. This was outside the time limits prescribed in terms of rule 49(1)(b) of the Uniform Rules by some three days only. The high court rightly described this slight delay as 'of inconsequential duration'; hence it readily condoned the delay. [45] The application for leave to appeal was heard on 15 May 2020. And the judgment of the high court granting leave to appeal to this court was handed 39 Albutt v Centre for the Study of Violence and Reconciliation and Others [2010] ZACC 4; 2010 (3) SA 293 (CC); 2010 (2) SACR 101 (CC); (2010 (5) BCLR 391) para 82. down on 26 October 2020 after undergoing a period of gestation of some five months. It is necessary to say something about this. An undesirable development appears to be taking root in some courts where applications for leave to appeal are invariably not dealt with and disposed of expeditiously. This is regrettable as delays in the disposition of applications for leave to appeal have a negative impact on the administration of justice. I mention this not to censure the learned Judge a quo but purely to sound a word of caution, namely that if delays of this nature go unchecked, they have the potential to bring the administration of justice into disrepute. Order [46] In the result the following order is made: The appeal is upheld with costs, including the costs of two counsel. The order of the court below is set aside and in its place is substituted the following order: 'The application is dismissed with costs, including the costs of two counsel where so employed.' X M PETSE DEPUTY PRESIDENT SUPREME COURT OF APPEAL APPEARANCES For the appellant: A R Sholto-Douglas SC (with him T S Sidaki) Instructed by: Ledwaba Mazwai Attorneys, Pretoria Matsepes Inc., Bloemfontein For the respondent: P A Swanepoel SC Instructed by: Cliffe Dekker Hofmeyer Inc., Pretoria Honey Inc., Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 22 April 2022 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Commissioner, South African Revenue Service v Sasol Chevron Holdings Limited (1044/2020) [2022] ZASCA 56 (22 April 2022) Today the Supreme Court of Appeal (SCA) handed down a judgment upholding, with costs, an appeal against the Gauteng Division of the High Court, Pretoria (the high court). The preliminary issue before the SCA concerned whether or not Sasol Chevron's review application was instituted within the 180 day period prescribed in s 7(1) of Promotion of Administrative Justice Act 3 of 2000 (PAJA). Sasol Chevron is an incorporated joint venture company registered in accordance with the laws of Bermuda. In 2014, Sasol Chevron purchased certain movable goods from Sasol Catalyst, a division of Sasol Chemical Industries (Pty) Ltd for exportation from South Africa to Nigeria. In line with the applicable statutory and regulatory framework, the goods were supplied to Sasol Chevron on what was known as an 'ex-works' and 'flash title' basis. Consequently, the goods were delivered by Sasol Catalyst to a warehouse at the Durban Harbour, from where they were sold to Sasol Chevron and then immediately on-sold to Escravos Gas-to-Liquids Project (EGTL) for export to Nigeria. The goods were specially manufactured for EGTL and could not be used in any other application. Regulation 15(1) of the Export Regulations requires that goods sold for exportation must be exported within 90 days of the date of sale. The relevant tax invoices for the sale of the goods concerned were dated 20 August 2014, 22 September 2014 and 22 October 2014. Sasol Catalyst, the seller of the goods, elected as the vendor to supply the goods to Sasol Chevron and levy tax at the zero rate in terms of s 11(1) of the Value Added Tax Act 89 of 1991 (the VAT Act). However, Sasol Chevron did not export the movable goods within 90 days of the date of the various tax invoices as required by regulation 15(1). The goods were ultimately exported on 24 April 2015. Accordingly, Sasol Catalyst was, by operation of regulation 8(2) of the regulations, required to levy value added tax at the standard rate on the supply of the goods to Sasol Chevron as prescribed in terms of s 7(1) of the VAT Act. Cognisant of the fact that value added tax would be payable in respect of the goods, Sasol Catalyst then addressed a letter to the South African Revenue Service (SARS) on 30 January 2015 in which it sought from SARS that the latter should issue a ruling in accordance with s 11(1)(a)(ii) of the VAT Act read with regulation 15(1) extending the prescribed 90 day period within which the goods sold to Sasol Chevron were required to be exported to EGTL in respect of the tax invoices issued by the former during August, September, October, November and December 2014. In the interim, and presumably anticipating that SARS would accede to its request, Sasol Catalyst purportedly issued new and revised tax invoices in substitution of those previously issued in August, September, October, November and December 2014, in terms of which it sought to replace the previously issued tax invoices, thereby substituting the initial zero-rated tax invoices with new tax invoices in which value added tax was levied at the standard rate of 14% that was operational at the time. Sasol Chevron, in turn, duly paid the value added tax levied by Sasol Catalyst in respect of the latter's replacement tax invoices. On 6 July 2015, Sasol Catalyst applied to SARS for the extension of the period within which to submit an application to the Vat Refund Authority (VRA) for a refund of the value added tax paid in respect of Sasol Catalyst's replacement tax invoices. In a comprehensive letter of 7 November 2016 to Sasol Catalyst's attorneys, SARS responded to Sasol Catalyst's request and declined the application for an extension of the 90 day period for the exportation of the goods sold in terms of the tax invoices issued in August, September and October 2014. However, SARS acceded to Sasol Catalyst's request in relation to the tax invoices issued in November and December 2014. Undaunted by this setback, Sasol Catalyst made further representations to SARS to 'reconsider the application by Sasol Chevron to submit the application for a refund of the South African VAT paid by Sasol Chevron on the goods sold by Sasol Catalyst'. However, in a letter dated 6 December 2017, SARS was not prepared to budge and reiterated its unwavering stance that Sasol Chevron was not entitled to a refund of the value added tax levied on the supply of the movable goods sold to Sasol Chevron. In the high court, Sasol Chevron instituted a review application under PAJA seeking, inter alia, an order to review and set aside SARS' decision of 6 December 2017. The SCA held that the high court's conclusion on the issue of delay raised the question whether the high court was right to reach such a conclusion. Therefore, it was necessary for the SCA to first determine this antecedent question, for if it was answered against Sasol Chevron, that result would be determinative of the outcome of this appeal, thus rendering it unnecessary to enter into the substantive merits of the review application. The SCA held that it was common cause between the parties that Sasol Chevron did not bring any application for the extension of the 180 day period in terms of s 9(2) of PAJA. In addition, the SCA held that where no application for the extension of the 180 day period in terms of s 9(2) had been made – as in this instance – a court had no authority to enter into the substantive merits of a review application brought outside the 180 day period as prescribed in s 7(1). Furthermore, the SCA held that there could be no doubt that s 7(1) was a time limitation provision. Thus, its object and purpose would not be served if the decision-maker was not made aware, by service of the process impugning the decision, that his or her or its decision was being challenged and, whilst at the same time, the beneficiaries of the decision arrange their affairs on the acceptance that the decision concerned was beyond question because they are completely oblivious to the pending challenge. Therefore, in the context of the undisputed facts of this case, the SCA held that it therefore followed that Sasol Chevron's review application was instituted outside the 180 day period prescribed in s 7(1). Thus, in the words of Brand JA in Opposition to Urban Tolling Alliance and Others v The South African National Roads Agency Ltd and Others [2013] ZASCA 148; 2013 (4) All SA 639 (SCA), 'after the 180 day period the issue of unreasonableness was predetermined by the legislature; it is unreasonable per se.' The inevitable consequence of this conclusion was that absent an application in terms of s 9(2) of PAJA, the high court should have dismissed the review application for want of compliance with the prescripts of s 7(1) as it had no power to enter into the substantive merits of the review. Consequently, the SCA found that the Commissioner's preliminary point ought to have been upheld, hence the appeal was upheld. ~~~~ends~~~~

4162

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 1154/2022 In the matter between: MHLONTLO LOCAL MUNICIPALITY First Appellant THE SPEAKER: MHLONTLO LOCAL MUNICIPALITY Second Appellant THE MUNICIPAL MANAGER: MHLONTLO LOCAL MUNICIPALITY Third Appellant and GCINIKHAYA NGCANGULA First Respondent MALIBONGWE NQEKETHO Second Respondent Neutral citation: Mhlontlo Local Municipality & 2 others v Ngcangula and Another (Case no 1154/2022) [2024] ZASCA 5 (January 2024) Coram: NICHOLLS, CARELSE and MATOJANE JJA and CHETTY and TOKOTA AJJA Heard: 24 November 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time of hand-down is deemed to be 11:00 am on 17 January 2024. Summary: Jurisdiction of the high court – whether withdrawal of salary increment constitutes a breach of contract of employment – jurisdiction of civil courts in terms of s 77(3) of the Basic Conditions of Employment Act. Analysis of pleadings – decisive in determining jurisdiction. Whether subsequent payment to the respondents after obtaining leave to appeal results in the appeal being perempted. ORDER On appeal from: Eastern Cape Local Division of the High Court, Mthatha (Nhlangulela DJP sitting as court of first instance): The appeal is reinstated with no order as to costs. The appeal is upheld with costs, save that no costs are to be paid by the respondents for the preparation of the appeal record. The order of the high court is set aside and substituted with the following order: ‘The applications in case numbers 1343/2021 and 1466/2021 are dismissed with costs.’ JUDGMENT Chetty AJA (Nicholls, Carelse and Matojane JJA and Tokota AJA concurring): [1] The first and second respondents instituted proceedings against their employer, the Mhlontlo Local Municipality (the municipality), in the High Court, Eastern Cape Division, Mthatha contending that the deductions made from their salary were unlawful in terms of s 34(1) of the Basic Conditions of Employment Act 75 of 1997 (the Employment Act). These deductions related to a ‘notch increase’ initially granted in terms of a resolution passed by the municipality, only to be subsequently revoked. The high court determined that it had the necessary jurisdiction to adjudicate the matter and upheld the claim. It ordered the reinstatement of the amounts deducted. The municipality applied for leave to appeal that order. The matter comes before this Court with leave of the high court. Factual background [2] The background facts are largely undisputed. Two applications were launched separately by the first and second respondents, both of whom contended that their employer had effected unauthorised deductions from their salaries in or about February 2021.1 The first respondent, Mr Gcinikhaya Ngcangula, who was employed by the municipality as the Chief Traffic Officer, contended that in February 2021 his basic salary and his essential use allowance were reduced without his consent. The second respondent, Mr Malibongwe Nqeketho, was employed in the position of Deputy Director: Economic Development. He contended along similar lines that his basic salary and his essential use allowance were also reduced, without his consent. It is not disputed that both respondents were contractually entitled to their basic salaries, residential allowances, cellular allowances and essential use allowances as set out in their contracts of employment. [3] On 25 March 2019 the municipality passed Resolution No. 01-18/19 to pay its employees a 2.5% notch increase on their basic salaries, retrospective to 2015. Both respondents benefitted from the notch increase. Mr Ngcangula then received a letter from the municipality dated 24 November 2020 informing him that the 2.5% increment to his salary paid in accordance with Resolution No. 01-18/19 must be repaid as it was identified by the Office of the Auditor-General as an irregular expense. Mr Ngcangula was directed to repay the amount of R218 306.33 before 30 June 2021. Mr Nqeketho received a similar demand to repay the amount of R 216 582.95 before 30 June 2021. In the high court [4] In the high court, the municipality contended that the decision to recover monies paid to the employees (including the respondents) was lawful as they were ‘overpaid’ because they had not been placed on salary scales in terms of an ongoing job evaluation process which was considered a qualifying condition for the notch increment. Accordingly, it was contended that they were never entitled to the 2.5% notch increase. It was uncertain whether the two respondents had reached the top of the applicable salary scales. [5] The municipality contended that the decision to cease paying the notch increase was both lawful and justifiable as it was aimed at correcting its earlier decision. It alleged that its conduct did not constitute a ‘deduction’ as contemplated in 1 The judgment of the high court erroneously refers to the deductions taking place in January 2020. sub-secs 34(1) and 34(2) of the Employment Act. The respondents however contended that the decision to cease paying their notch increase was made without any representations being sought from them. The decision was therefore unlawful and in breach of s 34(1) of the Employment Act as there was no agreement from either of the respondents for such deductions to be effected. 2 [6] The high court dismissed the various grounds of opposition advanced by the municipality, finding that it had jurisdiction to deal with the matter on the basis of s 77(3) of the Employment Act which grants concurrent jurisdiction to the Labour Court and the ‘civil courts to hear and determine any matter concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract’. The high court was satisfied that the dispute as framed by the employees implicated a breach of their contracts of employment. As to the merits, the high court concluded that the municipality’s decision to unilaterally reduce the employees’ remuneration, without due process, was unlawful, of no force and effect and was a resort to unfettered self-help.3 The fact that the salary grading system had not yet been completed did not dissuade the high court to disentitle the employees to the ‘benefits’ of the 2.5% notch increment. The municipality was ordered to re-instate the ‘terms and conditions’ of the employees’ employment contracts which prevailed prior to the deductions. Application for condonation and reinstatement of the appeal 2 Section 34 of the Employment Act provides (1) An employer may not make any deduction from an employee’s remuneration unless— (a) subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement; or (b) the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award. (2) A deduction in terms of subsection (1) (a) may be made to reimburse an employer for loss or damage only if— (a) the loss or damage occurred in the course of employment and was due to the fault of the employee; (b) the employer has followed a fair procedure and has given the employee a reasonable opportunity to show why the deductions should not be made; (c) the total amount of the debt does not exceed the actual amount of the loss or damage; and (d) the total deductions from the employee’s remuneration in terms of this subsection do not exceed one-quarter of the employee’s remuneration in money. 3 Public Servants Association obo Ubogu v Head of Department of Health, Gauteng and Others [2017] ZACC 45; 2018 (2) BCLR 184 (CC); (2018) 39 ILJ 337 (CC); [2018] 2 BLLR 107 (CC); 2018 (2) SA 365 (CC). [8] The appellants applied for condonation for the late filing of the notice of appeal. Leave to appeal was granted on 22 September 2022. The application for condonation was filed on 9 November 2022. The delay is not excessive, but blame for this is entirely attributable to the appellants’ attorneys for not being diligent in ensuring compliance with the time periods in this Court. [9] A further application for condonation was sought owing to the failure to lodge the appeal record within three months of the filing of the notice of appeal as required by rule 8(1) of this Court’s rules. No extension of the time period was agreed upon between the parties or requested from the Registrar in terms of rule 8(2). Consequently, the appeal lapsed. The record ought to have been lodged no later than 13 March 2023. The application for the reinstatement of the appeal was only filed on 10 May 2023. As with the late filing of the notice of appeal, blame is again attributed to the appellants’ attorney. [10] It is trite that applications for condonation must contain a proper explanation for the period(s) of delay.4 This Court held in Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd and others5 that other factors to be considered in determining whether to grant condonation include: ‘. . . the degree of non-compliance, the explanation therefor, the importance of the case, a respondent’s interest in the finality of the judgment of the court below, the convenience of this court and the avoidance of unnecessary delay in the administration of justice (per Holmes JA in Federated Employers Fire & General Insurance Co Ltd & another v McKenzie 1969 (3) SA 360 (A) at 362F-G).’6 [11] Although both applications were opposed, I considered that it would be in the interests of justice to grant condonation as the delay was not excessive and the respondents have not been financially or otherwise prejudiced. I took into account the prospects of success, which is an important, though not decisive consideration.7 Counsel for the appellants accepted that the appellants’ attorney’s non-compliance with the time periods could be sanctioned with an appropriate order for costs. 4 SA Express Ltd v Bagport (Pty) Ltd [2020] ZASCA 13; 2020 (5) SA 404 (SCA); para 34. 5 Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd and Others [2013] ZASCA 5; [2013] JOL 30158 (SCA); [2013] 2 All SA 251 (SCA). 6 Ibid para 11. 7 Commissioner for South African Revenue Services, Gauteng West v Levue Investments (Pty) Ltd [2007] ZASCA 22; [2007] 3 All SA 109 (SCA) para 11. Peremption [12] The respondents alleged that the appeal before this Court had become perempted in that after filing its application for leave to appeal in September 2022, the municipality paid all its employees, including the respondents, the ‘amounts due to them in terms of the applicable SA Local Government Bargaining Council (SALGBC) wage agreement with retrospective effect’. Their attorney, Mr Winter Mdlangazi, deposed to an affidavit in opposition to the condonation application and said the following: ‘9. I emphasise that this was to my surprise because in January 2023 I received notice that the Second Respondent had resolved to “condone” payment of the back-pay which was the subject of the Respondent’s application in the High Court and which was paid to all the First Appellant’s employees, including the Respondents. This decision was taken in compliance with a resolution taken at a special council meeting on 14 December 2022, the resolution and minutes of which are annexed marked “A”.8 10. Since this payment to the respondents fully satisfied their monetary claims, which the appellants had unsuccessfully sought to resist in the proceedings a quo, I naturally thought that the present appeal and the decision to defend an appeal against a conflicting judgment on the same issues of the Labour Court had been abandoned. 11. By way of background, I interpose to mention that it was strongly argued in the Respondent’s application for leave to appeal, heard remotely by his Lordship Nhlangulela DJP on 21st September 2022 that the right to appeal had been abandoned (perempted) on the strength of letters by the Mayor and the Acting Municipal Manager . . . which stated that the First Respondent would not be pursuing an appeal against the High Court judgment.’ 8 Annexure A refers to Resolution No. 05-2022/2023 issued by the Mhlontlo Local Municipality dated 14 December 2022 entitled ‘Employees back pay’. It records that ‘the council resolved that the money taken from savings to pay the employees be condoned’. The minutes of the Council meeting pertaining to the relevant Resolution read as follows: “Employees back pay Hon. Mayor Cllr Jara presented the report as follows: There were two judgments on the issue of employees where their money was deducted by the municipality and there was a resolution that the Acting Municipal Manager must seek legal opinion from a senior counsel and the advice was requested from Mr NZ Mtshabe who is the senior counsel and he advised that all the employees must be paid. RECOMMENDATION: The Exco recommended to council that the money taken from savings to pay the employees be condoned.”’ [13] The principle of peremption safeguards the integrity of the judicial process by preventing litigants from oscillating between contradictory positions, ensuring judicial consistency and fairness.9 It ensures finality and stability in legal proceedings,10 which is essential for maintaining public trust in the justice system.11 The underlying principle of the doctrine of peremption is that a litigant cannot take two inconsistent positions. Accordingly, an unsuccessful litigant cannot appeal a judgment it has acquiesced to. In order to succeed on peremption a respondent must demonstrate with reference to the facts before court that an appellant’s unequivocal conduct after having obtained leave to appeal, is inconsistent with an intention to appeal.12 In Qoboshiyane NO v Avusa Publishing Eastern Cape13 the test to determine whether an appeal had become perempted was set out as follows: ‘Where, after judgment, a party unequivocally conveys an intention to be bound by the judgment any right of appeal is abandoned. The principle can be traced back to the judgment of this court in Dabner v South African Railways & Harbours, where Innes CJ said: “The rule with regard to peremption is well settled, and has been enunciated on several occasions by this Court. If the conduct of an unsuccessful litigant is such as to point indubitably and necessarily to the conclusion that he does not intend to attack the judgment, then he is held to have acquiesced in it. But the conduct relied upon must be unequivocal and must be inconsistent with any intention to appeal. And the onus of establishing that position is upon the party alleging it. In doubtful cases acquiescence, like waiver, must be held non-proven.”’14 [14] The appellants submitted that the payments to the respondents were made in error and should not be construed as an indication that the municipality abandoned 9 Hlatshwayo v Mare and Deas 1912 AD 242 at 259. 10 Minister of Defence v South African National Defence Force Union [2012] ZASCA 110 para 23. 11 Zuma v Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector Including Organs of State and Others [2021] ZACC 28; 2021 (11) BCLR 1263 (CC) para [101] : “It is trite that the doctrine of peremption finds application across our legal landscape. The doctrine tells us that “[p]eremption is a waiver of one’s constitutional right to appeal in a way that leaves no shred of reasonable doubt about the losing party’s self-resignation to the unfavourable order that could otherwise be appealed against”. The principle that underlies this doctrine is that “no person can be allowed to take up two positions inconsistent with one another, or as is commonly expressed, to blow hot and cold, to approbate and reprobate”. 12 Government of the RSA & others v Von Abo [2011] ZASCA 65; [2011] 3 All SA 261 (SCA) para 15 13 Qoboshiyane NO and Others v Avusa Publishing Eastern Cape (Pty) Ltd and Others [2012] ZASCA 166; 2013 (3) SA 315 (SCA). 14 Ibid para 3. or waived its right to proceed with the appeal. In South African Revenue Service v Commission for Conciliation, Mediation and Arbitration and others15 it was held that: ‘Peremption is a waiver of one's constitutional right to appeal in a way that leaves no shred of reasonable doubt about the losing party's self-resignation to the unfavourable order that could otherwise be appealed against.’16 [15] Peremption, like waiver, is not lightly presumed and the onus rests on the party alleging peremption to establish conduct that clearly and unconditionally demonstrates acquiescence to abide by a judgment or order.17 There are no outward manifestations on the part of the municipality, whether in the form of words or some other conduct, from which the intention to waive its right to appeal can be inferred.18 [16] The respondents have not adduced any evidence to substantiate the contention that the municipality, through its resolution in December 2022, has effectively settled the matter and paid to the employees all of the amounts awarded in terms of the high court’s order. More importantly, there is nothing on record indicating that subsequent to the resolution in December 2022, the respondents received and continue to receive their salaries (inclusive of the 2.5% notch increment). One would have expected the employees to have annexed copies of their salary advice slips following upon the municipality’s decision to pay them. There is no evidence of this on record. I am accordingly not persuaded that the appeal has been perempted. Mootness [17] The high water mark of the respondents’ case on mootness rests on the inference to be drawn from the wording of the resolution taken on 14 December 2022 and the accompanying minutes of the Council meeting in terms of which the municipality paid the respondents the amounts due to them in terms of the wage agreement with the South African Local Government Bargaining Council (SALGBC). On this basis, the respondents contend that the payment by the municipality constitutes an ‘admission’ that their claim was well founded and that no purpose would 15 South African Revenue Service v Commission for Conciliation, Mediation and Arbitration and others 2017 (1) SA 549 (CC) . 16 Ibid para 26. 17 President of the Republic of South Africa v Public Protector [2017] ZAGPPHC 747; 2018 (2) SA 100 (GP). 18 National Union of Metal Workers of South Africa v Intervalve (Pty) Ltd and Others [2014] ZACC 35; 2015 (2) BCLR 182 (CC); [2015] 3 BLLR 205 (CC); (2015) 36 ILJ 363 (CC) paras 60-61 be served by any judgment of this Court as the matter has now become academic. In National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others19 Ackermann J said the following regarding mootness: ‘A case is moot and therefore not justiciable if it no longer presents an existing or live controversy which should exist if the Court is to avoid giving advisory opinions on abstract propositions of law.’ [18] In the present matter, the interests of justice justify looking past the issues of mootness and peremption. This is particularly so as there are two judgments subsequent to the decision of the high court in which the resolution which authorised the payment of the 2.5% notch increment to the employees was set aside and declared null and void. To that end, the underlying edifice on which the high court arrived at its decision has been found wanting in both the Labour Court and the Labour Appeal Court. It cannot therefore be said that the appeal will have no practical effect, or has become academic. The ‘live controversy’ is very much extant, especially as the municipality is obliged in terms of the high court’s order to continue paying the respondents the 2.5% notch increase until that judgment is set aside. In the result, I am not persuaded that the argument based on mootness and peremption can be sustained. In this Court [19] The thrust of the appellants’ case is that the high court erred in finding that the decision to cease payment of the 2.5% notch increment to its employees, including the respondents, was unlawful. Its case rests on two main pillars – first, that the high court had no jurisdiction to entertain the claim of the two employees under section 77(3) of the Employment Act, and second, that the employees failed to establish that the non-payment of their 2.5% notch increment constituted a breach of their contracts of employment. Success on either of these grounds would be dispositive of the appeal in favour of the appellants. 19 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others [1999] ZACC 17; 2000 (2) SA 1 (CC) para 21 fn 8. Jurisdiction of the high court [20] In assessing whether the high court lacked jurisdiction, the starting point is that the high court has jurisdiction to adjudicate on any matter, except where the legislature has assigned jurisdiction to another court, similar in status to the high court.20 The legislative framework which underpins the exclusive jurisdiction of the Labour Court in labour-related matters21 is located in s 77 of the Employment Act which reads as follows: ‘(1) Subject to the Constitution and the jurisdiction of the Labour Appeal Court, and except where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all matters in terms of this Act. (1A) The Labour Court has exclusive jurisdiction to grant civil relief arising from a breach of sections 33A, 43, 44, 46, 48, 90 and 92. (2) . . . (3) The Labour Court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract. (4) Subsection (1) does not prevent any person relying upon a provision of this Act to establish that a basic condition of employment constitutes a term of a contract of employment in any proceedings in a civil court or arbitration held in terms of an agreement. (5) If proceedings concerning any matter contemplated in terms of subsection (1) are instituted in a court that does not have jurisdiction in respect of that matter, that court may at any stage during proceedings refer that matter to the Labour Court.’ [21] As stated in Baloyi v Public Protector and others22 (Baloyi) ‘the provisions of section 77(1) do no more than confer a residual exclusive jurisdiction on the Labour Court.’ A plain reading of s 77(3) of the Employment Act makes it clear that the Labour Court and the civil courts have concurrent jurisdiction to determine any matter concerning a contract of employment irrespective of whether any basic condition of 20 Section 151(2) of the LRA provides: ‘The Labour Court is a superior court that has authority, inherent powers and standing, in relation to matters under its jurisdiction, equal to that which a court of a Division of the High Court of South Africa has in relation to matters under its jurisdiction.’ 21 See Amalungelo Workers’ Union and Others v Philip Morris South Africa (Pty) Limited and Another [2019] ZACC 45, 2020 (2) BCLR 125 (CC); (2020) 41 ILJ 863 (CC) (Amalungelo) para 20: ‘The section tells us in unambiguous terms that the Labour Court has exclusive jurisdiction over matters arising from the Basic Conditions Act’, with the exception being in section 77(3). 22 Baloyi v Public Protector and others [2020] ZACC 27; 2021 (2) BCLR 101 (CC) para 26. employment constitutes a term of that contract.23 Baloyi held further that ‘disputes arising from contracts of employment do not, without more, fall within the exclusive jurisdiction of the Labour Court is further made clear by section 77(4) of the Employment Act, which emphasises that the exclusive jurisdiction of the Labour Court referred to in section 77(1).’24 [22] In determining whether the high court had the necessary competence to adjudicate the matter, the starting point is whether the claim is of such a nature that it is required, in terms of the LRA or the Employment Act, to be determined exclusively by the Labour Court. Gcaba v Minister for Safety and Security and Others25 set out the approach to be followed where the jurisdiction of a court is challenged. The position was articulated as follows: ‘In the event of the Court’s jurisdiction being challenged at the outset (in limine), the applicant’s pleadings are the determining factor. They contain the legal basis of the claim under which the applicant has chosen to invoke the court’s competence. While the pleadings – including in motion proceedings, not only the formal terminology of the notice of motion, but also the contents of the supporting affidavits – must be interpreted to establish what the legal basis of the applicant’s claim is, it is not for the court to say that the facts asserted by the applicant would also sustain another claim, cognisable only in another court. If however the pleadings, properly interpreted, establish that the applicant is asserting a claim under the LRA, one that is to be determined exclusively by the Labour Court, the High Court would lack jurisdiction.’26 [23] If regard is had to the pleadings in the present matter, the notice of motion makes no mention of an employment contract or the breach of any terms thereof.27 The employees adopted the terminology used by the municipality in referring to the decision taken on 25 March 2019 and the steps to recover the 2.5% notch increment 23 Amalungelo para [21] declared that the Labour Court has jurisdiction ‘in respect of all matters’ arising from the Employment Act. 24 Ibid para 28. 25 Gcaba v Minister for Safety and Security and Others [2009] ZACC 26; 2010 (1) BCLR 35 CC. 26 Ibid para 75. 27 The National Prosecuting Authority v PSA obo Meintjies and 55 others and Others and The Minister of Justice and Correctional Services and Director-General: DoJCD v PSA obo Meintjies and 55 others and Others [2021] ZASCA 160; [2022] 1 All SA 353 (SCA) para 61, which noted: ‘Thus, the notice of motion and founding affidavit has to be analysed to ascertain whether the enforcement of employment contract terms was relied upon. In performing this exercise, substance must prevail over form and proper regard must be had to context.’ as an ‘over payment’. The remaining paragraphs of the notice of motion are directed at the demand for payment of the amounts deducted from their salaries. [24] In Lewarne v Fochem28 (Lewarne) this Court held that where the dispute relates to, is linked to, or is connected with an employment contract, s 77(3) of the Employment Act which confers concurrent jurisdiction on the civil courts and the Labour courts, applies. In overturning the decision of the high court that the Labour Court had exclusive jurisdiction in such matters, this Court concluded that the appellant’s claim was for money due to her in terms of her employment contract and affirmed the competence of the high court to determine the matter. [25] The focus of the founding affidavit is directed at addressing the deductions having been made without consent and that such conduct was in breach of s 34(1) of the Employment Act. According to the appellants, this alone would ensure that the matter should fall under the exclusive jurisdiction of the Labour Court. In order for the civil courts to acquire concurrent jurisdiction with the Labour Court, the respondents would have had to plead that the 2.5% increment formed a term for their employment contract. While no specific reference is made in the founding affidavit of Mr Ngcangula to any term of his contract of employment, Mr Nqeketho attached a copy of his contract of employment to his affidavit. The respondents’ case was that the conduct of the municipality in deducting the 2.5% notch increment from their salaries constituted a breach of their employment contracts. They considered the notch increment to form part of their salary, despite the appellants’ view to the contrary. As stated in Makhanya v University of Zululand29 ‘When a claimant says that the claim is to enforce a right that is created by the LRA, then that is the claim that the court has before it, as a fact. When he or she says that the claim is to enforce a right derived from the Constitution then, as a fact that is the claim. That the claim might be a bad claim is beside the point.’30 28 Lewarne v Fochem International (Pty) Ltd [2019] ZASCA 114; [2020] 1 BLLR 33 (SCA). The appellants cause of action in that case arose out of and was related to her contract of employment, a term of which provided that she would be paid a 13th cheque in December of each year. When her employer only paid a portion of her 13th cheque, she launched proceedings in the high court under s 77(3) of the Employment Act. 29 Makhanya v University of Zululand [2009] ZASCA 69; [2009] 4 All SA 146 (SCA). 30 Ibid para 71. On this basis, I am satisfied that the high court correctly, on the basis of the respondent’s pleadings, determined that it had jurisdiction to adjudicate the dispute. Whether or not the cause of action was well founded is entirely a different enquiry and has no bearing on the question of a court’s jurisdiction. Accordingly, the argument relating to the high court’s lack of jurisdiction is without merit. Was the notch increment a term of the employment contract [26] The position adopted by the appellants, which it maintained throughout, was that the respondents were never entitled to the 2.5% increment in the first instance, as this was a payment erroneously made to all municipal employees as opposed to only those who qualified for the benefit. More importantly, the appellants contended that the respondents failed to establish a contractual entitlement to a 2.5% increment in their salary. [27] The issue of the notch increase is not a red herring as the respondents contend, but is critical in determining the merits of the appeal. As stated earlier, the employment contract adduced by Mr Nqeketho does not contain any reference or entitlement to a notch increment. Mr Ngcangula did not adduce his contract of employment as part of his papers. His founding affidavit is silent regarding the notch increment being a term of his contract of employment. If the increment formed a component of either of their contracts of employment, such terms should have been pleaded in the respondents’ founding affidavits, alternatively should have been self-evident from a perusal of their contracts. On both fronts the respondents fail to overcome this hurdle. [28] On Mr Ngcangula’s own version he attached a letter to his founding affidavit from the SALGBC dated 20 February 2019 which states that the notch increase would apply ‘to employees who have been placed on salary scales (in terms of the erstwhile Industrial Council) and who have not yet reached the top of the said salary scales.’ Implicit in this is the recognition that the increment was not to be paid to all employees. Apart from the absence of the notch being a term of their contracts of employment, there is no averment from either of the respondents that they qualified for the notch increment or otherwise met the criteria to benefit under the resolution No. 01-18/19 of 25 March 2019. To the extent that Mr Ngcangula understood that his entitlement to the 2.5% increment stemmed from an agreement concluded in the SALGBC, this is contrary to the conditional wording in the Circular from the SALGBC dated 20 February 2019. [29] Once the municipality ascertained that it had mistakenly paid all employees the 2.5% increment instead of only those who qualified for the increment, it set about to recover such monies to reverse the illegality. It passed Resolution No. 01-18/19 on 25 March 2019 authorising it to take measures to recover amounts paid to employees who did not qualify for the notch increment. Mr Ngcangula and Mr Nqeketho fell within this category of employees. No challenge was mounted by the respondents against the lawfulness of the resolution directing the municipality to take steps to recover monies improperly paid to employees or to them specifically. [30] The high court erred in concluding that the ‘breaches pleaded by the applicants read together with the evidence show[ed] that [the] 2.5% increment was applied to all employees of the Municipality and actually paid the increased nomination over a period of time . . . amounts to the acceptance by conduct on the part of the Municipality that payments were lawful’. Firstly, the ‘evidence’, even on the documents attached to the founding affidavit of Mr Ngcangula, establish that the notch increment was payable only to those employees who met the qualifying criteria. The respondents were not in that category. Secondly, this conclusion suggests that because the respondents received the notch increment over a ‘considerable period of time’, this amounted to an ‘acceptance by conduct’. Payment made erroneously to the respondents cannot give rise to a contractual entitlement. Moreover, to hold otherwise would effectively entrench an illegality and permit the respondents to enforce continued payment into the future. [31] Prior to the hearing of this matter, the Registrar of this Court received two judgments from the appellant’s attorney, one from the Labour Court and another from the Labour Appeal Court. The Labour Court judgment31 by Lallie J was handed down on the same day as the judgment by Nhlangulela DJP. The applicant in the Labour 31 Independent Municipal and Allied Trade Union (IMATU) v Mase and Others [2022] ZALCPE 39; [2022] 12 BLLR 1107 (LC). Court, the trade union IMATU sought to hold the municipal manager of the Mhlontlo Municipality in contempt for failing to comply with an arbitration award. The award sought to be enforced concerned the 2.5% notch increment. The Labour Court noted that the municipality ceased paying the 2.5% increment and sought to challenge its legality. IMATU sought a declaratory order that the notch increment was a term and condition of all qualifying employees’ contracts of employment. The issue before the Labour Court was whether the implementation of the 2.5% notch increment was a term and condition of the contracts of employment. The Labour Court found that the municipality acted outside the scope of its powers in awarding the notch increment to all employees – without regard to the qualifying criteria. Its Resolution No. 01-18/19 dated 25 March 2019 was reviewed and set aside. [32] IMATU then appealed the decision to the Labour Appeal Court (LAC), which confirmed the decision of Lallie J that only those employees who met the qualifying criteria for the 2.5% notch increment were entitled to the benefit.32 The LAC noted that ‘it does not appear to be in dispute that the notch payments to employees who did not qualify in terms of the Evaluation Agreement were irregular.’33 The LAC noted that the municipality was ‘constitutionally obligated’ to ‘put in motion a process to ensure that the monies were recovered.34 The LAC concluded that ‘…there can be little doubt that the resolution adopted by the Municipal Council to pay the 2.5 % notch increase to all employees was not only fundamentally irrational and illegal, but also reckless. At no time could the Municipality reasonably have laboured under the misapprehension that all its employees were entitled to the increase. IMATU itself has been at pains to point out that it accepts that the increase only applies to qualifying employees...’.35 [33] In the high court there was a dispute as to whether the two respondents in the present matter had been placed on salary scales, or whether their job evaluations had been completed. Nhlangulela DJP found that it was through no fault on the part of the respondents that the TASK grading system had not been implemented by the municipality, and accordingly found that they could not be ‘disentitled’ from enjoying 32 IMATU v T Mase and Others (ZALAC, Gqeberha) case no. PA11/2022, unreported, 26 October 2023, para 53. 33 Ibid para 51. 34 Ibid para 61. 35 Ibid para 62. the benefits of the 2.5% notch increment. As the respondents had no lawful entitlement to the benefit from inception on the basis that they did not meet the qualifying criteria, there can be no complaint of ‘disentitlement’ thereafter. As set out above, the LAC confirmed the setting aside of the resolution in terms of which all municipal employees received the 2.5% notch increase on the basis that it offended the principle of legality. Accordingly, the decision of the high court cannot stand. Costs [34] The high court awarded costs against the municipality on an attorney-client scale, concluding that there was no ‘legal reason’ for the municipality to reduce the remuneration of the respondents. It is trite that the high court has a wide discretion to decide on the issue of costs which may only be interfered with where the court below misdirected itself as to the facts and legal principle. In the present matter there is no suggestion that the conduct of the municipality was dishonest or fraudulent, justifying a punitive order for costs. The fact that employees elect to litigate against their employer and incur costs in the process, is no justification for a punitive order for costs. The high court erred in considering this as a basis for awarding punitive costs against the municipality. In this Court it was conceded by the appellants that in light of the delays incurred in the late filing of the notice of appeal and non-compliance with rule 8(2), the costs of the preparation of the appeal record should be excluded from any costs order granted. Order [35] In the result, I make the following orders: The appeal is reinstated with no order as to costs. The appeal is upheld with costs, save that no costs are to be paid by the respondents for the preparation of the appeal record. The order of the high court is set aside and substituted with the following order: ‘The applications in case numbers 1343/2021 and 1466/2021 are dismissed with costs.’ ________________ CHETTY AJA Acting Judge of Appeal Appearances: For appellant: A Katz SC (with him L Haskins) Instructed by: Mvuzo Notyesi Incorporated, Mthatha Phalatsi and Partners, Bloemfontein For respondent: N van der Sandt (heads of argument drawn by J G Grogan) Instructed by: W Mdlangazi Attorneys, East London Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 17 January 2024 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal Mhlontlo Local Municipality & 2 others v Ngcangula and Another (Case no 1154/2022) [2024] ZASCA 5 (January 2024) Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Eastern Cape Division of the High Court, Mthatha (high court). The order of the high court was set aside and replaced with one dismissing the applications. The appeal revolved around certain deductions of employee salaries by their employer, the Mhlontlo Local Municipality (municipality). The deductions were related to a notch increase, initially granted retrospectively to 2015, in terms of a resolution taken by the municipality in 2019, but subsequently revoked, contrary to the provisions of s 34(1) of the Basic Conditions of Employment Act 75 of 1997 (the Employment Act). Two applications were launched separately in the high court by the first and second respondents, both of whom contended that their employer had effected unauthorised deductions from their basic salaries and their essential use allowance. Both received letters from the municipality in 2020 informing them that the notch increase was identified as an irregular expenditure by the Office of the Auditor-General, and both had to ensure repayment of the amounts by 2021. The municipality contended that the decision to recover the money was lawful as both employees had not been placed on salary scales as their job evaluation processes were still ongoing, the completion of which was considered a qualifying condition for the notch increment. As such, they were overpaid. The municipality contended that the decision to cease paying the notch increase was both lawful and justifiable and it alleged that its conduct did not constitute a ‘deduction’ as contemplated in sub-sections 34(1) and 34(2) of the Employment Act. The respondents however contended that the decision to cease paying their notch increase was made without any representations being sought from them. The decision was therefore unlawful and in breach of s 34(1) of the Employment Act as there was no agreement from either of the respondents for such deductions to be effected. The high court was satisfied that the dispute as framed by the employees implicated a breach of their contracts of employment and concluded that the municipality’s decision to unilaterally reduce the employees’ remuneration, without due process, was unlawful, of no force and effect and was a resort to unfettered self-help. The municipality was ordered to re-instate the ‘terms and conditions’ of the employees’ employment contracts which prevailed prior to the deductions. In this Court the respondents alleged that the appeal had become perempted in that after filing its application for leave to appeal in September 2022, the municipality paid all its employees, including the respondents, amounts due in terms of a SA Local Government Bargaining Council (SALGBC) wage agreement, with retrospective effect. In order to succeed on peremption a respondent must have demonstrated with reference to the facts that an appellant’s unequivocal conduct after having obtained leave to appeal, is inconsistent with an intention to appeal. This Court reiterated that peremption is not lightly presumed and the onus rested on the party alleging peremption to establish conduct that clearly and unconditionally demonstrates acquiescence to abide by a judgment or order. This Court was not satisfied that the respondents provided any evidence to conclusively prove that the appellant waived its rights in this regard. The Court found that the appeal was not perempted. Furthermore, the respondents claimed the matter has become moot and was based on the repayment of money in terms of the SALGBC wage agreement. The respondents contended that this repayment constituted an admission that their claim was well founded and that the judgment of this Court would serve no purpose. However, this court found that the matter was still live as there were real consequences attributable to the high court order until the judgment was set aside. Lastly, the appellants contended that the high court was wrong when it found that the municipality’s decision to cease paying the notch increase was unlawful. They submitted firstly, that the court did not have the requisite jurisdiction to entertain the claim and secondly, the employees failed to establish that the non-payment of the notch increase constituted a breach of the employment contracts. However, this Court found that the first contention was without merit and, as to the second, it confirmed that only employees who met the qualifying criteria of a notch increment were entitled to the accompanying benefits. In light of the respondents having no legal entitlement to the notch increase, it could not be held that they were disentitled by the municipality. In the result, the SCA upheld the appeal and replaced the order of the high court with one dismissing the appeal. ~~~~ends~~~~

2205

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case No:  391/08 DOCTOR MNISI (THEMBA) Appellant and THE STATE Respondent Neutral citation:  D Mnisi v The State (391/2008) [2009] ZASCA 17 (19 March 2009) Coram: CLOETE JA, MAYA JA and BORUCHOWITZ AJA Heard: 19 NOVEMBER 2008 Delivered: 19 MARCH 2009 Summary:  Criminal Law ─ Sentence ─ Diminished responsibility ─ deterrence. ORDER On appeal from:  High  Court,  Pretoria  (Brunette  and  Van  Zyl  AJJ sitting as a court of appeal). 1.  The appeal is upheld. The order of the court a quo is substituted with the following order: 'The appeal against the sentence is upheld. The sentence imposed by the magistrate  is  set  aside  and  replaced  with  a  sentence  of  five  years' imprisonment.' JUDGMENT BORUCHOWITZ AJA (Cloete JA concurring in separate judgment.): [1] This  is  an  appeal  against  sentence  only.  The  appellant  was convicted, upon a plea of guilty, by the Regional Court (Benoni) of one count of murder. As the appellant was a first offender and the offence was committed  in  circumstances  other  than  those  referred  to  in  part  1  of schedule 2 of the Criminal Law Amendment Act 105 of 1997 (the Act) the  provisions  of  s  51(2)(a)  of  the  Act  found  application.  This  section requires the imposition of a minimum sentence of 15 years imprisonment in the absence of ‘substantial and compelling circumstances’ justifying a lesser  sentence.  The  regional  court  found  such  circumstances  to  be present  and  sentenced  the  appellant  to  a  term  of  eight  years' imprisonment. An appeal to the High Court Pretoria proved unsuccessful and the further appeal to this court is with its leave. [2] The appellant was convicted on the strength of a written statement made in terms of s 112(2) of the Criminal Procedure Act 51 of 1977. The factual  basis  upon  which  the  plea  of  guilty  was  tendered  can  be summarised as follows:  The appellant, who was a prison warder, admits that on 11 August 2001 at Rambuda  Street in the district of Benoni he unlawfully  and  intentionally  shot  and  killed  the  deceased  Joshua Hlatswayo  with  his  licenced  service  firearm.  Prior  to  the  incident  the appellant’s  wife  and  the  deceased  were  involved  in  an  adulterous relationship.  The  appellant  resented  this  and  found  her  actions  to  be extremely humiliating and degrading. He eventually confronted her about the relationship with the deceased and their respective families discussed the  matter. The appellant was relieved when his wife promised that she would no longer see the deceased and felt hopeful that he would be able to reconcile with her. Unfortunately matters did not turn out as promised. On the day of the incident the appellant found his wife and the deceased embracing  each  other  in  a  car.  The  appellant  immediately  drew  his service firearm and shot the deceased where he was sitting in the vehicle. The appellant states that when he  found his wife  in the embrace of the deceased  all  the  hurt  and  pain  he  had  suffered  through  the  adulterous affair  flooded  his  mind  and  provoked  him  to  the  extent  that  he momentarily lost control of his ‘inhibitions’ and shot the deceased. The appellant claims that he did not intend to kill the deceased but discharged the  firearm  recklessly  appreciating  that  his  actions  could  kill  the deceased. [3] The argument of the appellant is that the trial court had not given sufficient consideration to the fact that the appellant acted at the relevant time with diminished criminal responsibility as a result of the provocation and  emotional  stress  which  preceded  the  shooting.  The  shooting  had occurred when the appellant’s powers of restraint and self control were diminished. It was also contended that the trial court over­emphasized the objective  gravity  of  the  offence  and  the  need  to  impose  a  deterrent sentence. Consequently, although the trial court had correctly found the existence  of  substantial  and  compelling  circumstances  justifying  the imposition  of  a  lesser  sentence  than  the  minimum  prescribed,  the sentence  imposed  is  vitiated  by  misdirection  as  to  entitle  this  court  to interfere therewith. [4] The appellant does not seek to rely upon the defence of temporary non­pathological  criminal  incapacity 1  but  rather  upon  diminished responsibility  which  is  not  a  defence  but  is  relevant  to  the  question  of sentence. The former relates to a lack of criminal capacity arising from a non­pathological cause which is of a temporary nature whereas the latter pre­supposes  criminal  capacity  but  reduces  culpability.  The  following cases are examples in this court where the fact that the accused was found to have acted with diminished responsibility warranted the imposition of 1 See S v Laubscher 1988 (1) SA 163 (A); S v Calitz 1990 (1) SACR 119 (A); S v Wiide 1990 (1) SACR 561 (A); S v Kalogoropoulos 1993 (1) SACR 12 (A); S v Potgieter 1994 (1) SACR 61 (A); S v Kensley 1995 (1) SACR 646 (A); S v Di Blasi 1996 (1) SACR 1 (A); S v Cunningham 1996 (1) SACR 631 (A); S v Henry 1999 (1) SACR 13 (SCA); S v Francis 1999 (1) SACR 650 (SCA); S v Kok 2001 (2) SACR 106 (SCA). a less severe punishment:  S v Campher, 2 S v Laubscher; 3 S v Smith; 4 S v Shapiro; 5 and S v Ingram. 6 [5] Whether an accused acted with diminished responsibility must be determined in the light of all the evidence, expert or otherwise. There is no obligation upon an accused to adduce expert evidence. His ipse dixit may suffice provided that a proper factual foundation is laid which gives rise to the reasonable possibility that he so acted. Such evidence must be carefully scrutinised and considered in the light of all the circumstances and  the  alleged  criminal  conduct  viewed  objectively.  The  fact  that  an accused acted in a fit of rage or temper is in itself not mitigatory. Loss of temper is a common occurrence and society expects its members to keep their  emotions  sufficiently  in  check  to  avoid  harming  others.  What matters for the purposes of sentence are the circumstances that give rise to the lack of restraint and self control. [6] The  State  accepted  the  averments  and  facts  set  out  in  the appellant’s written statement which accompanied his plea of guilty. These undisputed facts raise the reasonable possibility that the appellant was not 2 1987 (1) SA 940 (A) at 964 C­H and 976 D­E. 3 1988 (1) SA 163 (A) at 173 F­G. 4 1990 (1) SACR 130 (A) at 135 B­E. 5 1994 (1) SACR 112 (A) at 123C­F. 6 1995 (1) SACR 1 (A) at 8D­I. acting  completely  rationally  when  he  shot  the  deceased  and  that  his actions were the product of emotional stress brought about by the conduct of  the  deceased  and  the  appellant’s  wife.  In  my  view  the  appellant’s statement lays a sufficient factual foundation to support a finding that he acted  with  diminished  responsibility  when  he  committed  the  offence. Murder  is  undoubtedly  a  serious  crime  but  the  appellant’s  conduct  is morally  less  reprehensible  by  reason  of  the  fact  that  the  offence  was committed  under  circumstances  of  diminished  criminal  responsibility. This factor was not afforded sufficient recognition and weight by the trial court  in  imposing  sentence  on  the  appellant.  Also  in  the  appellant’s favour, and not taken into account by the trial court, was the fact that the appellant acted with dolus indirectus when shooting the deceased. [7] The  trial  court  also  placed  undue  emphasis  on  the  element  of deterrence as an object of punishment. This is evident from the following passage in the judgment where the magistrate states the following: ‘. . . the Court cannot give the impression that the Court condones people executing people being involved in adulterous affairs. As such deterrence plays a heavy role in the sentence of this Court should impose. Society will have to find other means to deal with this problem in our society.’ [8] So far as individual deterrence is concerned, the evidence does not suggest that the appellant has a propensity for violence or is a danger to society. He is a first offender and given the unusual circumstances of the case is unlikely again to commit such an offence. [9] The  element  of  general  deterrence  must  be  placed  in  its  proper perspective.  Domestic  violence  is  rife  and  those  who  seek  solutions  to domestic and other problems through violence must be severely punished. Sentences  imposed  must  send  a  deterrent  message.  On  the  other  hand sight cannot be lost of the fact that the appellant committed murder whilst acting with diminished responsibility. In such circumstances the element of  deterrence  is  of  lesser  importance  when  imposing  sentence.  This  is consistent  with  the  approach  followed  by  this  court  in  the  Campher, Smith, Ingram and Shapiro cases. [10]  In the light of these misdirections this Court is free to impose the sentence it considers appropriate, subject to the provisions of the Act and the sentencing guidelines laid down in S v Malgas. 7 [11]  Taking these factors into account I am satisfied that although direct imprisonment  is  warranted,  a  sentence  of  eight  years  would  be  unjust. The  circumstances do  not call  for an exemplary sentence.  In  my  view, 7 2001 (2) SA 1222 (SCA). imprisonment for a period of five years would be an appropriate sentence. [12]  The appeal is upheld. The order of the court a quo is substituted with the following order: 'The appeal against the sentence is upheld. The sentence imposed by the magistrate  is  set  aside  and  replaced  with  a  sentence  of  five  years' imprisonment. _________________________ P BORUCHOWITZ ACTING JUDGE OF APPEAL MAYA JA (dissenting): [13]  I  have  had  the  benefit  of  reading  the  judgment  of  my  colleague Boruchowitz  AJA.  Regrettably,  I  am  unable  to  agree  with  both  his reasoning and conclusion regarding the sentence he proposes should be imposed. [14]  The background facts and the factors relevant for determination in the sentencing enquiry are set out in the main judgment and I need not repeat  them.  Suffice  to  mention  that  there  is,  regrettably,  a  paucity  of detail on record as to how the incident actually occurred; no post mortem report seems to have been filed and the matter was decided solely on the appellant’s  rather  sketchy  statement  tendered  in  terms  of  s  112  of  the Criminal  Procedure  Act  51  of  1977  seemingly  tailored 8  to  explain  his mental state. [15]  The statement reads as follows: ‘… 2. I plead guilty to a count of murder, freely, voluntarily and without undue influence having been brought to bear on me. 3. I admit that on 11/08/2001 and at Rambuda Str.Daveyton which is within this Honourable Court’s jurisdiction area, I shot Joshua Hlatswayo (hereinafter referred to as the deceased) with my licensed 9mm Norenco arm as a result of which the deceased died. 4. I admit that I had no legal excuse for shooting the deceased and my actions were unlawful. 5. I found my wife in a car in flagrante delicto with the deceased whereupon  I immediately drew my arm and shot the deceased. 6. The shooting was not planned nor premeditated and I had no time to reflect before I pulled my arm and shot the deceased. 7. The deceased and my wife were involved in an adulterous relationship and after it became known and after the families discussed the matter, my wife had agreed to no longer see the deceased. At the time I suffered the actions of my wife extremely humiliating, degrading and I resented her activities. I was very relieved when she indicated that she would no longer see the deceased and hopeful that we could salvage our marriage. 8. On the day of the shooting when I found my wife and the deceased in the car, I was provoked to such an extent that I momentarily lost control of my inhibitions and shot at the deceased to injure him as he had injured me. 9. All the hurt and pain I suffered before through their adulterous affair, flooded my mind when I found them inside the car. 10. I did not want to kill deceased but recklessly fired with my arm at him. I appreciated that the instrument I used, the arm, was a dangerous weapon that could kill a person. I admit, as same had been explained to me by my legal representative, that legally it is viewed that I had the intent to murder the deceased. 11. I knew my actions on the day were unlawful although I was severely provoked and lost control of my inhibitions but nevertheless did at the time foresee that I could kill the deceased.’ 8 I use these words fully mindful of the fact that it was the State’s duty to prove its case against the appellant. [16]  All that can be gleaned from this statement is that the appellant’s wife  was having an adulterous affair with the  faceless deceased, which she failed to terminate despite her undertaking to do so to the appellant and  their  families  until  the  appellant  found  them  together  in  a  motor vehicle – in the magistrate’s judgment it is said that they were kissing, a detail which must have been mentioned during legal argument as it does not appear in the body of evidence – and, during a momentary lapse of self­control, shot and killed the deceased with the intent to ‘injure’ him and the foresight that he might die from his action. [17]  The  main contentions raised against the  magistrate’s decision are that  she  did  not  accord  due  weight  to  the  mitigating  factors  in  the appellant’s favour particularly that he was a first offender and his plea of guilt, which indicated his remorse, as these factors are not reflected in her judgment. It was also submitted that the magistrate overemphasized the element of deterrence which has no role in a case of this nature where it is not likely that the accused will repeat the offence. [18]  Regarding the first criticism, it is so that the  judgment makes no reference  to  the  appellant’s  clean  record  and  plea  of  guilty.  But  this hardly  seems  to  me  to  justify  a  conclusion  that  the  magistrate  did  not consider  these  factors  in  determining  the  sentence.  As  Davis  AJA  said some  sixty  years  ago  ‘[n]o  judgment  can  ever  be  perfect  and  all­ embracing, and it does not necessarily follow that, because something has not been mentioned, therefore it has not been considered.’ 9 To my mind, it is inconceivable that an experienced judicial officer such as a regional magistrate, who daily adjudicates criminal cases, would have overlooked such elementary aspects of the sentencing enquiry. I have no doubt that these  factors  would  have  weighed  on  the  magistrate’s  mind  when  she determined the appellant’s sentence. [19]  As regards the second challenge, I do not agree that the magistrate misdirected  herself by overemphasising the  element of deterrence. This court  has  made  it  quite  clear  in  recent  cases  not  so  dissimilar  to  the present one that the element of deterrence in the sentencing process is a material  factor  in  the  community’s  perception  of  justice  and  legal convictions. [20]  In  S  v  Makatu 10  the  appellant  murdered  his  estranged  wife  with whom  he  raised  four  minor children – one  born of their  marriage, two from  his  previous  relationship  and  one  from  the  deceased’s  previous relationship. The root of the strife was the deceased’s deceitful conduct as she, apparently, surreptiously  maintained  contact with the  father of  her child, engaged  in extramarital affairs whilst refusing sexual  intercourse 9 R v Dhlumayo 1948 (2) AD 677 at 706. 10 2006 (2) SACR 582 (SCA). with the appellant and misused money he gave her. During the appellant’s visit  to  her  place  of  work  in  a  bid  to  make  peace,  following  an unsuccessful attempt by their  families to  effect their reconciliation, she rebuffed his efforts and ordered him to vacate the family home which he was  renovating  for  them.  According  to  the  appellant  the  deceased’s reaction triggered all the past, hurtful memories of her conduct and, as he put it, ‘at that spur of the moment [he] felt hurt and started shooting at her’ and then shot himself in the head sustaining serious injuries which he miraculously survived. [21]  The court accepted that the offence was not premeditated and that the appellant, a first offender and soldier of good standing of 18 years in the  South  African  National  Defence  Force  who  pleaded  guilty  and expressed  remorse,  merely wished  to save his  marriage  for the  sake of their  children  whom  he  maintained  and  was  further  in  a  state  of  great anguish  when  he,  on  the  spur  of  the  moment,  shot  the  deceased. Notwithstanding these weighty mitigating factors Lewis JA held: ‘Domestic violence is rife and should not only be deplored but also severely punished. Family  murders are  all  too  common. Society,  the  vulnerable  in  particular,  requires protection  from  those  who  use  firearms  to  resolve  their  problems.  The  sentence imposed must send a deterrent message to those who seek solutions to domestic and other problems in  violence …  A sentence of 12 years’ imprisonment would send a strong  deterrent  message  to  the  community,  but  would  take  account  of  the  very difficult personal circumstances of the appellant.’ 11 [22]  In  a  more  recent  judgment  in  Director  of  Public  Prosecutions, Transvaal  v  Venter 12  Mlambo  JA,  writing  for  the  majority,  evaluated various past cases of this court, 13  including some of those referred to in paragraph  [4]  above,  which  involved  family  murders  committed  in emotionally stressful circumstances in which the accused were found to have  acted  with  diminished  criminal  responsibility.  The  learned  judge described  the  sentences  imposed  in  these  cases,  which  ranged  between three and eight years’ imprisonment, as ‘very lenient’ and cautioned that it  must  be  borne  in  mind  when  the  cases  are  invoked  that  they  were ‘decided  at  a  time  when  it  was “business  as  usual”  and  the  sentencing discretion of the courts was as yet unfettered by the minimum sentencing legislation’. [23]  In  Mlambo  JA’s  view,  an  effective  sentence  of  ten  years’ imprisonment – eight  years’  imprisonment  for  the  attempted  murder of the appellant’s wife, ten years’ imprisonment for the murder of his five year old daughter and 15 years’ imprisonment of which five years were 11 S v Makatu (supra) at paras 17 and 18. 12 2009 (1) SACR 165 (SCA) at para 25. 13 S v Laubscher 1988 (1) SA 163 (A); S v Smith 1990 (1) SACR 130 (A); S v Kalogoropoulos 1993 (1) SACR 12 (A); S v Shapiro 1994 (1) SACR 112 (A) and S v Di Blasi 1996 (1) SACR 1 (A). conditionally suspended for the murder of his four year old son, ordered to run concurrently – which he promptly replaced with an effective prison term of 18 years, was ‘shockingly light’ and did not reflect the interests of society which viewed the conduct in a very serious light and the need for deterrent sentences. The learned judge continued at para 31: ‘In  my  view  this  matter  calls  for  a  sentence  cognisant  of  [the respondent’s]  personal  circumstances,  but  which  takes  account  of  the seriousness  of  the  offences  and  the  need  for  appropriate  severity  and deterrence. This latter element is at the core of the community interest in how courts should deal with violent crime. This  is  a  matter  in  which  the  respondent’s  personal  circumstances  are outweighed by society’s need for a retributive and deterrent sentence.’ (My emphasis.) [24]  In  my  view,  the  magistrate  properly  considered  the  appellant’s favourable personal circumstances, namely that he was a 31 year­old first offender, was still married to the subject of his woes, had young children and  a  grandmother  dependent  on  him  for  support  and  was  remorseful. Included  in  that  enquiry  was  the  effect  on  the  appellant  of  his  wife’s adulterous conduct, which the magistrate severely disparaged commending  the  appellant’s  attempts  to  salvage  his  marriage.  The magistrate expressly acknowledged that the experience must have caused him frustration, humiliation, anger and pain. [25]  It is clear from the magistrate’s judgment that she, as did the court below,  fully  accepted  that  the  appellant’s  capacity  for  sound  judgment and rational thought were impaired by these emotions and that he was in a state of distress when he committed the murder. This, after all, is one of the  key  factors  that  led  to  the  substantial  reduction  of  the  mandatory minimum  sentence  of  15  years’  imprisonment  to  eight  years' imprisonment. [26]  Having said that, mitigating factors must nevertheless be weighed against  the  aggravating  circumstances  of  the  relevant  offence  and  the expectations of society. As properly acknowledged in the main judgment, murder is unquestionably an offence of the gravest nature. In this matter, the deceased posed no physical threat to the appellant and apparently had no interaction with him at all. All too often in this country, male partners lose  self­control  and  react  violently  to  marital  and  relational  strife,  a common fact of life, mostly with fatal results facilitated by the use of a firearm. [27]  I  cannot  agree  more  with  the  comments  of  Naidu  AJ  in  S  v McDonald 14 where he said: ‘It is indeed unfortunate that, in recent times, crimes of violence committed by the use of firearms as a result of anger and frustration, appear to be on the increase. Persons possessing  firearms  have  a  specific  responsibility  to  ensure  that  they  exercise  self control even in extreme cases, and that the use of a firearm must be resorted to only when there is no other alternative.’ In that case the court imposed, inter alia, eight years’ imprisonment on the appellant for the murder of his ex­wife committed spontaneously in a highly charged child custody tug­of­war. [28]  It  is  critical  to  send  out  a  clear  message  to  society  at  large  that resort  to  violence  cannot  be  tolerated.  The  courts  can  convey  that message effectively only in the sentences that they impose in cases of this nature. The possibility of rehabilitation of the appellant as a first offender and  the  improbability  of  a  repeat  offence,  strenuously  argued  on  his behalf,  certainly  do  not  mean  that  a  short  term  of  imprisonment  or correctional  supervision  are  the  only  appropriate  sentences  even  when other relevant factors indicate a substantial term of imprisonment. 15  Just as the interests of society are not properly served by too harsh a sentence, neither are they served by one that is too lenient such as the one proposed 14 2000 (2) SACR 493 (N) at 510 e­f. 15 S v Khumalo 1984 (3) SA 327 (A) at 333F. by my learned colleague which, in my view, fails to adequately reflect the gravity of the offence. [29]  In determining the precise weight to be attached to the appellant’s defence of diminished criminal responsibility it seems to me instructive to consider  the  remarks  of  Nugent  JA  in  his  concurrence  in  the  Venter decision. 16  There, the learned judge reminds us that diminished criminal responsibility is not a pathological condition but ‘a state of mind varying in degree that might be brought about by a variety of circumstances … [such as] the effects of alcohol, jealousy, distress, provocation … [which] have  always  been  matters  to  be  taken  account  of  in  mitigation’  and concludes that  nothing  is altered when these  circumstances are brought together under a label. 17 [30]  As  stated  above,  it  is  undisputed  that  the  appellant  acted  with diminished criminal responsibility when he committed the  murder. But, on a  fair assessment of all the  evidence, I hardly  find a  prison term of eight  years  for  the  offence  –  which,  incidentally,  the  legislature  has ordained  to  be  ordinarily  punishable  by  15  years’  imprisonment  in  the 16 2009 (1) SACR 165. 17 Para 65. absence  of  substantial  and  compelling  circumstances 18  –  startling, shocking or disturbing. I would, accordingly, dismiss the appeal. _________________ MML MAYA JUDGE OF APPEAL CLOETE JA: [31]  I  have  had  the  advantage  of  reading  the  judgments  of  my colleagues Boruchowitz and Maya. I respectfully agree with the  former and find myself, with equal respect, fundamentally in disagreement with the latter. [32]  The most significant fact in the present appeal so far as sentence is concerned,  is that when  he shot the deceased, the  appellant was acting with  diminished  responsibility.  That  appears  quite  clearly  from  both paragraphs 8 and 9 of the appellant's plea explanation, 19  accepted by the State, where the appellant says that he was provoked and 'lost control of [his]  inhibitions'.  My  colleague  Boruchowitz  gives  in  my  view  proper emphasis  to  this  fact  and  refers  to  previous  decisions  of  this  court  in support  of  his  view;  whereas  my  colleague  Maya  underplays  its significance  and  refers  to  authority  in  support  of  her  view  which,  for reasons  I  shall  give,  I  consider  inapposite  or  contrary  to  established authority in this court. 18 In terms of s 51(3)(a) of the Criminal Law Amendment Act 105 of 1997. 19 Quoted by my colleague Maya in paragraph 15 of her judgment. [33]  It must be underlined that diminished responsibility consists in loss of  restraint  and  self­control  (which  does  not  have  to  amount  to  sane automatism to amount to  mitigation). That is what  happened  here. The appellant  killed  the  deceased  but  when  he  had  'lost  control  of  [his] inhibitions'  ie  when  his  ability  to  exercise  normal  self­restraint  was impaired.  My  colleague  Maya  quotes  (in  para  29  above)  from  the judgment of Nugent JA in DPP Transvaal v  Venter. 20  I understand  my colleague Nugent in the passage quoted to be saying that various factors can  contribute  to  produce  the  state  of  mind  labelled  by  lawyers  as diminished responsibility, and that that state of mind may vary in degree. In the  present  matter, the  degree to which the  appellant's responsibility for his actions was diminished, and the reasons therefor, were established by the  appellant's plea explanation. My colleague  Maya  comments that there is 'regrettably a paucity of detail on record as to how the incident actually occurred', categorises the appellant's plea explanation as 'rather sketchy'  and  concludes  on  this  point  that  the  plea  explanation  was 'seemingly  tailored  to  explain  his  mental  state'.  I,  on  the  other  hand, would have expected the plea explanation to be tailored to emphasise the appellant's  mental  state  and  not  to  amount  to  a  regurgitation  of conclusions of fact to be found in some precedent from the law reports. And  if  the  State  considered  that  the  plea  explanation  could  be controverted by evidence at its disposal or by cross­examination of the appellant,  it was  free  not to accept  it. But the  prosecutor did accept  it, with the consequence that the facts it contains must be taken as correct. [34]  The  appellant  was  not  acting  with  diminished  responsibility  in either  of  the  two  decisions  in  this  court  relied  upon  by  my  colleague 20 2009 (1) SACR 165 (SCA). Maya. In the first, namely S v Makatu, 21 it was found that the appellant 'at the spur of the moment . . . felt hurt and started shooting' (my emphasis) ─  and  for  that  reason,  the  decision  is  of  no  relevance  in  the  present context. The other judgment of this court on which my colleague relies, that of Mlambo JA in DPP Transvaal v Venter, 22  in my respectful view and for reasons which I gave in a dissenting judgment at the time, both constitutes  a  radical  departure  from  sentences  previously  considered appropriate by the courts, including this court, for murder committed with diminished responsibility, and also emphasises aspects of sentence which this court has ─ repeatedly ─ held do not require emphasis in such cases. One  of those aspects is deterrence. My colleague Maya relies upon the judgment  of  Mlambo  JA  to  justify  the  emphasis  of  this  aspect  in  the present case and in particular places in italics 23  his statement that 'This latter element [viz deterrence] is at the core of the community interest in how courts should deal with violent crime'. I am unable to reconcile this approach with established case law in matters such as the present. I shall give four examples. [35]  In S v Campher 24 this court said: 'Die misdaad waaraan appellante haar skuldig gemaak het is ongetwyfeld 'n ernstige een. In ons huidige samelewing waar rusies tussen getroude pare dikwels uitloop op die dood van een (of soms albei)  van  hulle behoort die element van afskrikking in straf  normaalweg  sterk  na  vore te tree.  Die  huidige  is  egter, na  my  mening,  nie  'n geval  waar  daardie element  belangrik  is  nie.  Appellante was  'n  eerste oortreder  en daar  is  geen  suggestie  hoegenaamd  dat  sy  'n  neiging  tot  geweld  het  nie.  Die teenoorgestelde blyk eerder uit die getuienis.' 21 Referred to in paras 20 and 21 above. 22 Above, n 20. 23 In para 23 above. 24 1987 (1) SA 940 (A) at 964C­H per Jacobs JA, Boshoff AJA concurring at 967D­E. In S v Smith 25 this court said: 'The appellant is a first offender and on all the evidence has never, apart from on this occasion, acted violently. One can safely conclude that there is no need for a sentence to be imposed to serve as a personal deterrent. There is little or no likelihood of this experience repeating itself.' In S v Ingram, 26  which deals with the same point as my colleague Maya JA does in regard to the interests of society (in para 28 of her judgment), this court said: 'It is trite law that the determination of an appropriate sentence requires that proper regard be had to the triad of the crime, the criminal and the interests of society. A sentence must also, in  fitting cases, be tempered with  mercy.  Murder, in any form, remains  a serious  crime which  usually calls  for  severe punishment. Circumstances, however, vary and the punishment must ultimately fit the true nature and seriousness of the crime. The interests of society are not best served by too harsh a sentence; but equally so they are not properly served by one that is too lenient. One must always strive  for  a  proper  balance.  In  doing  so  due  regard  must  be  had  to  the  objects  of punishment.  In  this  respect  the  trial  Judge  held,  in  my  view  correctly,  that  the deterrent aspect of punishment does not play a major role in the present instance. The appellant  is  not  every  likely  to  repeat  what  he  did.  Deterrence  is  therefore  only relevant in the context of the effect any sentence may have on prospective offenders.' Lastly, I would refer to S v Shapiro 27 where the court said: '[T]here can be no doubt that the community must view this crime with abhorrence. I do not believe, however, that right­thinking men would demand condign punishment in  a  case  where  the  accused  acted  with  substantially  diminished  criminal responsibility. Nor do I think that there is substance in the point made in para 2.1.4 that the trial Judge ignored or underemphasised the increase in cases of this nature, or overemphasised  emotional  instability  as  a  justification  for  or  in  mitigation  of unacceptable  conduct. Each  case  must  be  judged  on  its  own  facts,  and  it  would,  I think, be wrong in principle to impose a heavier sentence in this case in an attempt to stem the flow of cases in which emotional instability is relied on by the defence. 25 1990 (1) SACR 130 (A) at 136b per Kumleben JA, Hefer and Friedman JJA concurring. 26 1995 (1) SACR 1 (A) at 8i­9b per Smalberger JA, Hefer and Nienaber JJA concurring. 27 1994 (1) SACR 112 (A) at 123i­124d per Nicholas AJA, Van Heerden and Smalberger JJA concurring. . . . I do  not agree that the  learned trial  Judge  ignored or minimised the  importance  of retribution and deterrence as objects of punishment. I do not think that in the light of the  finding  of  diminished  responsibility  this  case  is  one  which  is  clamant  for retribution.  It  does  not  appear  from  the  evidence  that  Shapiro  is  likely  to  again commit a violent crime. He has no previous convictions relevant to show propensity for violence. It does not seem that he is a danger to society which would call for his separation from the community for a long time. In regard to the deterrence of others, it does not seem to me that in the present case a long prison sentence is called for. The concatenation of circumstances was highly unusual and is unlikely to occur again.' I would only add, as I did in DPP Transvaal v Venter, 28 that to my mind there would seem to be little purpose in attempting to deter a person not in full control of his or her faculties. [36]  For  these  reasons,  I  am  unable  to  support  the  approach  of  my colleague  Maya  and  I  am  of  the  view  that  the  magistrate  committed  a misdirection in finding that: '[D]eterrence plays a heavy role in the sentence that this court should impose.' [37]  There is a further misdirection in the judgment of the magistrate to which my colleague Boruchowitz refers, 29 namely, that the magistrate did not afford sufficient recognition and weight to the fact that the appellant had  acted  with  diminished  responsibility.  The  concept  is  nowhere mentioned  by  name  by  the  magistrate.  The  high  water  mark  of  her judgment in this regard is contained in the following passages: 'So the court has to accept that this incident occurred as a result of you acting on the spur of the moment and that it was then to a great extent surely as the result of you being put under stress. . . . 28 Above n 20, para 61. 29 Para 6 above. However, the court accepts from the factual circumstances that you must have been frustrated and  probably  angered.  That these  feelings  of  mixed emotions  must have been made worse by means of the inevitable pain and heartache that you must have felt. And that all this then led to you acting on the spur of the moment.' The  High  Court  on  appeal  simply  paraphrased  these  findings.  I  am therefore, with  respect, also unable  to support the  following finding by my colleague Maya: 30 'It  is  clear  from  the  magistrate's  judgment  that  she,  as  did  the  court  below,  fully accepted that the appellant's capacity for sound judgment and rational thought were impaired by these emotions . . . when he committed the murder . . . .' [38]  Because  of  the  misdirections  by  the  magistrate,  I  agree  with  my colleague Boruchowitz that this court is at large to impose the sentence it considers  appropriate.  Giving  due  weight  to  the  fact  that  the  appellant acted with diminished responsibility, and bearing in mind the guidelines in S v Malgas, 31  I respectfully agree with my colleague Boruchowitz for the reasons he gives that imprisonment for a period of five years would be  an  appropriate  sentence.  I  accordingly  concur  in  the  order  made  by him. _______________ T D CLOETE JUDGE OF APPEAL 30 In para 25 above. 31 2001 (2) SA 1222 (SCA). APPEARANCES: For Appellant: M Wyngaard Instructed by A S Steijn; Benoni Rosendorff Reitz Barry; Bloemfontein For Respondent: S Masilela Instructed by Director of Public Prosecutions; Pretoria Director of Public Prosecutions; Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From:  The Registrar, Supreme Court of Appeal Date:  19 March 2009 Status: Immediate 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 DOCTOR MNISI v THE STATE The SCA, by a majority, reduced the sentence of 8 years' imprisonment for murder imposed on the appellant by the magistrate and confirmed by the Johannesburg High Court. When  he  shot  the  deceased  the  appellant  was  acting  with  diminished  responsibility.  The deceased and the appellant's wife had been involved in an adulterous relationship which she had  undertaken  to  terminate.  The  appellant  came  across  them  kissing  in  a  vehicle.  He temporally loss control of his inhibitions, drew his pistol and shot the deceased on the spur of the moment. The majority of the court considered that sentence overemphasised the element of deterrence and reduced it to 5 years imprisonment. ­­ends­­

1532

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case number: 653/07 In the matter between: FOURWAY HAULAGE SA (PTY) LTD APPELLANT and SA NATIONAL ROADS AGENCY LTD RESPONDENT Neutral citation: Fourway Haulage v SA National Roads Agency (653/07) [2008] ZASCA 134 (26 November 2008) CORAM: SCOTT, FARLAM, BRAND, LEWIS ET JAFTA JJA HEARD: 5 November 2008 DELIVERED: 26 November 2008 CORRECTED: SUMMARY: Delict – pure economic loss – meaning of – policy considerations relevant in determining wrongfulness – remoteness of damage – application of flexible test ORDER On appeal from: High Court, Pretoria (Rabie J sitting as court of first instance) The appeal is dismissed with costs JUDGMENT BRAND JA (Scott, Farlam, Lewis et Jafta JJA concurring) [1] The appellant ('Fourway') is a long distance haulier. The respondent ('the Agency') owes its existence to the South African National Roads Agency Limited and National Roads Act 7 of 1998 ('the Act'). The dispute between them originates from an accident which occurred in the early evening of 26 September 2003 on the N1 national road between Polokwane and Mokopane in the Limpopo province. The two vehicles involved were an articulated truck and a light delivery van. The articulated truck was driven at the time by an employee of Fourway who was acting in the course and scope of his employment. [2] The articulated truck was on its way from an asbestos mine in Zimbabwe to Durban harbour carrying about 34 tonnes of chrysolite asbestos, destined for export. As a result of the collision, the truck overturned and spilled its cargo onto practically the entire surface of a portion of the national road and its surroundings. Because of the hazardous nature of asbestos powder, the spillage required an extensive cleaning-up and decontamination operation. [3] To facilitate the cleaning-up and decontamination process, the traffic authorities closed the section of the national road involved and diverted the traffic in both directions onto an alternative road. This lasted for about 24 hours. The section of the national road which was closed forms part of a toll road. The alternative route was not subject to toll. As a result of the closure, two toll plazas – as defined in the Act – could not collect toll fees. Based on these facts, the agency as the entity authorised by s 27 of the Act to levy and collect toll fees on toll roads, instituted an action in delict against Fourway for the damages it allegedly suffered in the form of loss of toll revenue in an amount of R105 996.67. [4] At the commencement of the trial, the parties asked the court a quo (Rabie J) to order a separation of issues. In terms of the separation order, the issues relating to the liability of Fourway were to be decided first, while the quantum of the Agency's alleged damages stood over for later determination. The preliminary issues were decided in favour of the agency. Hence the court declared Fourway liable for such damages as the Agency may prove in respect of the lost revenue it would have collected at the two toll plazas involved, but for the closure of the road. It also ordered Fourway to pay the costs of the preliminary proceedings. Fourway's appeal against that judgment is with the leave of the court a quo. [5] Part of the controversy on appeal was brought about by a shift in the focus of the defence advanced by Fourway and the resulting mutation of the issues involved. A convenient starting point for an account of the mutation is the opening address by counsel for the Agency, as plaintiff, at the beginning of the trial. With reference to the pleadings, counsel at that stage defined the issues between the parties as follows: (a) Whether or not the respondent had the necessary authority to collect toll fees on that portion of the toll road which was closed as a result of the collision. (b) Whether the collision occurred as a result of the negligence of the driver employed by Fourway. (c) Whether the occurrence of the collision necessitated the decontamination operation and the closure of the road. [6] Counsel for Fourway did not react to this definition of the issues. During the trial, Fourway formally conceded the issue referred to in (a) and the evidence led by the parties therefore dealt exclusively with the issues in (b) and (c). But in argument at the end of the trial, Fourway's counsel, for the first time, raised two further contentions. First he submitted that the Agency's claim was for the recovery of pure economic loss which required the existence of a legal duty on the part of Fourway and that the Agency had failed to plead or establish the existence of such a legal duty. Secondly he submitted that the Agency had failed to establish the requirement of legal causation with reference to the loss which formed the basis of its claim. [7] As we know from the result, the court a quo dismissed all defences relied on by Fourway, including those originally raised under what I categorised as (b) and (c), as well as the two new ones advanced for the first time in argument at the end of the trial. As to (b) and (c) the court found on the evidence presented that the negligence of Fourway's employee was the cause of the collision which necessitated both the decontamination process and the closure of the road. With regard to the defence based on the concept of pure economic loss, the court essentially held that the damage suffered by the agency did not amount to pure economic loss and that the question regarding the existence of a legal duty therefore did not arise. Finally the court held that the damages claimed could not be classified as too remote and that the requirement of legal causation had thus been satisfied. [8] On appeal, it was conceded on behalf of Fourway that the court a quo was correct in deciding the issues under (b) and (c) against it. In consequence, the only issues on appeal turned on the contentions that were raised for the first time in argument at the end of the trial. They can be summarised thus: (a) Whether the court a quo correctly came to the conclusion that the Agency's claim is not a claim for pure economic loss. (b) If not, how the issue of wrongfulness should have been dealt with in the light of the fact that it was not pertinently raised in the pleadings. (c) Whether the court a quo correctly came to the conclusion that the damages claim by the Agency cannot be regarded as too remote. [9] The court a quo's finding that the damages claimed did not result from pure economic loss clearly emanated from its understanding of that concept. That understanding appears from the following statements in the judgment: 'The economic loss in this sense comprises patrimonial loss that does not result from a direct invasion of a subjective right of the person who suffered the loss.' And that 'the aforesaid rights of the plaintiff. . . [ie the Agency's statutory rights to operate a toll road and to collect toll fees] were clearly subjective rights worthy of protection and which the plaintiff could enforce against other people.' And that '[c]onsequently, the loss suffered by the plaintiff is not a so-called pure economic loss, but the direct result of a direct infringement of subjective rights which was as such unlawful.' [10] I do not share the court a quo's understanding of what is meant by 'pure economic loss' in the present context. I believe its meaning to be far less metaphysical. As explained by Harms JA in Telematrix (Pty) Ltd v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para 1, it means simply this: '"Pure economic loss" in this context connotes loss that does not arise directly from damage to the plaintiff's person or property but rather in consequence of the negligent act itself, such as loss of profit, being put to extra expenses or the diminution in the value of property.' (See also Lillicrap, Wassenaar and Partners v Pilkington Brothers (SA) (Pty) Ltd 1985 (1) SA 475 (A) 497I-498H; Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) para 14; Wille's Principles of South African Law 9 ed, (General editor: Francois du Bois) sv 'Delict' by Daniel Visser, 1105; Neethling, Potgieter & Visser, Law of Delict, 5 ed 268 et seq). [11] Thus understood, the Agency's claim, in my view, falls squarely within the ambit of pure economic loss. As formulated, its claim was for loss of revenue in the form of toll fees resulting from the closure of the road. The Agency did not allege, nor did it set out to prove in evidence, that it was the owner of the road; that the road was physically damaged by the collision; or that the closure of the road resulted from any physical damage to the road. The Agency's argument on appeal, that in terms of s 7 of the Act it was in fact the owner of the road on which the collision occurred, is of no consequence and misses the point. For present purposes the question is not whether the Agency is in fact the owner of the road. The point is that it did not rely on such ownership to support its claim. [12] Recognition that we are dealing with a claim for pure economic loss brings in its wake a different approach to the element of wrongfulness. This results from the principles which have been formulated by this court so many times in the recent past that I believe they can by now be regarded as trite. These principles proceed from the premise that negligent conduct which manifests itself in the form of a positive act causing physical damage to the property or person of another is prima facie wrongful. By contrast, negligent causation of pure economic loss is not regarded as prima facie wrongful. Its wrongfulness depends on the existence of a legal duty. The imposition of this legal duty is a matter for judicial determination involving criteria of public or legal policy consistent with constitutional norms. In the result, conduct causing pure economic loss will only be regarded as wrongful and therefore actionable if public or legal policy considerations require that such conduct, if negligent, should attract legal liability for the resulting damages (see eg Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) paras 12 and 22; Gouda Boerdery BK v Transnet 2005 (5) SA 490 (SCA) para 12; Telematrix (supra) paras 13-14; Trustees, Two Oceans Aquarium Trust (supra) paras 10-12). [13] In this light, so Fourway contended on appeal, the Agency was obliged to allege in its pleadings not only that the negligent conduct relied upon was wrongful, but that it also had to allege and prove the facts relied upon to substantiate the considerations of policy giving rise to a legal duty on the part of Fourway's employee. As a result of the Agency's failure to adhere to these rules of litigation, so the argument went, neither the policy considerations relevant to the question of wrongfulness, nor the factual basis underlying such policy considerations, were identified and investigated during the trial. In consequence, so the argument concluded, it would be prejudiced if the issue of wrongfulness were to be summarily disposed of at the appeal. Fourway therefore suggested that, unless this court upholds its contention that the damages claimed are too remote – to which I shall presently return – the issue of wrongfulness should be postponed and decided with the rest of the issues concerning the quantum of the Agency's damages, which are standing over in any event. [14] The proposition that a plaintiff claiming pure economic loss must allege wrongfulness, and plead the facts relied upon to support that essential allegation, is in principle well founded. In fact, the absence of such allegations may render the particulars of claim exipiable on the basis that no cause of action had been disclosed (see eg Trope v SA Reserve Bank 1992 (3) SA 208 (T) at 214A-G; Indac Electronics (Pty) Ltd v Volkskas Bank Ltd 1992 (1) SA 783 (A) 797E; Telematrix (supra) para 2). But, as we know, Fourway did not file an exception. The trial proceeded without any objection on its part. In the circumstances it would be futile to investigate whether an exception, if properly and timeously taken, would have been successful. As I see it, the question is rather whether, despite the lack of necessary allegations in the Agency's pleadings, Fourway had sufficient opportunity to produce the facts it would seek to rely on for the determination of the policy considerations pertaining to wrongfulness in its favour. Conversely stated, the question is whether Fourway has shown prejudice, in the sense that it would have conducted its case in a materially different way if the Agency's claim for pure economic loss had been properly pleaded. (See eg Shill v Milner 1937 AD 101 at 105; Robinson v Randfontein Estates GM Co Ltd 1925 AD 173 at 198; Collen v Rietfontein Engineering Works 1948 (1) SA 413 (A) at 433; Stead v Conradie 1995 (2) SA 111 (A) at 122A-H.) [15] As I see it, the proposal by Fourway that the issue of wrongfulness be referred back for determination by the trial court therefore depends on the outcome of two discrete enquiries. First, can this court, on the basis of the facts available, decide that, as a matter of policy, Fourway should be held liable for the loss of revenue claimed by the Agency? If not, that would be the end of the matter. The Agency would have failed to make out a case. A decision on the other hand that the issue of wrongfulness should on the facts available be determined in favour of the Agency will lead to the next enquiry. The question is: can it be said that, if the issue of wrongfulness had been properly pleaded by the Agency, Fourway would have conducted its case any differently? If not, the Agency is entitled to succeed. It is therefore only a finding of potential prejudice on the part of Fourway that can justify a referral back to the trial court. [16] The enquiry, whether as a matter of policy Fourway should be held liable for the pure economic loss suffered by the Agency, raises a question which is logically anterior: what are the considerations of policy that should be taken into account for purposes of the enquiry? In accordance with what criteria should the relevant considerations of policy be identified? Must we accept that policy considerations are by their very nature incapable of pre- determination and that the identification of the policy considerations that should find application in a particular case are to be left to the discretion of the individual judge? Does this mean that in the context of pure economic loss the imposition of liability will depend on what every individual judge regards as fair and reasonable? I believe the answer to the last two questions must be 'no'. Liability cannot depend on the idiosyncratic views of an individual judge. That would cloud the outcome of every case in uncertainty. In matters of contract, for example, this court has turned its face against the notion that judges can refuse to enforce a contractual provision purely on the basis that it offends their personal sense of fairness and equity. Because, so it was said, that notion will give rise to legal and commercial uncertainty (see eg Brisley v Drosky 2002 (4) SA 1 (SCA) paras 21-25; South African Forestry Co Ltd v York Timbers Ltd 2005 (3) SA 323 (SCA) para 27). I can see no reason why the same principle should not apply with equal force in matters of delict. A legal system in which the outcome of litigation cannot be predicted with some measure of certainty would fail in its purpose. As pointed out by Lord Scott of Foscote in Lagden v O'Conner [2004] 1 AC 1067 (HL) para 86: 'One of the main functions of the law of obligations, contractual or tortious, is to provide, or attempt to provide, a set of yardsticks for determining whether a legal injury has been inflicted on a person (the claimant) by another person (the defendant) and, if so, for determining the amount of the damages that the defendant must pay by way of reparation. If the two parties are unable to agree, an answer can be found by recourse to litigation. But the cost of litigation, often excessive both in absolute terms and in relation to the amount in dispute, and the inevitable delay, worry and anxiety that accompany court proceedings provide impelling reasons why the yardsticks by means of which legal liability is to be measured should be kept as simple and uncomplicated as practicable.' [17] We therefore strive for certainty. The question is, how can that be achieved in an area directed by considerations of public or legal policy? I believe we must accept at the outset that absolute certainty is unattainable. The moment this court took the first tier policy decision – in Administrateur, Natal v Trust Bank van Afrika Bpk 1979 (3) SA 824 (A) – to abolish the absolute exclusion of liability for pure economic loss, it abandoned the bright line of absolute certainty. The second tier policy decision as to when liability should be imposed must of necessity be accompanied by some degree of uncertainty, at least at the early stages of development in this area of the law. That much was recognised and predicted by Rumpff CJ in Administrateur, Natal itself (see 831B). This measure of resulting uncertainty also seems to be an experience shared by those jurisdictions where the same first tier policy decision has been taken. Thus it was stated, for example, by Gaudron J in the Australian High Court, in Perre v Apand (Pty) Ltd 1999 198 CLR 180 (HC of A) para 25: 'The law as to liability for economic loss is a "comparatively new and developing area of the law of negligence". It has not yet developed to a stage where there has been enunciated a governing principle applicable in all cases. Perhaps it never will.' And by McLachlin J in the Canadian Supreme Court in Canadian National Railway Co v Norsk Pacific Steamship Co Ltd (1992) 91 DLR (4th) 289 at 366: 'Judges seem able to pick out deserving cases when they see them. The difficulty lies in formulating a rule which explains why judges allow recovery of economic loss in some cases and not in others.' (Compare also K Zweigert & H Kötz An Introduction to Comparative Law 3 ed 625 et seq; B S Markesinis The German Law of Torts, A Comparative Introduction 3 ed 42 et seq; Daniel Visser & Niall Whitty The Structure of the Law of Delict in Kenneth Reid and Reinhard Zimmermann A History of Private Law in Scotland Vol II Obligations 461 et seq.) [18] What is more, it seems that in those jurisdictions where attempts have been made to obtain certainty by formulating new bright line rules – in lieu of the old rule excluding all liability for pure economic loss – there was little success in achieving this goal. In England, for example, the first such attempt was made in Anns v Merton London Borough Council [1978] AC 728 [HL]. Under the Anns test the court will find wrongfulness – or in English legal parlance, the existence of a duty of care – if the harm was foreseeable and there is no policy reason for negating liability. In a number of subsequent judgments of the House of Lords, there was, however, a retreat from Anns because of its expansionist tendencies. Eventually Anns was expressly overruled in Murphy v Brentwood District Council [1991] 1 AC 438 (HL) at 457. [19] Another attempt at a bright line rule is often referred to as 'the three- stage test' which is attributed to a passage in the speech of Lord Bridge of Harwich in Caparo Industries PLC v Dickman [1990] 2 AC 605 (HL) at 617- 618. (See eg D v East Berkshire Community Health NHS Trust [2005] 2 AC 373 (HL) para 2 where reference is made to 'the familiar test laid down in Caparo'. See also Sutradhar v Natural Environment Research Council [2006] 4 All ER 490 (HL) para 32.) According to this test a plaintiff can establish wrongfulness (in the South African sense) only when it can prove three things: first, that the causing of damage was reasonably foreseeable; secondly, that a relationship of 'proximity' or 'neighbourhood' existed between the parties; thirdly, that in all the circumstances of the case, it is fair, just and reasonable to impose liability on the defendant. Somewhat ironically, however, Lord Bridge never claimed to create a bright line rule. He did not even profess to formulate a 'test'. That, I think, is apparent from the very passage in his speech usually relied upon in support of the 'three-stage test'. After Lord Bridge referred to the ingredients of foreseeability, proximity and the situation in which the court considers it fair, just and reasonable to impose liability, he continued (at 618A-B): '[T]he concepts of proximity and fairness . . . are not susceptible of any precise definition as would be necessary to give them utility as practical tests, but amount in effect to little more than convenient labels to attach to features of different specific situations which . . . the law recognises pragmatically as giving rise to a duty of care . . ..' And in the same case Lord Oliver of Aylmerton said (at 633F): 'I think that it has to be recognised that to search for any single formula which will serve as a general test of liability is to pursue a will-o'-the-wisp.' [20] In some decisions of the House of Lords it is explicitly recognised that the question whether the required relationship of proximity exists is dependent on policy factors (see eg in Barrett v Enfield Borough Council [2001] 2 AC 550 (HL) at 559). And in Cooper v Hobart (2002) 206 DLR (4th) 193 para 37 the Supreme Court of Canada also recognised that, whatever the test formulated, the imposition of liability ultimately depends on 'residual policy considerations'. Proceeding from this premise, academic authors have engaged in the constructive exercise of identifying the relevant considerations of policy that can find application in determining whether, in a particular case, the negligent conduct of the defendant can sustain a claim for the plaintiff's pure economic loss (see eg John Hartshorne 'Confusion, Contradiction and Chaos within the House of Lords post Caparo v Dickman (2008) 16 Tort Law Review 8 et seq; Jonathan Burchell 'The Odyssey of Pure Economic Loss' in T J Scott & Daniel Visser Developing Delict – first published as Acta Juridica 2000 – 99 et seq). [21] Does this mean we are back to the proposition that, in the field of pure economic loss, liability depends on the idiosyncratic views of the individual judge as to what is reasonable and fair? Fortunately, I think the answer must again be 'no'. In the first instance some degree of certainty is established by the identification of categories where liability will be imposed. In Telematrix (para 15) one such category was recognised, by way of example, with reference to the liability of collecting banks. Another example is to be found in Perre v Apand (paras 28-30) where liability for the failure to provide accurate information or advice – ie for negligent misstatements – was recognised as a category of liability for pure economic loss in the context of Australian law. (For the South African law on the topic of negligent misstatements, see eg Kern Trust (Edms) Bpk v Hurter 1981 (3) SA 607 (C); Bayer South Africa (Pty) Ltd v Frost 1991 (4) SA 559 (A) at 568B-D; OK Bazaars (1929) Ltd v Standard Bank of South Africa Ltd 2002 (3) SA 688 (SCA) 695G-I.) I believe it can be predicted with confidence that in time further categories will become discernible and so the law will develop in an incremental way. [22] Further insurance against uncertainty and unpredictability derives from the principle which was formulated as follows by Nugent JA in Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 21: 'When determining whether the law should recognise the existence of a legal duty in any particular circumstances what is called for is not an intuitive reaction to a collection of arbitrary factors but rather a balancing against one another of identifiable norms.' (See also eg Telematrix paras 15-16). In a case like the present where the claim for pure economic loss falls outside the ambit of any recognised category of liability, the first step is therefore to identify the considerations of policy that are of relevance. As part of the identification process assistance can of course be gained from previous decisions, both at home and abroad, as well as from the helpful analysis by academic authors such as those to which I have already referred. [23] The policy consideration that immediately comes to mind is directly linked to the initial doubt as to whether pure economic loss should be actionable at all. That reason was referred to by Rumpff CJ in Administrateur, Natal v Trust Bank van Afrika Bpk (supra) – where this court eventually decided to cut the Gordian knot – (at 833A) as 'die vrees van die sogenaamde oewerlose aanspreeklikheid' (ie the fear of so-called boundless liability). In the light of this fear the relevant consideration is succinctly stated as follows by Gaudron J in Perre v Arpand (supra) para 32: 'The first policy consideration is the law's concern to avoid the imposition of liability in an indeterminate amount for an indeterminate time to an indeterminate class.' (See also eg Canadian National Railway Co v Norsk Pacific Steamship Co (1992) 91 DLR (4th) 289 at 359; M M Corbett 'The Role of Policy in the Evolution of our Common Law' 1987 SALJ 52 at 59.) [24] From this consideration it follows, in my view, that liability will more readily be imposed for a single loss of a single identifiable plaintiff occurring but once and which is unlikely to bring in its train a multiplicity of actions. That is the reason why liability was imposed, for example, in Coronation Brick (Pty) Ltd v Strachan Construction Co (Pty) Ltd 1982 (4) SA 371 (D) 386D-H and not in Shell and BP South African Petroleum Refineries (Pty) Ltd v Osborne Panama SA 1980 (3) SA 653 (D) at 659G-H. The present case self-evidently falls in the same class as Coronation Brick and not in the class of Shell and BP. The loss claimed was suffered by a single plaintiff and is finite in its extent. To illustrate the point: the position could very well be different if the plaintiff was a businessman who claimed for the loss he suffered because of a missed flight to London, being the loss of a lucrative business opportunity, owing to the closure of the road. [25] But the absence of indeterminate liability itself will not automatically give rise to the imposition of liability. That much was expressly held in Trustees, Two Oceans Aquarium Trust para 20. The reason why this court refused to come to the aid of the plaintiff in that case, despite the absence of indeterminate liability, was that the plaintiff was in a position to avoid the risk of the loss claimed by contractual means (see para 24). Conversely, the plaintiff's inability to protect itself by contract was one of the policy reasons why this court decided in Indac Electronics (Pty) Ltd v Volkskas Bank Ltd 1992 (1) SA 783 (A) at 799H-J to impose liability on a collecting bank. Support for the same consideration is to be found in Australian cases where delictual liability was extended to plaintiffs who were said to be 'vulnerable to risk' because they were unable to protect themselves against the risk of the particular loss by other means (see eg Woolcock Street Investments (Pty) Ltd v CDG (Pty) Ltd (formerly Cardno & Davies Australia (Pty) Ltd) [2004] HCA 16 (para 80); Perre v Apand (supra) para 11 (Gleeson CJ) and para 50 (McHugh J). In the present case the Agency can, in my view, be said to be 'vulnerable' to the risk of the loss that eventuated because it could not readily protect itself against that risk by concluding a contract with every user of the toll road. [26] Another policy reason why the extension of delictual liability is sometimes refused is that it would impose an additional burden on the defendant which would be unwarranted or which would constitute an unjustified limitation of the defendant's activities (see eg Minister of Law and Order v Kadir 1995 (1) SA 303 (A) at 321C-J; Steenkamp NO v Provincial Tender Board, Eastern Cape 2006 (3) SA 151 (SCA) paras 37-40; Road Accident Fund v Shabangu 2005 (1) SA 265 (SCA) para 18; X (Minors) v Bedfordshire County Council; [1995] 2 AC 633 (HL) at 750). The converse of this consideration appears from the statement by McHugh J in Perre v Apand (supra) para 50 that the imposition of liability would not 'unreasonably interfere with Apand's commercial freedom because it was already under a duty to [a third party] to take reasonable care'. That, I believe, is also the position in this case. Fourway's driver was already under an obligation towards other users of the road to drive with reasonable care. Imposing liability on him – and his employer – for economic loss resulting from his negligent driving would thus not foist any additional burden upon him at all. [27] The only policy consideration relied upon by Fourway as to why it should not be saddled with the Agency's loss was that it would be more appropriate to spread the burden by increasing toll fees in order to accommodate losses of this kind. I do not agree with this argument. On the contrary, I can see no reason why innocent users of the toll road should effectively be held responsible for the negligent conduct of Fourway's employee. The fact that the loss would be spread more widely may alleviate the burden imposed upon the individual innocent motorist, but it does not detract from the principle that it would be a choice to the prejudice of the innocent in favour of the negligent driver. [28] During argument the issue was raised as to the relevance of the consideration that Fourway's employee was transporting chrysolite asbestos which can, by all accounts, be described as dangerous cargo. Is this another policy consideration for imposing liability on Fourway for the Agency's loss, or not? My view is that it is not. As I see it, it would make no difference in principle in the determination of wrongfulness whether the cargo consisted of asbestos or of an innocuous substance like sand. I have given the policy reasons why Fourway should, in my view, be held liable. I cannot see that it would have any effect on any of them if the cargo was not asbestos, but sand. If the Agency lost revenue because the toll road had to be closed in consequence of the negligence of Fourway's employee, Fourway should, in my view, in principle be liable, whether the closure was necessitated by the spillage of asbestos, sand or cement. Where the dangerous nature of the cargo could have a bearing is on the issue of foreseeability of damage. I think it is more readily foreseeable that the closure of the toll road will be necessitated by a spillage of asbestos than a spillage of sand. But by the same token I believe that the issue of foreseeability should more appropriately be considered under the rubric of legal causation and not as part of determining wrongfulness. [29] Now that I have decided the issue of wrongfulness in favour of the Agency, the further question arises as to whether it can be said that Fourway had been prejudiced by the Agency's failure to specifically raise the issue of wrongfulness in its particulars of claim. I think not. The policy considerations that should, in my view, be taken into account all appear from the allegations in the pleadings supported by the evidence which was led at the trial. In argument, counsel for Fourway could not think of a single policy consideration in favour of their client that could have been supported by evidence led on its behalf if the Agency had specifically referred to the issue of wrongfulness in its pleadings. In short, despite an express invitation to that effect, counsel for Fourway were unable to submit that their client's case would have been presented any differently if the Agency's pleadings were in perfect order. [30] That brings me to causation. In this regard it has by now become well- settled that, in the law of delict, causation involves two distinct enquiries. First, there is the enquiry into factual causation which is generally conducted by applying the 'but-for' test, as described by Corbett CJ in International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA 680 (A) at 700E-G. The facts that are common cause on appeal leave no doubt that, but for the collision caused by the negligence of Fourway's driver, the Agency would not have suffered the loss. Factual causation is therefore not in issue. The dispute turns on the second enquiry, under the rubric of causation, namely whether the negligent conduct of Fourway's driver is linked sufficiently closely or directly to the loss suffered by the Agency for legal liability to ensue, or whether the loss is too remote. This issue is referred to by some as remoteness of damage and by others as legal causation. [31] In the final analysis, the issue of remoteness is again determined by considerations of policy. Broadly speaking, wrongfulness – in the case of omissions and pure economic loss – on the one hand, and remoteness on the other, perform the same function. They are both measures of control. They both serve as a 'longstop' where most right-minded people, including judges, will regard the imposition of liability in a particular case as untenable, despite the presence of all other elements of delictual liability. [32] Since wrongfulness – in the context of omissions and pure economic loss – and remoteness are both determined by considerations of policy, a certain degree of overlapping is inevitable. However, wrongfulness and remoteness are not the same. They involve two different enquiries in respect of two different elements of delict, each with its own characteristics and content (see eg LAWSA, 2ed Vol 8 (1) sv 'Delict' by J R Midgley and JC van der Walt, para 132). Even where negligent conduct resulting in pure economic loss is for reasons of policy found to be wrongful, the loss may therefore, for other reasons of policy, be found to be too remote and therefore not recoverable. An example of a case where this happened is to be found in a decision of this court in International Shipping Co (Pty) Ltd v Bentley (supra). [33] The question therefore remains: is the loss claimed by the Agency too remote? With regard to this question it has been held that the test in our law for determining remoteness is a flexible one (see eg International Shipping Co (Pty) Ltd v Bentley (supra) 701A-F; Smit v Abrahams 1994 (4) SA 1 (A) at 15E-G; OK Bazaars (1929) Ltd v Standard Bank of South Africa Ltd (supra) para 23). According to the 'flexible' test, (also referred to as the 'supple' test), so Fourway submitted, remoteness is determined by considerations of reasonableness, fairness and justice. As support for this submission it sought to rely on the judgment of Botha JA in Smit v Abrahams (supra) at 14F-15G. I do not agree with this submission and I do not believe it derives support from what Botha JA said. Considerations of fairness and equity must inevitably depend on the view of the individual judge. In considering the appropriate approach to wrongfulness, I said that any yardstick which renders the outcome of a dispute dependent on the idiosyncratic view of individual judges is unacceptable. The same principle must, in my view, apply with reference to remoteness. That is why I believe we should resist the temptation of a response that remoteness depends on what the judge regards as fair, reasonable and just in all the circumstances of that particular case. Though it presents itself as a criterion of general validity, it is, in reality, no criterion at all. In essence I agree with the following statement by McHugh J in Perre v Arpand (supra) para 80: 'But attractive as concepts of fairness and justice may be in appellate courts, in law reform commissions, in the academy and among legislators, in many cases they are of little use, if they are of any use at all, to the practitioners and trial judges who must apply the law to concrete facts arising from real life activities.' [34] As to the dicta of Botha JA in Smit v Abrahams (supra) it is apparent that they are founded largely on the judgment of Van Heerden JA in S v Mokgethi 1990 (1) SA 32 (A) at 40I-41D. What Van Heerden JA said in that case is not that the 'flexible' or 'supple' test supersedes all other tests such as foreseeability, proximity or direct consequences, which were suggested and applied in the past, but merely that none of these tests can be used exclusively and dogmatically as a measure of limitation in all types of factual situations. Stated somewhat differently: the existing criteria of foreseeability, directness, et cetera, should not be applied dogmatically, but in a flexible manner so as to avoid a result which is so unfair or unjust that it is regarded as untenable. If the foreseeability test, for example, leads to a result which will be acceptable to most right-minded people, that is the end of the matter (see eg LAWSA (supra) para 132). [35] In this case it can, in my view, be accepted with confidence that any of the various criteria will lead to the conclusion that the loss suffered by the Agency is not too remote. If, for example, the direct consequences criterion is applied, it is clear that the loss followed directly from the wrongful and negligent conduct of Fourway's driver; there was no so-called novus actus interveniens that broke the chain of events. If, on the other hand, one applies the foreseeability test, it was in my view reasonably foreseeable that a collision could cause spillage and that, because of the dangerous nature of the cargo, spillage could result in the closure of the toll road which could lead to a revenue loss by the Agency. What is more, I do not find the conclusion that Fourway should be held liable for the loss in any way untenable. Consequently, considerations of fairness and equity do not arise. In any event, the only consideration of fairness advanced by Fourway was that it would be fairer to spread the loss amongst users of the toll road by way of an increase in toll fees. As I have indicated earlier under the heading of wrongfulness, I cannot see the fairness of this proposal at all. [36] For these reasons the appeal is dismissed with costs, including the costs of two counsel. …………………….. F D J BRAND JUDGE OF APPEAL APPEARANCES: FOR APPELLANT: J H DREYER SC J A DU PLESSIS INSTRUCTED BY: MACGREGOR STANFORD KRUGER INC, PRETORIA CORRESPONDENTS: E G COOPER ATTORNEYS, BLOEMFONTEIN FOR RESPONDENT: A C FERREIRA SC I ELLIS INSTRUCTED BY: FRIEDLAND HART INC, PRETORIA CORRESPONDENTS: ISRAEL SACKSTEIN MATSEPES INC, BLOEMFONTEIN

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 26 November 2005 Status: Immediate 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 RE: FOURWAY HAULAGE SA (PTY) LTD APPELLANT and SA NATIONAL ROADS AGENCY LTD RESPONDENT On 26 November 2008 the Supreme Court of Appeal dismissed the appeal of Fourway Haulage SA (Pty) Ltd ('Fourway') against the judgment of the Pretoria High Court in favour of the SA National Road Agency Ltd ('the Agency'). Fourway is a long distance haulier. The Agency is the entity authorised by statute to levy and collect toll fees on toll roads. The dispute between the parties which gave rise to the appeal originates from an accident which occurred on 26 September 2003 on the N1 between Polokwane and Mokopane in the Limpopo province. The two vehicles involved were an articulated truck and a light delivery van. The articulated truck was driven at the time by an employee of Fourway who was acting in the course and scope of his employment. The articulated truck was on its way from an asbestos mine in Zimbabwe to the Durban harbour and carried about 34 tonnes of chrysolite asbestos, destined for export. As a result of the collision, the truck overturned and spilled its cargo onto a portion of the national road and its surroundings. Because of the hazardous nature of the asbestos powder, the spillage required an extensive cleaning-up operation of the polluted area. To facilitate the cleaning-up process, the traffic authorities closed the section of the national road involved and diverted the traffic in both directions onto an alternative road. This lasted for about 24 hours. The section of the national road which was closed forms part of a toll road. The alternative route was not subject to toll. As a result of the closure, two toll plazas could not collect toll fees. Based on these facts, the agency instituted an action against Fourway for the damages it allegedly suffered in the form of loss of toll revenue. In the Pretoria High Court Fourway was held liable in principle for the damages. On appeal it was not in dispute that the collision had been caused by the negligence of Fourway's driver or that it necessitated the closure of the toll road which in turn caused the Agency to suffer a loss in toll income. In consequence the dispute turned on the enquiry whether as a matter of legal policy, liability should be imposed on Fourway for the Agency's so-called pure economic loss, ie loss not resulting from physical damage to its property. Underlying to the dispute was the principle of our law that, unlike damages arising from physical damage to the plaintiff's property or person, so-called pure economic loss does not normally attract liability. The reason for the reluctance to extend liability to the latter kind of loss is essentially to be found in the fear of indeterminate liability. What gives rise to this fear can, in the present context, be illustrated by the example of a businessman who wishes to claim damages suffered because he missed a flight to London with the resulting loss of a lucrative business opportunity, owing to the closure of the road. In this case, however, so the Supreme Court of Appeal found, there was no prospect of indeterminate liability. The loss claimed was suffered by a single plaintiff and is finite in its extent. Other policy considerations in favour of imposing liability on Fourway, so the SCA held, were that: a) The Agency could not readily protect itself against the risk of such loss by concluding a contract with every user of the toll road. b) The extension of liability for the Agency's loss would not impose an additional burden on the driver of Fourway – for whose negligence it was held responsible – in that the driver was already under an obligation towards other users of the road to drive with reasonable care. c) If toll fees were to be increased in order to accommodate losses of this kind, it would mean that innocent users of the toll road would effectively be held responsible for the negligent conduct of Fourway's employee. That, in short, is why the SCA agreed with the High Court's decision to hold Fourway liable for the Agency's loss.

3488

non-electoral

2020

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 879/2019 and Case no: 880/2019 In the matter between: JOHANNESBURG SOCIETY OF ADVOCATES FIRST APPELLANT GENERAL COUNCIL OF THE BAR OF SOUTH AFRICA SECOND APPELLANT and SETH AZWIHANGWISI NTHAI FIRST RESPONDENT PRETORIA SOCIETY OF ADVOCATES SECOND RESPONDENT POLOKWANE SOCIETY OF ADVOCATES THIRD RESPONDENT THE SOUTH AFRICAN LEGAL PRACTICE COUNCIL FOURTH RESPONDENT Neutral citation: Johannesburg Society of Advocates and Another v Seth Azwihangwisi Nthai and Others (879/2020 and 880/2019) [2020] ZASCA 171 (15 December 2020) Bench: PONNAN, CACHALIA, DAMBUZA and MOCUMIE JJA and EKSTEEN AJA Heard: 2 November 2020 Delivered: This judgment was handed down electronically by circulation to the parties' representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10:00 am on 15 December 2020. Summary: Advocate – misconduct – application for readmission – nature of proceedings – onus to be discharged by applicant seeking readmission – standing of General Council of the Bar of South Africa and constituent Bars. __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Limpopo Division of the High Court, Polokwane (Makgoba JP and Mabuse J, sitting as court of first instance): judgment reported sub nom Nthai v Pretoria Society of Advocates and Others [2019] ZALMPPHC 23 (1) The application by the Pretoria Society of Advocates for leave to be joined as the third appellant in the appeal is dismissed. (2) The application by the first and second appellants for leave to adduce further evidence is dismissed. (3) The appeal is upheld with costs, excluding counsel’s fees. (4) The orders of the court below, dated 24 May 2019 and 18 July 2019, are set aside and each is replaced with the following: ‘The application is dismissed with costs, excluding counsel’s fees.’ (5) The Registrar is directed to forward a copy of this judgment to the National Director of Public Prosecutions. __________________________________________________________________ JUDGMENT __________________________________________________________________ Ponnan JA (Cachalia, Dambuza and Mocumie JJA and Eksteen AJA concurring) [1] ‘The slippery slope from ambition to greed to dishonesty’1 is a pithy, yet apt introduction to this appeal, which lies against a decision of the high court to readmit 1 I borrow the expression from the title of an article by Professor Lisa Lerman, Professor of Law and Director, Law and Public Policy Program at the Columbus School of Law. See L G Lerman ‘The Slippery Slope from Ambition to Greed to Dishonesty: Lawyers, Money, and Professional Integrity’ (2002) 30 Hofstra L Rev 879-922, especially at an advocate to practice.2 Advocates are required to be of complete honesty, reliability and integrity.3 The need for absolute honesty and integrity applies both in relation to the duties owed to their clients as well as to the courts.4 The profession has strict ethical rules to prevent malfeasance.5 This is for good reason. As officers of the court, Advocates serve a necessary role in the proper administration of justice. Given the unique position that they occupy, the profession has strict ethical rules. The observance of those rules is, regrettably, not always assured. Because ‘[t]he preservation of a high standard of professional ethics [has] been left almost entirely in the hands of individual practitioners, it stands to reason, firstly, that absolute personal integrity and scrupulous honesty are demanded of each of them and, secondly, that a practitioner who lacks these qualities cannot be expected to play his part’.6 The first respondent, Mr Seth Azwihangwisi Nthai, who had been exposed as precisely such a person in a particularly illuminating way, was previously struck from the roll of advocates. 880-881: ‘Lots of lawyers are among the wealthiest people in the country… Some of those lawyers have stepped over the lines of legality and embarked on illegal schemes of income expansion… Many lawyers are preoccupied with gaining power within their law firms and with expanding their own incomes… [But] preoccupation with money tends to have a corrosive effect on integrity. For some people, the desire for wealth leads to dishonesty because it’s easier to expand your income more quickly if you don’t bother about legal niceties… Lawyers have fiduciary responsibilities to their clients, including an obligation not to exploit their client’s resources for personal gain. A lawyer who is in the grip of a desire to expand his income may be more likely to trample on his client’s financial interests, either legally or illegally, honestly or dishonestly.’ (Footnotes omitted.) 2 The judgment of the high court is reported as Nthai v Pretoria Society of Advocates and Others [2019] ZALMPPHC 23 and was delivered on 24 May 2019. 3 Kekana v Society of Advocates of South Africa 1998 (4) SA 649 (SCA) at 655I-656A; General Council of the Bar of South Africa v Geach and Others, Pillay and Others v Pretoria Society of Advocates and Another, Bezuidenhout v Pretoria Society of Advocates [2012] ZASCA 175; 2013 (2) SA 52 (SCA) para 126, with reference to an earlier judgment of this court, viz Vassen v Law Society of the Cape of Good Hope 1998 (4) SA 532 (SCA) at 538G-H. 4 General Council of the Bar of South Africa v Geach (above fn 3) para 126. 5 Kekana v Society of Advocates of South Africa (above fn 3) para 13. 6 Per Hefer JA in Kekana v Society of Advocates of South Africa (above fn 3) para 13. [2] Mr Nthai was admitted as an advocate on 19 January 1988 and became a member of the Pretoria Society of Advocates (PSA) on 1 August 1996. Senior status was awarded to him in December 2006. Thereafter, he also served as the chairperson of PSA’s Bar Council. In 2007, Mr Nthai was appointed by the State Attorney to act as lead counsel on behalf of the South African Government (the Government) before the International Arbitration Tribunal (the arbitration tribunal). The claimants in that matter, who were Italian nationals, had asserted that South Africa’s new mining laws contravened a bilateral investment treaty between Italy and South Africa.7 Before the formal hearing could commence, the claimants had expressed a willingness to withdraw the claim. What stood in the way of a withdrawal was the issue of costs, which amounted to about €5 million (approximately R50 million at the then prevailing exchange rate). The claimants accordingly required the Government to consent to the withdrawal of the claim. [3] Mr Nthai met on a number of occasions with the CEO of one of the claimant companies, Mr Marcenaro. He did so without the knowledge of the Government or the State Attorney, who had briefed him in the matter. They initially met at their respective homes in Johannesburg. Later, Mr Nthai travelled to Italy. During these meetings, Mr Nthai attempted to solicit from Mr Marcenaro a bribe of R5 million, which he required to be paid into his foreign bank account. In return, he undertook to ensure that the Government would agree to settle the dispute on the basis that each party would pay its own costs, thus potentially saving the claimants millions of Rand, at the expense of his client, the Government. 7 Agreement on the Promotion and Protection of Investments (signed 06-09-1997, entered into force 16-03-1999). [4] Mr Nthai was not aware that Mr Marcenaro had recorded their conversations. In December 2009 it came to the attention of the claimants’ legal team that Mr Nthai had been communicating with Mr Marcenaro. The State Attorney who had instructed Mr Nthai in the matter was informed and, consequently, lodged a formal complaint with the PSA on 22 January 2010. At that time, Mr Nthai held chambers in both Pretoria and Johannesburg and was also a member of the Johannesburg Society of Advocates (JSA). [5] Upon receipt of the complaint, Advocate P Ellis SC, who was then the convenor of the Professional and Ethics Committee of the PSA, wrote to Mr Nthai on 26 January 2010. In the light of the serious nature of the allegations, Mr Nthai was requested to immediately resign as the Vice Chairperson of the General Council of the Bar of South Africa (the GCB), a position he then held, and to consent to his voluntary suspension from practice as an advocate for the duration of the investigation into the complaints, failing which an urgent application would be launched to suspend him from practice. Mr Nthai acceded to those requests. [6] That evening, the Bar Council of the PSA met and resolved that a disciplinary committee be appointed to investigate the complaint. Advocate NGD Maritz SC was appointed as the pro forma prosecutor. A similar resolution was adopted by the JSA. Advocate LP Halgryn SC was appointed as pro forma prosecutor on behalf of the JSA to assist Advocate Maritz. On 9 February 2010, Justice K van Dijkhorst as well as Advocates JH Dreyer SC and Bokaba SC (respectively of the PSA and the JSA) were appointed as members of the Disciplinary Committee (the DC). The disciplinary proceedings were held on 25 March 2010. [7] At the commencement of the proceedings, Mr Nthai intimated that he would be tendering his formal resignation from the JSA and the PSA. He, and his legal representatives, then asked to be excused and, despite being invited to remain, left the hearing. The disciplinary proceedings continued in their absence. On 6 April 2010 the DC delivered its findings. It found Mr Nthai guilty of, among other things, corruptly attempting to solicit a bribe; placing his own financial interest above the interest of his client; disclosing privileged information to the opposing party in the proceedings; and betraying the confidence that his client and instructing attorney had placed in him to honestly, objectively and independently advance his client’s interests. [8] The DC recommended that steps be taken to have Mr Nthai’s name removed from the roll of advocates in terms of s 7 of the Admission of Advocates Act 74 of 1964 (the Advocates Act). On 13 April 2010 the Bar Council of the PSA resolved to bring an application to have Mr Nthai’s name struck from the roll of advocates. A similar decision was taken by the Bar Council of the JSA. On 6 March 2012, the PSA brought proceedings to remove Mr Nthai from the roll. Although Mr Nthai filed a notice of intention to oppose, he did not deliver an answering affidavit or otherwise deal with or explain the allegations against him. He was struck from the roll of advocates, without opposition, by the Pretoria High Court on 15 April 2013, and ordered to return his letters patent. [9] On 4 August 2010 the arbitration tribunal published its award. As appears from the award, the claimants had sought a discontinuance of the arbitral proceedings, whereupon the tribunal dismissed their claim and ordered them to pay a sum of €400 000 in respect of the Government’s fees and costs. The tribunal recorded the interaction and discussions that had taken place between Mr Nthai and Mr Marcenaro and, having regard to the former’s ‘solicitation of a bribe’ and ‘corrupt solicitations’, decided that the Government could not claim the costs that were attributable to Mr Nthai’s work. [10] In October 2018, Mr Nthai applied ex parte to the Limpopo Division of the High Court, Polokwane, to be readmitted as an advocate (the readmission application). The readmission application was served only on the Polokwane Society of Advocates (POLSA). After being informed that the application had been launched, the PSA and the JSA applied for leave to intervene. On 30 November 2018 the application succeeded before Makgoba JP and Phatudi J and the PSA and the JSA were joined as the first and second respondents, respectively, ‘subject to [Mr Nthai’s] right to argue that [they] do not have locus standi’ POLSA, who supported Mr Nthai’s readmission, came to be cited as the third respondent. The order also directed Mr Nthai to serve the readmission application ‘on the Legal Practice Council (LPC), constituted in terms of the Legal Practice Act 28 of 2014 which is invited to consider the matter and file a report by not later than 11 February 2019 … if so advised’. [11] The JSA, the PSA and the LPC (the LPC came to be cited as the fourth respondent in the matter) all filed comprehensive affidavits in opposition to the readmission application. The readmission application was heard on 15 April 2019. Judgment was delivered on 24 May 2019. Despite opposition by the PSA, the JSA and the LPC, the application succeeded before the high court.8 8 Nthai v Pretoria Society of Advocates and Others (above fn 2) para 93. [12] On 11 and 14 June 2019 the JSA and the LPC respectively filed applications for leave to appeal. Mr Nthai thereupon launched an application in terms of s 18 of the Superior Courts Act 10 of 2013 that the readmission order ‘be executed in full pending the outcome of the application for leave to appeal including future appeals’. The s 18 application was opposed by the JSA and the LPC. The applications for leave to appeal and the s 18 application were heard on the same day. On 18 July 2019 the high court dismissed the applications for leave to appeal9 and allowed the s 18 application (the s 18 order).10 [13] The JSA appeals as the first appellant, with the leave of this court, which was granted on 19 December 2019, against the readmission judgment, as also the s 18 order, which is automatically appealable under s 18(4)(ii) of the Superior Courts Act. The order of this court also granted leave to the GCB to intervene in both appeals and directed that they should be heard together. The GCB is the second appellant. [14] On 24 January 2020, Mr Nthai applied to the President of this Court in terms of s 17(2)(f) of the Superior Courts Act for the order of 19 December 2019 to be referred to the court for reconsideration and, if necessary, variation. On 24 June 2020, the President dismissed the reconsideration application. Whilst the reconsideration application was pending, on 28 May 2020, the PSA applied to the President to be joined as the third appellant in the appeal. That application (to which 9 See Pretoria Society of Advocates and Others v Nthai [2019] ZALMPPHC 32; 2020 (1) SA 267 (LP) para 40: ‘We are satisfied therefore that all the grounds of appeal raised by both the JSA and LPC in their respective applications for leave to appeal lack merit. In our view there are no reasonable prospects of success on appeal and secondly, there are no valid reasons why this appeal should be heard…’ 10 See Nthai v Pretoria Society of Advocates and Others [2019] ZALMPPHC 33 para 30. Paragraph 1 of the order reads as follows: ‘The judgment and order of this court delivered and issued on 24 May 2019 shall operate and be executed in full pending the outcome of the application for leave to appeal including future appeals, if any, to be noted by any party.’ I will revert), which is opposed by Mr Nthai, has been referred by the President to the court for determination. [15] Preliminarily, it is necessary to pass some general observations about: (a) the nature of the proceedings; (b) the onus to be discharged by an applicant seeking readmission; and, (c) the role of the professional bodies in an application of this kind. [16] As to (a): Neither the high court, nor Mr Nthai and his legal team, appeared to appreciate that these are not ordinary civil proceedings, but proceedings that are sui generis in nature. As Nugent JA observed in Van der Berg v General Council of the Bar of South Africa: ‘Proceedings to discipline a practitioner are generally commenced on notice of motion but the ordinary approach as outlined in Plascon-Evans is not appropriate to applications of that kind. The applicant’s role in bringing such proceedings is not that of an ordinary adversarial litigant but is rather to bring evidence of a practitioner’s misconduct to the attention of the court, in the interests of the court, the profession and the public at large, to enable a court to exercise its disciplinary powers. It will not always be possible for a court to properly fulfil its disciplinary function if it confines its enquiry to admitted facts as it would ordinarily do in motion proceedings and it will often find it necessary to properly establish the facts. Bearing in mind that it is always undesirable to attempt to resolve factual disputes on the affidavits alone (unless the relevant assertions are so far-fetched or untenable as to be capable of being disposed of summarily) that might make it necessary for the court itself to call for oral evidence or for the cross-examination of deponents (including the practitioner) in appropriate cases. In the present case that might well have been prudent and desirable so as to resolve the many questions that are raised by the evidence, but that notwithstanding, the appeal can in any event be properly disposed of on the undisputed facts. (For that reason it is also not necessary to revisit what degree of persuasion evidence must carry before facts can be taken to have been established in cases of this kind.)11 [17] As to (b): Where a person applies for readmission, who has previously been struck off the roll on the ground of not being fit and proper to continue to practise: [t]he onus is on him to convince the court on a balance of probabilities that there has been a genuine, complete and permanent reformation on his part; that the defect of character or attitude which led to his being adjudged not fit and proper no longer exists; and that, if he is readmitted, he will in future conduct himself as an honourable member of the profession and will be someone who can be trusted to carry out the duties of an attorney in a satisfactory way as far as members of the public are concerned…’12 [18] In considering whether the onus has been discharged the court must: ‘...have regard to the nature and degree of the conduct which occasioned applicant’s removal from the roll, to the explanation, if any, afforded by him for such conduct which might, inter alia, mitigate or even perhaps aggravate the heinousness of his offence, to his actions in regard to an enquiry into his conduct and proceedings consequent thereon to secure his removal, to the lapse of time between his removal and his application for reinstatement, to his activities subsequent to removal, to the expression of contrition by him and its genuineness, and to his efforts at repairing the harm which his conduct may have occasioned to others.’13 [19] As to (c): Generally, a factor of some importance in an application such as this is the attitude of the professional bodies concerned.14 However, principally because the high court misconceived the nature of the proceedings (it proceeded as if the 11 Van der Berg v General Council of the Bar of South Africa [2007] ZASCA 16; [2007] 2 All SA 499 (SCA) para 2. (Footnotes omitted.) 12 Per Corbett JA in Law Society, Transvaal v Behrman 1981 (4) SA 538 (A) at 557B-C. 13 Kudo v The Cape Law Society 1972 (4) SA 342 (C) at 345H-346A, as quoted with approval in Behrman at 557D- E. 14 Swartzberg v Law Society of the Northern Provinces [2008] ZASCA 36; [2008] 3 All SA 438 (SCA); 2008 (5) SA 322 (SCA) para 18. professional bodies concerned were adversarial litigants and that the ordinary approach as outlined in Plascon-Evans applied), it found that the JSA and the PSA did not have locus standi in the readmission application; and that the GCB (which did not participate in the proceedings) and its constituent bars: (i) had been stripped of their role as custodes morum of the advocates’ profession by the establishment of the Legal Practice Council (LPC); (ii) may no longer make submissions in applications to strike advocates from the roll or to readmit applicants; (iii) ceased to exist as statutory bodies as of November 2018, when the Legal Practice Act 28 of 2014 (LPA) was brought into force; and (iv) were in the same position as deregistered companies. [20] At odds with its earlier judgment, the high court appeared to accept in dismissing the applications for leave to appeal that the Advocates Act applied to Mr Nthai’s application, because it had been launched before the commencement of the LPA. But, it reiterated that the JSA had no standing in the application because, so the high court reasoned, the JSA represented advocates in the Gauteng province, whilst Mr Nthai intended to practice in Limpopo. [21] The judgment on the application for leave to appeal further records that ‘[the GCB], and not the JSA, would have been the appropriate party to take up the matter on behalf of the advocates’ profession’ and that the LPC should not have participated in proceedings launched before the commencement of the LPA.15 But this directly contradicts the earlier judgment, which had concluded that 'the GCB and its 15 Pretoria Society of Advocates and Others v Nthai (above fn 9) para 12. constituent bars countrywide, may in law not even deal with pending applications, such as the current one’, and that ‘only the LPC’ had such standing.16 [22] Mr Nthai launched his application for readmission on 18 October 2018. The LPA, which repealed the Advocates Act,17 commenced on 1 November 2018. Section 12(2) of Interpretation Act 33 of 1957 regulates certain consequences of the repeal and replacement of an Act. In terms of that provision: ‘Where a law repeals any other law, then unless the contrary intention appears, the repeal shall not— … (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, forfeiture or punishment as is in this subsection mentioned, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing law had not been passed.’ [23] The LPA contains no ‘contrary intention’ to indicate that Mr Nthai’s readmission application, which was already pending in terms of the Advocates Act at the time of the LPA’s commencement, should be determined in terms of the LPA. Section 12(2) of the Interpretation Act therefore has the consequence that Mr Nthai’s application for readmission had to be determined in terms of the Advocates Act. This is consistent with the interpretive presumption that legislation does not operate retrospectively.18 Mr Nthai’s application therefore fell to be adjudicated under the Advocates Act. In terms of the Advocates Act, it is clear that each of the JSA and 16 Nthai v Pretoria Society of Advocates and Others (above fn 2) paras 71-72. 17 Section 119 of the LPA. 18 Veldman v Director of Public Prosecutions, Witwatersrand Local Division [2005] ZACC 22; 2007 (3) SA 210 (CC) para 26. the PSA had standing, as custos morum, to participate in readmission applications of this kind.19 [24] While the LPA does indicate an intention to place pending disciplinary investigations and applications for removal under the LPC’s jurisdiction, it does not indicate a similar intention with respect to readmission applications.20 In any event, even if the LPA were applicable to Mr Nthai’s application, it would not prevent the GCB or its constituent Bars from intervening. The LPA makes the LPC primarily responsible for the protection and regulation of the legal profession.21 However, whilst the LPA confers primary jurisdiction for the discipline of legal practitioners on the LPC, this does not deprive existing bodies from having a continuing interest in the professional ethics of the profession or standing. The LPA requires the LPC to establish disciplinary bodies tasked with evaluating complaints about professional conduct.22 And, it empowers the LPC to punish errant practitioners, including by approaching the high court for their removal from the roll.23 [25] The LPA does not, however, render nugatory the role of the GCB and the constituent Bars in the advocates’ profession or in the professional conduct of advocates. It instead affirms the role of persons other than the LPC in these matters. Section 44(1) states that the provisions of the LPA: ‘…do not derogate in any way from the power of the High Court to adjudicate upon and make orders in respect of matters concerning the conduct of a legal practitioner, candidate legal practitioner or a juristic entity’. 19 See Eberhard Bertelsmann SC ‘Independence and the advocates’ profession’ Consultus (May 1998) 66 at 67. 20 Section 116 of the LPA. 21 Sections 4 and 5 of the LPA. 22 Sections 37-41 of the LPA. 23 Section 40(3) of the LPA. Section 44(2) adds: ‘Nothing contained in this Act precludes a complainant or a legal practitioner, candidate legal practitioner or juristic entity from applying to the High Court for appropriate relief in connection with any complaint or charge of misconduct against a legal practitioner, candidate legal practitioner or juristic entity…’ [26] A legal practitioner or juristic person is accordingly entitled to approach the high court for relief ‘in connection with’ a complaint of misconduct against a legal practitioner. This must include applications concerning the readmission of advocates previously removed from the roll on account of misconduct.24 Section 44 must thus be construed to empower the Bars, which are juristic entities with legal personality and which have an interest in promoting and protecting the advocates’ profession, to involve themselves in readmission applications and other matters concerning the professional misconduct of advocates. [27] The high court reasoned that Mr Nthai sought readmission in Polokwane, which was outside of the jurisdiction of the JSA or the PSA, and that they were thus precluded from intervening by the Uniform Rules and a directive of the Judge President of the Polokwane High Court. First, the JSA and the PSA, of whom Mr Nthai was a member, had brought the disciplinary proceedings against Mr Nthai that led to his removal from the roll. They accordingly had a material interest in the outcome of his readmission application and were best placed to make submissions on his suitability for readmission. Second, neither the Uniform Rules, nor the Practice Directive, deprive the JSA and the PSA of standing to intervene in 24 According to the Supreme Court of Appeal in David Trust and Others v Aegis Insurance Co Ltd and Another 2000 (3) SA 289 (SCA) para 31, ‘[t]he phrase “in connection with” is a wide one’. Similarly, in Rex v Bresler 1939 CPD 504 at 505 the Cape Provincial Division (as it was then) stated, relying on English law, that ‘the words “in connection with” have been given a very wide meaning…’. readmission applications in different provinces.25 They merely state that, in an application for admission, an applicant needs to serve papers on the Bar Council for the Division concerned. Neither purports to address the standing or entitlement of the GCB or its constituent members to intervene in a former member’s application for readmission. [28] Moreover, the high court’s finding that the JSA had 'no jurisdiction to intervene in readmission applications which are moved in any division other than the Gauteng divisions of the high court’ is unsustainable. If this finding is upheld, it would be possible for an advocate who was struck off in one province to apply for readmission in another, thereby preventing the participation of the professional body that applied for his or her striking off. The absurd consequence would be that every readmission application would be decided as if it were a first-time application for admission. In that way, the professional body that obtained the striking off order would be precluded from placing the relevant facts relating to the striking off before the court hearing the application for readmission. This cannot be in the interests of justice, nor can it serve the objective of protecting the public interest. [29] Each of the JSA and the PSA has an ongoing interest in the adherence of advocates to the highest professional standards and whether an applicant for 25 The court relied on rule 3A(1)(c) of the Uniform Rules of Court, which states as follows: ‘Subject to the provisions of rule 6 in so far as they are not inconsistent with the provisions of this rule, a person applying for admission to practise and for authority to be enrolled as an advocate shall, at least six weeks before the day on which his application is to be heard by the court— … (c) serve a copy of the documents and affidavit referred to in paragraphs (a), (b) and (bA) on the Secretary of the Bar Council or the Society of Advocates of the division concerned.’ The Court also relied on a Practice Directive by the Limpopo Judge President, dated 24 July 2018, which states as follows: ‘With effect from 1 August 2018 it will no longer be necessary for the applications for admission as an advocate to be served also on the Pretoria Society of Advocates. Only service on the Polokwane Society of Advocates will suffice’. admission or readmission is a fit and proper person. The fact that the LPC also has such an interest does not deprive the JSA or the PSA of its own interest – and therefore legal standing – in legal proceedings such as this. [30] In any event, a person may intervene in an application if such person has a direct and substantial interest in the outcome of the litigation;26 namely, a legal interest in the litigation that may be prejudicially affected by the judgment of the court and not merely a financial interest.27 Practising advocates – and, more so, associations of advocates that represent their interests – plainly have a material interest in protecting and promoting the status and dignity of their profession, including by making submissions on the conduct of errant practitioners and its consequences. [31] What is more, joinder of a party is necessary if that party has a direct and substantial interest that may be affected prejudicially by the judgment of the court in the proceedings concerned. This court has set out the test as follows: ‘The issue in our matter, as it is in any non-joinder dispute, is whether the party sought to be joined has a direct and substantial interest in the matter. The test is whether a party that is alleged to be a necessary party, has a legal interest in the subject-matter, which may be affected prejudicially by the judgment of the court in the proceedings concerned.’28 The court went on to hold that the primary question is the impact of the order that is sought on the interest of third parties. Particularly important is the question whether the order sought cannot be carried into effect without substantially affecting their 26 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA) para 85. 27 South African Riding for the Disabled Association v Regional Land Claims Commissioner and Others [2017] ZACC 4; 2017 (5) SA 1 (CC) para 9. 28 Gordon v Department of Health, Kwazulu-Natal [2008] ZASCA 99; 2008 (6) SA 522 (SCA) para 9. (Footnotes omitted.) interests.29 For the purposes of assessing whether a party must be joined: ‘if suffices if there exists the possibility of such an interest. It is not necessary for the court to determine that it, in fact, exists; in many cases, such a decision could not be made until the party had been heard.’30 [32] Mr Nthai is a former member of the JSA, the PSA and the GCB. He was struck off pursuant to an application brought by the PSA. Following upon the high court’s decision to readmit him, Mr Nthai joined the Limpopo Society of Advocates, which is affiliated to the GCB. It is thus plain that the GCB, the PSA and the JSA had a direct and substantial interest and, far from lacking standing to participate in the application, were necessary parties in accordance with the tests set out above. [33] Moreover, our law recognises that associations that exist to promote the interests of their members have the power to intervene in litigation that affects those interests.31 In Veriava and Others v President, SA Medical and Dental Council, and Others,32 the Transvaal Provincial Division considered an application by individual medical professionals and two associations of medical professionals to review a decision of the South African Medical and Dental Council (SAMDC) in relation to misconduct by doctors. The court there dealt with a complaint that the SAMDC had failed to take appropriate disciplinary action against State employed doctors, who had failed to ensure that Mr Steve Biko was properly treated and cared for. Through their inaction and despite the fact that he was obviously severely injured, he was allowed to be transported by police on a long journey in the back of a vehicle. The 29 Ibid para 10. 30 Abrahamse and Others v Cape Town City Council 1953 (3) SA 855 (C) at 859B-F. 31 Minister for Justice and Constitutional Development v Nyathi and Others [2009] ZACC 29; 2010 (4) SA 567 (CC) paras 5-6. 32 Veriava and Others v President, SA Medical and Dental Council and Others 1985 (2) SA 293 (T). court took the view that although the SAMDC is the statutory custos morum of the medical profession, and the guardian of the public, it did not have an exclusive interest or role in that regard. [34] The court held that the medical professionals and their associations had ‘a real and direct interest in the prestige, status and dignity of their profession’ and, consequently, in decisions by the SAMDC on such conduct. If the individual doctors believed that the SAMDC had failed, they had the locus standi to pursue the matter in the courts. Significantly, unlike the professional bodies in this case, the SAMDC could, without the intervention of a court, strike a medical practitioner from the roll on grounds of misconduct. The empowering Act prohibited unethical conduct, among other things, to protect the medical profession. It could therefore be assumed, the court held, that other medical professionals would suffer injury if the SAMDC did not perform its role. [35] These principles apply equally to the professional bodies and their members in this case. Advocates have a legal interest in protecting the status and dignity of their profession. It is well-established that the GCB and its constituent Bars, including the JSA and the PSA, are the custodes morum of the advocates’ profession.33 They act in the interest of the legal profession, the court and the public.34 Indeed, in a matter such as this, they may well have been failing in their duty had they failed to place the information at their disposal, which was obviously material to the question of Mr Nthai’s fitness, before the court. The high court was accordingly wrong to conclude that the GCB, the JSA and the PSA were no longer 33 Johannesburg Society of Advocates v Edeling [2019] ZASCA 40; 2019 (5) SA 79 (SCA) para 17. 34 Society of Advocates of South Africa (Witwatersrand Division) v Cigler 1976 (4) SA 350 (T) at 358D. See also Kekana v Society of Advocates of South Africa (above fn3) at 655G-H. custodes morum of the advocates’ profession and to conclude that the JSA and the PSA had no standing in the readmission application. The GCB and its constituent Bars are voluntary associations with legal capacity as governed by their Constitutions and, not statutory bodies, as supposed by the high court. Likening them to ‘deregistered companies’ was likewise inapt. [36] The path has now been cleared for a consideration of the substantive merits of the readmission application. The court must be satisfied that the applicant is a fit and proper person and that his readmission would involve no danger to the public or the good name of the profession.35 The enquiry into whether an applicant is a fit and proper person to be readmitted is a factual one.36 As it was put in Swartzberg v Law Society of the Northern Provinces:37 ‘… This involves an enquiry as to whether the defect of character or attitude which led to him being adjudged not fit and proper no longer exists. (Aarons at 294H.) Allied to that is an assessment of the appellant’s character reformation and the chances of his successful conformation in the future to the exacting demands of the profession that he seeks to re-enter. It is thus crucial for a court confronted with an application of this kind to determine what the particular defect of character or attitude was. More importantly, it is for the appellant himself to first properly and correctly identify the defect of character or attitude involved and thereafter to act in accordance with that appreciation. For, until and unless there is such a cognitive appreciation on the part of the appellant, it is difficult to see how the defect can be cured or corrected. It seems to me that any true and lasting reformation of necessity depends upon such appreciation.’ [37] In arriving at the conclusion that Mr Nthai had discharged the heavy onus resting upon him, the high court accepted that Mr Nthai: (i) had made full disclosure 35 Ex Parte Knox 1962 (1) SA 778 (N) at 784G-H. 36 Kudo v The Cape Law Society 1972 (4) SA 342 (C) at 675G-676. 37 Swartzberg v Law Society of the Northern Provinces (above fn 14) paras 14 and 15. to the court regarding his transgressions and correctly identified the defects of character that led to his removal (namely, ‘dishonesty, greed, poor judgments [sic] and health conditions’); (ii) unreservedly accepted responsibility for his unethical conduct; (iii) was deeply remorseful; (iv) suffered dire personal consequences as a result of his misconduct, inasmuch as he had experienced financial hardship and was forced to sell his Porsche motor vehicle, five watches from his collection of fine watches and his immovable properties in Cape Town and Hartbeespoort; and (v) demonstrated integrity and honesty in his employment and interaction with others subsequent to his removal from the roll. [38] Although the parties disagree as to the consequences, the material facts that led to Mr Nthai’s fall from grace are not in dispute. In Mr Nthai’s own word (in his founding affidavit in support of the readmission application): ‘I then told Marcenaro that if the claimants were to pay me R5 million into my foreign bank account, I would use my influence to get the Government to agree to settle the matter with each party paying its costs. I further told Marcenaro that I had prepared the proposal for settlement and if the claimants agreed to pay the money, I would get the Government to accept the settlement proposal. He said that he would discuss the proposal with his partners. I however, cautioned him strongly against disclosing our discussion to third parties.’ [39] When Mr Marcenaro initially expressed misgivings about the amount being solicited, Mr Nthai is recorded as having said: ‘You need to understand that the only thing is that is, if we go your route of settling, I lose. That is the problem. … That is what is, what I have to weigh between the two, what do I do. … Most probably after the end of the trial I will have made more than R5 million, I think.’ [40] At a subsequent meeting, when Mr Marcenaro again expressed reservations, Mr Nthai said: ‘No, I mean if it is, look it is not an easy thing, I mean to deal with. I explained to you last time from my side that I am prepared to close this deal but I mean you must know I lose income, and that is the bottom line. If it goes ahead, well I will still get income. So …’ He then added: ‘something must come my way. Whatever avenue. I do not know you will do it but that I leave to you.’ [41] At some point, Mr Nthai appears to agree with an evidently racist assertion by Mr Marcenaro that this kind of corruption is ‘more African’. For good measure he then fuels that perception when he says: ‘Ja, but let me tell you, let me mention something, you need [your] people there in Italy must understand one thing, and that is that if this case continues it will damage, I am talking about public, it will damage your company because you know there are a lot of third parties that have come in. Oh yes, yes. And they are taking a dimension that says you guys you come in this country, you do not want to comply with the law, that is the dimension that they are taking. They do not know about all these nitty-gritty’s that you are telling me, the issues that you wanted your rights and all that. So, it is something that you have to be, and you know, there are unions here, NUM, and all that, you do not need that kind of publicity and noise around your company.’ [42] Having suggested that if the matter were to proceed it would attract the attention of the National Union of Mineworkers, he then alludes to environmental non-governmental organisations in disparaging terms, when he observes: ‘Ja, no, no it is with the government taking a very hard line against you. I mean you cannot find problems. You have operations in Zimbabwe, you do not know how they will react. You know, I mean this thing can affect you guys seriously, I mean that is what I just thought. You know when I saw some of these NGO’s coming, you know, those people they make money by making a noise. So, they will make a helluva noise for you which you will not be able to deal with, because that is how they get their funding. You must know that for them to maybe to raise money to enter in this case, I mean for them it is very, very important. So, they will make all sorts of noises that they want to make and you will appear as if you are people who do not understand what is going on around you, stuff like that. I do not think it is a good thing.’ [43] All of this was designed to bring home to Mr Marcenaro that continuing with the case will cause them serious reputational harm. The interactions between Mr Nthai and Mr Marcenaro were extraordinary in the light of the most fundamental ethical and legal obligations of counsel. The fact that the conversations occurred at all is astonishing; direct engagement between counsel and an opposing party is impermissible. He bypassed his own attorneys and the attorneys of the claimants to discuss settlement of the case directly with Mr Marcenaro. Even more shocking was the purpose of the engagement; he offered, in exchange for a bribe of R5m, which he wanted paid into his foreign bank account, to orchestrate the settlement of the litigation on terms patently disadvantageous to his own client. [44] It is difficult to imagine a more egregious transgression of the norms of professional conduct. This was no mere casual or momentary lapse of judgment. It was carefully calculated and zealously pursued. When the several meetings in this country failed to bear fruit, Mr Nthai travelled to Italy for the express purpose of nailing down an agreement. He sought to persuade Mr Marcenaro that the agreement would be economically advantageous to them and that he would actually lose money if there was a settlement. Implicit in this was the suggestion that R5 million was a bargain when compared to the costs of a trial. When the imploring and cajoling failed, Mr Nthai resorted to less than subtle threats. [45] Over a protracted period, no thought whatever was given to his client, the Government, or the people they represent, the citizenry of this country. It was a staggering breach not just of almost every conceivable ethical duty of counsel, but also the most basic standards of human decency. The advocates’ profession is founded on the principle that an advocate should fiercely uphold his client’s interests and further the client’s cause to the best of his ability (subject of course to ethical constraints and his duty of candour to the court). [46] The high court accepted that Mr Nthai’s misconduct was of the most serious sort and was deserving of significant sanction. Indeed, it compromised not only the interests of his client, the Government, but also the integrity of the advocates’ profession. He pursued personal enrichment at the expense of his client and, ultimately, the taxpaying public. Over the course of a number of months, he sought a substantial bribe that would have required him to act against his client’s interests. And, he persisted in doing so despite an obvious reticence by those from whom he sought the bribe. [47] Properly characterised, what Mr Nthai did went way beyond mere professional misconduct. With deliberate calculation and clear intent, he attempted to solicit a bribe of R5 m in exchange for his assistance, in settling the matter on terms disadvantageous to his client. On his own version, there is no escape from the fact that this constituted a serious crime, for which he surprisingly does not appear to have been charged. Thus, given the severity of the transgressions, Mr Nthai would have had to establish truly exceptional circumstances to be considered for readmission. [48] Regrettably, there was more: The affidavit deposed to by Mr Maritz, filed in support of the application by the PSA for Mr Nthai’s striking off, contained further allegations of overreaching against him. These allegations related to substantial amounts of money that he had been paid by Anglo Platinum Ltd (Anglo Platinum) over an extended period of time (the Anglo Platinum complaint). It was alleged that Mr Nthai had received unreasonable and unjustified amounts of money from Anglo Platinum. Over a period of 43 months, Mr Nthai was paid an amount in excess of R10 million. [49] On 9 February 2010, the Bar Council of the PSA resolved to include these allegations in its investigation of Mr Nthai. The PSA requested Mr Nthai to furnish his original fee book; diary; retainer agreements and VAT invoices for the period 2005 to 2010. Mr Nthai refused. Instead, he questioned the relevance of the information. [50] Mr Nthai has since purported to apologise for his uncooperative behaviour and refusing to disclose relevant documents during the investigation into his transgressions and the proceedings before the disciplinary committee. In his readmission application, Mr Nthai stated: ‘(11) As an officer of the Court, it was incumbent upon me to assist the Court. (12) On reflection and introspection, I accept that it was disrespectful of me not have provided this assistance to the Court. (13) This is a behaviour and attitude that would not be repeated if I am given a second chance. (14) I am advised that the fees earned as indicated above were reasonable in view of the work involved. (15) I accept that it was improper and unethical for me to play an active role in negotiating the budget and retainers directly with employees of AAP. The role I played was clearly blurred. On reflection, I fully appreciate that I was wrong. I have indeed learned the hard way that at all times, it is important for counsel to always adhere to and observe the time ─ honoured ethical rules.’ However, as I shall show, Mr Nthai is either guilty of deliberately downplaying the full extent of these allegations or shows no true cognitive appreciation of their seriousness. [51] Although Mr Nthai finally acknowledged that the PSA had the prerogative to determine the ambit of its investigation and admitted that he was wrong to question its request for the information sought, when his attorney was requested to furnish information (including information similar to that previously sought), the latter refused. It was indicated that Mr Nthai considered the requests ‘irregular’ and a ‘blatant fishing expedition’. Mr Nthai’s attorney also complained that the documents sought are ‘information and records dating back some 14 years’. [52] The letter written by the JSA’s attorneys requesting the information specifically invited Mr Nthai to obtain the relevant information from his attorney in the matter, Bhadrish Daya Attorneys, Anglo American, his financial and/or tax advisors, his bankers and/or the auditors, tax advisor and/or brokers, in the event that the information was not in his possession. That request has not been complied with and Mr Nthai has not explained why he has been unable to comply. [53] Mr Nthai’s role in the Anglo Platinum matter went way beyond that traditionally reserved for counsel. As he described it: ‘(9) The work included the required: (a) negotiations with AAP employees in South Africa and London and with its different attorneys and counsel; (b) consultations in the form of communities’ meetings; (c) identifying farms for relocation; (d) negotiations with government officials and owners of the farms, municipalities and other stakeholders. (10) I was involved in preparing agreements for relocation, construction, employment, audit, grave relocations, township schemes, home owners’ consent, municipal services, town planning, donation of farms agreements and many more. (11) The work also involved resolving complaints and disputes arising from the audits of each household and properties. (12) This required endless telephone calls, including international calls with members of the communities, the project team and other stakeholders. (13) Meetings through video links and teleconferences were frequently held. This was to ensure that issues were discussed and resolved regardless of the location where I was at any given time.’ [54] According to Mr Nthai: ‘42.4 (1) I negotiated directly with employees of AAP at the highest level the entire budget for the relocation project, including the unforeseen activities. The budget included items such as, payment of compensation to community members, compensation philosophy plowing fields, stipends for members of the section 21 companies, payments to contractors, professionals and many other service providers. The entire budget for the relocation of two communities was approximately R800 million. I also negotiated directly with employees of AAP the yearly increases and renewal of the retainers.’ [55] In a letter dated 14 June 2006, Mr Daya wrote to Anglo Platinum: ‘Enclosed herewith another statement for R200 000-00. I have been advised by Advocate Seth Nthai that he had discussed this matter with Mr R H H Van Kerckhoven. The initial order was for R1.5 million and this statement together with the two previous statements of R800 000-00 and R500 000-00 will fulfill the amount claimed in the order.’ On 16 November 2006, Mr Daya despatched the following email to Anglo Platinum: ‘I would appreciate it if you could advise me, whether you have approved the fee increment proposal for Seth. I have been advised by Seth that he needs a response by not later than Friday.’ Similar emails followed on 10 January 2007, 3 February 2007 and 5 February 2007. Those read: ‘In my previous e-mails I had advised as per Seth’s proposal that a sum of R500 000-00 be deposited into my Trust account.’ … ‘I had a discussion with Seth and have been advised as follows regarding the additional fees:- 1. With regard to my request for additional fees for R3 million. Seth advises that he will accept the first instalment of R750 000-00 to be paid into my Trust account. He advises that the remainder of R2 250 000-00 should be paid within two weeks of receiving the first instalment of R750 000.00.’ ‘I have discussed the matter with Seth and explained your proposal for making payment in instalments. Seth has agreed to same. I have already forwarded the first invoice in the sum of R750 000-00 to Dirk Moolman at Anglo Platinum Management Services (Jhb). I would appreciate it if you could liaise with Dirk to advise him of the agreement.’ [56] On 02 November 2011 the attorney representing the PSA in the striking off application wrote to Mr Daya requesting information from him pertaining to the Anglo Platinum matter. The next day Mr Daya responded that he would require some time to retrieve the files and will thereafter forward the requested information. Almost immediately thereafter he appeared to have a change of heart. In a further letter written that same day he stated: ‘2. Since I consider the information requested by your client to be privileged I would require, in my respectful submission, permission from my clients to disclose the requested information. 3. I had accordingly telephonically contacted my clients to advise them of your letter dated the 2nd November 2011. 4. Clients have requested that I furnish them with a copy of your letter under reply. Clients have also advised that since Advocate Nthai SC is a interested party that I also forward a copy of your letter to him and also obtain permission from him as to whether I can disclose the requested information.’ [57] In the exchange of correspondence that followed, Mr Daya clarified that his clients are not Anglo Platinum, but ‘the communities of Ga-Puka and Ga-Sekhoalelo based in Mokopane’. On 23 November 2011 Mr Daya wrote: ‘6. In the interim and to assist my clients to make a informed decision to your clients request, you are kindly requested furnish us with the following information: 6.1. The nature and purpose of your client’s enquiry relating to the payment of fees to Advocate Nthai; 6.2. Whether your client has requested the information it requires directly from Advocate Nthai; 6.3. The manner in which your clients have obtained the various tax invoices and that copies of all the tax invoices in your possession be forwarded to our offices.’ [58] Eventually, on 28 November 2011 Mr Daya wrote: ‘5. Although I fully understand your client’s obligation to pursue its investigation against Advocate Seth Nthai, as a attorney I also have a obligation to furnish any correspondence that you submit to me, to my client for further instructions. You will no doubt agree that I am duty bound to act on my client’s instructions. 6. I furthermore note your client’s reluctance to divulge the manner in which it has obtained the document/s in question. The documents in question, are in my respectful submission privileged documents and your client has an obligation to disclose the manner in which it has obtained same. 7. As you will note from my letter dated the 03rd November 2011, I had indicated from inception that personally and professionally I have no objections in furnishing the requested information. I am however as the attorney duty bound to follow and comply with my client’s instructions.’ [59] It is unclear on what basis privilege was asserted. But, it is not necessary to enter into that question, because it remained for Mr Nthai to explain his conduct. His explanation, such as it is, is wholly unsatisfactory. It was for him to take the court fully into his confidence. He failed to do so. The allegations pertaining to Mr Nthai’s conduct in the Anglo Platinum matter still hang over his head. His uncooperative attitude on this score is concerning. His persistent refusal to disclose relevant documents and to give a full account concerning the allegations against him are not the actions of a reformed person. [60] Importantly, the allegations in the Anglo Platinum complaint go beyond merely overreaching. Mr Nthai acted for the communities whilst he was paid by Anglo Platinum. This constitutes a clear conflict of interest. It is in a sense similar to Mr Nthai’s conduct when, whilst acting for the Government, he sought to cooperate with Mr Marcenaro and to be corruptly compensated by him. [61] Regardless of Mr Nthai’s failure to address the full details of the allegations of overreaching and conflict of interest, the high court found that the claims of overreaching were part of the original application for Mr Nthai’s striking off. The high court also found that he did not file an answering affidavit in the application because he realised that ‘he deserved to be punished due to the serious nature of his indiscretions’. [62] I have dwelt on this aspect, because it seems to me that the high court failed entirely to appreciate the full import of the transgression. This rendered it far too receptive to Mr Nthai’s explanation. At the time our law recognised a divided profession coupled with a referral system38 and that, at least in regard to the conduct of litigation, an advocate misconducts himself if he acts without the intervention of an attorney.39 [63] Our courts have generally affirmed that it is in the public interest that there should be an independent Bar whose members ‘in general do not perform administrative and preparatory work in litigation but concentrate their skills on the craft of forensic practice.’40 In In re: Rome, in outlining the points of distinction between the two branches of the profession, Corbett CJ said: ‘The advocate is, broadly speaking, the specialist in forensic skills and in giving expert advice on legal matters, whereas the attorney has more general skills and is often, in addition, qualified in conveyance and notarial practice. The attorney has direct links (often of a permanent or long- standing nature), with the lay client seeking legal assistance or advice and, where necessary or expedient, the attorney briefs an advocate on behalf of his client. The advocate has no direct links or longstanding relationship with the lay client: he only acts for the client on brief in a particular matter and is normally precluded by Bar rules from accepting professional work direct from the client. The attorney is responsible to the advocate for the payment of professional fees due to the latter by the client and for the recovery of these and his own fees and disbursements from the client: The advocate has no direct financial dealings with the client.’41 38 Commissioner, Competition Commission v General Council of the Bar of South Africa 2002 (6) SA 606 (SCA) para 19. 39 Van der Berg v General Council of the Bar of South Africa (above fn 11) para 23. 40 De Freitas and Another v Society of Advocates of Natal and Another 2001 (3) SA 750 (SCA) at 763G. 41 In re: Rome 1991 (3) SA 291 (A) at 306F-G. [64] Likewise, in Rösemann v General Council of the Bar of South Africa,42 Heher JA had this to say: ‘At this point the referral rule and its implications … become significant. An advocate in general takes work only through the instructions of an attorney. The rule is not a pointless formality or an obstacle to efficient professional practice, nor is it a protective trade practice designed to benefit the advocacy. The rule requires that an attorney initiates the contact between an advocate and his client, negotiates about and receives fees from the client (on his own behalf and that of the advocate), instructs the advocate specifically in relation to each matter affecting the client’s interest (other than the way in which the advocate is to carry out his professional duties), oversees each step advised or taken by the advocate, keeps the client informed, is present as far as reasonably possible during interaction between the client and the advocate, may advise the client to take or not take counsel’s advice, administers legal proceedings and controls and directs settlement negotiations in communication with his client. An advocate, by contrast, generally does not take instructions directly from his client, does not report directly or account to the client, does not handle the money (or cheques) of his client or of the opposite party, acts only in terms of instructions given to him by the attorney in relation to matters which fall within the accepted skills and practices of his profession and, therefore, does not sign, serve or file documents, notices or pleadings on behalf of his client or receive such from the opposing party or his legal representative unless there is a Rule of Court or established rule of practice to that effect (which is the case with certain High Court pleadings but finds no equivalent in magistrates’ court practice). The advocate does not communicate directly with any other person, save opposing legal representatives, on his client’s behalf (unless briefed to make representations), does not perform those professional or administrative functions which are carried out by an attorney in or from his office, does not engage in negotiating liability for or the amount of security for costs or contributions towards costs or terms of settlement except with his opposing legal representative and then only subject to the approval of his instructing attorney. (This catalogue does not purport to be all-embracing. It is intended only to illustrate the sharpness of the divide and to point the answer to other debates on the same subject.) 42 Rösemann v General Council of the Bar of South Africa 2004 (1) SA 568 (SCA) para 28. [65] In a separate judgment in Rösemann, Streicher JA pointed out: ‘… It follows, furthermore, on the other hand, that to allow advocates to accept instructions by attorneys to conduct litigation on behalf of a client from beginning to end, ie to do all the administrative and preparatory work in respect of litigation, would not serve the public interest and would constitute an abuse of the referral practice. The instructions relied upon by the appellant were to do all the administrative and preparatory work normally done by an attorney. I, therefore, agree with the court a quo that the instructions were not proper instructions and that they should not have been accepted by the appellant.’43 [66] Needless to say, fees charged by an advocate must be reasonable. One who charges an unreasonable fee, is guilty of overcharging or overreaching.44 Overreaching involves an abuse of a person’s status as an advocate, by taking advantage for personal gain of the person paying.45 For an advocate to take advantage of that situation by marking a fee knowing that it is not a proper fee, but one that is unreasonable and improperly marked under the rules, is an abuse of the advocate’s position and amounts to overreaching.46 As it was put in Society of Advocates of South Africa (Witwatersrand Division) v Cigler: ‘… the charging of excessive fees is not only a breach of the Rules but is also a matter of serious concern’.47 [67] Mr Nthai explained, but only in general terms, the nature of the work that he performed in return for his fees. It would be incumbent upon an advocate who is alleged to have charged excessive fees to provide sufficient detail of the work that 43 Ibid paras 9 – 10. 44 General Council of the Bar of South Africa v Geach (above fn 3) para 131. 45 Ibid para 132. 46 Ibid para 132. 47 Society of Advocates of South Africa (Witwatersrand Division) v Cigler (above fn 14) at 354. was performed to enable the fee to be assessed.48 I think that much of the difficulties relating to the fees arose because Mr Nthai acted without proper instructions in the matter. It is true that he had an attorney in the form of Mr Daya, but Mr Daya appears to have been no more than a nominal attorney. As I have pointed out, an advocate may in general not act other than on the instructions of an attorney and by that I do not mean a nominal attorney. Had Mr Nthai been properly instructed, he would no doubt have been held to account by his attorney for the fees that he charged. In that event, it would have been necessary for him to have: (i) recorded his fees in the usual fashion; (ii) marked his briefs with the work done and the fee relevant to such work; (iii) submitted accounts that would have been subject to scrutiny by his attorney; and (iv) no doubt, received payment in the more conventional way. [68] In summary, therefore, the evidence discloses that Mr Nthai had acted in conflict with the duties of an advocate in various respects. He marked fees and received payment other than in the conventional way, which was a consequence of him having acted without proper instructions. He associated himself with a mandate that was detrimental to the reputation of the profession. And, in executing the mandate he lent himself to what, at the very least, had the potential for fraud. [69] Unlike his admission to the misconduct based on the bribery and corruption, Mr Nthai has not admitted the allegations of overreaching. Given his denials, his refusal to provide the underlying documents is concerning. Similarly, in Johannesburg Society of Advocates v Edeling,49 Mr Edeling did not voluntarily disclose certain information relevant to his readmission as an advocate. He only did 48 Van der Berg v General Council of the Bar of South Africa (above fn 11) para 23. 49 Johannesburg Society of Advocates v Edeling (above fn 33). so after the JSA had raised specific concerns about the information that he had provided in his application. This court found that Mr Edeling’s failure to disclose matters relevant to the question of his readmission undermined his assertion that he had genuinely, entirely and permanently reformed. And, that he could not be trusted to carry out the duties of an advocate in a satisfactory way as far as members of the public are concerned.50 The same must apply to Mr Nthai. [70] It is no small matter for an advocate to disregard the rules of his professional body and the authorities that I have referred to illustrate the seriousness with which such conduct is viewed by the courts. Here, it is impossible to avoid the conclusion that Mr Nthai was a party to a relationship or an understanding between himself and the firm of attorneys, in terms of which he: was free to perform acts whether or not those were ordinarily performed by advocates; would not debit the attorneys for his work as and when the work was performed; and, would charge a composite fee irrespective of whether or not such fee was reasonable. The high court failed to recognise, as the full court emphasised in Society of Advocates of South Africa (Witwatersrand Division) v Cigler that: ‘The fact that an advocate has breached the Rules of the Society, even in isolated instances, may very well be relevant to the Court's decision as to whether he is a fit and proper person to practise as an advocate, and so is a finding whether he treats the Rules of the Society with respect or with contempt. Breaches of the Rules, as I have indicated, may cause an injustice and even an unfair trial. It is for these reasons that Courts have in the past always assisted Societies of Advocates in upholding and enforcing their Rules.’51 50 Ibid para 36. 51 Society of Advocates of South Africa (Witwatersrand Division) v Cigler (above fn 34) at 354. [71] In readmitting Mr Nthai, the high court placed particular emphasis on Mr Nthai’s mental health at the time of the misconduct. Mr Nthai had placed evidence before the court to the effect that he had been suffering from depression. This, the court held, contributed significantly to and was the only rational explanation for Mr Nthai’s misconduct. According to the court, it also explained his failure to participate in the disciplinary proceedings. The high court concluded that the fact that Mr Nthai was unwell at the time is the only thing that could ‘explain the fact that he risked his lucrative practice, the opprobrium of his colleagues and friends and the society at large and his entire career in which he would have practised his advocacy until his retirement for a mere R5 million which amount, it must be pointed out, was not even paid to him.’. [72] The high court considered the medical evidence concerning the role of anxiety and depression in Mr Nthai’s transgressions to be an overwhelming factor in favour of his readmission. It held that ‘it is easy for one to conclude that Nthai’s health condition played a significant role in his deviant and irrational behaviour’. In that regard, it placed reliance on the medical reports of Dr Williamson, a psychiatrist, and Prof Wolff, a clinical psychologist. The court considered this to be ‘powerful evidence in support of Nthai’s case’. The court further held that Mr Nthai had ‘made a good case that his misconduct was due to his poor health condition at the relevant time and that in that respect he has completely reformed’. [73] However, in making these findings, the court went beyond what the evidence reasonably justified. Neither of the health professionals who saw Mr Nthai, definitively concluded that depression caused or explained his misconduct. Both merely suggested that depression could have impaired his judgment and thus contributed to his misconduct. [74] The medical evidence also appeared to have satisfied the high court that Mr Nthai would not repeat his transgressions. The court found that ‘the reports of the said experts convincingly demonstrate that Nthai has fully recovered from the health condition that probably resulted in his irrational and corruptive conduct during October 2009.’ [75] It is clear that the high court misconstrued the evidence of Prof Wolff and Dr Williamson. Prof Wolff’s evidence was to the following effect: Mr Nthai was a patient of Prof Wolff’s practice since 2 April 2009 (which was before the date of his transgressions). Prof Wolff provided Mr Nthai with cognitive behavioural psychotherapy between 2 April 2009 and 12 May 2009 ‘when his depression and anxiety had improved significantly, and he was asymptomatic.’ In February 2010, Mr Nthai returned to the practice complaining of depression and indicating that in October/November 2009 he had committed the transgressions and become more depressed, when he was mentioned in a negative light in the media. Prof Wolff found that, after his transgression became public, Mr Nthai had become severely depressed and sought treatment. Prof Wolff says that the severity of Mr Nthai’s depression ‘was such that it could only have been caused by the events described by him above, especially his depression and anxiety dating back from 1995’. He concurred with Dr Williamson’s conclusion that Mr Nthai’s condition could not have developed over a short period of time. He concluded that there is no reason (to him as a medical practitioner) why Mr Nthai should not be reinstated in his previous professional role as an advocate on the basis that he was asymptomatic for depression, when he was re-examined in August 2018. [76] Dr Williamson’s evidence was that she had treated Mr Nthai after he had been referred to her by Prof Wolff on 2 February 2010. Mr Nthai described to Dr Williamson the incident in October/November 2009, which resulted in his name being removed from the roll of advocates. He alluded to the media coverage and the shame he felt at his actions, which also affected his late wife and children. Mr Nthai was unable to give Dr Williamson a rational basis for his actions. He had reported to Dr Williamson a long-standing history of intermittent depression and anxiety dating back to 1995, for which he had received treatment over the years. At the time when Dr Williamson first saw Mr Nthai, he was clearly very depressed. [77] Dr Williamson concluded that: ‘Given his history of intermittent episodes of depression and the Major Depressive Disorder that I observed in February 2010, I am of the view that this could have influenced his behaviour during the preceding months including September, October, November and December 2009. His severe condition in February 2010 could not have developed over a few short weeks. When I assessed Mr Nthai in February 2010, he was unable to give me a rational explanation of his decisions and behaviour in those months of 2009 that lead to his disbarment. She concluded that:  Mr Nthai is not suffering from depression at present  He may have been depressed at the time of his irrational professional transgressions in October/November 2009 which could then have influenced his insight and judgment.  Affording Mr Nthai a second chance, by re-admitting him to the Role of Advocates would contribute to his self-esteem and restore his dignity.’ [emphasis added] [78] This represents the high-water mark of the medical evidence. Ignoring some of the rather speculative hypotheses advanced by the medical professionals, what emerges is that Mr Nthai had suffered from depression and anxiety in the past, and it appeared to them that the anxiety and depression may have played some role in his transgressions. Neither of the experts went so far as to aver positively that depression or anxiety was the primary, or for that matter even a contributing factor to the transgressions. [79] Yet the high court held that his condition provides a full explanation for Mr Nthai’s transgressions. However, neither witness went so far as to suggest that it was the depression and anxiety that contributed to a lack of honesty, which marked his scheme, pursued vigorously over several months. Nor that without depression and anxiety, Mr Nthai would not have transgressed. Much more by way of evidence would have been required to justify the findings of the high court. [80] In the absence of such evidence, it is not possible to conclude that Mr Nthai is not a person inherently prone to dishonesty or the fact that he is currently asymptomatic for depression and anxiety means that he is not at risk of similar transgressions in the future. On the contrary, because of the equivocal and limited nature of the medical evidence about the causal relationship between his condition and the transgressions, the high court could not justifiably have concluded that there is any assurance that the character flaws which resulted in the transgressions – in particular dishonesty and greed – will not recur if he is readmitted to practice. [81] As a result, neither the psychiatrist, psychologist nor the high court genuinely came to grips with what patently was a significant contributing factor, namely, Mr Nthai’s greed and dishonesty. The anxiety and depression, such as it is, hardly explains his clear goal directed behaviour over a protracted period. Nor can it mitigate the dishonesty. It follows that neither of the health professionals could (or did) conclude definitively that Mr Nthai was depressed at the time of his misconduct or that a causal nexus existed between the two. Mr Nthai himself conceded that he was ‘unable, as lay person, to link the incident to the illness’. [82] While Mr Nthai makes the bare allegation that he accepts that greed and dishonesty played a role in his transgressions, and that he has reflected upon and repented for these character flaws, his reliance on depression and anxiety as a contributory factor obscures the fact that Mr Nthai has not properly come to grips with the real elements of his transgressions and of his inherent character flaw. As it was pointed out in S v Matyityi: ‘There is, moreover, a chasm between regret and remorse. Many accused persons might well regret their conduct, but that does not without more translate to genuine remorse. Remorse is a gnawing pain of conscience for the plight of another. Thus genuine contrition can only come from an appreciation and acknowledgement of the extent of one’s error. Whether the offender is sincerely remorseful, and not simply feeling sorry for himself or herself at having been caught, is a factual question. It is to the surrounding actions of the accused, rather than what he says in court that one should rather look. In order for the remorse to be a valid consideration, the penitence must be sincere and the accused must take the court fully into his or her confidence. Until and unless that happens, the genuineness of the contrition alleged to exist cannot be determined. After all, before a court can find that an accused person is genuinely remorseful, it needs to have a proper appreciation of, inter alia: what motivated the accused to commit the deed; what has since provoked his or her change of heart; and whether he or she does indeed have a true appreciation of the consequences of those actions. There is no indication that any of this, all of which was peculiarly within the respondent's knowledge, was explored in this case.’52 Although stated of an accused person in the context of criminal proceedings, those considerations apply no less in this context. [83] It was for Mr Nthai to demonstrate by means of clear and convincing evidence that he has grappled with the nature and degree of his transgressions, and that he has indeed reformed and that he is now a fit and proper person.53 The question is not whether he has been punished enough.54 It is rather whether he is a person who can safely be trusted to faithfully discharge all of the duties and obligations relating to the profession of an advocate. In readmitting Mr Nthai, the high court emphasised the importance of the PSA, the JSA and the LPC finding it ‘in their hearts to forgive Nthai’ and in that regard made reference to a sermon delivered by Dr Martin Luther King Jr emphasising the importance of the capacity of forgiveness. [84] The high court also gave considerable weight to the devastating impact of the media publicity on Mr Nthai and his family and the fact that his transgressions were made public. It accordingly concluded that Mr Nthai had been sufficiently punished for his transgressions. In the view of the high court the case was about whether Mr Nthai should be given a second chance. To focus on forgiveness and whether Mr Nthai had been sufficiently punished, as the high court did, is to fundamentally misconceive the nature of the enquiry. 52 S v Matyityi [2010] ZASCA 127; 2011 (1) SACR 40 (SCA) para 14. (Footnotes omitted.) 53 Law Society, Transvaal v Behrman (above fn 12). 54 Swartzberg v Law Society of the Northern Provinces (above fn 39) para 27. [85] As long ago as Law Society v Du Toit 1938 OPD 103, it was said in regard to an application for the removal of an attorney: 'The proceedings are instituted by the Law Society for the definite purpose of maintaining the integrity, dignity and respect the public must have for officers of this court. The proceedings are of a purely disciplinary nature; they are not intended to act as punishment of the respondent… It is for the courts in cases of this nature to be careful to distinguish between justice and mercy. An attorney fulfils a very important function in the work of the court. The public are entitled to demand that a court should see to it that officers of the court do their work in a manner above suspicion. If we were to overlook misconduct on the part of officers of the court, if we were to allow our desire to be merciful to overrule our sense of duty to the public and our sense of importance attaching to the integrity of the profession, we should soon get into a position where the profession would be prejudiced and brought into discredit.' This statement has been quoted and followed in a number of subsequent cases and, although it deals with an attorney, it is equally applicable to the case of an advocate.55 [86] Mr Nthai’s application was accompanied by affidavits from no less than five persons who attested to his rehabilitation. He also detailed his employment and business ventures subsequent to his removal from the roll. The high court placed great store by the evidence, especially that of Advocate George Bizos SC. It quoted from the affidavit of Mr Bizos, to the following effect: ‘4. I have served as a director of Lawyers for Human Rights (LHR). I met Nthai through his activities as a regional director of LHR and a member of the Legal and Constitutional Committee of the African National Congress (ANC). In this capacity, Nthai participated in many conferences that shaped democracy in South Africa. When the ANC’s Legal and Constitutional Committee convened a conference on whether South Africa should have the Nuremberg Style Trials or adopt the Truth and Reconciliation route, Nthai was an active participant. 55 Society of Advocates of South Africa (Witwatersrand Division) v Cigler (above fn 34) at 358A-B. 5. Nthai participated in the activities of the JSC, first as the Limpopo Premier’s representative and later through appointment by President Thabo Mbeki. It was in this role that I came to know Nthai better. 6. During interviews of candidates Nthai always asked incisive and relevant questions. It was, however, during close sessions that Nthai’s intellect and wisdom has shown. His views were always listened to and respected by all members of the JSC. 7. When the allegations of his transgressions first surfaced, they were met with disbelief and shock. Nthai was regarded by his peers as a man of integrity. 8. When he requested me to support his application, I agreed to do so as I believe that Nthai still has a role to play in the legal profession. His removal from the roll of practicing advocates had left a void which was difficult fill. 9. I therefore support his application for re-admission’. [87] The high court criticised the PSA for trying ‘to downplay the significance of the Mr Bizos’s support for Nthai’s application’. It suggested, ‘[t]his, in our view, is an attack upon the integrity of an eminent jurist, such as Mr Bizos’.56 In that, the high court misconstrued the contention advanced on behalf of the PSA. Consequently, it did not engage with the gist of the argument, which was articulated thus by Wallis JA in Edeling’s case: ‘Most of the references were unhelpful and meaningless, because all they did was paint a favourable picture of Mr Edeling, without indicating the extent of their knowledge of Mr Edeling’s wrongdoings or whether they knew about the personality traits or character defects which gave rise to his misdeeds and led to his striking off. None referred to the fact that dishonesty lay at the root of the decision to strike him from the roll of advocates. In regard to similar character references, Wessels JP said in Ex parte Wilcocks: 56 Nthai (above fn 2) para 77. “It is not sufficient to produce before the court a few certificates from interested friends or to say that he has led an honest life. The evidence with regard to that must be overwhelming: the court must be satisfied that it will make no mistake if it reinstates the applicant.”’57 It follows that the high court could not, without more, on the strength of the character references have been satisfied that ‘it will make no mistake’ in readmitting Mr Nthai. [88] There are, moreover, a number of telling instances where Mr Nthai’s conduct post-removal has demonstrated that he is fundamentally ill-suited to a profession based on integrity, candour and honesty. In his founding affidavit in support of his readmission application, Mr Nthai observed: ‘My initial reaction to the investigation by the Pretoria Bar Council and the inquiry by the DC was unhelpful. I felt that the manner in which the investigation by the Pretoria bar Council was conducted was unfair, my attitude was misguided and wrong.’ [89] However, what Mr Nthai somewhat euphemistically described as ‘misguided and wrong’ continues to characterise his behaviour. Instead of inviting rigorous scrutiny of his application by the very parties who had conducted the disciplinary proceedings and brought the striking off application, he has endeavoured to exclude them from the proceedings. Mr Nthai contested the standing of the JSA and the PSA in his application for readmission. This despite him having said that he ‘felt ethically duty bound to bring the application to the attention of both Bars’ and that he understood that they had an interest in his readmission. Contradictorily, he later denied the existence of the JSA and the PSA because ‘the new South African Legal Practice Council has now been established in terms of the Legal Practice Act with oversight regulatory powers to all legal practitioners, including advocates’. 57 Edeling (above fn 33) para 14. (Citations omitted.) [90] In the same breath though he recognised the existence of POLSA and stated that the role of custos morum resided only with them. Of course, POLSA supported the readmission application. Why the application was supported has not been explained. POLSA has a duty to ensure that persons who are enrolled as advocates are persons of dignity, honour and integrity. In supporting Mr Nthai’s readmission application POLSA appears to have failed in that duty. [91] After both the JSA and the PSA had resolved to intervene in the readmission application, Mr Nthai refused to accede to their request for a postponement. And, in opposing the application for leave to intervene, Mr Nthai asserted: ‘Simply put, this court is called upon to determine whether I am fit and proper person to be readmitted as an advocate. The burden of proof rests on me and no one else’. [92] Mr Nthai also strongly opposed the JSA’s application for leave to appeal and the GCB’s application to intervene. He expressed the following view: ‘Given the nature and effect of the judgment and order of the Court, and particularly the fact that the respondents’ prospects of success on appeal are non-existent, I was justified in concluding that it was unthinkable for any of the respondents to lodge an application for leave to appeal.’ He added: ‘[T]he application for leave to appeal is intended merely to harass, frustrate and drain me emotionally and financially. The intention is to drag and delay my return to practice law so that I would ultimately give up.’ Insofar as the GCB was concerned, he stated: ‘The GCB’s insistence on its continued regulatory role or as custos morum will, with respect always remain a pipe dream … It is clear that the GCB intends to use my case to try to achieve the outcome which it lost at the legislative altar’. This is hardly the conduct of a self-effacing, reformed individual, who is open to the scrutiny of a court, aided and assisted by the facts and arguments that the professional bodies were uniquely positioned to place before it. [93] What is more, after leave to appeal had been granted by this court and despite the fact that an appeal was pending against his readmission and the enforcement order, Mr Nthai started to accept briefs. In terms of section 18(4)(iv) of the Superior Courts Act, the enforcement order of the high court was ‘automatically suspended’ pending the outcome of the appeal of that order. He also continued using the appellation ‘SC’, thereby holding himself out as a senior counsel. Mr Nthai did so ostensibly because an application had been filed by him with the registrar of this court in terms of s 17(2)(f) of the Superior Courts Act for a reconsideration of this court’s decision to grant leave to appeal against the readmission order. I pause to record that it seems to me that s 17(2)(f) entitles the President of this court to refer a matter for reconsideration only where leave to appeal is refused and that it therefore could not have been invoked in a case such as this, to reverse the decision of the court where leave to appeal had been granted. Mr Nthai’s s 17(2) application was ultimately dismissed with costs by the President of this court on 20 June 2020. [94] Whilst the s 17(2) application was pending, however, in February 2020 it was brought to the GCB’s attention that Mr Nthai was scheduled to appear in the Constitutional Court on behalf of the Minister of Home Affairs. After seeking unsuccessfully to obtain Mr Nthai’s undertaking that, pending finalisation of the appeals, he would withdraw from all matters in which he was engaged, the GCB was forced to point out to the registrar of the Constitutional Court that he was not entitled to appear before that court in the matter. Mr Nthai’s instruction in the matter was terminated, in consequence of the GCB’s letter to the registrar, and the registrar’s subsequent letter to his instructing attorney, the State Attorney. The response from the State Attorney to the registrar was: ‘we thank you for bringing the developments in Mr Nthai’s litigation to our attention’. It may reasonably be inferred from that statement that Mr Nthai had failed to advise the State Attorney, when briefed, that he was not eligible to practise pending the appeals. [95] Despite this incident, Mr Nthai continued to act in a further brief for the Minister of Home Affairs in the Western Cape High Court. On 20 April 2020 Mr Nthai’s attorney was reminded that he was not entitled to continue practicing before the termination of the appeals. His attorney, once again, disputed that it was necessary for him to stop practicing. Consequently, the registrar of that court had to be notified, whereafter he came to be replaced as counsel. [96] The view of Mr Nthai’s attorney was: ‘Our client takes strong exception to the opportunistic and unilateral approach of the GCB to the CC … [T]he GCB failed to disclose the fact that our client has lodged an application for reconsideration of the SCA orders in terms of section 17(2)(f) … and accordingly such orders have been suspended in their operation.’ For that reason as well, the attorney took the view that the filing of the practice note and heads of argument by the JSA and the GCB was ‘premature and improper’. She contended that, until Mr Nthai’s s 17(2)(f) application had been determined, ‘none of the parties are entitled to take a further step in the prosecution of the [appeal]’. [97] What this demonstrates is an obstructive attitude on the part of Mr Nthai, aimed at preventing proper scrutiny of his readmission; hardly that of a reformed person who deserves readmission. His persistence in turning his back on the truth, gratuitous insults and intemperate language constitutes evidence that since his striking off he has developed no insight and no greater perception of what is expected of him. This, it seems to me, is a defect of character which, going forward, is hardly likely to be ameliorated. [98] In the words of Swartzberg, Mr Nthai ‘did not succumb to a sudden temptation and his fall from grace was not in consequence of an isolated act. His was deliberate and persistent dishonesty for personal financial gain over a protracted period’.58 Where, as here, an applicant for readmission has demonstrated a propensity for inherent dishonesty, ‘his prospects of being readmitted to what after all is an honourable profession, will be very slim indeed. Only in the most exceptional of circumstances, where he has worked to expiate the results of his conduct and to satisfy the court that he has changed completely, will a court consider readmission at all.’59 Mr Nthai has not demonstrated such exceptional circumstances. [99] It follows that the high court failed to apply the appropriate test. It did not find exceptional circumstances of the kind required by this court in Swartzberg. Instead, the high court prioritised the consequences Mr Nthai had to endure after his misconduct came to light. [100] I now turn to the appeal against the s 18 order, in terms of which Mr Nthai’s readmission was to operate and be executed pending the outcome of any future appeals. 58 Swartzberg v Law Society of the Northern Provinces [2008] (above fn 14) para 23. 59 Ibid para 32. (Footnotes omitted.) [101] Given that the s 18 appeal is being heard together with the main appeal, the JSA accepts that the appeal against the s 18 order will have no practical effect. This is so because if the main appeal fails, Mr Nthai will be entitled to practice going forward. Contrarily, if the main appeal succeeds, he will not be entitled to practice. That notwithstanding, it is nevertheless necessary to observe that the high court erred in granting the s 18 order. [102] This court explained in University of the Free State v Afriforum60 that s 18 ‘places a heavy onus on the applicant’ as ‘the granting of relief of this nature constitutes an extraordinary deviation from the norm that, pending an appeal, a judgment and its attendant orders are suspended.’61 Section 18 does not seek merely to codify the common law but to ‘introduce more onerous requirements’.62 And, the interim enforcement of court orders constitutes an ‘extraordinary deviation from the norm’ and thus requires ‘the existence of truly exceptional circumstances to justify the deviation’. Exceptional circumstances entail ‘something out of the ordinary and of an unusual nature; … in the sense that the general rule does not apply to it; [and] something uncommon, rare or different’.63 [103] The circumstances relied upon by the high court in granting the enforcement order were not extraordinary, markedly unusual or specially different. It was contended before the high court that the s 18 application should not succeed because of the irreparable harm that would be inflicted on the public if Mr Nthai commenced 60 University of the Free State v Afriforum and Another [2017] ZASCA 165; 2018 (3) SA 428 (SCA). 61 Ibid paras 11 and 9, respectively. 62 Ibid para 11. 63 MV Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas and Another 2002 (6) SA 150 (C) at 156I-157C. practising and this court on appeal overturned the order to readmit him. The public and the legal profession would then be faced with a situation where for that period, Mr Nthai would have been accepting briefs, conducting legal work and appearing in courts in circumstances where it would ultimately have been found that the decision to readmit him does not survive scrutiny. [104] Before a court can grant such order, it must also be satisfied that the party seeking the order has proved, on a balance of probabilities, that he will suffer irreparable harm if the order is not granted, and that his opponent will not suffer such harm in consequence of interim enforcement.64 Mr Nthai’s s 18 application did not meet these requirements. He was at no risk of such harm. It is so that he may have been inconvenienced if he was prevented from commencing practice pending finalisation of the appeal. But this is an ordinary and unavoidable incident of the appeal process. [105] The high court relied on the fact that Mr Nthai had already taken up chambers, paid his Bar fees, commenced lecturing pupils and had been briefed in various complex matters. But these circumstances are not exceptional in any sense. They were of Mr Nthai’s own making. He took these steps despite being fully aware of the normal rule that court decisions are suspended pending an appeal. If these were exceptional circumstances, any candidate for interim enforcement could abruptly take irreversible steps to ensure that the test in s 18 is met. 64 Section 18(3) of the Superior Courts Act. [106] The high court held that Mr Nthai ‘undertook not to practise … and observed his undertaking … despite the fact that he was admitted to practise as an advocate in both Lesotho and Botswana’.65 This meant, the court stated, that he could be trusted to cease practice if an appeal was successful. And, it held that Mr Nthai had demonstrated personal integrity and scrupulous honesty subsequent to his misconduct.66 I have demonstrated that this is not so. Further, Mr Nthai’s resignation on the eve of his disciplinary hearing was an act of self-preservation, designed to avoid scrutiny and culpability. It was not the act of a trustworthy man. But even if he were demonstrably trustworthy, this would not constitute exceptional circumstances. The test is not whether the ultimate appeal order would be complied with, as the high court appears to suggest, but whether exceptional circumstances exist that warrant enforcement pending the appeal. [107] If anything, it was the GCB and its constituent Bars that faced the threat of irreparable harm if the enforcement order was granted and the appeal subsequently upheld. The admission and practice, even if temporarily, of a person who is not fit and proper to practice can cause irreparable reputational damage to the advocates’ profession and real harm to members of the public. In my view, the high court should 65 Nthai (above fn 2) para 80. 66 Ibid para 55. The high court continued: ‘The fact that Nthai was entrusted with handling monies on behalf of the company [where he was employed subsequent to his striking off] without supervision means that his conduct was commensurate with a large degree of trust. This is one of the most crucial traits that the Court takes into account in considering an application for re-admission.’ However, even if the evidence of Mr Nthai’s former employer is accepted as fact, it remains entirely irrelevant. The degree of trust placed in Mr Nthai as a mere employee, after being struck from the roll and thus acutely aware of being under the proverbial magnifying glass, is by no means a reliable determinant of his rehabilitation or newly found fitness for the profession. Much less when it is the say-so of his former employer, who no longer resides in this country and therefore has nothing to lose in the event of Mr Nthai choosing to once more attempt unlawfully benefiting at the expense of the national government and thus, ultimately, at the expense of the entire country. have concluded, after weighing the respective interests of the parties,67 that the readmission judgment should not be enforced pending an appeal. [108] It remains to consider the applications for the PSA to be joined as an appellant and the GCB and the JSA to adduce further evidence, both of which have been opposed by Mr Nthai. On 20 May 2020 the PSA applied for leave to be joined as the third appellant in the appeal. Although the PSA had sought and previously obtained leave to intervene and was subsequently joined as the first respondent in the high court, it did not seek leave to appeal the judgment of the high court. Mr Ellis, explained on behalf of the PSA: ‘3.2.1 The Bar Council of the PSA adopted a resolution on 11 June 2019 not to pursue an application for leave to appeal the judgment and order that was made by the Court a quo on 24 May 2019. 3.2.2 The general membership of the PSA did not support the Bar Council’s aforementioned decision and a special general meeting was convened on 17 October 2019, during which a resolution was adopted to pursue the matter and to assist the SCA in this regard.’ [109] The PSA contends that it is duty-bound to apply to this court for leave to be joined as the third appellant so as to enable it to become actively involved in the appeal and to assist the court in the adjudication of the matter. The PSA did not furnish an explanation for the delay from 17 October 2019, when the resolution was adopted, until the application was filed with this court. It was also late in filing its replying affidavit. Mr Ellis deposed to the replying affidavit on 16 July 2020. However, the replying affidavit together with PSA’s practice note and heads of 67 In Minister of Health and Others v Treatment Action Campaign and Others (No 1) 2002 (5) SA 703 (CC) para 10, the Constitutional Court held that ‘a Court will have regard to the possibility of irreparable harm and to the balance of convenience of the parties’ before making ‘an order to execute pending appeal’. argument only came to be filed with the registrar of this court on 26 October 2020, some four court days before the hearing of the appeal. In addition, the issues that it sought to canvas have been comprehensively dealt with by the GCB and the JSA. In the circumstances, the PSA’s participation adds nothing new. I would accordingly dismiss the application. [110] On 22 September 2020 the JSA and the GCB applied, in terms of s 19(b) of the Superior Courts Act, for leave to adduce further evidence in the appeals. The evidence, which only saw the light of day after the finalisation of the matter in the high court, may be summarised as follows: In an application for condonation filed in June 2020, in support of an unfair dismissal claim before the CCMA against Mr Nthai, his former secretary, Ms Marietjie Jansen van Vuuren, alleged that he continued to practice law after his striking off. Ms Jansen van Vuuren set out in fair detail some of the legal work performed by Mr Nthai, along with supporting annexures. [111] It appeared from the annexures that Mr Nthai prepared opinions together with Advocate Sophia Masimene. In addition, it seemed that he had drafted letters to be placed on the letterhead of Bhadrish Daya Attorneys, to thereafter be sent to clients. Ms Jansen van Vuuren also alleged that Ms Masimene split her fees with Mr Nthai. Mr Nthai denied the allegations, which he described as ‘defamatory and scandalous’. Mr Nthai suggested that Ms Masimene had considered him a mentor and that it was in this capacity that he rendered assistance to her ‘over the years, and on various occasions’, for no payment. In his affidavit before the CCMA, Mr Nthai did not deal fully with the specific examples cited by Ms Jansen van Vuuren or the annexures to her affidavit. [112] When these allegations came to the attention of the GCB and the JSA, Mr Nthai was asked for an explanation. He adopted the stance that he is ‘not prepared to entertain false, untrue and defamatory allegations’. In opposing the application to adduce further evidence, Mr Nthai correctly pointed out that the CCMA had found Ms Jansen van Vuuren to be untruthful and her evidence not to be credible. He was also correct in stating that there are, on the face of it, certain disputes of fact. [113] Mr Nthai went on to describe the request by the JSA and the GCB as a ‘fishing expedition’ and the application for leave to adduce further evidence as ‘an abuse of court process’, asserting that ‘the relevance of the confidential emails between Adv Masimene and I “from 1 January 2018” is highly questionable’. He added: ‘36.4 In in any event, the issue of locus standi of both the GCB and JSA looms large. It goes into the legal authority of the GCB and JSA to demand confidential financial records for this from me… 37.3 The letters addressed to the State Attorneys demonstrate the desperation on the part of the GCB and JSA and an exercise in futility. All the efforts came to naught.’ [114] But, despite questions around Ms Jansen van Vuuren’s credibility and the potential disputes of fact, by his own admission, Mr Nthai assisted Ms Masimene with various opinions. Indeed, his handwritten notes disclosed by Ms Jansen van Vuuren, suggest that he was to an appreciable degree responsible for drafting significant parts of those opinions. In certain instances his handwritten notes, to the word (grammatical and spelling errors included), came to be incorporated into Ms Masimene’s opinions. In correspondence addressed to Ms Jansen van Vuuren he also suggested that he ‘worked on’ opinions with Ms Masimene. And, once again by his own admission, Mr Nthai engaged in ‘referral mining consultancy work’ with Bhadraish Daya Attorneys. [115] It is so that in appropriate cases, cross-examination might be required to establish the true facts. This might well be such a case. However, notwithstanding the troubling nature of the allegations, I prefer to pass over them. For, it seems to me that the matter can be decided without resort to the further evidence. As should be perfectly plain, on the evidence that served before the high court, the appeal must succeed. In that sense the further evidence will not alter the outcome and, strictly speaking, amounts to mere surplusage. I would accordingly refuse the application to adduce further evidence. [116] Finally, Mr Nthai apprehended that he would be prosecuted. According to Mr Maritz: ‘10.2. On 25 March 2010 and shortly before the scheduled time for the commencement of the disciplinary hearing, I met Advocate I A M Semenya SC, who was in the company of Mr Manaka, the respondent’s attorney. 10.3. Advocate Semenya SC engaged me in conversation outside the arbitration venue at Circle Chambers, Brooklyn, Pretoria away from his instructing attorney Mr Manaka. Advocate Semenya SC indicated to me that the respondent was prepared to plead guilty to unspecified unprofessional conduct and submit to the termination of his membership of both the Pretoria Society of Advocates and the Johannesburg Society of Advocates, but that he was reluctant to plead guilty to the charge sheet as formulated as it was possible that he may be criminally prosecuted on the same facts. Under those circumstances he was reluctant to waive his constitutional right to silence as a potentially accused person. He stated that for the same reason the respondent would not oppose an application brought to strike his name from the Roll of Advocates.’ [117] It must thus come as a surprise to many, not least Mr Nthai himself, that no prosecution ensued. The high court considered the amount involved ‘a mere R5 million’. That characterisation, is extraordinary. To borrow from John Till Allingham, ‘[R5 million] is a sum not to be sneezed at’.68 More so, when the bribe was solicited some 12 years ago. The high court also stressed that the amount had, in any event, not been paid. However, as emerges from the arbitral award in the matter, Mr Nthai occasioned the citizens of this country actual prejudice. The arbitration award recorded that: ‘The [Government] very correctly and wisely withdrew that element of its claim for costs that was attributable to Mr Nthai’s work. A Tribunal cannot properly order that the costs of a Party’s adviser who engages in the solicitation of bribes should be recovered from the other Party.’ Thus, whilst the Government was successful in the arbitration and the Tribunal concluded that it was entitled to its costs, the Tribunal held that the fees paid to Mr Nthai could not be recovered as a result of his conduct. It appears that Mr Nthai’s fees for his involvement in the matter amounted at that stage to € 432 320.21 (in excess of six million rand at the current exchange rate). The Registrar of this court will accordingly be directed to forward a copy of this judgment to the National Director of Public Prosecutions, for her attention. [118] With regard to costs, we were informed from the bar that counsel for the GCB and the JSA acted in this appeal without fee and that an order should be made only for the recovery of their disbursements. We intend making the ordinary order with regard to costs, though we note for the information of the taxing master that the costs of counsel are restricted to the recovery of disbursements that have been made by them or on their behalf. 68 The phrase has its roots in J T Allingham’s 1799 play, Fortune’s Frolic: ‘Why as to his consent I don’t value it a button; but then £5000 is a sum not to be sneezed at’. [119] In the result: (1) The application by the Pretoria Society of Advocates for leave to be joined as the third appellant in the appeal is dismissed. (2) The application by the first and second appellants for leave to adduce further evidence is dismissed. (3) The appeal is upheld with costs, excluding counsel’s fees. (4) The orders of the court below, dated 24 May 2019 and 18 July 2019, are set aside and each is replaced with the following: ‘The application is dismissed with costs, excluding counsel’s fees.’ (5) The registrar is directed to forward a copy of this judgment to the National Director of Public Prosecutions. _________________ V M Ponnan Judge of Appeal APPEARANCES For First Appellant: P Kennedy SC (with him N Ferreira and Y Ntloko) Instructed by: Edward Nathan Sonnenbergs Inc, Sandton Webbers, Bloemfontein For Second Appellant: F Ismail (with him PN Smith and M Lengane) Instructed by: Edward Nathan Sonnenbergs Inc, Sandton Webbers, Bloemfontein For First Respondent: G Shakoane SC (with him F Khunou) Instructed by: Kgatla Incorporated, Polokwane Lovius Block, Bloemfontein For Second Respondent: FW Botes SC Instructed by: Bernhard van der Hoven Attorneys, Brooklyn Rosendorff Reitz Barry, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED Johannesburg Society of Advocates and Another v Seth Azwihangwisi Nthai and Others (879/2020 and 880/2019) [2020] ZASCA 171 (15 December 2020) From: The Registrar, Supreme Court of Appeal Date: 15 December 2020 Status: Immediate The following summary is for the benefit of the media in the reporting of these cases and does not form part of the judgments of the Supreme Court of Appeal Today the Supreme Court of Appeal upheld an appeal by the Johannesburg Society of Advocates (the JSA) and the General Council of the Bar of South Africa (the GCB) against a decision of the Limpopo Division of the High Court, Polokwane (per Makgoba JP and Mabuse J) (the high court) readmitting the respondent, Mr Sethe Nthai, as an advocate. Mr Nthai had been admitted as an advocate in 1988. He held chambers in Pretoria and Johannesburg and was a member of both the Johannesburg Society of Advocates (JSA) and the Pretoria Society of Advocates (PSA). Senior status was awarded to him in December 2006. In 2007, Mr Nthai was appointed by the State Attorney to act as lead counsel on behalf of the South African Government (the Government) before the International Arbitration Tribunal. Mr Nthai met on a number of occasions with the CEO of one of the claimant companies in the matter. During these meetings, Mr Nthai attempted to solicit a bribe of R5 million, which he required to be paid into his foreign bank account. In return, he undertook to ensure that the Government would agree to settle the dispute on the basis that each party would pay its own costs, thus potentially saving the claimants millions of Rand, at the expense of his client, the Government. When these allegations came to light, the PSA and JSA commenced disciplinary proceedings against Mr Nthai. He did not participate in the proceedings and was found guilty in his absence of, among other things, corruptly attempting to solicit a bribe. On 15 April 2013, Mr Nthai was struck from the roll of advocates by the Pretoria High Court. In October 2018, Mr Nthai applied to the high court to be readmitted as an advocate. Despite opposition by the PSA, the JSA and the Legal Practice Council, the application succeeded before the high court. On appeal, the SCA held that because the high court had misconceived the nature of the proceedings (it proceeded as if the professional bodies concerned were adversarial litigants), it had found that the GCB and its constituent Bars did not have locus standi in the readmission application; and that they: (i) had been stripped of their role as custodes morum of the advocates’ profession; (ii) may no longer make submissions in applications to strike advocates from the roll or to readmit applicants; (iii) ceased to exist as statutory bodies as of November 2018, when the Legal Practice Act 28 of 2014 (LPA) was brought into force; and (iv) were in the same position as deregistered companies. The SCA concluded that it was plain that the GCB, the PSA and the JSA had a direct and substantial interest in the matter and, far from lacking standing to participate in the application, were necessary parties. The SCA took the view that it is difficult to imagine a more egregious transgression of the norms of professional conduct. It described Mr Nthai’s transgression as a staggering breach not just of almost every conceivable ethical duty of counsel, but also the most basic standards of human decency. In the view of the SCA, the high court had misconceived the nature of the enquiry. Where a person applies for readmission, who has previously been struck off the roll on the ground of not being a fit and proper person, such a person has a heavy onus to discharge. It is for the person to convince the court that there has been a genuine, complete and permanent reformation; that the defect of character or attitude which led to being adjudged not fit and proper no longer exists. The SCA found that the high court had been far too receptive to Mr Nthai’s explanation. In readmitting Mr Nthai, the high court emphasised the importance of forgiveness. The question is not whether he has been punished enough. It is rather whether he is a person who can safely be trusted to faithfully discharge the duties and obligations relating to the profession of an advocate. It was for Mr Nthai to demonstrate by means of clear and convincing evidence that he has grappled with the nature and degree of his transgressions, and that he has indeed reformed and that he is now a fit and proper person. The SCA was not satisfied that Mr Nthai had met that standard. According to the SCA, there were, moreover, a number of telling instances where Mr Nthai’s conduct post-removal demonstrated that he is fundamentally ill-suited to a profession based on integrity, candour and honesty. The SCA pointed out that his objection to the participation of the professional bodies in his readmission application, is hardly the conduct of a self-effacing, reformed individual, who is open to the scrutiny of a court. What this demonstrates, so stated the SCA, is an obstructive attitude on the part of Mr Nthai, aimed at preventing the proper scrutiny of his readmission. This was hardly the conduct of a reformed person, who deserves readmission. His persistence in turning his back on the truth, gratuitous insults and intemperate language constituted evidence that since his striking off he has developed no insight and no greater perception of what is expected of him. That is a defect of character which, going forward, is hardly likely to be ameliorated. Properly characterised, what Mr Nthai did went way beyond mere professional misconduct. With deliberate calculation and clear intent, he attempted to solicit a bribe of R5 m in exchange for his assistance in settling the matter on terms disadvantageous to his client. On his own version, there is no escape from the fact that this constituted a serious crime, for which he surprisingly does not appear to have been charged. Thus, in addition to upholding the appeal and setting aside the order readmitting Mr Nthai, the SCA also referred the matter to the National Director of Public Prosecutions. ________________________________________

4055

non-electoral

2023

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case nos: 309/2022 and 567/2022 In the matter between: NATIONAL BRANDS LIMITED APPELLANT and CAPE COOKIES CC FIRST RESPONDENT THE REGISTRAR OF TRADE MARKS SECOND RESPONDENT Neutral citation: National Brands Limited v Cape Cookies CC and Another (Case nos: 309/2022 and 567/2022) [2023] ZASCA 93 (12June 2023) Coram: PONNAN, GORVEN, HUGHES and GOOSEN JJA and SIWENDU AJA Heard: 17 May 2023 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives via e-mail, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down are deemed to be 12 June 2023 at 11h00. Summary: Trade Marks – opposition to registration – section 10(17) of the Trade Marks Act 194 of 1993 – test – applies to similar goods – proof of actual detriment or advantage not required – opposition well-founded – registration refused. __________________________________________________________________ ORDER ______________________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Le Roux AJ, sitting as court of first instance): The appeal is upheld with costs, including those consequent on the employment of two counsel. Cape Cookies CC is directed to pay the costs arising from the inclusion of the two supplementary volumes in the appeal record on the scale as between attorney and client. The order of the high court is set aside and the following order substituted: ‘(a) The opposition to trade mark application no. 2013/06837 in class 30 in the name of Cape Cookies CC succeeds and the application for registration is refused. (b) Cape Cookies CC is directed to pay the costs of the opposition proceedings, including those consequent on the employment of two counsel.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Gorven JA (Ponnan, Hughes and Goosen JJA and Siwendu AJA concurring) [1] The first respondent, Cape Cookies CC (Cape Cookies) applied to register the trade mark SNACKCRAX by way of application no. 2013/06837 under the Trade Marks Act 194 of 1993 (the Act). Publication took place on 28 May 2014. The registration was sought in the following specification in class 30: ‘Coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder, salt, mustard, vinegar, sauces (condiments); spices; ice.’ It was common ground that these specifications covered savoury biscuits. The application for registration was opposed by the appellant, National Brands Limited (National Brands), on one or more of ss 10(4), 10(7), 10(12), 10(14) and 10(17) of the Act. As is customary, the Registrar of Trade Marks, who was cited as the second respondent, elected to abide the decision in both the high court and in this court. [2] National Brands is the proprietor in South Africa of the following registered marks: (a) trade mark registration no. 1951/2139 SALTICRAX in class 30 in respect of ‘salt flavoured biscuits’, dating back to 1 August 1951 (the SALTICRAX registration); (b) trade mark registration no. B1985/03525 SNACKTIME in class 30 in respect of ‘flour and preparations made from cereals; bread, biscuits, cakes, pastry, confectionery and bakery products of all kinds; yeast, baking powder’, dating back to 29 October 1986 (the SNACKTIME registration); (c) trade mark registrations no. 2001/18858 VITASNACK and no. 2003/01759 VITASNACK WHOLEWHEAT CRISPS logo in class 30 in respect of ‘coffee, tea, cocoa, sugar, rice, tapioca, sago, artificial coffee; flour and preparations made from cereals, bread, pastry and confectionery, ices; honey, treacle; yeast, baking-powder, salt, mustard, vinegar, sauces (condiments); spices; ice’ dating back to 2 November 2001 and 31 January 2003 respectively (the VITASNACK registration). [3] Cape Cookies’ SNACKCRAX savoury biscuits have been on the market since August 2014 and are sold in competition with National Brands’ SALTICRAX savoury biscuits. In addition, Cape Cookies uses the VITACRAX mark, registered in 2009, in relation to a crisp bread snack. National Brands has sought to interdict that use in the Western Cape Division of the High Court, Cape Town (the Cape litigation). The Cape litigation is still pending. [4] The opposition proceedings were heard in the high court by Le Roux AJ in the Gauteng Division of the High Court, Pretoria (the high court), who dismissed the opposition and ordered that the relevant trade mark application must proceed to registration and directed the Registrar of Trade Marks to register it. National Brands was ordered to pay the costs of the opposition proceedings. The high court granted leave to appeal on a limited basis but this court granted leave on the balance of the grounds of opposition. [5] The opposition by National Brands was based on the following provisions of s 10 of the Act: ‘The following marks shall not be registered as trade marks or, if registered, shall, subject to the provisions of sections 3 and 70, be liable to be removed from the register: . . . (4) a mark in relation to which the applicant for registration has no bona fide intention of using it as a trade mark, either himself or through any person permitted or to be permitted by him to use the mark as contemplated by section 38; . . . (7) a mark the application for registration of which was made mala fide; . . . (12) a mark which is inherently deceptive or the use of which would be likely to deceive or cause confusion, be contrary to law, be contra bonos mores, or be likely to give offence to any class of persons; . . . (14) subject to the provisions of section 14, a mark which is identical to a registered trade mark belonging to a different proprietor or so similar thereto that the use thereof in relation to goods or services in respect of which it is sought to be registered and which are the same as or similar to the goods or services in respect of which such trade mark is registered, would be likely to deceive or cause confusion, unless the proprietor of such trade mark consents to the registration of such mark; . . . (17) a mark which is identical or similar to a trade mark which is already registered and which is well-known in the Republic, if the use of the mark sought to be registered would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark, notwithstanding the absence of deception or confusion . . .’. [6] It is as well to reiterate that, historically and primarily, a trade mark functions as a badge of origin of the goods offered.1 This originates from the definition of 1 Verimark (Pty) Ltd v BMW AG; BMW AG v Verimark (Pty) Ltd [2007] ZASCA 53; 2007 (6) SA 263 (SCA) para 5 (Verimark). This applies also to services which are not relevant here. ‘trade mark’ in the Act.2 It reassures persons seeing the mark that the proprietor is the source of those goods. A registered trade mark constitutes a monopoly. That being the case, it must not be interpreted in such a way as to impermissibly widen its scope. On the other hand, the registration stage is aimed at ensuring the sanctity of the Trade Mark Register, which should contain only distinctive marks.3 It is also worth noting that only one ground of opposition need succeed for registration to be prohibited and the application dismissed. There is an overall onus on the applicant for registration to satisfy the court that there is no bar to registration under the Act. [7] I turn to the objection under s 10(17) of the Act which precludes registration of: ‘a mark which is identical or similar to a trade mark which is already registered and which is well- known in the Republic, if the use of the mark sought to be registered would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark, notwithstanding the absence of deception or confusion . . .’. Section 10(17) was introduced in 1997 along with s 34(1)(c) of the Act, which is the equivalent section dealing with infringement, and provides: ‘(1) The rights acquired by registration of a trade mark shall be infringed by – . . . (c) the unauthorized use in the course of trade in relation to any goods or services of a mark which is identical or similar to a trade mark registered, if such trade mark is well known in the Republic and the use of the said mark would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark, notwithstanding the absence of confusion or deception . . .’. 2 Apart from a non-applicable provision, ‘trade mark’ is defined as ‘a mark used or proposed to be used by a person in relation to goods or services for the purpose of distinguishing the goods or services in relation to which the mark is used or proposed to be used from the same kind of goods or services connected in the course of trade with any other person’. 3 See s 9 of the Act. These are known as the ‘anti-dilution’ provisions. [8] We were not referred to any authority, which has dealt with the provisions of s 10(17) of the Act. Nor have I found any. There are a number of cases dealing with s 34(1)(c). These afford some guidance as far as the applicable principles are concerned but cannot be applied without more, because the provisions are not entirely on all fours and since they relate to infringement whereas s 10(17) relates to the registration stage. What is more, the incidence of the onus in respect of each differs. [9] In Laugh It Off Promotions CC v South African Breweries International (Finance) BV t/a SabMark International (Laugh It Off SCA), Harms JA listed the requirements for proceedings under s 34(1)(c): ‘In order to establish infringement, the owner of the trademark must establish: (a) the unauthorised use by the defendant of a mark (b) in the course of trade (c) in relation to any goods or services (d) the mark must be identical or similar to a registered trademark (e) the trademark must be well known in the Republic, and (f) the use of the defendant's mark would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trademark.’4 Of these, the first three are not in dispute. 4 Laugh It Off Promotions CC v South African Breweries International (Finance) BV t/a SabMark International [2004] ZASCA 76; 2005 (2) SA 46 (SCA); [2004] 4 All SA 151 para 20 (Laugh It Off SCA). This judgment was reversed on appeal by the Constitutional Court in Laugh It Off Promotions CC v SAB International (Finance) BV t/a Sabmark International (Freedom of Expression Institute as Amicus Curiae) [2005] ZACC 7; 2006 (1) SA 144 (CC); 2005 (8) BCLR 743 (Laugh It Off CC) but this aspect was not departed from in that court. [10] I will turn to item (d) presently. In support of its contention that item (e) was satisfied, National Brands made the point that, for a period of 58 years, it was the only proprietor of a mark which included the expression ‘CRAX’ in any guise or form in class 30. At the time of the application by Cape Cookies for the registration of SNACKCRAX, there were three such marks appearing in the Trade Marks Register: SALTICRAX, Cape Cookies’ VITACRAX and trade mark registration no. 2009/24890, ETI CRAX, in the name of a third party who, when requested by National Brands to cancel the registration, did so. Cape Cookies were also requested to cancel the VITACRAX mark and refused, leading to the Cape litigation. [11] National Brands gave detailed, unchallenged, evidence of the reputation and goodwill of the SALTICRAX brand. It is sold through more than 2095 retail stores in South Africa. It is also sold at over 270 convenience stores located at the major South African fuel stations. It is sold in at least ten countries in Africa as well as in the United Kingdom, the United States of America and Australia. Through its Snackworks division, National Brands held a total of 66.7 percent of the savoury biscuit market in 2012, with SALTICRAX biscuits alone accounting for 14.8 percent. In 2013, the percentages were 66.2 and 14.9 and in 2014, they were 66.9 and 13.7 respectively. In addition, nett sales of SALTICRAX for the period from 1999 to 2014 totalled some R671 million. Between 1994 and 2009, National Brands spent more than R11 million in advertising SALTICRAX. [12] In argument it was conceded that the trademark SALTICRAX is well known in South Africa. The high court found that the SALTICRAX trade mark enjoyed a significant reputation and goodwill. This finding is now unchallenged. This means that like items (a) to (c), item (e) has also been met. It is items (d) and (f) which must accordingly be considered. [13] Turning to item (d). By introducing the anti-dilution provisions, it was recognised that protection should be extended beyond merely ‘protecting the mark as a badge of origin.’5 In National Brands Ltd v Blue Lion Manufacturing (Pty) Ltd, this court explained as regards s 34(1)(c) of the Act: ‘Section 34(1)(c) introduces a new form of trade mark protection into our law, which aims to protect the commercial value that attaches to the reputation of a trade mark, rather than its capacity to distinguish the goods or services of the proprietor from those of others . . .’.6 Verimark expanded: ‘. . . the provision “aims at more than safeguarding a product's ‘badge of origin’ or its ‘source- denoting function’”. It also protects the reputation, advertising value or selling power of a well- known mark.’7 [14] The inclusion of anti-dilution provisions was prompted by developments elsewhere. In 1988, the Council of the European Communities (EC) agreed a Directive whose material terms in Article 5 provide: ‘2. Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trademark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. . . . 5. Paragraphs 1 to 4 shall not affect provisions in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use 5 Verimark para 5. 6 National Brands Ltd v Blue Lion Manufacturing (Pty) Ltd 2001 (3) SA 563 (SCA) (National Brands v Blue Lion) para 11. 7 Verimark para 13. of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.’8 Paragraph 5 of Article 5 omits the requirement of use on ‘goods or services which are not similar to those for which the trademark is registered’ and that of reputation in a Member State. [15] This prompted the production in the United Kingdom of a White Paper on the reform of Trade Mark law in 1990. The UK then introduced its anti-dilution provisions in 1994 by way of s 10(3) of its Trade Marks Act: ‘A person infringes a registered trade mark if he uses in the course of trade a sign which – (a) is identical with or similar to the trade mark, and (b) is used in relation to goods or services which are not similar to those for which the trade mark is registered, where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.’ As will be noted, this aligns with paragraph 2 of Article 5 of the EC Directive. [16] As was explained by Harms JA in Laugh It Off SCA: ‘According to the 'Memorandum on the Objects of the Draft Trade Marks Bill' an object of our current Act, was to harmonise our law with that of the European Community, taking into account the said White Paper.’9 That memorandum led to the introduction in 1997 of the anti-dilution provisions in our Act. The Constitutional Court approved the dictum in Premier Brands UK Ltd v Typhoon Europe Ltd,10 concerning the provisions of s 10(3) of the UK Act: 8 First Council Directive 89/1988 of the Council of the European Communities ‘To approximate the laws of the Member States relating to trademarks’. To be found at David Kitchin et al Kerly's Law of Trade Marks and Trade Names (13 ed) 1017. 9 Laugh It Off SCA para 18. 10 Premier Brands UK Ltd v Typhoon Europe Ltd [2000] EWHC 1557; [2000] FSR 767. ‘(T)he owner of . . . a distinctive mark has a legitimate interest in continuing to maintain the position of exclusivity he acquired through large expenditures of time and money and that everything which could impair the originality and distinctive character of his distinctive mark, as well as the advertising effectiveness derived from its uniqueness, is to be avoided . . . Its basic purpose is not to prevent any form of confusion but to protect an acquired asset.’11 Moseneke J went on to say of s 34(1)(c) of the Act: ‘Clearly, in our case too s 34(1)(c) serves a vital purpose in preserving trade and commercial interests of owners of trademarks which have a reputation. This it does by prohibiting use which, although it may not confuse or deceive, materially undermines the repute of well renowned trade marks ordinarily harnessed to sell goods and services. The . . . section aims at more than safeguarding a product's “badge of origin” or its “source-denoting function”. The section strives to protect the unique identity and reputation of a registered trademark. Both of these attributes underpin the economic value that resides in the mark's advertising prowess or selling power. As it is often said the mark sells the goods and therefore its positive image or consumer appeal must be saved from ruin.’12 [17] Cape Cookies submitted that the provisions of s 10(17) should not be regarded as a ‘fall-back’, in the event of the other grounds of opposition in s 10 not being met. However, as mentioned, each of the provisions of s 10 are self-standing grounds of opposition to registration. If any one of them is established, the opposition must succeed and the registration of the mark must be refused. [18] Cape Cookies also submitted that s 10(17) applies only to goods that are different to those for which the mark had been registered. As a result, since both SALTICRAX and SNACKCRAX would cover savoury biscuits, National Brands was not entitled to rely on s 10(17) to resist registration. For this proposition, Cape 11 Laugh It Off CC para 39. 12 Laugh It Off CC para 40. Cookies called in aid the following dictum of Smit J in Triomed (Pty) Ltd v Beecham Group plc and Others: ‘It would appear, although not specifically stated in the section, that the purpose of the section is to prevent the use of a well-known mark in the Republic on goods other than those for which the mark is registered. It seems to me that this subsection is not intended to protect a proprietor who cannot prove the requirements of s 34(1)(a) or 34(1)(b) of the Act in respect of the same or similar goods, as those for which a trade mark is registered.’13 This found support in Klimax Manufacturing Ltd and Another v Van Rensburg and Another.14 Neither matter employed any reasoning in arriving at that conclusion. [19] There are a number of strong indicators that this dictum cannot be supported. Firstly, the language of our anti-dilution provisions does not in terms exclude similar goods and services. In the second place, the provision was adopted with the stated purpose of aligning our Act with provisions of the EC and the UK White Paper. The EC provisions found expression in the Directive mentioned above. It allowed for at least two kinds of provisions: those which applied to non-similar goods or services and those which did not do so. The UK opted in s 10(3) of its Act to limit the provision to non-similar goods and services. Our legislature, cognisant of both options in the Directive and the election by the UK, chose not to limit the application 13 Triomed (Pty) Ltd v Beecham Group plc and Others 2001 (2) SA 522 (T) at 555D-E (Triomed Gauteng). It should be noted that Triomed was upheld on appeal to this court in Beecham Group plc and Another v Triomed (Pty) Ltd [2002] ZASCA 2002; 2003 (3) SA 639 (SCA); [2002] 4 All SA 193 (SCA) (Triomed SCA). However, this court decided the case on a different point and did not deal with the dictum, saying in para 6, ‘In view of my conclusion that the appeal stands to be dismissed, I do not intend to canvass the whole area as did the learned Judge, but my failure to deal with any particular issue should not be seen as either approval or disapproval of his judgment.’ 14 Klimax Manufacturing Ltd and Another v Van Rensburg and Another [2004] 2 All SA 301 (O); 2005 (4) SA 445 (O) at 454G-H (Klimax). of our anti-dilution provisions to non-similar goods and services.15 This has also been noted in some academic writing.16 [20] In the third place, this court has considered whether the provisions of s 34(1)(c) apply to alleged infringements without limiting the enquiry to non-similar goods. Some examples will suffice. Bata Ltd v Face Fashions CC and Another,17 was concerned with the infringement of the appellant’s trade mark in respect of footwear on the respondents’ clothing. Consideration was given to the merits of a s 34(1)(c) infringement claim. Likewise, in Lucky Star Ltd v Lucky Brands (Pty) Ltd,18 both the LUCKY STAR mark and the LUCKY FISH AND CHIPS were used in relation to fish products; the former in respect of canned fish and the latter, cooked fish and chips. Once more, the merits of alleged infringement under s 34(1)(c) were considered. Finally, in Yuppiechef Holdings (Pty) Ltd v Yuppie Gadgets Holdings (Pty) Ltd,19 this court had to consider whether the respondent was infringing the appellant’s ‘YUPPIECHEF’ mark by using the unregistered mark ‘Yuppie Gadgets’ in respect of ‘different types of kitchen equipment . . . as well as other items of household equipment’. Although in each matter the alleged claim of infringement 15 In Laugh It Off CC, this difference in our Act was not material and not dealt with. There Moseneke J commented in para 36 that: ‘Provisions virtually identical in text and substance to our s 34(1)(c) are found in art 5(2) of the European Directive and s 10(3) of the 1994 United Kingdom Act. However, there is an important difference. The corresponding European Community and United Kingdom (UK) provisions require proof of actual detriment or unfair advantage. Our section requires a likelihood of unfair advantage or detriment.’ Reference omitted. As will be seen, the difference identified by him achieves some significance below. 16 Roshana Kelbrick: The term ‘well-known’ in South African trade-mark legislation: some comparable interpretations in https://journals.co.za/doi/pdf/10.10520/AJA00104051_44, p435 at p437. Accessed on 30 May 2023. 17 Bata Ltd v Face Fashions CC and Another 2001 (1) SA 844 (SCA) (Bata). 18 Lucky Star Ltd v Lucky Brands (Pty) Ltd [2016] ZASCA 77; 2017 (2) SA 588 (Lucky Star). 19 Yuppiechef Holdings (Pty) Ltd v Yuppie Gadgets Holdings (Pty) Ltd [2016] ZASCA 118 (Yuppiechef). failed, this court considered the infringement claim on its merits despite some overlap in the nature of the goods. [21] Finally, certain dicta of this court lend some support to an inclusive interpretation. In Verimark, the goods were dissimilar: one being a car and the other a car polish. Harms JA there said that s 34(1)(c) applied to ‘any goods’.20 Likewise, in Laugh It Off SCA, it was said that, ‘the defendant's use need not be in relation to similar goods or services’.21 In National Brands v Blue Lion, this court held, ‘the nature of the goods or services in relation to which the offending mark is used is immaterial . . .’.22 It must be pointed out however that in none of these matters was the nature of the goods placed in issue. But, they all support the general acceptance of the notion that the provision applies to ‘any goods’. [22] For all of the above reasons, I conclude that s 10(17) is not limited to matters involving different goods or services to those covered by the registered trade mark. Similar goods and services fall squarely within its ambit. The submission of Cape Cookies to the contrary effect must be rejected, as must the dicta in Triomed Gauteng and Klimax. [23] With that in mind, I turn to a comparison of the two marks. These are to be compared as they are without taking into account extraneous matter.23 Special care needs to be taken that only the marks are compared in matters where, as here, the 20 Verimark para 11. 21 Laugh It Off SCA para 20. Emphasis in the original. 22 National Brands v Blue Lion para 11. 23 Tri-ang Pedigree (South Africa) (Pty) Ltd v Prima Toys (Pty) Ltd 1985 (1) SA 448 (A) at 468G–H. getup on goods to which they relate has been extensively dealt with in the papers.24 It has also been made clear that ‘in opposition proceedings the question that falls to be decided is not how the parties use or intend to use their marks, but how they would be entitled to use them if both were to be registered’.25 [24] With that as a backdrop, the long-accepted approach as to how to compare word marks must be applied: ‘You must take the two words. You must judge them both by their look and their sound. You must consider the goods to which they are to be applied. You must consider the nature and kind of customer who would be likely to buy those goods. In fact you must consider all the surrounding circumstances; and you must further consider what is likely to happen if each of those trade marks is used in a normal way as a trade mark for the goods of the respective owners of the marks.’26 In addition, ‘global appreciation of the visual, aural and conceptual similarity of the marks in question must be based on the overall impression given by the marks bearing in mind in particular the distinctive and dominant components.’27 The ‘value judgment is largely a matter of first impression and there should not be undue peering at the two marks to find similarities and differences.’28 [25] It hardly needs saying that the marks are not identical. As was said in LTJ Diffusion SA v Sadas Vertbaudet SA, ‘[t]he very definition of identity implies that the two elements compared should be the same in all respects’.29 Accordingly, it is 24 National Brands v Blue Lion para 7. 25 Orange Brand Services Ltd v Account Works Software (Pty) Ltd [2013] ZASCA 158 para 6 (Orange Brand). 26 See ‘In the Matter of an Application by the Pianotist Company Ld. For the Registration of a Trade Mark’ (1906) Reports of Patent, Design and Trade Mark Cases vol 23(32) 774-778. 27 Orange Brand para 14. 28 Yuppiechef para 26. 29 LTJ Diffusion SA v Sadas Vertbaudet SA [2003] ETMR 83 (European Trade Mark Reports) para 50. This dictum was approved in Century City with the caveat that ‘minute and wholly insignificant differences’ should not be taken into account. Century City para 12. an evaluation for similarity which must be undertaken. Many of the cases conflate this enquiry with that of deception or confusion. Section 10(17) explicitly excludes deception or confusion as an element of the enquiry. I do not think it goes so far as to exclude the possibility that the marks, albeit similar, might also deceive or confuse. Simply put, the enquiry before us does not have to encompass that element.30 [26] The cases have recognised that the word ‘similarity’ introduces the notion of a continuum. In R v Revelas, Schreiner ACJ remarked that there are: ‘. . . degrees of similarity or likeness, some approaching, and exceptionally perhaps even reaching, sameness, others amounting to no more than a slight resemblance. The similarity may be basic or superficial, general or specific.’31 Having mentioned this dictum, and in the context of the test for infringement under s 34(1)(c) of the Act, Melunsky AJA held: ‘“Similar” must obviously be construed in the context in which it appears and, in my view, it should not be given too wide or extensive an interpretation for the purposes of s 34(1)(c). The section, while seeking to preserve the reputation of a registered mark, introduces a new concept into South African law. If the word “similar” is given too extensive an interpretation the section might have the effect of creating an unacceptable monopoly to the proprietor of a trade mark and thus unduly stultify freedom of trade. I doubt whether the Legislature could have intended such a result.’32 The need to guard against the impermissible broadening of a trade mark monopoly was succinctly stated in English law: 30 Although it might arise in the future, I do not think it necessary to attempt to resolve the ‘conundrum’ adverted to by Wallis JA in Yuppiechef para 44 as to the possibility of a mark being similar but not deceiving or confusing. 31 R v Revelas 1959 (1) SA 75 (A) at 80B–C. 32 Bata para 14. ‘The attraction of a trade mark registration is that provided it is used and the fees are paid, it gives a perpetual monopoly. The problem is the same as the attraction but from the other perspective. Unless the registration of trade marks is kept firmly in its proper sphere, it is capable of creating perpetual unjustified monopolies in areas it should not.’33 [27] Using a dictionary definition of ‘similar’, and in the light of the warnings of overbroad monopolies, Melunsky AJA concluded that it meant ‘having a marked resemblance or likeness’.34 This court in turn explained that ‘“marked” means “easy to recognise”’.35 The European Court of Justice assesses whether there is a link between the marks: ‘The types of injury referred to in Article 4(4)(a) of the Directive, where they occur, are the consequence of a certain degree of similarity between the earlier and the marks, by virtue of which the relevant section of the public makes a connection between those two marks, that is to say, establishes a link between them even though it does not confuse them.’36 I agree with the academic comment that the opposite extreme of virtual identity should not be required.37 The test, in my view, is that the likeness in the marks should be easy to recognise and that a connection will be made or a link established between them. This, of course, gives expression to the approach which recognises first impressions and imperfect recollection, and eschews undue peering. 33 Société des Produits Nestlé SA v Cadbury UK Ltd [2012] EWHC 2637 (Ch) para 20. 34 Bata par 14. 35 National Brands v Blue Lion para 12. 36 Intel Corporation Inc. v CPM United Kingdom Ltd Case C-252/07 (ECJ) para 30. Cited in Webster and Page, issue 19, para 12.26, p12-55. 37 C Job: ‘The Value Judgment Conundrum: A critical review of recent trade mark appeal decisions in South African Intellectual Property Law Journal (2017) p202 at p213. [28] In assessing similarity, the courts have regard to any dominant feature of the marks. In Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd, Corbett JA said: ‘. . . if each of the marks contains a main or dominant feature or idea the likely impact on the mind of the customer must be taken into account.’38 Clearly, the dominant feature in the present matter is the use by both of the suffix CRAX. This is what would strike the mind of a customer. Cape Cookies contended that this was a descriptive word in common use rather than a made-up, distinctive one. It submitted that ‘both parties know and accept that CRAX is an abbreviation, or variation, of the word “CRACKERS”, which is an ordinary, descriptive, word’. It sought support for this submission in the affidavit of National Brands where it claimed that ‘“CRAX” was used instead of the descriptive word “crackers”’. But the opposite is true. National Brands argued for the distinctiveness of ‘CRAX’ over the non-distinctive and descriptive ‘crackers’. [29] Evidence of language usage must include dictionary use, even though this is not decisive. The Concise Oxford Dictionary does not list ‘crax’ or give it as a form of ‘cracker’ or ‘crackers’. The Merriam-Webster online dictionary defines ‘crax’ as ‘the type genus of Cracidae’.39 There is no mention of its being a shortened term or an abbreviation for ‘crackers’. The Online Cambridge Dictionary has no meaning for ‘crax’, simply listing similar words, the closest of which is ‘crack’.40 The Online Etymology Dictionary has no result for ‘crax’.41 There is no basis for concluding that it is, or was, a word in everyday use or is used as an abbreviation for crackers. 38 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 641B-D. See also PepsiCo v Atlantic Industries [2017] ZASCA 109 para 20 (PepsiCo). 39 ‘Crax.’ Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/Crax. This is a species of long-legged bird. Accessed 25 May 2023. 40 https://dictionary.cambridge.org/spellcheck/english/?q=crax. Accessed 25 May 2023. 41 https://www.etymonline.com/search?q=crax. Accessed 25 May 2023. [30] In support of its contention that ‘crax’ was a commonly used word for ‘crackers’, Cape Cookies attempted to rely on averments in an affidavit delivered in the Cape litigation. National Brands submitted that the affidavit in question did not form part of the papers in the present matter. It had simply been added to the application papers without agreement or the leave of the high court. When pressed in argument, Cape Cookies was constrained to concede that this was the case and that the affidavit in question had not been properly introduced in evidence in the present matter. This means, of course, that it cannot be relied on. The costs arising from this action shall be dealt with later. [31] It must be recognised that the competing words are both composite word marks which include the suffix CRAX. CRAX has not been registered as a standalone mark. The question is whether the different prefixes achieve sufficient prominence to render SNACKCRAX dissimilar to SALTICRAX. Both prefixes are descriptive words and thus not distinctive. SALTI alludes to taste and SNACK the envisaged use for the biscuit. CRAX accordingly must be given more prominence than was held to be the case in the word ‘Lucky’,42 the phonetical equivalent of the commonly used word pepper in the mark PEPPA,43 and the common words ‘Power’44 and ‘Yuppie’.45 All of these were held to be non-distinctive despite their being arguably the dominant element of the composite marks in question.46 CRAX as the dominant feature of the two words is a coined word, unlike the other example 42 As in Lucky Star. 43 As in Dinnermates (Tvl) CC v Piquante Brands International & another [2018] ZASCA 43. 44 As in Bata. 45 As in Yuppiechef. 46 There has been criticism of some of these findings. See C Job: ‘The Value Judgment Conundrum: A critical review of recent trade mark appeal decisions in South African Intellectual Property Law Journal (2017) p202 at p211-215; Roshana Kelbrick and Coenraad Visser: Intellectual Property Law in 2017 Annual Survey of South African Law p658 at p670. cited. It is therefore capable of distinguishing. In so far as the others are concerned, it has come to be accepted that it is not the purpose of trade marks to enable people ‘to secure monopolies on the commons of the English language’47 and that the phonetic equivalent of a non-distinctive word is itself non-distinctive.48 [32] It is worth mentioning some cases where comparisons of words have been found to be similar and registration refused. In American Chewing Products Corporation v American Chicle Company,49 this court upheld the opposition of the proprietor of a registered trademark CHICLETS for chewing gum to registration of Chicks for the same goods. In Century City Apartments Property Services CC and Another v Century City Property Owners’ Association, this court held that, despite the addition of the word ‘apartment’, Century City Apartments was not only similar to Century City but confusingly so.50 In Orange Brand, the holder of the ORANGE trademark in the technology goods category was held to be entitled to resist registration of ORANGEWORKS, despite the word ‘orange’ being in common use. This court explained: ‘The suffix WORKS – a word that might at best suggest an imprecise metaphor – trails off considerably when the mark is expressed orally, is dominated visually by the distinctive ORANGE when written, and is entirely overshadowed by the unusual conceptual use of ORANGE in association with technology.’51 47 Yuppiechef para 38; Quad Africa Energy (Pty) Ltd v The Sugarless Company (Pty) Ltd and Another [2020] ZASCA 37; [2020] 2 All SA 687 (SCA); 2020 (6) SA 90 (SCA); 2020 BIP 426 (SCA) para 15. 48 Cochrane Steel Products (Pty) Ltd v M-Systems Group [2017] ZASCA 189 para 21. 49 American Chewing Products Corporation v American Chicle Company 1948 (2) SA 736 (A). 50 Century City Apartments Property Services CC and Another v Century City Property Owners' Association [2009] ZASCA 157; 2010 (3) SA 1 (SCA); [2010] 2 All SA 409 (SCA) para 13. 51 Orange Brand para 16. In the Court of Appeal in England, registration of ‘Alka-vescent’ was refused as being too similar where ‘Alka-Seltzer’ had been registered.52 Finally, in relation to prescribed medicines, this court held that ZEMAX and ZETOMAX were not only similar, but confusingly so for lay purchasers.53 [33] The suffix CRAX is a distinctive feature of SALTICRAX, as TWIST was held to be in PepsiCo.54 As was said in Distell Ltd v KZN Wines and Spirits CC, ‘the visual, aural and conceptual similarities of the marks must be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components’.55 Not only is the first letter of both an ‘S’, but phonetically each commences with a strong ‘s’ sound. It is well established that the first syllable of a word is important for distinction.56 Both are three syllables. When spoken, they sound the same, with the emphasis on ‘CRAX’. The difference, to the extent that there is any, lies in the middle syllable. But, that distinction fades into insignificance, against the backdrop of the overall impression created by the marks. Considered as wholes, bearing in mind their dominant and distinctive features, SNACKCRAX must be considered to be similar to SALTICRAX. I do not consider that the prefix SNACK serves to sufficiently distinguish SNACKCRAX from SALTICRAX either visually or aurally. The conceptual similarities are clear. 52 Broadhead’s Application for Registration of a Trade Mark (1950) 67 RPC 209 at 217. 53 Adcock Ingram Intellectual Property (Pty) Ltd and Another v Cipla Medpro (Pty) Ltd and Another [2012] ZASCA 39; 2012 (4) SA 238 (SCA); [2012] 3 All SA 1 (SCA) para 31. 54 PepsiCo para 27. I am aware that the matters are not on all fours because TWIST was on the register. It is the prominence of the distinctive feature that is similar. 55 Distell Ltd v KZN Wines and Spirits CC [2016] ZASCA 18 para 10. 56 Tripcastroid [1925] RPC 264 cited in In the matter of Trade Mark application m1553108 by Flexiform Business Furniture to Register the Mark Flexilink and In the matter of Opposition Thereto Under Opposition m 42604 by Wagon Storage Products Ltd https://www.ipo.gov.uk/t-challenge-decision-results/o05399.pdf. Accessed 6 June 2023. [34] Of further significance is that the marks at present, and if registered, will be capable of being used on identical goods. In my view, the relevant consumer will make a connection or discern a link between the two. In this regard, the Rus/Sanrus matter is instructive.57 In that case, the plaintiffs were the registered proprietors of a trademark consisting of the word Rus in respect of porcelain and earthenware. They brought proceedings for infringement and passing off against the defendants for use of the word Sanrus in respect of bricks. In that matter, Simonds J held that, due to its reputation in the building trade and despite the words not being similar, a link would be made by a ‘person accustomed to deal in this class of material, that is to say an architect, builder or purveyor of builders’ materials’. As such, Sanrus was held to amount to an infringement of Rus. By analogy, it would seem reasonable to suppose that SNACKCRAX might be linked with, and thus amount to an infringement of, SALTICRAX in the same way. [35] The test of an easily recognisable similarity between the two marks is met. The mark SNACKCRAX must therefore be held to be similar to SALTICRAX for the purposes of s 10(17). [36] Item (f) remains: This pertains to whether, as National Brands contends, it can be said that ‘the mark sought to be registered would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark’. [37] It is noteworthy that s 10(3) of the UK Act proscribes registration where, ‘the use of the sign, being without due cause, takes unfair advantage of, or is detrimental 57 Ravenhead Brick Co v Ruabon Brick & Terra Cotta Co. Ltd [1937 RPC 341 also cited in Flexilink fn 56 above. to, the distinctive character or the repute of the trade mark.’ Our legislation differs in only requiring the mark to be likely to do so. This court has accepted that the word ‘likely’ in s 17 of the Act must be taken to mean a reasonable probability as opposed to a reasonable possibility.58 That approach applies equally here. In Verimark, the following comments were said to be apposite to s 34(1)(c): ‘. . . the unfair advantage or the detriment must be properly substantiated or established to the satisfaction of the Court: the Court must be satisfied by evidence of actual detriment, or of unfair advantage.’59 These were, however, made in the context of the UK legislation which requires actual advantage or prejudice.60 They accordingly did not apply to the test that such advantage or detriment was likely. However, in a footnote to that dictum, Harms JA said that, ‘[d]epending on the primary facts these may be self-evident’.61 [38] Concrete evidence of actual advantage or detriment is not required under s 10(17). Only a likelihood need be shown. It seems to me that a well-founded basis for why it would be likely that an unfair advantage would be gained if registration takes place suffices. I agree that, as opposed to bare assertions, facts supporting such an inference must be put up.62 In any event, at the time that opposition proceedings are launched, concrete evidence may well not yet have emerged. 58 Cowbell AG v ICS Holdings Ltd [2001] ZASCA 18; 2001 (3) SA 941 (SCA); [2001] 4 All SA 242 para 10. 59 Verimark para 14. 60 Ibid, Harms JA said: ‘The following points made by Lord Menzies with reference to a number of authorities are in this context apposite: . . . that the unfair advantage or the detriment must be properly substantiated or established to the satisfaction of the Court: the Court must be satisfied by evidence of actual detriment, or of unfair advantage.’ 61 Footnote 21 of Verimark. 62 See Laugh It Off CC para 54. [39] The Constitutional Court accepted as correct what was stated in Pfizer Ltd and Pfizer Incorporated v Eurofood Link (United Kingdom) Ltd,63 which said: ‘The concept of ''unfair advantage'' requires an enquiry into the benefit to be gained by the defendant from the use of the mark complained of and the concept of ''detriment'' requires an enquiry into the goodwill accruing to the business in the goods sold under the trade mark.’64 The benefit which National Brands contends Cape Cookies will likely derive from the use of SNACKCRAX must thus be considered. [40] National Brands submitted that Cape Cookies would be likely to take unfair advantage of ‘the power of attraction, the prestige and repute’ of the SALTICRAX mark. It submitted with some force that this had been built up over a considerable period and with a considerable investment of money. Cape Cookies chose to go into direct competition with it. The use of the similar mark will enable Cape Cookies to ‘ride on the coat tails’ of National Brands as regards the well-established SALTICRAX mark without itself having to expend time and money to achieve an equally competitive position. It was submitted that this was why Cape Cookies chose a mark similar to SALTICRAX as opposed to a different mark under which it could have traded without that advantage. Cape Cookies was challenged to produce its instructions to the advertising agency so as to negate this inference but refused to do so on the grounds that they were confidential. [41] In my view, National Brands went beyond simply parroting the provisions of the section. The trademark SALTICRAX was registered in 1951. It was the only mark containing ‘CRAX’ until 2009, when Cape Cookies registered the disputed VITACRAX mark. National Brands spent more than R11 million in advertising 63 Pfizer Ltd and Pfizer Incorporated v Eurofood Link (United Kingdom) Ltd [2000] FSR 767. 64 Laugh It Off CC para 39. SALTICRAX over a 15-year period and achieved strong market penetration over many years. The products marketed under the SNACKCRAX mark are virtually the same as SALTICRAX biscuits. The significance of this is that Cape Cookies does not have to embark upon any marketing campaign of its own (and there is no evidence that it has thus far done so) to achieve market penetration, despite the fact that it will be trading in the same stores with a similar product and in the same consumer niche market. [42] In all the circumstances, I take the view that, if registration was to be allowed, use of SNACKCRAX would reasonably probably, or be likely to, take unfair advantage of the distinctive character or repute of SALTICRAX. In the result, the case was made out that s 10(17) stands in the way of registration of the mark applied for. In my view, the high court erred in dismissing the opposition to the registration application. It is thus not necessary to consider the other grounds of opposition relied upon by National Brands. [43] As mentioned, Cape Cookies attempted to utilise an affidavit from the Cape litigation when it did not form part of the present papers. Cape Cookies persuaded the Registrar of this court to admit into the appeal record two additional volumes totalling 287 pages containing that affidavit in the face of protest by National Brands. National Brands sought a punitive costs order against Cape Cookies for the inclusion of those volumes. It had warned Cape Cookies that a punitive costs order would be sought. Despite this, Cape Cookies persisted. There was absolutely no basis on which Cape Cookies was entitled to include the volumes. I see no reason why Cape Cookies should not bear the costs arising from the inclusion of those volumes on an attorney and client scale. [44] As regards the balance of the costs in the high court and on appeal, they should follow the result. Although Cape Cookies utilised the services of only one counsel, it raised no argument against the entitlement of National Brands to the costs of two counsel which, in my view, was warranted. [45] In the result, the following order issues: The appeal is upheld with costs, including those consequent on the employment of two counsel. Cape Cookies CC is directed to pay the costs arising from the inclusion of the two supplementary volumes in the appeal record on the scale as between attorney and client. The order of the high court is set aside and the following order substituted: ‘(a) The opposition to trade mark application no. 2013/06837 in class 30 in the name of Cape Cookies CC succeeds and the application for registration is refused. (b) Cape Cookies CC is directed to pay the costs of the opposition proceedings, including those consequent on the employment of two counsel.’ ____________________ T R GORVEN JUDGE OF APPEAL Appearances For appellant: C E Puckrin SC, with L G Kilmartin Instructed by: Adams and Adams, Pretoria Honey Attorneys, Bloemfontein For first respondent: M Seale SC Instructed by: Brian Bacon Incorporated, Cape Town Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 12 June 2023 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgments of the Supreme Court of Appeal National Brands Limited v Cape Cookies CC and Another (Case nos 309/2022 and 567/2022) [2023] ZASCA 93 (12 June 2023) Today the Supreme Court of Appeal upheld an appeal from a judgment of Le Roux AJ in the Gauteng Division of the High Court, Pretoria (the high court). The appeal arose from an application by Cape Cookies CC (Cape Cookies) to register the trade mark SNACKCRAX in class 30 relating, inter alia, to savoury biscuits. The application was opposed by National Brands Limited (National Brands) which holds the registered trade mark SALTICRAX in that class. The opposition was based on various grounds in s 10 of the Trade Marks Act 194 of 1993 (the Act). One such ground was s 10(17) of the Act which prohibits the registration of: ‘. . . a mark which is identical or similar to a trade mark which is already registered and which is well-known in the Republic, if the use of the mark sought to be registered would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the registered trade mark, notwithstanding the absence of deception or confusion . . .’. Cape Cookies accepted that SALTICRAX was well-known in the Republic. It submitted that this section, introduced in 1993 in line with international anti-dilution provisions, applied only to marks used in goods or services which were not similar to each other. In an analysis of the provision, the Supreme Court of Appeal rejected that submission, holding that it applied also to similar goods or services. Cape Cookies also submitted that SNACKCRAX had as its dominant element the suffix CRAX, that this was a word in common use as a shortened form of ‘crackers’ and was, thus, non-distinctive. There was no evidence in support of that contention and it was also not reflected as such in dictionaries. This argument was thus also rejected. Cape Cookies contended that SNACKCRAX and SALTICRAX were not similar. In analysing them in the accepted manner, without reference to whether it would lead to confusion, the Supreme Court of Appeal held that the two marks were similar. As a result, it had to be assessed whether, if registered, the use of SNACKCRAX ‘would be likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute’ of SALTICRAX. On the evidence before it, the Supreme Court of Appeal held that such was the case and that the high court had accordingly erred in directing that SNACKCRAX be registered. An order was substituted upholding the opposition to registration and refusing the application for registration along with costs orders. ~~~~ends~~~~

2736

non-electoral

2012

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 369/11 Reportable In the matter between: NTHABELENI DANIEL RATHUMBU Appellant and THE STATE Respondent Neutral citation: Rathumbu v S (369/11) [2012] ZASCA 51 (30 March 2012) Coram: MTHIYANE DP, CLOETE, MHLANTLA, LEACH JJA and NDITA AJA Heard: 15 February 2012 Delivered: 30 March 2012 Summary: Murder charge – admissibility and probative value of a statement made by a witness to the police and later disavowed in evidence – s 3(1) of the Law of Evidence Amendment Act 45 of 1988 - trial court correctly relied on the disavowed statement. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Limpopo High Court, Thohoyandou (Hetisani J sitting as a court of first instance): The appeal against conviction is dismissed. ______________________________________________________________ JUDGMENT ______________________________________________________________ NDITA AJA (MTHIYANE DP, CLOETE, MHLANTLA, and LEACH JJA concurring) [1] The appellant was convicted of murdering his wife in their homestead at Rhavele village in the district of Tshilwavhusiki by the Limpopo High Court sitting in Thohoyandou (Hetisani J) and sentenced to ten years’ imprisonment. With the leave of this court, he now appeals against the conviction. [2] The conviction was based primarily on a written sworn statement made by the appellant’s sister Ms Johanna Rathumbu to a policeman that implicated the appellant in the murder of the deceased. Central to this appeal is an enquiry into whether the statement, the contents of which were disavowed by her when she testified, should have been admitted in evidence. [3] It is necessary to set out the facts in some detail. Shortly before midnight on 15 June 2008 Constable David Mulaudzi was on duty at the Tshilwavhusiku police station when Ms Rathumbu arrived, running. She reported that she found the appellant stabbing the deceased with a knife at their home. Acting on this information, Mulaudzi, Tshikudu as well as Ms Rathumbu, drove to the appellant’s home where Mulaudzi found the body of the deceased lying on the other side of an internal door. She had sustained multiple stab wounds and was lying motionless in a pool of wet blood. The witness summoned paramedics who certified the deceased dead at the scene. Prior to the arrival of the paramedics, the appellant also arrived and sought permission from Mulaudzi to board the police vehicle and be taken to the police station. According to Mulaudzi, the appellant smelt of alcohol. When the appellant made this request, Mulaudzi enquired from Ms Rathumbu who he was. Johanna told him that he was the person who had stabbed his wife in the room. This explanation was given in the presence of the appellant. [4] Amongst the police officers who attended the murder scene on the night in question was Inspector Nndwambi. He testified that on his arrival at the appellant’s home he asked for the owner of the house. Ms Rathumbu offered to help and led him to the room where the body of the deceased lay. Nndwambi testified that he made enquiries about the murder and Johanna disclosed to him that the appellant, who she identified as her brother, had stabbed the deceased, whom she identified as his wife. Nndwambi further testified that when he closely examined the body of the deceased, he observed that she had sustained multiple wounds, some of which were covered in blood; notably two on the chest and another on the back. According to the post mortem report, the deceased sustained nine external wounds. [5] Ms Rathumbu testified that on 16 June 2008, at 21h00, she received a telephone call from the deceased requesting her to come to her house and to bring with her the deceased’s five year old daughter. According to her, on her arrival at the deceased’s home, she found her lying in a pool of blood. The gruesome discovery alarmed her and she ran to the police station. The police drove with her back to the village. She denied seeing the appellant stabbing the deceased with a knife. As her evidence was in stark contrast to the facts she had disclosed in her statement to the police, the State successfully applied to have her declared a hostile witness in terms of s 190(2) of the Criminal Procedure Act 51 of 1977. It is necessary to place on record the witness’s statement in its entirety. The relevant part reads: ‘On 2008-06-15 at about 21:00, I was at my common when I received a call from the deceased Khathutshelo Rathumbu that I must come to her place. I immediately went to the deceased’s kraal. On my arrival I find the deceased who inform me that she is leaving her husband and further that I must help her to carry her goods. I then ask the suspect one Daniel Rathumbu who is the deceased’s husband if there is any problem. The suspect told me ask the deceased as she is the one who called. I was at the lapa when the deceased and the suspect enter inside the house. I also enter inside and I saw the suspect pushing the deceased and stabbing her with a sharp instrument. I then run away to the neighbours for assistance but there was no responds. I then rushed to the police station and report the matter. I come back with the police and find the deceased lying in the bedroom and in a pool of blood. At that moment the suspect come back and I ask him the whereabouts of the child, he told me that she is gone. The police then summoned the ambulance and she was certified dead. The police arrested the suspect.’ [6] Inspector Thifhulufheli Sirunwa testified that he took the above statement in the early hours of the morning, at 01h45, on 16 June 2008. Johanna made the statement voluntarily. According to Inspector Sirunwa he interviewed Ms Rathumbu in Tshivenda as they were both conversant in the language but wrote it in English. After writing it, he read it back to her and she appended her signature. Ms Rathumbu was extensively cross-examined on the contents of her statement which was admitted into evidence. She persistently denied its contents to the extent that it implicated the appellant in an attack upon the deceased. The appellant did not give evidence in rebuttal of the evidence tendered by the State. [7] In convicting the appellant, the trial court made significant favourable credibility findings in respect of witnesses for the State and rejected Ms Rathumbu’s evidence disavowing the statement she had made to Sirunwa. The statement was admitted in evidence after argument and the court a quo relied on its contents. [8] Counsel representing the appellant assailed the conviction on several grounds. The main ground of appeal was that the trial court’s reliance on the statement made by Ms Rathumbu to the police, which essentially is hearsay evidence, constituted a material misdirection. Counsel representing the State conceded that without the statement, the appeal should succeed. [9] The reception of hearsay evidence is regulated by s 3(1) of the Law of Evidence Amendment Act 45 of 1988. The section provides as follows: ‘(1) Subject to the provisions of any other law, hearsay evidence shall not be admitted as evidence in criminal proceedings, unless - (a) each party against whom the evidence is to be adduced agrees to the admission thereof as evidence at such proceedings; (b) the person upon whose credibility the probative value of such evidence depends, himself testifies at such proceedings; or (c) the court, having regard to - (i) the nature of the proceedings; (ii) the nature of the evidence; (iii) the purpose for which the evidence is tendered; (iv) the probative value of the evidence; (v) the reason why the evidence is not given by the person upon whose credibility the probative value of such evidence depends; (vi) any prejudice to a party which the admission of such evidence might entail; and (vii) any other factor which should in the opinion of the court be taken into account, is of the opinion that such evidence should be admitted in the interests of justice.’ For reasons that follow I am of the view that the statement was correctly admitted in terms of the section. [10] Section 3 enjoins a court in determining whether it is in the interests of justice to admit hearsay evidence, to have regard to every factor that should be taken into account and, more specifically, to have regard to the factors mentioned in s 3(1)(c). 1This court in S v Ndhlovu 2002 (6) SA 305 (SCA) considered the provision of s 3 and at paragraph 31 held that: ‘The probative value of the hearsay evidence depends primarily on the credibility of the declarant at the time of the declaration, and the central question is whether the interests of justice require that the prior statement be admitted notwithstanding its later disavowal or non-affirmation. And though the witness’s disavowal of or inability to affirm the prior statement may bear on question of the statement’s reliability at the 1 See S v Shaik & others 2007 (1) SA 240 (SCA) para 170. See also S v Molimi 2008 (3) SA 608 (CC). time it was made, it does not change the nature of the essential inquiry, which is whether the interests of justice require its admission.’ In amplification, at paragraph 33, it was stated that: ‘The “probative” value’ of the accused’s statements to the police did not depend on their credibility at the time of the trial – which the Court right found totally lacking – but on their credibility at the time of their arrest. And the admissibility of those statements depended not on the happenstance of whether they chose to testify but on the interests of justice.’ [11] In the present appeal, following the approach set out in Ndhlovu, and considering the totality of the circumstances under which the statement was made, one is driven to the conclusion that the court below was correct in admitting Ms Rathumbu’s statement. Substantial corroboration for the truthfulness of the statement is to be found in other evidence tendered by the State. I now deal with such corroborative evidence. 11.1 It is common cause that Ms Rathumbu proceeded to the appellant’s home at approximately 21h00 on 16 June 2008. According to her evidence as well as her statement, her visit to the deceased’s home was prompted by a telephone call from the deceased requesting her to bring her child to her. In the statement, she stated that in that telephonic conversation, the deceased told her that she was leaving her husband and she needed her assistance in carrying her goods. Mulaudzi testified that he observed that outside the house, about three paces from the kitchen door, there was clothing packed inside a box ‘like one is moving somewhere else.’ This provides corroboration for Ms Rathumbu’s assertion in her statement that the deceased told her that she was leaving her husband and that she needed help in carrying her goods. Importantly, a photograph taken by the police depicts a pile of items outside the house, which lends further credence and weight to the statement. 11.2 Mulaudzi testified that when he enquired from Ms Rathumbu as to the identity of the person who wanted to be taken to the police station, her response was that he was the person who had stabbed his wife in the room. This accords with what, according Mulaudzi, she had said at the police station earlier. This spontaneous response by Ms Rathumbu at the scene whilst the deceased’s body was still lying in the house affirms the reliability of the original statement in preference to her later disavowal. Furthermore, these words were uttered in the presence of the appellant. The utterances did not attract any protestation from the appellant. Nor was the evidence challenged in cross-examination. 11.3 Ms Rathumbu confirmed in her evidence that she had made a statement to Inspector Sirunwa. But she said that the contents had been read back to her in English (which Sirunwa denied). She also averred that she knew nothing about of the contents of the statement that implicate the appellant. That means, according to her, parts of the statement are a complete fabrication. But the contents of the statement accord with what she had told Inspector Tshivhase in the presence of Constable Mulaudzi when she arrived at the police station. Shortly thereafter she repeated the same version to Nndwambi. It is highly improbable that three policemen, two of whom arrived at different intervals at the murder scene, would conjure up all the details contained in the statement on the same night of the murder of the deceased. Similarly, it is not likely that Inspector Sirunwa could have concocted the information contained in the statement before leaving the scene of the murder. [12] Applying the principles set out in the Ndhlovu case, all of the above factors clearly demonstrate that when she made the statement Ms Rathumbu was telling the truth. Her inconsistent evidence at the trial can be easily explained on the basis that she wished to protect her brother. Her statement therefore, was correctly admitted into evidence. [13] Ms Rathumbu’s statement is not the only evidence to be considered in determining the appellant’s guilt. The conduct of the appellant is also relevant. Mulaudzi gave evidence to the effect that whilst the police were awaiting the arrival of the paramedics, the appellant appeared. After entering the yard and without saying anything to the police officers or people at the scene, he climbed into what seemed to the witness to be a disused motor vehicle. I have already said that the appellant did not give evidence. Neither did he deny Ms Rathumbu’s assertion at the scene that he had stabbed the deceased. The appellant did not enquire as to the reason for the presence of the police in his own home or why members of the community were present. He made no attempt to ascertain what the problem was and the inference is irresistible that he already knew why all these people were there [14] The court below considered the State witnesses to be credible and rejected the appellant’s defence. In the present appeal, once Ms Rathumbu’s statement was admitted, and in the face of all the evidence tendered by the State, it called for an answer from the appellant. Thus, the court a quo correctly considered the evidence tendered by the State to be such as to warrant a response from the appellant. In S v Mapande2 it was reiterated that if a witness has given evidence implicating an accused, the latter can seldom afford to leave such testimony unanswered. The court is unlikely to reject credible evidence which the accused has chosen not to deny. Thus in S v Chabalala3 it was stated that: ‘The appellant was faced with direct and apparently credible evidence which made him the prime mover in the offence. He was also called on to answer evidence of a similar nature relating to the parade. Both attacks were those of a single witness and capable of being neutralised by an honest rebuttal. There can be no acceptable explanation for him not rising to the challenge. If he was innocent appellant must have ascertained his own whereabouts and activities on 29 May and be able for his non- participation. . . To have remained silent in the face of the evidence was damning. He thereby left the prima facie case to speak for itself. One is bound to conclude that the totality of the evidence taken in conjunction with his silence excluded any reasonable doubt about his guilt.’ [15] In my view, the appellant’s culpability for the murder of the deceased was established beyond any reasonable doubt. In the circumstances, the appeal against conviction must fail. [16] In the circumstances, the following order is made: The appeal against conviction is dismissed. 2 [2010] ZASCA 119. 3 2003 (1) SACR 134 (SCA) para 21 See also S v Boesak 2001 (1) SACR 912 (CC) para 24. ___________________ T NDITA ACTING JUDGE OF APPEAL APPEARANCES: FOR APPELLANT: L B Sigogo Instructed by: Mathobo, Rambau & Sigogo Attorneys, Thohoyandou. FOR RESPONDENT: R J Makhera Instructed by: Director of Public Prosecutions, Thohoyandou; Director of Public Prosecutions, Bloemfontein.

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 March 2011 Status: Immediate 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. * * * NTHABELENI DANIEL RATHUMBU V THE STATE Today, the Supreme Court of Appeal (SCA) handed down a judgment, in the case of Nthabeleni Daniel Rathumbu v The State, dismissing the appeal. The appellant had been convicted of the murder of his wife, whose body was discovered at their common home having sustained multiple stab wounds. He was sentenced to ten years imprisonment. The order and judgment of the high court was attacked mainly on the ground that the trial court in convicting the appellant, incorrectly relied on a sworn written statement wherein a witness stated that she saw the appellant, her brother, stabbing the deceased, with a knife. The statement was made to the police shortly after she had allegedly witnessed the incident. But when the witness gave evidence, she disavowed the contents of the statement, only to the extent to which she implicated the appellant in the murder of the deceased. That statement constitutes essentially hearsay evidence. This court found that the trial court correctly admitted the statement as the evidence demonstrates that there is substantial corroboration for its truthfulness. In addition, in applying the principles for the admission of hearsay evidence, there are factors that indicate that when the witness made the statement she was telling the truth. The appellant was therefore correctly convicted.

1401

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 482/09 In the matter between: TELKOM DIRECTORY SERVICES (PTY) LTD Appellant and FREDERICK JOSEPH KERN Respondent Neutral citation: Telkom Directory Services v Kern (482/09) [2010] ZASCA 116 (22 September 2010) Coram: Lewis, Heher, Ponnan, and Mhlantla JJA and R Pillay AJA Heard: 7 September 2010 Delivered 22 September 2010 Summary: Interpretation of contract in terms of Californian law, as agreed: extrinsic evidence of intention admitted provisionally: terms of written agreement not, however, susceptible to meaning advanced by plaintiff: claim for breach of contract should have been dismissed. ORDER On appeal from: South Gauteng High Court (Johannesburg) (Victor J sitting as court of first instance). 1 The appeal is upheld with costs. 2 The order of the court below is replaced with: ‘The plaintiff’s claim is dismissed with costs, including those of the plaintiff’s expert witness, Mr Meredith, who is declared a necessary witness.’ JUDGMENT LEWIS JA (HEHER, PONNAN AND MHLANTLA JJA and R PILLAY AJA concurring) [1] This appeal turns on the interpretation of a contract in terms of Californian law. Fortunately the parties have agreed on the principles that govern the interpretation, and the appeal turns only on whether the high court applied them correctly. The respondent, Frederick Kern, claimed damages for breach of contract from the appellant, Telkom Directory Services (Pty) Ltd (TDS). The contract was expressly stated by the parties to be governed by the domestic laws of the state of California. The issues of liability and quantum (some R6m was claimed) were separated by agreement. A claim for rectification of the contract was abandoned at the outset of the trial. Victor J found that TDS was liable to pay damages to Kern in terms of the agreement. TDS appeals against that order with the leave of this court. [2] Kern is an expert in creating systems for entries in yellow pages of telephone directories. He is American and was resident in California when the contract was concluded in November 1998. In 1997 Ms C Sheasby became the managing director of TDS, a South African company that publishes the telephone directories, and which was in the process of merging its yellow pages database with the white pages database previously managed by Telkom, the state entity that provides telephone services in South Africa. In 1998 TDS mandated Sheasby to find an appropriate computer system for this purpose. [3] To this end, in October 1998 Sheasby attended a conference in Florida, America, on behalf of TDS: there she met Kern, who agreed to provide services to TDS. They concluded a contract, referred to as a Master Consulting Agreement on 3 November 1998, and subsequently (on 18 January 1998) a ‘work order’ in respect of the first phase of services to be rendered. The work order was extended (updated) twice, once in September 1999 and then in June 2000. Kern had drafted the master agreement and the work order and updates himself, using a precedent that he had worked on previously. (The agreements were all in the name of Logos Consulting Group, but it transpired that there was no such entity and that Kern himself was the party to the contract and would render the services. Nothing turns on this.) [4] On 13 March 2001 TDS purported to exercise its right to terminate the agreement, giving the requisite notice. The dispute centres on whether a termination clause in the master agreement had been superseded by a term in the work order. If so, TDS would be liable in damages having repudiated the contract. If, however, the right to terminate was not affected by the work order then Kern would have no claim. [5] I shall turn to the terms and the parties’ respective interpretations shortly: but it is necessary to state at this point that Californian law allows the leading of evidence on the intention of the parties provisionally. If, after considering the evidence, the court decides that the parties had a common intention and that the language of the contract is reasonably susceptible to the interpretation suggested by a party, the court will admit the evidence and give effect to that intention. Both Kern and Sheasby (for Kern) testified as to what had been intended by them in the conclusion of the contract and the high court admitted the evidence. But first the terms themselves. [6] The master agreement provided that it would become effective on 3 November 1998 and would remain in force ‘until terminated as provided herein’. Kern would render services in terms of ‘work agreements’ which would be ‘attached to and become an integral part of this Master Agreement’. A clause headed ‘Termination’ provided: ‘Either party may terminate this agreement upon giving thirty (30) days prior written notice thereof to the other.’ [7] The work order, which was part of the master agreement, stated: ‘This Work Order shall become effective on January 18, 1999, and, unless sooner terminated as provided in the Master Consulting Agreement, shall remain in force and shall continue thereafter until all work has been satisfactorily completed as described herein’ (my emphasis). Under the heading ‘Compensation’ it was stated that project management would be broken into several stages ‘for the purposes of corporate approval’. The first stage would be from January to September 1999; the second the remainder of 1999 and 2000; and the third stage would encompass subsequent periods ‘if any, that are mutually agreed upon’. The work order had been extended, as I have indicated, to the third stage. The clause continued: ‘Negotiations for each subsequent stage must be completed 45 days prior to the next stage or Logos is free to accept alternate assignments. Once both parties have signed the Work Order for a subsequent stage, they are both bound to fulfil the time and monetary obligations of the Work Order’ (my emphasis). [8] Kern contended that this provision in effect excluded the right to terminate on 30 days’ notice in the master agreement. Once a work order or extension had been signed, the stage in question had to run its course and the contract could not be terminated. TDS, on the other hand, argued that the work order was part of the master agreement and that the termination clause continued to be operative. TDS contended moreover that there was no conflict between the different provisions of the contract: at all times either party had the right to terminate on notice. The obligation to ‘fulfil the time and monetary obligations’ had to be read in the context of the entire clause. It meant no more than that the parties were bound to negotiate the next stage within a particular period and to perform their respective obligations. This is reflected in the letter of termination of 13 March 2001 which first gave notice and then stated: ‘We confirm that, in terms of the termination provisions of the Master Agreement, we shall have no liabilities to you except for charges for services performed by you and accepted by you under the agreement prior to receipt of this notice.’ [9] As indicated earlier, Californian law allows the provisional tendering of evidence: if the terms of the written contract are susceptible to the interpretation contended for in evidence as to their mutual intention then that interpretation will prevail. Evidence as to what the parties intended was thus provisionally allowed. Only evidence for Kern was led. Both he and Sheasby testified that they believed that after signing the master agreement, and once the first phase had been completed, TDS was not entitled to invoke the termination clause. They made much of the fact that Kern would have to relocate to South Africa to render his services, and would be foregoing work in America. It was thus important to him to know that he had some security – assured work from TDS. From Sheasby’s perspective, it was important not to lose Kern’s services. He was central to the project TDS was undertaking. And so once a work order was signed the contract would remain in force until the agreed date. But neither of them showed that their understanding had been conveyed to anyone else at TDS, including its board of directors. [10] Victor J considered the evidence to be admissible and accepted Kern and Sheasby’s assertion that the right to terminate could not be invoked once the work order had been signed. She accordingly found for Kern. TDS contended on appeal that the learned judge erred in the application of the principles governing contractual interpretation – that the written contract was not susceptible to the meaning attributed to it by Kern and Sheasby. [11] Prior to the trial the parties had agreed on certain principles of interpretation based on expert advice. They state: ‘1 The parties agree that there is one contract that consists of the Master Agreement, the Work Order and the two updates to the Work Order. 2 The contract must be interpreted so as to give effect to the mutual intention of the parties as it existed at the time of the contracting (meaning the dates that the Master Agreement, the Work Order and the two updates were executed). 3 The language of the contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity. 4 Since the contract is in writing, the intention of the parties is to be ascertained from the writing alone, if possible. 5 To determine whether it is possible to ascertain the intention of the parties from the writing alone the court should consider the following: a The language of the contract; and b Extrinsic evidence, including testimony of the intentions of the parties, if not excluded by the parol evidence rule. 6 The parol evidence rule provides that the terms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement 7 Extrinsic evidence to explain an extrinsic ambiguity or otherwise to interpret the terms of the contract is not excluded by the parol evidence rule. 8 Evidence of subsequent negotiations or subsequent agreements may be received when the subsequent agreement is in writing. 9 Where the court finds an apparent conflict between different clauses or provisions of the written contract, the court may consider the recitals of the agreement and other admissible extrinsic evidence. 10 If a party asserts a meaning of the contract, the court shall provisionally receive evidence of the asserted meaning. If the court finds that the language of the contract is reasonably susceptible to the asserted meaning based on the language of the contract and the evidence of the asserted meaning, then the evidence is not excluded by the parol evidence rule (my emphasis). 11 The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other. That is, if one provision of the contract, taken in isolation, is clear and explicit, it does not necessarily follow that that provision will govern the interpretation of the contract. The court should attempt to give some meaning to every provision of the contract so that none is rendered meaningless, so long as consistent with the mutual intent of the parties (my emphasis). 12 Under no circumstances is evidence of unexpressed unilateral intentions of a party admissible. If admissible under the above principles, evidence of expressed intentions of a party is admissible. . . . 13 The purpose of these principles is to make the language of the contract serve rather than subvert the mutual intention of the parties 14 When a general provision and a specific provision are inconsistent the specific provision is paramount to the general provision so long as consistent with the intention of the parties. 15 Based on the foregoing principles, the court should attempt to give effect to the mutual intention of the parties.’ [12] These principles are borne out by Californian cases dealing with contractual interpretation, and on which both parties relied. The leading case is Pacific Gas and Electric Company v GW Thomas Drayage and Rigging Company (1968) 69 Cal. 2D 33, followed in Bionghi v Metropolitan Water District of Southern California 70 Cal App 4th 1358 (March 1999). In Pacific Gas Traynor CJ said (para 5): ‘Although extrinsic evidence is not admissible to add to, detract from, or vary the terms of a written contract, these terms must first be determined before it can be decided whether or not extrinsic evidence is being offered for a prohibited purpose. The fact that the terms of an instrument appear clear to a judge does not preclude the possibility that the parties chose the language of the instrument to express different terms. That possibility is not limited to contracts whose terms have acquired a particular meaning by trade usage, but exists whenever the parties’ understanding of the words used may have differed from the judge’s understanding. Accordingly, rational interpretation requires at least a preliminary consideration of all credible evidence offered to prove the intention of the parties.’ [13] The principle is elucidated further in Bionghi (at 1365): ‘Pacific Gas & Electric is thus not a cloak under which a party can smuggle extrinsic evidence to add a term to an integrated contract, in defeat of the parol evidence rule. Instead, it calls for a two-step process. First, the court must determine whether the language of the contract is reasonably susceptible to the meanings urged by the parties. In so doing, the court must give consideration to any evidence offered to show that the parties’ understanding of words used differed from the common understanding. If the court determines that the contract is reasonably susceptible of the meanings urged, extrinsic evidence relevant to prove the meaning agreed to by the parties is admissible.’ [14] In my view, the evidence was not helpful. Neither of the witnesses shed any light on the mutual intention of the parties in respect of the exclusion of the termination clause. And, as TDS argued, the high court gave effect to the intention of Kern and Sheasby, as expressed in their oral evidence, without regard to the written contract as a whole. While they asserted that they believed that after the first phase the agreement could not be terminated, this was not consonant with the wording of the contract. Their testimony ignored entirely the express provision that the work order and updates were part of the master agreement. In effect, on their view, the termination provision was excluded from the agreement, contrary to the express terms of the work order. [15] The principles agreed make it clear, argued TDS, that it is the mutual (shared) intention of the parties that must be given effect. There was no evidence at all that the board of TDS was aware, at the time of entering into the master agreement and subsequent work order, of Sheasby and Kern’s view that the right to terminate fell away once the second phase commenced. And they did not explain coherently how the termination clause fitted in with their understanding of the contract. [16] In my view the most important principle on which the experts agreed is that every provision in a contract should be given effect: none should be rendered meaningless as long as ‘consistent with the mutual intent of the parties’. The high court invoked this principle in finding that the ‘monetary and time clause’ must be given meaning – but in the process appeared to overlook the termination clause itself. [17] TDS contended, correctly in my view, that the high court assumed that there was a conflict between the termination clause and the clause imposing an obligation to perform (fulfil time and monetary obligations) under the work order. The assumption led the learned judge to allow the latter provision to prevail over the termination clause, and to ignore the fact that the termination clause was very much part of the entire contract. The decision took no account of the principle that every part of the contract must be given effect. [18] As indicated, TDS argued that the time and monetary clause in the work order simply set the time when the second and third stages would come into operation. But once in operation either party could invoke the right to terminate. To find otherwise would be to read into the termination clause a provision that it ceased to be operative as soon as a work order was signed: and that would be contrary to the express provision of the work order that it was part of the master agreement and would remain in force until a specified date ‘unless sooner terminated as provided in the Master Consulting Agreement’. [19] I consider that TDS’s interpretation is the only one consonant with the express provisions of the contract, read as a whole. The contract was not reasonably susceptible to the construction advanced by Kern. The evidence was thus not admissible. The high court accordingly erred in admitting and relying only on the evidence of Kern and Sheasby and in failing to consider the actual terms of the contract, as is required by Californian law, reflected in principles 3, 10 and 11 above and as stated in Pacific Gas and Bionghi, above. TDS was entitled to terminate the agreement as envisaged in the termination provision. [20] The appeal is upheld with costs. The order of the court below is replaced with: ‘The plaintiff’s claim is dismissed with costs, including those of the plaintiff’s expert witness, Mr Meredith, who is declared a necessary witness.’ _____________ C H Lewis Judge of Appeal APPEARANCES APPELLANTS: B H Swart SC Instructed by Klagsbrun De Vries & van Deventer, Johannesburg Naudes Attorneys, Bloemfontein. RESPONDENTS: J L C Janse van Vuuren SC (with him S Strydom) Instructed by Kevin Cross & Affiliates , Johannesburg Matsepes Inc, Bloemfontein.

SUPREME COURT OF APPEAL OF SOUTH AFRICA PRESS RELEASE 23 September 2010 STATUS: Immediate Telkom Directory Services v Kern (482/09) [2010] ZASCA 116 (22 September 2010) 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 The Supreme Court of Appeal today upheld an appeal against a judgment of the South Gauteng High Court which, using the principles of Californian law to interpret a contract, held that Kern, an expert in systems for entries in the yellow pages of the telephone directory, was entitled to damages. Kern, an American citizen, had entered into a contract with Telkom Directory Services (TDS), undertaking to introduce a new system for yellow pages entries. The parties agreed that Californian law would govern their contract, which included a clause that entitled either party to terminate the contract on giving 30 days’ notice. It also provided for ‘work orders’ to be concluded in respect of different stages of the work to be done. The work order concluded, and which was extended twice, expressly referred to the termination clause, but also provided that each party had to meet time and money obligations after the work order was signed. Kern contended that this provision precluded termination once work orders had been signed. During the course of the third stage TDS gave Kern notice of termination. He sued for damages (some R6 million), asserting that TDS had not been entitled to terminate. At the request of the parties the high court determined only the question of liability and not the quantum of damages. Kern and a former employee of TDS, Ms Sheasby, gave evidence at the trial to the effect that they had intended, when concluding the agreement, that once work orders were signed, neither party could terminate on notice. They pointed to the time and money provision in the work order. In Californian law, evidence of the intention of the parties is provisionally admitted to determine whether the written agreement is reasonably susceptible to the interpretation contended for by a party. The high court concluded that Kern’s and Sheasby’s evidence as to their intention should be admitted although in conflict with the express terms of the written contract, and thus found that the termination amounted to a repudiation of the agreement. The SCA, on the other hand, concluded that the written agreement was not susceptible to the interpretation advanced for Kern, and that the evidence should not have been admitted. On a clear construction of the terms of the contract TDS had been entitled to terminate it on notice. It thus upheld the appeal by TDS. --------------

207

non-electoral

2018

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 327/2017 In the matter between: THE NATIONAL POLICE COMMISSIONER FIRST APPELLANT THE MINISTER OF POLICE SECOND APPELLANT and BETTY MMAMONNYE NGOBENI (PROVINCIAL POLICE COMMISSIONER: KWAZULU-NATAL) RESPONDENT Neutral citation: National Police Commissioner v Ngobeni (327/2017) [2018] ZASCA 14 (15 March 2018) Coram: SHONGWE ADP, WALLIS, SALDULKER and MATHOPO JJA and PLASKET AJA Heard: 1 March 2018 Delivered: 15 March 2018 Summary: Institution of a board of inquiry into alleged misconduct, unfitness for office or incapacity of a provincial commissioner of police – powers of national commissioner of police in terms of ss 8 and 9 of South African Police Service Act 68 of 1995 – s 207 of Constitution ORDER On appeal from: KwaZulu-Natal Division of the High Court, Durban (Chili J sitting as court of first instance): 1 The application to strike the appeal from the roll is dismissed with costs. 2 The appeal is upheld with costs. 3 The order of the High Court is altered to read: ‘The application is dismissed with costs.’ JUDGMENT Wallis JA (Shongwe ADP, Saldulker and Mathopo JJA and Plasket AJA concurring) [1] In 2009 the respondent, Lieutenant General Ngobeni, was appointed as the Provincial Commissioner for KwaZulu-Natal of the South African Police Service. Her appointment was renewed in 2014 by the then National Police Commissioner, General Phiyega. On 18 March 2016 the then acting National Commissioner, Lieutenant General J K Phahlane, served her with notice of the establishment of a board of inquiry into ‘alleged misconduct and/or fitness for office and/or capacity to execute duties efficiently’. On the same day he served her with a notice of intended suspension. After receiving her submissions, Lieutenant General Phahlane suspended her with effect from 20 May 2016. This prompted Lieutenant General Ngobeni, citing herself as the Provincial Police Commissioner KwaZulu-Natal, to bring proceedings in the KwaZulu-Natal, Durban, High Court to review and set aside both the establishment of the board of inquiry and her suspension. The application succeeded before Chili J. He refused leave to appeal, but leave was given on petition to this Court. Lapsing of the appeal [2] I deal briefly at the outset with an application by Lieutenant General Ngobeni, for an order declaring the appeal to have lapsed and striking it from the roll. There is no merit in this application. It was based upon two points. The one was that the record included a document in the form of an affidavit that was not before the High Court. The simple answer to that is that the members of this Court ignored the document as they would any other irrelevant material placed before them. As Innes ACJ once commented in argument about a similar submission, ‘this is a perfectly ridiculous point’.1 The second was that in the High Court the Provincial Executive Council, KwaZulu-Natal was cited as the Third Respondent, but played no part in the proceedings. Nonetheless in the preparation of the record it was reflected on the cover of the record as the second respondent. It commonly occurs that parties who were cited but did not participate in the proceedings in the High Court are nonetheless shown on the cover of the record and other documents in this court as a party in the appeal. If that occurs it is irrelevant and is ignored, as it was in this case. The application will be dismissed and the respondent must pay the costs in relation thereto. 1 Norwich Union Life Insurance Society v Dobbs 1912 AD 395 at 397. [3] In the event of the respondent not securing an order declaring the appeal to have lapsed, she sought condonation of the late filing of her heads of argument. This was granted without opposition at the outset of the appeal. I turn to the merits. The issues [4] The central issue in both the High Court and this Court was whether Lieutenant General Phahlane was in law entitled to establish the board of inquiry and, pursuant to its establishment, to suspend Lieutenant General Ngobeni from her position as Provincial Commissioner for KwaZulu-Natal. The answer to that question lies in a consideration of the provisions of ss 205 to 207 of the Constitution and those of ss 8 and 9 of the South African Police Service Act 68 of 1995 (the Act). If that question is answered adversely to Lieutenant General Ngobeni, because the National Commissioner did indeed have these powers, then in the alternative, their exercise was challenged on conventional review grounds. [5] Section 207(1) of the Constitution provides for the President as head of the national executive to appoint the National Commissioner of the police service. This is reflected and confirmed in s 6(1) of the Act. Section 207(3) of the Constitution provides that: ‘The National Commissioner, with the concurrence of the provincial executive, must appoint a woman or a man as the provincial commissioner for that province . . .’ That constitutional provision is reflected and confirmed in s 6(2) of the Act. It can be accepted that Lieutenant General Ngobeni was appointed as the Provincial Commissioner for KwaZulu-Natal in accordance with these provisions. [6] This case concerns the circumstances in which alleged misconduct or unfitness for service or incapacity to fill their post on the part of a Provincial Commissioner of police may be investigated and resolved, potentially resulting in him or her being dismissed or otherwise disciplined. Three other provisions of the Constitution have a bearing on this question. Under s 207(2) the National Commissioner: ‘. . . must exercise control over and manage the police service in accordance with the National Policing Policy and the directions of the Cabinet member responsible for policing.’ Under s 207(4) the Provincial Commissioners are responsible for policing in their respective provinces as prescribed by national legislation, but: ‘subject to the power of the National Commissioner to exercise control over and manage the police service in terms of subsection (2).’ Finally, in terms of 207(6): ‘If the provincial commissioner has lost the confidence of the provincial executive, that executive may institute appropriate proceedings for the removal or transfer of, or disciplinary action against, that commissioner, in accordance with national legislation. [7] The national legislation referred to in these sections is the Act, the key provisions of which are ss 8 and 9. In relevant part they read as follows: ‘8 Loss of confidence in National or Provincial Commissioner (1) If the National Commissioner has lost the confidence of the Cabinet, the President may establish a board of inquiry … to — (a) inquire into the circumstances that led to the loss of confidence; (b) compile a report; and (c) make recommendations. (2)(a) If a Provincial Commissioner has lost the confidence of the Executive Council, the member of the Executive Council may notify the Minister of such occurrence and the reasons therefor. (b) The Minister shall, if he or she deems it necessary and appropriate, refer the notice contemplated in paragraph (a) to the National Commissioner. (c) The National Commissioner shall, upon receipt of the notice establish a board of inquiry … to — (i) inquire into the circumstances that led to the loss of confidence; (ii) compile a report; and (iii) make recommendations. (d) … (3)(a) The President or National Commissioner, as the case may be, may, after hearing the Commissioner concerned, pending the outcome of the inquiry referred to in subsection (1) or (2)(c); suspend him or her from office … (4) to (7) … (8) If a Provincial Commissioner has lost the confidence of a National Commissioner, the provisions of subsections (2)(c) and (d), (3), (4), (5), (6) and (7) shall apply mutatis mutandis. Misconduct by or incapacity of National or Provincial Commissioner (1) Subject to this section, subsections (1) to (8) of section 8 shall apply mutatis mutandis to any inquiry into allegations of misconduct by the National or Provincial Commissioner, or into his or her fitness for office or capacity for executing his or her official duties efficiently. (2) The board of inquiry established by virtue of subsection (1) shall make a finding in respect of the alleged misconduct or alleged unfitness for office or incapacity of executing official duties efficiently, as the case may be, and make recommendations as contemplated in section 8(6)(b).’ [8] Lieutenant General Ngobeni contended that if the National Commissioner wished to institute an inquiry into allegations of misconduct against her, or her fitness for office, or capacity for executing her official duties efficiently, the route he had to follow was to refer the matter to the Provincial Executive Council of KwaZulu-Natal. If the Provincial Executive Council formed the view that the National Commissioner’s concerns resulted in a loss of confidence in the Provincial Commissioner, then it would have been obliged to notify the Minister of that fact and of its reasons for reaching that conclusion. Thereafter the Minister, if he or she deemed it necessary and appropriate, could have referred the notice to the National Commissioner. Once that happened the National Commissioner would have been obliged to constitute a board of inquiry. The acting National Commissioner did not follow that route. It was alleged accordingly that he acted without lawful authority in constituting the board of inquiry and suspending Lieutenant General Ngobeni. This argument was upheld by the High Court. The law [9] Whether the National Commissioner had the powers he purported to exercise is a matter of interpreting the provisions of s 9 of the Act, which is the section dealing with alleged misconduct, unfitness for office or incapacity, in the light of the relevant constitutional provisions. That exercise is to be undertaken in the light of the summary of the proper approach to interpretation in Endumeni,2 a judgment that has been repeatedly cited and followed in this court and in the Constitutional Court.3 [10] Sections 8 and 9 of the Act deal with two separate situations that may lead to the termination of the appointment of the National Commissioner or a Provincial Commissioner. The first, in s 8, is where there is a loss of confidence in the incumbent. The second, in s 9, is where there is misconduct by the incumbent, or circumstances arise 2 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18. 3 Most recently in Municipal Employees Pension Fund v Natal Joint Municipal Pension Fund (Superannuation) and Others [2017] ZACC 43; 2018 (2) BCLR 157 (CC) para 28 and Trinity Asset Management (Pty) Limited v Grindstone Investments 132 (Pty) Limited [2017] ZACC 32; 2018 (1) SA 94 (CC); 2017 (12) BCLR 1562 (CC) para 52. causing them to be unfit for office or to lack the capacity to execute their official duties efficiently. It is first necessary to deal with s 8 and situations of loss of confidence. The reason is that, because the provisions of sub-sections (1) to (8) of s 8 are incorporated mutatis mutandis in relation to investigations under s 9, the proper construction of those sub- sections must be determined before one can assess what changes will be necessary in applying s 9. [11] Loss of confidence in a police commissioner may arise for many reasons and is not necessarily linked to any misconduct, unfitness for office or lack of capacity. It is far more likely to arise because of dissatisfaction with the manner in which they are discharging the duties and functions of their office and whether under their command the South African Police Service, nationally or provincially, is fulfilling its functions in a satisfactory manner. [12] The Act does not deal with the situation where the President loses confidence in the National Commissioner of Police, but it is a necessary corollary of the President’s power to appoint the National Commissioner that the President may also dismiss the incumbent.4 However, when appointing the National Commissioner under s 206(1) of the Constitution, the President is acting as head of the national executive and accordingly exercises the executive authority to make that appointment together with the other members of the Cabinet in terms of s 85(2)(e) of the Constitution. For that reason, s 8(1) provides that if the Cabinet loses confidence in the National Commissioner the President must appoint a 4 Masetlha v President of the Republic of South Africa and Another [2007] ZACC 20; 2008 (1) SA 566 (CC) paras 66-72. board of inquiry to inquire into the circumstances leading to that loss of confidence, to report and to make recommendations.5 [13] The parallel provision in s 8(2) applies if the Executive Council of a province loses confidence in its local Provincial Commissioner. The reason is again apparent, namely, that the Executive Council played a role in the appointment of the Provincial Commissioner and, if it has lost confidence in the person it helped to appoint, it should be able to address that situation. Section 207(6) of the Constitution contemplates this and s 8(2)(a) is the required legislative response to it. When invoked the Executive Council must notify the Minister of Police in the national government of its loss of confidence in the Provincial Commissioner and give its reasons for that occurring.6 No involvement on the part of the National Commissioner is required. If the Minister of Police deems it necessary and appropriate to do so the notice from the Executive Council is referred to the National Commissioner, who is then obliged to constitute a board of inquiry in terms of s 8(2)(c) of the Act to inquire into the circumstances leading to the loss of confidence, report and make recommendations. [14] The third situation dealt with under s 8 is where the National Commissioner, as the person constitutionally responsible for the appointment of Provincial Commissioners, loses confidence in a Provincial Commissioner. That is dealt with in s 8(8) and it is appropriate to repeat the provisions of that section. It reads: 5 It is unnecessary for present purposes to decide whether the President’s power to dismiss the National Commissioner is linked to a loss of confidence in the incumbent on the part of the Cabinet or whether this is a separate and distinct power arising from the Constitution alone. 6 Section 8(2)(a) of the Act. ‘If a Provincial Commissioner has lost the confidence of a National Commissioner, the provisions of subsections (2)(c) and (d), (3), (4), (5), (6) and (7) shall apply mutatis mutandis.’ [15] It is notable that the earlier provisions of ss 8(2)(a) and (b), that apply when an Executive Council’s loses confidence in the Provincial Commissioner, are not made applicable when the National Commissioner loses confidence in a Provincial Commissioner. Only s 8(2)(c), which is the section dealing with the establishment of the board of inquiry, applies and even then it is applicable mutatis mutandis, that is, ‘with necessary changes in point of detail’.7 The word ‘necessary’ deserves emphasis. It is not for the court to redraft the section, but merely to change those things that are essential to it being of application in its new setting. [16] What changes are necessary to make the provisions of s 8(2)(c) applicable in the context of the National Commissioner’s loss of confidence in a Provincial Commissioner, and the need consequent upon that to establish a board of inquiry? One only has to read the section to realise that the words ‘upon receipt of the notice’ are glaringly inappropriate. Those words refer to a notice by the Minister of Police under s 8(2)(b), arising from the Minister’s consideration of an Executive Council’s report under s 8(2)(a) that it has lost confidence in its Provincial Commissioner. Section 8(8) has no bearing on that situation. Its concern is the National Commissioner’s loss of confidence in the Provincial Commissioner, not that of the Executive Council. 7 Touriel v Minister of Internal Affairs 1946 AD 535 at 545; South African Fabrics Ltd v Millman NO and Another 1972 (4) SA 592 (A) at 600C-E. [17] The omission of the words ‘upon receipt of the notice’ in s 8(2)(c) resolves the difficulty. That is also a sensible construction. If the National Commissioner loses confidence in a Provincial Commissioner that ought to be the subject of inquiry. The National Commissioner is responsible in terms of s 207(2) of the Constitution for control over and management of the police service. Under s 207(4) Provincial Commissioners perform their functions subject to the power of the National Commissioner to exercise control over and manage the police service. There is no conceivable reason and none was suggested why the institution of a board of inquiry into the National Commissioner’s loss of confidence in a Provincial Commissioner should be constrained by the need to follow the route under s 8(2)(a) and (b). Making the institution of such an inquiry dependent on the support of the Executive Council and a possible veto by either that body, or the Minister of Police, is not sensible and could hamper the proper management of the police service. [18] The argument on behalf of Lieutenant General Ngobeni does not contemplate any amendment at all to s 8(2)(c). It was based on the proposition that the words ‘upon receipt of the notice’ have the effect of importing into s 8(8) the provisions of sub-sections 8(2)(a) and (b), notwithstanding their deliberate omission from that section. That is an impermissible approach involving a misconception of what is meant when provisions in one section are incorporated mutatis mutandis into another having a different subject. Such incorporation affects only the provisions expressly incorporated and the necessary amendment of those provisions in their new setting. It cannot incorporate matter that is deliberately excluded. [19] In summary therefore, s 8 deals separately with the Cabinet losing confidence in the National Commissioner and either the Executive Council of a province, or the National Commissioner, losing confidence in a Provincial Commissioner. In the first case, the President, and in the latter two cases, the National Commissioner, must establish a board of inquiry. The composition of the board, the subject and manner of conducting the inquiry and the possible outcomes are in each instance the same. Under s 8(3)(a) the President, or the National Commissioner, as the case may be, is entitled to suspend the National Commissioner or the Provincial Commissioner once a board of inquiry has been established. Lastly, if the National Commissioner is the person who has lost confidence in a Provincial Commissioner the establishment of a board of inquiry and, pursuant thereto, a suspension of the affected Provincial Commissioner requires no input from the Executive Council of the province concerned, even if it disagrees with the National Commissioner. [20] Turning then to s 9(1), the provisions of sub-sections 8(1) to 8(8) inclusive are made applicable mutatis mutandis to any inquiry into allegations of misconduct, unfitness for office or incapacity on the part of either the National Commissioner or a Provincial Commissioner. Manifestly that cannot mean that all of those sub-sections are applicable when the President is dealing with alleged misconduct on the part of the National Commissioner. Nor can they all apply where the National Commissioner is considering alleged misconduct on the part of a Provincial Commissioner. By way of example, sub-section (1) can only apply where the President institutes an inquiry into alleged misconduct by the National Commissioner and sub-sections (2) and (8), which deal only with alleged misconduct involving Provincial Commissioners, have nothing to do with that situation. The converse is equally true, that sub- section (1) has no application to an inquiry in respect of a Provincial Commissioner. [21] Section 9 makes s 8(8) applicable mutatis mutandis to inquiries into alleged misconduct, unfitness for office or incapacity. As explained in the analysis of s 8(8) in paragraphs 14 to 19 of this judgment, the National Commissioner’s decision to establish a board of inquiry to investigate a loss of confidence in a Provincial Commissioner does not require a reference to the Provincial Executive. Similarly, when an investigation into a Provincial Commissioner’s alleged misconduct, unfitness for office or incapacity is called for, the National Commissioner must establish a board of inquiry without reference to the Executive Council of the province and whether or not the Executive Council has lost confidence in the Provincial Commissioner. [22] I am aware that s 9(1) appears to apply the whole of s 8(2) mutatis mutandis, but that must be viewed alongside its similar incorporation of s 8(8), which only incorporates s 8(2)(c). As the latter section deals with a situation where the National Commissioner acts of his or her own volition, while the former is concerned with the Executive Council, which is not implicated in and cannot instigate an inquiry into alleged misconduct, unfitness for office or incapacity,8 it is to the latter that we must look. That being so the National Commissioner need not refer alleged misconduct, unfitness for office or incapacity on the part of a Provincial Commissioner to the Executive Council of the relevant province before appointing a board of inquiry into those matters. 8 It could of course do so indirectly by referring such matters to the National Commissioner, but it has no power to do so of its own volition. [23] It follows that the approach of the High Court was incorrect. There was no attempt in argument before us to pursue the other grounds of review. That was wise as the acting National Commissioner was in possession of prima facie evidence of misconduct when he took the decision to establish a board of inquiry and suspend Lieutenant General Ngobeni. The other review grounds were accordingly unfounded. The appeal must succeed and the following order is made: 1 The application to strike the appeal from the roll is dismissed with costs. 2 The appeal is upheld with costs. 3 The order of the High Court is altered to read: ‘The application is dismissed with costs.’ _______________________ M J D WALLIS JUDGE OF APPEAL Appearances For appellant: T Ngcukatoibi (assisted in drafting heads of argument by F Hobden and R Taki) Instructed by: The State Attorney, Durban and Bloemfontein For respondent: P Daniels SC (Heads of argument prepared by G Harpur SC and K Thango) Instructed by: Ravindra Maniklall & Company, Umhlanga Hill, McHardy and Herbst, Bloemfontein.

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 15 March 2018 Status: Immediate 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. National Police Commissioner v Ngobeni The SCA today upheld an appeal against the decision of the KwaZulu-Natal Division of the High Court, Durban setting aside the suspension of Lieutenant General Ngobeni, the provincial police commissioner, KwaZulu-Natal. The then National Police Commissioner had established a board of inquiry into alleged misconduct or unfitness for office of Lieutenant General Ngobeni arising out of a surprise birthday party arranged by a Durban businessman, Mr Panday, for her husband, also a senior policeman. This was challenged on the basis that the National Police Commissioner lacked the powers under section 9, read with section 8, of the Police Service Act 68 of 1995 (the Act) to establish a board of inquiry unless he had first referred the matter to the Executive Council, KwaZulu-Natal and it had in turn referred the matter to the national Minister of Police, who had authorised the establishment of a board of inquiry. The challenge was upheld in the High Court and both the establishment of the board of inquiry and the suspension were set aside. On appeal the SCA pointed out that s 9 of the Act deals with possible misconduct or unfitness for office, while s 8 deals with a loss of confidence in the national or a provincial police commissioner. The Act provides in the latter situation that the parties involved in their appointment, namely, the Cabinet in the case of the national commissioner and the relevant provincial Executive Council or the national commissioner in respect of a provincial police commissioner are given powers to establish or have established a board of inquiry and in the case of a provincial police commissioner the national commissioner is given the power to suspend. The provisions of s 8 are incorporated with the necessary changes in s 9 dealing with misconduct or unfitness for office. As the national commissioner is empowered under s 8 to establish a board of inquiry and suspend a provincial commissioner when he or she has lost confidence in the provincial commissioner, the same is true of a situation where the national commissioner believes that there is misconduct or possible unfitness for office to be investigated. This does not require any involvement on the part of the provincial executive council. Accordingly the appeal was upheld and the original application dismissed.

1356

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 613/09 In the matter between: ELLOUISE BRITZ Appellant and THE STATE Respondent Neutral citation: Britz v S (613/09) [2010] ZASCA 71 (27 May 2010). Coram: CLOETE et MLAMBO JJA et SALDULKER AJA Heard: 18 May 2010 Delivered: 27 May 2010 Summary: Criminal appeal: Evidence: application to adduce new evidence not available when appellant sentenced: approach of appeal court. ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Eastern Cape High Court (Grahamstown) (Jansen and Sandi JJ sitting as court of appeal): The appeal is dismissed. ______________________________________________________________ JUDGMENT ______________________________________________________________ CLOETE JA (Mlambo JA et Saldulker AJA concurring): [1] On 6 May 2008 in the Eastern Cape Commercial Crimes Division of the regional court in Port Elizabeth, the appellant, an adult female aged 33 years, pleaded guilty to, and was convicted of, 67 counts of fraud. The first fraud was committed in June 2003 and the last, some three-and-a-half years later in January 2007. The appellant was employed by a close corporation as a bookkeeper. She made electronic transfers of money from the close corporation's bank account into the account of her husband and she also purchased goods, which she appropriated, from suppliers to the close corporation using the close corporation's money, whilst representing to the close corporation and its sole member that the transfers were to settle debts owed to the close corporation's creditors and representing to the suppliers that the goods had been purchased for the close corporation. The total amount involved was over R330 000 and nothing has been voluntarily repaid. [2] On 9 June 2008, after a correctional supervision report had been submitted and evidence led from a probation officer (Ms van der Mescht), the appellant was sentenced, in a careful judgment by the regional magistrate, to five years' imprisonment of which two years were suspended conditionally for five years. The appellant served about four-and-a-half months of her sentence and then brought an application on notice of motion in the regional court for condonation and leave to appeal against the sentence; and leave to place evidence, which was allegedly not available when she was sentenced, before that court and ultimately the court of appeal. At the same time the appellant brought an application for bail pending appeal. The application was supported by affidavits from the appellant, her attorney and her husband, and a report from a psychologist. The evidence that the appellant sought to adduce was that after she had been sentenced, her mother had died and the latter was therefore not able to give the appellant's children, a girl born on 12 April 1993 and a boy born on 29 January 1997, 'the necessary care, attention and love that they needed whilst I served my sentence'. Further, according to the appellant, her husband 'had to work extra long hours in order to make up for the loss of income that I was bringing to the family. As such my husband found it very difficult to look after the children as he could not be there when they returned from school and as my mother was no longer alive.' The psychologist's report comprised a psychological assessment of the two children 'because of the change in their personal circumstances after the incarceration of their mother and the recent death of the grandmother' and concluded: 'The family is in desperate need for a mother to take charge again of the emotional and physical wellbeing of the family. The children are not neglected but their emotional needs for a mother are great and much needed'. The submission in the affidavit by the appellant, and the submission on appeal, was that although the sentence was not inappropriate when it was imposed, the interests of the children should lead a court of appeal to substitute a non-custodial sentence. The magistrate granted condonation and leave to appeal and ordered the appellant's release on bail. [3] In the court a quo (Jansen J, Sandi J concurring) the application and appeal were dismissed but that court (Jansen J, Froneman J concurring) subsequently granted leave to appeal to this court. The basis of the judgment in the court a quo dismissing the appeal was that an appeal must be decided on the basis of facts in existence at the time the appellant was convicted or sentenced; that there are no exceptions to this rule; and that where an appellant wishes to rely on facts which came into existence after sentence was imposed, the proper remedy is not to appeal but to approach the executive authority. The court went on to point out that the Criminal Procedure Act1 provides for the conversion of a sentence of imprisonment to a sentence of correctional supervision. The court a quo therefore did not consider the merits of the application to lead further evidence on appeal, although the court in its judgment granting leave to appeal considered that this court might do so because the interests of children were involved [4] The power of a high court sitting as a court of appeal from a decision in the magistrate's court to hear further evidence derives from both the Criminal Procedure Act and the Supreme Court Act.2 Section 309(3) of the Criminal Procedure Act provides that a provincial or local division sitting as a court of appeal shall 'have the power referred to in s 304(2)' and paragraph (b) of that section in turn provides that 'such court may at any sitting thereof hear any evidence and for that purpose summon any person to appear and to give evidence or to produce any document or other article'. Section 22 of the Supreme Court Act, which in terms also applies to this court, provides that: 'The appellate division or a provincial division, or a local division having appeal jurisdiction, shall have power ─ (a) on the hearing of an appeal to receive further evidence, either orally or by deposition before a person appointed by such division, or to remit the case to the court of first instance, or the court whose judgment is the subject of the appeal, for further hearing, with such instructions as regards the taking of further evidence or otherwise as to the division concerned seems necessary. . . .' This court has itself heard evidence on appeal ─ in R v Carr3 the court apparently over a period of four days heard the evidence of as many medical doctors (two for the appellant, two for the State) and itself evaluated the conflicting evidence they gave, because it considered that this was 'the course best calculated to achieve the due and expeditious administration of justice in the present case, the decision of which it was obviously most undesirable to delay. . . .'4 (The appellant had been sentenced to death.) However, as 1 Act 51 of 1977. 2 Act 59 of 1959. 3 1949 (2) SA 693 (A). 4 At 700. pointed out in S v De Jager5 the usual course, if a sufficient case has been made out, is to set aside the conviction and/or sentence and send the case back for the hearing of further evidence, with a suitable order6 to guide the court that will hear the evidence. Such a course would be unnecessary where the evidence contained in the affidavit made in support of the application to receive it is accepted by the State (as in S v Michele & another7) or is incontrovertible (as in S v Karolia8 and S v Jaftha9). [5] Despite the wide wording of the statutory provisions, this court has laid down requirements which must be complied with before it would be prepared to hear evidence on appeal. Those requirements were summarised in S v De Jager,10 have been 'applied in countless cases since',11 and are as follows: '(a) There should be some reasonably sufficient explanation, based on allegations which may be true, why the evidence which it sought to lead was not led at the trial. (b) There should be a prima facie likelihood of the truth of the evidence. (c) The evidence should be materially relevant to the outcome of the trial.' The same requirements apply equally to any court sitting as a court of appeal: S v A.12 In addition, the general rule13 is that an appeal court will decide whether the judgment appealed from (and that includes a judgment on sentence)14 is right or wrong according to the facts in existence at the time it was given, not according to new circumstances subsequently coming into existence. Nevertheless, this court has previously indicated that the rule is not necessarily invariable15 and the rule has recently been relaxed to allow evidence to be adduced on appeal of facts and circumstances which arose subsequent to the sentence imposed, where there were exceptional or 5 1965 (2) SA 612 (A) at 613A. 6 See the order in S v Wilmot 2002 (2) SACR 145 (SCA) at 159d-g and the orders in the cases referred to at 159d. 7 2010 (1) SACR 131 (SCA). 8 2006 (2) SACR 75 (SCA). 9 2010 (1) SACR 136 (SCA). 10 1965 (2) SA 612 (A). 11 Per Smalberger JA in S v H 1998 (1) SACR 260 (SCA) at 262i. 12 1990 (1) SACR 534 (C) at 540c-d. 13 R v Verster 1952 (2) SA 231 (A) at 236B; R v Jantjies 1958 (2) SA 273 (A) at 279C-D and Attorney-General, Free State v Ramokhosi 1999 (3) SA 588 (SCA) para 8 at 593D-F. 14 R v Hobson 1953 (4) SA 464 (A) at 465H-466B and 466F-G; S v Barnard 2004 (1) SACR 191 (SCA) para 19. 15 S v Immelman 1978 (3) SA 726 (A) at 730H; S v Marx 1989 (1) SA 222 (A) at 226C. peculiar circumstances present: S v Karolia;16 S v Michele;17 S v Jaftha,18 and also where there were misdirections by the court which imposed sentence, which had the effect that the appeal court was at large to impose the sentence it considered appropriate: S v Barnard.19 (It is not necessary for present purposes to consider whether this latter situation should be subject to particular safeguards to prevent an abuse of the appeal procedure.) The more liberal approach by this court, shown by a comparison of the decision in Verster20 (where the court refused to take into consideration a delay in the hearing of an appeal as a reason for altering a sentence imposed by a magistrate) and the decision in Michele (where such evidence was taken into account and the sentence reduced), must not be interpreted as a willingness to open the floodgates. In cases such as the present where the facts and circumstances arose after sentence, the application must be carefully scrutinized to ascertain whether it does indeed disclose exceptional or peculiar circumstances. It is undesirable to attempt to define these concepts further. [6] Apart from scrutinizing applications to ascertain whether they pass the exceptional or peculiar circumstances test, and in common with previous decisions of this court dealing with the circumstances under which a court of appeal would be prepared to hear new evidence in existence at the time of the trial, two further requirements must be complied with, being those set out in paragraphs (b) and (c) in De Jager quoted in para 5 above. [7] The first additional requirement ─ that there should be a prima facie likelihood that the evidence is true ─ did not arise for consideration in Karolia, where the facts which arose subsequent to the imposition of sentence were described as 'unquestionable';21 or in Michele where the six-year delay fell into the same category; or in Jaftha, where Lewis JA was at pains to 16 Above, n 8. 17 Above, n 7. 18 Above, n 9. 19 Above, n 14, paras 19 tot 21 and p 197h-i. 20 Above, n 13. 21 At 93i-94a. emphasize22 that the State did not question the truth of the allegations made by the appellant. It was inter alia for that reason that Lewis JA decided in the latter case that there was no point in referring the matter back to the trial court to hear evidence.23 Ordinarily, if the new evidence is accepted, there is no reason why the matter should be referred back as an appeal court can itself impose an appropriate sentence, taking into account the new evidence, as happened in Karolia, Michele and Jaftha. It is not the usual practice of this court, or of high courts sitting as courts of appeal,24 to refer a matter back for re-imposition of sentence if a misdirection is discovered; and in the interests of saving unnecessary delay and expense, this approach should apply equally where evidence which is admitted by the State is allowed on appeal. But where there is a dispute, or where the State wishes to challenge the evidence by cross-examination or to lead rebutting evidence, different considerations apply. It is notable that Schreiner JA in Goodrich v Botha & others,25 quoted and followed in Karolia,26 only considered cognisance of subsequent events by a court of appeal 'where, for example, their existence was unquestionable or the parties consented to the evidence being so used'. But the right to hear evidence (in terms of the Criminal Procedure Act) and the right to receive further evidence or to remit the case for further hearing (in terms of the Supreme Court Act) are not qualified or made subject to any limitations. And in my view the policy reasons that underly the justifiable reluctance of appeal courts to receive evidence of events on appeal27 would not be compromised if, in the very limited circumstances set out in this judgment, an appeal court were to set aside the sentence and remit the matter to the trial court with directions as to the hearing of further evidence which the appellant, the State or the court might wish to adduce. Such a procedure has been followed by this court from as early as 1935 in R v Mhlongo & another28 in cases where the further evidence subsequently obtained casts doubt on whether there 22 Para 16 at 139f-g, para 19 at 140d and para 20 at 140e. 23 Para 20. 24 The practice in the Constitutional Court appears to be different : S v M (Centre of Child Law as amicus curiae) 2007 (2) SACR 539 (CC) para 49. 25 1954 (2) SA 540 (A) at 546B-C. 26 Above, n 8 para 36 at 93g and 93 in fine-94a. 27 See S v De Jager above, n 5 at 613A-C; R v Jantjies above, n 13 at 279D-E. 28 1935 AD 133. should have been a conviction; and I see no difference in principle between that type of case and a case such as the present. [8] So far as the 'materially relevant' consideration is concerned, the appeal court should only allow the evidence tendered if satisfied that there is at least a probability, not merely a possibility, that the evidence, if accepted, would affect the outcome (R v Weimers & others)29 ─ in casu, whether the evidence warrants interference with the sentence. In my view the evidence would not have to be decisive. The dicta to the contrary in English decisions referred to by Schreiner JA in Weimers30 date from a time when courts of appeal were most reluctant to allow evidence on appeal in criminal matters and before the position was regulated by statute.31 [9] In the present matter, the appellant fails at every hurdle. It is convenient to deal with the three requirements for admission of evidence on appeal in a case such as the present which I have set out above, in reverse order. [10] First, the evidence is not materially relevant. The unchallenged evidence given by the probation officer, Ms van der Mescht, was that the appellant herself had told her that her husband would be responsible for looking after the children if she were not able to do so; and the probation officer said that the appellant's mother was apparently very ill so she would not have been in a position to care for the children. The appellant was accordingly sentenced on the basis that her mother would not have been of assistance in caring for the children. The magistrate said: 'Die kinders is 'n probleem en dit gee altyd vir ons, wat veral dames voor ons het om te vonnis, hoofbrekens. Die Grondwet bepaal aan die eenkant dat die belange van die kinders vooropgestel moet word wanneer hulle belange betrokke is by enige iets, soos in hierdie tipe geval. Gelukkig in hierdie situasie is daar 'n ander ouer wat byderhand is en wat die ouerlike werk kan behartig.' 29 R v Weimers & others 1960 (3) SA 508 (A) at 514F-515B and 515G. 30 At 515A-D. 31 For the present position in England see Halsbury's Laws of England (4th ed) vol 11(4) para 1867. But that apart, even if the evidence which the appellant seeks to place before the court (summarised in para 2 above) were to be accepted, it would, for the reasons which immediately follow, make no difference. [11] The magistrate, with obvious regret, concluded that a sentence of direct imprisonment was the only appropriate sentencing option (although he suspended two of the five years' imprisonment which he imposed specifically because the appellant's children were young, so that her absence from them would not be, as he put it, unnecessarily long). I agree that direct imprisonment was the only legitimate option which could have been considered. The appellant was a first offender. Apart from that, there is very little that can be said in her favour. She pleaded guilty, but that fact is not necessarily an indication of remorse as where there was a paper trail as there must have been in this case, she would have had little option. The uncontested evidence of the sole member of the close corporation was that the appellant's confession to him some 14 days after she had resigned was due to the fact that her fraudulent scheme was going to be uncovered anyway; and that the amount she confessed to was far less than the actual amount involved. She was furthermore in a position of trust; the offences were committed over a fairly long period of time (three-and-a-half years); a substantial sum of money was involved (over R330 000); and nothing has been repaid voluntarily (a sale in execution of the appellant's goods realised only R4 950 and the cost of the proceedings amounted to just less than R10 000). The appellant also implicated a co-employee who could have lost his job. She entered appearance to defend the civil proceedings instituted against her by the close corporation. She threatened the member of the close corporation that she would report him to the SARS and expose an insurance fraud should he (as he put it) not 'back off'. She was motivated by pure greed ─ she wished to maintain a standard of living above the family's means. And she continued to defraud the close corporation when she knew that its business was suffering financially to the extent that employees, including her own brother, were being laid off in consequence of the frauds she continued to commit. In addition the sole member of the close corporation was obliged to extend the close corporation's overdraft and to borrow money from his brother and his mother to meet the payroll. [12] In S v M (Centre of Child Law as amicus curiae)32 Sachs J, writing for the majority of the Constitutional Court, said: 'There is no formula that can guarantee right to results. However, the guidelines that follow would, I believe, promote uniformity of principle, consistency of treatment and individualisation of outcome. . . . (c) If on the Zinn-triad33 approach the appropriate sentence is clearly custodial and the convicted person is a primary caregiver, the court must apply its mind to whether it is necessary to take steps to ensure that the children will be adequately cared for while the caregiver is incarcerated. . . . (e) Finally, if there is a range of appropriate sentences on the Zinn approach, then the court must use the paramountcy principle concerning the interests of the child as an important guide in deciding which sentence to impose. . . . A balancing exercise has to be undertaken on a case-by-case basis. It becomes a matter of context and proportionality. Two competing considerations have to be weighed by the sentencing court. The first is the importance of maintaining the integrity of family care. . . . The second consideration is the duty on the State to punish criminal misconduct. The approach recommended . . . makes plain that a court must sentence an offender, albeit a primary caregiver, to prison if on the ordinary approach adopted in Zinn a custodial sentence is the proper punishment. The children will weigh as an independent factor to be placed on the sentencing scale only if there could be more than one appropriate sentence on the Zinn approach, one of which is a non-custodial sentence. For the rest, the approach merely requires a sentencing court to consider the situation of children when a custodial sentence is imposed and not to ignore them.' 32 Above, n 24 paras 36-39. 33 S v Zinn 1969 (2) SA 537 (A) at 540G-H. For these reasons the evidence which the appellant seeks to place before the court is not materially relevant as it would not result in a non-custodial sentence being substituted. [13] Second, the application does not satisfy the requirement that there should be a prima facie likelihood of the truth of the evidence. When leave to appeal was sought in the magistrate's court, counsel representing the appellant (who is not the same counsel who argued the appeal before this court) submitted that because the State had not filed opposing affidavits, it was bound by the allegations made in the appellant's affidavit, and counsel for the State appearing in those proceedings accepted this submission. The argument is quite wrong. There is a difference between the evidence of the probation officer, Ms van der Mescht34 and the appellant's affidavit,35 in regard to whether the appellant's mother was in a position to look after the children. To give the appellant the benefit of the doubt, Ms van der Mescht may have been dealing with the appellant's mother's ability to care for the children physically whilst the appellant may have been dealing only with the ability to take care of their emotional needs. But there are other discrepancies. The appellant says in her affidavit that: '[M]y husband found it very difficult to look after the children as he could not be there when they returned from school and as my mother was no longer alive. The two children had to look after themselves whilst alone at home. This basically meant that my 15 year old daughter had to act as a mother to my 11 year old son and, inter alia, cook for him and ensure that he does his homework etc. and look after him whilst my husband is working late hours. . . . I am worried that something is going to happen to [my children] being such young children left on their own. There is absolutely no-one in the area whom my husband or I can call on to assist us to look after the children whilst my husband works these lengthy hours.' But according to the psychologist's report, there is a domestic worker employed by the appellant's husband full time during the week. In addition, it appears from the affidavit of the appellant's husband that her father lives at home and that although he is employed full time (by a security company), he 34 Para 10 above. 35 Para 2 above. is only 63 years old. There seems to be no good reason why he cannot be of physical assistance in the evenings and over the weekends even if, as the appellant's husband said, he is heavily in mourning and not much company to the children. The appellant has accordingly not produced evidence that is probably true in regard to the physical needs of the children. I shall deal with their emotional needs immediately below. [14] Then finally, there are no exceptional or peculiar circumstances present which would justify reception of the evidence. The fact that the appellant's mother could not act as a physical caregiver for the children was an existing fact when sentence was passed, not a consequence of her death thereafter. No doubt, as counsel who argued the appeal before us emphasized, the children were left in an emotional void once their mother, and shortly thereafter their grandmother, was no longer part of the household. As the father put it, 'they are "lost at sea" at present. They are exceptionally emotional with the loss of their beloved grandmother and appear to me to be lost at times, bearing in mind that I (their father) are not able to be present in the house as often as I was in the past.' One has the greatest sympathy for the children but their emotional needs cannot trump the duty on the State properly to punish criminal misconduct where the appropriate sentence is one of imprisonment. As Sachs J said in S v M:36 '[S]eparation from a primary caregiver is a collateral consequence of imprisonment that affects children profoundly and at every level. Parenting from a distance and a lack of day-to-day physical contact places serious limitations on the parent-child relationship and may have severe negative consequences. The children of the caregiver lose the daily care of a supportive and loving parent, and suffer a deleterious change in their lifestyle. Sentencing officers cannot always protect the children from these consequences. They can, however, pay appropriate attention to them and take reasonable steps to minimise damage. The paramountcy principle, read with the right to family care, requires that the interests of children who stand to be affected receive due consideration. It does not necessitate overriding all other considerations. Rather, it calls for appropriate weight to be given in each case to a 36 Above, n 24 para 42. consideration to which the law attaches the highest value, namely, the interests of children who may be concerned.' In the present matter, as I have said, the magistrate specifically suspended two years of the sentence imposed because of the interests of the children. And if it be accepted that the appellant's husband has to work long hours to make up for the income lost in consequence of the appellant's imprisonment, that is exactly what one would expect. Nor can the appellant legitimately contend that her sentence should be reduced on appeal (as was done in Michele)37 or that a non-custodial sentence should be substituted for the remainder of the period of imprisonment imposed (as was done in S v M)38 because of the delay in her completing her sentence and the undesirability of sending a person back to jail. Of course it is harsh to send a person back to jail, particularly a mother who has no doubt re-bonded with her family, and her family with her. But the process which led to the appellant's temporary release was not only initiated by her, it had no prospect of success. The decision of the Constitutional Court in S v M was published in the law reports a year before the date on which the appellant deposed to her affidavit. In the circumstances it would be quite wrong to allow the appellant to benefit from these ill-conceived proceedings and escape the consequences of what, it is common cause between the appellant and the State, was a fair sentence. [15] Before making the appropriate order, I would emphasize that the procedure in terms of s 276A of the Criminal Procedure Act, which would enable the appellant's sentence to be reconsidered by the magistrate at the instance of the Commissioner or a parole board, remains open.39 That section provides: '(3)(a) Where a person has been sentenced by a court to imprisonment for a period ─ (i) not exceeding five years; or (ii) exceeding five years, but his date of release in terms of the provisions of the Correctional Services Act 8 of 1959, and the regulations made thereunder is not more than five years in the future, 37 Above, n 7 para 13. See also S v Roberts 2000 (2) SACR 522 (SCA) para 22. 38 Above, n 24 paras 57 to 76. See also Karolia above, n 8 paras 38 and 39. 39 Cf S v M above, n 23 para 65. and such a person has already been admitted to a prison, the Commissioner or a parole board may, if he or it is of the opinion that such a person is fit to be subjected to correctional supervision, apply to the clerk or registrar of the court, as the case may be, to have that person appear before the court a quo in order to reconsider the said sentence.' The views expressed in this judgment are in no way a bar to that procedure being followed as some additional and different considerations apply and the enquiry is not the same as that in the present appeal. [16] The appeal is dismissed. _______________ T D CLOETE JUDGE OF APPEAL APPEARANCES: APPELLANTS: E Kammies Instructed by Lee Strydom Fourie Inc, Port Elizabeth Hill McHardy & Herbst Inc, Bloemfontein RESPONDENTS: Ms U L de Klerk Instructed by The Director of Public Prosecutions, Grahamstown The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 27 May 2010 Status: Immediate 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 E BRITZ v THE STATE The appellant was sentenced to an effective three years' imprisonment for 67 counts of fraud committed against her employer over a period of three-and-a-half years and involving over R330 000. The appellant sought to adduce evidence on appeal of the fact that after she had been sentenced and served over four months of her sentence, her mother had died and her children (a girl aged 17 and a boy aged 13) would therefore not be cared for properly whilst she was in prison. The magistrate granted bail to the appellant pending appeal. The SCA rejected the application for three reasons. First, reception of the evidence would make no difference to the sentence of imprisonment. The magistrate had sentenced the appellant on the very basis that her mother was too ill to look after the children. Additionally, the magistrate had correctly considered that direct imprisonment was the appropriate sentence despite the fact that the appellant had children. Second, there was no prima facie likelihood of the evidence being true. There were discrepancies in the facts put before the court. It appeared from the record that the children could be looked after by the appellant's father over weekends when their own father was at work, and that there was a domestic helper employed full-time during the week. Third, the fact that the appellant's husband had to work longer hours to supplement the income she had earned was not an exceptional or peculiar circumstance that occurred after sentence but was precisely what one would have expected. The SCA concluded that the emotional needs of the children could not be allowed to trump duty on the State properly to punish criminal conduct where the appropriate sentence was one of imprisonment. The effect of the judgment is that the appellant will have to return to jail, although the SCA pointed out that the Commissioner for Prisons or a parole board could invoke the procedure under the Criminal Procedure Act to enable the magistrate to alter the remainder of the sentence to correctional supervision. --ends--

3782

non-electoral

2022

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 898/2020 In the matter between: OPPRESSED A C S A MINORITY 1 (PTY) LTD (Formerly known as African Harvest Strategic Investments (Pty) Ltd) FIRST APPELLANT UP-FRONT INVESTMENTS 65 (PTY) LTD SECOND APPELLANT and GOVERNMENT OF THE REPUBLIC OF SOUTH AFRICA FIRST RESPONDENT MINISTER OF TRANSPORT SECOND RESPONDENT AIRPORTS COMPANY OF SOUTH AFRICA SOC LTD THIRD RESPONDENT PYBUS THIRTY-FOUR (PTY) LTD FOURTH RESPONDENT AIRPORTS MANAGEMENT SHARE INCENTIVE SCHEME COMPANY (PTY) LTD FIFTH RESPONDENT LEXSHELL 342 INVESTMENT HOLDINGS (PTY) LTD SIXTH RESPONDENT TELLE INVESTMENTS (PTY) LTD SEVENTH RESPONDENT ADR INTERNATIONAL AIRPORTS SOUTH AFRICA (PTY) LTD EIGHTH RESPONDENT G10 INVESTMENTS (PTY) LTD NINTH RESPONDENT MINISTER OF FINANCE TENTH RESPONDENT Neutral citation: Oppressed A C S A Minority 1 (Pty) Ltd and Another v Government of the Republic of South Africa and Others (case no 898/2020) [2022] ZASCA 50 (11 April 2022) Coram: DAMBUZA, MAKGOKA, SCHIPPERS, PLASKET and GORVEN JJA Heard: 24 November 2021 Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10h00 on 11 April 2022. Summary: Civil Procedure – rescission of judgment – no distinction in approach to rescission of consent orders and other judgments – the starting point is the court order rather than the underlying agreement – lack of authority to conclude settlement agreement and consequent consent court order – good cause for rescission established. ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Yacoob J sitting as court of first instance): The appeal is dismissed with costs including the costs of two counsel. JUDGMENT Dambuza JA (Makgoka, Schippers, Plasket and Gorven JJA concurring) Introduction [1] This appeal is against an order granted by the Gauteng Division of the High Court, Johannesburg (high court, Yacoob J), in terms of which a consent order made by the same court, per Matojane J, was rescinded. The appeal is with the leave of the high court. Background [2] The two appellants, Oppressed ACSA Minority 1 (Pty) Ltd (formerly known as African Harvest Strategic Investments (Pty) Ltd) and Up-Front Investments 65 (Pty) Ltd, are part of a 4.21%1 minority shareholder component in Airports Company of South Africa (ACSA), the third respondent in this appeal. ACSA is a statutory entity established by the first respondent, the Government of 1 ACSA was formed by the Government in 1993 to operate the nine main South African airports. In 1998 it was partially privatised when 25.4% of its shareholding was sold to private sector shareholders. By 2015 the Government held 74.6% shares and the balance was held as follows: ADR International Airports South Africa (Pty) Ltd (a wholly owned subsidiary of the Public Investment Corporation (PIC) SOC Limited) held 20%, a staff share incentive scheme (constituted by Amsis and Lexshell 342 Investment Holdings (Pty) Ltd) held 1.19%, Minority Shareholders held 4.21% (formerly African Harvest Strategic Investments (Pty) Ltd) - 1.40% shares, G10 Investments (Pty) Ltd – 1.21% shares, Upfront Investments 65 (Pty) Ltd – 0.40% shares, Pybus Thirty Four (Pty) Ltd – 0.40% shares, and Telle Investments (Pty) Ltd – 0.80% shares). the Republic of South Africa (the Government), in terms of the Airports Company Act 44 of 1993 (Airports Act). The appellants acquired their share in 1998 at a price of R172 million. The Government, holds 74.6% of the shares. The second respondent (Minister of Transport) is the designated Government representative on the ACSA Board. [3] On 29 July 2015 the appellants brought an application in the high court under s 163 of the Companies Act 71 of 2008 (Companies Act), seeking an order directing ACSA to acquire their 1.8% stake in ACSA at fair value.2 The application was a culmination of a longstanding dissatisfaction on the part of the appellants with the business direction adopted by ACSA, subsequent to the appellants’ acquisition of their shares. It was not in dispute that subsequent to the appellants’ acquisition of their shares, ACSA had deviated from undertakings it had made when the appellants acquired their shares. Instead of pursuing a public offering (IPO) as promised and listing on the Johannesburg Stock Exchange (JSE), ACSA adopted business practices that prioritized its economic developmental role. In addition, the Government retained its shares in ACSA instead of divesting of them as the appellants had been led to believe it would. [4] In the s 163 application the appellants contended that ACSA’s deviation from the promised commercial route resulted in their return on capital being limited to the cost of their capital. At some stage ACSA also stopped declaring dividends, leaving the appellants burdened with the debt they had assumed in order to buy the shares, with no escape avenue. 2 In terms of s 163(1)(a) of this Act a shareholder or director of a company may apply to a court for relief if any act or omission by the company, or related person, has had a result that is oppressive, or unfairly prejudicial to, or that unfairly disregards the interests of the applicant. The same relief is available under s 163(1)(b) [where] the business of the company, or a related person, is being or has been . . . conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of the applicant; or (under s 163(1)(c) [where] the powers of a director or prescribed officer of the company, or a person related to the company, are being or have been exercised [in a manner] that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of the applicant. [5] While admitting that during June 1998 it had considered a public offering of its shares as recorded in its prospectus, ACSA maintained that it could not be held responsible for the appellants’ debts. It contended that there was never a time limit for effecting the IPO, and that, in any event, the appellants had rejected an offer to buy their shares at R12.87 per share. They never proved that the offer was unreasonable and they never showed mala fides or unlawfulness in ACSA’s developmental role. Instead, they were only prepared to sell their shares at R26.51 each, the value as per ACSA’s interim accounts for the six-month period ending on 30 September 2014, so it was asserted. [6] ACSA insisted that its Board of Directors had acted within its rights and mandate in determining its business direction. And the appellants had not shown any oppressive or prejudicial conduct on the part of ACSA and the Minister. Therefore the appellants had not proved an entitlement to a relief based on s 163 of the Companies Act. [7] ACSA, the Minister of Finance and the Government (State parties) contended that the appellants did not specify when and by whom the decisions not to list and not to pay dividends were taken, and whether they were executive or administrative decisions. They pleaded that in acquiring the shares from the appellants, ACSA would have to comply with the provisions of s 217 of the Constitution and other procurement requirements prescribed in terms of the Constitution. Furthermore, an order sought by the appellants, that an internationally recognised expert be appointed to value their shares, would be offensive to the provisions of the Public Finance Management Act 1 of 1999 (PFMA) and the Regulations promulgated thereunder.3 3 The specific sections of the PFMA which, it was alleged, would be contravened if the s 163 application were to be granted, are set out in the paragraphs that follow. [8] A few days before the date of the hearing of the s 163 application, discussions were held between the appellants and ACSA’s representatives. These resulted in a settlement agreement being concluded on 31 July 2017, the day before the hearing. On the day of the hearing, 1 August 2017, the high court, per Matojane J, granted a consent order based on the settlement agreement. In the relevant part the order read as follows: ‘NOW THEREFORE the parties agree to settle the dispute between them as set out hereunder. 1. The first respondent (“ACSA”): 1.1 is directed to purchase the shares of the applicants in ACSA; 1.2 is to take transfer thereof against payment to the applicants of a purchase consideration in an amount to be determined by the referee referred to in paragraph 4 below; 1.3 purchase [sic] the applicants’ shares as a share buy-back out of ACSA’s retained income. 2. The value of the applicants’ shares in ACSA will be as at the date of this order. 3. In order to determine the value of the applicants’ shares in ACSA, the court refers this issue to a referee as contemplated in terms of section 38 of the Superior Courts Act, No 10 of 2013 (“Superior Courts Act”). 4. The applicants and first respondent will appoint the referee within 14 days from date of this order such referee to be: 4.1 an internationally recognised, independent merchant banker doing business in South Africa with experience in the valuation of infrastructure businesses shall be appointed by agreement between the parties (or failing such agreement by the chairperson for the time being of the Banking Association of South Africa); . . . 8. The referee’s costs shall be borne equally by the applicants on the one part, and ACSA, on the other part.’ [9] The consent order was partially implemented. A referee was appointed pursuant to the court order and a valuation was concluded on 26 February 2018. ACSA, however, disputed the valuation and launched proceedings in the high court to challenge it. On 17 July 2018, whilst the ACSA challenge to the valuation was pending, and almost a year after the consent order was granted, the Government launched an application in the high court seeking rescission of the consent order and, in the alternative, leave to appeal against that order. [10] The application for rescission of the consent order was brought in terms of both rule 42(1) of the Uniform Rules of Court (the rules) and under common law. It was contended that the consent order was erroneously granted as it was not competent for the court to grant an order which bolstered an illegality. The illegality was said to be the conclusion of a settlement agreement in breach of ss 3 and 4 of the Airports Act,4 and the provisions of paragraphs 9.5 and 9.6 of ACSA’s Memorandum of Incorporation (MOI).5 The Government contended that the Minister of Transport never gave approval to the share buy-back. Furthermore, although the Government was the majority shareholder in ACSA, it had not been party to the settlement agreement, yet it found itself bound thereby whilst it could not discharge its obligations to protect public funds. [11] In addition, so contended the Government, the settlement agreement was concluded in breach of ss 54(2)(c) and 66 of the PFMA. Section 54(2)(c) of the PFMA imposes an obligation on accounting authorities of public entities intending to acquire or dispose of a ‘significant shareholding’ in the company to inform National Treasury of the impending transaction and to submit particulars 4 Section 3 of that Act provides: ‘(1) The State shall be the holder of the shares in the company; (2) The said shares shall only be sold or otherwise disposed of with the approval, by resolution, of Parliament; (3) The rights attached to the shares of which the State is the holder shall be exercised by the Shareholding Minister on behalf of the State; (4) The State President shall designate a Minister as the Shareholding Minister.’ Section 4 provides that: ‘the objects of the company are the acquisition, establishment, development, provision, maintenance, management, control or operation of any airport, any part of any airport or any facility or service at any airport normally related to the functioning of, an airport.’ 5 The relevant provisions of the MOI provide that: ‘9.5 In addition to any prescribed obligations which the Shareholders may agree to and notwithstanding any provisions of this MOI, no Securities in the Company held by any other Holder, other than the Minister, shall be transferred to any party without the consent of the Minister. 9.6 Where the Minister consents to the sale or disposal or transfer of securities in the manner contemplated in clause 9.5 above, the Minister shall be entitled , at his or her discretion, to stipulate any conditions which shall apply to the granting of the consent.’ relevant to the transaction to ‘their executive authorities’.6 The Goverment maintained that the share buy-back transaction fell within the ambit of this section, yet no report to National Treasury was made prior to the conclusion of the agreement. The appellants retorted that there was no evidence that the share buy-back amounted to a disposal of a significant shareholding in ACSA. [12] Section 66 sets out restrictions on borrowing money, the issuing of guarantees, indemnities and securities by public institutions to which the PFMA is applicable.7 The contention by the Government was that in terms of the consent order, ACSA had to buy the shares back at some undetermined time in the future. [13] Another reason why it was contended that the consent order was an illegality was that it was granted in the absence of a solvency and liquidity test that is required under ss 46 and 48 of the Companies Act. There was no resolution by the ACSA Board of Directors acknowledging that it was satisfied that the solvency and liquidity requirements had been complied with. Sections 46(1)(a) and (b) of the Companies Act regulate the making of distributions by companies. In terms thereof distributions may only be made pursuant to an existing legal obligation or on authorisation by the board. Further, distributions may only be 6 Section 54(2) provides: ‘Before a public entity concludes any of the following transactions, the accounting authority for the public entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction: . . . (c) acquisition or disposal of a significant shareholding in a company. . .’. 7 Section 66, in relevant part, provides: ‘(1) An institution to which this Act applies may not borrow money or issue a guarantee, indemnity or security, or enter into any other transaction that binds or may bind that institution or the Revenue Fund to any future financial commitment, unless such borrowing, guarantee, indemnity, security or other transaction - (a) is authorised by this Act; and (b) in the case of public entities, is also authorised by other legislation not in conflict with this Act; . . . (3) Public entities may only through the following persons borrow money, or issue a guarantee, indemnity or security, or enter into any other transaction that binds or may bind that public entity to any future financial commitment: (a) A public entity listed in Schedule 2: The accounting authority for that Schedule 2 public entity. . .’. made when it reasonably appears that the company will satisfy a solvency and liquidity test immediately after completion of the proposed distribution. [14] The high court found that the requirements of rule 42 had not been met. It rejected the Government’s argument that the absence of authority for the conclusion of the settlement agreement by ACSA constituted justus error. Instead, the court accepted a submission by the Government that the court order fell to be rescinded on just and equitable grounds by exercise of the court’s remedial powers under s 172(1)(b) of the Constitution, because the settlement agreement and the consent order contravened the provisions of s 66 of the PFMA and were therefore unlawful. [15] Although ACSA had filed a notice to abide to the decision of the high court in the application for rescission of judgment, it filed an explanatory affidavit and also made written and oral submissions, essentially supporting the application for rescission. It also opposed the appellants’ application for leave to appeal, and again filed Heads of Argument, and made oral submissions opposing the appeal. To a large extent the submissions made on behalf of the State parties in opposing the appeal overlapped. [16] On appeal the appellants asserted that the Government lacked standing to bring the rescission application because the consent order was only granted against ACSA. It was submitted on the appellants’ behalf that the Government had no legal interest in the share buy-back transaction as it could not be held liable for the payment of the price of the shares. Furthermore, the unlawfulness or illegality of the court order was not a proper basis for rescission of the consent order and it was not competent to rescind a court order under s 172(1)(b) read with s 173 of the Constitution. Instead, it was submitted, the Government should have brought an application for the review of the decision to conclude the settlement agreement. The appellants also contended that the high court erred in concluding that the settlement agreement was never authorised by the ACSA Board. [17] The Government persisted in its argument that because the settlement agreement was not in compliance with the law, a proper basis for rescission of the consent order had been established. It insisted in its contention that rescission was permissible on the common law ground of justus error because ACSA’s legal representatives and officials had no authority to conclude the settlement agreement. It highlighted that both this Court and the Constitutional Court have emphasised that courts cannot perpetuate an illegality, and they have a responsibility to scrutinise settlement agreements for legal compliance. The violation of the provisions of the Companies Act and PFMA remained part of the Government’s case on appeal. [18] The appellants took issue with ACSA’s participation in the appeal. They maintained that it was not open to ACSA, having withdrawn from active participation in the case and having undertaken to accept whatever outcome the court might give, to enter the fray on appeal as an ‘antagonist’. Their stance was that the Government and ACSA should not be afforded audience in the appeal. It is therefore necessary to determine first the standing of these parties in this appeal. Government standing [19] The enquiry is whether the Government has a direct and substantial interest in the valuation and the share buy-back ordered by the high court. It is trite that a party to litigation must have an actual and current interest in the subject matter and the outcome of the litigation.8 8 Four Wheel Drive CC v Leshni Rattan NO [2018] ZASCA 124; 2019 (3) SA 451 (SCA) para 7. [20] As discussed, the Government is the major shareholder in ACSA. In the founding affidavit deposed to by Mr Alun Frost on behalf of the appellants in the s 163 application,9 it was pleaded that the Minister of Transport was designated by the President as the Government shareholder representative in ACSA. The Government was instrumental in the establishment of ACSA and, by and large, remains the force behind ACSA’s business policy. It is the custodian of the public’s interest in ACSA. It therefore has the requisite direct and substantial interest in ACSA. It must have been for these reasons that it was cited as a respondent by the appellants in the s 163 application. [21] For the same reasons the Government had a responsibility to participate in the conclusion of the settlement agreement. The fact that on 1 August 2018 it inexplicably abdicated its responsibility and formed the view (as communicated by its counsel at the time) that it was not affected by the contents of the agreement did not divest it of its legal interest.10 That legal interest still obtains in this appeal. ACSA standing [22] The appellants’ objection to ACSA’s participation in this appeal must also fail. It is true that, having elected to abide by the order of the high court in the application for rescission of the consent order, ACSA was barred, under the doctrine of peremption, from mounting an appeal against the consent order.11 One would therefore not have expected ACSA to present emphatic opposing submissions as it did in opposition to the appeal. Curiously, in its explanatory affidavit ACSA offered no explanation for its partial compliance with the consent order over the period of almost a year following the granting thereof. Be that as 9 The application for the share buy–back under s 163(2) of the Companies Act. 10 When the parties moved for an order that the settlement agreement be made an order of court, counsel for the government confirmed to Matojane J that as government’s legal team, they had consulted extensively with ‘[their] clients’ with regard to the terms of the settlement agreement. He further confirmed that the ‘clients’ were also in attendance in court on the day. 11 Hlatshwayo v Mare & Deas 1912 AD 242 at 247. it may, the doctrine of peremption is not absolute. Sometimes the interests of justice will be served by the court electing not to enforce peremption.12 And when confronted with the possible operation of the doctrine, the approach is to consider whether any overriding policy considerations militate against the enforcement of the doctrine.13 [23] Given the centrality of ACSA to the issues that had to be determined in this appeal, its rather active participation was more likely to be beneficial to the proceedings, even if to a limited extent, in giving insight into the issues relevant for determination of the appeal. Furthermore, there had been no objection to the affidavit and comprehensive Heads of Arguments filed on its behalf in the high court in the rescission application and in its opposition to the application for leave to appeal. For these reasons, this Court exercised its discretion in favour of granting audience to ACSA in the appeal. The appeal [24] At common law a final judgment may be set aside for fraud, justus error (in exceptional circumstances) and justa causa. The Government’s insistence that it was entitled to have the judgment rescinded based on justus error is misplaced. A party may escape liability under a contract where it can be shown that the denier laboured under a mistake. That was not the case made out by the Government in this case. The Government was not party to the settlement agreement. On the other hand, the Government could have the consent order rescinded on just cause. The inquiry requires that a good and sufficient cause be shown in accordance with the principles applicable to rescission under rule 31(2)(b) of the rules.14 The relevant factors include the reasonableness of the explanation of the 12 Booi v Amathole District Municipality and Others (CCT 119 of 2020) [2021] ZACC 36; 2022 (3) BCLR 265 (CC) at para 31. 13 Booi para 29. 14 D E Van Loggerenberg et al Erasmus: Superior Court Practice 2 ed (2015) at B1–308. circumstances in which the consent judgment was given, and the bona fides of the application, including the bona fides of the defence on the merits of the case. The court has a wide discretion in evaluating ‘good cause’ in order to ensure that justice is done.15 [25] It is not necessary to discuss in great detail each of the plethora of statutory and other alleged infringements raised by the Government and ACSA in relation to the conclusion of the settlement agreement and the granting of the consent order. The arguments based on ss 54(2)(c) and 66(1) of the PFMA and s 163 of the Companies Act may immediately be discounted. As it was submitted on behalf of the appellants, the evidence did not show that their shares amounted to a ‘significant shareholding’ in ACSA. In addition, it is relevant that the high court ordered that the buy-back would be financed from ACSA’s retained income. [26] Consequently, the argument by the respondents that the order authorised the buy-back at some indeterminate time in the future was not persuasive. If the buy-back price as determined in the referee’s evaluation could not be paid out of the retained income, the buy-back could not be implemented in terms of the court order. Furthermore the need to satisfy the requirements of s 163 of the Companies Act was superseded by the settlement agreement (subject, of course, to its validity in other respects). The settlement would have been pointless if the requirements of s 163 still had to be met. [27] However, although the Government did not explain its counsel’s submissions in court in relation to the settlement agreement, its arguments on lack of authority for the conclusion of the settlement agreement and the consent order were more persuasive in support of a bona fide defence justifying rescission of 15 Ibid fn 14 at B1- 204. the judgment. In Moraitis Investments (Pty) Ltd and Others v Montic Dairy (Pty) Ltd and Others,16 this Court highlighted that in determining whether a consent order falls to be rescinded the correct starting point is the order itself rather than the underlying settlement agreement. Where the basis of the attack on the judgment is lack of authority to conclude the underlying agreement (as it is in this case), the principle that comes into play is that no agreement came into existence.17 Essentially, this is the respondents’ argument in this case. [28] The crux of the Government’s submission was that ACSA’s officials and representatives lacked the authority to conclude the settlement agreement. It was not in dispute that until the ACSA Board passed the necessary resolution, neither the settlement agreement nor the consent order would be lawful. It was also not in dispute that the Minister’s approval was necessary for the buy-back agreement to be valid. [29] A recounting of the uncontested background to the conclusion of the settlement agreement is necessary for consideration of the consent issue. Until the few days preceding the date of hearing of the s 163 application, ACSA and the appellants were destined for a full hearing on 1 August 2017 on all the issues raised in that application. On 27 and 28 July 2017 pre-hearing discussions commenced between the parties’ legal representatives.18 On 27 July 2017, proposed terms for a possible settlement were presented to the ACSA Board by its lawyers. The Board resolved that more time was required to consider the proposal and to consult the Minister before making ‘any commitment’. That was the last word from the ACSA Board on possible settlement. 16 Moraitis Investments (Pty) Ltd and Others v Montic Dairy (Pty) Ltd and Others [2017] ZASCA 54; [2017] 3 All SA 485 (SCA); 2017 (5) SA 508 (SCA) at para 10. 17 Ibid fn 16 para 17. 18 Between ACSA, the Minorities and the Government. [30] On 31 July 2017 a further meeting to discuss the possibility of a settlement was held between the legal representatives of the respective parties. Also in attendance at that meeting were ACSA’s Chief Executive Officer, the Head of its Legal Department, its Company Secretary, Mr. Frost (for the appellants) and various other persons. On that day a proposed draft order was exchanged and discussed between the legal representatives and the parties’ representatives.19 By the end of the meeting it appeared that everyone in attendance at the meeting was satisfied that a court order based on a proposed settlement agreement would be sought on the following day. Matojane J, the judge to whom the matter had been allocated, was advised accordingly in preparation for the next day. The settlement agreement was signed by the legal representatives of ACSA and the appellants. [31] The next morning, however, ACSA’s legal representatives advised the court that they had been instructed to seek a postponement of the application. When the request for a postponement was refused, ACSA’s senior counsel withdrew from the proceedings, leaving only junior counsel to continue with the matter. Thereafter, submissions were made on some contentious portions of the settlement agreement. Ultimately a consensus was reached on all the terms of the consent order. Counsel for the Government indicated that the Government had not been party to the discussions which led to the settlement agreement, but had been given a copy thereof which was duly considered by the relevant Government functionaries. He expressed the view that the Government was ‘not affected’ by the terms of the agreement. The consent order was then granted in that context. [32] From these facts, it was clearly established that the ACSA Board never passed a resolution adopting the settlement agreement. The factual finding by the high court to this effect cannot be faulted. The Minister also never consented to 19 The contested issues were the inclusion of a reference to s 163 of the Companies Act 2008 in the preamble of the proposed order and a reference to oppressive conduct in relation to the contemplated valuation exercise. the settlement agreement. Much was made by the appellants of ACSA’s conduct in compliance with the court order. They highlighted ACSA’s active participation in the steps taken to implement the court order over the seven months following the granting thereof. It was submitted that even if no resolution was ever taken by the Board on the agreement, ACSA, through its conduct, ratified the settlement agreement and was estopped from relying on lack of authority. As proof thereof, in the answering affidavit, Mr Frost referred to correspondence between himself and ACSA’s secretary relating to the appointment of the referee who was to do the valuation as provided in the consent order. He also highlighted that copies of the correspondence were sent to the Chairman of the ACSA Board together with the Chief Executive Officer (CEO) and Acting Chief Financial Officer (CFO), and that the latter signed the referee’s terms of engagement, where after ACSA paid the R650 000.00 which was its share of the referee’s fees. [33] However, as correctly submitted on behalf of the Minister, compliance with the authorisation requirements was a fundamental necessity for consent to an order in the terms proposed in the settlement agreement. Neither ACSA’s legal representatives nor its Board Chairman, CEO or CFO, either individually or together had the authority to give such consent. And the unauthorised agreement could not be legitimised through a court order.20 The submissions on behalf of the appellants that they were entitled to rely on some authority, ‘whether actual or ostensible’, by ACSA’s ‘representatives’ and legal representatives who consented to the order, was unsustainable. There could be no basis for ostensible authority, when, on the day of the hearing of the s 163 application, ACSA’s legal representatives said that they had been instructed to seek a postponement. 20 Eke v Parsons [2015] ZACC 30, 2016 (3) SA 37 (CC), 2015 (11) BCLR 1319 (CC); Valor IT v Premier, North West Province and Others [2020] ZASCA 62, [2020] 3 All SA 397 (SCA), 2021 (1) SA 42 (SCA); Road Traffic Management Corporation v Waymark Infotech (Pty) Limited [2019] ZACC 12, 2019 (6) BCLR 749 (CC), 2019 (5) SA 29 CC. [34] Similarly, the reference to a special resolution adopted by ACSA’s shareholders at its 22nd Annual General Meeting in 2015 authorising the buy-back of ACSA’s shares did not assist the appellants. Neither could the argument that the Minister of Transport was represented at the negotiations and the court proceedings that culminated in the consent order on 1 August 2017. The 2015 resolution preceded the s 163 application. The only relevant resolution adopted by ACSA’s Board in relation to the pending application was the one passed on 27 July 2017 in which the Board resolved that it needed more time to consider the settlement proposal. That resolution set out clearly that the Board’s attitude was that it was not amenable to settlement on those terms at that time and it directed that the Minister’s opinion be sought on the matter. The conduct of ACSA’s legal representatives in applying for a postponement on the date of the hearing of the main application was consistent with that resolution. [35] The appellants’ ratification argument was equally doomed to fail. ACSA’s principal was its board of directors. No conduct by the Chairman of the Board, acting on his own, could constitute ratification. Nor could the conduct by ACSA’s CEO or its CFO constitute ratification of the unauthorised agreement. Conduct by these ACSA representatives, whether at the conclusion of the contract or subsequent thereto, was irrelevant to the determination of validity of settlement agreement and the consent order. [36] There was also no proper basis to support the estoppel argument. No conduct on the part of the ACSA’s Board could be understood to invest its legal representatives, Chairman, the CEO or the CFO with authority to consent to the agreement. There was no evidence that the share buy-back was a matter that normally fell within the scope of those representatives. In any event it was not the appellants’ case that they were led to believe that the necessary resolution had been passed by the Board. [37] The appeal is dismissed with costs, including the costs of two counsel. ________________ N DAMBUZA JUDGE OF APPEAL Appearances: For appellants: J Gauntlett SC with N Luthuli Instructed by: Falcon & Hume Inc, Sandton Webbers, Bloemfontein For 1st and 2nd respondents: G Marcus SC with A Hassim SC Instructed by: State Attorney, Johannesburg State Attorney, Bloemfontein For 3rd respondent: S Budlender SC with P Ngcongo Instructed by: Edward Nathan Sonnenbergs Inc, Sandton Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OFSOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED FROM The Registrar, Supreme Court of Appeal DATE 11 April 2022 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Oppressed A C S A Minority 1 (Pty) Ltd and Another v Government of the Republic of South Africa and Others (case no 898/2020) [2022] ZASCA 50 (11 April 2022) MEDIA STATEMENT Today the Supreme Court of Appeal dismissed an appeal against an order granted by the Gauteng Division of the High Court, Johannesburg, in terms of which a consent order made by the same court was rescinded. The rescinded court order was granted by the high court following an agreement concluded between the Oppressed ACSA Minority 1 (Pty) Ltd together with Up-Front Investments 65 (Pty) Ltd on one hand, and the Airports Company of South Africa on the other hand. The Oppressed Minority and Upfront Investments are minority shareholders in ACSA and the Government is a majority shareholder. The court order in terms of which ACSA was ordered to buy back the shares owned by the two minority shareholders was granted with the consent of these parties. The Oppressed Minority parties had brought an application in the high court during 2015 under s 163 of the Companies Act 71 of 2008 seeking an order directing ACSA to acquire their 1.8% stake in ACSA at fair value. The application was a culmination of a longstanding dissatisfaction on the part of the Oppressed Minorities with a developmental business strategy adopted by ACSA, subsequent to their acquisition of their shares. A few days before the hearing of the application, in July 2017, settlement discussions were held between the Oppressed Minorities’ and ACSA’s representatives, leading to the conclusion of a settlement agreement. The terms of the settlement agreement were then made an order of court on 1 August 2017 with the consent of the three parties. The consent order directed that a referee be appointed to value the shares held by the Oppressed Minorities and that ACSA implement the share buy-back. After the valuation was concluded, ACSA launched proceedings in the high court to challenge the valuation. Whilst ACSA’s challenge to the valuation was pending, the Government approached the high court seeking rescission of the consent order on the basis that it was erroneously granted. The argument was that neither the Minister of Transport, who represented the Government on the ACSA Board, nor ACSA’s Board of Directors approved the settlement agreement as prescribed in the Public Finance Management Act 1 of 1999, the Airports Company Act 44 of 1993 and ACSA’s Memorandum of Incorporation. Therefore it was not competent for the court to grant an order which was an illegality. The high court granted the rescission application on the basis that it was just and equitable to do so, as the settlement agreement and the consent order contravened section 66 of the PFMA. In dismissing the appeal by the Oppressed Minorities, the SCA rejected their argument that ACSA and the Government had no legal standing in the appeal. The SCA found that, as the majority shareholder in ACSA and the custodian of the public’s interest in ACSA, the Government had the requisite direct and substantial interest in it. The court also held that although ACSA had undertaken to abide by the judgment of the court in the appeal, submissions could be made on its behalf as it was central to the issues under consideration. The SCA then held that the evidence showed that the ACSA Board never passed a resolution adopting the settlement agreement and the Minister never consented to the agreement. Further, ACSA’s office bearers and legal representatives who concluded the settlement agreement, lacked the necessary authority to do so. --- ends --

221

non-electoral

2018

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 291/2017 In the matter between: BS APPELLANT and PS RESPONDENT Neutral citation: BS v PS (291/2017) [2018] ZASCA 37 (28 March 2018) Coram: Lewis, Willis, Swain, Mathopo and Mocumie JJA Heard: 9 March 2018 Delivered: 28 March 2018 Summary: Divorce Act 70 of 1979 – s 7(8)(a)(i) – 50 per cent of respondent’s pension interest in Government Employees Pension Fund assigned to appellant – Matrimonial Property Act 88 of 1984 – s 10 – deferral of payment of pension interest – precluded in terms of s 24A of Government Employees Pension Law, 1966. ORDER On appeal from: Eastern Cape Division of the High Court, Grahamstown (Bloem J sitting as court of first instance): The appeal succeeds with costs. Paragraphs 28.3 to 28.7 inclusive of the order of the court a quo are set aside and replaced with the following order: ‘(a) The defendant is ordered to make payment of the amount of R433 000 to the plaintiff in satisfaction of the plaintiff's accrual claim in respect of the matrimonial home. (b) The Government Employees Pension Fund (the Fund) is ordered in terms of s 7(8)(a)(i) of the Divorce Act 70 of 1979, read together with s 24A of the Government Employees Pension Law, 1966 (the GEPL) to make payment to the plaintiff in accordance with the provisions of the GEPL, of 50 per cent of the defendant’s pension interest calculated in accordance with the rules of the Fund, as at the date of the decree of divorce, being 1 November 2016, which is assigned to the plaintiff. (c) The registrar of the court a quo is directed in terms of s 7(8)(a)(ii) of the Divorce Act 70 of 1979, to forthwith notify the Fund that pending compliance by the Fund with the provisions of paragraph (ii) above, an endorsement be made in the records of the Fund that 50 per cent of the pension interest of the respondent is payable to the appellant, and that the administrator of the Fund furnish proof of such endorsement to the registrar, in writing, within one month of receipt of such notification. (d) The defendant is ordered to pay the plaintiff's costs.’ JUDGMENT Swain JA (Lewis, Willis, Mathopo and Mocumie JJA concurring): [1] The issues for determination in this appeal are first whether the Eastern Cape Division of the High Court (Bloem J), correctly granted an order for the partial forfeiture of the benefits of a marriage out of community of property but subject to the accrual system, against the appellant, Ms BS, in an action instituted by her against the respondent, Mr PS, for a decree of divorce and ancillary relief. Secondly, whether Bloem J correctly ordered that payment of the pension benefit to the appellant be deferred. [2] It was common cause before the court a quo that: (a) The marriage had irretrievably broken down and a decree of divorce should be granted. (b) The parties had declared in their antenuptial contract that the net values of their respective estates at the commencement of their marriage were ‘nil’. (c) The estate of the appellant had not shown any accrual during the marriage. (d) The estate of the respondent had shown an accrual in respect of two assets. First, the matrimonial property valued at R1 450 000 with a bond over the property in an amount of R584 000, produced a net accrual of R866 000. Second, the pension interest of the respondent in the Government Employees Pension Fund (the Fund), was valued at R4 537 231. [3] The portions of the order granted by the court a quo, which are relevant to the appeal, were as follows: (a) In terms of s 9 of the Matrimonial Property Act 88 of 1984 (the Act), that the appellant forfeit 80 per cent of her right to share in the accrual of the estate of the respondent, in respect of these two assets. (b) That the respondent pay the amount of R173 200 to the appellant within two months from the date of the order in satisfaction of the appellant's 20 per cent interest in the matrimonial property. (c) That in respect of the appellant's 20 per cent pension interest in the respondent’s pension benefits in the Fund, (calculated as at the date of the decree of divorce), payment to the appellant by the Fund was deferred in terms of s 10 of the Act, to the date when the pension benefits of the respondent in the Fund accrued to the respondent. The respondent was ordered to pay interest to the appellant, at the legal rate on the amount payable to the appellant by the Fund, from the date of the divorce to the date of payment. (d) That the parties pay their own legal costs. [4] The main reasons advanced by the court a quo for the order of partial forfeiture of the right of the appellant to share in the accrual of the estate of the respondent, were as follows: (a) The turning point in the breakdown of the parties’ marriage was when the appellant informed the respondent of her relationship with a certain Mr W. The court a quo concluded that the appellant had breached her moral obligation to the respondent and had thereby caused the breakdown in the marriage. (b) The respondent had proved that the appellant would be unduly benefited if a partial forfeiture order was not granted. The court a quo reasoned that because the appellant contributed to a lesser degree in the accrual of the respondent's estate during the marriage, and because her conduct led to the breakdown in the marriage, she should be ordered to forfeit 80 per cent of her right to share in the accrual of the estate of the respondent. The appellant was therefore entitled to payment of the sum of R173 200 in respect of the matrimonial property, being 20 per cent of R866 000 and 20 per cent of the respondent’s pension benefit in the Fund, calculated as at the date of divorce. (c) Regard being had to the evidence that the monthly net income of the appellant and the respondent was respectively R59 000 and R20 000, and that the appellant owned a motor vehicle but did not own a house, whereas the respondent owned a house but did not own a motor vehicle, deferral of the appellant's claim to share in the accrual of the pension benefit should be granted. Reasons for the breakdown in the marriage [5] On a conspectus of the evidence this was not a marriage made in heaven. Within two years of the parties’ marriage on 1 July 1988 and again during 1996, the appellant was unfaithful to the respondent and left the marital home, but subsequently returned. The respondent for his part admitted that he was also unfaithful to the appellant at this time. The respondent admitted that they had argued a lot, that he was jealous of her, had accused her of having affairs with other men and that they swore and shouted at each other. He agreed there was no longer any love or affection between them and admitted that the appellant had obtained a protection order restraining him from verbally abusing her. [6] The marriage was placed under considerable stress during 2014 when the respondent who is a Lieutenant Colonel and head of financial services in the South African Police Service, stationed at Aliwal North at the time, was advised that he was transferred to Port Alfred in the Eastern Cape. The respondent was excited by this as he wanted to retire to the coast. A move was however problematic for the appellant as she was employed on a yearly contract by First National Bank (FNB), and would have been obliged to repay R150 000, if she moved. She was the main breadwinner with a child (whom she supported) at university and would have had to start from scratch in Port Alfred. [7] The respondent attempted to prevent his transfer, but was advised in December 2015 that his salary would be stopped if he did not accept the transfer. On 19 January 2016, after making further representations, he was ordered to give effect to his transfer within seven days. [8] The respondent advised the appellant of this turn of events and on the following morning the appellant handed to him a letter. The contents of the letter are hotly disputed by the parties and neither the original nor a copy could be produced in court. The respondent maintains the appellant said she had met her soulmate three days earlier, who it subsequently transpired was Mr W. The conclusion he drew from the letter was that the appellant refused to continue with the marriage. In his view, the appellant's affair with Mr W ended the marriage. [9] The appellant denied she said this in the letter. She maintained she had said she wanted her freedom and could not continue with the marriage, because he was a tyrant who swore and shouted at her. She highlighted the problems in their marriage which had become so serious it could not be saved. The appellant asked the respondent to let her start a new life. According to the appellant, her affair with Mr W only started on 24 February 2015 and she later left the marital home at the beginning of April 2015. She denied this caused the breakdown of the marriage, maintaining that it was impossible to live with the respondent. [10] The court a quo erred in concluding that the appellant caused the breakdown of the marriage. To place all the blame on the appellant was not justified by the evidence. The marriage was unhappy from an early stage, with both parties being guilty of infidelity. Insufficient weight was accorded to the marriage being placed under considerable strain by the respondent’s impending transfer and the justifiable inability of the appellant to accompany him. There was no evidence that the appellant had commenced an affair with Mr W when she handed the letter to the respondent, which was not produced in court. That the appellant wished to terminate an obviously unhappy marriage is not surprising. The proprietary consequences of the marriage [11] The respondent acknowledged that the appellant was very successful in her employment. They never spoke of ‘her money’ or ‘my money’ as they shared expenses. They originally had a joint account at Absa bank into which their income was deposited. According to the appellant they thereafter opened separate accounts at FNB, with each of them having access to both accounts. The respondent acknowledged that the appellant made a large contribution to the joint expenses of the household and that shortly before she left, was paying 80 per cent of their expenses. [12] The respondent became a member of the Fund on 28 December 1982, when he joined the South African Police Service. The respondent's employer deducted his pension contributions and the balance of his salary was used for household expenses. He maintained that the appellant never contributed directly to his pension fund. [13] As regards the matrimonial home, the bond repayments were deducted from the respondent’s salary. Although conceding they could be viewed as a joint expense, he again maintained that the appellant had not contributed directly to the bond repayment. The appellant, however, pointed out that the income she generated enabled the respondent to pay an increased bond instalment, and that they had agreed the respondent would pay for the medical aid and the house, and she would pay for the rest of their expenditure. [14] The evidence again establishes that the court a quo erred in concluding that the appellant contributed to a lesser degree in the accrual of the respondent's estate. Counsel for the respondent was constrained to concede that the evidence did not support this finding by the court a quo. The respondent was only able to afford the deductions made from his salary in respect of the bond repayments on the matrimonial home, as well as his pension contributions to the Fund, because the appellant made a far greater contribution to their joint expenses. [15] When due regard is had to the fact that the court a quo erred in concluding that the appellant caused the breakdown in the marriage and also erred in concluding that the appellant contributed to a lesser degree in the accrual of the respondent's estate, it should not have ordered the appellant to forfeit 80 per cent of her interest in the accrual of the respondent's estate. No forfeiture order should have been granted when sufficient weight is also accorded to the duration of the marriage of approximately 28 years and the evidence that the appellant does not own a home. In addition, no evidence was led on whether the appellant possesses a pension for her old age. Deferral of the payment to the appellant in terms of s 10 of the Matrimonial Property Act 88 of 1984, of the portion of the respondent's pension interest assigned to the appellant, in accordance with s 24A of the Government Employees Pension Law 1996 (GEPL) [16] I turn to consider the order granted by the court a quo that payment to the appellant by the Fund, of the appellant's 20 per cent pension interest in the respondent’s pension benefits in the Fund, (calculated as at the date of the decree of divorce), was deferred in terms of s 10 of the Act to the date when the pension benefits of the respondent in the Fund, accrued to the respondent. It is necessary to do so as the respondent supported the order of deferral granted by the court a quo. [17] Whether the court a quo was entitled to grant an order of deferral requires an interpretation of the provisions of s 24A of the GEPL, read together with s 10 of the Act. The relevant portions of s 24A of the GEPL provide as follows: ‘24A Payment of pension interest upon divorce or dissolution of customary marriage. (1) The Board shall direct the Fund to reduce a member's pension interest by any amount assigned from the member’s pension interest to the member's former spouse in terms of a decree of divorce granted under section 7(8)(a) of the Divorce Act, 1979 (Act 70 of 1979), or a decree for the dissolution of a customary marriage. (2) (a) Subject to paragraph (j), for purposes of section 7(8)(a) of the Divorce Act, 1979 …, the portion of a member's pension interest assigned to the member's former spouse in terms of a decree of divorce or a decree for the dissolution of a customary marriage is deemed to accrue to the member on the date on which the decree of divorce or the decree for the dissolution of a customary marriage is granted. (b) The amount of the member's pension interest in the Fund shall be determined and the amount of the member’s pension interest that is assigned to the former spouse shall be calculated by the Fund in accordance with the rules as at the date of the decree of divorce or the decree for the dissolution of a customary marriage. . . . . . . (e) The Fund shall, within 45 days of the submission of the court order by the former spouse of a member, request the former spouse to elect whether the amount to be deducted must be – (i) paid directly to the former spouse; or (ii) transferred to an approved retirement fund on behalf of the former spouse. (f) The former spouse shall, within 120 days of being requested to make a choice- (i) inform the Fund of the manner in which the amount referred to in paragraph (e) must be dealt with; and (ii) if the former spouse chooses that the amount must be paid to the former spouse directly, provide the Fund with the details that are necessary to effect the payment; or (iii) if the former spouse chooses that the amount must be transferred to an approved pension fund on his or her behalf, provide the Fund with the details of that approved retirement fund. (g) The Fund shall pay or transfer the amount within 60 days of being informed of the manner in which the amount shall be dealt with in accordance with the former spouse's choice. (h) In the event that the former spouse fails to make a choice or identify the approved retirement fund to which the amount should be transferred within the period referred to in paragraph (f), the Fund shall pay the amount directly to the former spouse within 30 days of the expiry of that period.’ [18] In Wiese v Government Employees Pension Fund & others [2012] ZACC 5; 2012 (6) BCLR 599 (CC) paras 5-9, the Constitutional Court in dealing with the history and object of the amendment, analysed the legislative enactments that had preceded it and pointed out that: ‘During 1989, section 7(7)(a) was added by the Divorce Amendment Act to deal with certain problems. Under the Divorce Act non-member spouses were, in certain circumstances, entitled to payment of part of the pension interest due, or assigned to, the member of the Government Pension Fund when any pension benefit accrued to that member. A pension interest which had not yet accrued was not considered an asset in the spouse's estate. To cure this defect, the amendment, provided that a pension interest is deemed to be an asset in the estate for the purpose of determining patrimonial benefits.’ (Footnotes omitted.) [19] The problem, however, that still remained was: ‘. . . the question of when payment of a pension interest should occur. Generally, this depended on the rules of a specific fund but usually took place on retirement, dismissal or some other defined “exit event”. The problem was that a non-member spouse would be severely prejudiced if the value of his or her benefit was frozen at the date of divorce and the beneficiary would have had to wait for a later exit event.’ [20] The Constitutional Court noted that in order to cure this defect, various amendments were made to the Pension Funds Act 24 of 1956 (PFA) which introduced the ‘clean-break’ principle. The result was that: ‘. . . the non-member spouse no longer has to wait for an exit event to occur. This means that a pension benefit awarded to a non-member spouse in terms of the Divorce Act is deemed to have accrued on the date of the divorce. This demonstrates the interplay between the Divorce Act and the PFA.’ [21] The Constitutional Court noted that there was an oversight in that these amendments only applied to the PFA and the Government Pension Fund could not benefit from the ‘clean-break’ principle as it was governed by its own statute. The introduction of s 24A of the GEPL, by way of s 3 of the GEPL Amendment Act 19 of 2011, cured this oversight and introduced the ‘clean-break’ principle which: ‘. . . authorises the Government Pension Fund to make payment of a pension interest upon divorce or dissolution of a customary marriage.’ [22] The clear object of the amendment is to ensure that the non-member spouse receives payment of the amount assigned from the member’s pension interest in terms of a decree of divorce, without delay and within the statutorily defined periods, after the grant of the order. The peremptory provisions of s 24A(2)(e), (f), (g) and (h) of the GEPL ensure attainment of this objective in that: (a) The Fund is obliged within 45 days of the submission of the court order by the former spouse of a member, to request the former spouse to elect whether payment is to be made directly to the former spouse, or to an approved retirement fund on behalf of the former spouse. (b) The former spouse is obliged, within 120 days of being requested to make this choice, to inform the Fund of the manner in which payment must be made. (c) The Fund is obliged within 60 days to make payment in accordance with this choice. In the event that the former spouse fails to make a choice within 120 days, the Fund is obliged to make payment directly to the former spouse within 30 days of the expiry of that period. [23] Accordingly, the issue for determination is whether the provisions of s 24A of the GEPL oust the jurisdiction of a court to grant deferment of satisfaction of an accrual claim (in the form of payment of the amount assigned from the member’s pension interest in terms of a decree of divorce) in terms of s 10 of the Act. The section provides as follows: ‘10 Deferment of satisfaction of accrual claim A court may on the application of a person against whom an accrual claim lies, order that satisfaction of the claim be deferred on such conditions, including conditions relating to the furnishing of security, the payment of interest, the payment of instalments, and the delivery or transfer of specified assets, as the court may deem just.’ [24] As stated in De Wet v Deetlefs 1928 AD 286 at 290: ‘It is a well recognised rule in the interpretation of statutes that, in order to oust the jurisdiction of a court of law, it must be clear that such was the intention of the Legislature.’ In my view, the clear intention of the legislature in enacting s 24A of the GEPL was to oust the jurisdiction of a court to grant deferment of satisfaction of an accrual claim, in the form of payment of the amount assigned from the member’s pension interest in terms of a decree of divorce, for the reasons that follow. [25] The deeming provision contained in s 24A(2)(a) of the GEPL, that the portion of a member's pension interest assigned to the member's former spouse in terms of a decree of divorce, is deemed to accrue to the member on the date of the grant of the order, may be described as ‘conclusive or irrebuttable’ rather than ‘merely prima facie or rebuttable’ (S v Rosenthal 1980 (1) SA 65 (A) at 75-76). This is because it serves as the basis for a determination by the Fund in terms of s 24A(2)(b), of the amount of the member’s pension interest in the Fund, as well as the amount of the member’s pension interest that is assigned to the former spouse, as at the date of the decree of divorce. [26] The provision of peremptory defined periods, commencing on the presentation of the order to the Fund by the non-member spouse, to ensure payment without delay of the amount so determined by the Fund, which has to be assigned from the member’s pension interest in terms of the order, is irreconcilable with the power to defer payment. Deferral of payment would defeat the object of the section. [27] As pointed out by the Constitutional Court in Wiese, the object of s 24A of the GEPL was to introduce the ‘clean-break’ principle with regard to the payment of the amount assigned from the member’s pension interest to the non-member spouse, in a decree of divorce. A deferral of payment would also defeat this objective. [28] Accordingly, the court a quo erred in ordering that payment to the appellant by the Fund of the appellant's 20 per cent pension interest in the respondent’s pension benefits in the Fund (calculated as at the date of the decree of divorce), be deferred in terms of s 10 of the Act to the date when the pension benefits of the respondent in the Fund, will accrue to the respondent. [29] As the only issue before the court a quo was whether the appellant should forfeit the patrimonial benefits of the marriage and the appellant has been successful on this issue, there can be no reason why the respondent should not be ordered to pay the costs of the appellant incurred in the court a quo and on appeal. [30] The following order is granted: The appeal succeeds with costs. Paragraphs 28.3 to 28.7 inclusive of the order of the court a quo are set aside and replaced with the following order: ‘(a) The defendant is ordered to make payment of the amount of R 433 000 to the plaintiff in satisfaction of the plaintiff's accrual claim in respect of the matrimonial home. (b) The Government Employees Pension Fund (the Fund) is ordered in terms of s 7(8)(a)(i) of the Divorce Act 70 of 1979, read together with s 24A of the Government Employees Pension Law, 1966 (the GEPL) to make payment to the plaintiff in accordance with the provisions of the GEPL, of 50 per cent of the defendant’s pension interest calculated in accordance with the rules of the Fund, as at the date of the decree of divorce, being 1 November 2016, which is assigned to the plaintiff. (c) The registrar of the court a quo is directed in terms of s 7(8)(a)(ii) of the Divorce Act 70 of 1979, to forthwith notify the Fund that pending compliance by the Fund with the provisions of paragraph (ii) above, an endorsement be made in the records of the Fund that 50 per cent of the pension interest of the respondent is payable to the appellant, and that the administrator of the Fund furnish proof of such endorsement to the registrar, in writing, within one month of receipt of such notification. (d) The defendant is ordered to pay the plaintiff's costs.’ K G B Swain Judge of Appeal Appearances: For the Appellant: J L Olivier Instructed by: McIntyre Van Der Post, Bloemfontein For the Respondent: P Jooste (with T Rossi) Instructed by: Honey Attorneys Inc, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 28 March 2018 STATUS Immediate BS v PS (291/17) [2018] ZASCA 37 (28 March 2018) Please note that the media summary is for the benefit of the media and does not form part of the judgment. The SCA today upheld an appeal from the Eastern Cape Division of the High Court, Grahamstown, in which an order had been granted in a divorce action, in terms of s 9 of the Matrimonial Property Act 88 of 1984 (the Act), that the appellant forfeit 80 per cent of her right to share in the accrual of the estate of the respondent, her husband, in respect of two assets. These were the matrimonial home and the respondent’s pension interest in the Government Employees Pension Fund (the Fund). It was also ordered that payment of the appellant's 20 per cent pension interest in the respondent’s pension benefits in the Fund, be deferred in terms of s 10 of the Act, to the date when the pension benefits of the respondent in the Fund accrued to the respondent. The SCA held that the court a quo had erred in granting a forfeiture order against the appellant, and in ordering a deferral of the appellant's right to payment of her pension interest in the respondent’s pension benefits. A deferral of payment was precluded in terms of the provisions of s 24A of the Government Employees Pension Law 1996.

1773

non-electoral

2011

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case No: 237/2010 In the matter between: EDS SOUTH AFRICA (PTY) LTD Appellant and NATIONWIDE AIRLINES (PTY) LTD First Respondent (IN PROVISIONAL LIQUIDATION) DUNCAN OKES INC Second Respondent THE MASTER OF THE HIGH COURT Third Respondent (WITWATERSRAND LOCAL DIVISION) Neutral citation: EDS v Nationwide (237/2010) [2011] ZASCA 16 (14 March 2011) Coram: HARMS DP, CLOETE and MALAN JJA Heard: 4 March 2011 Delivered: 14 March 2011 Summary: Funds held in attorney’s trust account – whether attorney stakeholder – control of funds. _____________________________________________________________________ ORDER On appeal from: South Gauteng High Court (Johannesburg) (Spilg J sitting as court of first instance): The appeal is dismissed with costs. _____________________________________________________________________ JUDGMENT MALAN JA (HARMS DP, CLOETE JA concurring) [1] This is an appeal with leave of the court a quo against the judgment and order of Spilg J dismissing a claim of EDS South Africa (Pty) Ltd for the payment of funds held in an investment account by the attorneys for Nationwide Airlines (Pty) Ltd, Duncan Okes Inc, and in the name of Nationwide. [2] Nationwide was provisionally liquidated on 29 April 2008 and is represented in these proceedings by its provisional liquidators. EDS supplied information technology services to Nationwide and the funds held by Duncan Okes form part of fees allegedly owing by Nationwide to EDS. [3] Prior to Nationwide’s liquidation there existed an information technology agreement in terms of which EDS undertook to render such services to Nationwide. A dispute arose between them as to the extent of Nationwide’s indebtedness. On 1 February 2008 the attorneys for EDS wrote to Nationwide demanding payment of the fees alleged to be owing. It concluded with reference to s 345(1) of the Companies Act 61 of 1973 by stating that should Nationwide fail to pay the amount claimed or secure or compound it to the satisfaction of EDS within a period of 21 days Nationwide would be deemed to be unable to pay its debts. [4] Further correspondence followed and on 22 February 2008 Duncan Okes responded on behalf of Nationwide disputing the amount of the indebtedness in respect of various categories of charges. It recorded Nationwide’s denial of indebtedness and stated that the latter refused to make payment albeit that it was able to do so. The letter continued that certain amounts, in respect of which Nationwide denied liabIility, had been paid by the latter to Duncan Okes and that Nationwide had ‘instructed us to deposit it into an interest bearing account under our control and instructed us as follows’ - ‘(a) If your client institutes dispute resolution proceedings against our client for payment of [certain charges] within two months from date hereof, we must keep this amount in the said account and pay it out in terms of the final outcome of such proceedings. (b) Those instructions will not be revoked otherwise than on written notice to yourselves of not less than a month. (c) If dispute resolution proceedings are not instituted within the aforesaid period of two months, our client reserves the right to require us to withdraw this amount for repayment to it.’ [5] The attorneys for EDS replied to this letter on the same day. They did not accept the proposal but enquired whether, in the event of an agreement being reached to proceed in terms of the dispute resolution clause in the information technology agreement, certain provisions could be dispensed with and whether Nationwide would be agreeable to pay into trust further amounts that EDS contended would be owing so as to demonstrate its ability to pay on an ongoing basis. [6] On 10 March 2008 EDS’s attorneys wrote to Duncan Okes discussing the proposed arbitration and suggesting the following terms to be incorporated in the arbitration agreement – ‘2.1 the procedure and time limits for the arbitration shall be substantially those set forth in the annexed draft arbitration agreement; 2.2 the existing funds in trust shall continue to be held and your client shall agree to pay into trust such further amounts as our client contends would be owing as and for [certain charges], all such amounts being held until the final outcome of the arbitration or the termination of the agreement (whichever shall occur first); 2.3 all funds paid into trust shall be held in escrow/trust by a third party such as an unrelated law firm which will be mandated to hold the funds and release them, together with all accrued interest to the relevant party, upon production of a settlement agreement or alternatively a final award by the arbitrator (which has not been appealed) or the appeal tribunal. The funds shall be invested [in an] interest bearing account with a financial institution of your client’s choice.’ The final sentence of the letter reads that ‘[i] goes without saying that should we not reach agreement regarding the referral to arbitration our client’s rights remain otherwise reserved’. [7] In reply Duncan Okes on 19 March 2008 wrote - ‘2.1 That the dispute between our clients should be resolved by way of a speedy arbitration as proposed by you; 2.2 The funds being held in our trust account shall continue to be held in trust and our client will make payment of all further amounts in respect of [certain charges] into trust until the final outcome and determination of the dispute; 2.3 The funds currently held in our trust account together with such further amounts that are to be held will be transferred to a third party law firm, of our client’s choice, who will hold the funds in trust in an interest bearing account and who shall be mandated to release such funds and the interest accrued thereon to the relevant party, upon production of a settlement agreement or a final award by the arbitrator (which have not been appealed) or appeal tribunal.’ [8] The arbitration agreement was signed by EDS and Nationwide on 3 and 4 April 2008 respectively in terms of which the dispute was submitted to arbitration. It recorded in clause 1.2 that the parties agree - ‘that the amounts contended by [EDS] to be owing shall forthwith be paid into the trust account of an independent firm of attorneys nominated by [Nationwide] who shall hold the funds and release them, together with all accrued interest to the relevant party, upon production of a settlement agreement or a final award by the Arbitrator (which has not been appealed) or the Appeal Tribunal. The funds shall be invested in an interest–bearing account with a financial institution of [Nationwide’s] choice.’ [9] On 4 April 2008 the attorneys for EDS acknowledged receipt of the signed arbitration agreement, enclosed their client’s statement of claim and added - ‘We confirm finally that you will let us have your client’s final proposals regarding the holding of the funds in trust pending the outcome of the arbitration and also the list of arbitrators.’ [10] On 30 April 2008 the attorneys for EDS wrote to Duncan Okes informing them of their understanding that a winding-up application had been brought against Nationwide and requesting confirmation that ‘you are still holding the funds referred to in your letter of 22 February 2008’. They also stated that they relied ‘upon your undertaking and the provisions of the arbitration agreement in regard to the funds held by you in trust’. To this letter Duncan Okes replied on 7 May 2008 confirming ‘that we are holding an amount of R 3, 678, 896.15 in an interest bearing account in accordance with our instructions as recorded in our letter of 22 February 2008’. [11] It is common cause that Nationwide did not nominate ‘the independent firm of attorneys’ as agreed to in the arbitration agreement. On 29 April 2008 Nationwide was provisionally wound up without the funds having been transferred to the ‘independent firm of attorneys’. [12] In the court a quo Spilg J held that Duncan Okes’ letter of 22 February 2008 was written not only to demonstrate an ability to pay but also contained an offer. He found that the arbitration agreement did not amount to an acceptance of the offer because it specifically provided for the paying over of the funds to an independent firm of attorneys nominated by Nationwide who would hold it as a stakeholder. Moreover, he could not infer from the exchange of the letters of 10 March 2008 and 19 March 2008 that an agreement that Duncan Okes was to be the stakeholder had been concluded. Nor could Spilg J find that a tacit agreement to that effect had been reached. He concluded that because there was no compliance with clause 1.2 of the arbitration agreement the funds remained in the estate of Nationwide. He accordingly upheld the claim of the provisional liquidators. I agree with his judgment. [13] The argument on behalf of EDS proceeded along the following lines: it was submitted that EDS timously complied with the conditions referred to in Duncan Okes’ letter of 22 February 2008 (cited in paragraph 4 above) by instituting dispute resolution proceedings. It was at that time that Nationwide lost control of the funds.1 Since this occurred before the winding up the funds fell outside the assets of Nationwide and it mattered not that clause 1.2 calling for the transfer of the funds to an independent firm of attorneys of the Arbitration agreement was not ‘literally’ complied with. EDS further relied on Duncan Okes’ letter of 7 May 2008 in which it confirmed that it was holding the funds in accordance with the instructions as recorded in their letter of 22 February 2008. This, it was submitted, provided further evidence of a tacit understanding between the attorneys that if no independent firm of attorneys were nominated the funds would remain in Duncan Okes’ trust account on the same terms. [14] A stakeholder agreement is based on contract to which Duncan Okes must be a party in addition to EDS and Nationwide.2 Absent an agreement of stakeholding the funds remained those of Nationwide. Its unilateral action of paying the funds into the investment account of Duncan Okes could not have given the funds a different character creating rights in rem to them.3 The offer contained in Duncan Okes’ letter of 22 February 2008 was never accepted. The reply on behalf of EDS on the same day does not contain an unequivocal acceptance of the offer, and suggests that a counter- proposal may be made. Moreover, their letter of 10 March 2008 contains a counter- proposal ending with the words that it went without saying that should agreement not be reached EDS’s rights remain reserved. EDS cannot rely on certain terms of the offer contained in the letter of 22 February 2008. That offer was never accepted, and there is, accordingly no basis for the submission that Nationwide had lost control of the funds at 1 Relying on Ngwalangwala v Auto Protection Insurance Co Ltd (in Liquidation) 1965 (3) SA 601 (A) at 611D-E and Silverleaf Pastry & Confectionery Co (Pty) Ltd v Joubert & another 1972 (1) SA 125 (C) at 127D-1287H. 2 See Sadie v Currie’s City (Pty) Ltd & others 1979 (1) SA 363 (T) at 366B-C: ‘[T]he stakeholder also assumes a contractual obligation to hold the stake for and on behalf of the person who becomes entitled to it.’ See Baker v Probert 1985 (3) SA 429 (A) at 441B-E; Ramdin v Pillay & others 2008 (3) SA 19 (D) para 14. 3 Ex parte Kelly 1942 OPD 265 at 271-2. that or, for that matter, any other stage. Moreover, the funds were held pending resolution of a dispute relating to fees that were disputed. No admission that they were due was ever made. [15] Duncan Okes had never agreed to be a stakeholder. Although clause (a) of their letter of 22 February 2008 may suggest such, clause (b) makes it clear that Nationwide may revoke the instructions to Duncan Okes. A stakeholder is not the agent of any of the other parties to the stakeholding:4 on the evidence Duncan Okes held the funds as agent of Nationwide. Nor do clauses 2.1 and 2.3 proposed by the attorneys for EDS (and agreed to by Duncan Okes in their letter of 19 March 2008 with some amendments) convert them into a stakeholder. The stakeholder envisaged is the ‘unrelated law firm’ mentioned in clause 2.3 of these letters, not Duncan Okes, whose obligation it was to transfer the funds to the stakeholder (clause 2.3 of their letter of 19 March 2008). The negotiations between the parties culminated in the conclusion of the arbitration agreement which provided expressly for the stakeholder to be nominated by Nationwide. No nomination was made. The suggested tacit term or agreement contended for that Duncan Okes would be the stakeholder is in conflict with this term. The appeal is dismissed with costs. _________________ F R MALAN JUDGE OF APPEAL 4 Baker v Probert 1985 (3) 429 (A) at 441B-E. APPEARANCES: For Appellant: M J Fitzgerald SC Instructed by: Bowman Gilfillan Inc c/o Keith Sutcliffe & Associates Johannesburg Matsepes Inc Bloemfontein For Respondent: A Subel SC Instructed by: John Joseph Finlay Cameron Johannesburg Lovius-Block Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 14 March 2011 Status: Immediate 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. EDS v NATIONWIDE AIRLINES The Supreme Court of Appeal dismissed an appeal today against a decision of the Johannesburg high court granting an application by the provisional liquidators of Nationwide Airlines (Pty) Ltd for the payment of funds held in an investment account by the attorneys of Nationwide pending resolution of a dispute concerning fees payable between Nationwide and EDS South Africa (Pty) Ltd, a provider of information technology services. The funds were allegedly held by the attorneys as a stakeholder. Both the high court and the Supreme Court of Appeal found that no agreement of stakeholding had been established and also that Nationwide never lost control of the funds held on its behalf by its attorneys. The provisional liquidators were thus entitled to the funds.

1282

non-electoral

2008

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT CASE NO: 493/05 LUZUKO KERR HOHO Appellant and THE STATE Respondent Neutral citation: Hoho v The State (493/05) [2008] ZASCA 98 (17 September 2008) Coram: STREICHER, HEHER, MLAMBO, CACHALIA JJA & KGOMO AJA Heard: 15 AUGUST 2008 Corrected: Delivered: 17 SEPTEMBER 2008 Summary: Criminal defamation – not abrogated by disuse – consonant with Constitution. _______________________________________________________________ ORDER ____________________________________________________________________ On appeal from: High Court, Bisho (White J sitting as court of first instance) The appeal is dismissed. ____________________________________________________________ JUDGMENT ____________________________________________________________ STREICHER JA (HEHER, MLAMBO, CACHALIA JJA and KGOMO AJA concurring) [1] The Bisho High Court convicted the appellant on 22 of 23 charges of criminal defamation and sentenced him to three years’ imprisonment suspended for five years and, in addition, to three years correctional supervision in terms of s 276(1)(h) of the Criminal Procedure Act 51 of 1977 (‘the Act’). An application for leave to appeal against the conviction and the sentence was dismissed by the court a quo but granted by this court. In granting leave to appeal this court indicated that argument would be required ‘on the question whether the crime of defamation is still extant, and if so whether it is consonant with the Constitution’. It also advised the parties that it would ensure that argument is presented on these issues independently of any argument that the appellant might wish to advance. [2] The appellant was accused of having ‘compiled, produced and/or published’ several leaflets during the period 2001 to 2002 in which he defamed the Speaker of the Legislature of the Eastern Cape Province (‘the Legislature’), the Premier of the Eastern Cape Province, members of the Legislature, the National Minister of Safety and Security, the National Deputy Minister of Home Affairs, the National Minister of Health, the Chief Whip of the African National Congress in the Legislature and a legal adviser to the Legislature. In these leaflets allegations of, amongst others, corruption, bribery, financial embezzlement, sexual impropriety, illegal abortion and fraud were made. [3] At the relevant time the appellant was employed by the Legislature as a researcher. He pleaded not guilty to the charges and denied in his plea explanation that he was the author and publisher of the leaflets. He stated that any connection between him and the utterances published ‘was being sought to be made’ by members of the security police or members of the police services with whom he had certain difficulties. [4] Although the appellant did not specially plead a defence of ‘truth and public benefit’ as is required by s 107 of the Act, in the event of such a defence being relied upon, the state called a number of witnesses to establish that the defamatory allegations were untrue. The state also called several witnesses to prove that the appellant was the author of the leaflets. The appellant testified that he was not the author of the leaflets and also called a number of witnesses. After a very lengthy trial (the record comprises 24 volumes consisting of 2946 pages), the court a quo found that the allegations made against the various complainants in respect of the 22 charges that the appellant had been convicted on, were defamatory and that the state had proved beyond reasonable doubt that the appellant was the author of the leaflets and that he had published or caused them to be published. [5] Before us counsel for the appellant did not attack the findings of the court a quo but in effect abandoned the appeal save in so far as it related to the question raised by the order granting leave to appeal ie whether our law still recognised defamation as a crime. They advised us that they were of the view that should it be held that the crime of defamation is still extant and that it is consonant with the Constitution the conviction and sentence should stand and addressed us only in respect of these two issues. Consequently these are the only issues that must be dealt with in this appeal. [6] It should be stated at the outset that we are indebted to Mr G Marcus SC and Mr S Budlender who kindly agreed to appear as amici curiae in the matter and whose heads of argument and very fair and balanced oral submissions at the hearing of the appeal were of considerable assistance to us. IS THE CRIME OF DEFAMATION STILL EXTANT? [7] In R v Japel 1906 TS 108 the court had to decide whether ‘ordinary verbal slander was punishable as a crime under Roman-Dutch law’.1 Innes CJ with whom Smith and Mason JJ agreed, after having stated that there was no doubt that serious verbal defamation was so punishable and having referred to Voet 47.10.15 and Matthaeus de Criminibus 47.4.7, concluded ‘that ordinary verbal slander is still a crime in this country, though the instances where prosecutions are instituted in respect of it are few and far between’.2 In R v Harrison and Dryburgh 1922 AD 320 at 327 Innes CJ said: ‘That defamation is by our law a crime admits of no doubt; it was so regarded by the Roman-Dutch authorities and has been repeatedly dealt with as such by South African Courts. But the practice has been to confine criminal proceedings to serious and aggravated cases.’ [8] Since 1922 very few convictions for criminal defamation have been reported. The last such reported conviction was in the case of S v Revill 1970 (3) SA 611 (C). The case concerned the defamation of a judge in contravention of s 1 of the Cape Libel Act 46 of 1882 which was repealed 1 At 110-111. 2 At 111. in 1977.3 The last reported conviction for criminal defamation in terms of the common law was R v MacDonald 1953 (1) SA 107 (T). It is probably for this reason that the question was raised in the order granting leave to appeal whether the crime of defamation was still extant ie has it not been abrogated by disuse? Mr Budlender who presented the argument of the amici curiae in respect of this issue submitted that there must have been, since these cases were decided, many instances of defamation in respect of which convictions could have been secured and that the absence of reported convictions indicated that the South African community no longer considered defamation to be a crime. [9] The doctrine that law may be abrogated by disuse is well established in our law.4 The basis of the doctrine is the tacit repeal ‘through disuse by silent consent of the whole community’.5 It is therefore necessary to consider whether it can be said that the South African community tacitly consented that defamation should no longer constitute a criminal offence. [10] The problem with Mr Budlender’s submission based on the absence of reported convictions for a long period of time, is that it is unlikely that prosecutions would, in the absence of special circumstances, have been instituted in the high courts. Regional courts have at all relevant times had jurisdiction to impose substantial periods of imprisonment. At the moment they may impose sentences of up to 15 years’ imprisonment.6 In these circumstances, if there were prosecutions for defamation, they are more likely to have been instituted in the lower courts and the judgments of the lower courts are not reported in the law reports. The absence of reported 3 Section 1 of the Pre-Union Statute Law Revision Act 43 of 1977. 4 Green v Fitzgerald and others 1914 AD 88 at 111; R v Chipo 1953 (4) SA 573 (A) at 578-579; and R v Sibiya 1955 (4) SA 247 (A) at 265D-F. 5 Green v Fitzgerald supra at 110; and LTA Engineering Co Ltd v Seacat Investments (Pty) Ltd 1974 (1) SA 747 (A) at 771G-H. 6 Section 92(1) of the Magistrates’ Courts Act 32 of 1944. convictions in the law reports can therefore not be taken as evidence of tacit consent that defamation should no longer constitute a criminal offence. [11] In any event, although there have not been reported convictions for defamation since Revill there have been reported prosecutions. See in this regard S v Gibson 1979 (4) SA 115 (D & CLD) at 140G-151A, S v Bresler and another 2002 (4) SA 524 (C); and S v Moila 2006 (1) SA 330 (T). In Moila and Bresler it was not necessary for the court to consider the defamation charge as the charge was in the alternative to a contempt of court charge, which the court found to have been proved. In Gibson the court did consider the defamation charge and acquitted the accused. The basis of the doctrine of abrogation being a supposed tacit repeal ‘through disuse by silent consent of the whole community’, not only convictions but also prosecutions are relevant in determining whether there had been such a tacit repeal. See in this regard Green v Fitzgerald7 where the fact that there had been no criminal prosecutions for adultery for 85 years was a factor that weighed with the court in finding that adultery as a crime had been abrogated by disuse. Unsuccessful prosecutions can, however, be no more than a factor to be taken into account. The unsuccessful attempt to secure a conviction for defamation by a prosecutor, who may be uncertain as to whether the crime still exists or who may not even have considered the question, can hardly constitute conclusive proof of the attitude of the community. [12] A more reliable indication of the attitude of the community is to be found in the fact that the then Minister of Internal Affairs, in August 1982, requested the South African Law Commission ‘to investigate the possibility 7 Above at 112. of extending criminal defamation to include the publication of untruths concerning a person in public, and group defamation’. The request arose out of a recommendation by a Parliamentary Select Committee in respect of a proposal by a Cabinet Committee that the Electoral Act 45 of 1979 be amended to make the publication of false or defamatory allegations about an election candidate punishable.8 The Parliamentary Select Committee would seem not to have considered criminal defamation to have been abrogated by disuse. The Commission reported that it investigated the matter and that more than 60 persons and bodies responded to a questionnaire prepared by it. The investigation did not, however, reveal any need for the proposed amendment of the law and the opinion poll showed a substantial majority feeling against it.9 It thus recommended ‘that the legal position regarding criminal defamation be left unchanged’.10 Of even more importance to the present enquiry is the fact that notwithstanding the investigation there is no suggestion in the report that criminal defamation had by 1982 been abrogated by disuse. [13] Notwithstanding the Law Commission’s report, the extension of the crime of criminal defamation was subsequently introduced by the Legislature in terms of the Electoral Act 73 of 1998. Schedule 2 of that Act contains an Electoral Code of Conduct which provides in para 9(1)(b) thereof that no registered party or candidate may publish false or defamatory allegations in connection with an election in respect of a party, its candidates, representatives or members or a candidate or that candidate’s representatives. In terms of s 94 of that Act no person or party bound by the Code may contravene a provision of the Code and in terms of s 97 such a contravention constitutes an offence. 8 South African Law Commission Annual Report 1983 p 15. 9 Op cit p 16. 10 Loc cit. [14] I have not been able to find and we have not been referred to any suggestion by an academic or anybody else, before this case, that criminal defamation has been abrogated by disuse. The text books on criminal law that I consulted contain a section dealing with the crime without any suggestion that it has been abrogated by disuse.11 Even more telling is the fact that it is not suggested by those academics who are in favour of the abolition of the crime. They would, because of that attitude, certainly have raised the possibility that the crime had been abrogated, had they considered that to be a possibility.12 [15] In the light of the foregoing it cannot be said that criminal defamation has been repealed as a crime by silent consent of the whole community. IS THE CRIMINALISATION OF DEFAMATION CONSONANT WITH THE CONSTITUTION? [16] Criminal defamation is defined by JRL Milton as the unlawful and intentional publication of matter concerning another which tends to injure his reputation.13 But he then says that although not authoritatively decided, criminal defamation should be restricted to serious cases.14 The inclusion of the additional requirement that the injury to reputation should be serious is supported by CR Snyman15 but not by John van der Berg (although he is in 11 JRL Milton South African Criminal Law and Procedure Vol ll Common-Law Crimes 3 ed p 520-535; and CR Snyman Criminal Law 5 ed p 475-477; and Jonathan Burchell Principles of Criminal Law 3 ed p 741. 12 JRL Milton loc cit; CR Snyman loc cit; Jonathan M Burchell The Law of Defamation in South Africa p 332-333; and John van der Berg ‘Should There be a Crime of Defamation’ (1989) 106 SALJ p 276. 13 JRL Milton op cit 520. See also Jonathan Burchell Principles of Criminal Law 3 ed p 741. 14 JRL Milton op cit 531. 15 CR Snyman op cit 477. favour of the abolition of the crime)16 and F F W van Oosten.17 [17] I referred above to the statement by Innes CJ in R v Harrison and Dryburgh that ‘the practice has been to confine criminal proceedings to serious and aggravated cases’. It is implicit in this statement that Innes CJ did not consider seriousness to be an element of criminal defamation. In R v Fuleza 1951 (1) SA 519 (A) the court had to determine whether slander, or injuria verbis, was a crime in the Colony of the Cape of Good Hope as at 10 June 1891. Van den Heever JA examined the Roman Dutch authorities, referred to Voet 47.10.15 who says ‘all injuries, whether grave or slight, may be prosecuted criminally’18 and concluded, in relation to the question whether gravity was an element of the offence of criminal defamation, that ‘it is abundantly clear therefore that the apparent conflict between the Roman-Dutch authorities relates to procedure and policy in regard to prosecution not to the elements of the offence’.19 In respect of Van Leeuwen (Romeinse Hollandse Reg, 4.37.1 in fin) who ‘avers that a criminal prosecution does not lie in respect of oral defamation “unless it is an uncommon defamatory statement which affects the commonwealth because of its results”’ Van den Heever JA said: ‘The distinction, if it relates to the definition of the offence and not to policy in regard to its prosecution, seems to me arbitrary, variable and uncertain. It is as incapable of practical application as the Byzantine degrees of culpa, descriptions of which read well, but which no one has been able to apply to practical affairs and which have now generally been discarded.’20 [18] The other members of the bench in Fuleza were Hoexter JA and Fagan JA. Hoexter JA found it unnecessary to express a view as to whether 16 John van der Berg ‘Is gravity really an element of crimen injuria and criminal defamation in our law?’(1988) THRHR 54 p 72. 17 FFW van Oosten ‘Seriousness, Defamation and Criminal Liability’ (1978) 95 SALJ p 505. 18 At 525G-H. 19 At 526E-F. 20 At 525E-G. the gravity of the defamation was an element of the offence.21 Fagan JA, having stated that he wished to guard himself against a finding which could encourage prosecutions for less serious cases of slander, accepted the statement by Innes CJ ‘that the practice has been to confine criminal proceedings to serious and aggravated cases’. But he left open the question ‘whether this limitation is merely a matter of policy depending on the decision of the public prosecutor in each individual case in which a complaint is lodged with him, or whether the practice has in the course of time hardened into a legal rule which should also be applied by a court trying the criminal charge’. He conceded that it may be difficult to draw a line, for the purpose of applying this limitation as a legal principle, between cases that are serious and those that are not.22 It follows that he agreed with Van Heerden JA that the apparent conflict between the Roman-Dutch authorities relates to procedure and policy in regard to prosecution not to the elements of the offence. [19] In R v MacDonald23 the accused had been convicted of defamation and sentenced to a fine of ₤10. On appeal the court did not consider the defamation in question to be an aggravated defamation but concluded that the weight of modern authority precluded it from deciding that a court had a discretion as to whether to convict according to the seriousness of the offence.24 [20] Milton submits that the Roman-Dutch (and the pre-1951 South African) position is sufficiently equivocal for our courts to decide this matter on considerations of policy without worrying about problems of 21 At 529F-G. 22 At 532E-G. 23 1953 (1) SA 107 (T). 24 At 110G-H. desuetude.25 According to him a third group of Roman-Dutch jurists ‘actually qualifies the definition of criminal defamation by requiring “an extraordinary case of defamation, affecting the common weal in its results”’.26 Burchell, on the other hand, agrees with Van den Heever JA that the Roman-Dutch writers fall into two groups, the one holding that the criminal remedy lay whether the injury was serious or slight and the other, apparently accepting that view, holding that for policy reasons only serious cases should be prosecuted. According to him Van Leeuwen and Van der Keessel, who, according to Milton fell into the third group, would ‘appear to be commenting on the fact that prosecutors do not prosecute for slight, as opposed to serious, injuries’.27 According to Van der Berg the correct interpretation of the Roman-Dutch authors ‘seems to be that non-serious iniuriae were regarded as crimes, but were, as a matter of policy, infrequently prosecuted.28 Van Oosten rejects seriousness as a requirement for criminal defamation and states that the view that it is a requirement leads to uncertainties, anomalies, inconsistencies and confusion in regard to criminal liability.29 [21] In the light of these authorities I am not persuaded that the authoritative analysis of the law by Van den Heever JA in Fuleza is wrong and that a degree of seriousness was an element of the crime of defamation in Roman-Dutch law or that it is an element of criminal defamation in our law. I am also not aware of any evidence that the practice of confining criminal proceedings for defamation to serious and aggravated cases has hardened into a legal rule, being the possibility mooted by Fagan JA in Fuleza. In the case of a common assault seriousness is not an element of 25 JRL Milton op cit p 531. 26 Op cit p 529. 27 Jonathan M Burchell The Law of Defamation in South Africa p 326. 28 Van der Berg ‘Is gravity really an element of crimen injuria and criminal defamation in our law?’ (1988) THRHR 54 p 59. 29 FFW van Oosten op cit p 507-508 and 512-513. the offence (that is not to say that the de minimis rule does not apply in cases where the offence is so trivial that a court should not take notice thereof).30 I can see no reason why the position should be different in the case of an injury to a personality right such as a person’s reputation. [22] It would seem to be accepted that seriousness is a requirement for the crime of crimen injuria31 but it is not clear what the test for seriousness is. In this regard I agree with Thirion J that ‘[t]he test requiring the injuria to be “serious”, in so far as it can be called a test at all, is so nebulous as to lead to arbitrariness in its application’. There is in my view no reason to extend this requirement, accepting that it is a requirement in the case of crimen injuria, to criminal defamation. There has been no suggestion that the courts’ valuable time has unduly been taken up by serious criminal defamation cases, let alone non-serious ones. Should the prosecuting authority oblige and prosecute for non-serious defamation, which seems to me to be highly unlikely, the fact that the defamation is not serious would be reflected in the sentence. In trivial cases it may be found that the de minimis rule applies. [23] I, therefore, conclude that the crime of defamation consists of the unlawful and intentional publication of matter concerning another which tends to injure his reputation. [24] In regard to the element of unlawfulness it has long been recognized that if defamatory matter is true and published for the public benefit, or constitutes fair comment or is published on a privileged occasion, the publication is not unlawful. But those are not the only circumstances that 30 S v Kgogong 1980 (3) SA 600 (A) 603G-604A; and S v A and another 1993 (1) SACR 600 (A) at 607 d-f. 31 S v Bugwandeen 1987 (1) SA 787 (N) at 794D-796E; John van der Berg ‘Is gravity really an element of crimen iniuria and criminal defamation in our law?’(1988) THRHR p 54. would render the publication of defamatory matter lawful. In National Media Ltd and others v Bogoshi 1998 (4) SA 1196 (SCA) this court had to consider whether the publication by the press of false defamatory statements may in appropriate circumstances be lawful. In his judgment, with which all the members of the court agreed, Hefer JA said that the three mentioned defences do not constitute a numerus clausus of defences and added:32 ‘In our law the lawfulness of a harmful act or omission is determined by the application of a general criterion of reasonableness based on considerations of fairness, morality, policy and the Court’s perception of the legal convictions of the community.’ Hefer JA then, after having referred to the competing rights, namely the right to reputation and the right to freedom of expression, the way in which these two interests have been weighed in this country in the past and the way the matter has been resolved elsewhere, concluded ‘that the publication in the press of false defamatory allegations of fact will not be regarded as unlawful if, upon a consideration of all the circumstances of the case, it is found to have been reasonable to publish the particular facts in the particular way and at the particular time’.33 [25] In Q v Shaw 3 EDC 323 at 328 the court held that the onus in respect of a plea of justification rests on the accused. That statement does not, however, accord with the fundamental principle of our common law that the State has to prove all the elements of an offence. The common law recognised only two exceptions to that general principle namely where an accused raised a defence of insanity and where a statute created an exception (R v Ndhlovu 1945 AD 369 at 380-381 and 386-387). In the absence of any statutory exception the fundamental principle applies in the 32 At 1204D-E. 33 At 1212G-H. case of criminal defamation.34 This fundamental principle of the common law has now been entrenched in s 35(3)(h) of the Constitution which provides that every accused person has a right to a fair trial, which includes the right to be presumed innocent, to remain silent and not to testify during the proceedings.35 [26] It follows that the state must prove the unlawful and intentional publication of defamatory matter. Intentional publication also requires proof that the accused knew that he was acting unlawfully or that he knew that he might possibly be acting unlawfully.36 As in any other criminal case the degree of proof required is proof beyond reasonable doubt.37 It does not follow that the state has to negative merely hypothetical possible defences.38 It would be necessary, for example, for an accused, whose defence is that the alleged defamatory allegations were true and made for the public benefit, to plead that defence as is required by s 107 of the Act. Precisely what circumstances would require the state to negative other defences will depend on the particular circumstances and will be left for decision when the need to do so arises. [27] Having determined the elements of the crime of defamation and that those elements are to be proved by the state beyond reasonable doubt I shall now proceed to deal with the question whether the crime is consonant with the Constitution. [28] In terms of s 16 of the Constitution everyone has the freedom to receive and impart information. The section reads: 34 See Worme and another v Commissioner of Police of Grenada [2004] UKPC 8 para 24 where the Privy Council came to the same conclusion. 35 S v Bhulwana; S v Gwadiso 1996 (1) SA 388 (CC) para 15. 36 S v De Blom 1977 (3) SA 513 (A); S v Hlomza 1987 (1) SA 25 (A) at 31H-32G; and see Maisel v Van Naeren 1960 (4) SA 836 (C) at 840 in respect of the requirement of animus injuriandi in the civil context. 37 R v Ndhlovu 1945 AD 369 at 386-387. 38 Op cit at 381; see also S v De Blom above at 532E-H. ‘(1) Everyone has the right to freedom of expression, which includes – (a) freedom of the press and other media; (b) freedom to receive or impart information or ideas; (c) freedom of artistic creativity; and (d) academic freedom and freedom of scientific research. (2) The right in subsection (1) does not extend to – (a) propaganda for war; (b) incitement of imminent violence; or (c) advocacy of hatred that is based on race, ethnicity, gender or religion, and that constitutes incitement to cause harm.’ [29] The importance of the right to freedom of expression has often been stressed by our courts.39 Suppression of available information and of ideas can only be detrimental to the decision-making process of individuals, corporations and governments. It may lead to the wrong government being elected, the wrong policies being adopted, the wrong people being appointed, corruption, dishonesty and incompetence not being exposed, wrong investments being made and a multitude of other undesirable consequences. It is for this reason that it has been said ‘that freedom of expression constitutes one of the essential foundations of a democratic society and is one of the basic conditions for its progress and the development of man’.40 Although false information will not benefit a society, democratic or otherwise, the right to freedom of expression is not restricted to correct or truthful information because errors are bound to be made from time to time and to suppress the publication of erroneous statements on pain of penalty would of necessity have a stifling effect on the free flow of information.41 But the freedom of expression is not 39 National Media Ltd and others v Bogoshi 1998 (4) SA 1196 (SCA) 1207I-1208G; Khumalo and others v Holomisa 2002 (5) SA 401 (CC) para 21-25; and Mthembi-Mahanyele v Mail & Guardian Ltd and another 2004 (6) SA 329 (SCA) para 65. 40 Bogoshi at 1208. 41 Holomisa v Argus Newspapers Ltd 1996 (2) SA 588 (W) at 616I-J; and National Media Ltd and others v Bogoshi at 1210G-I. unlimited. Although it is fundamental to our democratic society it is not a paramount value. It must be construed in the context of other values such as the value of human dignity.42 [30] Human dignity is stated in s 1 of the Constitution to be a foundational value of our democratic state and s 10 of the Constitution provides: ‘Everyone has inherent dignity and the right to have their dignity respected and protected.’ ‘The value of human dignity in our Constitution . . . values both the personal sense of self-worth as well as the public’s estimation of the worth or value of an individual’43 ie an individual’s reputation. In regard to the importance of protecting an individual’s reputation Lord Nicholls of Birkenhead said in Reynolds v Times Newspapers Ltd [2001] 2 AC 127 at 201: ‘Reputation is an integral and important part of the dignity of the individual. It also forms the basis of many decisions in a democratic society which are fundamental to its well-being: whom to employ or work for, whom to promote, whom to do business with or to vote for. Once besmirched by an unfounded allegation in a national newspaper, a reputation can be damaged for ever, especially if there is no opportunity to vindicate one’s reputation. When this happens, society as well as the individual is the loser. For it should not be supposed that protection of reputation is a matter of importance only to the affected individual and his family. Protection of reputation is conducive to the public good. It is in the public interest that the reputation of public figures should not be debased falsely. In the political field, in order to make an informed choice, the electorate needs to be able to identify the good as well as the bad.’ [31] The law of defamation, both criminal and civil, is designed to protect the reputation of people. In doing so it clearly limits the right to freedom of expression. Such limitation can be consistent with the Constitution only if 42 Khumalo and others v Holomisa para 25. 43 Op cit at para 27. it can be said that ‘an appropriate balance is struck between the protection of freedom of expression on the one hand, and the value of human dignity on the other’.44 In Khumalo that was held to be the case in so far as the civil remedy for defamation is concerned. [32] In regard to criminal defamation Burchell45 poses the question whether a criminal sanction for defamatory words is too drastic a means of regulating free speech, especially when there is a relatively well developed civil-law remedy. Snyman46 submits that our law will be no poorer if the crime is abolished. He bases his submission on the small number of prosecutions and the existence of a civil remedy. Milton47 thinks that there is a strong and persuasive case for the decriminalisation of defamation and Van der Berg,48 referring to the frequency of prosecutions, the limited redress which a victim may achieve through a criminal prosecution, the existence of a civil remedy and trends in other jurisdictions, says that the need for the crime of defamation has become highly suspect. [33] A criminal sanction is indeed a more drastic remedy than the civil remedy but that disparity is counterbalanced by the fact that the requirements for succeeding in a criminal defamation matter are much more onerous than in a civil matter. In a civil action for defamation unlawfulness and animus injuriandi are presumed once the publication of defamatory material is admitted or proved49 and the onus is on the defendant to prove whatever he relies upon in justification.50 In the case of criminal defamation not only is there no presumption of unlawfulness or animus injuriandi, the state has to prove both elements and has to do so 44 Op cit para 28. 45 Jonathan M Burchell The Law of Defamation in South Africa p 325. 46 CR Snyman Criminal Law 5 ed p 476. 47 JRL Milton op cit p 520. 48 John van der Berg ‘Should there be a Crime of Defamation’, (1989) 106 SALJ p 290. 49 National Media Ltd and others v Bogoshi at 1202G-H. 50 Op cit 1218D-F. beyond reasonable doubt. Media defendants in a civil action have to go even further than proving absence of animus injuriandi - they have to prove absence of negligence;51 whereas in a criminal matter they would escape liability if the state cannot prove that they knew that they were acting unlawfully or that their actions might be unlawful. It is therefore substantially more difficult to secure a conviction on a charge of defamation than it is to succeed in a civil claim for defamation and although a criminal conviction and the sanction arising therefrom may be more severe than an order to pay damages the limitation of the right to freedom of expression is, in my view, not. In any event to expose a person to a criminal conviction if it is proved beyond reasonable doubt, not only that he acted unlawfully, ie without justification, but also that he knew that he was acting unlawfully in my view constitutes a reasonable and not too drastic a limitation on the right to freedom of expression. [34] The onerous requirements in the case of criminal defamation are probably a reason for the paucity of prosecutions for defamation compared to civil defamation actions. Another reason is probably the fact that, in civil defamation actions, plaintiffs very seldom give evidence and thus avoid being exposed to cross-examination. In criminal cases on the other hand the complainant is not in control of the proceedings and would in most cases be called to give evidence specifically in order to prove that the relevant allegations are untrue. [35] It does not follow that there is no need for the crime. Another reason for the paucity of prosecutions may be the effectiveness of the remedy in the sense that defamatory allegations are not published when it is known 51 Op cit 1215H-J. that they could be proved beyond reasonable doubt, to be untrue.52 There have been cases in the past where complainants required the state to prosecute for defamation and there may well be such cases in the future. It is true that there is a civil remedy available for defamation but there is also a civil remedy available for common assault, yet nobody would suggest that there is for that reason no need for the crime of common assault. There is in my view no reason why the state should oblige and prosecute in the case of a complaint in respect of an injury to a person’s physical integrity but not in the case of a complaint in respect of an injury to reputation, which may have more serious and lasting effects than a physical assault. In any event, the need for the crime in addition to the civil remedy is proved by the present case. The complainants in this case did not know who was responsible for the publication of the defamatory allegations and had to enrol the assistance of the police and the prosecuting authorities to prove that it was the appellant. [36] For these reasons I am of the view that our crime of defamation is not inconsistent with the Constitution. Support for this finding is to be found in Worme and another v Commissioner of Police of Grenada [2004] UKPC 8 where the Privy Council had to decide whether the hindrance to freedom of speech under s 10(1) of the Grenada Constitution constituted by the statutory crime of intentional libel was reasonably justifiable in a democratic society.53 It concluded that the offence was reasonably required to protect people’s reputations and that it did not go further than was necessary to accomplish that objective.54 In respect of the question whether the crime is justifiable in a democratic society it held:55 52 Worme and another v Commissioner of Police of Grenada [2004] UKPC 8 at 455E-F para 42; and R v Lucas [1998] SCR 439 para 55. 53 Para 41. 54 Para 42. 55 Para 43. ‘Of course, some democratic societies get along without it. But that simply shows that its inclusion is not the hallmark of the criminal law of all such societies. In fact criminal libel, in one form or another, is to be found in the law of many democratic societies, such as England, Canada and Australia. It can accordingly be regarded as a justifiable part of the law of the democratic society in Grenada.’ [37] For these reasons the appeal is dismissed. __________________ P E STREICHER JUDGE OF APPEAL APPEARANCES: For Appellant: C Ploos van Amstel SC P W Nel (Attorney) Instructed by The Justice Centre, King William’s Town Bloemfontein Justice Centre, Bloemfontein For Respondent: M P Z Sotenjwa Amici curiae G J Marcus SC S Budlender Instructed by The Director of Public Prosecutions, Bisho The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 17 September 2008 Status: Immediate L K HOHO v THE STATE 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. * * * The Supreme Court of Appeal (‘the SCA’) today dismissed an appeal by the appellant against his conviction in the Bisho High Court on 22 charges of criminal defamation. The defamation charges related to defamatory allegations that had been made against various people associated with the Legislature of the Eastern Cape as well as against national ministers, in leaflets that had been distributed in the Eastern Cape and elsewhere. At his trial the appellant denied that he was the author of the leaflets but on appeal the only issue was whether defamation still constituted a criminal offence in South Africa. It was submitted that the crime of defamation had been abrogated by disuse and also that it was inconsistent with the Constitution. The SCA held that the basis of the doctrine that law may be abrogated by disuse is the tacit repeal through disuse by silent consent of the whole community. No such tacit repeal could be found to have taken place. In regard to the question whether the crime of defamation is consistent with the Constitution the SCA held that the law of defamation is designed to protect the reputation of people and that in doing so it limits the right to freedom of expression. Such limitation can be consistent with the Constitution only if it can be said that an appropriate balance is struck between the protection of freedom of expression on the one hand and the value of human dignity on the other. Having considered the competing interests and the hurdles that have to be overcome in order to secure a conviction on a charge of criminal defamation the SCA concluded that the criminalisation of defamation is not inconsistent with the Constitution.

2453

non-electoral

2013

SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT CASE NO: 084/13 Not Reportable In the matter between: IAIN CAMERON MCLAGGAN APPELLANT and THE STATE RESPONDENT Neutral citation: McLaggan v The State (084/13) [2013] ZACSA 92 (June 2013) Coram: Mthiyane DP, Majiedt, Pillay JJA et Willis, Saldulker AJJA Heard: 17 May 2013 Delivered: 03 June 2013 Summary: Rape – evidence - complainant single witness – sufficient corroboration - all evidence, not only parts of it, to be taken into account when determining the guilt of accused – accused’s version not reasonably possibly true - appeal against conviction dismissed. Sentence – Prescribed sentence in terms of Criminal Law Amendment Act 105 of 1997 – appeal by State against sentence - finding of existence of substantial and compelling circumstances as envisaged in subsection 52(3) attacked by State – court below misdirected itself in finding substantial and compelling circumstances – appeal upheld. ORDER On appeal from: Eastern Cape High Court, Grahamstown (Goosen J sitting as court of first instance) 1 The appeal against conviction is dismissed. 2 The appeal against sentence is upheld. 3 The sentence imposed by the court below is set aside and substituted with the following: ‘The accused is sentenced to 10 years’ imprisonment.’ JUDGMENT PILLAY JA (MTHIYANE DP, MAJIEDT JA ET WILLIS, SALDULKER AJJA CONCURRING) [1] This is an appeal against conviction. The appellant, Iain Cameron McLaggan, was convicted in the High Court, Grahamstown (Goosen J) of one count of rape in the contravention of s 3, read with s 1, 56(1), 57(1), 58, 59 and 60 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007. He was sentenced to a term of 8 years’ imprisonment. [2] Leave to this court was granted by the court below, which also granted the Director of Prosecutions leave to appeal against the sentence. In order to avoid any confusion, I will hereinafter refer to the appellant (on the merits) and the Director of Prosecutions as they were referred to in the court below viz accused and the State. The following are facts which are common cause or undisputed: [3] At the age of 7 years old, the complainant was diagnosed with a brain tumour behind the left eye. Her condition was not treated by way of surgery but with vigorous radiation over a number of years. This treatment affected her control hormone levels which made her prone to stress and its consequences: It also had an effect on her bodily sugar levels. At the age of 18, she undertook a trip to South Africa under the auspices of Worldwide Experiences, a British institution, in order to enhance her chances for admission to a university in the United Kingdom to persue studies in Veterinary Science. Worldwide Experiences had established a working relationship with Shamwari Game Reserve (‘Shamwari’) which is located near Grahamstown. The complainant was placed there with some fourteen other foreigners to complete courses which, inter alia, included dealing with large animals. [4] The group was entrusted to the accused and one Conrad Muller both of whom seemed to be experienced in working at Shamwari and were to co-ordinate the course. The complainant and the other international students started the program on 30 August 2010. Some of these students had been at Shamwari for about a week before then. Towards the end of that week a social outing was arranged at a tavern in Paterson. Because she felt tired, she was reluctant to go on this outing, but felt in necessary to socialise with the others. The group went to the tavern where they enjoyed some drinks. The complainant bought a glass of red wine which she was sipping in front of the fire place with some of the members of the group. When one of the girls remarked that she was drinking her wine very slowly the complainant finished her glass of wine and purchased another. She then continued to consume the wine and joined other members of the group in playing pool. By the time she started to drink the third glass of wine, she had also consumed a single shot of Sambuca which the accused had bought. She then started to feel hot and removed the long sleeved top which she was wearing over another top. [5] She then became emotional because she started to think of her failure in obtaining university entrance while some of her friends had succeeded in doing so. She did not feel too well and went outside with Ms Laura Sloan, her older roommate and with whom she had struck up a good sisterly relationship, to get some fresh air. Once outside, she started to vomit a few times. So violent was the vomiting that she soiled her hair and part of her clothing. She could not remember for how long she was outside. She was unable to get up from where she was sitting and had to be carried to the taxi commissioned to convey them back to the lodge. She has vague memories of the trip back to the lodge. Thereagain, she had to be carried from the taxi to her bed by the accused. As soon as she had been placed on the bed, she suffered a seizure. She was gasping for air, her head was jerking and her back was arched. Amidst this trauma however the complainant remembers that the accused asked some of the girls to put her to bed and make her comfortable as he ‘does not want a lawsuit’. She was put into bed after two of her female friends had taken off some of her clothes and made her comfortable in bed wearing only a top and her panties. The complainant then again suffered another seizure which lasted a bit longer. The accused told the others to bring him a spoon and to leave the room while he attended to the complainant. He emerged from the room shortly thereafter reporting to the others that she was fine. Later, at about 2h30, the group discovered that she had fallen out of bed and she was helped back into it. She was then left alone in the room so that she could rest. At the time the complainant could hear the voices of members of the group including that of the accused, but she could not make out everything that was being said. She however remembers him saying that he did not want a law suit. At about 3 am the accused sent one of the students to go check on her and it was reported that she was sleeping peacefully. [6] At 5h00, when all the students had gone to sleep, including her roommate, who had gone to sleep with another student in light of the circumstances, the accused decided to go to the complainant’s room himself. He entered and at some stage, he had sexual intercourse with her. She thereafter went to the bathroom and cleaned herself of the semen and blood which was a result of her hymen being ruptured. She went back into the bedroom and saw him dressing. He left the room soon thereafter – at about 5h30 am. She then went back to bed and fell asleep. She was later woken up by Laura Sloan, the complainant’s erstwhile roommate, and reminded they were scheduled to go to the Addo Elephant Park. The complainant did this and the group were taken to the Elephant Park in two groups. She rode with Conrad Muller. During the lunch break at the Elephant Park she had a conversation with Sloan and asked her for information relating to what had happened to her the previous night and in particular what she was wearing when she was put to bed. She then told Sloan that she had been raped by the accused. After a brief discussion between them, it became apparent that the complainant was especially concerned about whether the accused had used a condom when he had raped her and was focussed on getting to a hospital to get treatment to contend with any virus or germ she might have been contaminated with during the rape. [7] The group was taken back to the lodge and the complainant took the rest of the day to consider ways to get medical attention. On the Sunday morning she eventually approached Nadia Muller, a permanent employee at Shamwari and told her what had happened. Nadia then immediately reported the event to Conrad Muller. Upon hearing about the complaint, he called his supervisor, Qiunton Gillson. As a result of what was explained to him, he decided to conduct a preliminary investigation for purposes of reporting to his employers. Upon his request, the complainant penned a statement of what had occurred to her. On considering the content of the statement, he called upon the accused and informed him that the complainant had alleged that he had raped her. The accused first responded that he knew ‘it would come to this’. In order to equip himself to report to his employers and probably to cover himself, he asked the accused to make a written statement in response to the allegations in terms of company policy regarding complaints by a student guest. After the complainant had completed her statement, she was taken to a private doctor who said he was unable to treat her properly. She was then referred to the Greenacres Private hospital in Port Elizabeth to which she was then taken. There she was examined by Dr Conradie who recorded his finding on the customary medico-legal form. She then went to the police station in Port Elizabeth to lay a charge of rape. She was referred to the Paterson Police Station because it had jurisdiction over the area where the alleged offence occurred. She was taken to the Paterson Police Station where she laid a charge of rape against the accused. As a result the accused was arrested and this culminated in his appearance in the High Court in Grahamstown. The Trial [8] The accused pleaded not guilty and explained that he indeed engaged in sexual intercourse with the complainant but it was consensual. During the trial the State sought to admit the statement made by the accused to Gillson, even though it was exculpatory. It turned out that Gillson had told the accused that no charges had been laid – indeed none had been laid at that time. Its admissibility was contested and this resulted in a trial- within-a-trial. In the end the statement was admitted into evidence. It afforded the State a tool to cross examine the accused. The statement was indeed used to cross-examine the accused but fortunately the judge in the court below chose to ignore the contents of the statement and, it seems, all that flowed from cross-examination regarding the statement. It is just as well that this was ignored in assessing the evidence because I have serious reservations as to the correctness of the admissibility of that statement into evidence. A number of other exhibits were admitted by agreement and included a photograph album and the medico-legal report. [9] The State lead the evidence of Laura Sloan. The evidence was essentially common cause and it basically related to the events of the night of 3 to 4 September 2010 at the lodge prior to the alleged rape. Her evidence was not seriously challenged and was correctly accepted as the truth. [10] The complainant also testified at the trial. She confirmed the evidence about her trip to South Africa and her placement at Shamwari. She also confirmed the evidence of what occurred on the Friday night – early Saturday morning – as far as she could remember. She also testified about her illness regarding the brain tumour, the treatment and the effects thereof. She explained that at times she would become susceptible to stress and consequently, had been granted special allowances during school hours and additional time to complete examinations. She also said that during her short period at Shamwari, she found the physical activities exhausting but had nonetheless enjoyed them. [11] She confirmed that during the outing she became ill after consuming some alcohol and as far as she could remember, she experienced the symptoms of seizure. In particular she testified about the period when she was alone in bed at about 5h00 on the Saturday morning. She said that she woke up when she became aware that her panties were being pulled down her legs and that when she opened her eyes, she saw that it was the accused who was doing it. He was alone with her in the bedroom. She pulled her legs up but he pulled them down by pulling at her ankles. She blacked out again. She was then again awoken by a pain in the region of her lower stomach. She opened her eyes and she discovered the accused on top of her and he was rocking back and forth. His mouth was on one of her breasts. She realised that she was completely naked. As he lifted his body – probably when she felt less pressure of his body on her – she tried to fight him off by pushing him away. He pushed her hands away from him. She stated that she said ‘no, no, no’. The accused told her to stop that and put his hand over her mouth. He told her to put her arms around him and moved one of her arms onto his shoulder. When she removed it, he slapped her lightly on the cheek. He then told her to kiss him. When he moved his lips towards her mouth, she turned her head to the side. She then managed to pull some of the bedding over her face. She realised that she was being raped. She lay still in that position until he stopped. When he got off her, she immediately sat on the side of the bed and faced the window. She explained that she was extremely confused and that she remembers that she was concerned about whether he had used a condom or not. She started looking for it on the floor and in the bin. [12] She remembers that the accused asked her what was wrong. She did not respond. In looking for the condom, she saw her brassiere on Sloan’s bed, and put it on. She then went to the bathroom in order to clean herself. She did so with toilet paper and discovered a white mucous on the toilet paper. On emerging from the bathroom again, she went to sit on the bed. The accused was still in the room. According to her, she had difficulty in conceptualising why and how this rape occurred. She asked him what just happened. In response, the accused asked her what had happened a few times. She described how the accused then sat down next to her on the bed when she started to shake. He put his arm around her and told her to lean her head on his shoulder. She did not do so and he then tilted her head against his shoulder with his hand. He then asked her if she wanted him to leave and invited her to say whatever she wanted to about him and call him whatever she wanted to call him. She in fact referred to him by a crude slang reference to a penis to which he just laughed. She then told him that she could not believe that he had just 'taken advantage' of her. The accused responded by saying that it was a harsh accusation to make and became angry. At the same time he told her how he had looked after her the whole night, how he had saved her life by putting a spoon in her mouth to prevent her swallowing her tongue during the seizures. He asked sarcastically if that was the gratitude she had for all that he had done for her. As he left she sarcastically said to him 'thanks for the spoon'. [13] The State also called Dr Conradie to testify. He had noted in the medico-legal report general redness around the labia of the vagina of the complainant, generalised redness and swelling in the entire fossa navicularis in the area of where the hymen is expected to be found as well as two small superficial tears on the posterior of the fourchette, from which there was bleeding. Further internal gynaecological examination was not done because the complainant was experiencing pain and discomfort in the area which required examinations. He concluded that full sexual intercourse with full penetration had occurred with the complainant. He prescribed anti-retroviral treatment as a precaution as well as antibiotics. Pregnancy and what is known as Human Immunodeficiency Virus (HIV) tests were also conducted by way of blood tests. He conceded that from his findings, he could not exclude the possibility that the injuries and symptoms which he noted could also have been caused during consensual sexual intercourse. [14] Quinton Gillson also testified. His evidence was unchallenged and was essentially as set out above. It was correctly accepted as the truth in the court below. [15] The State also lead the evidence of Detective Warrant Officer Marshall, the commanding officer of the Paterson detective unit, who had arrested the accused. The State sought to rely on his evidence as to what transpired between him and the accused. The court below rejected his evidence and did not rely on anything he testified to. Nothing more need be said about his evidence. [16] The State sought to lead the evidence of Dr Helen Spoudeas a medical specialist paediatrician and endocrinologist who focuses on brain tumours. She holds a doctorate in the diagnosis and treatment of children with brain tumours. She is recognised internationally and is a European expert in the field particularly on the late effects of brain tumours and the related treatment as well as the long term assessment and treatment of children who have survived brain tumours. She is involved in research with about 200 child patients. Her credentials were not questioned in the court below nor on appeal. However because Dr Spoudeas was very much sought after and is so committed that she was unable to travel to South Africa to testify, an application to lead her evidence by way of what is referred to as a video-conference was launched by the State in terms of s 158 of the Criminal Procedure Act 51 of 1977. The application was opposed on various grounds. After argument, the application was granted and the evidence of Dr Spoudeas was received by video-conference. On appeal the ruling to receive her evidence was not attacked and there is no reason to deal with this aspect any further. [17] Dr Spoudeas testified that she was very familiar with the situation of the complainant and had been treating her since she was 7 or 8 years old. She was accordingly also familiar with the pathology experienced by the complainant. [18] It is perhaps prudent to deal with her evidence relating to endocrinology. She explained that endocrinology is the study of hormones. In particular she explained that hormones which originate from the central pituitary axes, (the central area of the brain which controls the essential rhythms relating to one’s conscious cycles - sleeping patterns and also body responses to certain stimuli) convey vital information from the central pituitary axes to certain parts of the body and facilitate body reactions to various conditions and stimuli. She went further to explain that these hormones control body rhythms and accordingly permit the habits of waking up and going to sleep. Many of these functions are vital and any imbalance or deficiency in regard thereto would cause abnormality which could be life threatening. She said that children who are treated for cancer, in particular brain tumours are prone to develop pituitary axes deficiencies as a result of the treatment they receive to deal with the tumours. This, in turn, affects the glands which produce the hormones and, as I understand this evidence, results in imbalances in these important hormonal requirements. [19] Dr Spoudeas testified that in 2000, the complainant presented with an optic glaucoma which required high dose radiation therapy. As a result of receiving this treatment she suffered from a permanent growth hormone deficiency. Tests have also shown that the complainant has a marginal response in her cortisol, the stress hormone. She explained that cortisol, an important life saving hormone, is essential for one’s daily rhythm. Cortisol levels also play an important role in dealing with stress. She testified that the complainant’s cortisol level tested at 480 while the normal level should read between 500 and 550. She further testified that both the aforementioned hormones affect the production of blood sugar. The effect of the medical regime (as was required by the complainant), is that if confronted with a stressful situation, she would be unable call on sufficient cortisol to respond to the stress and this would in turn induce a low blood sugar level. The deficiencies would restrict any reversal of the low blood sugar level which would occur in normal circumstances. According to Dr Spoudeas, low blood sugar level could lead to fitting or epilepsy or seizures and if left untreated, could lead to deep coma and even death. [20] Dr Spoudeas took into consideration that prior to the seizures, the complainant had (a) consumed some liquor – intoxication occurs more readily and quicker in females than in males (this she said, was based on clinical evidence) and (b) had not eaten very much – her glucose levels would already be low and the intake of alcohol would have stunted the production of body glucose and concluded that the complainant’s pathology regarding the brain tumour, were alcohol related. She described a seizure where the person’s limbs move involuntarily and where the head jerks as a clonic tonic seizure. She said that in such an event, it was to be expected that the person would be in a post-ictal state – state of mind of a person just after suffering a seizure. She explained that a person in a post-ictal state would be conscious of having experienced the seizure and may typically have a blurred memory of what had occurred. She further describes that in a post-ictal state, the person may be in a deep sleep and may appear not fully conscious though such a person may become aware of some sensation such as touch or pain and could respond to this. However the person would still be in a state of confusion during the recovery period though the effects of the alcohol would be wearing off. She stated that given the history of the intake of alcohol late the Friday night, and the seizures at approximately 2h30, it was to be expected that by 5h30, the complainant would be in the latter stages of a post-ictal state. The reaction to pain and touch would be greater, her memory would be less blurred and her confusion would be less obvious than it was during its peak period of the pathology. [21] Dr Spoudeas said the account of the complainant that she was slipping in and out of consciousness and that she was not aware of certain events she was told of is consistent with a person, having suffered a series of seizures, in a post-ictal state. In response to being asked to comment on certain aspects which were raised with the complainant on behalf of the accused, she explained that the sensation the complainant felt when her panties were being removed is suggestive of her being in a post-ictal state but more conscious than earlier after the seizures (clearly in a state of recovery). She also explained that in the post-ictal state, even during a state of recovery, a measure of confusion is to be expected. As I understand her evidence the confusion would diminish in the process of recovery and simultaneously her reaction to pain would also improve. [22] The accused also testified and essentially confirmed the evidence about the occurrences that night and early morning as already set out, save for what occurred in the complainant’s room when he was alone with her at about 5h00. He stated that at about 4h30 that morning, he went outside from the lounge of the lodge where he was sitting with some of the students listening to music to smoke and relieve himself. When he returned, he found that the students had all gone to sleep. He packed up and went to his room. It then dawned on him that he should again go and check on the complainant for his own peace of mind. When he opened her bedroom door, he found her awake and sitting up on the edge of the bed. The bedside light was on and she had wrapped the duvet around herself. He enquired about her health. She said she was feeling better but wanted to know what had happened. He then went to sit next to her on the bed and briefly explained that she had become heavily intoxicated and he had carried her to her bed and asked some of the girls to make her comfortable. [23] He further explained that after informing her of what had happened, she leaned her head against his shoulder and he placed his arm around her shoulder. They remained sitting like that until the complainant turned her head towards him and kissed him passionately. He reacted positively to this by kissing her with equal passion. As he put it, as this developed both of them continued kissing each other while laying on the bed and that the passion then heigtened to the extent that they started caressing each other. He testified that she then loosened his belt. This led to him removing his trousers. The kissing and caressing then intensified. At some point he rolled onto her and started having sexual intercourse with her. She did not object to or protest against this. The import of his testimony in this regard is that she was an active participant and was not a dispassionate partner. He added that she asked him not to ejaculate inside her, a request he adhered to. Afterwards, they lay next to each other until he noticed that the sun was beginning to rise. He then decided to leave and got up. When he began to dress the complainant covered herself with the duvet and went to the bathroom. By the time she returned, he had already put on his clothes he kissed her on the forehead and then left. [24] Another significant part of his evidence was that when he was confronted by Gillson with the complaint, he thought it related to having sexual intercourse with a student guest and it was in response to that notion that he prefaced his response with the exclamation that ‘he expected it to come to this’. He explained that he felt obliged to make a statement (in regard to his employment status) and did not mention the sexual intercourse with the complainant as he did not want to risk his occupation or his marriage. In addition he testified that he did not want to say too much as it might be used to his prejudice. He therefore made an exculpatory statement. On Appeal [25] As is apparent from the above, the version of the accused is substantially different from that of the complainant’s. The issue on the merits is therefore whether there was consensual sexual intercourse between the complainant and the accused. In other words whether the State has discharged the onus resting upon it to prove beyond a reasonable doubt that the accused had raped the complainant. [26] Mr Price who appeared for the accused submitted that the court below had misdirected itself firstly, by ignoring the many inconsistencies in the complainant's testimony when measured against her statement to the police and also her statement to Gillson and secondly, by relying on the evidence of Dr Spoudeas who had not examined the complainant after the alleged rape and was therefore not in a position to testify about her condition at the time it occurred or shortly thereafter. He submitted that if these aspects had properly been considered by the court below, it would have concluded that the State had not discharged the onus of proving the accused's guilt or that the version of the accused was reasonably possibly true in the circumstances and therefore entitled to be acquitted of the charge. [27] As was pointed out in the judgment of the court below that earlier the accused was wary that he should be cautious in his dealing with the complainant so as to avoid any suggestion of impropriety on his part. Quite apart from the legal problems he might face, he was also mindful of company policy prohibiting any relationship with students. The accused had nevertheless gone to the complainant’s room alone in the early hours of the morning. He chose to go and sit next to her on the bed when, if he was only interested in her health, he need not have entered the bedroom as if he thought he should, he could have sat on the stool which is clearly depicted in one of the photographs of the inside of her room. His version that it was the complainant who had initiated the kissing, that she had loosened his belt and that she was a willing participant in this occurrence which culminated in sexual intercourse is improbable. It is so because it is hardly likely that a person that had just been through multiple seizures and had vomited on herself, and in particular her hair, would have developed an urge to engage in sexual intercourse in those circumstances. [28] Mr Price submitted further that it was improbable that the accused would have raped the complainant with the bedroom light on and the door unlocked and consequently his version should be accepted as reasonably possibly true. The flaw in this argument is that it is common cause that sexual intercourse occurred between them while the light was on and the door unlocked. Yet he knew that even on his version he was transgressing company policy in those circumstances. The probabilities in this regard therefore do not detract from the complainant’s version and consequently this factor does not enhance his version at all since if this event was consensual, the ever mindful accused would have taken the trouble of locking the door at heart when he took off his trousers. Furthermore, his evidence that he did not have a conversation about how he saved her life with the spoon cannot be true. Her knowledge of the significance of the spoon, which she saw in her room, begs the question as to how she got to know why it was in her room. His explanation that he thought that Gillson was referring to consensual intercourse with the complainant is disingenuous simply because he was confronted with the complaint of rape. If he had not committed rape then he could hardly have ‘expected’ to be confronted with such allegations. The accused was a poor witness. The rejection of his evidence as being improbable and not being reasonably possibly true cannot be faulted. There was no misdirection in arriving at that conclusion. [29] That however is not the end of the matter. It still remains for the State to discharge the onus it carries. As Maya JA stated at para [14] of Monageng v S [2009] I All SA 237 (SCA) – ‘[14] But whilst it is entirely permissible for a court to test an accused’s evidence against the probabilities, it is improper to determine his or her guilt on a balance of probabilities. The standard of proof remains proof beyond reasonable doubt, ie evidence with such a high degree of probability that the ordinary reasonable man, after mature consideration, comes to the conclusion that there exists no reasonable doubt that an accused has committed the crime.’ [30] In assessing whether the State has discharged the onus of proving its case against the accused beyond a reasonable doubt, it must consider all the evidence in arriving at a conclusion whether to convict or acquit an accused. In S v Van der Meyden 1999 (1) SACR 447 (WLD) at 449h – 450b, Nugent J said the following: ‘A court does not base its conclusion, whether it be to convict or to acquit, on only part of the evidence. The conclusion which it arrives at must account for all the evidence. Although the dictum of Van der Spuy AJ was cited without comment in S v Jaffer 1988 (2) SA 84 (C), it is apparent from the reasoning in that case that the Court did not weigh the 'defence case' in isolation. It was only by accepting that the prosecution witness might have been mistaken (see especially at 89J - 90B) that the Court was able to conclude that the accused's evidence might be true. I am not sure that elaboration upon a well-established test is necessarily helpful. On the contrary, it might at times contribute to confusion by diverting the focus of the test. The proper test is that an accused is bound to be convicted if the evidence establishes his guilt beyond reasonable doubt, and the logical corollary is that he must be acquitted if it is reasonably possible that he might be innocent. The process of reasoning which is appropriate to the application of that test in any particular case will depend on the nature of the evidence which the court has before it. What must be borne in mind, however, is that the conclusion which is reached (whether it be to convict or to acquit) must account for all the evidence. Some of the evidence might be found to be false; some of it might be found to be unreliable; and some of it might be found to be only possibly false or unreliable; but none of it may simply be ignored.’ This approach was followed and approved in S v Chabalala 2003 (1) SACR 134 (SCA) para 15. It was stated therein as follows: ‘The correct approach is to weigh up all the elements which point towards the guilt of the accused against all those which are indicative of his innocence, taking proper account of inherent strengths and weaknesses, probabilities and improbabilities on both sides and, having done so, to decide whether the balance weighs so heavily in favour of the State as to exclude any reasonable doubt about the accused’s guilt. The result may prove that one scrap of evidence or one defect in the case for either party (such as the failure to call a material witness concerning an identity parade) was decisive but that can only be an ex post facto determination and a trial court (and counsel) should avoid the temptation to latch on to one (apparently) obvious aspect without assessing it in the context of the full picture presented in evidence.’1 [31] Mr Price argued that the complainant was a single witness in regard to the material aspects involved in this event. He argued that the circumstances are such that the evidence of the complainant requires to be examined very carefully before it can be accepted so as to form a foundation by which the State could discharge the onus of proving the guilt of the accused beyond a reasonable doubt. He submitted that her evidence required to be corroborated. He correctly did not argue that this was more so because the matter at hand was one involving an alleged sexual violation (See: S v Jackson 1998 (1) SACR 470 (SCA)). 1 See also: S v Van Aswegen 2001 (2) SACR 97 (SCA) [32] Mr Price referred to inconsistencies in the complainant’s evidence when measured against the contents of the two statements she had previously made. He attacked her evidence on the basis that she resorted to an alleged confused state of mind at the material time in attempting to explain away these discrepancies. His submission in this regard is consistent with the version of the accused that the complainant was in fact conscious at the time and was alert to what she was doing and what was happening. [33] Save to say that absent an acceptable explanation for the discrepencies, the State might very well have had difficulty in discharging the required onus. The discrepencies referred to by Mr Price included matters such as her failure to mention certain aspects in either of her statements, such as where her panties were, where her brassiere was found, and so forth. In what follows, it is unnecessary to deal with the details of the contradictions referred to by Mr Price. [34] Mr Price also argued that if the complainant was indeed in a state of confusion, how is it possible that she able to remember certain aspects of what occurred to her that morning viz that it was the accused who was raping her, that she was unable to scream; how in this confused state she had the presence of mind to look for a condom; that she put on a brassiere just after being raped and that she had the presence of mind to check the time. [35] The explanation for her inability to testify about certain details is to be found in the evidence of Dr Spoudeas. Immediately prior to Dr Spoudeas’ evidence being lead, Mr Price objected to it being taken by way of video transmission. The court below ruled that application to do so be granted. He wisely did not raise that objection on appeal. What he did submit however is that the court below misdirected itself in having regard to her evidence because she had not examined the complainant after the incident. This submission is clearly wrong as it misconstrues the nature of the evidence of Dr Spoudeas. Dr Spoudeas did not suggest that her testimony was complainant specific about the rape. Her evidence was indeed of a clinical nature explaining the chemical reactions to the treatment of a brain tumour. Furthermore she testified to the effects of such treatment in particular the effects of essential hormones which generally control human life eg. sleeping and waking up. Of note is her evidence that the effects of alcohol intake by a person presenting with the ailment the complainant was treated for, was that the already dangerous levels of these important hormones and also the sugar levels, was exactly as the complainant described – experiencing violent vomiting and seizures, falling in and out of a conscious state, improving with time and after approximately 5 hours she would have been more alert than earlier, capable of better bodily feeling than earlier and capable of sporadic memory. Her memory would be blurry in regard to certain aspects of her experience while in regard to others, it would be non-existent and even further it would be quite clear. [36] The evidence of Dr Spoudeas was accepted as providing an understanding of the condition of the complainant and explains her reactions to the intake of alcohol. The court below was correct in accepting the evidence of Dr Spoudeas. Consequently, taking into consideration her evidence, it becomes clear that the complainant was still suffering from the effects of the intake of alcohol and in particular the seizures. She was clearly not in a condition to realise everything that was happening to her and hence her inability to give a clear account of events. She readily conceded that in the circumstances she had, in trying to understand what had happened to her, resorted to some reconstruction of events. However, what is significant is that from the time she felt the pain in her lower stomach until the time when the sexual intercourse ended and the accused left, she was awake and alert. While her memory might be blurred, she was not unconscious at the material time. Her version of the evening’s events prior to her being raped is corroborated by Sloan. Her inability to give a cohesive account of certain insignificant details when she was raped gels with the evidence of Dr Spoudeas. The court below who saw the complainant when she testified, found her to be a candid and truthful witness and the record certainly lends itself to that conclusion. There is no reason to conclude that her evidence is false or incorrect on the material aspects. Her evidence can therefore be relied upon as being satisfactory in all material respects. Taking a holistic view of all the evidence, it is clear that the State proved the guilt of the accused beyond a reasonable doubt and the appeal against the conviction falls to be dismissed. [37] I come now to the State’s appeal against the sentence. At the commencement of the trial, the accused was aware that in the event of a conviction, the State would seek to invoke s 51(2) of the Criminal Law Amendment Act 105 of 1997. The sub-section provides for the imposition of a minimum sentence of 10 years’ imprisonment if no substantial and compelling circumstances as envisaged in subsection 51(3), which would otherwise allow for a deviation of the prescribed sentence, are found to exist. [38] The evidence of State witness, Ms Smit, Neuro-Psychologist attached to the University College, London College, was also received by way of video-conference in terms of s 158 of Act 51 of 1977. Her evidence is relevant because Ms Smit was part of the team which treated the complainant in respect of her brain tumour. It seems that after the accused was convicted, Ms Smit was requested by the State to prepare and submit an updated report focussing on the rape of the complainant. Such evidence is undoubtedly relevant in considering whether substantial and compelling circumstances exists and, if so, in considering an appropriate sentence. [39] The personal circumstances of the accused which were taken into account by the court below are the following. At the time of sentencing he was a 30 year old male with a clean record. He is a university graduate having read for a Bachelors degree in Media Studies. He was married and his family and social circumstances were accepted as good. He was a high achiever at school both academically and in sport. He was a talented musician and is evidently an able leader. When he was employed at the Philharmonic Society in Port Elizabeth he was involved in teaching music in underprivileged communities. It also seems that he apologised for his indiscretion of having sexual intercourse with the complainant. The court below accepted that to this extent he had taken responsibility for the situation he finds himself in. [40] On the other hand, the accused was employed at the material time as a student co-ordinator and the 18 year old complainant, together with the other students, was placed in his trust and care. [41] Ms Smit having examined the complainant, testified that the complainant will suffer negatively from the rape, both on a long and short-term basis. She concluded that the complainant is putting up a veil of defence to protect herself against the full impact of the rape on her by repressing her emotional responses thereto and to an extent, was in a state of denial. According to Ms Smit, these protection techniques allow her to function with apparent ease in her day to day life but they stunt her ability to process the effect of the rape. She states that in repressing her emotions, the complainant becomes self- critical and has negative thoughts about herself. This is consistent with a cognitive response to her trauma and while they assist her on a day to day basis, they are destructive and have the distinct capability of affecting her negatively in the long-term. Ms Smit testified that the complainant regards this rape as a serious setback in her quest to build an independent life as a survivor of a life threatening illness. [42] Ms Smit stated that generally, the state of mind of victims of rape are not fully restored. Therapy and counselling may ameliorate the effect of the rape trauma but it cannot be completely undone. The complainant, she suggested, would require such therapy but added that she will continue to have long-term traumatic consequences. [43] It seems that the court below found that, (a) the accused had the ability to contribute to society; (b) that he was not an obvious threat to society; (c) the rape was not accompanied by additional violence; (d) there was no threat of violence during or after the rape and (e) this kind of conduct was not expected of a person of the character and background of the accused, taken cumulatively, constituted mitigation which would render the imposition of the minimum sentence of 10 years’ imprisonment an injustice, destructive of his person and would defeat the overriding interest of society to rehabilitate the offender back into society. In light hereof and the fact that the learned judge in the court below deviated from the prescribed minimum sentence, it is obvious that he found substantial and compelling circumstances to exist. There are two other factors which the learned judge in the court below mentioned viz that he was a first offender and that he had expressed some remorse to his mother in regard to his conduct. The court accepted that he took responsibility for the situation he found himself in. I will assume in his favour that these two factors were also considered as mitigating. [44] Ms Turner for the State contended that the court below had misdirected itself in taking into account as mitigating factors that (a) there was a lack of additional violence other than that inherently involved in the rape (b) regarding his character and his background as a mitigating factor and (c) the remorse attributed to the accused was not related to the crime but more self pity. [45] On the other hand Mr Price submitted that the court below had taken everything into account and that this court should be loathe to interfere therewith and punish the accused even more than he has already been. [46] The approach to substantial and compelling circumstances was dealt with in S v Malgas 2001 (1) SACR 469 (SCA). At para 25 Marais JA, writing for the court set out what has essentially become a guideline approach to sentences for listed offences as follows: ‘[25] What stands out quite clearly is that courts are a good deal freer to depart from the prescribed sentences than has been supposed in some of the preciously decided cases and that it is they who are to judge whether or not the circumstances of any particular case are such as to justify a departure. However, in doing so, they are to respect, and not merely pay lip service to, the Legislature’s view that the prescribed periods of imprisonment are to be taken to be ordinarily appropriate when crimes of the specified kind are committed. In summary – A. Section 51 has limited but eliminated the courts’ discretion in imposing sentence in respect of offences referred to in Part I of Schedule 2 (or imprisonment for other specified periods for offences listed in other part of Schedule 2). B. Courts are required to approach the imposition of sentence conscious that the Legislature has ordained life imprisonment (or the particular prescribed period of imprisonment) as the sentence that should ordinarily and in the absence of weighty justification be imposed for the listed crimes in the specified circumstances. C. Unless there are, and can be seen to be, truly convincing reasons for a different response, the crimes in question are therefore required to elicit a severe, standardised and consistent response from the courts. D. The specified sentences are not to be departed from lightly and for flimsy reasons. Speculative hypotheses favourable to the offender, undue sympathy, aversion to imprisoning first offenders, personal doubts as to the efficacy of the policy underlying the legislation, and marginal differences in personal circumstances or degrees of participation between co-offenders are to be excluded. E. The Legislature has however deliberately left it to the courts to decide whether the circumstances of any particular case call for a departure from the prescribed sentence. While the emphasis has shifted to the objective gravity of the type of crime and the need for effective sanctions against it, this does not mean that all other considerations are to be ignored. F. All factors (other than those set out in D above) traditionally taken into account in sentencing (whether or not they diminish moral guilt) thus continue to play a role; none is excluded at the outset from consideration in the sentencing process. G. The ultimate impact of all the circumstances relevant to sentencing must be measured against the composite yardstick ('substantial and compelling') and must be such as cumulatively justify a departure from the standardised response that the Legislature has ordained. H. In applying the statutory provisions, it is inappropriately constricting to use the concepts developed in dealing with appeals against sentence as the sole criterion. I. If the sentencing court on consideration of the circumstances of the particular case is satisfied that they render the prescribed sentence unjust in that it would be disproportionate to the crime, the criminal and the needs of society, so that an injustice would be done by imposing that sentence, it is entitled to impose a lesser sentence. J. In so doing, account must be taken of the fact that crime of that particular kind has been singled out for severe punishment and that the sentence to be imposed in lieu of the prescribed sentence should be assessed paying due regard to the bench mark which the Legislature has provided.’ [47] It is noteworthy that in part ‘D’, it is clearly stated that specified sentences should not be departed from lightly and for flimsy reasons. It further sets out which types of factors should be excluded from consideration. On the other hand, in part ‘E’, the approach also allows for all the factors traditionally considered in respect of sentence, to be included in the overall consideration in the sentencing process. The general approach as set out in Malgas found support and approval in S v Fatyi 2001 (1) SACR 485 (SCA) and has been followed since. [48] In this case, the lack of evidence that the accused did not have a propensity for such conduct is of no moment. While the legislature has essentially left it for the courts to deal with sentence, is has ordained prescribed sentences. In particular, it has provided a sentence for first offenders and consequently, being a first offender does not justify taking into account the fact that he may or may not have a propensity to commit a crime of this nature. Indeed sentence for second and subsequent offenders are specifically provided for in the subsection. The court below clearly misdirected itself in adopting this approach in regard to this factor. It similarly misdirected itself by concluding that the absence of additional violence constituted a mitigating factor. The fact of the matter is that rape is itself a violent intrusion of the rights of the victim. The lack of a threat of violence or aggression afterwards also does not favour the accused. Such factors if they existed, may well have lead to a harsher sentence. However their absence cannot serve to benefit the accused in deciding whether substantial and compelling circumstances exist. [49] It is not clear from the judgment whether the learned judge in the court below actually put all the factors, both aggravating and mitigating, into the melting pot as suggested in Malgas. [50] The accused, a stranger to the complainant, raped her soon after she had multiple seizures and when she was, at best for him, asleep. He did so when he was in a position of trust and indeed betrayed that trust. The complainant has been traumatised by the rape and is likely to have long-term residual effects as alluded to by Ms Smit. [51] On the other hand, it is true that the accused had the potential to contribute to society and that he has a good family and social background. However, the accused’s remorse was not directed at either the complainant or the actual crime itself. It was more a matter of apologising for being in the predicament. To the extent that it was used to favour the accused, it should not have been considered as a mitigating factor in the circumstances. [52] The mitigating factors and the aggravating circumstances, especially the residual effects on the complainant as explained by Ms Smit, ought to have been balanced against each other in assessing whether substantial and compelling circumstances existed or not. Even if all the mitigating and aggravating factors were balanced by the court below, measured against the guidelines as set out in Malgas, it was wrong to conclude that substantial and compelling circumstances do exist. Neither would the imposition of the prescribed minimum sentence be disproportionate to the offence itself and the circumstances in which this offence was committed. The court below therefore misdirected itself in concluding that substantial and compelling circumstances indeed exist and ought to have found that none existed. [53] The effect of this is that the accused must be sentenced in terms of s 51(2) of Act 105 of 1997. The minimum period of imprisonment in the case of a first offender, as is the accused, is 10 years. [54] The State contented itself with the minimum prescribed sentence of 10 years’ imprisonment and did not suggest a harsher period of imprisonment. The appeal against sentence therefore succeeds. [55] In the result, the following order is made: 1 The appeal against conviction is dismissed. 2 The appeal against sentence is upheld. 3 The sentence imposed by the court below is set aside and substituted with the following: ‘The accused is sentenced to 10 years’ imprisonment.’ R PILLAY JUDGE OF APPEAL Appearances: For Appellant: Mr T N Price (appearing pro bono) Instructed by Legal Aid South Africa, Grahamstown Legal Aid South Africa, Bloemfontein For Respondent: Ms N Turner Instructed by Director of Public Prosecutions, Grahamstown Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 03 June 2013 Status: Immediate 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. McLaggan v The State (084/13) [2013] ZACSA 92 (June 2013) The Supreme Court of Appeal (SCA) today dismissed an appeal from the Eastern Cape High Court, Grahamstown against a conviction of Iain Cameron McLaggan on one count of rape. The complainant, a British national, is a brain tumour survivor. She travelled to South Africa and commenced a wildlife programme at Shamwari Game Reserve in April 2010. The appellant was one of those to whom she was entrusted at the reserve. The treatment for the brain tumor caused a hormonal imbalance and the complainant consequently became susceptible to stress related reactions. As a result of consuming wine during a night out with fellow students and the appellant, she suffered seizures which rendered her unconscious at the time. The appellant returned to her room to which he had earlier carried her and raped her whilst she was recovering. In sentencing the appellant, the trial court found substantial and compelling circumstances which allowed it to deviate from the prescribed minimum sentence for this rape and it imposed a sentence of 8 years’ imprisonment. The State appealed against this finding. The SCA upheld the appeal by the State and found that no such substantial and compelling circumstances existed. The effect thereof was that the prescribed minimum sentence had to be imposed. The sentence was therefore altered to 10 years’ imprisonment.

2292

non-electoral

2009

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Case no: 603/08 FRED KRUGER NO Appellant and DENISE EMMERENTIA GOSS First Respondent MASTER OF THE HIGH COURT Second Respondent ________________________________________________________________ Neutral citation: Kruger v Goss and another (603/08) [2009] ZASCA 105 (21 September 2009) CORAM: NAVSA, BRAND and PONNAN JJA HEARD: 14 September 2009 DELIVERED: 21 September 2009 CORRECTED: SUMMARY: Rehabilitative maintenance order ─ claim against deceased estate ─ s 7(2) of the Divorce Act 70 of 1979 and the common law discussed ─ claim held not to be enforceable. ________________________________________________________________ ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: High Court, Pretoria (Hartzenberg J sitting as court of first instance). 1. The appeal is upheld with costs. 2. The order of the court below is set aside and substituted as follows: ‘The application is dismissed with costs.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ NAVSA JA (BRAND and PONNAN JJA concurring): [1] The question in this appeal is whether an order for rehabilitative maintenance, pursuant to a decree of divorce, is enforceable by a spouse against her former husband’s deceased estate. Background [2] The respondent, Ms Denise Emmerentia Goss, and Mr Fred Loll Stephanus Kruger married each other on 23 March 1988. The marriage was out of community of property with the exclusion of the accrual system as contemplated in Chapter 1 of the Matrimonial Property Act 88 of 1984. [3] Approximately three and a half years later they were divorced by order of the Pretoria High Court (Hartzenberg J). The divorce order was granted after a trial lasting a week. The respondent had no capital claim against her former husband and had restricted her claim to one for rehabilitative maintenance. The relevant part of the order reads as follows: ‘ “2. THAT the Plaintiff is to pay rehabilitative maintenance to the Defendant as follows: 2.1 R8 000-00 per month for the months of October, November and December 2003; 2.2 R6 000-00 per month for the next 57 months; 2.3 All payments are to be paid on or before the 3rd day of each month; 2.4 If the Defendant becomes employed and earns an income, the Plaintiff will not be entitled to advance that income as changed circumstances for purposes of an alteration of the maintenance order.” ’ [4] Subsequent to the divorce proceedings and the order referred to above, Mr Kruger, to whom I shall hereafter refer as the deceased, duly and punctually paid rehabilitative maintenance to the first respondent until 31 August 2006. He passed away on 29 September 2006 due to natural causes. By this time the deceased had paid 33 of the envisaged 57 monthly instalments. [5] On 13 February 2007 the deceased’s son, Mr Fred Kruger, was appointed executor of the latter’s estate. The first respondent lodged a claim against the deceased’s estate for the remainder of the rehabilitative maintenance, which she considered due to her. This amounted to R144 000, which was calculated as follows: 24 months x R6 000. The executor, after taking legal advice, rejected the claim. [6] Not surprisingly, this led to the litigation culminating in the present appeal. During March 2008 the first respondent launched application proceedings in the Pretoria High Court against Mr Kruger, in his capacity as executor of the deceased’s estate. She sought an order declaring that the estate was liable to pay her rehabilitative maintenance. More specifically, she sought an order for payment of the amount of R144 000, with interest a tempore morae. [7] As fate would have it the matter once again came before Hartzenberg J, who granted the relief sought by the first respondent and ordered the executor, the appellant herein, to pay her costs. [8] It is against that order, with the leave of the court below, that the present appeal is directed. Conclusions [9] Section 7 of the Divorce Act 70 of 1979 provides for the division of assets and the maintenance of parties. The relevant part of s 7(2) provides that a court, in the absence of an agreement, may, ‘having regard to the existing or prospective means of each of the parties, their respective earning capacities, financial needs and obligations, the age of each of the parties, the duration of the marriage, the standard of living of the parties prior to the divorce, their conduct in so far as it may be relevant to the break-down of the marriage, … and any other factor which in the opinion of the court should be taken into account, make an order which the court finds just in respect of the payment of maintenance by the one party to the other for any period until the death or remarriage of the party in whose favour the order is given, whichever event may first occur.’ (My emphasis). [10] As can be seen, the power to grant maintenance is confined not to the duration of the life of the spouse liable to pay, but rather to the life of the beneficiary spouse. This legislative provision should, however, not be viewed in isolation. The common law viewed the duty of support which spouses owed each other, and consequently the liability for maintenance, as incidents of their matrimonial relationship. Termination of the relationship by death brought that duty to an end.1 [11] The Maintenance of Surviving Spouses Act 27 of 1990 (the MSSA) allowed widows and widowers, in specified circumstances, to be maintained from the estates of their late partners.2 Up until the promulgation of the MSSA there was no such entitlement. The MSSA was limited legislative intervention, altering 1 See Glazer v Glazer NO 1963 (4) SA 694 (A). 2 Section 2(1) provides: ‘If a marriage is dissolved by death after the commencement of this Act the survivor shall have a claim against the estate of the deceased spouse for the provision of his reasonable maintenance needs until his death or remarriage in so far as he is not able to provide therefor from his own means and earnings.’ the common law to the extent set out therein. The common law rule remained otherwise untouched. [12] It can hardly be argued that before the MSSA came into being, divorced persons, whose erstwhile spouses had died, were in a more favourable position than widowed ones, giving them ‘rights against the estates of people no longer married to them at the time of death which widowed spouses did not enjoy against the estates of those to whom they were then still married.’3 [13] I agree with the conclusion reached by Didcott J in Hodges v Coubrough,4 that s 7(2) of the Divorce Act cannot be construed so as to alter the common law position reflected in para 10 above. The following passage from that case (at 64E-F) is worth noting: ‘Had [the legislature] meant something so surprising, something so startling, it would surely have spelt out the meaning. It would hardly have left such to be conveyed by the sidewind of generally worded provisions which, while accommodating the idea linguistically, dealt with it obliquely and elliptically.’ [14] The court below held that s 7(2) was inapplicable, in that, rehabilitative maintenance is ‘an animal of its own’, and if ordered in the terms referred to in para 3, the estate of ‘the maintaining spouse’ is liable to pay the outstanding maintenance. On that basis the court below granted the first respondent the relief sought. [15] Counsel on behalf of the first respondent rightly conceded before us that if rehabilitative maintenance is to be regarded as a species of maintenance the appeal should succeed. Rehabilitative maintenance is most certainly a species of maintenance. I cannot imagine how rehabilitative maintenance can be maintenance of a kind that does not fall within the ambit of s 7(2) of the Divorce Act. For this reason alone the appeal should succeed. There are further 3 Per Didcott J in Hodges v Coubrough 1991 (3) SA 58 (D & CLD) at 64B-E. 4 Op cit 64E-G. considerations that militate against the conclusion reached by the court below, which are alluded to hereafter. [16] Of course a spouse is free to agree to bind his/her estate to pay maintenance after death. That is not what occurred in the present case. To allow maintenance claims of the kind encountered here against deceased estates might have all sorts of undesirable consequences. The legitimate claims to maintenance of minor children might be diminished or excluded. And, the rights of beneficiaries might be implicated. Section 3(b) of the MSSA provides that a claim for maintenance of a surviving spouse shall have the same order of preference against the estate of the deceased spouse as a claim for maintenance of a dependant child of such deceased person and that in the event of competing claims, each shall, if necessary be reduced proportionately. Theoretically, a claim for maintenance such as the present one could compete with the claim of a surviving spouse and with claims by dependant children and beneficiaries. In the absence of legislative regulation the permutations and uncertainties abound. [17] Furthermore, maintenance is always relative to the means and needs of the respective spouses. In the present case the earning capacity of the first respondent was held not to be a changed circumstance on which the deceased could rely to seek a variation of the maintenance order. The propriety of that aspect of the order appears to be doubtful. But that issue is not before us. In any event, that portion of the order did not preclude the deceased from approaching a maintenance court to seek a variation based on a diminution in or lack of means. Remarriage was not excluded. To subject a deceased estate to assessments of this kind is not only undesirable but appears to me to offend against first principles. [18] If there is to be intervention of any kind it should be by the legislature on an informed and well-considered basis. For the moment the legislature is content with s 7(2) of the Divorce Act. So too, should we be. [19] The following order is made: 1. The appeal is upheld with costs. 2. The order of the court below is set aside and substituted as follows: ‘The application is dismissed with costs.’ _________________ M S NAVSA JUDGE OF APPEAL APPEARANCES: For Appellant: M C Erasmus SC Instructed by Du Plessis Attorneys Sandton Symington & De Kok Bloemfontein For Respondent: L C Matthysen Instructed by Chris Kotzé & Partners c/o Hendriëtte Müller Attorneys Pretoria McIntyre & Van Der Post Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 21 September 2009 Status: Immediate 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 On 21 September 2009 the Supreme Court of Appeal handed down judgment in Fred Kruger NO v Denise Emmerentia Goss and another. It overturned a judgment of the Pretoria High Court which held that an order for rehabilitative maintenance pursuant to a decree of divorce is enforceable by a wife against her former husband’s deceased estate. The first respondent, Ms Denise Emmerentia Goss, and Mr Fred Loll Stephanus Kruger married each other on 23 March 1988. The marriage was out of community of property with the exclusion of the accrual system as contemplated in Chapter 1 of the Matrimonial Property Act 88 of 1984. Approximately three and a half years later they were divorced by order of the Pretoria High Court (Hartzenberg J). The divorce order was granted after a trial lasting a week. The respondent had no capital claim against her former husband and had restricted her claim to one for rehabilitative maintenance. The court granting the divorce order made an order, inter alia, that Mr Kruger pay Ms Goss R6 000 per month for 57 months. Subsequent to the divorce proceedings and the order referred to above, Mr Kruger duly and punctually paid rehabilitative maintenance to the first respondent until 31 August 2006. He passed away on 29 September 2006 due to natural causes. By this time he had paid 33 of the envisaged 57 monthly instalments. After his death the deceased’s son, Mr Fred Kruger, was appointed executor of his estate. Ms Goss lodged a claim against the deceased’s estate for the remainder of the rehabilitative maintenance, which she considered due to her. This amounted to R144 000, which was calculated as follows: 24 months x R6 000. The executor, after taking legal advice, rejected the claim. During March 2008 the first respondent launched application proceedings in the Pretoria High Court against the executor. She sought an order declaring that the estate was liable to pay her rehabilitative maintenance. More specifically, she sought an order for payment of the amount of R144 000 together with interest. The Pretoria High Court granted the relief sought by her and also ordered the executor, the appellant in this case, to pay her costs. The SCA, with reference to s 7(2) of the Divorce Act 70 of 1979, and after considering the common law, held that the duty of support which spouses owe each other and consequently the liability for maintenance are incidents of their matrimonial relationship. Termination of that relationship by death brought the duty to an end. The SCA held that the court had erred in enforcing the first respondent’s claim against her former husband’s deceased estate. It noted that a spouse is free to agree to bind his or her estate to pay maintenance after death but that is not what occurred in the present case. To allow claims of this kind might have all sorts of undesirable consequences. The legitimate claims to maintenance of minor children might be diminished or excluded. And the rights of beneficiaries may be implicated. A claim such as the one in question could compete with the claim of the surviving spouse and with claims by dependant children and beneficiaries. In the absence of legislative regulation the permutations and uncertainties abound. The appeal was upheld with costs.

2671

non-electoral

2014

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 767/2013 In the matter between: MEADOW GLEN HOME OWNERS ASSOCIATION FIRST APPELLANT MEADOW RIDGE HOME OWNERS ASSOCIATION SECOND APPELLANT MORELETA PARK EXTENSION 44 RESIDENCE ASSOCIATION THIRD APPELLANT MOOIKLOOF EIENAARSVERENIGING FOURTH APPELLANT WOODHILL HOME OWNERS ASSOCIATION FIFTH APPELLANT and CITY OF TSHWANE METROPOLITAN MUNICIPALITY FIRST RESPONDENT FANIE FENYANI SECOND RESPONDENT Neutral citation: Meadow Glen Home Owners Association v City of Tshwane Metropolitan Municipality (767/2013) [2014] ZASCA 209 (1 December 2014) Coram: CACHALIA, WALLIS and ZONDI JJA and SCHOEMAN and DAMBUZA AJJA Heard: 11 November 2014 Delivered: 1 December 2014 Summary: Contempt of court — suspended sentence — whether there was substantial compliance with court order — wilful default required — appropriateness of incarceration of municipal official for failure by municipality to comply with court order — whether contempt of court appropriate means for enforcing a structural order _______________________________________________________________ ORDER ________________________________________________________________ On appeal from: North Gauteng High Court, Pretoria (Kubushi J sitting as court of first instance): The costs order in the high court is set aside and replaced with an order that each party pay their own costs. The appeal is otherwise dismissed Each party is to pay their own costs of appeal. ________________________________________________________________ JUDGMENT ________________________________________________________________ Wallis JA and Schoeman AJA (Cachalia and Zondi JJA and Dambuza AJA concurring) [1] Since some time prior to 2006, a property owned by the City of Tshwane Metropolitan Municipality (the Municipality) in Moreleta Park has been occupied by poor people who have constructed rudimentary homes for themselves out of corrugated iron, wood, plastic and similar materials. They call the settlement Woodlane Village. The appellant home owner associations, have concerns arising from the proximity of this settlement to their own properties. They wish to prevent it from expanding from the present nearly 900 homes and to arrive at a situation where a more formal residential area is established for the residents of the settlement. To that end they have instituted various proceedings against the Municipality contending that the settlement exists in conflict with town planning regulations and seeking broad-ranging relief in the form of what have come to be called structural orders.1 Several such orders have been granted in their favour against the Municipality, usually by consent. All have lacked the usual feature of such orders that the process set out therein is supervised by means of reports and the court retaining jurisdiction to deal further with the case. [2] The appellants have consistently complained that the Municipality makes no proper attempt to comply with the terms of these orders. This appeal arises from an attempt by them to have Mr Fanie Fenyani, the Municipality‘s Director: Housing Resource Management, committed to prison for contempt of court arising from an alleged failure by the Municipality to comply with one of those orders. The attempt failed before Kubushi J in the high court and the appeal is with her leave. [3] A number of issues arise in the appeal. First, there is the fact that the Municipality consented to the court making the orders giving rise to a dispute and implicitly agreed that it had not complied with those orders. In a country based on the rule of law that is a situation that cannot be countenanced particularly when it involves an organ of state at the third tier of government. But whether the incarceration of one of its employed officials is the way in which to address this problem lies at the heart of the case. Second, we must consider the basis upon which courts are asked to make these structural orders and whether their terms are sufficiently definite to form a foundation for a citation for contempt. Third, one must question whether the blunt instrument of contempt of court is the appropriate means of securing enforcement of orders directed at resolving complex social issues. Those issues in this case involve the provision of housing and other basic amenities for the desperately poor and vulnerable, while being sensitive to the interests of those more fortunate in our 1 They are sometimes referred to as structural interdicts but that is often a misnomer in relation to an order that combines elements of an interdict and a mandatory order. society, whose interests in terms of health, security and the protection of their property are also valued and protected under the Constitution. Background [4] It is convenient to commence a description of relevant events on 31 March 2006, when the Municipality, together with other public entities, unlawfully evicted the occupants from the area in and around this property and destroyed their homes. This court, in the matter of Tswelopele Non-Profit Organisation v City of Tshwane Metropolitan Municipality,2 inter alia ordered the municipality: ‗… to construct for those individual applicants who were evicted on 31 March 2006, and who still require them, temporary habitable dwellings that afford shelter, privacy and amenities at least equivalent to those that were destroyed, and which are capable of being dismantled, at the site at which their previous shelters were demolished.‘ [5] Thereafter the settlement was established in Woodlane Village within a demarcated, fenced area. From an early stage there appear to have been attempts to limit the number of residents and prevent the expansion of the settlement. This included issuing residents with identity cards to determine their entitlement to reside in Woodlane Village. Whatever the Municipality did in this regard it did not satisfy the appellants. They sought and obtained a number of court orders. Those that are relevant to the present matter are the following. [6] On 21 August 2009 Hartzenberg J ordered by consent: ‗1. … 2. THAT the first respondent [the municipality] maintain the fence which has been erected around the demarcated area in a condition suitable to prevent free access into and egress from the demarcated area, save at the two existing gates. 2 Tswelopele Non-Profit Organisation and Others v City of Tshwane Metropolitan Municipality and Others 2007 (6) SA 511 (SCA). 3. THAT the first respondent [the municipality] employ and maintain the presence of a security officer on a full-time basis at each of the two gates which permit access into and egress from the demarcated area in order with effect from 1 September 2009 to prevent any persons, other than those to whom the first respondent has already issued access cards in respect of the demarcated area as at date of this order, to enter upon the demarcated area; provided that persons wishing to visit occupiers of the demarcated area may be allowed reasonable temporary access. 4. THAT the first respondent takes all such steps as are reasonable and necessary to prevent any persons other than those to whom the first respondent has already issued access cards in respect of the demarcated area as at date of this order, to enter upon or take occupation of the demarcated area. 5. THAT the first respondent continue to provide sufficient potable water and a sufficient number of portable chemical toilets and a sufficient number of refuse bins (which are to be emptied by the first respondent on a regular basis) for the use of the persons who occupy the demarcated area. 6. THAT the first respondent is interdicted from allocationing (sic) to any person any stand in the demarcated area, other than the 916 stands already allocated. 7. THAT the first respondent is interdicted with effect from 1 September 2009 from permitting any persons, other than those who already occupy one of the 889 shacks in the demarcated area and in respect of whom the first respondent has issued access cards in respect of the demarcated area as at date of this order, to enter upon or occupy the demarcated area, provided that persons wishing to visit occupiers of the demarcated area may be allowed reasonable temporary access. 8. … 9. … 10. THAT the applicants and the fourth respondent shall within one month of date of this order nominate not more than two persons each to serve on a committee with which the first respondent shall consult in regard to the plan, as contemplated in paragraph 8 above, and which committee shall monitor the implementation of the plan and compliance by the first respondent with the terms of this order. 11. … 12. THAT the applicants, the first respondent and the fourth respondent shall be entitled, on good cause shown, to apply to the Court on the same papers, supplemented as may be necessary, for the variation or amplification of any of the terms of this order.‘ [7] No doubt when it agreed to an order in these terms the Municipality intended to carry it out. However, the generality of its terms was such as would, almost inevitably, lead to disputes between the Municipality and the appellants. Some of these should be highlighted. What, for example, was meant by the obligation in para 1 to maintain the fence in a condition to prevent free access to the settlement? When counsel for the appellants was asked this in the course of argument his answer was that it should be patrolled throughout the day and any breaks in the fence repaired within a day of them occurring. Counsel for the Municipality contended for a far less onerous regime. If the Municipality employed the requisite number of security guards specified in para 2, would it nonetheless be in breach of the order if they were slack in performing their duties? What steps would be reasonable and necessary in order to prevent people from entering and occupying the settlement? There was simply no clear- cut answer to these questions. Accordingly the terms of the order provided fertile grounds for future disputes and that is precisely what happened. [8] Having said that, the Municipality consented to the court making an order in those general terms. That obliged it to make serious good faith endeavours to comply with it. That is what we are entitled to expect from our public bodies. If they experienced difficulty in doing so then they should have returned to court seeking a relaxation of its terms. If there was a dispute between them and the appellants regarding the scope of the order and what needed to be done to comply with it, it was not appropriate for the Municipality to wait until the appellants came to court complaining of non-compliance in contempt proceedings. It should have taken the initiative and sought clarification from the court. Its failure over a protracted period to take these steps is to be deprecated. [9] On 15 September 2011, and by consent, Muller AJ ordered that Mr Fenyani be committed to imprisonment for a period of one month for contempt for failing to comply with the order granted in this matter by Hartzenberg J on 21 August 2009. This committal order was suspended on condition that the Municipality complied with paragraphs 2, 3 and 4 of that order pending the final determination of an application to amend and supplement it. The paragraphs relevant to the suspension related to the maintenance of the fence; the employment and presence of security guards at the two gates of the demarcated area; the control of the gates to restrict entrance into and egress from the property; and finally to prevent the occupation of the property or access of persons who were not in possession of access cards. [10] On 5 June 2012 Van der Byl AJ substantially varied the order of Hartzenberg J, and in the course of doing so amended the conditions of the suspension order. He ordered that the order for committal to imprisonment imposed on Mr Fenyani be further suspended on condition that the Municipality complied with paragraphs 2-7, of the order by Hartzenberg J. The order of Van der Byl AJ continued to oblige the Municipality to provide basic services to the occupiers of the demarcated area; to ensure the Municipality did not allocate further stands to any other person within the demarcated area; and to prohibit the entry of persons without access cards who were not occupiers of the 889 shacks. However, it went further in that it obliged the Municipality to establish a township in respect of the area of the settlement and adjacent land; to allocate serviced residential erven to certain residents (described as ‗qualified persons‘) and to bring proceedings to evict the remaining residents (described as unlawful occupiers). If a township was not established by 30 November 2013, within about 18 months of the order, they were obliged to evict everyone from the settlement. How it was thought that this was to be achieved in the light of the established jurisprudence of this Court3 and the Constitutional Court4 in regard to evictions is difficult to see. Furthermore, it is difficult to see on what basis, 3 City of Johannesburg v Changing Tides 74 (Pty) Ltd and Others 2012 (6) SA 294 (SCA) and Ekurhuleni Metropolitan Municipality and Another v Various Occupiers, Eden Park Extension 5 2014 (3) SA 23 (SCA). 4 City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd and Another 2012 (2) SA 104 (CC). The leading cases are collected in footnote 127 in Head of Department, Department of Education, Free State Province v Welkom High School and Others 2014 (2) SA 228 (CC). consistent with a proper appreciation of the separation of powers,5 it was permissible for a court to order the Municipality to establish a township or evict people to whom it owed obligations to provide access to housing. However that is typical of the problems that these orders posed. [11] Matters came to a head when in November 2012 the appellants brought an application for the committal of Mr Fenyani to prison for a period of one month, thereby seeking the implementation of the suspended sentence imposed by Muller AJ and extended by Van der Byl AJ. The application was based on the Municipality‘s alleged failure to comply with paragraphs 2 and 3 of the order by Hartzenberg J, in that the fence was not maintained and the security guards that were stationed at the gates, did not monitor the persons entering and exiting the property. As noted above the application failed and this appeal is the result. [12] The events giving rise to the application happened some time ago. Accordingly, this court requested affidavits from the parties in the following terms: ‗1 The Tshwane Municipality is to deliver an affidavit by 31 October 2014 deposed to by the municipal manager, setting out in detail the steps it has taken to comply with the order of Hartzenberg J, as amended by the order of Van der Byl AJ, since the delivery of its answering affidavit in the present proceedings. The affidavit must identify all officials charged with responsibility for securing compliance with the order and their superiors responsible for ensuring that they comply with their obligations in that regard. 2 The Appellants are to deliver an affidavit by 31 October 2014 detailing any respects in which they say (if at all) that there has been further or continued non-compliance with that order since the delivery of their replying affidavit in the present proceedings. 3 Both parties are to deliver supplementary heads of argument, no longer than 10 pages in extent, on the source, nature and extent of the Court's power to enforce orders ad factum praestandum, such as the one in this case, by way of committal of an official of a local 5 National Treasury and Others v Opposition to Urban Tolling Alliance and Others 2012 (6) SA 223 (CC) paras 63-71. authority arising from the local authority's failure to comply with the terms of such an order. The heads must deal with the appropriateness of committal as a remedy in this type of case and whether in our constitutional dispensation it is open to the courts to grant such an order. The parties are referred to Nyathi v MEC for Department of Health, Gauteng & another 2008 (5) SA 94 (CC) paras 75, 76 and 78.‘ [13] The municipal manager of the Municipality and a director of the first appellant deposed to affidavits. Further heads of argument were filed. None of the parties addressed the question of the ‗appropriateness of committal as a remedy in this type of case and whether in our constitutional dispensation it is open to the courts to grant such an order‘, or referred to Nyathi. They did, however, provide a considerable amount of further information about what had occurred in the interim. Consistent with the stand-off that has characterised their relationship, they disagreed about the nature and extent of, and reasons for, the problems. The appellants contended in vigorous terms that the Municipality was guilty of on-going non-compliance and that the Municipality had ‗no respect for the orders granted‘. For its part the Municipality complained that the problems with the fence were due to residents breaking it at a particular point in order to obtain easier access to their homes and that the access cards given to residents had been duplicated and forged so that the security guards could not do what was expected of them. [14] These further affidavits revealed that there had been further and subsequent court proceedings. On 3 February 2014 Webster J issued an order (again by consent). The salient terms were: ‗1. … 2. On or before 28 February 2014 the First Respondent [the municipality] shall repair the fence around the demarcated area in a condition suitable to prevent free access into and egress from the demarcated area; and thereafter maintain such fence in good order. 3. The First Respondent [the municipality] shall from date of this order employ and maintain the presence of 8 security officers on a full time basis, at the demarcated area working in two shifts with each shift having four security guards present. These security guards will patrol the demarcated area on a 24 hour basis, which shall include the monitoring of the fence and to permit access into and egress from the demarcated area solely to qualified persons and to prevent access into and egress from the demarcated area of and persons not qualified [or] entitled to reside within the demarcated area as well as occasional trespassers.‘ [15] This order led to another contempt of court application. On 2 April 2014 Pretorius J found the municipality and Mr Fenyani guilty of contempt of court. They were ordered to pay a combined fine of R60 000, which was suspended on condition that both the Municipality and Mr Fenyani comply with the orders of Webster J within 30 days. As Mr Fenyani had not hitherto been under any personal obligation to comply with the earlier orders and it was manifest that he did not have it within his power to comply with many of their provisions, that was a remarkable extension of his potential liability. According to the affidavit filed on behalf of the appellants, the Municipality has not complied with all the conditions of the suspension of the order of Pretorius J. Contempt of court [16] Although some punitive element is involved, the main objectives of contempt proceedings are to vindicate the authority of court and coerce litigants into complying with court orders. The foundation and bases for a conviction of contempt of court have been authoritatively set out in Fakie NO v CCII Systems (Pty) Ltd:6 ‗To sum up: (a) The civil contempt procedure is a valuable and important mechanism for securing compliance with court orders, and survives constitutional scrutiny in the form of a motion court application adapted to constitutional requirements. (b) The respondent in such proceedings is not an ―accused person‖, but is entitled to analogous protections as are appropriate to motion proceedings. 6 Fakie NO v CCII Systems (Pty) Ltd 2006 (4) SA 326 (SCA) para 42. (c) In particular, the applicant must prove the requisites of contempt (the order; service or notice; non-compliance; and wilfulness and mala fides) beyond reasonable doubt. (d) But, once the applicant has proved the order, service or notice, and non-compliance, the respondent bears an evidential burden in relation to wilfulness and mala fides: Should the respondent fail to advance evidence that establishes a reasonable doubt as to whether non- compliance was wilful and mala fide, contempt will have been established beyond reasonable doubt. (e) A declarator and other appropriate remedies remain available to a civil applicant on proof on a balance of probabilities.‘ [17] The goal of a suspended sentence in contempt of court proceedings bears some resemblance to a suspended sentence imposed in terms of the Criminal Procedure Act 51 of 1977: ‗A suspended sentence is generally used as a weapon of deterrence against the reasonable possibility that a convicted person may again fall into the same error (or at least one substantially similar).‘7 In other words there is the element of coercion to compel the transgressor to comply with the court order. [18] Furthermore, in Fakie NO Cameron JA stated that:8 ‗… there is no true dichotomy between proceedings in the public interest and proceedings in the interest of the individual, because even where the individual acts merely to secure compliance, the proceedings have an inevitable public dimension - to vindicate judicial authority. Kirk-Cohen J put it thus on behalf of the Full Court: ―Contempt of court is not an issue inter partes; it is an issue between the court and the party who has not complied with a mandatory order of court.‖ [Federation of Governing Bodies of South African Schools (Gauteng) v MEC for Education Gauteng 2002 (1) SA 660 at 673D-E] Elaborating this, Plasket J pointed out in the Victoria Park Ratepayers case [(511/03) [2003] ZAECHC 19 (11 April 2003)] that contempt of court has obvious implications for the effectiveness and legitimacy of the legal system and the legal arm of government: There is 7 S v Gardener & another 2011 (1) SACR 570 (SCA) para 75; see also S v Beyers 1968 (3) SA 70 (A) at 76E-G. 8 Para 38. thus a public interest element in every contempt committal. He went on to explain that when viewed in the constitutional context ―it is clear that contempt of court is not merely a mechanism for the enforcement of court orders. The jurisdiction of the Superior Courts to commit recalcitrant litigants for contempt of court when they fail or refuse to obey court orders has at its heart the very effectiveness and legitimacy of the judicial system … That, in turn, means that the Court called upon to commit such a litigant for his or her contempt is not only dealing with the individual interest of the frustrated successful litigant but also, as importantly, acting as guardian of the public interest.‖' [19] In Fakie the court was concerned with the onus of proof in cases of civil contempt. It held that an order could only be made on proof of the contempt on the criminal standard of proof beyond a reasonable doubt. We think it follows inevitably that bringing a suspended order of committal into operation requires proof of a wilful breach of the conditions of suspension to a similar standard. Was that standard met in this case? One of the difficulties we face is that the committal order in relation to Mr Fenyani was made by consent. We accordingly do not know on what factual basis the order was made. Indeed we do not even know whether the two acting judges who made these orders formed an independent view on the subject. Consent orders are not usually the subject of extended judicial scrutiny in the environment of a busy motion or opposed application court. Whilst it would perhaps go too far to say that a contempt order cannot be made by consent, it will ordinarily be desirable for the judge to be satisfied that there is adequate proof of the contempt and to set out, albeit briefly, the nature and extent of the contempt and the reasons for suspending the order. That will enable a court that is subsequently asked to bring the order into operation to understand fully the case before it. That was not possible in this case. The citation of Mr Fenyani [20] A further difficulty is that we do not know on what basis Mr Fenyani became the subject of this order in the first place. There is a disquieting letter in the supplementary affidavits in which the attorneys representing the appellants wrote to the Municipality‘s attorneys, recording that they understood that Mr Fenyani was no longer in the employ of the Municipality and asking that they ‗nominate a successor in title‘ to Mr Fenyani. The clear inference is that Mr Fenyani was simply the nominee of the Municipality to be the scapegoat for any shortcoming in its compliance with the order of Hartzenberg J. If that is so, it is necessary to say immediately that there is no basis in our law for orders for contempt of court to made against officials of public bodies, nominated or deployed for that purpose, who are not themselves personally responsible for the wilful default in complying with a court order that lies at the heart of contempt proceedings. [21] Mr Fenyani is the Director: Housing Resource Management of the Municipality. According to the supplementary affidavit by the municipal manager, he is the person responsible for seeing to the maintenance of the fence and the provision of basic services. The other obligations of the Municipality, brought about by the various court orders, must be performed and attended to by other officials. However, according to the conditions attached to the suspension of the order for his imprisonment he would also be subject to incarceration if the Municipality did not, inter alia, take the necessary steps to prevent people other than those with access cards entering the demarcated area; issue and deliver access cards; bring eviction proceedings against all persons on the property; and if the Municipality were to fail to establish and proclaim a ‗… township with serviced residential erven … in terms of the Town Planning and Townships Ordinance 1986 by no later than 30 November 2013‘.9 According to the 9 Paragraph 2 of the order of Van der Byl AJ. affidavit by the municipal manager, it is the ‗land invasion department‘ of the Municipality that should ensure that no further residential units are erected or added to existing ones within the demarcated area. In similar vein, it is the Director: Metro Police who is responsible for the control of access and the appointment of security officers. Mr Fenyani is not responsible for the appointment of security guards but under this order he is nevertheless held accountable for the non-compliance of others with those duties. [22] On that ground alone the imprisonment of Mr Fenyani for the inadequacies in the Municipality‘s compliance with the order of Hartzenberg J, a non-compliance that, notwithstanding the difficulty of knowing precisely what they had to do to comply with it, they acknowledged when the consent contempt order was granted, would be inappropriate. We do not hesitate to endorse what Nugent JA said in this court in Kate,10 that ‗there ought to be no doubt that a public official who is ordered by a court to do or to refrain from doing a particular act, and fails to do so, is liable to be committed for contempt, in accordance with ordinary principles‘. However, it must be clear beyond reasonable doubt that the official in question is the person who has wilfully and with knowledge of the court order failed to comply with its terms. Contempt of court is too serious a matter for it to be visited on officials, particularly lesser officials, for breaches of court orders by public bodies for which they are not personally responsible. [23] There are numerous legislative provisions regarding the person or persons responsible for the administration of local authorities. Section 82 of the Local Government: Municipal Structures Act 117 of 1998 determines that the municipality must appoint a municipal manager as the person responsible for the administration of the municipality and such person will also be the accounting 10 MEC, Department of Welfare, Eastern Cape v Kate 2006 (4) SA 478 (SCA) para 30. officer of the municipality. In terms of s 56(3) of the same Act, the executive mayor, in performing his duties must monitor the management of the municipality‘s administration in accordance with the direction of the municipal council (s 56(3)(d)) and oversee the provision of services to communities in the municipality in a sustainable manner (s 56(3)(e)). Section 54A of the Local Government: Municipal Systems Act 32 of 2000 also provides that the municipal council must appoint a municipal manager as the head of administration of the municipal council. Furthermore, s 55 sets out the responsibilities of the municipal manager as head of the administration, subject to the policy directions of the municipal council. Section 55(1)(b) determines that the municipal manager is responsible and accountable for the management of the municipality‘s administration. Section 60 of the Local Government: Municipal Finance Act 56 of 2003 provides that the municipal manager is the accounting officer of the municipality. [24] From the abovementioned provisions it is clear that the municipal manager is, so far as the officials of a municipality are concerned, the responsible person tasked with overseeing the implementation of court orders against the municipality. The municipal manager would know, as the accounting officer, what is feasible and what is not. The municipal manager cannot pass responsibility for these administrative duties to a manager or director who is not directly accountable in terms of their duties. It is unacceptable that a person is ‗selected‘ by the municipality to be liable for imprisonment, when that person is clearly not the one who has control over all the facets and terms of the order and it is clear that they are being made the scapegoat. The municipal manager is the official who is responsible for the overall administration of the municipality and the logical person to be held responsible. Even if, as must necessarily be the case, the municipal manager delegates tasks flowing from a court order to others it remains his or her responsibility to secure compliance therewith. It may be that certain of the political office bearers may also be liable for a contempt but it is unnecessary to traverse the possible ambit of such responsibility here. Was there non-compliance? [25] The appellants‘ approach to this matter was to take the order as their starting point and then seek to establish that the conditions on which the order had been suspended had not been fulfilled. There is certainly justification in the evidence for many of their complaints. It is clear, for example, that the damage to the fence is a persistent problem. Under those circumstances it was argued, on behalf of the appellants, that the municipality is required to inspect the fence and effect repairs daily. That seems excessive but it can be accepted that weekly inspections were considered reasonable as gauged from the appellants‘ founding affidavit, and the fact that it is what Mr Fenyani attested to doing, according to the respondents‘ affidavits. However, if his reports are considered it is clear that he inspected the fence irregularly. He filed inspection reports on 1 August 2012, 14 September 2012, 16 October 2012, 16 November 2012 and 4 December 2012. The report of 14 September 2012 and all further reports given by him are in a more or less standard form and state that ‗During my inspection, the Northern fence a hole is opened for illegal access. Jacaranda fencing company will be requested to repair the damage‘. However, according to his affidavit he only contacted the contractor on 20 December 2012 to effect the repairs, after this application was served. The fence was subsequently repaired in January 2013. That was clearly an insufficient effort to comply with the order. [26] In regard to the provision of security guards to monitor access to the settlement it appears that the Municipality contracted with external firms to provide this service. The regular reports furnished to the appellants by a representative of a different security firm paint a picture of an inadequate service being rendered in this regard. There is little indication that the Municipality did anything to oversee the work of these contractors, whether by explaining to them the exact nature of the duties required of them, or by regular inspections to ascertain whether they were performing their contractual duties adequately. Although this was drawn to the attention of the Municipality there is no indication that they did anything about it. This was not of course Mr Fenyani‘s responsibility. [27] There were undoubtedly challenges facing the Municipality in giving effect to these orders. The evidence that the holes in the fence were cut by residents at the same place on a regular basis in order to provide them with a more convenient point of access to the settlement was not disputed. The Municipality‘s suggestion that a further gate should be fitted at that point manned by security guards received the unhelpful response from the appellants that this would be a breach of the court‘s order. In regard to access cards these have been duplicated and it is difficult to control the access due to such duplication. Whilst a further consent order required new access cards to be issued within four weeks of the order, this does not appear to have taken into consideration the safeguards against duplication, which needed to be built into the access cards and the costs and general feasibility involved in such re-issue. [28] Overall the impression is that the Municipality was less than diligent in seeking to comply with these orders. Even if allowance is made for the broad terms in which they were couched it does not seem that the Municipality and its officials, of whom Mr Fenyani was one, exerted any vigour to secure compliance. The municipality‘s affidavits are replete with statements that it is a ‗challenge‘ to give effect to the order; the residents make it ‗difficult‘ to maintain the area; it is not ‗practically possible for second respondent … constantly to monitor the fence‘; ‗… it is difficult for the respondents to control and maintain the behaviour of the residents of the demarcated area‘. And ‗It is unfortunate that the first respondent is not able to control the behaviour of the residents of the demarcated area‘. Paragraph 12 of the order of Hartzenberg J envisaged that the Municipality could apply for the variation or amplification of any of the terms of the order. In spite of the obstacles faced by the Municipality and Mr Fenyani, no application was brought to vary the orders. Van der Byl AJ recorded that an application for the variation of the earlier order was withdrawn, but we know nothing of its terms or the reason for not proceeding with it. However, all of this was insufficient in the light of the considerations set out above to hold Mr Fenyani – and the order sought was directed at him personally – in wilful non-compliance with the provisions of the order warranting his imprisonment. Events have overtaken this appeal. [29] One further aspect of the matter cannot be allowed to pass without mention. The current application was brought during November 2012, nearly two years ago. There have been two subsequent court orders dealing with the same issues. In one, made by consent, Webster J inter alia refined and established time frames within which the fence had to be repaired, increased the number of security guards that had to be employed and increased their duties. His order made paragraphs 2 and 3 of the original order obsolete. The appellants were asking that Mr Fenyani be committed to prison based on paragraphs of an order that had been superseded by a subsequent court order. Non-compliance with Webster J‘s order was the subject of the proceedings before Pretorius J. That could not be justified on any basis. Costs [30] The court below should have found that there was culpable non- compliance by the Municipality. However, as set out above, Mr Fenyani was not the correct person to hold accountable, as he was not responsible for the implementation of all of the terms of the order by Hartzenberg J, nor was the order made against him. Indeed it could not have been. In this court, although the applicants were substantially successful in contending that there had been non-compliance their remedy was ill chosen and they should have realised that events had overtaken the appeal. In those circumstances the correct costs order in both this court and the court below should be that each party pay their own costs. That requires an amendment of the order granted by Kubushi J. Conclusion [31] It is apparent that in spite of the numerous court orders (stretching over a period of at least eight years) and applications for contempt of court; the application for the committal of Mr Fenyani to imprisonment; and an order that the Municipality launch eviction proceedings against all the occupiers of the property, the problems of neither the neighbouring landowners nor the residents of Woodlane Village have been solved. [32] The Municipality is obliged to respond to people‘s needs and encourage the public to participate in policy making and the administration must be accountable.11 Furthermore, the Municipality must adhere to the principles of Schedule 2 of the Systems Act dealing with the code of conduct for municipal staff members, and specifically s 3(b) and (c) thereof, which reads thus: ‗Commitment to serving the public interest — A staff member of a municipality is a public servant in a developmental local system, and must accordingly— (a) … (b) foster a culture of commitment to serving the public and a collective sense of responsibility for performance in terms of standards and targets; (c) promote and seek to implement the basic values and principles of public administration described in section 195 (1) of the Constitution;‘ 11 The Constitution 1996, s 195(1)(e) and (f). Ngaka Modiri Molema District
 Municipality v Chairperson, North West Provincial Executive Committee and Others [2014] ZACC 31 paras 1, 9 and 12. [33] In Nyathi v MEC for Department of Health, Gauteng12 dealing with the issue whether the provision of s 3(1) of the State Liability Act 20 of 1957 that '(n)o execution, attachment or like process … may be issued against the defendant or respondent in any action or legal proceedings or against property of the State' is constitutional, Madala J said: ‗The English Courts have looked at the possibility of holding officials responsible for wrongs that they have committed in their official capacity. They proceed on the premise that, in committing the wrongs, such officials are stepping outside of the realm of protection afforded to public officials under the Crown Proceedings Act. The possibility of a similar route in South Africa is, however tempting, impractical. The committal of public officials would only result in the ―naming and shaming‖ of such officials and would produce no real remedy for the aggrieved litigant who is primarily concerned with the payment of the judgment debt. The potential disruption of already overburdened State departments is also a result which should be avoided.‘ and ‗Secondly, State administration is inefficient and ineffective. The conduct of State officials undermines the legitimacy of both the judiciary and the State. Generally, relevant State departments are in the best position to assess the magnitude of the problems faced by their personnel and are similarly in the best position to address the systemic failure of State officials to perform their duties. These State institutions need to look at these failings holistically and consider the best manner in which to deal with the problems at hand. This court is not in a position at this stage to assess the problems faced.‘ [34] The question of injunctive relief against the State was addressed in Minister of Health & others v Treatment Action Campaign & others (No 2)13 After discussing the jurisprudence in foreign jurisdictions on the permissible scope of court orders the court said in para 112: ‗… The various courts adopt different attitudes to when such remedies should be granted, but all accept that within the separation of powers they have the power to make use of such remedies – particularly when the State‘s obligations are not performed diligently and without delay.‘ 12 Nyathi v MEC for Dept of Health, Gauteng 2008 (5) SA 94 (CC) paras 76 and 78. 13 Minister of Health & others v Treatment Action Campaign & others (No 2) 2002 (5) SA 721 (CC). And it was held by the court in para 113: ‗South African Courts have a wide range of powers at their disposal to ensure that the Constitution is upheld. These include mandatory and structural interdicts. How they should exercise those powers depends on the circumstances of each particular case. Here due regard must be paid to the roles of the Legislature and the Executive in a democracy. What must be made clear, however, is that when it is appropriate to do so, Courts may – and, if need be, must – use their wide powers to make orders that affect policy as well as legislation.’ [35] Both this Court14 and the Constitutional Court15 have stressed the need for courts to be creative in framing remedies to address and resolve complex social problems, especially those that arise in the area of socio-economic rights. It is necessary to add that when doing so in this type of situation courts must also consider how they are to deal with failures to implement orders; the inevitable struggle to find adequate resources; inadequate or incompetent staffing and other administrative issues; problems of implementation not foreseen by the parties‘ lawyers in formulating the order and the myriad other issues that may arise with orders the operation and implementation of which will occur over a substantial period of time in a fluid situation. Contempt of court is a blunt instrument to deal with these issues and courts should look to orders that secure on-going oversight of the implementation of the order. There is considerable experience in the United States of America with orders of this nature arising from the decision in Brown v Board of Education16 and the federal court supervised process of desegregating schools in that country. The Constitutional 14 Modderfontein Squatters, Greater Benoni City Council v Modderklip Boerdery (Pty) Ltd (Agri SA and Legal Resources Centre, Amici Curiae); President of the Republic of South Africa and Others v Modderklip Boerdery (Pty) Ltd (Agri SA and Legal Resources Centre, Amici Curiae) 2004 (6) SA 40 (SCA) para 42; Children's Resource Centre Trust and Others v Pioneer Food (Pty) Ltd and Others 2013 (2) SA 213 (SCA) para 87. 15 Port Elizabeth Municipality v Various Occupiers 2005 (1) SA 217 (CC) para 36 (per Sachs J): ‗The court is thus called upon to go beyond its normal functions and to engage in active judicial management according to equitable principles of an ongoing, stressful and law-governed social process. This has major implications for the manner in which it must deal with the issues before it, how it should approach questions of evidence, the procedures it may adopt, the way in which it exercises its powers and the orders it might make.‘ 16 Brown v Board of Education 347 US 483 (1954). Court referred to it with approval in the TAC (No 2) case.17 Our courts may need to consider such institutions as the special master used in those cases to supervise the implementation of court orders.18 [36] When these matters were raised with them counsel for both parties indicated that they would endeavour to find a workable solution. This is imperative, as the residents of Woodlane Village have been living in squalid conditions over the past eight years without any solution in sight. Indeed their hopes for a solution have been repeatedly dashed. The report of the Tswelopele Non-Profit Organisation19 makes it clear that the residents have formed a community. Examples of this are that 85 per cent of the households have at least one person in the formal employment sector; the dwellings are numbered which enable the occupants to access medical facilities; the people have elected an executive committee and in addition to the five members of the committee there are also 31 block leaders. There is a real likelihood of the parties finding a workable solution if there is the will to do so, even under the authority of an independent overseer that could hold all parties accountable. In this instance the parties must find innovative methods to resolve the competing interests of the different factions of the community. Order [37] The following order is made: The costs order in the high court is set aside and replaced with an order that each party pay their own costs. The appeal is otherwise dismissed Each party is to pay their own costs of appeal. 17 Para 107. 18 See Geoffrey F Aronow ‗The Special Master in School Desegregation Cases: The Evolution of Roles in the Reformation of Public Institutions Through Litigation‘ 7 Hastings Constitutional Law Quarterly 739, (Spring1980). 19 A poverty alleviation and social development organisation that has been involved with the occupiers of the property since the establishement thereof. ____________________ M J D WALLIS JUDGE OF APPEAL ____________________ I SCHOEMAN ACTING JUDGE OF APPEAL Appearances: For the Appellant: N G D Maritz SC (with him A P J Els) Instructed by: Salomé Le Roux Attorneys, Pretoria Symington & De Kok, Bloemfontein For the Respondent: L G Nkosi-Thomas SC (with her N Ntuli) Instructed by: Kunene Ramapala & Botha Inc, Pretoria Lovius Block Attorneys, Bloemfontein

Supreme Court of Appeal of South Africa MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 1 December 2014 Status: Immediate 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. Meadow Glen Home Owners Association v City of Tshwane Metropolitan Municipality This case concerned disputes that have arisen between the residents’ associations of residential complexes in Moreleta Park, Tshwane and the municipality over an informal settlement called Woodlane Village. Over a number of years the Municipality has consented to the high court making orders for the fencing of the settlement; control of access to and egress from it; the provision of potable water and rubbish removal services; and the development of a formal township in the area as well as the eviction of allegedly unlawful occupiers. Throughout the residents’ associations have complained that the Municipality has failed to implement these orders and they have sought and obtained orders that the Municipality has been guilty of contempt of court. The appeal concerned one such order where an official of the Municipality, Mr Fanie Fenyani, had by consent had a suspended sentence of imprisonment imposed upon him, subject to the Municipality complying with the terms of one of these orders. It was alleged that the conditions of suspension had not been complied with and therefore that Mr Fenyani’s sentence should be put into operation. The high court refused to do so and the SCA today upheld that decision. The SCA held that it was inappropriate for the Municipality to nominate a member of staff to undergo imprisonment for the failure of the Municipality to comply with the court order. If any official was liable to imprisonment for contempt it would be the municipal manager or one of the political office bearers responsible for the failure to comply with the court order. The SCA held that although the orders had been couched in wide terms so that the precise nature of what was required in order to comply with them was not entirely clear the Municipality was under an obligation to make serious good faith endeavours to comply and if any issue arose as to what was required of it to approach the court for clarification. It did not do so and the evidence revealed that the Municipality was less than diligent in seeking to comply with these orders. This was to be deprecated. The court also considered whether orders of this type were best enforced by contempt proceedings or by more stringent supervision of the Municipality in complying with the terms of the order.

3399

non-electoral

2020

` THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 506/19 In the matter between: THE SCHOOL GOVERNING BODY GREY COLLEGE, BLOEMFONTEIN APPELLANT and DEON SCHEEPERS FIRST RESPONDENT SOUTH AFRICAN TEACHERS’ UNION SECOND RESPONDENT FEDERATION OF GOVERNING BODIES OF AMICUS CURIAE SOUTH AFRICAN SCHOOLS Neutral citation: The School Governing Body Grey College, Bloemfontein v Scheepers and Another (Case no 506/19) [2020] ZASCA 82 (03 July 2020) Coram: Navsa, Schippers and Nicholls JJA and Koen and Eksteen AJJA Heard: 18 May 2020 Delivered: This judgment was handed down electronically via e-mail to the parties’ legal representatives on 03 July 2020. It has been published on the Supreme Court of Appeal website. Summary: Education South African Schools Act 84 of 1996 (the Act) – Employment of Educators Act 76 of 1998 (the EEA) – professional management of school – what it entails – role of principal contrasted with role of governing body – principal executing functions and duties under provisions of the Act and not in terms of delegation by governing body – in withdrawing principal’s functions governing body acting beyond its statutory authority. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Free State Division of the High Court, Bloemfontein (Musi AJP and Van Zyl J, sitting as court of first instance): judgment reported sub nom Scheepers v School Governing Body, Grey College Bloemfontein and Others (Suid-Afrikaanse Onderwys-Unie Intervening) [2018] ZAFSHC 210 The appeal is dismissed with costs, including the costs of two counsel. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Navsa JA (Schippers and Nicholls JJA and Koen and Eksteen AJJA concurring): [1] From the perspective of the first respondent, Mr Deon Scheepers, the question to be addressed in this appeal, expressed sardonically, would be the following: Is a school principal still a school principal when he or she is no longer to perform the key functions attached to that role? The question appears rhetorical because the answer seems self-evident. Not so, would be the instant retort from the appellant, the School Governing Body of Grey College, Bloemfontein (the SGB), for that would be a mischaracterisation of their dispute with Mr Scheepers, who was employed as the school principal. All it did, said the SGB, in a decision it made, which is at the centre of this appeal, was to withdraw some of the powers and functions it had delegated to Mr Scheepers as principal. He was still free to continue conducting teaching and learning activities at the school. [2] Technically, the question to be addressed in this appeal is whether the SGB, established in terms of the provisions of the South African Schools Act 84 of 1996 (the Act),1 acted within its powers when, at a special meeting held on 15 May 2018, it purported to recall all delegated SGB powers from the then principal, the first respondent, and simultaneously appointed Mr Jurie Geldenhuys as interim school manager to manage, on behalf of the SGB, all school activities, with the exception of teaching and learning activities. The second respondent, the South African Teachers’ Union (the SAOU), a registered trade union in the education sector, representing some 36 000 members, including Mr Scheepers, had sought and was granted leave to intervene by the court below, the Free State Division of the High Court, Bloemfontein (Musi AJP and Van Zyl J, sitting as court of first instance). It also sought a declaratory order. More about that later. The Federation of Governing Bodies of South African Schools (FEDSAS), a national representative organisation of public schools’ school governing bodies, was admitted as amicus curiae in relation to this appeal. [3] I shall, in due course, deal with the detailed background and the full reasoning of the court below when it adjudicated an application brought by Mr Scheepers to review and set aside the SGB’s aforesaid decisions. For the moment, it suffices to set out its essential conclusions in relation to the application: ‘It is clear that the SGB was not entitled to take the decision that it took because the Act and other policy instruments which covers the role, responsibilities and functions of the principal does not sanction it. The SGB therefore did not have the necessary authority to do what it did. The SGB was not authorised by the Act to take the decision that it did. Furthermore it is clear that the decision was not preceded by a procedurally fair process. [Mr Scheepers] was for all intents and purposes ambushed. When he requested time to prepare himself that was refused. … … The decision effectively stripped the principal of powers, duties and functions which are entrusted to him by legislation and official policy. … In summary, a [school governing body] is an organ of State. [The Promotion of Administrative Justice Act 3 of 2000 (PAJA)] is applicable to its decisions. [A school governing body] may delegate some, not all, of its functions. It may delegate some of its functions to a principal. The SGB in casu did not delegate any functions to [Mr Scheepers]; it abdicated its functions 1 See ss 16 and 23 of the Act. and allowed [Mr Scheepers] to perform them. The Act does not allow the SGB to denude the principal of functions entrusted to him by legislation, policy or the [Head of Department of the Free State Department of Education (HOD)]. The SGB in casu stripped the principal of functions that he must perform in terms of the Act and policies of the Department of Basic Education. The SGB’s decision fell afoul of s 6(2)(a)(i) of the PAJA.’2 [4] The court below went on to grant the application with costs, including those occasioned by the costs of two counsel. It also issued a declaratory order sought by the SAOU, the details of which will be dealt with in due course. The court below also dismissed the SGB’s conditional counter-application3 with costs, including the costs of two counsel. In addition, the SGB was ordered to pay the SAOU’s costs. It is against the conclusions referred to above and the resultant order that the present appeal is directed. The detailed background is set out hereafter. [5] Grey College in Bloemfontein (Grey) is a public school for boys. Mr Scheepers had matriculated at Grey. It is one of the oldest and most well-known schools in South Africa. After obtaining his education degree at the University of Stellenbosch, Mr Scheepers taught at Grey for six years. He subsequently taught at Michaelhouse, in KwaZulu-Natal, and in 2000 took up a post in the same province at Hilton College. In 2012 Mr Scheepers was head-hunted by Grey. The SGB recommended his appointment as principal of Grey to the Head of the Free State Department of Education (the HOD), in terms of s 20(1) of the Act, and he was appointed by the Department as principal of the secondary school at Grey from 1 January 2013. He took up his appointment and had served in that position until May 2018. [6] On 3 May 2018 Mr Scheepers was invited by email to attend a special meeting of the SGB, scheduled to take place on 15 May 2018. The email indicated that the only item on the agenda was the withdrawal of ‘rights’ and ‘duties’ that the SGB had 2 See paras 87-88, 90 and 94 of the judgment of the court below: Scheepers v School Governing Body, Grey College Bloemfontein and Others (Suid-Afrikaanse Onderwys-Unie Intervening) [2018] ZAFSHC 210. 3 The counter-application was conditional upon the court below finding that a school governing body has no express or implied authority to delegate any of its functions to a school principal. In that event the SGB sought an order declaring that its decision to delegate any of its functions in terms of the Act to Mr Scheepers was unlawful and invalid, alternatively, that such decision be reviewed and set aside in terms of s 6(2) of the PAJA. delegated to him. Mr Scheepers, via email, enquired of the chairperson of the SGB, Mr Büchner, which rights and duties were being withdrawn. The response, by email, was a terse statement that no delegated rights and duties had been withdrawn. [7] Mr Scheepers persisted, and by way of a further email enquired, once again, which rights and duties were in contemplation. The response from the chairperson bears repetition: ‘Beste Deon Dankie vir jou e-pos van 11 deser. As skoolhoof in diens van die Vrystaatse Departement van Onderwys het jy sekere regte en verpligtinge wat uit hoofde van die Skolewet aan jou toegedig is. Ek is nie van voorneme om al daardie regte en verpligtinge hierin uiteen te sit nie aangesien jy op hoogte is van die bepalings van die Skolewet. Soos jy weet is alle ander regte, verpligtinge, funskies en bevoegdhede wat jy tans uitoefen en wat nie uit hoofde van die Skolewet voortspruit nie, deur die Beheerliggaam, hetsy uitdruklik en/of stilswyend, aan jou gedelegeer. Die doel van die spesiale Beheerliggaam vergadering en die enigste punt op die agenda is duidelik, naamlik die terugtrekking van die Beheerliggaam se regte en verpligtinge wat aan jou gedelegeer is. Vriendelike groete…’4 [8] To this Mr Scheepers responded by stating, in an email, that as far as he was concerned he was executing all of his duties in terms of the Act and that he required clarity on the specific functions the SGB had in mind to withdraw. [9] The chairperson did not respond to the last-mentioned email and Mr Scheepers attended the meeting to which he had been invited, still in the dark. He had no idea of what the SGB required of him. At the meeting the chairperson commenced by 4 ‘Dear Deon Thank you for your email of the eleventh instant. As school principal in the service of the Free State Department of Education, you have certain rights and obligations that flow from the Schools Act. I do not intend to set out all of those rights and obligations here, as you are aware of the provisions of the Schools Act. As you know, all of the other rights, obligations, functions and powers that you presently exercise, and that do not flow from the Schools Act, have been either expressly and/or tacitly delegated to you. The purpose of the special SGB meeting and the only point on the agenda is clear, namely, the withdrawal of the SGB’s rights and obligations that have been delegated to you. Kind regards’ [translation my own]. informing those in attendance that the SGB’s executive had identified certain issues which potentially impacted on the trust relationship between Mr Scheepers, as principal, and the SGB. He went on to state that the Act conferred distinct functions on the principal and the SGB, respectively, and that the functions assigned to the principal were limited to managing the academic activities of the school, while all other functions had been delegated to the principal by the SGB. Mr Büchner went on to indicate that the purpose of the meeting was to determine whether the SGB was ‘comfortable’ with the manner in which Mr Scheepers had discharged those delegated functions and duties. [10] Mr Scheepers placed it on record that he had received no prior clarification on the rights and duties that were in contemplation for withdrawal by the SGB. He sought a postponement to enable him to deal with what was put to him at the special meeting. He adopted the attitude that all his functions were being executed in accordance with the provisions of the Act and his contract of employment with the Department. [11] The SGB debated the matter and adopted the position that Mr Scheepers simply had to look at the applicable provisions of the Act to appreciate the distinction between his professional duties and those that were within the preserve of the SGB. The SGB urged him to accept that all of the functions and responsibilities that s 20 of the Act assigned to a school governing body were at least tacitly delegated to him by the SGB. [12] Mr Scheepers’ request for a postponement of the meeting was refused. Instead, he was confronted with a list of complaints to which he was invited to respond. To his mind the complaints that were listed were as follows: ‘[T]hat [Mr Scheepers] treated staff harshly and aggressively pursuant to a meeting that the Chairman and Mr Grobbelaar, also a SGB member, had with educators of Grey College on 22 November 2016. In that meeting staff members of Grey College aired certain grievances which [he] did not – or was unwilling to resolve; that [he] victimized educators and bullied them; that there was a lack of visible discipline at Grey College, Grey College’s code of conduct was not an effective tool to manage discipline and there was an increase in disciplinary issues which impacted on the academic part of Grey College; that [he] was not equipped to handle complex racial issues; that [he] sought to manipulate the outcome of the appointment of the SGB’s annual office bearers in the run-up to the March 2018 elections; that [his] wife had canvassed the voting roll for the 2017 annual office bearers with third parties before the voting roll was announced; that [he] broke [his] trust and contractual obligations with the Department by prematurely informing certain candidates that they were unsuccessful in their bid to become deputy principal of Grey College; that [he] was unable to instil the Grey College values and traditions to learners; that [he does] not enjoy the respect of learners because [he is] not emotionally connected to them; that [he is] not approachable to parents and parents are concerned about Grey College’s academics.’ [13] Mr Scheepers was aggrieved that he had not been given any prior notice of any of these complaints and was not provided with an opportunity to adequately prepare to meet them. Towards the end of the meeting Mr Scheepers was asked how he viewed the relationship of trust he was supposed to enjoy with the SGB. He responded by stating that he did not have a strong trust relationship with the chairperson and ascribed this to personal grievances being entertained by the chairperson behind his back. Mr Scheepers acknowledged that this breakdown had occurred a long time ago. [14] The SGB then proceeded to vote by secret ballot on whether the functions and responsibilities delegated to Mr Scheepers by the SGB should be withdrawn. Fourteen of the seventeen SGB members present at the special meeting voted in favour of the motion. The following resolution was subsequently adopted: ‘[T]hat the Federation of Governing Bodies of South African Schools and [Mr Scheepers’] representative engage in a process to manage the relationship between the parties in the best interest of Grey College; that, pending the finalisation of said process, the functions, responsibilities and duties of the SGB that were either expressly or tacitly delegated to [Mr Scheepers] be withdrawn with immediate effect; that the SGB appoint Mr Geldenhuys as interim school manager to execute the delegated functions of the SGB until a long-term solution could be implemented; that Mr Geldenhuys would manage all school activities, with the exception of teaching and learning, on behalf of the SGB, which, according to the SGB, entail the following: (i) the management of school finances to the extent that those powers do not specifically vest in [Mr Scheepers] in terms of the provisions of the Act; (ii) the management of the extra-curricular activities, such as sport and culture; (iii) the management of the school campus and assets, including the hostels; (iv) the management of the personnel, where they are not performing academic functions; (v) communication and liaison internally and externally; (vi) representing Grey College at all non-academic forums; (vii) internal and external liaising; (viii) management of Grey College’s ethos mission, values and spirit within the school context; (ix) the management of discipline; (x) that [Mr Scheepers], as an employee of the Department, would continue with [his] professional duty as school principal, limited to only those powers as assigned to [him] in terms of [the Act].’ [15] Thereafter, the resolution was publicised by way of a memorandum addressed to the Grey community, namely, learners, parents and personnel, under the heading ‘Drastic management decision following breakdown of trust between Grey College Governing Body and School Principal’. (Emphasis added). [16] Mr Scheepers was aggrieved at what he considered to be a process that was procedurally unfair, that is, that he was given inadequate notice and information concerning the contemplated action by the SGB and thereby deprived of a reasonable opportunity to make representations in relation thereto. Furthermore, as far as he was concerned, he was not provided with adequate or clear reasons for the decision made by the SGB. The SGB’s belated reliance on the breakdown of trust, according to Mr Scheepers, did not avail it because that had not been foreshadowed as a ground upon which the decision was going to be based. He was not informed that he was going to be confronted with the litany of complaints presented at the meeting. Some of the complaints referred to at the meeting were related to incidents that dated back to 2016. [17] Mr Scheepers contended that if, in effect, what was being contemplated by the SGB was a disciplinary enquiry based on misconduct, then it ought to have followed the disciplinary procedures in Grey’s code of conduct. The following are the pertinent parts: ‘[A] determination by the Deputy Chairperson of the SGB that there is a prima facie case to take action; the appointment of an investigative committee consisting of at least three (3) individuals to investigate allegations against a member; furnishing the member with written description of the charges of misconduct against [them]; an opportunity to direct written representations; the making of representations by the investigative committee to the SGB whether to impose a reprimand or recommend to the HOD to either suspend the member or to terminate his or her membership of the SGB.’ That process was clearly not followed. [18] According to Mr Scheepers, insofar as any part of the public was to be affected by the contemplated decision, a public enquiry ought to have been held, or a notice and comment procedure resorted to, or some other fair procedure adopted. None of these measures was taken. Those members of the public that the decision would affect were not consulted. [19] Mr Scheepers was adamant that there was no substantive basis for the decision of the SGB. He insisted that the SGB could not deprive him of his statutory role, as provided for by the Act, more particularly by s 16(3). In taking the decision under discussion, he submitted, the SGB acted contrary to the principle of legality. Mr Scheepers did not contest that he was obliged to execute lawful instructions of the SGB. However, according to him, the decision in question fell outside the scope of the SGB’s powers. [20] The aforementioned formed the basis of Mr Scheepers’ approach to court. Given the apparent hostility between the chairperson and Mr Scheepers, and the manner in which events unfolded, including written exchanges between the contesting parties’ legal representatives prior to the commencement of litigation, it was predictable that the application launched by Mr Scheepers would be vigorously opposed. It is to the basis of that opposition that I now turn. [21] In its opposition, the SGB raised a number of procedural points that did not find favour with the court below and which, advisedly, were not persisted with on appeal. Before us, the SGB criticised the court below for finding that its decision to ‘denude’ the principal of his powers was administrative action, as defined in s 1 of the PAJA. It submitted that the court below should have held, in the light of Mr Scheepers’ assertions that it had acted unlawfully in revoking his powers, functions and duties, that it was faced with a ‘legality’ review. Thus, so it contended, procedural irregularities did not arise. [22] The SGB, in opposing the application by Mr Scheepers, adopted the position it had adopted prior to the litigation, namely, that the powers, functions and duties that the principal had exercised before its impugned decision had been delegated to him by the SGB. It was adamant that, as the repository of the original power and functions, it could revoke them at will. In this regard it relied on s 16(1), read with ss 5, 7, 8, 9, 12A, and 20 of the Act. Paragraph 58.3 of Grey’s founding affidavit reads as follows: ‘I have been advised that there is nothing wrong, if the SGB no longer requires professional staff to act on its behalf, to simply say so and get somebody else to act on its behalf.’ That, so it was contended, was made clear at the commencement of the meeting at which the impugned decision had been taken. [23] In the view of the SGB, any complaints Mr Scheepers might have had in relation to the infringement of his labour law rights were to be taken up with his employer, the Department. It reiterated that all it did, in revoking Mr Scheepers’ powers and functions, was to retake the control that vested in it in terms of the provisions of the Act. There was thus no unlawful withdrawal of Mr Scheepers’ powers, functions or duties. [24] In support of its fundamental premise, set out in the immediately preceding paragraphs, the SGB pointed to the ultimate responsibility it held, in terms of the provisions of the Act, for managing and controlling the finances of the school. Furthermore, it was contended that in terms of the Personnel Administrative Measures (PAM), 5 gazetted by the Minister of Education, the principal’s role in relation to managing the school’s accounts and records is one in terms of which he is required to act in consultation with the governing body. This meant that Mr Scheepers could continue to fulfil these functions, despite the decision by the SGB. The SGB contended that the decision did not impact on the exercise of Mr Scheepers’ statutorily conferred powers and functions. [25] Before us it was submitted, on behalf of the SGB, that the court below had erred in rejecting its core submissions, set out above, by reliance, inter alia, on provisions such as s 8A of the Act, which conferred on the principal the power to conduct random searches of learners or their property during school hours. It was asserted that this defined power did not confer an entitlement to manage school activities in the general sense. It was notable, so counsel for the SGB asserted, that there was no power to be found in the provisions of the Act conferring a general power to manage school activities. Instead, so it was argued, the Act provides only for the ‘professional management of the school’, and this relates to the implementation of educational programmes and curriculum activities, in respect of which a principal is required to report to the Department. [26] Before us, in support of the essence of its case, it was submitted that the provisions of PAM, which envisages the principal having an active role in promoting the extra-curricular activities and encouraging learners’ voluntary participation in sporting activities, do not militate against the lawfulness of the decision to revoke the delegated powers. In short, so the argument went, although the power to manage such activities vests in the SGB, the principal is not precluded from promoting or encouraging extra-curricular activities. All that was revoked was the management function, which, in any event, resides in the governing body. [27] The same applied, so the SGB submitted, in relation to the provisions of PAM, which enable a principal to conduct regular inspections of a school to ensure that the school premises and equipment were being used properly and that good discipline 5 As determined by the Minister in terms of s 4 of the Employment of Educators Act 76 of 1998. See GN 170 in GG 39684 of 12-02-2016. was being maintained and, in addition, to be responsible for the hostel and all related activities The court below was criticised for relying on these provisions in holding against the SGB. The SGB took the view that the PAM and the Act vested the management of the school in respect of those aspects in the SGB. [28] Similarly, so it was contended on behalf of the SGB, the provisions of PAM, in terms of which the principal was responsible for communication and liaison on behalf of the school and for representing the school at non-academic fora, have to be seen in the light that they concern delegated powers which the SGB could withdraw at any time. In respect of the assistance that a principal provides to the governing body in handling disciplinary matters, it was submitted that the obligation only exists if a principal is called upon to fulfil it. This, it submitted, supported the position adopted by the SGB, namely, that a school principal exercises all these functions at the behest of the governing body and that all such functions entrusted to the principal could be withdrawn at the instance of the governing body. [29] It was accepted on behalf of the SGB that a principal has a duty to manage educators and support staff. However, it was submitted that this must be seen in the light of the obligation that a principal undertakes, namely the professional management of a school, which relates to the exercise of academic and support functions. I pause to record that a letter from the Head of Department, dated 4 July 2018 and addressed to the SGB, makes it clear that the Department did not side with it in the conflict with Mr Scheepers. Furthermore, it considered the SGB to be mistaken about its view of the provisions of the Act and considered Mr Scheepers to be the principal of Grey. It is also clear from that letter that it considered FEDSAS to be on the wrong side of the conflict. For completeness, it is also necessary to note that the litany of complaints, presented to Mr Scheepers at the meeting at which the impugned decision was taken, was repeated in the SGB’s answering affidavit, with specific incidents referred to in some detail. We are not called upon to decide on the correctness of those allegations by the SGB. I now turn to deal with the judgment of the court below. [30] Musi AJP (as he then was), at the outset, had regard to the judgment of the Constitutional Court in Head of Department, Department of Education, Free State Province v Welkom High School and Others; Head of Department, Department of Education, Free State Province v Harmony High School and Another6 at para 124, where the following appears: ‘Given the nature of the partnership [the Act] has created, the relationship between public school governing bodies and the state should be informed by close cooperation, a cooperation which recognises the partners’ distinct but interrelated functions. The relationship should therefore be characterised by consultation, cooperation in mutual trust, and good faith. The goals of providing high-quality education to all learners and developing their talents and capacities are connected to the organisation and governance of education. It is therefore essential for the effective functioning of a public school that the stakeholders respect the separation between governance and professional management, as enshrined in [the Act].’ [31] The court below recorded that the SAOU had sought and been granted leave to intervene in support of Mr Scheepers. The position of the SAOU was uncomplicated and direct. It had intervened in support of its members, amongst whom there were school principals and people aspiring to that position, and it contended that the SGB had no power to retract, as it purported to do, the principal’s statutory powers, functions and duties, which were statutorily mandated. The court below had rejected the SGB’s submission that the SAOU had no standing. [32] The court below had regard to the relevant provisions of the Act. It commenced by noting that in terms of s 15 every public school is a juristic person with legal capacity to perform its functions in terms of the Act. Musi ADP went on to consider s 16 and s 23, which make it clear that the governance of public schools is vested in governing bodies.7 He also had regard to ss 6, 20, 36 and 38, in terms of which governing bodies performed a number of functions, such as policy making, the setting, implementation and control of budgets, the sourcing of finance and the administration and control of school property. 6 Head of Department, Department of Education, Free State Province v Welkom High School and Others; Head of Department, Department of Education, Free State Province v Harmony High School and Another [2013] ZACC 25; 2014 (2) SA 228 (CC). 7 Section 16(1) of the Act states: ‘Subject to this Act, the governance of every public school is vested in its governing body and may perform only such functions and obligations and exercise only such rights as prescribed by the Act.’ (Emphasis added). [33] In the view of the court below, a governing body, by its very nature and setting, is unable to perform all of its functions by itself and that in the ordinary course it would delegate some of its functions. This, it was held, is countenanced by the Act. The court took into account that in terms of s 30, a governing body may establish committees to perform some of its functions. With reference to Schoonbee and Others v MEC for Education, Mpumalanga and Another 2002 (4) SA 877 (T), it held that in appropriate circumstances and within the statutory framework, a governing body could delegate some of its functions to a principal. [34] Musi ADP recognised that delegation ‘postulates a revocable transmission of subsidiary authority’.8 In other words, if a delegator is able to delegate some of its functions it has a corresponding right to revoke such delegation. If the revocation has to be preceded by a formal requirement, in terms of a statute or policy, then that has to be complied with before the revocation can take place. Where no such requirement has to be fulfilled, the delegator can revoke the delegation without more. The court below looked to see whether the principal had in any form usurped any of the SGB’s functions, duties or powers. In that exercise it considered whether there were statutory provisions or a policy that enabled a principal to co-exercise functions, duties or powers with a governing body. If the answer was in the affirmative, so it reasoned, there could be no talk of an unlawful exercise of powers, functions or duties on the part of the principal. [35] The court below considered s 16A of the Act and took into account what the Constitutional Court, in Welkom, had said in relation thereto: ‘A principal must, in discharging his or her professional management duties, amongst other things, implement educational programmes and curriculum activities, manage educators and support staff, perform functions that are delegated to him or her by the HOD under whose authority he falls and implement policy and legislation. In contrast, a school governing body’s governance functions include promoting the school’s best interests and striving to ensure the provision of quality education to all learners at the school, developing a mission statement for 8 See in this regard Executive Council, Western Cape Legislature and Others v President of the Republic of South Africa and Others 1995 (4) SA 877 (CC) para 173. the school, adopting a code of conduct for learners and administering school property (subject to certain constraints).’9 [36] Against the SGB’s assertion that it had delegated to the principal the administration of school funds, the court below had regard to the provisions of s 37 of the Act, which reads as follows: ‘(1) The governing body of a public school must establish a school fund and administer it in accordance with directions issued by the Head of Department. (2) Subject to subsection (3), all money received by a public school including school fees and voluntary contributions must be paid into the school fund. (3) The governing body of a public school must open and maintain one banking account, but a governing body of a public school may, with the approval of the Member of the Executive Council, invest surplus money in another account. (4) Money or other goods donated or bequeathed to or received in trust by a public school must be applied in accordance with the conditions of such donation, bequest or trust. (5) All assets acquired by a public school on or after the commencement of this Act are the property of the school. (6) The school fund, all proceeds thereof and any other assets of the public school must be used only for— (a) educational purposes, at or in connection with such school; (b) educational purposes, at or in connection with another public school, by agreement with such other public school and with the consent of the Head of Department; (c) the performance of the functions of the governing body; or (d) another educational purpose agreed between the governing body and the Head of Department. (7)(a) Money from the school fund of a public school may not be paid into a trust or be used to establish a trust. (b) if a trust was established from a school fund of a public school or if such money was paid into a trust prior to 1 January 2002, such trust or payment is invalid and the money must be paid back into the school fund. (c) A governing body of a public school may not collect any money or contributions from parents to circumvent or manipulate the payment of compulsory school fees and to use such money or contributions to establish or fund a trust, and if such money or contributions of 9 Welkom op cit fn 3 para 39. (Citations omitted.) parents were paid into a trust prior to 1 January 2002, the trust must pay such money or contributions into the school fund.’ [37] Alongside ss 16A and 37 the court below considered s 42 of the Act, which reads as follows: ‘The governing body of a public school must— (a) keep records of funds received and spent by the public school and of its assets, liabilities and financial transactions; and (b) as soon as practicable, but not later than three months after the end of each financial year, draw up annual financial statements in accordance with the guidelines determined by the Member of the Executive Council.’ [38] Completing its conspectus of provisions of the Act relating to the administration of school funds, the court took into account that, in terms of s 16A(2)(h), the principal of a school has a duty to assist a governing body with the management of school funds. That subsection provides: ‘The principal must— … (h) assist the governing body with the management of the school’s funds, which assistance must include — (i) the provision of information relating to any conditions imposed or directions issued by the Minister, the Member of the Executive Council or the Head of Department in respect of all financial matters of the school contemplated in Chapter 4; and (ii) the giving of advice to the governing body on the financial implications of decisions relating to the financial matters of the school…’ The court below held that was unclear how these functions were to be executed while the newly appointed school manager, Mr Geldenhuys, was in charge. This becomes all the more glaring, so the court below reasoned, when regard is had to the PAM, in terms of which a school principal’s professional management of a school includes the keeping of various kinds of accounts and records in relation to the use of school funds. [39] Musi ADP went on to explore other provisions of PAM, including those that authorise school principals, in relation to school activities, to prohibit drugs and dangerous objects from being brought onto school premises. PAM provides for a school principal to play an active role in promoting extra and co-curricular activities. The court below held that the Act does not permit the SGB to strip the principal of these functions and duties. [40] The court below took into account that PAM also provides for a school principal to ensure that school premises and equipment are properly utilised and that discipline is maintained. So, too, a school principal is tasked with managing educators and support staff. In doing so he/she is not restricted to managing only in relation to academic functions. PAM also imposes a duty on school principals to represent the school in communications with stakeholders. The court below asked the following question: ‘How can a principal professionally manage a school and not at the same time manage the vision, mission and values of the school as espoused by the SGB?’10 It went on to hold that the SGB overreached in stripping Mr Scheepers of these management functions. [41] The court below, having regard to what is set out in the preceding paragraphs, reached the conclusions set out in para 3 above. It went on to add the following: ‘The unlawfulness of the act did not end there. The SGB summarily and unlawfully appointed Mr Geldenhuys as the school manager of Grey College Secondary School. There is no evidence that there is such a post on the establishment of the school. Mr Geldenhuys was the principal of Grey College Primary School. His transfer or temporary secondment to Grey College Secondary School was done without the intervention or authorisation of the HOD.’11 [42] It is against the conclusions set out in para 3 above and the resultant order that the present appeal, with the leave of this court, is directed. To consider whether the SGB acted within its powers, it is necessary to consider the applicable legislative framework and then to decide whether the conclusions reached by the court below are justified. [43] There can be no doubt that the Act is transformative. It says so in the preamble, which records that the achievement of democracy has consigned to history the past system of education, based as it was on racial inequality and segregation. It notes that 10 See the high court’s judgment in Scheepers, op cit fn 1, para 85. 11 Ibid para 91. a new national system for schools is required that will redress past injustices and provide a progressively high-quality education for the nurturing and ultimate realisation of the talents and capabilities of all our people. The long title indicates that its purpose is to provide a ‘uniform’ system for the ‘organisation, governance and funding of schools’. [44] As referred to above, every public school, in terms of s 15 of the Act, is recognised as a juristic person with legal capacity. Section 16(1) states that ‘subject to this Act, the governance of every public school is vested in its governing body’ (emphasis added). Significantly, the remainder of the section states that a governing body ‘may perform only such functions and obligations and exercise only such rights as prescribed by the Act’. [45] Section 16(2) provides that a governing body stands in a position of trust towards the school. In terms of s 18, a governing body is obliged to function in terms of a constitution, which must comply with minimum requirements set by the MEC of the applicable province. Such a constitution is required to provide for a meeting of a governing body ‘at least once every school term’.12 Furthermore, a governing body is required, in terms of 18(2)(b), to meet with parents, learners, educators and other staff at least once every year. Section 18(2)(c) and (d) also obliges a governing body to keep minutes of its meetings, which it must make available for inspection by the HOD. Finally on this score, a governing body is required at least once a year to render a report on its activities to parents, learners, educators and other staff of the school. [46] In terms of s 18A(1) the MEC ‘must’, by notice in the Provincial Gazette, ‘determine a code of conduct for the members of the governing body of a public school’, which must be ‘aimed at establishing a disciplined and purposeful school environment dedicated to the improvement and maintenance of a quality governance structure at a public school’.13 The code of conduct must be observed by all members of a governing body, contravention of which may lead to a member’s suspension or even termination by the relevant HOD.14 12 See s 18(2)(a). 13 See s 18A(2) 14 See s 18A(4) and (5). [47] Section 20 is extensive. It sets out the functions of a governing body. The relevant parts are set out hereafter: ‘(1) Subject to this Act, the governing body of a public school must— (a) promote the best interests of the school and strive to ensure its development through the provision of quality education for all learners in the school; (b) adopt a constitution; (c) develop the mission statement of the school; (d) adopt a code of conduct for the leaners of the school; (e) support the principal, educators and other staff of the school in the performance of their professional functions; (eA) adhere to any action taken by the Head of Department in terms of section 16 of the Employment of Educations Act [76 of 1998 (the EEA)], to address the incapacity of a principal or educator to carry out his or her duties effectively; (f) determine times of the school day consistent with any applicable conditions of employment of staff at the school; (g) administer and control the school’s property, and buildings and grounds occupied by the school, including school hostels, but the exercise of this power must not in any manner interfere with or otherwise hamper the implementation of a decision made by the Member of the Executive Council or Head of Department in terms of any law or policy; (h) encourage parents, learners, educators and other staff at the school to render voluntary services to the school; (i) recommend to the Head of Department the appointment of educators at the school, subject to the Employment of Educators Act, 1998, and the Labour Relations Act, 1995; (j) … (k) at the request of the Head of Department, allow the reasonable use … of the facilities of the school for educational programmes not conducted by the school; …’ Subject to certain conditions a governing body may, in terms of the provisions of s 20, establish posts for educators and non-educators.15 Section 20(8), in turn, provides that the employment of these educators and non-educators must be in compliance with the values and principles enshrined in s 195 of the Constitution and, when making 15 See ss 20(4), 20(5), 20(6) and 20(7). appointments, a candidate’s ability, the principle of equity, the need to redress past imbalances and representivity are all factors which must be taken into account.16 [48] Section 23 of the Act deals with membership of governing bodies of ordinary public schools. It comprises elected members, the principal and co-opted members. Elected members are comprised of parents of learners, both educators and non- educators at the school, and school learners in the eighth grade or higher. Section 11 of the Act provides for the establishment of a representative council of learners at every public school, while s 23(4) provides that the learner on the governing body is to be elected by that council. [49] Section 29 provides for office bearers of a governing body, which include at the least a chairperson, a secretary and a treasurer. Section 30 permits a governing body to establish committees, including an executive committee, and it may appoint persons who are not members of the governing body to serve on such committees, provided that each committee is chaired by a member of the governing body. [50] In terms of s 34 of the Act the state is obliged to fund public schools from public revenue. The responsible Minister, in terms of s 35, is responsible for setting norms and standards for school funding. In terms of s 36 a governing body is required to take reasonable measures within its means to supplement the resources supplied by the state. In terms of s 37, set out in para 36 above, a governing body must establish a school fund and administer it in accordance with directives from the HOD. In terms of s 42, as referred to above, the governing body is required to keep records of funds received and spent by the school and of its assets, liabilities and financial transactions. It must draw up annual financial statements in accordance with directions of the MEC. [51] What, then, of the role of the principal? In terms of s 16(3) the ‘professional management’ of a public school must be undertaken by the principal under the authority of the Head of Department’ (emphasis added). Section 16A(1)(a) and (b), under the title ‘Functions and responsibilities of principal of public school’, read as follows: 16 Listed in paras (a)-(d) of s 20(8). ‘1(a) The principal of a public school represents the Head of Department in the governing body when acting in an official capacity as contemplated in sections 23(1)(b) and 24(1)(j). (b) The principal must prepare and submit to the Head of Department an annual report in respect of— (i) the academic performance of that school in relation to minimum outcomes and standards and procedures for assessment determined by the Minister in terms of section 6A; and (ii) the effective use of available resources.’ [52] The Act has more in mind for a principal. Section 16A(2) provides: ‘The principal must— (a) in undertaking the professional management of a public school as contemplated in section 16(3), carry out duties which include, but are not limited to— (i) the implementation of all the educational programmes and curriculum activities; (ii) the management of all educators and support staff; (iii) the management of the use of learning support material and other equipment; (iv) the performance of functions delegated to him or her by the Head of Department in terms of this Act; (v) the safekeeping of all school records; and (vi) the implementation of policy and legislation; (b) attend and participate in all meetings of the governing body; (c) provide the governing body with a report about the professional management relating to the public school; (d) assist the governing body in handling disciplinary matters pertaining to learners; (e) assist the Head of Department in handling disciplinary matters pertaining to educators and support staff employed by the Head of Department; (f) inform the governing body about policy and legislation; (g) provide accurate data to the Head of Department when requested to do so; (h) assist the governing body with the management of the school’s funds, which assistance must include— (i) the provision of information relating to any conditions imposed or directions issued by the Minister, the Member of the Executive Council or the Head of Department in respect of all financial matters of the school contemplated in Chapter 4;17 and (ii) the giving of advice to the governing body on the financial implications of decisions relating to the financial matters of the school; 17 Sections 34, 35, 36, 37 and 42, referred to in para 48 above, are located within Chapter 4 of the Act. (i) take all reasonable steps to prevent any financial maladministration or mismanagement by any staff member or by the governing body of the school; (j) be a member of a finance committee or delegation of the governing body in order to manage any matter that has financial implications for the school; and (k) report any maladministration or mismanagement of financial matters to the governing body of the school and to the Head of Department.’ [53] Section 16A(3) provides: ‘The principal must assist the governing body in the performance of its functions and responsibilities, but such assistance or participation may not be in conflict with— (a) instructions of the Head of Department; (b) legislation or policy; (c) an obligation he or she has towards the Head of Department, the Member of the Executive Council or the Minister; or (d) a provision of the Employment Educators Act, 1998, and the Personnel Administration Measure determined in terms thereof.’ [54] Section 8A(1) reads as follows: ‘Unless authorised by the principal for legitimate educational purposes, no person may bring a dangerous object or illegal drug onto school premises or have such object or drug in his or her possession on school premises or during any school activity.’ The relevant part of s 8A(2) provides: ‘Subject to subsection (3), the principal or his or her delegate may, at random, search any group of learners or the property of a group of learners, for any dangerous object or illegal drug, if a fair and reasonable suspicion has been established …’ Subsection 3 sets out factors that must be taken into account when such a search is being contemplated. [55] The EEA deals with the employment of educators by the State, the regulation of their conditions of service, disciplinary matters, the retirement of educators and matters connected therewith. ‘Educator’ is defined in section 1 as follows: ‘[A]ny person who teaches, educates or trains other persons or who provides professional educational services, including professional therapy and education psychological services, at any public school, departmental office or adult basic education centre and who is appointed in a post on any educator establishment under this Act …’ [56] Section 3 of the EEA provides that the Director-General: Basic Education is the employer of educators in the service of the national department and that the Head of Department is the employer of educators in the service of the provincial department of education in posts on the educator establishment of that department for all purposes of employment. Section 4 provides for conditions of service to be determined by the Minister, subject to the Labour Relations Act 66 of 1995 and collective agreements. Different salaries and conditions may be determined by the Minister in respect of different ranks and grades of educators. Section 7, consonant with the provisions of the Act, provides that, in making appointments, regard must be had to the values and principles enshrined in s 195 of the Constitution, and that the factors of candidate ability, the need to redress the imbalances of the past and achieve broad representation, shall be taken into account. Section 6 states that any appointment may only be made on the recommendation of the governing body of a public school. In the present case the SGB had recommended the appointment of Mr Scheepers who was then appointed by the provincial Head of Department.18 [57] The provisions of PAM elaborate on the role of a school principal in a public school, consonant with the provisions of the Act and the EEA. Under the title ‘AIM OF THE JOB’, the following appears: ‘2.1 To ensure that the school is managed satisfactorily and in compliance with applicable legislation, regulations and personnel administration measures as prescribed. 2.2 To ensure that the education of the learners is promoted in a proper manner and in accordance with approved policies.’ The provisions of PAM then proceed to reiterate the functions of a principal as encapsulated in the Act, the specific provisions of which are referred to above. The clause dealing with ‘Personnel’ reads as follows, in relevant part: ‘3.2.1 To provide professional leadership within the school. 3.2.2 To guide, supervise and offer professional advice on the work and performance of all staff in the school and, where necessary, to discuss and write or countersign reports on teaching, support, non-teaching and other staff. 18 The letter of appointment states that Mr Scheepers has been appointed ‘in the post of Principal (Post Level 4) – Salary Level 11 at Grey College Secondary School. The contract subsequently signed confirms that. On the duties to be performed in terms of that contract, clause 7 records the following: “The employee shall be expected to satisfactorily carry out all the tasks and duties normally associated with the position…’ 3.2.3 To ensure that workloads are equitably distributed amongst the staff. 3.2.4 To be responsible for the development of staff training programmes, both school-based, school-focused and externally directed, and to assist educators, particularly new and inexperienced educators, in developing and achieving educational objectives in accordance with the needs of the school. …’ Other provisions of PAM deal with a principal’s role in relation to the academic performance of the school, and in teaching. Clause 3.6 is entitled ‘Interaction with stakeholders. The relevant parts read as follows: ‘3.6.1 … 3.6.2 To participate in community activities in connection with educational matters and community building.’ Para 3.7 bears the title ‘Communication’. The relevant clauses appear hereunder: ‘3.7.4 To meet parents concerning learners’ progress and conduct. … 3.7.8 To participate in departmental and professional committees, seminars and courses in order to contribute to and/ or update professional views/standards. 3.7.9 To maintain contacts with sports, social, cultural and community organisations.’ [58] Chapter 5 of the EEA deals with incapacity and misconduct of educators. Section 17 deals with categories of so-called serious misconduct, none of which is applicable here, in respect of which dismissal is mandatory. The relevant parts of s 18(1) read as follows: ‘(1) Misconduct refers to a breakdown in the employment relationship and an educator commits misconduct if he or she— … (f) unjustifiably prejudices the administration, discipline or efficiency of the Department of Basic Education, an office of the State or a school or adult learning centre; (g) misuses his or her position in … a school … to promote or to prejudice the interests of any person; … (l) performs poorly or inadequately for reasons other than incapacity; … (q) while on duty, conducts himself or herself in an improper, disgraceful or unacceptable manner; … (t) displays disrespect towards others in the workplace or demonstrates abusive or insolent behaviour; (u) intimidates or victimises fellow employees, learners or students…’ [59] Section 18(2) provides that ‘[i]f it is alleged that an educator committed misconduct as contemplated in subsection (1), the employer must institute disciplinary proceedings in accordance with the disciplinary code and procedures contained in Schedule 2’. [60] What is apparent is that the statutory architecture is to ensure symmetry and to provide a platform for synergies between the different role players. In Welkom19 Khampepe J, referring to the Act, said the following (at para 36): ‘[T]he state’s obligations to ensure that the right to education is meaningfully realised for the people of South Africa are great indeed. The primary statute setting out these obligations is [the Act]. That Act contains various provisions governing the relationships between the Minister, members of provincial executive councils responsible for education (MECs), HODs, principals and the governing bodies of public schools. It makes clear that public schools are run by a partnership involving school governing bodies (which represent the interests of parents and learners), principals, the relevant HOD and MEC, and the Minister. Its provisions are carefully crafted to strike a balance between the duties of these various partners in ensuring an effective education system.’ [61] Welkom noted that the Act did not define ‘governance’, even though it placed the responsibility for governance in the hands of governing bodies. It considered the essential governance functions to be those listed in s 20(1), set out in para 47 above, and although the Act placed ‘professional management’ of a public school in the hands of the principal, it did not define that either.20 The Constitutional Court had regard to the provisions of s 16A(2)(a), set out in para 52 above, which lists the functions and responsibilities of a public-school principal. These were an essential part of his or her professional management duties.21 It took the view that although the principal is a member of the governing body, he or she occupies that position as a representative of the HOD. 19 Op cit fn 3. 20 Ibid paras 37 and 38. 21 See para 39. [62] In para 41 of Welkom Khampepe J said the following: ‘In addition to s 16A’s general delineation of a principal’s duties, each provision of [the Act] dealing with a specific aspect of a school governance or administration provides further guidance on the roles and responsibilities of the relevant actors.’ [63] In Welkom the Constitutional Court recognised a governing body’s authority to determine a public school’s admission policy, subject to express stipulations aimed at preventing the imposition of unfair admission requirements and further subject to regulation prescribed by the Minister. A Head of Department, on the other hand, is empowered to administer admissions. The Constitutional Court also appreciated that governing bodies are entitled to set a language policy, again subject to certain prescripts. So, too, is a governing body entitled to adopt a code of conduct, subject to guidelines that might be determined by the Minister. In certain instances a governing body may, as a precautionary measure, suspend a learner for up to seven days.22 The court had regard to the power of a HOD, under certain circumstances, to intervene directly in the affairs of the school.23 It will be recalled that a principal’s duties in relation to the relevant HOD was dealt with earlier in the judgment. [64] In para 49 of Welkom, the Constitutional Court returned to the theme of the manner in which public schools are meant to function as a partnership. It said the following: ‘Under [the Act], two things are perspicuous. First, public schools are run by a partnership involving the state, parents of learners and members of the community in which the school is located. Each partner represents a particular set of relevant interests and bears corresponding rights and obligations in the provision of education services to learners. Second, the interactions between the partners – the checks, balances and accountability mechanisms – are closely regulated by [the Act]. Parliament has elected to legislate on this issue in a fair amount of detail in order to ensure the democratic and equitable realisation of the right to education. The detail must be respected by the executive and the judiciary.’24 22 See paras 43-46. 23 See paras 47-48 and the provisions of the Act there referred to. 24 See also, in this regard, Head of Department, Mpumalanga Department of Education and Another v Hoerskool Ermelo and Another [2009] ZACC 32; 2010 (2) SA 415 (CC) para 56. The Constitutional Court also stated that the Act must be read in conjunction with other applicable legislation, in this context the EEA, which provides that an HOD is the employer of public-school educators who are appointed to provincial departmental posts, including principals. [65] The Constitutional Court had regard to the Oxford English Dictionary which defines ‘governance’ as, amongst other things, ‘(t)he action or manner of governing’, ‘(c)ontrolling, directing or regulating influence’ and ‘(t)he manner in which something is governed or regulated; method of management, system of regulations’.25 In Ermelo the Constitutional Court stated that a governing body’s primary function is to serve the interest of the school and its learners.26 In Welkom the distinction was noted between the ‘governance’ and the ‘professional management’ of a school. It said the following: ‘As is evident from s 16A(2)(a), the professional management of a public school consists largely of the running of the daily affairs of a school by directing teachers, support staff and the use of learning materials, as well as the implementation of relevant programmes, policies and laws.’27 [66] Continuing, the court returned to the role of a governing body and contrasted it with the role of the principal. The court said the following: ‘To my mind, therefore, a governing body is akin to a legislative authority within the public school setting, being responsible for the formulation of certain policies and regulations, in order to guide the daily management of the school and to ensure an appropriate environment for the realisation of the right to education. By contrast, a principal’s authority is more executive and administrative in nature, being responsible (under the authority of the HOD) for the implementation of applicable policies (whether promulgated by governing bodies or the Minister, as the case may be) and the running of the school on a day-to-day basis. It is this understanding of a governing body’s governance obligations which must inform our interpretation of [the Act].’28 25 Welkom op cit fn 3 para 60. 26 See para 57 of Ermelo, op cit fn 21. 27 Welkom op cit fn 3 para 62. (Citations omitted.) 28 Ibid para 63. The definition of ‘management’ in the Oxford English Dictionary (2008), applicable in the present context, is also useful: ‘Organisation, supervision, or direction; the application of skill or care in the manipulation, use, treatment, or control (of a thing or person), or in the conduct of something’. [68] As presaged by the question posed at the commencement of this judgment, the SGB’s case is built on a house of cards. The SGB ignores the statutory architecture and does not distinguish between the different roles played by the governing body and the principal. It does not appreciate the distinction between its governance/legislative function and the managerial/executive function of the principal. It is clear from its answering affidavit that it sees the principal as having no original authority and adopts the position that all his functions and duties derive from it. Paragraph 58.3 of the answering affidavit, quoted in para 21 above, makes it clear that the SGB holds the view that it can dispense with the principal’s professional role if and when it chooses. The foundation of the SGB’s case is that s 20 of the Act is extensive in relation to its role, that that section puts it in overall charge of the school, and that in performing his task as principal, Mr Scheepers is merely acting on delegated authority. The SGB is unjustifiably dismissive of the provisions of the Act, the EEA and the PAM that deal with the role of the principal. It contended that the provisions of the Act restrict the principal’s role to academic functions. That is palpably fallacious. [69] Section 16 (3), in express terms, bestows a professional management authority in relation to a public school on the principal. In that capacity he or she is not restricted to managing only the academic programme of the school. Section 16A(2)(a) reaffirms the professional management function of a principal and, far from restricting it, says that what is listed thereunder as the duties of a principal is not exhaustive. In terms of s 16(2)(a) the principal is required to manage all academic and support staff. Furthermore, he is required to ‘manage’ the use of learning support material and other equipment. These are functions that exist not because of the SGB’s delegation, but by virtue of the provisions of the Act. The principal’s role in terms of s 8A(1), in controlling what is brought onto school premises, is yet another aspect of his management function and it does not derive from the SGB but from the provisions of the Act. When the SGB recommended Mr Scheepers to be appointed principal it was obliged, both in terms of the provisions of the Act and the EEA, to consider his ability to perform that function which, by its nature, is managerial. It is, as indicated in the provisions of PAM referred to above, and as one would expect, a position with a specific ranking within the post of educators. [70] Moreover, the resolution of the SGB, set out in para 14 above, in terms, confers ‘management’ functions on Mr Geldenhuys. These functions are encompassed within the ‘professional management’ of the school, as envisaged in the Act, the EEA and the PAM. This is what Mr Scheepers’ letter of appointment envisaged he would do. The functions and duties assigned to Mr Geldenhuys are those within the remit of a school principal. It is that list of functions that the SAOU sought to have declared as part of a principal’s management functions and that relief was granted by the court below. One need not be a lawyer or be versed in the specifics of the applicable legislation to understand the role that a school principal plays. He or she is the day-to- day face of the school; the first port of call for parents, learners, educators, other staff and the community. Given the express terms of the applicable statutes and the incisive and clear guidance from the Constitutional Court in Welkom, the attitude of the SGB, with which FEDSAS aligned itself, is baffling. The SGB’s case is premised on a fundamentally contorted view of the functions of a principal and a school governing body. Sections 5, 6, 7 and 8 of the Act, on which the SGB relied for its view that the principal exercised delegated powers, are of no assistance to it. Those sections deal with the governing body’s authority in relation to admission to schools, the setting of its language policy, religious observances and the adoption of a code of conduct. This is in accordance with its ‘legislative’ and governance function. It was never the SGB’s case that, in relation to that function, the principal impinged on its jurisdictional territory. The SGB, on the other hand, sought to restrict the role of the principal to strictly academic functions, despite the clear wording of the relevant provisions of the Act and in the face of clear guidance from the Constitutional Court in Welkom. [71] More accurately, the fundamental premise on which the impugned decision is based is not only false but also contrived. It is clear that the relationship between the chairperson of the SGB and Mr Scheepers has soured. It is equally clear form the documents filed of record that there is tension between camps on either side. The principal might be the victim of unjustified criticism by those opposed to him or he might be conducting himself as described by them. The accusations by each camp are serious. If there is a basis for a disciplinary case to be pursued against Mr Scheepers by the SGB then that should be the route that is followed, rather than the stratagem adopted here. It is disingenuous to suggest that whatever labour law complaints Mr Scheepers might have he must take up with his employer, the HOD. In taking the impugned decision the SGB not only acted beyond its statutory authority, but also negated Mr Scheepers’ labour law rights. Wherever lies the fault for the breakdown in the relationship, it cannot be in the school’s best interests that it continues. What is required is sober reflection by all concerned. More often than not, in situations such as the present it is difficult to persuade parties to retreat from entrenched positions. The school’s interests are not best served by protracted litigation, with attendant financial implications for all, and continuing tensions and uncertainty. There should be a sustained effort to arrive at a solution that best serves the school and any attempt at mediation should involve parties without a leg in either camp. This ongoing tension might also be part of a greater turf war, including organisations. In this instance the interest of FEDSAS and the SAOU diverge. The legislation is there as a beacon. We must, all of us, get down to the real and urgent business of realising the right to education, which is the pathway to the development of the full potential of our learners and communities. This will only occur if every role player understands its role and fulfils it. Put differently, the message to all the role players is simply this: Put the learners first. [72] The conclusion of the court below that the SGB lacked the statutory authority to act in the manner complained of, by effectively preventing the principal from fulfilling his statutory functions and duties, is correct. The assertion that the court below erred in holding that the decision by the SGB constituted administrative action is also unfounded. In Minister of Education, Western Cape, and Others v Governing Body, Mikro Primary School, and Another [2005] ZASCA 66; 2006 (1) SA 1 (SCA) 3 All SA 436 (SCA) para 20 this court held that a public school, along with its governing body, is an organ of state.29 In Minister of Defence and Military Veterans v Motau and Others30 the Constitutional Court, referring with approval to the decision of this court in Grey’s Marine,31 divided the definition of ‘administrative action’ in s 1 of PAJA into seven elements to be used as a practical guideline: ‘[T]here must be (a) a decision of an administrative nature; (b) by an organ of state or a natural or juristic person; (c) exercising a public power or performing a public function; (d) in terms of 29 See also Welkom op cit fn 3 para 141. 30 Minister of Defence and Military Veterans v Motau and Others [2014] ZACC 18; 2014 (5) SA 69 (CC) para 33. (Citations omitted.) 31 Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA 43; 2005 (6) SA 313 (SCA). any legislation or an empowering provision; (e) that adversely affects rights; (f) that has a direct, external legal effect; and (g) that does not fall under any of the listed exclusions.’ [73] The decision in question is quite clearly administrative action. But in this case that issue is a red herring. All parties accepted that if it were to be held that the SGB did not have the statutory authority to make the decision, that would be dispositive of the appeal, irrespective of whether the decision constituted administrative action or not.32 The challenge by the SGB on this point might have been motivated by the need to avoid having to deal with procedural fairness issues. This appears to be premised on the view that a legality challenge necessarily avoids questions related to procedural impropriety. Even in that regard the SGB appears to be mistaken.33 However, having regard to the conclusion reached above we need not entertain any of these issues any further. [74] A further issue raised on behalf of the SGB concerned the right of the SAOU to intervene. It was contended on its behalf that the SAOU did not have a direct and substantial interest but that in reality in only had a contingent interest and that none of its rights were potentially adversely affected by the SGB’s decision. In short, it submitted that the court below should not have allowed the intervention by the Union and should not have ordered the SGB to pay its costs. It was contended on behalf of the SGB that the present application did not implicate labour issues, which was all the more reason not to permit the intervention. I disagree. The SAOU was clear about its motivation. It has membership of tens of thousands, which includes principals and deputy principals, and people who aspire to those positions and educators in general. The SAOU exists to serve the interests of its members. For them it must be important that there be clarity on the rights and statutory authority of important role players within the public education sector. It also seeks to make a contribution to the development of education legislation and policy. The declaratory order sought by the union falls within the jurisdiction of the high court in terms of s 21(1)(c) of the Superior Courts Act 10 of 2013, which states that the court, at the instance of any interested party, can enquire into and determine any existing, future or contingent right. In Cordiant Trading 32 See Minister of Education, Western Cape and Another v Beauvallon Secondary School and Others [2014] ZASCA 218; 2015 (2) SA 154 (SCA) para 16 33 See Democratic Alliance v President of the Republic of South Africa and Others [2012] ZACC 24; 2013 (1) SA 248 (CC) paras 33-37. CC v Daimler Chrysler Financial Services (Pty) Ltd34 this court, in referring to that subsection’s predecessor, said the following: ‘Put differently, the two-stage approach under the subsection, consists of the following. During the first leg of the enquiry the Court must be satisfied that the applicant has an interest in an ’existing, future or contingent right or obligation’. At this stage the focus is only upon establishing that the necessary conditions precedent for the exercise of the Court’s discretion exist. If the Court is satisfied that the existence of such conditions has been proved, it has to exercise the exercise the discretion by deciding either to refuse or grant the order sought. The consideration of whether or not to grant the order constitutes the second leg of the enquiry.’ [75] It is of course so that an applicant for leave to intervene must satisfy the direct and substantial interest test. In SA Riding for the Disabled Association v Regional Land Claims Commissioner and Others35 the Constitutional Court said: ‘This means that the applicant must show that it has a right adversely affected or likely to be affected by the order sought. But the applicant does not have to satisfy the court at the stage of intervention that it will succeed. It is sufficient for such applicant to make allegations which, if proved, would entitle it to relief.’ [76] In this case it must be borne in mind that the SGB sought relief in a conditional counter-application and sought to resist relief that implicated the rights of the SAOU’s membership. In my view there can be no doubt that the declaratory order sought by the SAOU and granted by the court below will lead to greater certainty for all concerned. The court below was also correct in having regard to s 38 of the Constitution, which deals with the right to approach a court for the enforcement of rights. It recognises the rights, inter alia, of anyone acting as a member, or in the interest of a group or class of persons, anyone acting in the public interest and an association acting in the interests of its members. Thus, the court below cannot be faulted for allowing the intervention by the Union, granting it relief and costs. [77] Finally, in my view, FEDSAS contributed very little to the proceedings before us. It will be recalled that the resolution adopted by the SGB sought to involve FEDSAS 34 Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd [2005] ZASCA 50; 2005 (6) SA 205 (SCA) para 18. 35 SA Riding for the Disabled Association v Regional Land Claims Commissioner and Others [2017] ZACC 4; 2017 (5) SA 1 (CC) para 9. (Citations omitted.) as a facilitator/mediator, even though it is an organisation for school governing bodies. The contemplated mediation exercise was predictably doomed to fail. FEDSAS successfully sought to be admitted as amicus in this appeal. In its heads of argument it was emphatic that it did not seek to take sides in the present dispute. Much of its heads of argument was devoted to repeating the applicable provisions of the Act. Despite disavowing partisanship it echoed the delegation argument made by the SGB. It is very difficult to discern a different coherent thread to the submissions on behalf of FEDSAS. [78] For all the reasons set out above the following order is made: The appeal is dismissed with costs, including the costs of two counsel. ________________________ M S NAVSA JUDGE OF APPEAL APPEARANCES: For Appellant: Adv G Engelbrecht SC, with Adv J Meraba Instructed by: Horn & Van Rensburg Prokuruers, Bloemfontein For First Respondent: Adv Kemp J Kemp SC, with Adv W van Aswegen Instructed by: Peyper Attorneys, Bloemfontein For Second Respondent: Adv N Snellenburg SC, with Adv T Pienaar Instructed by: Lovius Block Attorneys, Bloemfontein Amicus: Adv J du Toit SC Instructed by: Hill McHardy & Herbst Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL The School Governing Body Grey College, Bloemfontein v Scheepers and Another (Case no 506/19) [2020] ZASCA 82 (3 July 2020) From: The Registrar, Supreme Court of Appeal Date: 03 July 2020 Status: Immediate The following summary is for the benefit of the media in the reporting of this case and does not form part of the judgment of the Supreme Court of Appeal Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against an order of the Free State Division of the High Court, Bloemfontein (Musi AJP and Van Zyl J, sitting as court of first instance). The appeal was dismissed with costs. The matter concerned a dispute between the School Governing Body of Grey College, Bloemfontein (the SGB) and the first respondent, the principal of Grey College secondary school, Mr Deon Scheepers. Mr Scheepers was appointed as principal from 1 January 2013 by the Head of the Free State Department of Education (the HOD) on the recommendation of the SGB. He served in that position until May 2018, when the SGB purported to recall all delegated SGB powers from him. At a special meeting of the SGB on 15 May 2018, Mr Scheepers was informed that the SGB’s executive had identified certain issues which potentially impacted on the relationship of trust between him, as principal, and the SGB. The SGB had taken the view that, as principal, Mr Scheepers’ functions were limited to managing the academic activities of the school and that all other functions had been delegated to him by the SGB. The purpose of the meeting, so it was said, was to determine whether the SGB was comfortable with the manner in which Mr Scheepers had discharged those apparently delegated functions. At the meeting Mr Scheepers was confronted with a litany of complaints, including the harsh and aggressive treatment of staff, that he victimized and bullied educators and that he was not approachable to parents. Thereafter the SGB voted, by secret ballot, on whether the functions and responsibilities delegated to him should be withdrawn. Fourteen of the seventeen members in attendance voted in favour of the motion. A resolution was subsequently adopted to reflect this. It provided, inter alia, that the functions, responsibilities and duties that were delegated to Mr Scheepers are withdrawn with immediate effect. It also provided for the appointment of a so-called interim school manager, to execute the delegated functions of the SGB until a long-term solution could be implemented. The interim school manager would manage all school activities save for teaching and learning, which Mr Scheepers would remain responsible for. This meant, according to the SGB, that Mr Scheepers would be continuing with his professional duty as school principal, exercising only those powers that are assigned to him under the South African Schools Act 84 of 1996. Aggrieved at the decision, Mr Scheepers approached the court below to have it reviewed. He contended that the SGB’s decision was unlawful and procedurally unfair. In his view, there was no substantive basis for the decision and the SGB was thus acting beyond its powers. On the other hand, he argued that had been deprived of a reasonable opportunity to make representations by not being given adequate notice of and information concerning the contemplated action by the SGB. In addition, there were no adequate or clear reasons provided for the SGB’s decision. Opposing the relief sought by Mr Scheepers, the SGB maintained its view that the powers, functions and duties which he exercised prior to the impugned decision had been delegated to him by the SGB. As the repository of the original powers and functions, so the argument went, the SGB was entitled to revoke them and, in so doing, retake the control that vested in it in terms of the provisions of the South African Schools Act. The high court considered the applicable legislative framework and concluded that the SGB had overreached in stripping Mr Scheepers of the various functions and duties. It held that the SGB’s decisions to recall all delegated governing body powers from Mr Scheepers and to simultaneously appoint an interim school manager were unlawful and set them aside. The SCA had regard to the functions and duties of governing bodies and school principals by considering the applicable legislation as well as Constitutional Court jurisprudence on this subject. It held that the SGB had ignored the statutory architecture which distinguished clearly between the governance/legislative function and the managerial/executive function performed by the governing body and the principal, respectively. It held, further, that the SGB was unjustifiably dismissive of the provisions of the South African Schools Act and the other applicable legislation by adopting the position that Mr Scheepers, as principal, derived all his functions and duties from it; that in performing his task as principal, Mr Scheepers was merely acting on delegated authority. The decision of the court of a quo that the SGB lacked the statutory authority to act in the manner complained of was thus confirmed. In conclusion, the SCA held as follows: ‘[T]he fundamental premise on which the impugned decision is based is not only false but also contrived. It is clear that the relationship between the chairperson of the SGB and Mr Scheepers has soured. It is equally clear form the documents filed of record that there is tension between camps on either side. The principal might be the victim of unjustified criticism by those opposed to him or he might be conducting himself as described by them. The accusations by each camp are serious. If there is a basis for a disciplinary case to be pursued against Mr Scheepers by the SGB then that should be the route that is followed, rather than the stratagem adopted here. It is disingenuous to suggest that whatever labour law complaints Mr Scheepers might have he must take up with his employer, the HOD. In taking the impugned decision the SGB not only acted beyond its statutory authority, but also negated Mr Scheepers’ labour law rights. Wherever lies the fault for the breakdown in the relationship, it cannot be in the school’s best interests that it continues. What is required is sober reflection by all concerned. More often than not, in situations such as the present it is difficult to persuade parties to retreat from entrenched positions. The school’s interests are not best served by protracted litigation, with attendant financial implications for all, and continuing tensions and uncertainty. There should be a sustained effort to arrive at a solution that best serves the school and any attempt at mediation should involve parties without a leg in either camp. This ongoing tension might also be part of a greater turf war, including organisations. In this instance the interest of FEDSAS and the SAOU diverge. The legislation is there as a beacon. We must, all of us, get down to the real and urgent business of realising the right to education, which is the pathway to the development of the full potential of our learners and communities. This will only occur if every role player understands its role and fulfils it. Put differently, the message to all the role players is simply this: Put the learners first. In the result, the appeal was dismissed with costs, including the costs of two counsel.

130

non-electoral

2017

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1029/2016 In the matter between: INVESTEC BANK LIMITED APPELLANT and ERF 436 ELANDSPOORT (PTY) LIMITED & OTHERS RESPONDENT Neutral citation: Investec Bank Ltd v Erf 436 Elandspoort (Pty) Ltd (1029/2016) [2017] ZASCA 128 (29 September 2017) Coram: Cachalia, Majiedt and Petse JJA and Mokgohloa and Gorven AJJA Heard: 5 September 2017 Delivered: 29 September 2017 Summary: Practice: Civil Procedure: extinctive prescription: claim by bank for payment of a debt arising from loan agreement: mortgage bond registered over a notarial lease: lease cancelled and thus security falling away: debt no longer secured: period of prescription running from date when amount payable under the loan became due as envisaged in s 12(1) of the Prescription Act 68 of 1969. _____________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Molopa-Sethosa J sitting as court of first instance): The appeal is dismissed with costs. _____________________________________________________________________ JUDGMENT ______________________________________________________________________ Petse JA (Cachalia and Majiedt JJA and Mokgohloa and Gorven AJJA concurring): [1] This is an appeal against a judgment of the Gauteng Division of the High Court, Pretoria (Molopa-Sethosa J) which upheld the special plea of prescription raised by the respondents against the appellant’s claim. I shall, for convenience, hereinafter refer to the court a quo as the High Court. [2] The essential facts, which are common cause may be summarised as follows: the appellant, Investec Bank Limited, which is a commercial bank and company with limited liability, instituted an action against six defendants for payment of the sum of R3 979 184.50, together with interest and costs. These were Erf 436 Elandspoort (Pty) Ltd as first defendant; Cecilia Joubert NO; Erf 1081 Arcadia (Pty) Ltd; V & J Properties (Pty) Ltd; Remaining Ext 764 Brooklyn (Pty) Ltd and Erf 22 Hillcrest (Pty) Ltd as second, third, fourth, fifth and sixth defendants respectively. [3] The first respondent, to which the appellant had lent money, was sued as principal debtor whilst the remaining defendants were sued in their capacities as sureties. The action was subsequently withdrawn against the fourth defendant before the commencement of the trial. [4] As security for the loan, the first respondent registered a notarial covering mortgage bond in favour of the appellant over a notarial agreement of lease that it had earlier concluded with a third party, South African Railway Commuter Corporation Limited (SARCC). During January 2002, SARCC cancelled the lease agreement. The cancellation was confirmed by court order in August 2002. [5] On 10 September 2002, pursuant to the cancellation of the lease, the appellant addressed a letter to the first respondent, through its attorneys, in terms of which it advised the latter that it had committed a breach of the loan agreement. Consequently, the letter demanded payment of the outstanding balance of R5 633 177.42. In particular, the letter also contained an intimation that failure to pay the aforesaid amount within seven days would result in action being instituted against the first defendant. As already indicated, on 18 January 2011 – after a period of some eight years – the appellant instituted action against the respondents claiming payment of R3 979 184.50, the amount then owing. [6] The respondents defended the action, advancing various defences to the claim. They also raised a special plea of prescription against the claim asserting that the claim had prescribed by 18 September 2002 at the latest as a result of the amount stipulated in the appellant’s demand not having been paid. The appellant, in turn, delivered a replication in terms of which it alleged that the claim had not prescribed as it was secured by a mortgage bond as contemplated in s 11(a) of the Prescription Act 68 of 1969 (the Prescription Act). In the alternative, it pleaded that the running of prescription was interrupted between the period 7 May 2003 and 21 May 2007. [7] At the trial, and despite resistance by the appellant, the High Court directed that the trial be limited to the respondents’ special plea of prescription only. And more particularly, to the question whether the period of prescription of the debt in issue was 30 years or three years as provided in s 11(a) or s 11(d) of the Prescription Act respectively. Accordingly, it ordered a separation of the issues in terms of Uniform Rule 33(4).1 After hearing argument, the High Court upheld the special plea with costs. It subsequently granted the appellant leave to appeal to this Court. [8] The crisp issue is whether, in these circumstances, the 30 year prescription period provided for in s 11(a)(i) of the Prescription Act in respect of any debt secured by mortgage bond is applicable to the debt. If not, the debt would have become prescribed 3 years after the due date for payment (unless the running of prescription was interrupted in terms of s 14(1)) in terms of s 11(d). [9] Thus the only issue debated at the hearing of this appeal was prescription. Consequently, an analysis of the relevant statutory framework is now apposite. Section 10(1) of the Prescription Act reads: ‘10(1) . . . a debt shall be extinguished by prescription after the lapse of the period which in terms of the relevant law applies in respect of prescription of such debt.’ Section 11, in turn provides for periods of prescription of debts which, in material terms, reads: ’11 The period of prescription of debts shall be the following: (a) thirty years in respect of – (i) any debt secured by mortgage bond; (b) . . . 1 In terms of rule 33(1) of the Uniform Rules of Court, parties to a dispute may agree upon a written statement of facts in the form of a special case for the adjudication of points of law. This statement sets out the facts agreed upon and the questions of law in dispute between the parties, as well as their contentions. Rule 33(3) gives the court the discretion to draw any inference of fact or law from the facts and documents as if proved at trial. See in this regard: Mighty Solutions t/a Orlando Service Station v Engen Petroleum Ltd & another [2015] ZACC 34; 2016 (1) SA 621 (CC) para 61, and Bane & others v D’Ambrosi [2009] ZASCA 98; 2010 (2) SA 539 (SCA) para 7 where this court said that rule 33(1) and (2) made it clear that the resolution of a stated case proceeds on the basis of a statement of agreed facts, and is, after all, seen as a means of disposing of a case without the necessity of leading evidence. (c) . . . (d) save where an Act of Parliament provides otherwise, three years in respect of any other debt.’ [10] Section 12(1) provides: ‘. . . prescription shall commence to run as soon as the debt is due.’ As already mentioned, it is common cause that the debt in issue in this appeal fell due on 18 September 2002.2 What is contested is whether the relevant period is 30 years (s 11(a)(i) of the Prescription Act) or three years (s 11(a)(d) of the Prescription Act). If the period is 30 years, prescription will not avail the respondents, but it will if the period is three years. One of the philosophical justifications for prescription is that ‘society is intolerant of stale claims. The consequence is that a creditor is required to be vigilant in enforcing his rights. If he fails to enforce them timeously, he may not enforce them at all.’3 This consideration assumes significance in this case where the appellant waited for over eight years before it enforced its right against the respondents. [11] The resolution of the dispute between the protagonists in this appeal lies in the proper interpretation of the relevant provisions of the Act set out above (paras 9-10) in accordance with the well-established canons of construction of documents. This exercise entails that the following must be considered, namely: the language used; the context in which the relevant provisions appear; the apparent purpose to which it is directed; and the material known to those responsible for the production of the document under consideration.4 [12] Whilst accepting that the debt in issue became due on 18 September 2002, counsel for the appellant nevertheless contended that the debt had not become prescribed by the time the appellant’s summons was served on the respondents on 2 See List v Jungers 1979 (3) SA 106 (A) at 121C-D where this Court held that there is a difference between when a debt comes into existence on the one hand and when it becomes recoverable on the other hand, although these dates may coincide. 3 Cape Town Municipality v Allie NO 1981 (2) SA 1 (CPD) at 5G-H; Murray & Roberts Construction (Cape) (Pty) Ltd v Upington Municipality 1984 (1) SA 571 (A) at 578F-H. 4 See: Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 18. 21 January 2011 (some eight years after due date). This was so, so went the argument, because the debt was secured by a mortgage bond in which event the period of prescription was 30 years in terms of s 11(a)(i) of the Prescription Act. It was further argued that the fact that the notarial lease which served as the appellant’s real right under the mortgage bond was cancelled did not matter. Counsel placed heavy reliance on Oliff v Minnie 1953 (1) SA 1 (A) in support of his contentions. I shall return to Oliff later. Suffice to state at this stage that the facts in Oliff are distinguishable from the facts of this case. Oliff was concerned with the provisions of a statute that were materially different from those under consideration in this appeal. [13] In support of the special plea of prescription, counsel for the respondents argued that the question whether the debt in issue was secured by mortgage bond must be determined in relation to the time of the service of the summons enforcing the claim. Consequently, as the cancellation of the lease agreement had the effect of extinguishing the first respondent’s rights under the lease and terminating the appellant’s real right under the mortgage bond, the object of the mortgage bond, ie the first respondent’s rights deriving from the lease agreement, ceased to exist with effect from 21 August 2002 at the latest. Thus, when prescription commenced to run from the due date (ie 18 September 2002) the appellant’s debt was not secured by mortgage bond and s 11(d) of the Prescription Act meant that the debt became prescribed after a period of three years reckoned from 18 September 2002. [14] I return to Oliff whose facts are conveniently set out in the headnote of the judgment as follows. In 1930 the respondent had passed a second mortgage bond in favour of the appellant as security of a debt payable on 1 September 1931. During December 1933 the holder of the first mortgage bond caused the mortgaged property to be sold in execution. The sale did not realise enough to reduce the indebtedness on the second bond. The property was transferred to the purchaser and without the encumbrances of the bonds. On 12 February 1931, the appellant gave the respondent notice to pay the amount due under the bond within three months and upon liability being repudiated issued provisional sentence summons on 20 September 1951 based on the bond. The court of first instance refused provisional sentence holding that when the mortgaged property was transferred free of the bonds the appellant’s mortgage bond lost its security so that the shorter period of prescription of eight years applied and not 30 years as would have been the case if its security was still in place. On appeal this Court, accepting that the running of prescribed commenced only from the date when the appellant’s right of action accrued, ie 1 September 1931, held that the mortgage bond did not cease to be such simply because it had become valueless as security. Provisional sentence was consequently granted. It must be emphasised that in Oliff the plaintiff sued for provisional sentence, solely relying on the mortgage bond passed by the mortgagor, ie the defendant in that case. In addition, the statutory provision under consideration in Oliff was materially different from that with which this case is concerned. [15] The decision in Oliff has been commented upon by some academic writers. The learned authors of The Law of Property,5 inter alia, point out that a mortgage bond will be extinguished by the mortgagee releasing the property which is the subject of his or her mortgage bond. And when this happens the security is released but the principal obligation remains. They go on to say that as the debt in Oliff was no longer secured by a mortgage bond, prima facie, Oliff is no longer authority for the interpretation of the [current] Prescription Act, unless a court is prepared to hold that s 11(a)(i) [of the Prescription Act] ‘means any debt which was initially secured by a mortgage bond and justify such construction by reference to the ratio decidendi in Oliff ’.6 [16] Professor Loubser7 supports the views expressed in Silberberg and Schoeman’s The Law of Property referred to in the preceding paragraph and in turn explains the position as follows: ‘Where the bond is cancelled before payment or performance of the debt, the thirty-year prescription period will no longer be applicable and if more than the otherwise applicable shorter 5 Badenhorst Pienaar Mostert Sibberberg and Schoeman’s The Law of Property, 5ed (2006) at 378, para 16.4.9(c). 6 Idem at page 379 para 16.4.9(f). 7 M M Loubser: Extinctive Prescription (1996) at 38. prescription period has elapsed since the due date of the debt, the debt will become prescribed upon cancellation of the bond when the operation of the thirty year period falls away.’ [17] Similarly, Saner in Prescription in South African Law says the following (at 3-35): ‘In a situation where a mortgage bond is cancelled before payment or performance of the debt in question and the debt would, but for the registration of the mortgage bond, have prescribed in the meanwhile, the debt will immediately become prescribed upon cancellation of the bond due to the falling away of the 30 year period.’ The weight of academic authority therefore supports the view that once the security ceases to exist, the debt is no longer secured and the prescription period then becomes 3 years as it is with any other debt (s 11(d)). [18] In this case counsel for the appellant accepted that the appellant’s action was based, not on the mortgage bond as in Oliff but squarely on the loan agreement. As already mentioned, he also accepted that prescription commenced to run from 18 September 2002, this being the due date of the debt. In Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd [1990] ZASCA 136; 1991 (1) SA 525 (A) this Court said the following in relation to when prescription commences to run as intended in s 12(1) of the Prescription Act (at 532G-H): ‘. . . This means that there has to be a debt immediately claimable by the creditor or, stated in another way, that there has to be a debt in respect of which the debtor is under the obligation to perform immediately.’ [Citations omitted] [19] Apparently emboldened by the rider to what the learned authors of Silberberg and Schoeman’s The Law of Property say (in para 16.4.9(f) at 379 referred to in para 15 above), counsel for the appellant contended that the phrase ‘any debt secured by mortgage bond’ in s 11(a)(i) can be interpreted to mean ‘any debt that was at any time’ secured by mortgage bond. (My emphasis.) And that if this were done the period of prescription would be 30 years, meaning that the claim had not prescribed. In my view this argument is untenable. The language of s 11(a)(i) of the Prescription Act is clear. And it is hardly the sort of language that the legislature would have used if the intention was that the loss of the security or the cancellation of the mortgage bond would have no effect on the period of prescription. In my view this interpretation accords with the tenets of purposive and contextualised statutory interpretation and does not result in an absurdity.8 [20] It was not the appellant’s pleaded case, nor was any evidence adduced to establish such a case – given the approach adopted in the High Court – that there is a lacuna in s 11(a)(i) of the Prescription Act rendering it necessary to read in the words ‘that was at any time’ to cure such lacuna.9 Consequently, if this Court were disposed to uphold the appellant’s counsel’s argument it would thereby ‘cross the divide between interpretation and legislation’.10 Counsel for the appellant was understandably constrained to concede as much. [21] As already alluded to in para 8 above, the only issue adjudicated upon by the High Court was whether the period of prescription of the debt sought to be enforced by the appellant was 30 years or three years. The High Court held that the relevant period of prescription was three years. Since this was the only issue argued in this Court, and has been determined against the appellant, it follows that the appeal must fail. [22] In the result the following order is made: The appeal is dismissed with costs. _________________ X M Petse Judge of Appeal 8 Jaga v Dönges NO & another; Bhana v Dönges NO & another 1950 (4) SA 653 (A) at 664E-H; Dadoo Ltd & others v Krugersdorp Municipal Council 1920 AD 530 at 543; Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd & others (CCT 39/2013) [2013] ZACC 48; 2014 (5) SA 138 (CC). 9 Phillips & others v National Director of Public Prosecutions [2005] ZACC 15; 2006 (1) SA 505 (CC) paras 36-38. 10 Endumeni footnote 4 above, para 18. APPEARANCES: For Appellant: F J Erasmus Instructed by: V D T Incorporated, Pretoria Peyper Attorneys, Bloemfontein For Respondent: H F Oosthuizen SC Instructed by: Nöthling Attorneys, Pretoria De Villiers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 29 September 2017 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal. Investec Bank Ltd v Erf 436 Elandspoort (Pty) Ltd (1029/2016) [2017] ZASCA 128 (29 September 2017) The SCA today dismissed an appeal against a judgment of the Gauteng Division of the High Court, Pretoria. The issue on appeal was whether the appellant’s claim against the respondents had become prescribed prior to 21 January 2011 when the appellant’s summons was served on the respondents. The appellant asserted that the claim had not become prescribed because it was secured by a mortgage bond registered in its favour by the first respondent over a notarial lease. It was common cause between the parties that the subject of the mortgage bond, which was a notarial lease that the first respondent had concluded with a third party was cancelled prior to the service of the appellant’s summons. Upon cancellation of the lease, the appellant’s real right in terms of the mortgage bond was extinguished. On 10 September 2002 the appellant addressed a letter of demand to the respondents relying on the cancellation of the lease as a breach of the loan agreement between the parties, giving the respondents seven days within which to pay the outstanding balance. The respondents failed to pay the amount due. The seven day period expired on 18 September 2002. The appellant instituted its action against the respondents on 18 January 2011 and the summons was served on 21 January 2011, some eight years after 18 September 2002. It was argued on behalf of the appellant that s 11(a)(i) of the Prescription Act which inter alia provides that a debt secured by a mortgage bond is subject to a 30 year period of prescription can be interpreted to mean ‘a debt that was at any time’ secured by mortgage bond. And that if such a construction is adopted the fact that the debt in issue was no longer secured by mortgage bond once the lease was cancelled would not matter. The SCA rejected this argument and held that once the security ceased to exist (as when the appellant’s real right was extinguished upon cancellation of the lease) the loan agreement was no longer subject to a 30 year period of prescription but to a three year period of prescription as with any other debt in terms of s 11(d) of the Prescription Act. In the result the appeal was dismissed with costs. --- ends ---

1358

non-electoral

2010

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Case no: 726 / 07 In the matter between: ANTONIO CESAR ALVES DOS SANTOS First Appellant SIKHOSIPHO DERICK MBATHA Second Appellant and THE STATE Respondent Neutral citation: Dos Santos and another v The State (726/07) [2010] ZASCA 73 (27 MAY 2010) BENCH: CLOETE and PONNAN JJA and MAJIEDT AJA HEARD: 3 MAY 2010 DELIVERED: 27 MAY 2010 CORRECTED: SUMMARY: Diamonds Act 56 of 1986 – convictions of dealing in unpolished diamonds. Prevention of Organised Crime Act 121 of 1998 (POCA) – pattern of racketeering – requires proof of a fact which a conviction of the Diamonds Act does not – no improper splitting of charges. Evidence – admissibility of seized items pursuant to an admittedly defective warrant – s 35(5) of the Constitution does not provide for an automatic exclusion of evidence obtained in violation of an accused‟s rights – fairness requires that a balance be struck – accomplices – exercise of caution must not be allowed to displace common sense – circumstantial evidence - not to be approached piece-meal. Sentence – grossly divergent sentences between the two appellants – disturbingly inappropriate – warranting appellate interference. ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape High Court (Cape Town) (Le Grange AJ sitting as court of first instance): (1)(a) The first appellant‟s convictions for contravening s 21 of the Diamonds Act 56 of 1986 are altered to convictions for contravening s 20 of that Act. (b) Save as is set out in para 1(a), the first appellant‟s appeal is dismissed. (2)(a) The second appellant‟s conviction for contravening s 21 of the Diamonds Act 56 of 1986 is altered to a conviction for contravening s 19 of that Act. (b) Save as set out in para 2(a), the second appellant‟s appeal against his conviction is dismissed. (c) The appeal of the second appellant against sentence succeeds to the extent that the sentence imposed on him is set aside and in its stead is substituted the following: „Accused number 6 is sentenced to pay a fine of R 20 000 or in default of paying the fine to a term of imprisonment for a period of one year of which R 10 000 or six months‟ imprisonment is suspended for a period of five years on condition that he is not convicted of a contravention of sections 18, 19, 20 or 21 of the Diamonds Act 56 of 1986, committed during the period of suspension‟. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ PONNAN JA ( JA and AJA concurring): [1] Port Nolloth, notwithstanding its relatively small community of approximately 12 000 residents and some 220 businesses, has become, so the evidence suggests, a hotbed of illicit diamond dealing and related activity. The reason is not hard to find - it is its proximity to rich veins of alluvial diamonds, established diamond mines and mining houses. It and other towns close to the Namibian border have witnessed a proliferation of diamond dealing syndicates. Because of the corrupting and generally corrosive influence that with time becomes all too pervasive in such communities, a task team of the now disbanded Directorate of Special Operations commonly known as the Scorpions, under one of its special investigators, Koos Jooste, was established. It was not the only operation of its kind, nor was it the first. It followed the South African Police Service (SAPS) operations such as Steenbra and Solitaire in that general geographical area. [2] For reasons that are not necessary to recount, the first appellant, Tony dos Santos, became the focus of this particular task team. On 17 January 2003, the task team sought and obtained from the judge designated in terms of s 31 of the Interception and Monitoring Prohibition Act1 an order in terms of s 2(2) authorising a surveillance operation of Tony's Auto Spares, a business enterprise managed and operated by the first appellant in Port Nolloth. Given that the premises housing Tony's Auto Spares was secured by a high perimeter wall and monitored by CCTV cameras, Jooste secreted a pinhole camera in what came to be described in the evidence as the „buyer‟s room‟ of the building. From it, video images and audio feed was transmitted by radio link, in real time, to a house approximately one and a half kilometres away. There some members of the task team in addition to recording what was being transmitted onto video tapes, viewed the live feed on a monitor. Moreover, each of the monitoring crew maintained a log in which they made contemporaneous notes of what they witnessed and heard as it unfolded on the monitor in front of them. [3] Unbeknown to the task team, the first appellant had also attracted the attention of a unit of the SAPS. On 22 February 2003 that unit, armed with a search warrant that had been issued by the Regional Court President of the Cape Regional Division the previous day, conducted a search of Tony's Auto Spares and an adjoining residential unit that was housed under the same roof. The SAPS seized 153 unpolished diamonds 1 Act 127 of 1992. (including one partly polished diamond), cash to the value of R55 000.00 and diamond dealing paraphernalia such as a diamond scale, loupe, tweezers and pieces of paper with diagrammatic representations of diamonds and calculations on them. The first appellant was arrested, charged and released on bail. By that stage the task team had had the first appellant under close observation for approximately one month. [4] On 25 June 2003, Jooste sought and obtained, in terms of s 29 of the National Prosecuting Authority Act,2 a warrant authorising the search of Tony‟s Auto Spares and the first appellant's home at Karee Avenue, Port Nolloth and the seizure of items suspected of being connected to contraventions of inter alia the Diamonds Act3 and the Prevention of Organised Crime Act (POCA).4 By 4 July 2003 Jooste had resolved given the information that had been secured pursuant to the surveillance operation that the time was ripe for him to execute the warrants. He thus deployed three units at approximately 9pm to keep watch at Tony's Auto Spares, the first appellant's home, as well as the local cemetery that the first appellant had taken to frequenting. Shortly before midnight the first appellant was observed entering Tony‟s Auto Spares. All three units descended on those premises. The warrant was served on the first appellant and in his presence his business, the entire building housing Tony‟s Auto Spares and the adjoining residential unit were searched. A video cassette recorder was employed to record the search. The search proceeded into the early hours of the next morning. Various items were seized and the first appellant was arrested and taken into custody. The next afternoon the first appellant accompanied members of the investigating team to his home, which, in his presence, was also searched. Once again various items were seized. In total the second search yielded 24 unpolished diamonds and further diamond dealing paraphernalia. [5] The first appellant was the first of nine accused indicted in the Cape High Court on a host of statutory contraventions. The broad hypothesis sought to be advanced by the State was that each of the accused to different degrees were parties to a pattern of racketeering activity. The alleged activity consisted in the planned, ongoing, continuous 2 Act 32 of 1998. 3 Act 56 of 1986. 4 Act 121 of 1998. or repeated participation or involvement in contraventions of the Diamonds Act. In all, the first appellant was charged with 61 counts of contravening the Diamonds Act, six counts of contravening the Riotous Assemblies Act5 (conspiracy to commit a crime) and two counts of contravening POCA (conducting or participating in racketeering activity or managing an enterprise used for racketeering). [6] The second appellant, Derek Mbatha, who had come to be identified in consequence of the surveillance of the first appellant as one of the alleged role players in the illicit diamond trafficking enterprise, was arrested approximately one year after the first appellant on 3 June 2004. He was charged with three counts – one of contravening the Diamonds Act (dealing in unpolished diamonds), one of contravening the Riotous Assemblies Act (conspiracy to commit a crime) and one of contravening POCA (conducting or participating in racketeering activity or managing an enterprise used for racketeering). [7] A protracted trial ensued. In all some 27 witnesses testified for the State. At the close of the State case all of the accused bar the two appellants were found not guilty and discharged. Neither of the appellants testified in their defence. At the conclusion of the trial before Le Grange AJ (sitting with assessors) the first appellant was convicted on five charges of dealing in unpolished diamonds in contravention of s 21(b) of the Diamonds Act and one charge of conducting or participating in racketeering activity in contravention of s 2(1)(e) of POCA. The second appellant was convicted on one count of dealing in unpolished diamonds in contravention of s 21(a) of the Diamonds Act. On the convictions in terms of the Diamonds Act: before us it was common cause that the first appellant ought correctly to have been convicted under s 20 and the second appellant under s 19. Nothing, however, turns on this. On the racketeering conviction the first appellant was sentenced to a term of eight years‟ imprisonment and in respect of the five contraventions of the Diamonds Act he was sentenced to 12 months‟ imprisonment on each count. Those latter sentences were ordered to run concurrently with the first. The first appellant's effective sentence was thus eight years‟ imprisonment. The second appellant was sentenced to a fine of R20 000 or 5 Act 17 of 1956. imprisonment for a term of four years, half of which was conditionally suspended. The appeal in each instance against the convictions and sentences is with the leave of the court below. [8] The cornerstone of the State case was the evidence of the brothers Basson – Tim and Aubrey. Both were accomplices who were warned in terms of s 204 of the Criminal Procedure Act6 (CPA). The former had been in the first appellant's employ for some nine years prior to his arrest. On 24 January 2003, Tim contacted the first appellant telephonically and informed him that his brothers Aubrey and Andre, who were then employed by Alexkor mine, sought a meeting with him. The purpose of that meeting, so Tim and Aubrey testified, was to enable them to dispose of certain unpolished diamonds that they had smuggled from their place of employment, to the first appellant. That meeting took place in the buyer‟s room of Tony's Auto Spares. In it, the diamonds changed hands for R1 000.00. [9] Two days later on 26 January 2003, as was their wont, the three brothers visited the first appellant to view a rugby match on MNet. On that occasion, according to both Tim and Aubrey, all three of them were schooled by the first appellant in the purchase of unpolished diamonds. In the words of Aubrey: 'Dit was die Sondagnamiddag gewees. Ons het weer gegaan na die kantoor wat die winkelgedeelte van die huis skei en ons het weer stelling ingeneem by sy lessenaar. Wat daar gebeur het, mnr Dos Santos het aan ons 'n demonstrasie gedoen hoe om 'n loop te hanteer. Hoe om – hoe jy die loop in jou regterkantste hand vashou, 'n ongeslypte diamant aan jou linkerkantste hand en hoe jy die diamant dan bestudeer. Mnr Dos Santos het die demonstrasie gedoen en daarna het ons drie broers dit ook daarna gedoen. En hoe was dit aan u verduidelik om die loop te gebruik? --- Kan u weer die vraag stel? U sê u was gewys om die loop te gebruik? --- Dis korrek, ja. Kan u vir ons verduidelik hoe dit aan u getoon is of hoe gebruik 'n mens 'n loop? --- Die loop hou jy aan jou regterkantste hand vas. Dan sit jy jou lang vinger sit jy deur die opening. Die vergrootglas van die loop hou jy in jou wysvinger en jou duim vas. Dan bring jy hom naby aan jou oog. In jou linkerkanste hand, jou wysvinger en jou duim het jy jou diamant. Dan bring jy jou diamant nader na die loop toe om 'n beter view te kan kry van hom, dan rol jy die diamant om te kyk vir enige krake, spots, die kleur van die diamant. 6 Act 51 0f 1977. U Edele, ek sal nie nou daardie beeld toon nie, maar ek sal dit môre toon. Dit gaan 'n bietjie tyd neem om dit te kry, want dis op dieselfde band. Wat het na die opleiding gebeur, mnr Basson? --- Mnr Dos Santos het die diamantskaal sowel as die loop sowel as kontant aan my oorhandig omdat ek nou nie oor die nodige finansies beskik om die diamante aan te koop nie, sowel as 'n tabel wat hy vir my geteken het, wat ek moes gebruik het om – in die tabel is dit opgestel die rand, die hoeveelheid geld wat jy moet betaal vir 'n diamant. Dan kyk jy vir die kleur van die diamante en die verskillende karate. U sê mnr Dos Santos het geld aan u oorhandig? --- Dis korrek, ja. Kan u onthou hoeveel aan u oorhandig was? --- Dit was 'n bedrag van R5 000.' [10] A few days later, Aubrey used the scale and loupe and R1 000.00 of the first appellant's R5 000.00 to purchase unpolished diamonds from certain persons in Buffelsrivier, a few kilometres from his place of employment. On 29 January 2003, together with his brother Andre and possibly Tim (of the latter Aubrey was not sure) he called on the first appellant at Tony‟s Auto Spares. There he supplied the diamonds to the first appellant. Early in February 2003 Aubrey once again purchased unpolished diamonds from the same persons in Buffelsrivier. On 6 February 2003 he visited Tony's Auto Spares and handed those unpolished diamonds (12 in all) to the first appellant. Each of those three occasions testified to by Aubrey constituted a separate charge of contravening the Diamonds Act on which the first appellant was ultimately convicted. [11] Insofar as the second appellant is concerned, Tim testified that he (the second appellant) came to see the first appellant during the course of Friday 21 February 2003. Tim was told by the first appellant that the second appellant had to go and fetch something from the mine and that Tim must give him some money for petrol. That Tim did. After 10pm that evening, the first appellant called Tim on his cellular phone to tell him that the second appellant was at Tony's Auto Spares and that he (Tim) must go there to open the premises for the second appellant. Tim did as he was told and let the second appellant onto the premises. When the first appellant arrived, the two appellants made their way to the buyer‟s office, whence Tim heard the first appellant who was speaking loudly say 'Dit is 'n 100 carat. Ek is ryk. Al die probleme is verby'. Later that evening and after the second appellant had left, the first appellant invited Tim into his office. There the first appellant placed a large unpolished diamond on the table, which he informed Tim the second appellant had brought. Tim was asked to examine the stone and to weigh it. The stone weighed 91 carats. That constituted the fourth charge of contravening the Diamonds Act on which both appellants were convicted. [12] In respect of the first appellant‟s fifth conviction of contravening the Diamonds Act, Tim testified: 'Terwyl mnr Dos Santos in die selle was in Port Nolloth, het 'n ene John Legged [that should have been Legget] besoek by die winkel afgelê en aan my gesê hy will mnr Dos Santos sien. Ek het aan hom genoem ... (tussenbeide). HOF: Jammer, kan u die persoon se naam net herhaal, asseblief. --- John Legget. John Legget? --- Ja, Edelagbare. Ek het aan hom genoem dat Tony nie hier is nie. Die polisie was die naweek by ons en hulle het hom gearresteer en hy het vir my gesê hy wil my privaat sien. Ek het hom na die eerste kantoor gevat wat net naby die winkel is en daar binne met hom gepraat. Hy het aan my gesê dat hy iets wil kom afsit by mnr Dos Santos. Ek het aan hom gesê ek sal hom help omdat mnr Dos Santos in die selle is. My woorde aan hom was gewees, ons gaan nie loop lê terwyl mnr Dos Santos in die selle is nie. Ons sal wys ons gaan voort. Ek sal hom help met die transaksie om vir mnr Dos Santos te wys dat ons staan agter hom. Ek is na die binne kantoor en het van die toerusting daar gaan haal en dit na die eerste kantoor gebring om John Legget se steen te weeg op die skaaltjie. Ek het die diamant by hom gevat en dit op die diamantskaal geplaas en gesien dit weeg 2.77 karaat. Ek het aan hom genoem dat ek nie die volle bedrag kan betaal nie, omdat ek nie weet hoeveel ek hom moet gee nie en aan hom genoem ek gee hom 'n deposito van R400. Ek sal hom R400 gee totdat mnr Dos Santos uit is - op borg uit is en dan kan hy terugkom en sy verskil kom haal. Hy het verstaan en ek het die geld aan hom oorhandig.' There can be little doubt that Tim acted as the first appellant‟s agent in respect of the 2.77 carat diamond purchased from Legget. That much emerges from the following excerpt of his evidence: 'Op daai stadium was die winkel onveilig gewees en ek het geglo dat ek Tony se goed by my huis moet bêre. Ek het ook John Legget se 2.77 karaat gevat en dit by my huis in die kluis toegesluit. Na Tony op borg uit is, het ek aan hom gevra of ek dit moet gaan haal by my huis om dit vir hom te bring. Hy het vir my gesê, nee, ek moet dit daar bêre. Dis veilig daar. Ons het nog altyd voortgegaan om kliënte te help na-ure en ek het weer aan mnr Dos Santos gevra, moet ek daai goed gaan haal en dit vir hom bring, want John Legget het nie sy geld gekry nie. Hy het gesê, nee, ons bêre dit daar. Die ander bly in sy ma se tuin.' [13] The Legget transaction was not an isolated one. According to Tim: „My dienspligte, soos ek sê, het later verbeter in die winkel, deurdat ek van die kliente moes help in die winkel na-ure as Tony nie daar was nie, met onwettighede en dan moes ek ook geld uitbetaal het of ek moes geld weggeneem het. … Watter onwettighede? --- Dit was die aankoop van ongeslypte diamante. Ken u „n ongeslypte diamante, mnr Basson? --- Dis reg, ja. Tony het my vertel of geleer wat is „n geslypte diamante en wat is „n ongeslypte diamante.‟ Tim testified furthermore that there were other instances when he dealt, in the absence of the first appellant, with potential sellers of unpolished diamonds. He explained: 'Verduidelik my die prosedure, mnr Basson, wat u sal volg as iemand – of toe u nou ongeslypte diamant aankoop? --- Dit sou net gebeur as Tony nie in die plek is nie, wanneer die kliënte na my toe gaan kom, dan gaan ek hulle help. Ek sal hulle in die eerste kantoor van die winkel los. Dan sal ek alleen na Tony se kantoor beweeg en dan sal ek die diamante op die tafel plaas. Dan sal ek die papiertjie op die tafel plaas. Ek sou die diamantskaaltjie vat. Dan sou ek dit op die lessenaar plaas, dit oopmaak. Ek sou die diamant vat en dit op die skaaltjie plaas om te kyk hoeveel dit weeg. En dan sou ek die loop vat en dit daardeur besigtig deur te kyk of daar enige spots of krake of onsuiwerhede daarin is.' [14] Immediately after the sentencing of the appellants, the court below granted an order in terms of s 35(1)(a) of the CPA declaring forfeit to the State the diamond dealing paraphernalia that had been seized during the search of the first appellant's premises. The State, moreover, gave notice of its intention to apply for a confiscation order against the first appellant in terms of s 18 of POCA in the sum of R2 099 218.75, being the value of the unpolished and polished diamonds seized from the appellant's premises, as also the cash to the value of R55 000.00. [15] Paragraph 4 of the draft confiscation order read: 'The commissioner of the South African Police Services, at his discretion and written authority, as provided for in terms of section 3(1) of the Finance and Financial Adjustments Acts Consolidation Act 11 of 1977, is authorized to pay a reward of one third of the value of the unpolished diamonds seized by members of the South African Police Services on 22 February 2003, i.e. one third of R1 897 605.00.' That immediately prompted counsel for the first appellant to apply for a special entry to be made in terms of s 317 of the CPA. Counsel motivated the application thus: 'I am caught at a disadvantage, M'Lord, because the defence was not informed that a reward to the tune of R600 000 will be paid in return for information which apparently led to the prosecution in this matter and we were not informed whether the person who provided this information would be a witness and we were not told what this information would entail. Under the circumstances I am obliged to request that Your Lordship authorizes that a special entry be made in the record with regard to this particular aspect.' [16] Without immediately settling the terms of the special entry, Le Grange AJ acceded to counsel‟s request. After certain skirmishes between the parties as to the terms of the special entry the learned Judge eventually granted leave to the State as also the appellants to adduce evidence to enable him to determine and state the facts underpinning the special entry. Jooste testified for the State. None of the appellants did, nor were any other witnesses called on their behalf. In essence the court held that despite the evidence of Jooste which was not gainsaid by the appellants, it could not find that the application for a special entry was frivolous or absurd or that granting it would constitute an abuse of the process of the Court. It accordingly made a special entry in these terms: 'i). Jacobus Hermanus van Wyk ("Van Wyk") and Willem ("Tim") Basson testified on behalf of the State against the Accused prior to the conviction of Accused 1 and 6. ii). On 23 October 2004, Van Wyk, and Tim had a telephonic conversation during which Tim told Van Wyk that he had been informed that a sum of R600 000 was available for information that would lead to the conviction of the Accused. iii). As far as the Directorate of Special Operations ("DSO") is concerned, no reward will be paid to a State witness in this matter. iv). The DSO and the Commissioner of the South African Police ("the Commissioner") agreed that the Commissioner has a discretion to pay a reward of approximately R600 000 to State witnesses in this matter. v). Prior to the conviction of Accused 1 and 6, Tim consulted with members of the South African Police in the absence of members of the DSO. vi). The information referred to in paragraphs (ii) - (v) was only obtained by the accused and their legal representatives after the conviction and sentence of accused 1 and 6. vii). The Accused were deprived of an opportunity to cross-examine the State witnesses in the aforesaid regard.' [17] Before us counsel conceded that the irregularity referred to in the special entry was not of such a nature that it amounted without more to a failure of justice. Rather, so the submission went, the possibility that Tim Basson may have been motivated by the payment of a reward justified his evidence being approached with extreme caution. That being so it is unnecessary for me to express any view on the correctness of the procedure adopted in the court below in respect of the invocation of s 317 of the CPA by counsel and the consideration given it by the court below. In my view, counsel was amply justified in his submission that the evidence of the Bassons was deserving of heightened scrutiny, for, as the following extract from the recorded transcript of Aubrey‟s evidence makes plain, both were particularly dangerous witnesses. 'Daar was een keer 'n geval gewees wat ek 'n video-opname gemaak het in mnr Dos Santos se kantoor met my persoonlike videokamera waar ek ongeslypte diamante afgeneem het. Hoekom? --- Die rede hoekom ek dit gedoen het, daar is 'n ander Portugees in Port Nolloth omdat my broer altyd na hom toe gegaan het as mnr Dos Santos daar was nie, het hy met die ongeslypte diamante na die persoon toe gegaan en ons op 'n dag gaan geld leen ook by die persoon en hy het vir ons gesê, soos hy vir my broer toe die vorige keer gesê het, onthou een ding, julle speel met vuur. Is 'n gevaarlike game waarmee julle besig is. . . . U sê u het 'n opname gemaak van ongeslypte diamante, waar het u die opname gemaak? --- Die opname het ek gemaak in die kantoor wat op die video nou gewys was, die kamertjie van mnr Dos Santos. En die ongeslypte diamante wat u op band vasgelê het, waar het u dit gekry? --- Die ongeslypte diamante was in die laai, my broer wat daar werk, het die diamante daar uitgehaal, dit was in 'n klein swart potjie gewees en hy het dit uitgegooi en ek het dit opgeneem. . . . Kan u vir ons sê wat dit is? --- Dit is een van die ongeslypte diamante wat ek met my persoonlike videokamera afgeneem het. Mnr Basson, terwyl ons kyk sien ons daar is sekere getalle of syfers op die TV of op die beeld, kan jy dit vir ons verduidelik wat dit is? --- Dit is die datum wanneer die opname gemaak is en die tyd. Wat sien ons nou, mnr Basson? --- Dit is die karaat hoeveel daardie diamant weeg wat op die skaal is. Dit is nog van die diamante wat uit die swart potjie uitgekom het. Wat gebeur nou, mnr Basson? --- Dit is nog diamante daardie en hulle was ook in daardie swart houertjie gewees. Behalwe om die diamante op te neem. M'Lord, that's just the footage. Daar is net een vraag, mnr Basson, behalwe om die videoband op te neem, watter ander handelinge het u met die diamante gedoen tydens daardie opneming van die videoband? --- As u net die vraag anders kan stel, ek verstaan hom nou nie so mooi nie. Julle het die diamante uit die pot geneem, julle het dit opgeneem op die videoband. --- Dit is korrek. Wat het toe met die diamante gebeur wanneer julle klaar was met die opneming? --- O, die diamante is teruggesit in die pot en dit is my broer se werk, hy het gewerk met die diamante. Hy het dit teruggesit in die pot en in die laai gebêre.' [18] It follows that the cautionary rule relating to accomplices is applicable to the evidence of the Bassons. That rule has been stated as follows by Holmes JA in S v Hlapezula:7 'It is well settled that the testimony of an accomplice requires particular scrutiny because of the cumulative effect of the following factors. First, he is a self-confessed criminal. Second, various considerations may lead him falsely to implicate the accused, for example, a desire to shield a culprit or, particularly where he has not been sentenced, the hope of clemency. Third, by reason of his inside knowledge, he has a deceptive facility for convincing description – his only fiction being the substitution of the accused for the culprit. Accordingly, even where sec. 257 of the Code has been satisfied, there has grown up a cautionary rule of practice requiring (a) recognition by the trial Court of the foregoing dangers, and (b) the safeguard of some factor reducing the risk of a wrong conviction, such as corroboration implicating the accused in the commission of the offence, or the absence of gainsaying evidence from him, or his mendacity as a witness, or the implication by the accomplice of someone near and dear to him; see in particular R v Ncanana, 1948 (4) SA 399 (AD) at pp 405-6; R v Gumede, 1949 (3) SA 749 (AD) at p 758, R v Nqamtweni 1959 (1) SA 894 (AD) at pp 897G-898D. Satisfaction of the cautionary rule does not necessarily warrant a conviction, for the ultimate requirement is proof beyond reasonable doubt, and this depends upon an appraisal of all the evidence and the degree of the safeguard aforementioned.' [19] It must be emphasised that by corroboration is meant other evidence which supports the evidence of the state witness and which renders the evidence of the accused less probable on the issues in dispute (S v Gentle).8 And whilst I am inclined to heed Counsel‟s note of caution that the evidence of the Bassons be treated with extreme caution, it bears noting that corroboration is not the only safeguard that can properly be employed to reduce the danger of convicting an innocent person. For, ultimately what is required is proof beyond a reasonable doubt and whether or not that threshold has been passed by the State depends upon an appraisal of all of the evidence. [20] To the evidence of the Bassons, may be added the various items seized during each search. On behalf of the appellants it has been submitted that the evidence secured pursuant to the search falls to be excluded in terms of s 35(5) of the Constitution. Section 35(5) provides: 7 1965 (4) SA 439 (A) at 440D-H. 8 2005 (1) SACR 420 (SCA) at 430j-431a. 'Evidence obtained in a manner that violates any right in the Bill of Rights must be excluded if the admission of that evidence would render the trial unfair or otherwise be detrimental to the administration of justice.' The learned trial judge concluded after an admissibility trial that the admission of the evidence would not render the trial unfair or otherwise be detrimental to the administration of justice. [21] The warrant, so it was conceded by the State, suffered the technical defect that the regional magistrate who issued it was not a magistrate as defined for the purposes of s 21 of the CPA.9 The Constitution's specific exclusionary provision does not provide for the automatic exclusion of evidence obtained in violation of an accused's constitutional rights. Evidence falls to be excluded only if its admission would (a) render the trial unfair or (b) be otherwise detrimental to the administration of justice. As to (a): That provision resonates with Section 35(3) of the Constitution which guarantees every accused person the right to a fair trial. That constitutional principle is underscored by the philosophy that before persons are to be punished their guilt must first be established in a fair trial.10 But as it was put in S v Jaipal11 'The right of an accused to a fair trial requires fairness to the accused, as well as fairness to the public as represented by the State. It has to instil confidence in the criminal justice system with the public, including those close to the accused, as well as those distressed by the audacity and horror of crime.' As to (b): This involves essentially a value judgment. In S v Mphala,12 Cloete J formulated the approach to be adopted as follows: 'So far as the administration of justice is concerned, there must be a balance between, on the one hand, respect (particularly by law enforcement agencies) for the Bill of Rights and, on the other, respect (particularly by the man in the street) for the judicial process. Overemphasis of the former would lead to acquittals on what would be perceived by the public as technicalities, whilst overemphasis of the latter would lead at best to a dilution of the Bill of Rights and at worst to its provisions being negated.' [22] The approach to an enquiry such as this is appositely captured in Key v Attorney- General, Cape Provinicial Division,13 where Kriegler J held: 9 According to s 1 „magistrate includes an additional magistrate and an assistant magistrate but not a regional magistrate‟. 10 Sanderson v A G Eastern Cape 1998 (2) SA 38 (CC) para 23. 11 2005 (4) SA 581 (CC) para 29. 12 1998 (1) SACR 654 (W) at 657G-H. Cited with approval by Scott JA in his minority judgment in S v Pillay 2004 (2) SACR 419 (SCA) para 10. 'In any democratic criminal justice system there is a tension between, on the one hand, the public interest in bringing criminals to book and, on the other, the equally great public interest in ensuring that justice is manifestly done to all, even those suspected of conduct which would put them beyond the pale. To be sure, a prominent feature of that tension is the universal and unceasing endeavour by international human rights bodies, enlightened legislatures and courts to prevent or curtail excessive zeal by State agencies in the prevention, investigation or prosecution of crime. But none of that means sympathy for crime and its perpetrators. Nor does it mean a predilection for technical niceties and ingenious legal stratagems. What the Constitution demands is that the accused be given a fair trial. Ultimately, as was held in Ferreira v Levin [1996 (1) SA 984 (CC], fairness is an issue which has to be decided upon the facts of each case, and the trial Judge is the person best placed to take that decision. At times fairness might require that evidence unconstitutionally obtained be excluded. But there will also be times when fairness will require that evidence, albeit obtained unconstitutionally, nevertheless be admitted.' [23] Here the investigating team did not act in flagrant disregard of the first appellant's constitutional rights. On the contrary, they sought judicial authority for their conduct. That judicial imprimatur was an attempt to uphold the law in spirit and letter. None of those executing the warrant knew that it suffered a defect. Eschewing the local Magistrates' Court in favour of one located in Cape Town was designed to protect the integrity of the investigation and to preserve the element of surprise, for, during operation Solitaire an approach to the Port Nolloth Magistrates' Court had resulted in the leaking of information. Significantly, Superintendent Bruwer testified: 'Nou sup Bruwer, u het getuig dat deel van u magte is dat u ook visenteringslasbriewe mag uitreik. Verduidelik vir ons hoekom het u nie self hierdie visenteringslasbrief uitgereik nie en dit deurgestuur na die Kaap toe? --- U Edele, ek het gevoel dat daar is genoeg tyd en dat 'n onafhanklike persoon buite die polisie, dat 'n landdros die inligting voorgelê word en dat die landdros die visenteringslasbrief uitreik.' [24] In those circumstances it is plain that the task team was not attempting to garner any unfair advantage for themselves. Rather it plainly was an endeavour to protect the interests of the first appellant. For that they should be commended, not penalised by having the evidence that has been secured pursuant to that warrant excluded. To exclude the evidence in those circumstances would not conduce to a fair trial. Nor for that matter would it serve to advance the administration of justice. To exclude the evidence simply because the wrong magistrate had been inadvertently approached 13 1996 (4) SA 187 (CC) para 13. would run counter to the spirit and purport of the Constitution. In my view, on the facts of this case s 35(5) could hardly countenance the exclusion of the impugned evidence. Accordingly the conclusion reached by the trial court on this score cannot be faulted. [25] Reverting to the evidence of the Bassons: Notwithstanding their relationship of employer and employee, Tim often accompanied the first appellant on his long personal and business trips. The level of trust that the first appellant reposed in Tim is illustrated by the fact that Tim often opened and closed the business premises and supervised the conduct of the business in the first appellant's absence. To facilitate that arrangement, the first appellant had leased premises for Tim to occupy across the street from Tony's Auto Spares. The first appellant also paid for Tim's cellular phone. The location of the leased premises was significant according to Tim, for it enabled him quick access to Tony's Auto Spares whenever needed, which all too frequently was late in the evening and way after the spare‟s shop had closed for business at 6pm. Moreover, both of the Bassons, upon being arrested, intimated their desire to plead guilty to the charges and a willingness to co-operate with the State. Each was convicted pursuant to this plea and was sentenced to imprisonment for a term of two years which was conditionally suspended for five years. [26] The brothers corroborated each other in material respects (see S v Avon Bottle Store (Pty) Ltd;14 S v Hlapezula15). Moreover each was supported by the surveillance tapes, the incident register as confirmed by the evidence of the relevant member of the task team who made the entries in question and the record from MTN confirming the cellular telephone calls between Tim and the first appellant as testified to by the former. The surveillance tapes were admittedly of a very poor quality. Notwithstanding its grainy quality however, it afforded confirmation of the Bassons‟ presence in the buyer‟s room on each occasion that they allegedly participated in an illicit diamond dealing transaction as testified to by them. Importantly their account found support in the dates and times on the surveillance tapes and the corresponding entries in the log. 14 1963 (2) SA 389 (A) at 393H. 15 1965 (4) SA 439 (A) at 440H. [27] The trial court, I should perhaps add, was alive to the dangers of accepting the evidence of the Bassons absent corroborating evidence implicating the appellants (see S v Scott-Crossley 2008 (1) SACR 223 (SCA) paras 7 and 8). It is so that the evidence of the Bassons taken individually and cumulatively was not without blemish. But when taken together with the other evidence to which I have alluded it has an unquestionable ring of truth. I thus do not believe that those blemishes are such as to warrant either a rejection of the evidence of either or to undermine reliance upon them. For, as Holmes JA made plain (S v Artman16): „courts must guard against their reasoning tending to become stifled by formalism. In other words, the exercise of caution must not be allowed to displace the exercise of common sense‟. [28] In respect of the first appellant there are as well the items seized during each search. To recapitulate, those items included the unpolished and polished diamonds, substantial sums of cash, the diamond dealing paraphernalia such as magnifying glasses, diamond scales, diamond loupes and two other seemingly insignificant items being recently torn pieces of paper with diagrammatic representations that were recovered from the toilet system and other pieces of paper with diagrammatic representations, and partially used 49% strength hydrofluoric acid. In so far as the pieces of paper are concerned, whilst Superintendent Hamman, the handwriting expert, could not say with any degree of certainty that the pieces of paper bore the first appellant‟s handwriting he was willing to opine that it strongly resembled his handwriting. The significance of those pieces of paper emerges from the following evidence in cross examination of the expert gemmologist, Arthur Thomas: 'Now my question to you, Mr Thomas, having analyzed what now transpires to be uncut diamonds that were presented to you, would you be able to identify what purports to be a description of those two stones in conjunction with the little sketch appended there? --- What I see here, is something that we frequently use in the trade, that I use myself. In other words, I take it that this stone was an octahegen. This little sketch is typical of what we use.' .... 'Let's move on to the other stone? --- Here we see an octahegen with an intrusion indicated in the stone. This appears to conform to stone B11, which to three decimal places weighed 1.736 carats. 16 1968 (3) SA 339 (A) at 341C. And there's a possibility that this may be ... (intervention). --- I would put it as a strong possibility, not on oath, but a strong possibility that this is the stone.' And the evidence was that whilst hydrofluoric acid in that strength has other heavy industrial uses, it is commonly used to clean unpolished diamonds. [29] In respect of the second appellant and the transaction involving the 91 carat diamond, it was put by counsel to one of the state witnesses on behalf of the first appellant: 'Nou mnr Dos Santos sal met betrekking tot hierdie spesifieke transaksie kom getuig as hy moet en daar sal ook eksterne bewys wees daarvan indien nodig, dat by hierdie spesifieke geleentheid mnr Mbatha by hom kom geld leen het met die oog op 'n begrafnis wat moes plaasvind.' Likewise the following was put on behalf of the second appellant: 'Mnr Jooste, beskuldigde nommer 6 [the second appellant] sal erken indien dit nodig is, dat hy wel daar op die 21ste was, maar die doel was om geld te leen en nie diamant te verkoop nie? --- U Edele, dis die eerste keer in my lewe wat ek sien iemand omhels iemand as hy geld geleen het, van blydskap.' 'Sal u sê dat daar is niks verkeerd om iemand te omhels as daai persoon aan my meegedeel het dat hy net nou een van sy geliefdes verloor en dat môre is daar 'n begrafnisdiens? --- U Edele, dan gaan jy dit met deernis doen. Jy gaan nie bly wees nie. En dit is wat beskuldigde 6 kom sê indien nodig dat 'n stamlid, 'n vrou, is oorlede en die Saterdag ... (tussenbeide) . . . Dis 'n vrou wat 'n lid van die Zoeloe-stam is, wat oorlede is en die Saterdag is die begrafnisdiens. En hy was eers Tony's Auto Spares toe na middag om geld te gaan leen, want hy wou skape gaan koop en later Tony het hom gebel om te sê, het jy reg gekom met die skape. Toe sê hy, nee. En Tony het gesê, hoekom nie. En hy het gesê, ek benodig geld. En toe het hy geld gaan leen.' [30] It thus came to be undisputed that the second appellant was indeed at the first appellant‟s premises at the time in question. The trial court concluded as presaged in Jooste‟s evidence: 'Despite this poor quality, the video footage of the evening of 21 February 2003 when Accused no 6 [the second appellant] visited Accused no 1 [the first appellant] does not however support the contention that this was an occasion where a bereavement was discussed since it was clear to this Court that both accused were in a mood of ecstasy. Both of them could hardly control their joy and laughter and recorded them hugging each other. It is therefore highly improbable that Accused No 6 was asking for financial assistance as a result of a bereavement.' [31] The trial court has been criticised for what it is submitted is a contradictory approach inasmuch as it refused to place any reliance on the tapes when it acquitted the remaining accused at the conclusion of the state case in terms of s 174 of the CPA. In my view the approach of the trial court is beyond reproach. Given the quality of the tapes it was understandably reluctant, on the strength of them, to place the other accused on their defence. It was thus unwilling to rely upon them as a source of incriminating evidence. At the close of the defence case not only was the test different but also the nature of the enquiry. At that stage the trial court was confronted with two hypothetical postulates – one, advanced by the state, that the second appellant was there to sell a 91 carat diamond and the other, advanced by the appellants, that he was there to borrow money on account of a family bereavement. The trial court concluded, against the backdrop of the surveillance tapes, that the one advanced by the appellants (in support of which neither appellant testified it must be added) was implausible and therefore untenable. In that, the trial court, in my view, cannot be faulted. [32] Tellingly, the one search yielded a 91 carat diamond. That in itself lends material corroboration to Tim Basson‟s version. So do the surveillance tapes, incident register and MTN records. But even if Tim were not to be relied on, there remains the evidence of the gemmologist Thomas. Under cross examination by counsel for the second appellant, he testified with reference to what he could see of the 91 carat diamond on the surveillance tapes: 'That is real evidence. Now what I want to know is can you say with certainty that one of those objects on the scale there, was the same size as that …? --- The object that was being handled was approximately this size, yes. The object that was being handled? --- The object that we saw being handled was approximately this size. Now can you just tell me when did you see an object being handled? --- I saw the scale brought out. I saw the 50 carat correcting weight put into place, in order to calibrate the balance. Then the person picked up an object and put it on the balance. That object, looking at his hands as he picked it up and put it on the balance, was approximately this size. If I can explain that a little further, this is approximately the size of the 50 carat metal calibrating weight that was used. He picked up the calibrating weight, put it onto the balance, set the balance ... (intervention).' ... 'Now when you say that you saw him pick up something, are you referring to what you could see on the scale or what you could see before that? --- He had it on a pad in front of him. They shook hands (indistinct) a couple of times. The stone that had come out of the stone paper, was sitting on the pad in front of him. He calibrated the scale. He picked up something off the pad that was approximately this size and put it on the scale to weigh it.' [33] In assessing circumstantial evidence one needs to be careful, as our courts have repeatedly warned, not to approach such evidence upon a piecemeal basis and to subject each individual piece of evidence to a consideration of whether it excludes the reasonable possibility of an innocent explanation (S v Reddy).17 For as Davis AJA, quoting with approval from Best on Evidence, reminded us in R v De Villiers:18 'Not to speak of greater numbers; even two articles of circumstantial evidence – though each taken by itself weigh but as a feather – join them together, you will find them pressing on the delinquent with the weight of a millstone. . . . It is of the utmost importance to bear in mind that, where a number of independent circumstances point to the same conclusion the probability of the justness of that conclusion is not the sum of the simple probabilities of those circumstances, but is the compound result of them.' [34] Before us counsel sought to suggest that the evidence seized during the search may have been planted by the investigating team. That as a possibility was not explored before the trial court. In fact it was not even suggested to any of the state witnesses that that may have occurred. A court, particularly one such as this on appeal, need hardly concern itself with what at best for the first appellant would qualify as a remote possibility. To do so would oblige the State during the trial to eliminate every conceivable possibility that may depend upon "pure speculation" (S v Glegg).19 The fact that a number of inferences can be drawn from a certain fact, taken in isolation, does not mean that in every case the State, in order to discharge the onus which rests upon it, is obliged, according to Diemont JA (S v Sauls):20 „to indulge in conjecture and find an answer to every possible inference which ingenuity may suggest any more than the Court is called on to seek speculative explanations for conduct which on the face of it is incriminating.‟ 17 1996 (2) SACR 1 (A). 18 1944 (AD) 493 at 508. 19 1973 (1) SA 34 (A) at 38H. 20 1981 (3) SA 172 (A) at 182G-H. [35] There was thus an entire body of evidence that operated against both appellants to different degrees. All of that evidence certainly called for an answer, for in respect of each a prima facie case had been established. Yet the appellants countered it with nothing, preferring instead to shun the witness stand. That was the right that each had, but its exercise is not without certain consequences. The choice of each to remain silent in the face of evidence implicating them in criminal conduct is suggestive of the fact that each had no answer to it. For if the evidence implicating the appellants was capable of being neutralised by an honest rebuttal, it ought to have been.21 Weighing carefully the cumulative effect of all of the circumstantial evidence together with the direct evidence, the guilt of each appellant was so strong, that the learned Judge in the court below must inevitably have convicted. It follows that save for correcting the five convictions in the case of the first appellant to read s 20 instead of s 21, and in the case of the second appellant the one conviction to read s 19 instead of s 21, each of the appellants was correctly convicted on charges in terms of the Diamonds Act. [36] There remains the conviction of the first appellant in terms of POCA. Section 2(1)(e) of POCA to the extent here relevant provides: „Any person who – . . . (e) whilst managing or employed by or associated with any “enterprise”, conducts or participates in the conduct, directly or indirectly, of such enterprise's affairs through a “pattern of racketeering activity".' In S v Eyssen,22 Cloete JA stated: 'The essence of the offence in subsec (e) is that the accused must conduct (or participate in the conduct) of an enterprise's affairs. Actual participation is required (although it may be direct or indirect). [The subsection] covers a person who was managing, or employed by, or associated with the enterprise. "Manage" is not defined and therefore bears its ordinary meaning, which in this context is: "1 be in charge of; run. 2 supervise (staff). 3 be the manager of (a sports team or a performer)." Thus for a conviction the state had to establish the existence of an enterprise, a pattern of racketeering activity and a link between them and the first appellant. 21 S v Mavinini 2009 (1) SACR 523 (SCA) para 23; S v Thandwa 2008 (1) SACR 613 (SCA) para 53; S v Chabalala (2003) (1) SACR 134 (SCA) para 21. 22 2009 (1) SACR 406 (SCA) para 5. [37] It is a requirement of the subsection that the accused must participate in the enterprise's affairs. The word „enterprise‟ is widely defined. As pointed out in Eyssen (para 6) „it is difficult to envisage a wider definition‟. It is a further requirement that the participation must be through a pattern of racketeering activity. 'Pattern of racketeering activity' is defined to mean „the planned, ongoing, continuous or repeated participation or involvement in any offence referred to in Schedule 1 and includes at least two offences referred to in Schedule 1, of which one of the offences occurred after the commencement of this Act and the last offence occurred within 10 years (excluding any period of imprisonment) after the commission of such prior offence referred to in Schedule 1.‟ Once again the term is widely defined. The participation must be by way of ongoing, continuous or repeated participation or involvement (see Eyssen para 8 and 9). [38] In the present case the evidence adduced by the state established that the first appellant conducted an illegal diamond dealing enterprise. The affairs of the enterprise entailed him purchasing unpolished diamonds from people who were not entitled to possess them. All five of the offences of dealing in unpolished diamonds in contravention of the Diamonds Act of which the first appellant was convicted, constituted participation in such affairs. And all occurred after the commencement of POCA. None of them was an unrelated instance of proscribed behaviour nor an accidental coincidence with any of the others (see Eyssen para 8). On the contrary, each of the five transactions was concluded in the same room, namely the buyer‟s room of Tony‟s Auto Spares. Tony‟s Auto Spares, which at the very least was managed by the first appellant, plainly had a legitimate as well as an illegitimate face. There were repeated instances of participation by the first appellant, which save for the one conviction involved personal participation on the part of the first appellant. In respect of that one his employee Tim Basson acting as his agent procured the diamonds for him. Moreover, according to Tim Basson, on diverse occasions he transported prospective sellers on behalf of the first appellant, from the nearby Sizamele Township to Tony‟s Auto Spares and back. Significantly, it was never even put to either of the Bassons that they had not received training at the hands of the first appellant nor been supplied with money or diamond dealing paraphernalia by him. [39] For a pattern of racketeering activity, POCA requires at least two offences committed during the prescribed period. In this court, as indeed the one below, counsel argued that the word „offence‟ in that context meant a prior conviction. Absent two prior convictions, so the submission went, POCA could not be invoked. Underpinning that submission is the contention that an accused person must first be tried and convicted of the predicate offences (here the charges in terms of the Diamonds Act) before he/she could be indicted on the racketeering charge in terms of POCA. Allied to that submission is the argument that in this instance there has been an improper splitting of charges resulting in an improper duplication of convictions. [40] In my view, whether to prosecute and what charge to file or bring before a court are decisions that generally rest in the prosecutor's discretion. Nor would it be necessary, it seems to me, for the court to return a verdict of guilty in respect of the predicate offences for the POCA racketeering charge to be sustained. It may well suffice for the court to hold that the predicate charge has been proved without in fact returning a guilty verdict. But that need not be decided here. [41] In respect of a similarly worded provision in the American Racketeer Influenced and Corrupt Organizations Act (RICO),23 United States courts have held that a criminal defendant could properly be convicted of the predicate acts that form the pattern of racketeering activity basic to the RICO charge, and later be prosecuted under RICO.24 On the other hand in United States v Brooklier,25 the appellants had pleaded guilty to a RICO conspiracy charge, and were then indicted a few years later for a RICO violation. One activity instrumental in the prior conspiracy charge supplied a basis for the 23 18 USC §1961 (5): 'A "pattern of racketeering activity" requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity'. 24 United States v Harley 678 F.2d 961 (1982); United States v Martino 648 F.2d 367 (1981); United States v Peacock 654 F.2d 339 (1981). 25 685 F.2d 1208 (1982). substantive RICO charge. The appellants moved to dismiss the alleged activity from the indictment on double jeopardy grounds. In denying the motion the Ninth Circuit stated that if the appellants had not been indicted and convicted previously, the government could have charged them with both the RICO conspiracy and the substantive RICO offence, each based partly on the same extortion activity, in the same indictment. Thus, since the offences were separate, the prior conviction did not bar a subsequent prosecution for the substantive RICO violations based in part on the same activity. [42] RICO has come to be described as a formidable tool in the US Government's arsenal to wage war against crime. It has been pointed out that the relationship between the RICO substantive and predicate offences is crucial to the application of the statute. Because Congress expressed its intent that the two offences be treated separately when it enacted RICO, the Federal Circuit Courts of Appeal have rejected double jeopardy attacks on RICO prosecutions. The reasoning appears to be that Congress manifested its intention that RICO and its predicates be separate offences.26 [43] Prosecutions under POCA as also the predicate offences would usually involve considerable overlap in the evidence, especially where the enterprise exists as a consequence of persons associating and committing acts making up a pattern of racketeering activity. Such overlap does not in and of itself occasion an automatic invocation of an improper splitting of charges or duplication of convictions. As should be evident from a simple reading of the statute, a POCA conviction requires proof of a fact which a conviction in terms of the Diamonds Act does not. I can conceive of no reason in principle or logic why our approach should be any different to that adopted by our American counterparts, for as Justice Frankfurter remarked in United States v Dotterweich:27 '[T]he good sense of prosecutors, the wise guidance of trial judges, and the ultimate judgment of juries must be trusted. Our system of criminal justice necessarily depends on "conscience and circumspection in prosecuting offenses". ' 26 Karen J Ciupak 'RICO and the Predicate Offenses: An Analysis of Double Jeopardy and Verdict Consistency Problems' (1982) 58 Notre Dame Law Review 382. 27 320 U.S. 277 (1943). [44] In a similar vein Navsa and Van Heerden JJA, writing for the majority in S v Whitehead28 stated: 'There is no infallible formula to determine whether or not, in any particular case, there has been a duplication of convictions. The various tests that have been formulated by our courts . . . are not rules of law, nor are they exhaustive. They are simply useful practical guides and in the ultimate instance, if these tests fail to provide a satisfactory answer, the matter is correctly left to the common sense, wisdom, experience and sense of fairness of the court.' [45] Whitehead recognised that a single act may have numerous criminally relevant consequences and may give rise to numerous offences. Our legislature has chosen to make the commission of two or more crimes within a specified period of time and within the course of a particular type of enterprise independent criminal offences. Here the two statutory offences are distinctly different. Since POCA substantive offences are not the same as the predicate offences, the State is at liberty to prosecute them in separate trials or in the same trial. It follows as well that there could be no bar to consecutive sentences being imposed for the two different and distinct crimes as the one requires proof of a fact which the other does not. Although a court in the exercise of its general sentencing discretion may, with a view to ameliorating any undue harshness, order the sentences to run concurrently. Thus, by providing sufficient evidence of the five predicate acts, the State has succeeded in proving the existence of the „racketeering activity' as defined in POCA. [46] Lastly, as to sentence: Section 87(a) of the Diamonds Act provides: 'Any person who is convicted of an of (a) in the case of an offence referred to in section 82(a) or (b), to a fine not exceeding R250 000, or to imprisonment for a period not exceeding ten years, or to both such fine and such imprisonment'. Section 82(a) refers inter alia to any person who contravenes sections 19(1), 20 and 21. Thus notwithstanding the learned trial judge having misdirected himself by convicting each appellant in terms of the wrong section of the Act, that misdirection does not vitiate 28 2008 (1) SACR 431 (SCA) para 35. the sentence, for as the section makes plain the legislature intended a contravention of each of those sections to be visited with the same maximum penalty. [47] The question is thus whether it can be said that the trial court did not exercise its judicial discretion properly. As to that, the sentence of the first appellant does not appear to me to be startlingly inappropriate. The same, however, does not hold true of the second appellant. It is so that the stone in question weighed 91 carats, which, according to the state, he sold to the first appellant for R 14 000. Neither that in itself, nor anything else on the record that I can find, can justify the grossly divergent sentences between that imposed on the second appellant, a first offender, and that imposed on the first (being 12 months imprisonment) in respect of the same transaction in contravention of the Diamonds Act. Both appellants were associated to more or less the same degree in the commission of the offence. If anything the first appellant‟s conduct ought to have attracted greater opprobrium because he was the financier and kingpin of this murky business. In those circumstances it has to be said that the sentence of four years‟ imprisonment (albeit that it was coupled with a fine of R 20 000 and half of which was conditionally suspended) imposed on the second appellant is disturbingly inappropriate and warrants appellate interference (S v Giannoulis).29 At the very least it seems to me that the sentence imposed on the second appellant should be equated to that imposed on the first. It follows that the sentence imposed by the trial court on the second appellant falls to be set aside and in its stead I would substitute the following: „Accused number 6 is sentenced to pay a fine of R 20 000 or in default of paying the fine to a term of imprisonment for a period of one year of which R 10 000 or six months imprisonment is suspended for a period of five years on condition that he is not again convicted of a contravention of sections 18, 19, 20 or 21 of the Diamonds Act 56 of 1986, committed during the period of suspension‟. [48] In the result: (1)(a) The first appellant‟s convictions for contravening s 21 of the Diamonds Act 56 of 1986 are altered to convictions for contravening s 20 of that Act. 29 1975 (4) SA 867 (A). (b) Save as is set out in para 1(a), the first appellant‟s appeal is dismissed. (2)(a) The second appellant‟s conviction for contravening s 21 of the Diamonds Act 56 of 1986 is altered to a conviction for contravening s 19 of that Act. (b) Save as set out in para 2(a), the second appellant‟s appeal against his conviction is dismissed. (c) The appeal of the second appellant against sentence succeeds to the extent that the sentence imposed on him is set aside and in its stead is substituted the following: „Accused number 6 is sentenced to pay a fine of R 20 000 or in default of paying the fine to a term of imprisonment for a period of one year of which R 10 000 or six months‟ imprisonment is suspended for a period of five years on condition that he is not convicted of a contravention of sections 18, 19, 20 or 21 of the Diamonds Act 56 of 1986, committed during the period of suspension‟. _________________ V M PONNAN JUDGE OF APPEAL APPEARANCES: For the 1st Appellant: T Möller Instructed by: Van der Merwe & Robertson c/o Oosthuizen Meyer De Waal Cape Town Symington & De Kok Bloemfontein For the 2nd Appellant J L Vismer Instructed by: Legal Aid Board Cape Town Bloemfontein Justice Centre Bloemfontein For Respondent: A M Breitenbach SC H M Slingers Instructed by: The State Attorney Cape Town The State Attorney Bloemfontein

REPUBLIC OF SOUTH AFRICA SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM The Registrar, Supreme Court of Appeal DATE 27 May 2010 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. Dos Santos and another v The State (726/07) [2010] ZASCA 73 (27 May 2010) Media Statement Today the Supreme Court of Appeal (SCA) delivered judgment in the appeals of Tony Dos Santos and Derick Mbatha against their convictions and sentences by the Cape High Court. Each had been convicted of dealing in unpolished diamonds in contravention of s 21 of the Diamonds Act. In addition the former had been convicted of one count of racketeering in terms of the Prevention of Organised Crime Act (POCA). The SCA found that each had been convicted for contravening the wrong section of the Diamonds Act. It accordingly altered Mr Dos Santos’ five convictions from that of contravening s 21 of the Act to convictions for contravening s 20 and Mr Mbatha’s one conviction to that of contravening s 19. Mr Dos Santos’ appeal against the effective sentence of 10 years’ imprisonment imposed upon him by the High Court also failed. Mr Mbatha, who was sentenced by the high court to a fine of R20 000 or imprisonment for a term of 4 years, half of which was conditionally suspended, did succeed in his appeal against sentence to the limited extent that the term of imprisonment of four years was set aside and in its stead was substituted a term of imprisonment for one year. Mr Dos Santos lived in Port Nolloth, where he managed and operated a business enterprise called Tony's Auto Spares. Port Nolloth, notwithstanding its relatively small community of approximately 12 000 residents and some 220 businesses had become, so the evidence suggested, a hotbed of illicit diamond dealing and related activity. Because of the corrupting and generally corrosive influence that with time becomes all too pervasive in such communities, a task team of the now disbanded Directorate of Special Operations commonly known as the Scorpions, was established to counter the proliferation of diamond dealing syndicates that had began flourish in that general geographical location. Mr Dos Santos had become the focus of that particular task team. The task team had sought and obtained from the Judge designated in terms of the Interception and Monitoring Prohibition Act, an order authorising a surveillance operation at Tony's Auto Spares. The task team secreted a pinhole camera in the building housing Tony's Auto Spares and from it video images and audio feed was transmitted by radio link, in real time, to a house approximately one-and-half kilometres away, where some members of the task team, in addition to recording what was being transmitted onto video tapes, viewed the live feed on a monitor and maintained a log in which they made contemporaneous notes of what they had witnessed and heard as it unfolded. Unbeknown to the task team, Mr Dos Santos had also attracted the attention of a unit of the SAPS. That unit, acting on a search warrant that had been issued by the Regional Court President of the Cape Regional Division, conducted a search on 22 February 2003 of Tony's Auto Spares and the adjoining residential unit that was housed under the same roof. During the course of the evening of 4 July 2003 the task team armed with separate warrants conducted a search of the same premises and on the next day, Mr Dos Santos' home which was also situated in Port Nolloth. Both searches yielded in all some 177 unpolished diamonds to the value of approximately R2m, cash to the tune of R55 000 and diamond dealing paraphernalia such as loupes, scales, tweezers and pieces of paper with diagrammatic representations of diamonds and calculations on them. Mr Mbatha, who had come to be identified in consequence of the surveillance of the first appellant as one of the alleged role players in the illicit diamond trafficking enterprise, was arrested approximately one year after the first appellant on 3 June 2004. The two appellants were indicted together with seven others in the Cape High Court on a host of statutory convictions. The hypothesis advanced by the State was that each of the accused to different degrees was a party to a pattern of racketeering activity. A protracted trial ensued in the Cape High Court. In all some 27 witnesses testified for the State. The evidence included the direct evidence of Tim Basson, who had been in Mr Dos Santos’ employ for seven years prior to his arrest, and his brother Aubrey. Both of them testified about Mr Dos Santos’ involvement in illicit diamond dealing. Each of the brothers Basson after having been schooled by Mr Dos Santos had been involved in purchasing unpolished diamonds on his behalf. Both had been convicted and sentenced in separate trials for their involvement in the criminal enterprise. The high court, as also the SCA, recognised that as accomplices their evidence had to be treated with caution but that the exercise of caution must not be allowed to displace common sense. The Bassons corroborated each other. There was moreover other evidence such as the items that were seized, the incident log, the video tapes and the evidence of the various police officers and expert witnesses. On behalf of Dos Santos it was submitted that the evidence secured pursuant to the warrant fell to be excluded in terms of s 35(5) of the Constitution. The argument was that the warrant suffered a technical defect in that the regional magistrate who had issued it was not a magistrate as defined for that purpose. The SCA held that the constitutional principle of a fair trial required fairness to an accused as also to the public as represented by the State. In this case, so the SCA reasoned, the investigating team did not act in flagrant disregard of Mr Dos Santos's constitutional rights. On the contrary they sought judicial authority for their conduct. To exclude the evidence, so the SCA reasoned, simply because the wrong magistrate had been inadvertently approached would not conduce to a fair trial and would run counter to the spirit and purport of the Constitution. In the view of the SCA there was an entire body of evidence that operated against both appellants. All of that evidence certainly called for an answer. Yet neither appellant testified or called any evidence in his defence. The SCA accordingly concluded that the evidence was so strong that the judge in the court below must inevitably have convicted the appellants of the charges in terms of the Diamonds Act. In respect of the POCA conviction, the SCA found that the evidence adduced by the State established that the first appellant had conducted an illegal diamond dealing enterprise. Tony's Auto Spares which was managed by Mr Dos Santos, and at which most of the illicit diamond transactions had occurred, had both a legitimate as well as an illegitimate face. The SCA was thus satisfied that Mr Dos Santos was correctly convicted on that charge as well. In reaching that conclusion, the SCA held that as the POCA conviction required the satisfaction of an additional requirement, it did not constitute an improper splitting of charges resulting in a duplication of convictions. Finally, in respect of Mr Mbatha’s sentence the SCA held that the sentences imposed upon both appellants was grossly divergent. The sentence imposed upon Mr Mbatha was thus disturbingly inappropriate warranting appellate interference. --- ends ---

3184

non-electoral

2007

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA JUDGMENT Reportable Case no: 121/06 In the matter between: BRUCE BENNET BELL APPELLANT and THE ROAD ACCIDENT FUND RESPONDENT CORAM: STREICHER, CAMERON, JAFTA JJA, et SNYDERS, THERON AJJA DATE OF HEARING: 17 MAY 2007 DATE OF DELIVERY: 1 JUNE 2007 Summary: Motor vehicle accidents – Compensation – Damages claim in terms of Multilateral Motor Vehicle Accidents Fund Act 93 0f 1989 – Whether a flatbed transporter is a ‘motor vehicle’ as defined in the Act – Whether ‘road’ in the definition of a ‘motor vehicle’ means a ‘public road’. Neutral citation: This case may be cited as Bell v The Road Accident Fund [2007] SCA 83 (RSA). ___________________________________________________________________________ THERON AJA/ [1] The appellant was employed as a baggage controller by a company based at Cape Town International Airport, transferring luggage containers to and from aircraft. On 18 November 1994 he was involved in a collision with a flatbed transporter inside the operational area of the airport. In consequence he sustained certain bodily injuries. He instituted an action for damages against the Road Accident Fund (‘the Fund’) in the Cape High Court on the basis that the collision was caused by the negligence of the driver of the flatbed transporter. The Fund, in a special plea, alleged that the appellant’s claim should be dismissed as the flatbed transporter was not a motor vehicle as defined in s 1 of the Road Accident Fund Act 56 of 1996.1 [2] In the court a quo, the parties agreed that the issue raised in the special plea be adjudicated as a stated case in terms of Rule 33 of the Rules of the High Court. The court (HJ Erasmus J) upheld the special plea, finding that the flatbed transporter did not fall within the statutory definition of a motor vehicle. It is against that finding that the appellant appeals, with the leave of the court a quo. [3] This appeal raises the question whether the flatbed transporter is a motor vehicle as defined in Articles 1 and 40 of the Agreement Establishing the Multilateral Motor Vehicle Accidents Fund (‘the Agreement’) which Agreement was entered into pursuant to the provisions of the Multilateral Motor Vehicle Accidents Fund Act 93 of 1989. 1 The parties were agreed that since the collision occurred in 1994, the applicable legislation was the Multilateral Motor Vehicle Accidents Fund Act 93 of 1989. In Article 1 of the Agreement it is stated that a: ‘ “motor vehicle” means any vehicle designed or adapted for propulsion or haulage on a road by means of fuel or electricity and includes a trailer, a caravan, an agricultural or any other implement designed or adapted to be drawn by such motor vehicle.’ This definition is substantially similar to that in the Road Accident Fund Act 56 of 1996. Article 40 of the Agreement provides that: ‘The MMF or its appointed agent, as the case may be, shall subject to the provisions of this Agreement be obliged to compensate any person whomsoever (in this Agreement called the third party) for any loss or damage which the third party has suffered as a result of- (a) any bodily injury to himself; (b) the death of or any bodily injury to any person, in either case caused by or arising out of the driving of a motor vehicle by any person whomsoever at any place within the area of jurisdiction of the members of the MMF…’ [4] The vehicle in question is a Transporter 7750A made in Switzerland. It is powered by a diesel engine and has a hydraulic transmission similar to that of a standard vehicle with an automatic transmission; a drive lever is fitted to the left of the driver’s seat with the positions R-N-L-D. The vehicle can reverse and go forward. The accelerator pedal and foot brake are on the floor and according to the manufacturer’s specifications it has a speed range of up to 30km/h in drive and 15km/h in reverse. It was however agreed by the parties that the vehicle can attain a speed of approximately 50km/h. The vehicle does not have a rearview mirror, side mirrors or seat belts. [5] The vehicle is fitted with a raised seat for the driver which is not enclosed. It is equipped with a power steering, a footbrake on all four wheels and a separate handbrake. It has four large heavy duty pneumatic tyres. The drive controls are on a panel to the left of the steering wheel and include a starter and light switch, fuel gauge, thermometer, oil pressure gauge and blinker switch with hooter. The vehicle is fitted with headlights which may be dimmed or brightened, a beacon light, indicator lights and parking lights on all four corners, brake lights and reflectors at the rear. Its lighting system allows it to be operated twenty four hours a day. The basic weight of the vehicle is 4000kg and it has a carrying capacity of up to 6800kg. [6] According to the manufacturer’s brochure admitted in evidence, it is a self– propelled vehicle designed for the transportation of baggage and cargo. It is used at airports to transport baggage and cargo from its place of origin within the confines of the terminal, to next to an aircraft on the airside of an airport (the tarmac and runway area where planes arrive and take off). The flatbed transporter operates only within the confines of the airport. [7] The airside of the airport has a road system which functions similarly to that of public roads, except that the general public does not have access to these roads. The roads are two way with a demarcated middle line. There are standard traffic control signs such as stop, yield and speed signs. No vehicle may drive anywhere else on the airside, except on the demarcated roads. The roads on the airside are utilized by standard licensed vehicles, including bakkies, trucks, tractors, various types of transporters, and passenger busses, as well as by pedestrians (personnel and passengers) who cross at designated pedestrian crossings. [8] This court has on a number of occasions considered and pronounced upon the correct interpretation to be given to the phrase ‘designed for propulsion on a road’ as envisaged in the definition of a motor vehicle. While the third party insurance legislation has been amended over time, the definition of a ‘motor vehicle’ has remained fairly constant. The test to determine whether a vehicle was designed for propulsion on a road is objective.2 In Chauke v Santam,3 Olivier JA stated that ‘designed for’ connotes ‘the general idea of its purpose’ and added that the phrase must be given an objective common sense meaning. The learned judge explained that the word ‘design’: ‘conveys the notion of the ordinary, everyday and general purpose for which the vehicle was conceived and constructed and how the reasonable person would see its ordinary, and not some fanciful, use on a road.’4 Streicher JA in Road Accident Fund v Van Den Berg5 endorsed this reasoning and described the test as being ‘the general purpose for which the vehicle, objectively determined, was conceived and constructed’. 2Chauke v Santam 1997 (1) SA 178 (A) at 183A-C; Road Accident Fund v Van Den Berg 2006 (2) SA 250 (SCA) paras 6-7. 3 1997 (1) SA 178 (A). 4 At 183A-B. 5 2006 (2) SA 250 (SCA) para 7. [9] It was common cause that the flatbed transporter was designed for propulsion on an airport road. The question then is whether the definition of a ‘motor vehicle’ requires that it be designed for propulsion on a public road. On appeal, counsel for the Fund contended that the definition does so require. This question was authoratively answered in Road Accident Fund v Mbendera6 where Lewis JA held that ‘road’ in the definition should not be narrowly interpreted to mean ‘public road’. Lewis JA reasoned that the Road Accident Act 56 of 1996 (like the Agreement) ‘applies throughout the Republic and not just to vehicles used on public roads’.7 I respectfully agree with and adopt the reasoning of Lewis JA. In my view, the words ‘at any place within the area of jurisdiction of the members of the MMF’ as contained in Article 40 of the Agreement, supports the broader interpretation of ‘road’. [10] It was clearly not the intention of the legislature to limit ‘road’ to a ‘public road’. There is no reason why ‘road’ should not be given its ordinary meaning, namely, ‘a line of communication, especially a specially prepared track between places for use by pedestrians, riders and vehicles’.8 If it was the legislature’s intention to limit ‘road’ to a ‘public road’, it would, in my view, have said so. If a passenger bus or any other standard vehicle were to collide with a pedestrian (third party) within the operational area of the airport, and injure such third party, the latter would be able to claim compensation from the Fund for any injury sustained as a result of the collision. It would be anomalous, as found in Mbendera, to hold that where the injuries were caused as a result of the 6 [2004] 4 All SA 25 (SCA). 7 At para 13. 8 Per Olivier JA in Chauke v Santam Ltd 1997 (1) SA 178 at 181F-G. negligence of the driver of a vehicle such as the flatbed transporter, which is designed for propulsion on a road, the third party would have no claim against the Fund. [11] For these reasons I find that the flatbed transporter is a motor vehicle as contemplated in the Agreement. The appeal is upheld with costs. The order of the court a quo upholding the special plea is set aside and substituted with an order dismissing the special plea with costs. L V THERON Acting Judge of Appeal CONCUR: STREICHER JA CAMERON JA JAFTA JA SNYDERS JA

THE SUPREME COURT OF APPEAL REPUBLIC OF SOUTH AFRICA MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 1 June 2007 Status: Immediate 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 BRUCE BENNET BELL v THE ROAD ACCIDENT FUND In a judgment today the Supreme Court of Appeal has upheld an appeal by a third party relating to the definition of a ‘motor vehicle’ for purposes of the Multilateral Motor Vehicle Accidents Fund Act 93 of 1989. The appellant was employed as a baggage controller by a company based at Cape Town International Airport, transferring luggage containers to and from aircraft. On 18 November 1994 he was involved in a collision with a flatbed transporter inside the operational area of the airport. In consequence he sustained certain bodily injuries. He instituted an action for damages against the Road Accident Fund (‘the Fund’) in the Cape High Court on the basis that the collision was caused by the negligence of the driver of the flatbed transporter. The Fund, in a special plea, alleged that the appellant’s claim should be dismissed as the flatbed transporter was not a motor vehicle as defined in Articles 1 and 40 of the Agreement Establishing the Multilateral Motor Vehicle Accidents Fund (‘the Agreement’). The court upheld the special plea, finding that the flatbed transporter did not fall within the statutory definition of a motor vehicle. The SCA, in a judgment by Theron AJA in which Streicher JA, Cameron JA, Jafta JA and Snyder AJA concurred, that the Act applied to all roads in South Africa and not just to vehicles used on public roads. The court stated that it was clearly not the intention of the legislature to limit ‘road’ to a ‘public road’ and there is no reason why ‘road’ should not be given its ordinary meaning. If it was the legislature’s intention to limit ‘road’ to a ‘public road’, it would have said so. --ends--