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2310 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 402/08
HAMILTON NTSHANGASE
Appellant
and
MEC FOR FINANCE: KWAZULU-NATAL
1ST Respondent
MEC FOR EDUCATION: KWAZULU-NATAL 2ND Respondent
Neutral citation:
Ntshangase v MEC: Finance Kwa-Zulu Natal and Another
402/08 [2009] ZASCA 123 (28 September 2009)
Coram:
BRAND, NUGENT, HEHER, SNYDERS JJA et
BOSIELO AJA
Heard:
7 SEPTEMBER 2009
Delivered:
28 SEPTEMBER 2009
Summary:
Labour law – whether an employer in the public sector is
entitled to review its own decision pursuant to a
disciplinary enquiry, not to dismiss an employee –
whether on the merits the decision in question was
reviewable and whether the Labour Appeal Court should
have substituted its own decision to dismiss the appellant
instead of referring the matter for a rehearing on the issue
of an appropriate sanction.
______________________________________________________________
ORDER
On appeal from: Labour Appeal Court (Zondo JP, Pillay et Kruger AJJA on
appeal from the Labour Court)
1.
The appeal is dismissed.
JUDGMENT
BOSIELO AJA (Brand, Nugent, Heher et Snyders JJA concurring)
[1] The appellant was employed in the Department of Education: Kwazulu-
Natal, as Director: Arts, Culture, Museum Services and Youth Affairs. He was
charged and found guilty of twelve charges of misconduct in a disciplinary
hearing initiated by the second respondent, the MEC for Education: KwaZulu-
Natal, and chaired by Mr Wentworth Dorkin (Dorkin). With regard to the
sanction that should be imposed, Dorkin determined that the appellant should
be given a final written warning. The second respondent found that sanction
inappropriate. In his view the appellant should have been dismissed. He
therefore brought a review application in the Labour Court for the proposed
sanction to be set aside and replaced with the sanction of dismissal. His
application to the Labour Court was unsuccessful. However, on appeal to the
Labour Appeal Court, the decision of the Labour Court was set aside and the
second respondent's review application was granted. The Labour Appeal
Court set aside the sanction imposed on the appellant by Dorkin, the
chairperson of the disciplinary hearing, and replaced it with a sanction of
dismissal with immediate effect. The appellant is appealing against the
judgment of the Labour Appeal Court with special leave of this court.
[2] The facts of this matter are fairly simple and to a large extent common
cause. A succinct account will suffice to elucidate this judgment. As I have
said, the appellant was charged and convicted of twelve counts of
misconduct, involving allegations of wilful or negligent mismanagement of the
State's finances and of abusing his authority. Facts found by Dorkin to support
these charges indicated, inter alia, the unauthorised awarding of bursaries to
various students amounting to approximately R1m and the unauthorised
purchase by the appellant of goods exceeding R500 000. It also transpired
that the second respondent suffered a loss of R200 000 from the last
mentioned transaction. After considering some evidence tendered both in
aggravation and mitigation of sentence, Dorkin decided, as I have said, that
the imposition of a final written warning would be an appropriate sentence.
That is the decision which gave rise to the review proceedings by the second
respondent; first unsuccessful in the Labour Court and then successful in the
Labour Appeal Court.
[3] In his answering affidavit the appellant admitted that he was found
guilty on all twelve counts and stated further that he did not challenge any of
Dorkin's factual findings. As clearly foreshadowed in the appellant's notice of
appeal the appellant raised three legal issues for determination by this court,
namely:
'15.1
Whether Dorkin's decision not to dismiss the appellant constitutes administrative
action which in principle is reviewable at the instance of the respondent;
15.2
if it is, whether the respondent made out a proper case to review and set aside
Dorkin's decision on the merits; and
15.3
In the event that both of the aforementioned questions are decided in the
respondent's favour, whether LAC was correct in deciding itself to dismiss the appellant in
preference to the alternative relief sought in the review application, namely the referral of the
matter for decision by another presiding officer in respect of the appropriate sanction.'
In supplementary heads of argument volunteered by the appellant, the
appellant added another ground of appeal to the three referred to above,
namely what the applicable grounds of review are in this matter.
[4] Although the second respondent initially relied on s158(1)(g), (h) and (j)
of the Labour Relations Act 66 of 1995 (LRA) as grounds for its review, the
arguments both in the Labour Court and the Labour Appeal Court were
confined to s158(1)(h) of the LRA.
[5] It became clear during argument before us that the appellant relied on
the decision of Chirwa v Transnet Ltd and Others 2008 (4) SA 367(CC) and a
recent decision by this court in Makhanya v University of Zululand [2009] 8
BLLR 721 (SCA) for its main proposition that a decision by an organ of state
to dismiss one of its employees or not to dismiss such an employee does not
constitute administrative action and is therefore not reviewable by the Labour
Court. However, it was conceded on behalf of the appellant that the Labour
Court has jurisdiction to adjudicate second respondent's claim under s
158(1)(h) of the LRA. The appellant contended however that s 158(1)(h) of
the LRA does not establish a statutory right of review where none existed
either in terms of the common law or Promotion of Administrative Justice Act
3 of 2000 (PAJA). It was submitted therefore that Dorkin's decision not to
dismiss the appellant is not administrative action and is therefore not
reviewable.
[6] Regarding the decision by the Labour Appeal Court to substitute its
own decision for that of the chairperson of the disciplinary enquiry, it was
submitted that a decision to dismiss is essentially an operational decision. It
was contended that as the element of trust is at the heart of every
employment relationship, the Labour Appeal Court was not in a position to
decide on an appropriate sanction as it had no knowledge of the appellant's
employment history in the period between his reinstatement and when the
appeal was heard. In other words, the Labour Appeal Court was not in a
position to consider all facts relevant to a determination of an appropriate
sanction. The upshot of the argument is that having reviewed and set Dorkin's
decision aside, the Labour Appeal Court should have referred the matter back
to the disciplinary hearing for a determination of an appropriate sanction. The
appellant argued that there are no exceptional circumstances to justify the
decision by the Labour Appeal Court not to refer the matter back to the
disciplinary hearing for a reconsideration of an appropriate sanction and to
impose it itself.
[7] On the other hand the second respondent, relying on Sidumo &
Another v Rustenburg Platinum Mines Limited & Others 2008 (2) SA 24(CC),
submitted that a disciplinary enquiry of the type undertaken in terms of the
Public Service Co-ordinating Bargaining Council (PSCBC) Resolution 2 of
1999 constitutes administrative action which is reviewable not in terms of s 33
of the Constitution of the Republic of South Africa (the Constitution) or PAJA
but under s 158(1)(h) of the LRA. It was submitted that because Resolution 2
created a statutorily imposed disciplinary system which involved an
independent enquiry, the procedure was in substance the same as that which
would be followed in arbitration proceedings before the CCMA. In terms of
Sidumo arbitration proceedings are reviewable in terms of the LRA. It was
contended that by parity of reasoning Dorkin's decision at the disciplinary
hearing held in terms of Resolution 2 is reviewable. Furthermore, it was
contended that in terms of Resolution 2 the second respondent does not take
an independent decision after the hearing is finalised but is obliged to
implement the sanction pronounced by the chairperson of the disciplinary
enquiry. As a result Dorkin's decision becomes that of the second
respondent. Based on this, it was submitted that the enquiry undertaken by
Dorkin cannot be correctly described as 'an internal managerial enquiry.'
[8] The second respondent contended that in terms of Resolution 2 Dorkin
was obliged to follow due process and then pronounce an appropriate
sanction. In so acting, he would be acting qua the second respondent which is
the State itself. As Dorkin had failed to apply his mind to the issue of an
appropriate sanction thus resulting in him arriving at an irrational decision, it
was argued that the second respondent was not only entitled but obliged, in
the public interest, to have Dorkin's irrational decision reviewed by a court of
law. This is particularly so as the employer, as opposed to the employee,
does not have a right of appeal. It was argued that the contrary argument is
untenable as it implies that in the absence of the right to appeal or review its
own decision, the second respondent would be left in an invidious position
where it would be forced to enforce a decision with which it does not agree or
one which is patently unjustified. Relying on Pepcor Retirement Fund v
Financial Services Board 2003 (6) SA 38 (SCA) the second respondent
contended that it was not only entitled but was obliged to take Dorkin's
decision on review.
[9] Concerning the question whether the Labour Appeal Court should have
referred the matter back to the disciplinary hearing for a reconsideration of an
appropriate sanction, the second respondent submitted that on the facts of
this case, the only appropriate sanction which Dorkin could have imposed is a
dismissal. It was contended that, given the gravity of the appellant's
misconduct, any other sanction would have been irrational. The essence of
this submission is that it would be futile and fruitless to refer the matter to
Dorkin when the sanction he should have imposed is a foregone conclusion.
The second respondent maintained that the Labour Appeal Court acted
correctly in the circumstances as all it did was to replace Dorkin's sanction
with the sanction which he should have imposed.
[10] The crisp legal issue in this appeal is therefore whether Dorkin's
decision amounts to administrative action or not. This question has created a
lot of controversy in the past. To my mind the first port of call is s 33(1) of the
Constitution of the Republic of South Africa 108 of 1996 (the Constitution)
which provides that :
'Everyone has the right to administrative action that is lawful, reasonable and procedurally
fair.'
In an attempt to define what administrative action is, the Constitutional Court
stated the following in President of the Republic of RSA v South African
Rugby Football Union 2000 (1) SA 1(CC) in para 141:
'In s 33 the adjective "administrative" not "executive" is used to qualify "action". This suggests
that the test for determining whether conduct constitutes "administrative action" is not the
question whether the action concerned is performed by a member of the executive arm of
government. What matters is not so much the functionary as the function. The question is
whether the task itself is administrative or not. It may well be, as contemplated in Fedsure,
that some acts of a legislature may constitute "administrative action". Similarly, judicial
officers may, from time to time, carry out administrative tasks. The focus of the enquiry as to
whether conduct is "administrative action" is not on the arm of government to which the
relevant actor belongs, but on the nature of the power he or she is exercising.'
[11] In grappling with the difficult task of trying to define a difficult and
complex concept like 'administrative action' Professor Cora Hoexter states in
her book, Administrative Law In South Africa at p 167:
'In the SARFU case the Constitutional Court admitted that deciding what is and what is not
administrative action "may be difficult" and suggested that it would have to be done on a
case-by-case basis. It offered the following as relevant considerations in the diagnosis: the
source of the power, the nature of the power, its subject matter, whether it involves the
exercise of a public duty and how closely it is related to policy matters – which are not
administrative – or to the implementation of legislation which is characteristic of administrative
action.'
[12] To my mind, it cannot be argued that the second respondent is not an
organ of State as envisaged by s 239 of the Constitution. Furthermore, there
is no gainsaying that the second respondent exercises public power in the
public interest in terms of legislation. This gives the second respondent's
powers the necessary public character as opposed to a private character.
Undoubtedly, when the second respondent appointed Dorkin to preside over
the appellant's disciplinary hearing, it did so in its capacity as the State. It
follows, in my view, that Dorkin's action complained of herein which
essentially is that of the second respondent qualifies as administrative action.
That being so, such action has to be lawful, reasonable and procedurally fair
as contemplated by s 33(1) of the Constitution.
[13] It is not in dispute that Dorkin was appointed by the second respondent
as chairperson of the disciplinary hearing involving the appellant to preside
over it as its (second respondent's) representative. Dorkin was appointed in
terms of Resolution 2. In terms of Resolution 2 the second respondent is
obliged to execute the decision taken by Dorkin, the chairperson of the
disciplinary hearing. To my mind, it follows that Dorkin was acting qua the
second respondent and his decision became that of second respondent. It is
common cause that Resolution 2 embodies the procedure negotiated and
agreed upon by the employer and trade unions representing the employees.
Unlike an ordinary collective agreement, the procedure embodied in
Resolution 2 has a statutory force which is buttressed by s 23 of the LRA
which provides clearly that the collective agreement binds the parties thereto.
As this court observed in S v Prefabricated Housing Corporation (Pty) Ltd &
Another 1974 (1) SA 535 (A) at p 539G-540B:
'It is true that the type of document now under consideration is termed under the Act and in
industrial parlance an "agreement", and it is said to be "negotiated" or "entered into" but
technically it is not a contract in the legal sense . . . . From all those provisions it is clear, I
think, that an industrial agreement is not a contract but a piece of subordinate, domestic
legislation made in terms of the Act by the industrial council and the Minister. (See the clear
and concise summary of the position given by Dowling J, in South African Association of
Municipal Employees (Pretoria Branch) and Another v Pretoria City Council 1948 (1) SA 11
(T) at p 17). In that respect it does not differ from by-laws made by the council of a local
authority and approved by the Administrator of a Province under its Local Government
Ordinance, or from a wage determination made by the Minister on the recommendation of the
Wage Board under the provisions of the Wage Act, presently 5 of 1957, both of which are
similarly regarded. (See Rex v Stoller, 1939 A.D. 599 at pp 616-8; Kneen's case supra at pp
406-7). . . '.
[14] It is plain from paras 10 to 12 above that the powers to be exercised by
Dorkin in terms of Resolution 2 in the disciplinary hearing against the
appellant qualify as public power or a public function performed in terms of
Resolution 2 which has statutory authority in terms of s 23 of the LRA.
Furthermore, it cannot be gainsaid that the exercise of such public power by
Dorkin was in the public interest and had a direct and external effect on at
least the appellant's employment relationship with the second respondent. To
my mind, it follows that the decision by Dorkin qualifies as administrative
action. However, the vexed legal question remains whether Dorkin's decision
is reviewable at the instance of the second respondent or not. If so, is it under
the Promotion of Administrative Justice Act 3 of 2000 (PAJA) or s 158(1)(h) of
the LRA?
[15] S 158(1)(h) of the LRA provides as follows:
' 158(1) The Labour Court may-
. . .
(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;'
. . . .'
Undoubtedly this section provides in explicit terms that a decision like the one
taken by Dorkin who acted qua his employer can be reviewed on such
grounds as are permissible in law. The ground relied upon by the second
respondent for the review of Dorkin's decision is rationality, which is one of the
recognised grounds of review. I am therefore of the view that Dorkin's
decision can be taken on review under s 158(1)(h) of the LRA.
[16] I am also persuaded to agree with Zondo JP in his judgment in the
Labour Appeal Court where he stated in para 10:
'In Sidumo & Another v Rustenburg Platinum, case no: CCT 85/06 as yet unreported, which
was handed down on the 5th October 2007, the Constitutional Court had to decide whether,
when a CCMA commissioner conducts arbitration proceedings under the compulsory
arbitration provisions of the Labour Relations Act 1995 (Act 66 of 1995) ("The Act") to resolve
a dismissal dispute, that constitutes administrative action. It held that such action does
constitute administrative action. It seems to me that if the conduct of compulsory arbitrations
relating to dismissal disputes under the Act constitutes administrative action, then the conduct
of disciplinary hearings in the workplace where the employer is the State constitutes, without
any doubt, administrative action. If it constitutes administrative action, then it is required to be
lawful, reasonable and procedurally fair. Accordingly, if it can be shown not to be reasonable,
it can be reviewed and set aside.'
[17] However, this is not the end of the conundrum. Having found that the
decision by Dorkin amounts to administrative action, the pertinent legal
question remains whether the second respondent (the employer) had the
locus standi to take the matter on review. In this court, like in the court below,
the appellant seriously challenged the second respondent's locus standi to
bring the review proceedings. To my mind the answer to this legal question
hinges on whether Dorkin acted as the second respondent or as an
independent arbiter. It is common cause that Dorkin was appointed in terms of
Resolution 2 which provides that the employer is bound by Dorkin's decision.
In the result Dorkin's decision becomes that of the second respondent as
Dorkin acted qua the second respondent. Admittedly the challenge raised
herein is novel as it has never enjoyed the attention of our courts. However, I
found some guidance from Pepcor Retirement Fund and Another v Financial
Services Board and Another 2003 (6) SA 38 (SCA), where confronted by a
similar problem, this court held as follows in para 10:
'This Court has already held that if an administrative act has been performed irregularly – be it
as a result of an administrative error, fraud or other circumstance – then, depending upon the
legislation involved and the nature and functions of the public body, it may not only be entitled
but also bound to raise the matter in a court of law, if prejudiced: Transair (Pty) Ltd v National
Transport Commission and Another 1977 (3) SA 784 (A) at 792H-793G.'
[18] Although Pepcor involved the action by the Registrar of Pension Funds
this dictum is equally applicable to this case as both the Registrar and the
second respondent are public functionaries exercising a power in the interests
of the public in terms of legislation. Based on the Pepcor judgment I am of the
view that the second respondent was not only entitled, but bound to take
Dorkin's decision on review. This it could competently do in terms of s
158(1)(h) of the LRA which makes clear provision for such a review on such
grounds as are permissible in law. As Cloete JA aptly remarked in Pepcor in
para 13:
'. . . . It is unthinkable that, if the Registrar were to realise ex post facto that there had not
been compliance with the section, he could not apply to Court to have it set aside. Compare
in this regard what was said by this Court in Rajah and Rajah Ltd and Others v Ventersdorp
Municipality and Others 1961 (4) SA 402 (A) at 407 E:
Mr De Villiers for the Council submitted that in the exercise of its statutory functions it has an
administrative interest, on behalf of the public, in certificates for local trading. I agree: that is
what gives it a locus, unlike a purely judicial tribunal.
It would indeed be the Registrar's duty to make such an application, if prejudiced.'
Undoubtedly the second respondent has an interest in ensuring that fair
labour practices are upheld in its employment relationships. The same holds
true for its employees. All actions and/or decisions taken pursuant to the
employment relationship between the second respondent and its employees
must be fair and must account for all the relevant facts put before the
presiding officer. Where such an act or decision fails to take account of all
relevant facts and is manifestly unfair to the employer, he/she is entitled to
take such decision on review. Moreover, the second respondent has a duty to
ensure an accountable Public Administration in accordance with ss 195 and
197 of the Constitution. I therefore find that the second respondent had the
necessary locus standi to take Dorkin's action on review to the Labour Court.
[19] The second respondent contended that Dorkin acted irrationally in
deciding to give the appellant a final written warning instead of dismissing
him, given the seriousness and gravity of the charges for which he was found
guilty. Furthermore, the second respondent argued that based on Resolution
2 the second respondent has no choice but to execute the decision by Dorkin,
wrong and irregular as it may be. Undoubtedly, Dorkin's decision has caused
the second respondent some prejudice in that, despite the alleged breakdown
of trust, the second respondent is obliged to retain the appellant in
employment. Furthermore, second respondent contended that if Dorkin's
decision was allowed to stand, it would be difficult for the second respondent
to impose the sanction of dismissal on anyone of its employees in line with the
hallowed principle of parity of treatment of employees. The Labour Appeal
Court found in para 18 of its judgment that 'a finding by Dorkin that this was a
case in which dismissal was not an appropriate sanction and that a final
warning was, is a conclusion which could only be reached by someone who
did not exercise any discretion at all and who simply acted arbitrarily and did
not apply his mind at all. To the extent that his decision constitutes an
administrative action, I have no hesitation in concluding that his decision is a
decision that no reasonable person could reach on the facts of this case and
his decision is not just unreasonable but is, without doubt, grossly
unreasonable . . . .' Suffice to state that I am in respectful agreement with this
dictum.
[20] I agree that Dorkin's decision, measured against the charges on which
he convicted the appellant appear to be grossly unreasonable. Given the
yawning chasm in the sanction imposed by Dorkin and that which a Court
would have imposed, the conclusion is inescapable that Dorkin did not apply
his mind properly or at all to the issue of an appropriate sanction. Manifestly,
Dorkin's decision is patently unfair to the second respondent. To my mind, it
fails to pass the test of rationality or reasonableness (see Pharmaceutical
Manufacturers of SA and Another: in re Ex Parte President of the Republic of
South Africa and Others 2000 (2) SA 674(CC) para 89; Sidumo And Another v
Rustenburg Platinum Mines Ltd And Others 2008 (2) SA 24(CC) paras 106
and 276; Toyota SA Motors (Pty) Ltd v Radebe and Others [2000] 21 ILJ 340
(LAC) para 53). In the circumstances, the second respondent was entitled to
take such a decision on review in terms of s 158(1)(h) of the LRA to have it
set aside.
[21] Having reviewed and set aside Dorkin's decision on the basis of gross
unreasonableness, the Labour Appeal Court imposed a sanction of dismissal
on the appellant. A strong attack was levelled against the decision of the
Labour Appeal Court on the basis that there were no exceptional
circumstances which justified the Labour Appeal Court departing from the
established and orthodox approach and to take such a decision. The main
argument was that the Labour Appeal Court did not have all the relevant
material to consider in the determination of an appropriate sanction. It is
indeed correct that it is well established that, ordinarily, a court will refer a
matter back to the administrative functionary for reconsideration rather than to
substitute its own decision for that of the functionary. The underlying reasons
for this are as Heher JA stated in Gauteng Gambling Board v Silverstar
Development Ltd and Others 2005 (4) SA 67 (SCA) in para 29 that such a
functionary is generally best equipped by amongst others, its composition, by
experience, and its access to sources of relevant information and expertise to
make the right decision. However, this principle is not inflexible.
[22] The facts of each case will determine whether it is fair and practical to
remit the matter to the original functionary or for the court to substitute its own
decision for that of the original functionary. The appellant was suspended on
25 August 2000 pending the outcome of a disciplinary hearing. On 12
February 2002 the appellant was given a final written warning. During July
2002 he was reinstated. The review application was finalised in the Labour
Court on 18 March 2005 when the application was dismissed. The judgment
of the Labour Appeal Court was delivered on 21 December 2007. Manifestly
there has been a time lapse of approximately five years from the time of the
original sanction to the judgment of the Labour Appeal Court. To remit this
matter to the chairperson of the disciplinary hearing in a situation where the
appropriate sanction to be imposed is inevitable, would, to my mind, not be
fair to both parties.
[23] Given the nature and gravity of the misconduct for which appellant was
found guilty, there can be no argument that dismissal was the only
appropriate sanction. Referring the matter to the disciplinary hearing to
impose a sanction of dismissal would, in my view, serve no purpose.
[24] What remains to be determined is the issue of costs. Both the Labour
Court and Labour Appeal Court did not make any order regarding costs. In the
result, I think it is appropriate not to make any order regarding costs.
[25] In the result the following order is made:
1.
The appeal is dismissed.
………………..
L O BOSIELO
ACTING JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
C E WATT-PRINGLE SC
Ms D LANDSTRöM (Pupil)
Instructed by
MACGREGOR ERASMUS ATTORNEYS,
DURBAN
LOVIUS BLOCK, BLOEMFONTEIN
FOR RESPONDENT:
P J OLSEN SC
M G de KLERK
Instructed by
FEISAL ABRAHAM ATTORNEYS, DURBAN
MATSEPES INC, BLOEMFONTEIN | SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN SUPREME
COURT OF APPEAL
FROM:
The Registrar, Supreme Court of Appeal
DATE:
28 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.
HAMILTON NTSHANGASE v MEC: FINANCES: KWAZULU-NATAL AND
ANTOTHER
[1] In a judgment delivered on 28 September 2009, the Supreme Court of Appeal
dismissed an appeal against a judgment of the Labour Appeal Court.
[2] Having been found guilty at a disciplinary hearing of twelve counts of
misconduct, involving allegations of wilful or negligent mismanagement of finances
amounting to approximately R1m and unauthorised expenditure amounting to R500
000,00, the presiding officer imposed a sanction of a final written warning and not a
dismissal on the appellant. The second respondent failed in an application to the
Labour Court to have the sanction imposed by the presiding officer reviewed and set
aside. On appeal to the Labour Appeal Court, the decision of the Labour Court was
set aside and the second respondent's application for review granted. The Labour
Appeal Court set aside the sanction of a final written warning imposed on the
appellant and replaced it with a sanction of dismissal with immediate effect.
[3] On appeal to this court, the appellant attacked the finding by the Labour
Appeal Court that the decision of the presiding officer of the disciplinary hearing
qualifies as administrative action and is therefore reviewable under s 158(1)(h) of the
Labour Relations Act 66 of 1995; further that the second respondent did not have
locus standi to bring its own act on review and last that the Labour Appeal Court
erred in, instead of referring the matter to the disciplinary hearing for a
reconsideration of an appropriate sanction, it imposed a sanction of dismissal with
immediate effect.
[4] On appeal the Supreme Court of Appeal dismissed the appeal holding that the
decision taken by the presiding officer during the disciplinary hearing qualifies as an
administrative action; that it is reviewable under s 158(1)(h) of the LRA; that second
respondent had locus standi to bring the review application, and further that, given the
gravity of the misconduct committed by the appellant, the Labour Appeal Court acted
correctly in imposing a sanction of dismissal with immediate effect instead of
referring the matter to the disciplinary hearing as the sanction of a dismissal was the
only appropriate sanction. The Supreme Court of Appeal held that in the
circumstances it would serve no practical purpose to refer the matter to the
disciplinary hearing for a reconsideration of an appropriate sanction. |
3949 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1274/2021
In the matter between:
CLOETE MURRAY N O
FIRST APPELLANT
THOMAS CHRISTOPHER VAN ZYL N O SECOND APPELLANT
RAPHAEL GRANT BRINK N O
THIRD APPELLANT
CARON-ANN SCHROEDER N O
FOURTH APPELLANT
(In their capacity as joint liquidators of
Cape Concentrate (Pty) Ltd (in liquidation))
and
HUMANSDORP CO-OPERATIVE LIMITED
RESPONDENT
Neutral citation: Cloete Murray N O and Others v Humansdorp Co-operative
Limited (1274/2021) [2022] ZASCA 187 (30 December
2022)
Coram:
DAMBUZA ADP, NICHOLLS and GORVEN JJA and BASSON
and WINDELL AJJA
Heard:
11 November 2022
Delivered: 30 December 2022
Summary: Company law – Insolvency Act 24 of 1936 – disposition – whether
payment was made in terms of a bank guarantee or it was a payment by the
respondent constituting a disposition in terms of s 2 of the Insolvency Act – if so,
whether the payment was ‘not made for value’ as contemplated in s 26 of the
Insolvency Act – payment was bank guarantee.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Eastern Cape Division of the High Court, Grahamstown
(Stretch J, sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel where so
employed.
________________________________________________________________
JUDGMENT
________________________________________________________________
Nicholls JA (Dambuza ADP, Gorven JA and Basson and Windell AJJA
concurring):
[1] This appeal concerns the payment of monies held in the trust account of
Pagdens Incorporated Attorneys (Pagdens) of Gqeberha and made to
Humansdorp Co-operative Limited (the Co-op), the respondent. The question to
be determined is whether the payment was a disposition made not for value as
envisaged in s 261 of the Insolvency Act 24 of 1936 (the Act). Integral to this
issue is whether the payment was made by the appellant, Cape Concentrate (Pty)
Ltd (now in liquidation) (Cape Concentrate), or whether it was a payment made
by or on behalf of The Standard Bank of South Africa Limited (Standard Bank),
1 Section 26(1) of the Act provides:
‘Disposition without value
(1)
Every disposition of property not made for value may be set aside by the court if such disposition was
made by an insolvent –
(a)
more than two years before the sequestration of his estate, and it is proved that, immediately after the
disposition was made, the liabilities of the insolvent exceeded his assets;
(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:
Provided that if it is proved that the liabilities of the insolvent at any time after the making of the disposition
exceeded his assets by less than the value of the property disposed of, it may be set aside only to the extent of
such excess.’
of demand guarantees issued in favour of the Co-op for the liabilities of the Tyefu
Community Farming Trust (the Trust). Only if the payment was made by
Cape Concentrate does the question then arise whether it was a disposition by
Cape Concentrate not made for value. If the disposition was not made for value,
then the third issue is whether the Co-op is entitled to be indemnified in terms of
s 33(1) and (2) of the Act. Neither Standard Bank nor the Trust are parties to this
appeal.
[2] The Eastern Cape Division of the High Court, Grahamstown (the high
court) dismissed, with costs, the application brought by the liquidators of Cape
Concentrate to set aside, as a payment without value, the payment of
R22 268 848.85 made to the Co-op on 8 May 2015. The high court found that the
payment was of demand guarantees made by Cape Concentrate to the Co-op and
was a disposition with value.
[3] Cape Concentrate has appealed the judgment and order of the high court.
The Co-op has cross-appealed against the high court’s finding that, although the
payment was made in terms of demand guarantees, it ‘was paid with
[Cape Concentrate’s] money’ rather than a payment by or on behalf of Standard
Bank with money ceded and pledged to Standard Bank. Both leave to appeal and
to cross-appeal to this Court were granted by the high court.
Background
[4] Cape Concentrate was incorporated in 2006 and built, at large expense, a
tomato paste processing plant at Coega in Gqeberqa. A sister company with the
same shareholders, Rumibyte (Pty) Ltd (Rumibyte) was established to procure
tomatoes for processing by Cape Concentrate. Both experienced financial
difficulties, partly because Rumibyte had difficulty in securing a reliable supply
of tomatoes, and both were simultaneously placed under business rescue in
May 2013. A practising attorney and director of Pagdens, Francois Vienings
(Vienings), was appointed as the business rescue practitioner of the two
companies.
[5] At the first business rescue meeting, on 24 May 2013, Vienings expressed
the view that the companies were capable of being saved. This was subject to
raising funds of approximately US$90 million. The creditors were duly convinced
and the proposed business rescue plan was adopted. However, as at November
2013, Cape Concentrate had liabilities exceeding R133 million and had been
trading at a loss for several months. Vienings and the directors of Cape
Concentrate approached Africa Agriculture and Trade Investment Fund
(AATIF), a non-profit fund advocating the enhancement of agricultural
production and food security in Africa, for a loan to finance the operations of
Cape Concentrate during the business rescue process.
[6] Pursuant thereto, a term facility was concluded, on 18 August 2014,
between AATIF and Cape Concentrate, represented by Vienings, in terms of
which AATIF would loan Cape Concentrate amounts for the financing of its
tomato farming and processing operations. The Co-op was defined as the
investment partner. As to the purpose of the agreement, it was recorded that
Cape Concentrate would apply all amounts borrowed, firstly, to the payment of
existing lease and supplier indebtedness. Secondly, Cape Concentrate would
apply it to pay existing income tax indebtedness, acquisition of new farming
equipment to support the operation and for the financing of Cape Concentrate’s
working capital requirements.
[7] In the interim, and without it having been included in the business rescue
plan, in December 2013 Vienings established the Trust to involve local
community farmers in the production of tomatoes for supply to Cape Concentrate.
Rumibyte and Cape Concentrate were the founders of the Trust. The Trust
required a substantial amount of money for the production of tomatoes.
Discussions, facilitated by Vienings, took place between the Co-op and AATIF
for funding, and in April 2014 the Co-op indicated to AATIF that it would
provide loans to community farmers on commercially negotiated terms.
[8] Vienings then proceeded to make applications for a production loan to the
Co-op on behalf of the Trust, first in his capacity as the business rescue
practitioner for Cape Concentrate, and then in his capacity as a director of
Pagdens. The Co-op required security if they were to loan and advance monies to
the Trust. These included, inter alia, a cession of the proceeds of the tomato crop
which would be supplied to Cape Concentrate, a cession of any insurance on the
crops and most importantly a bank guarantee for the sum of the loan facility.
[9] Vienings tendered certain security for the loan, including a cession of the
proceeds of all tomato produce sold by the Trust to Cape Concentrate in favour
of the Co-op. It was contemplated that the crop would be produced and delivered
to Cape Concentrate, who would pay the Co-op for the value of the tomatoes in
terms of the cession and by so doing the production loan would be repaid and the
bank guarantees would not have to be called up.
[10] On 14 August 2014, an Investment Partner Agreement was concluded
between AATIF and the Co-op, in terms of which the Co-op agreed that it would
ensure that its clients would have the ability to pay their obligations without being
over-indebted. On 28 August 2014, Vienings confirmed that Cape Concentrate
had deposited R5 million into the trust account of Pagdens, which would serve as
security, and asked for confirmation that the Co-op would provide a loan to the
Trust. Shortly thereafter, the Co-op agreed to grant loan facilities to the Trust,
subject to a bank guarantee in respect of the R5 million. It also required a
resolution from the Trust that it would apply for credit and membership of the
Co-op. On 3 September 2014, the Trust executed a deed of cession of the
proceeds of all its crop in favour of the Co-op. It also made application to the Co-
op for membership (which was approved on 28 November 2014). Thereafter,
Vienings sent the required documents to the Co-op, including a Standard Bank
Corporate Saver guarantee.
[11] As early as mid-September 2014, the Co-op raised its reservations about
the planning and management of the Trust. The Co-op pointed out the risks
involved and expressed the view that it would be difficult to find another financial
institution prepared to finance such a scheme. Undeterred, Vienings saw to it that
a further R4 million and R12 million were deposited into the Pagdens trust
account, by Cape Concentrate, on 5 November and 18 November 2014
respectively. Vienings confirmed in an email to the Co-op that Cape Concentrate
was not in a position, nor was it ever the intention, to provide security for the
Trust’s farming operations. The credit facility for a production account was
approved by the Co-op on 11 February 2015.
[12] Various payments were made by Cape Concentrate into the Pagdens trust
account, over the period 1 September 2014 to 31 January 2015. It was on the
strength of those payments that the guarantees were issued by Standard Bank.
Between 1 September 2014 and 14 January 2015, Vienings provided the Co-op
with six demand bank guarantees in the total sum of R25 million. These were
issued by Pagdens utilising the Standard Bank electronic system, Third Party
Fund Administration (TPFA), as follows: R5 million on 5 September 2014; R2
million on 7 October 2014; R4 million on 6 November 2014; R3 million on 19
November 2014; R9 million on 19 November 2014; and R2 million on 14 January
2015.
[13] Each guarantee is identical, apart from the transaction number, issue date
and the amounts reflected therein. It bears the Standard Bank logo and reads as
follows:
‘Electronically generated DEMAND GUARANTEE – only presentable and payable by
electronic means.
Standard Bank
TRN No. [M567801]
TPFA Guarantees Standard Bank
P O Box 61029
Marshalltown
2107
Beneficiary Name: HUMANSDORP KOOPERASIE
Account Number: 0001940000110
Beneficiary Reference: TYEFU
Beneficiary Address: HUMANSDORP
Issue Date: [05/09/2014]
DEMAND GUARANTEE
We, The Standard Bank of South Africa Limited Registration Number 1962/000738/06 (“the
Bank”), undertake to pay HUMANSDORP KOOPERASIE BPK (“the Beneficiary”) the sum
of 5000000 (FIVE MILLION RAND) (“the Guaranteed Amount”) on receipt of a first written
demand for payment from the Beneficiary stating that the amount is due and payable by THE
TYEFU COMMUNITY FARMING TRUST IN THE EVENT OF IT NOT BEING ABLE TO
MAKE PAYMENT OF THE PRODUCTION LOAN FROM THE BENEFICIARY WHEN
IT BECOMES DUE AND PAYABLE (“the Principal”) in terms of an agreement
(“the Agreement”) between the Principal and the Beneficiary.
The Bank’s liability under this guarantee is principal in nature and is not subject to any
agreement. The Bank’s liability shall not be reduced, or in any way be affected by any alteration
of the terms of the Agreement, or any other arrangements made between the Principal and the
Beneficiary.
The Bank will pay on demand and will not determine the validity of the demand or the
correctness of the amount demanded, or become party to any claim or dispute of any nature
which any party may allege.
Escape clause The Bank reserves the right to withdraw from this guarantee at its entire
discretion by giving the Beneficiary 3 (three) months’ written notice of its intention to do so.
The Beneficiary may, however, claim under this guarantee during the mentioned notice period
from the date that such notice is given. The Bank’s liability shall cease on expiry of the notice
period and no further claims will be considered.
The cancellation of, or any change to the terms and/or conditions of this guarantee, must first
be agreed to in writing by the Beneficiary, the Principal and the Bank.
This Guarantee is neither negotiable, transferable nor payable upon presentation at a Branch of
Standard Bank and must be returned to us either against payment of the abovementioned sum
or in the event of our withdrawal from the undertaking in terms of the preceding paragraph.’
[14] It was not long before the Trust was unable to make payment towards the
loan facility provided to it by the Co-op. The Co-op’s attorneys directed a letter
to Pagdens, on 7 May 2015, stating that the Trust was indebted to their clients in
the sum of R22 268 848.85 and demanding immediate payment of the guarantees
to the said value. The demand guarantees were hand-delivered to Pagdens by the
Co-op at 18h00 later that day. On 8 May 2015, Pagdens loaded the release of the
amount of the guarantees from the two TPFA accounts and authorised the transfer
of R12 057 148.99 and R11 049 210.88. Payment was then effected to the Co-op
by Pagdens transferring these amounts into their Nedbank trust account and from
there to the Co-op’s account.
[15] The following day, Rob Parker (Parker) directed a letter to his fellow
director, Vienings, confirming that the Co-op had made demand on 7 May 2015
and that Pagdens had made payment of R22 268 848.85, which left R839 180.08
remaining in the trust account of Cape Concentrate.
[16] AATIF immediately dispatched a letter to Vienings asking how it was
legally possible that R25 million of the AATIF loan to Cape Concentrate was put
in a guarantee account in the name of the Trust when AATIF was not a lender to
the Trust. Vienings was requested to explain the grounds on which he had opened
guarantee accounts in the name of the Trust with funds provided by AATIF under
a facility agreement with Cape Concentrate. The accounts were, in fact, not in the
name of the Trust but in that of Cape Concentrate. The letter went on to ask how
it was possible that a colleague from the same firm instructed Vienings to make
this payment.
[17] Approximately a month later, in June 2015, Vienings resigned as business
rescue practitioner of Cape Concentrate and was replaced by Daniel Terblanche.
On 15 December 2015, Mr Terblanche applied for the liquidation of
Cape Concentrate and the final order of liquidation was granted on 29 March
2016.
Referral to oral evidence
[18] The application launched by the liquidators in the high court to set aside
the payment of R22 268 848.85 was brought on the basis that it was a disposition
without value made by Cape Concentrate. In response, the Co-op asserted that
the monies were paid by Pagdens on behalf of Standard Bank in terms of a
demand guarantee issued in respect of the Trust. In reply, the liquidators stated
that the Trust only became a member of the Co-op on 28 November 2014, after
five of the six guarantees had been issued, and that the credit facility for the Trust
was only approved on 11 February 2015, after all the guarantees had been issued.
[19] This prompted the Co-op to file various supplementary affidavits,
explaining how the payments were made by Pagdens for or on behalf of Standard
Bank, utilising the Standard Bank TPFA. Finally, by agreement, a court order
was granted on 15 October 2020 for ‘the hearing of oral evidence in respect of
the facts and circumstances surrounding and involving the issuing, presentation
and payment of the six demand guarantees of the Standard Bank Ltd’. The order
also provided that certain witnesses from Pagdens and Standard Bank be called
to give evidence, including Mr Antonie Pick (Pick), the Standard Bank solutions
manager for various products, including TPFA guarantees. The other witnesses
named in the order were Mr Brett Weddell (Weddell) and Parker, both of whom
were directors at Pagdens, and had provided affidavits.
[20] In the end, the Co-op, who had introduced the affidavit of Pick, elected not
to call him as a witness and it was the liquidators who called Pick to testify. Even
though Weddell and Parker’s version was pertinently put to Pick, after Pick’s
evidence, the Co-op decided not to call Weddell and Parker as witnesses. Pick
was thus the sole witness on some of the issues.
[21] In evaluating Pick’s evidence, the high court found that this was not a
matter where the application had been referred to trial and where the affidavits
stood as pleadings, with evidence to be adduced. The high court favoured the
version of Weddell and Parker over the oral evidence of Pick, whose evidence
the high court found did not add value to the issue. Instead, the high court found
that the affidavits of Parker and Weddell had clarified the position on the issuing
of, the presentation of and the payment of the demand guarantees.2
[22] In Lekup Prop Co No 4 (Pty) Ltd v Wright,3 this Court pronounced on the
status of affidavits in a referral to evidence in the following manner:
‘. . . A referral to trial is different to a referral to evidence on limited issues. In the latter case,
the affidavits stand as evidence save to the extent that they deal with dispute(s) of fact; and
once the dispute(s) have been resolved by oral evidence, the matter is decided on the basis of
that finding together with the affidavit evidence that is not in dispute.’
2 Paragraph 52 of the high court judgment.
3 Lekup Prop Co No 4 (Pty) Ltd v Wright [2012] ZASCA 211; 2012 (5) SA 246 (SCA); [2012] 4 All SA 136
(SCA) para 32.
[23] The facts in this matter are those which appear from the affidavits of
Weddell and Parker, which are either consistent with, or not disputed by, the oral
evidence of Pick. Accordingly, the oral evidence of Pick must prevail where there
is a dispute.
[24] Pick testified that the TPFA is a fully automated electronic system which
is accessed on the business online platform of Standard Bank. It allows managers
of those funds to open the accounts, transact on the accounts, close the accounts
and to issue guarantees electronically. Pick’s evidence was that attorneys could
only issue property guarantees using the TPFA system. This was for
conveyancing matters and once the guarantee was issued, the funds in the TPFA
account were automatically pledged to Standard Bank, and paid to the seller upon
registration.
[25] The relationship between Standard Bank and the attorney would be
regulated by a written agreement, whereby the attorney acts as agent for the
investor principal. The attorney would sign a pledge and cession of all trust
monies held in the TPFA trust account, which, according to Pick, was for property
matters only. Notwithstanding his insistence that Pagdens was only authorised to
issue property guarantees, Pick was unable to dispute the contractual obligations
that the guarantee created between Standard Bank and the Co-op, nor the fact that
the online options available to Pagdens were not limited to property guarantees
and the system’s functionality extended to property guarantees, demand
guarantees, and lease guarantees.
[26] According to Pick, the pledges placed on the TPFA accounts would remain
in place while the guarantees were ‘live’ on the TPFA system. Three of the
guarantees had expired on the system and the other three were cancelled on 7
May 2015, after 16h00. He stated that this meant that none of these could be paid
through the TPFA system. If Pagdens were to cancel the guarantees, they would
phone or email Standard Bank to arrange for cancellation. He later conceded that
the terms of the guarantee required any cancellation or change in terms to be
agreed upon in writing between the bank, the beneficiaries and the principal.
[27] The common thread running through Pick’s evidence is his emphasis on
how the system worked, which frequently conflicted with the terms of the
guarantee. He focused on the functioning of the system and methodology of
payment, without having sufficient regard to the binding terms of the guarantee
itself.
On appeal
[28] The liquidators submit that Pagdens paid the Co-op the amount required to
settle the production loan it had granted to the Trust, using the funds of
Cape Concentrate. As such, it was a disposition without value within the meaning
of s 26 the Act. The Co-op’s position is that the payment was pursuant to a
demand guarantee and that, with the issuing of guarantees, the funds deposited in
the Standard Bank TPFA accounts became the subject of a pledge and cession in
favour of Standard Bank and payable on demand.
[29] Both parties agree that if the payment was made in terms of a demand
guarantee, then there has been no disposition as defined in s 24 of the Act and this
is dispositive of the appeal.
[30] The following facts are common cause. A debt was owed to the Co-op by
the Trust. While Cape Concentrate was under business rescue, the business rescue
4 A disposition is defined in s 2 of the Act as meaning ‘any transfer or abandonment of rights to property and
includes a sale, lease, mortgage, pledge, delivery, payment, release, compromise, donation or any contract
therefor, but does not include a disposition in compliance with an order of the court’.
practitioner caused monies of Cape Concentrate to be paid into the trust account
of Pagdens. Pagdens paid that money from its trust account to the credit of
Standard Bank TPFA accounts, in order for Pagdens to cause guarantees to be
issued by its utilisation of the Standard Bank’s TPFA system. The guarantees
were to secure the debts of the Trust to the Co-op. The Trust was not able to
honour its debt to the Co-op, which made demand in terms of the guarantees.
When demand was made, the guarantees were not presented to Standard Bank for
payment, but to Pagdens. Crucially, it is not disputed that the bank guarantees
were binding on Standard Bank.
[31] Once the monies had been credited to the Standard Bank TPFA account,
they became subject to a pledge and cession in favour of Standard Bank. In its
heading, the pledge and cession document executed by Pagdens and Cape
Concentrate specifically stipulated that it was a ‘[p]ledge and cession of trust
funds held in the Third Party Fund Administration (“TPFA”) account on behalf
of the investor principal, in favour of The Standard Bank of South Africa Limited
to cover property guarantees issued on the instruction of the Pledgor from time to
time’. It was not in dispute that, in this instance, Cape Concentrate was the
pledgor.
[32] Paragraph 1 of the pledge and cession then provided that Pagdens:
‘acting in [their] capacities as duly authorised agents of the investor principal (“the Pledgor”),
transfers all rights to (cedes), surrenders and pledges to The Standard Bank of South Africa
Limited (“the Bank”), or anyone who takes transfer of the Bank’s rights under this pledge and
cession, trust funds held in the TPFA account, from time to time, on behalf of the investor
principal (“Trust Funds”) upon the terms and conditions set out in [the] agreement.’
The cession therefore divested Cape Concentrate of its rights to the monies once
they were paid into the TPFA system accounts. Those rights became vested in
Standard Bank.
[33] The trust funds and interest thereon were ‘given and transferred’ to
Standard Bank as a continuing covering security for property transaction
guarantees issued on the pledgor’s (Cape Concentrate’s) instructions. Cape
Concentrate would only have the right to redelivery of the funds on cancellation
of the pledge and cession by Standard Bank. The guarantees could only be
withdrawn by Standard Bank on three months’ notice and could only be cancelled
by way of an agreement to do so.
[34] The submission, on behalf of the liquidators, that when Pagdens made the
payments on 8 May 2015 the monies had reverted to Cape Concentrate, because
the guarantees had already been cancelled, is unsustainable. The guarantees had
not been cancelled as provided therein. Instead, the demand for payment was
made on the date of their expiry on the TPFA system. In any event, the cession
and pledge over the funds, which was intended to secure the guarantees, remained
in place until the guarantees were paid.
[35] The fact that the cession was in respect of a property guarantee, as opposed
to a demand guarantee, is irrelevant. Once a guarantee is valid on the face of it,
the contractual obligation of the bank is to pay the nominated beneficiary once
the conditions are met.5
[36] The evidence of Pick does not assist. He was constrained to agree that the
guarantee was issued by Standard Bank using electronic means; that demand was
5 See Lombard Insurance Company Limited v Landmark Holdings and Others [2009] ZASCA 71; 2010 (2) SA
86 (SCA); [2009] 4 All SA 322 (SCA) para 20, where this Court stated that disputes which arise are of no moment
insofar as the bank’s obligation to pay is concerned; See also Joint Venture between Aveng (Africa) (Pty) Ltd and
Strabag International GmbH v South African National Roads Agency SOC Ltd and Another [2020] ZASCA 146
(SCA); 2021 (2) SA 137 (SCA) paras 7-9; Raubex Construction (Pty) Ltd v Bryte Insurance Company Ltd [2019]
ZASCA 14; [2019] 2 All SA 322 (SCA) para 6; State Bank of India and Another v Denel SOC Limited and Others
[2014] ZASCA 212; [2015] 2 All SA 152 (SCA) paras 6-7; Coface South Africa Insurance Co Ltd v East London
Own Haven t/a Own Haven Housing Association [2013] ZASCA 202 (SCA); 2014 (2) SA 382 (SCA) paras 12-
13.
all that was required to trigger payment; the demand could only be made to
Pagdens; and payment could only be made by Pagdens.
Conclusion
[37] In conclusion, the guarantees were presentable and payable by electronic
means, by making a demand to Pagdens. When the demand was made by the Co-
op for payment under the guarantees, payment of the pledged and ceded monies
was made by Pagdens, in line with its obligations under the guarantees. The
payment was therefore made by Standard Bank in satisfaction of the demand
guarantee.
[38] In light of the above, it is unnecessary to determine the other issues that
arose on the pleadings. It is also unnecessary to make an order on appeal in respect
of the findings of the high court against which the Co-op cross-appealed. The
high court did not make any specific order in relation thereto and once a finding
is made that the R22 268 848.85 payment was made in satisfaction of Standard
Bank’s demand guarantees, any further order would be superfluous.
[39] In the result, the following order is made:
The appeal is dismissed with costs, including the costs of two counsel where so
employed.
______________________
C HEATON NICHOLLS
JUDGE OF APPEAL
Appearances
For appellants:
J E Smit
Instructed by:
Werksmans Attorneys, Johannesburg
Symington De Kock, Bloemfontein
For respondent:
D H de la Harpe SC and K L Watt
Instructed by:
De Jager & Lordan Incorporated, Grahamstown
Phatshoane Henney 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 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 judgments of the Supreme Court of Appeal
Cloete Murray N O and Others v Humansdorp Co-operative Limited (1274/2021) [2022] ZASCA 187
(30 December 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the appeal against the
order of the Eastern Cape Division of the High Court, Grahamstown (the high court).
The high court dismissed, with costs, the application brought by the liquidators of the appellant, Cape
Concentrate (Pty) Ltd (Cape Concentrate) to set aside, as a payment without value, the payment of
monies made to the Respondent from trust account of Pagdens (a firm of attorneys of which the
business rescue practitioner was a director). The high court found that the payment was a demand
guarantees made by Cape Concentrate to the Respondent and was a disposition with value.
The issues for determination before the SCA was whether the payment of monies amounted to a
disposition not made for value as envisaged in s 26 of the Insolvency Act 24 of 1936 (the Act); whether
the payment was made by Cape Concentrate, or whether it was a payment made by or on behalf of
The Standard Bank of South Africa Limited (Standard Bank), of demand guarantees issued in favour of
the Co-op for the liabilities of the Tyefu Community Farming Trust (the Trust).
On evaluating the facts before it, the SCA held that it was common cause that a debt was owed to the
Respondent by the Trust. While Cape Concentrate was under business rescue, the business rescue
practitioner caused monies of Cape Concentrate to be paid into the trust account of Pagdens. Pagdens
paid that money from its trust account to the credit of Standard Bank Third Party Trust Administration
(TPFA) accounts, in order for Pagdens to cause guarantees to be issued by its utilisation of the Standard
Bank’s online TPFA system. The guarantees were to secure the debts of the Trust to the Respondent.
The Trust was not able to honour its debt to the Respondent, which made demand in terms of the
guarantees. When demand was made, the guarantees were not presented to Standard Bank for
payment, but to Pagdens.
Crucially, the SCA held, it was not disputed that the bank guarantees were binding on Standard Bank.
Once those monies were credited to the Standard Bank TPFA account, they became subject to a pledge
and cession in favour of Standard Bank. The fact that the cession was in respect of a property
guarantee, as opposed to a demand guarantee, was irrelevant, said the SCA. Once a guarantee is valid
on the face of it, the contractual obligation of the bank is to pay the nominated beneficiary if the
conditions are met. The SCA held that when the demand was made by the Respondent for payment
under the guarantees, payment of the pledged and ceded monies was made by Pagdens on behalf of
Standard Bank, in line with its obligations under the guarantees. The payment was therefore made by
Standard Bank in satisfaction of the demand guarantee and not by Cape Concetrate.
In light of the above, the SCA held, it was unnecessary to make a determination in respect of the other
issues that arose in the pleadings. As a result, the SCA made an order dismissing the appeal with costs,
including the costs of two counsel where so employed
~~~~ends~~~~ |
494 | non-electoral | 2016 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 419/2015
In the matter between:
NATIONAL TERTIARY RETIREMENT FUND
APPELLANT
and
A T MOKADI
FIRST RESPONDENT
LUKHAIMAINE M A N.O.
SECOND RESPONDENT
Neutral citation: National Tertiary Retirement Fund v Mokadi (419/2015)
[2016] ZASCA 92 (1 June 2016)
Coram:
Ponnan, Theron, Petse and Zondi JJA and
Kathree-Setiloane AJA
Heard:
9 May 2016
Delivered:
1 June 2016
Summary:
Pension Funds Act 24 of 1956 – s 30N – discretion conferred on
Pension Funds Adjudicator to determine whether interest shall accrue where
determination consists of an obligation to pay money, and the rate at which,
and date from which it accrues.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from Gauteng Local Division of the High Court, Johannesburg
(Bashall AJ sitting as court of first instance):
The appeal is dismissed.
______________________________________________________________
JUDGMENT
______________________________________________________________
Kathree-Setiloane AJA (Ponnan, Theron, Petse and Zondi JJA
concurring):
[1] The first respondent, Professor A T Mokadi (Mokadi) was the Rector
and Vice-Chancellor of the Vaal University of Technology (the University) until
his employment was terminated on 11 July 2006. During his employment with
the University, Mokadi was a member of the appellant, the National Tertiary
Retirement Fund (the Fund), which is registered in terms of s 4 of the Pension
Funds Act 24 of 1956 (the PFA). After consideration of the report of a
commission of enquiry appointed to investigate certain allegations levelled
against Mokadi, the University charged him with misconduct. A disciplinary
tribunal found him guilty of numerous counts of misconduct including fraud,
corruption, theft, abuse of power and abuse of the University‘s funds.
Pursuant thereto he was dismissed by the University. Subsequent to his
dismissal, Mokadi referred an unfair dismissal dispute to the Commission for
Conciliation Mediation and Arbitration, but did not proceed with it. There were
seven high court applications as between the University and Mokadi
immediately before and after his dismissal. Except for a number of cost orders
which were granted in favour of the University, these applications are not
directly relevant to the issues in this appeal.
[2] Subsequent to dismissing Mokadi, the University instituted criminal
charges of fraud and corruption against him. Having done so, it requested the
Fund to withhold his pension benefit pending finalisation of the criminal case.
Almost a year later on 5 August 2007, the University instituted a civil action
against Mokadi for damages, in the amount of R6 073 215.01, arising from his
alleged fraudulent actions during his tenure as the Rector. When Mokadi was
acquitted of thecriminal charges in February 2009, the University instructed
the Fund to withhold Mokadi‘s pension benefit pending finalisation of the civil
action against him.
[3] Pursuant to this instruction, the Board of Trustees of the Fund (the
Board) resolved to withhold Mokadi‘s pension benefit in terms of s 37D(1)(b)1
of the PFA, pending the finalisation of the civil action against him. Aggrieved
by the withholding of his benefit, Mokadi lodged a complaint (the complaint)
on 3 January 2010, against the Fund with the second respondent, the Deputy
Pension Funds Adjudicator (the Adjudicator),2 appointed in terms of
s 30C(1)(b) of the PFA.
[4] On 2 March 2010 the Adjudicator, in writing, requested the Fund to
respond to the complaint by 1 April 2010 and, in particular, to provide her with
Mokadi‘s benefit statement, his contribution history and his benefit
breakdown. The Fund did not provide the Adjudicator with the requested
information. However, on 19 April 2010, it filed a response to the complaint. In
the response, the Fund alleged that Mokadi‘s complaint was time-barred in
terms of s 30I of the PFA as it related to a benefit which he should have
1 Section 37D of the PFA provides:
‗Fund may make certain deductions from pension benefits ─
(1) A registered fund may ─
(a) . . .
(b) deduct an amount due by a member to his employer on the date of his retirement or on
which he ceases to be a member of the fund, in respect of ─
(i) (aa) . . .
(bb) . . .
(ii) compensation (including any legal costs recoverable from the member in a matter
contemplated in subparagraph (bb)) in respect of any damage caused to the employer by
reason of any theft, dishonesty, fraud or misconduct by the member, and in respect of which
─
(aa) the member has in writing admitted liability to the employer; or
(bb) judgment has been obtained against the member in any court, including a magistrate‘s
court, from any benefit payable in respect of the member or a beneficiary in terms of the rules
of the fund, and pay such amount to the employer concerned; . . .‘.
2 The Adjudicator did not oppose the proceedings in the court a quo. Nor does she oppose
the appeal in this court.
received in June 2006 when his employment at the University was
terminated.3 The Fund contended that Mokadi ought to have utilised his
remedies under the PFA within three years from the date when he became
aware of the Fund‘s decision to withhold his benefit, which was soon after his
dismissal or, at the latest, on 22 August 2008 when he demanded payment of
his pension benefit from the Fund through his attorneys.
[5] It also, in the response, sought to justify its decision to withhold
Mokadi‘s pension benefit at the University‘s request, on the basis of the
various cost orders obtained by the University against Mokadi which were
outstanding, as well as the pending civil action against him. The Fund averred
that pursuant to the various cost orders which the University had obtained
against Mokadi, it had already paid the University an amount of R431 043.55
from Mokadi‘s pension benefit, and that the remaining amount held by the
Fund was R1 305 477.10. The Fund furthermore alleged that having regard to
the history of the matter and that the University had done everything it could
to expedite the proceedings (as obtaining a trial date was beyond its control),
it was of the view that it acted within the scope of s 37D of the PFA by
withholding payment of Mokadi‘s pension benefit until the civil action had
been properly ventilated and considered by a court. Finally, as to the status of
the pending civil action, the Fund asserted that it was being defended by
Mokadi; that the pleadings had closed; and that the matter was set down for
hearing on 2 June 2010. The Fund sought justification for withholding the
pension benefit in the decision of Highveld Steel & Vanadium Corporation Ltd
v Oosthuizen4 where this court held that the object of s 37D(1)(b) of the PFA
is to protect the employer‘s right to pursue the recovery of money
misappropriated by its employees.
3 Section 30I of the PFA provides:
‗(1) The Adjudicator shall not investigate a complaint if the act or omission to which it relates
occurred more than three years before the date on which the complaint is received by him or
her inviting.
(2) The provisions of the Prescription Act, 1969 (Act no. 68 of 1969), relating to a debt apply
in respects of the calculation of the three year period referred to in subsection (1).‘
4 Highveld Steel & Vanadium Corporation Ltd v Oosthuizen [2008] ZASCA 164; 2009 (4) SA 1
(SCA) paras 16-19.
[6] A month after filing its response to the complaint, the University‘s
attorneys advised the Fund, in a letter dated 21 May 2010, that another bill of
costs, in one of the applications between it and Mokadi, had been taxed in the
University‘s favour in the amount of R303 803.49. The University furthermore
confirmed that Mokadi‘s pension benefit remained subject to retention as
resolved by the Board, pending the taxation of a further bill of costs in respect
of amongst others, the pending civil action. Presumably, Mokadi was advised
of this decision because, on 7 June 2010, he wrote to both the Adjudicator
and the Fund under separate cover, expressing his dissatisfaction with the
decision of the Fund to deduct moneys from his pension benefit, without
informing him of the deductions. On 10 June 2010, the Fund responded
stating that it did not deem it necessary to deal with the allegations in
Mokadi‘s letter and baldy denied them. These letters were followed by a letter
dated 30 June 2010 to the Fund from the National Education Health and
Allied Workers‘ Union, a trade union, noting its disappointment with the Fund
for allowing the deduction of moneys from Mokadi‘s pension benefit to settle
legal costs owing to it by him. It also demanded that Mokadi‘s pension benefit
be paid out to him within ten days from the date of the letter.
[7] There was no further written communication between Mokadi and the
Fund until 11 April 2012, when Mokadi wrote to the Fund stating ‗[a]fter much
prevarication the University has eventually, by resolution of its Council,
directed that my pension benefit be released forthwith, without any conditions
. . .‘. To this, he attached a letter from the University‘s office of the Vice-
Chancellor at the time, Professor Moutlana, but no resolution from the Council
of the University (the Council). The Fund consequently sent a letter to the
University on 12 April 2012, requesting a copy of the Council‘s resolution
referred to in Mokadi‘s letter of 11 April 2012. The Fund did not receive a
response from the University.
[8] Mokadi then wrote to the Adjudicator on 10 July 2012 recording that:
‗There is no pending civil case against me by my previous employer, Vaal University
of Technology. The first time such an attempt was made was in December 2006. I
responded by informing the University that I am instituting a counterclaim which was
more than their claim against me. That was the last time I heard about this matter. In
all subsequent communications with me, the University has neither pursued nor
persisted in this fictitious civil suit.‘
Pursuant to this letter, the Adjudicator wrote to the Fund, on the same day,
pointing out that according to a further submission from Mokadi, there
appeared to be no pending legal proceedings against him, and hence the
withholding of his pension benefit was unlawful. The Adjudicator then sought
clarification from the Fund as to whether there were any pending legal
proceedings against Mokadi. On 11 July 2012 the Fund again requested an
update from the University on the pending legal proceedings against Mokadi.
[9] On 13 July 2012, the University informed the Fund that:
‗[W]e wish to point out that our Bill of Costs in the matter of The Vaal University of
Technology v Mr A T Mokadi and Another (North Gauteng High Court, Pretoria under
case number 5877/2006) was taxed and allowed in favour of the [University] in an
amount of R303 803.49 . . . as long ago as 6 May 2010.
To this end we confirm that the determination by the Taxing Master has the effect of
a civil Judgment against [Mokadi] and in favour of the [University].
With further reference to your submission to the Pension Funds Adjudicator, dated 14
April 2010, we wish to point out that the abovementioned amount may be deducted
from [Mokadi‘s] pension benefits in terms of section 37D of the [PFA], as was done in
two other matters where the [University] obtained similar costs orders against
[Mokadi].
[Mokadi‘s] allegation that there is currently no civil action pending between him and
the [University] is therefore unfounded and deprived of truth. The matter discussed
above will only be finalized once the amount of the taxed Bill of Costs is paid.
It is indeed so that the [Council] resolved not to pursue the action for damages
against [Mokadi] and the matter discussed above therefore remains the only
outstanding issue.
. . .
Turning to the last issue, we wish to record the following:
1.
A Special [Council] Meeting was convened and held on 5 August 2010 . . . on
the issue of withholding [Mokadi's] pension benefits.
2.
During the meeting the full [Council] inter alia resolved that [Mokadi‘s] pension
benefits be withheld further.
3.
To this end, we have to advise that the above resolution may only be
overturned by a resolution of the full [Council].
. . .‘
Dissatisfied with the University‘s response, the Fund advised it in writing, on
17 July 2012, that in view of the University‘s decision not to pursue the action
for damages against Mokadi, it could no longer withhold his benefit. On 18
July 2012, the Fund received a further letter from the University confirming
that it had decided not to pursue the claim for damages against Mokadi,
although a judgment for costs still remained unsatisfied. Following receipt of
this letter, the Fund‘s legal advisors advised both the University and the Fund,
on 20 July 2012, that it could no longer withhold Mokadi‘s pension benefit and
that it had instructed its administrator to calculate the benefit payable to
Mokadi, and essentially, to effect payment thereafter. In addition, the Fund
stated that the ‗matter has been resolved and no determination is required‘.
By 7 September 2012, when the Fund had still not paid Mokadi his pension
benefit, the Adjudicator enquired by email when payment could be expected.
Curiously, on the same day, the Fund responded by requesting the
Adjudicator to confirm that the complaint had been resolved and that it would
not be proceeded with. The Fund, moreover, somewhat contradictorily
advised her that until it received her determination, it was unable to proceed
with the payment.
[10] On 10 September 2012, the Adjudicator advised the Fund that she
would issue her determination as requested, and did so on 19 September
2012. She found that the complaint had not prescribed because, as indicated
in the letter of 20 July 2012, the University had decided not to pursue the civil
claim for damages against Mokadi, but rather to pay Mokadi his pension
benefit. On the question of whether the Fund was justified in withholding the
benefit pending the finalisation of the damages action, the Adjudicator made
the following ruling:
‗The purpose of section 37D(1)(b) of the [PFA] is to protect an employer‘s right to
recover losses caused by the misconduct of an employee and is a legitimate
objective of protecting [an] employer‘s rights to recover debts due (see Dakin v
Southern Sun Retirement Fund [1999] 9 BPLR 22 PFA). While this objective is not an
absolute right of the employer, what is implicit is that the employer may request a
fund to withhold benefits pending the determination of proceedings against the
member.
The submissions indicate that although the [University] instituted civil proceedings
against [Mokadi] for damages, it subsequently resolved not to pursue the matter.
Thus there is no pending civil claim against [Mokadi] and [he] did not sign any written
acknowledgment of liability for the alleged misconduct. It follows that there is no
reason for the Fund to withhold payment of [Mokadi‘s] benefit.‘
The Adjudicator accordingly made the following order:
‗6.1.1 The [Fund] is ordered to compute [Mokadi‘s] withdrawal benefit in terms of its
rules together with interest at the rate of 15.5% from 2 June 2010, within one week of
the date of this determination;
6.1.2 the [Fund] is further ordered to pay [Mokadi] his withdrawal benefit, less any
deductions permissible in terms of the [PFA], within seven days of completing its
computation as stated above.‘
[11] On 28 September 2012 the Fund advised Mokadi that the payment
process was underway and, on 1 October 2012, the pension benefit
(excluding interest) was finally released into Mokadi‘s bank account. On 15
November 2012, the Fund sent Mokadi a statement of the computation of his
benefit. According to the Fund, although the statement shows a payment of
R597 739.51 in respect of ‗late payment interest‘, this amount did not
represent ‗interest‘ accrued, but rather ‗fund return‘.
[12] The Fund appealed the decision of the Adjudicator to the Gauteng
Local Division, Johannesburg (the court a quo), in terms of s 30P5 of the PFA.
In addition to opposing the appeal, Mokadi lodged a counter-application in
which he requested the court a quo to make an order allowing interest on the
pension benefit to be calculated from 27 November 2006 (the date on which a
5 Section 30P of the PFA provides:
‗(1) Any party who feels aggrieved by a determination of the Adjudicator may, within six
weeks after the date of the determination, applied to the division of the High Court which has
jurisdiction, for relief, and shall at the same time give written notice of his or her intention so to
apply to the other parties to the complaint.
(2) The division of the High Court contemplated in subsection (1) may consider the merits of
the complaint made to the Adjudicator under s 30A(3) and on which the Adjudicator‘s
determination was based and, may make any order it deems fit.
tax directive was issued in respect of the pension benefit) as opposed to 2
June 2010, as determined by the Adjudicator. Both the Fund‘s application and
Mokadi‘s counter application were dismissed by Bashall AJ, who reasoned:
‗The [PFA], in terms, does provide that where there is a determination consisting of
an obligation to pay an amount of money, then there is a statutory obligation that,
that debt will bear interest. The interest will be as determined by the Adjudicator as to
the rate and as to the commencement date.
. . .
I have already found that the [Fund] exercised a proper discretion in withholding the
benefit pending determination of the civil action by the University. Neither acted
unreasonably having regard to the factual background.
Once the University had determined not to proceed further, then the [Fund] became
obliged to pay the benefit.
The [Adjudicator], on learning of the decision not to proceed further then issued the
Determination and Orders including the order as to interest which was ancillary to the
order to pay the benefit.
The [Adjudicator] was statutorily empowered to determine the date of payment of the
interest as also the rate. She did so. She did not act improperly or unreasonably in
doing so. There is, in my view, no merit in the counter-application.‘
Bashall AJ made no order as to costs. The present appeal is with leave of this
court.There is no cross-appeal against the court a quo‘s dismissal of Mokadi‘s
counter-application.
[13] The primary issue for determination in this appeal is whether the
Adjudicator was empowered under the PFA to order interest against the Fund.
The Fund‘s contentions are two-fold: First, that it was not in mora and
therefore not liable to pay the interest which the Adjudicator awarded to
Mokadi as it had, in terms of s 37D of the PFA, lawfully withheld Mokadi‘s
benefit pending the finalisation of the civil action instituted by the University.
Second, that because it had paid Mokadi his benefit together with the fund
return on his benefit to the date of payment, the payment of interest will result
in Mokadi receiving a double benefit.
As to the Fund’s first contention:
[14] Section 30N of the PFA regulates the payment of interest. It provides:
‗Where a determination consists of an obligation to pay an amount of money, the
debt shall bear interest as from the date and at the rate determined by the
Adjudicator.‘
Section 30N confers a discretion on the Adjudicator to order the payment of
interest, where his or her determination consists of an obligation to pay
money, and to determine the rate of interest that shall accrue, and the date
from which it will run. It goes without saying that the discretion must be
exercised in a manner that is fair and appropriate.
[15] The central purpose of the regulatory framework for occupational
pension funds, is to protect the pension benefit of members since the
payment of contributions to their retirement often extend across their
lifetimes.6 These contributions are, to my mind, perhaps the most significant
source of saving for most individuals in formal employment. The object of
s 30N is thus to recompense a member for the late payment by the Fund of a
benefit, so as to place the member in the same ─ or substantially similar ─
position that he or she would have been in, had the benefit been paid
timeously.
[16] Thus, whether interest shall accrue at all and the rate at which it
accrues and date from which it runs, are matters that have been left by the
legislature to the discretion of the Adjudicator. Principally for this reason, the
PFA does not make the Prescribed Rate of Interest Act 55 of 1975 (the
Prescribed Rate of Interest Act) applicable to the rate of interest payable
under s 30N of the PFA. Notably, s 1 of the Prescribed Rate of Interest Act
governs interest payable on all debts, but only to the extent that the interest
payable ‗is not governed by any other law or by an agreement or a trade
custom or in any other manner‘. Since the interest payable on amounts
awarded by the Adjudicator is governed by s 30N of the PFA, such a debt is
not in law subject to the Prescribed Rate of Interest Act. The Adjudicator is,
therefore, not obliged to use the prescribed rate as determined in that Act
when making a determination as contemplated in s 30N of the PFA.
6 As reflected in the Explanatory Summary of the Pension Funds Amendment Bill, 2007,
National Treasury Regulations, GN R169, GG 29632,16 February 2007.
[17] This does not, however, preclude the Adjudicator from applying the
prescribed rate of interest, if he or she considers it to be appropriate in the
circumstances of a particular case. The Adjudicator is also free to use a
different interest rate such as, for instance, the average rate of inflation7 or the
rate of fund return,8 where these would be more appropriate. It follows that on
this score the Fund‘s contention to the contrary is untenable.
[18] In determining the date from which interest shall run, the Adjudicator
may again choose from a range of options which in his or her view is fair and
appropriate. For instance, the Adjudicator may choose to order interest to run
from the date of the determination to the date of payment of the debt, or that it
be calculated from the date that the benefit awarded should originally have
been paid to the complainant, ie the date from when the fund was in default or
mora.9 Under the common law, where payment of a debt is overdue, and no
interest has been agreed upon between the parties, mora interest may be
charged.10 What this means, in the context of a determination under s 30P of
the PFA, is that even where the rules of a pension fund do not provide for
interest to be paid, for example, on the late payment of a pension benefit or
there is no contractual arrangement to that effect, then the Adjudicator may in
the proper exercise of her discretion, order the fund to pay interest on the
benefit from the date that the benefit was originally due to the member, or any
other date which she deems just and appropriate in the circumstances.11
Accordingly, there is no merit in the contention that the Adjudicator was not
permitted to order the payment of interest, because there was no agreement
7 Nakalebe v South African Retirement Annuity Fund & another [2005] 11 BPLR 954 (PFA)
paras 19-20.
8 Khumalo v Prosure Retirement Annuity Fund & another [2006] 3 BPLR 247 (PFA) para 27.
9 R Hunter, J Esterhuizen, T Jithoo and S Khumalo The Pension Funds Act: A commentary
on the Act, regulations, selected notices, directives and circulars (The law as at November
2009.) (2010) at 623-624.
10 Commissioner for Inland Revenue v First National Industrial Bank Ltd [1990] ZASCA 49;
1990 (3) SA 641 (A) at 645D and 659A; Mahambehlala v Member of the Executive Council for
Welfare, Eastern Cape & another 2002 (1) SA 342 (SE) at 356H-J and Mbanga v Member of
the Executive Council for Welfare, Eastern Cape & another 2001 (8) BCLR 821 (SE).
11 See Bogie (obo Trustees of Chaka’s Rock Pension Fund) v Metropolitan Life Limited &
others [2009] 3 BPLR 237 (PFA), where the adjudicator found that in order to put the creditor
in the same position as he or she would have been if the debt was paid, an interest rate in the
amount of 25 per cent should be imposed given the failure of the employer to comply with its
duties to pay contributions for a protracted period.
between the parties to do so or the Fund‘s rules did not provide for such
payment.
[19] In Meyer v Iscor Pension Fund,12 this court considered the nature of an
application in terms of s 30P of the PFA and described it as follows:
‗From the wording of section 30P(2) it is clear that the appeal to the High Court
contemplated is an appeal in the wide sense. The High Court is therefore not limited
to a decision whether the Adjudicator‘s determination was right or wrong. Neither is it
confined to the evidence or the grounds upon which the Adjudicator‘s determination
was based. The Court can consider the matter afresh and make any order it deems
fit. At the same time, however, the High Court‘s jurisdiction is limited by
section 30P(2) to a consideration of ―the merits of the complaint in question‖. The
dispute submitted to the High Court for adjudication must therefore still be a
―complaint‖ as defined. Moreover, it must be substantially the same ―complaint‖ as
the one determined by the Adjudicator. Since it is an appeal, it follows that where, for
example, a dispute of fact on the papers is approached in accordance with the
guidelines formulated by Corbett JA in Plascon-Evans Paints Ltd v Van Riebeeck
Paints (Pty) Ltd 1984 (3) SA 623 (A) [at] 634E-635D, the complainant should be
regarded as the ―applicant‖ throughout, despite the fact that it is the other side who is
formally the applicant to set the Adjudicator‘s determination aside. In case of a
―genuine dispute of fact‖ on the papers as contemplated in Plascon-Evans, the
matter must therefore, in essence, be decided on the version presented by the other
side unless that version can, in the words of Corbett JA, be described as ―so far-
fetched and unclearly untenable that the court is justified in rejecting [it] merely on the
papers‖.‘13
[20] In line with these principles, Mokadi had to establish the date whence
the Fund became liable to pay him his benefit. Any factual disputes on the
papers had to be decided in accordance with Plascon-Evans.14
[21] In Highveld Steel15 this court considered the question of the
interpretation of s 37D(1)(b)(ii) of the PFA and held that the board of a
12 Meyer v Iscor Pension Fund [2002] ZASCA 148; [2003] 1 All SA 40 (SCA).
13 Meyer v Iscor Pension Fund para 8.
14 Meyer v Iscor Pension Fund para 8, citing Plascon-Evans.
15 Highveld Steel para 16-19.
pension fund has the power to withhold payment of a pension benefit due to a
member (or ex-member) pending the outcome of a damages action to be
instituted by the employer against the member. In view of this finding, both the
Adjudicator and the court a quo found, correctly in my view, that the Fund had
no obligation to pay Mokadi his benefit pending finalisation of the civil action
which the University had instituted against him. In reliance upon this finding,
the Fund contended that it was not in default when it withheld Mokadi‘s benefit
pending finalisation of the civil action, because it did so lawfully. It accordingly
submitted that it is not liable to pay interest on Mokadi‘s pension benefit from
2 June 2010. As I understand the contention, it is that although the
Adjudicator ordered payment of interest from 2 June 2010, that date had no
apparent significance because even though the civil action between the
University and Mokadi was set down for that date, he had failed to adduce
any evidence to establish that as the date when the civil claim fell away.
[22] I disagree. In deposing to his affidavit in the counter-application Mokadi
explains that the civil action had been set down for 2 June 2010, but ‗this date
came and passed‘, and the University did nothing to proceed with the matter,
yet the Fund had neither released his benefit nor enquired from the University
about the status of the case until two years later. He then suggests that
‗either the [Fund] knew that the set down of 2 June 2010 had lapsed‘ and was
aware that the University did ‗nothing further in prosecuting the matter‘ or ‗it
neglected to enquire from the [University] what the status of the civil case
was‘. The Fund responds by criticising the allegation as vacuous, since
Mokadi had purportedly failed to allege that the claim had been ‗withdrawn‘.
[23] However, just a few pages later when Mokadi pertinently enquires ‗so
the question is why was my pension delayed, when already the [Fund] was in
receipt of [the] final bill of cost of R 303 803.49 by 21 May 2010, and by 3
June 2010 the [Council) in its sitting had for all intents and purposes
abandoned the civil claim which had a set down on 2 June 2010, the previous
day‘,16 the Fund responds brusquely that: ‗[t]his relates to issues between the
16 Own emphasis.
[University] and [Mokadi] and is irrelevant to this application‘. When Mokadi
alleges, repeatedly so, that ‗from 2 June 2010 there was no valid reason for
withholding his benefit‘; that ‗beyond 2 June 2012 there was no further cases
of litigation between him and the [University] and that all matters pertaining to
loss or damages or claims by the [University] were finalized‘; and that ‗after 2
June 2010 there was no further litigation processes‘, the Fund simply fails to
respond. Crucially, these allegations stand unchallenged. It must thus be
accepted as not being in dispute that the University had abandoned the civil
action against Mokadi on 2 June 2010, and that the Fund was no longer
justified, in terms of s 37D of the PFA, to withhold Mokadi‘s benefit beyond
that date. I turn to consider the contention of the Fund that the court a quo
erred by failing to deal with this very issue ─ which it viewed as the ‗core‘
issue in the appeal.
[24] I am not convinced that the judge in the court a quo did not apply his
mind to this issue. That he did so, is made clear from a reading of the
penultimate paragraph of judgment, where he found that the Adjudicator ‗was
statutorily empowered to determine the date of payment of interest as also the
rate . . . [s]he did not act improperly or unreasonably in so doing‘. It is implicit
from this finding, read in the context of the judgment as a whole that the
learned judge in the court below remained unpersuaded that the Adjudicator
was wrong in ordering interest to run from 2 June 2010. He accordingly found
no basis for interfering with that conclusion by the Adjudicator.
[25] In my view, the Fund was not justified in withholding Mokadi‘s benefit
once the University decided not to proceed with the civil action against
Mokadi. Mokadi‘s benefit was originally due to him in July 2006, when his
employment with the University was terminated. At that stage, the Fund‘s
justification for withholding Mokadi‘s benefit was that the University had
charged Mokadi with fraud and corruption. When Mokadi was acquitted of
these charges, the Fund then sought to justify the withholding of his benefit on
the basis of the pending civil action. The Fund was aware that the civil action
was set down for hearing on 2 June 2010. It, nonetheless, adopted a supine
attitude and simply made no effort to enquire from the University what the
status of the civil action was subsequent to that date, until after it had received
the enquiry from the Adjudicator on 10 July 2012. If, as contended by the
Fund, the Adjudicator was not empowered under s 30N of the PFA to award
interest, in the terms determined, then one wonders why the legislature found
it necessary to enact s 30N of the PFA at all. Acceptance of the submissions
advanced on behalf of the Fund would render this statutory provision
nugatory.
As to the Fund’s second contention:
[26] I turn to the Fund‘s second contention that because it had paid Mokadi
his benefit together with ‗fund return’ from date of his dismissal to date of
payment, the Adjudicator was not entitled to order it to pay interest on the
benefit, because that will result in Mokadi receiving a double benefit. ‗Fund
return‘ and ‗interest‘ are independent concepts which serve different purposes
in the scheme of the PFA. This much is clear from the definition of ‗fund
return‘ in s 1 of the PFA which provides:
‗―fund return‖ in relation to —
(a)
the assets of a fund, means any income (received or accrued) and capital
gains and losses (realised or unrealised) earned on the assets of the fund, net of
expenses and tax charges, associated with the acquisition, holding or disposal of
assets; or
(b)
any portion of the assets of a fund if the assets are separately identifiable,
means any income (received or accrued) and capital gains and losses (realised or
unrealised) earned on those assets, net of expenses and tax charges associated with
the acquisition, holding or disposal of assets; or
(c)
the assets of a fund, to the extent that those assets consist of long-term
policies which are ―fund member policies‖ as defined in Part 5 of the Regulations
under the Long-term Insurance Act, 1998 (Act No. 52 of 1998), means the ―growth
rate‖ (as defined in those Regulations) applicable to those policies, as determined in
accordance with those Regulations,
which in any such case may be positive, negative or nil: Provided that the board may
use a reasonable approximation, made in such manner as may be prescribed, to
allocate a fund return if there are sound administrative reasons why an exact
allocation cannot be effected.‘
[27] Fund return is fundamental to the rationale of a pension fund. It
accrues as part of the objective for which moneys are invested in a pension
fund − to yield speculation gains. Interest, as envisaged in s 30N of the PFA,
on the other hand, is clearly distinguishable. Its purpose may be comparable
to a tempore mora interest, which was described by this court in Scoin
Trading (Pty) Ltd v Bernstein NO,17 as follows:
‗If a debtor‘s obligation is to pay a sum of money on a stipulated date and he is in
mora in that he failed to perform on or before the time agreed upon, the damages
that flow naturally from such failure will be interest a tempore morae or mora interest.
The purpose of mora interest is to place the creditor in the position he would have
been if the debtor had performed in terms of the undertaking. This notion was more
fully explained in Bellairs v Hodnett & another [1978] (1) SA 1109 (A) at 1145D-G:
―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. . . . This loss is assessed on the
basis of allowing interest on the capital sum owing over the period of mora . . .
Admittedly, it is pointed out by Steyn, Mora Debitoris [at] 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 emphasised
by Centlivres, CJ, in Linton v Corser, 1952 (3) SA 685 (AD) at 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.‘
More recently in Crookes v Regional Land Claims Commission18 this court
made plain that:
17 Scoin Trading (Pty) Ltd v Bernstein NO [2010] ZASCA 160; 2011 (2) SA 118 (SCA) para
14. See also David Trust & others v Aegis Insurance Company Ltd & another [2000] ZASCA
19; 2000 (3) SA 289 (SCA) para 39.
18 Crookes v Regional Land Claims Commission [2012] ZASCA 128; 2013 (2) SA 259 (SCA)
para 16.
‗. . . a party who has been deprived of the use of his or her capital for a period of time
has suffered a loss (Thoroughbred Breeders’ Association v Price Waterhouse 2001
(4) SA 551 (SCA) ([2001] 4 All SA 161) para 85). And that, in the normal course of
events, such a party will be compensated for his loss by an award of mora interest.‘
What is apparent from these authorities is that the concept and purpose of
‗interest‘ is distinguishable from ‗fund return‘ as defined in the PFA. There is
accordingly no merit in the contention of the Fund that Mokadi will receive a
double benefit, should it be required to pay interest on the benefit which the
Adjudicator awarded to him.
[28] For these reasons, the appeal must fail. As in the court below, Mokadi
was not represented in this court. As he succeeds on appeal, the question of
costs does not arise.
[29] It is ordered that:
The appeal is dismissed.
________________
F Kathree-Setiloane
Acting Judge of Appeal
APPEARANCES:
For Appellant:
P van der Berg SC
Instructed by:
Bowman Gilfillan, Sandton
McIntyre & Van der Post, Bloemfontein
For First Respondent:
In Person | 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.
National Tertiary Retirement Fund v Mokadi (419/2015) [2016] ZASCA 92 (1 June 2016)
MEDIA STATEMENT
Today, the Supreme Court of Appeal (SCA) dismissed the appeal by the National Tertiary Retirement
Fund (the Fund) against a judgment of the Gauteng Local Division of the High Court (the court a quo)
in an application in terms of s 30P of the Pension Funds Act 24 of 1956 (the PFA), which was lodged
by the Fund. The appeal arose from a decision by the Fund to withhold the respondent’s pension fund
benefits, in terms of s 37D(1)(b) of the PFA, following instructions by the Vaal University of
Technology (the University) to do so. The University had terminated the respondent’s employment in
July 2006.
When the respondent had still not received his benefit by early 2010, he lodged a complaint with the
Pension Fund’s Adjudicator. The Adjudicator issued a determination in which she found that the Fund
was not justified in withholding the pension benefits as the University was not persisting with the
pending civil action against the respondent and awarded him, in terms of s 30N of the PFA, his
pension benefits with interest at a rate of 15.5 per cent from 2 June 2010. The Fund paid the pension
benefits to the respondent in November 2012, but did not pay the interest.
Both in the court a quo and the SCA, the Fund complained that the Adjudicator was not empowered
to cause interest to accrue to the respondent’s pension benefit. The Fund was also of the view that
the award of interest would mean that the respondent would receive a double benefit, as he had
already receiving fund return on his pension benefit.
The SCA held that the court a quo was correct in upholding the Adjudicator’s decision to order the
Fund to pay the respondent his pension benefit together with interest, and dismissed the appeal.
--- ends --- |
2189 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 573/08
NATIONAL DIRECTOR OF
PUBLIC PROSECUTIONS
Appellant
and
JACOB GEDLEYIHLEKISA ZUMA
Respondent
(THABO MVUYELWA MBEKI and GOVERNMENT OF THE REPUBLIC
OF SOUTH AFRICA intervening)
Neutral citation: National Director of Public Prosecutions v Zuma
(573/08) [2009] ZASCA 1 (12 Jan 2009)
Coram:
HARMS DP, FARLAM, PONNAN, MAYA AND CACHALIA
JJA
Heard:
28 NOVEMBER 2008
Delivered: 12 JANUARY 2009
Updated:
Summary: (1) Criminal procedure – setting aside of indictment – s 179 of the
Constitution – consultation by National Director of Public Prosecutions
when reviewing a prosecutorial decision with accused. (2) Civil
procedure – principles of deciding factual issues in motion
proceedings restated. (3) Judiciary – the limits of judicial decision-
making restated.
ORDER
On appeal from: High Court, Pietermaritzburg (Nicholson J sitting as court of first
instance).
A
The appeal is upheld with costs including the costs of three counsel.
B
Paragraphs 1 to 4 of the order of the court below are set aside and replaced
with the following:
‘1 The application is dismissed.
2 The applicant is to pay the respondent’s costs of suit including those
consequent upon the employment of three counsel.
3 On the respondent’s application to strike out, the applicant is ordered
to pay the costs on the attorney and client scale.
4 The applicant’s application to strike out is dismissed with costs on the
attorney and client scale.’
C
The application to intervene is dismissed.
JUDGMENT
HARMS DP (FARLAM, PONNAN, MAYA and CACHALIA JJA concurring):
INTRODUCTION
[1] This is an appeal against a judgment of Nicholson J, in which he set aside a
decision by the National Director of Public Prosecutions (the NDPP) to indict the
respondent, Mr Jacob G Zuma.1 The appeal by the NDPP is with the leave of the
court below. Mr Thabo M Mbeki (until recently the President of the country) and the
Government of the RSA sought leave to intervene in the appeal on the ground that
they have an interest in the appeal since many findings of the court below impinged
on them negatively and they wish to have the record set straight.
[2] The litigation between the NDPP and Mr Zuma has a long and troubled
history and the law reports are replete with judgments dealing with the matter.2 It is
accordingly unnecessary to say much by way of introduction and a brief summary
will suffice.
[3] Mr Zuma was appointed as Deputy President of the RSA on 19 June 1999.
He was, however, dismissed by Mr Mbeki during June 2005. During December
2007, he became the president of the governing political party, the African National
Congress (the ANC), at the expense of Mr Mbeki, the incumbent and only other
candidate for that position. It is common knowledge that subsequent to the judgment
of the court below Mr Mbeki resigned as President of the country and that Mr Zuma
is said to be the ANC’s candidate for that post after the 2009 general election. Mr
1 See Zuma v National Director of Public Prosecutions (8652/08) [2008] ZAKZHC 71 (12 September
2008) to be found at www.saflii.org.za.
2 See especially Thint (Pty) Ltd v National Director of Public Prosecutions; Zuma v National Director
of Public Prosecutions 2008 (2) SACR 421 (CC); [2008] ZACC 13 and Thint Holdings (Southern
Africa) (Pty) Ltd v National Director of Public Prosecutions; Zuma v National Director of Public
Prosecutions 2008 (2) SACR 557 (CC); [2008] ZACC 14.
Zuma regards the indictment as an impediment to his political future and the present
case is an attempt by him to seek, on procedural grounds, closure of the criminal
proceedings.
[4] On 23 August 2003, Mr Bulelani Ngcuka, the then NDPP, announced his
intention to indict a certain Mr Schabir Shaik on two counts of corruption, but stated
that he would not indict Mr Zuma, who was said to have been the recipient of alleged
corrupt payments from Mr Shaik. I shall revert to the detail of the announcement, to
which I shall refer as the Ngcuka decision. Mr Shaik was convicted and sentenced
during June 2005,3 and Mr Zuma, who was implicated in the judgment, was
dismissed by Mr Mbeki from the position of Deputy President as a consequence, not
(as Mr Mbeki said) because he was guilty but (as Mr Mbeki implied) on the theory
that Caesar’s wife should be above reproach.4
[5] A few days later, on 20 June, the newly appointed NDPP, Mr Vusi Pikoli,
announced his decision to indict Mr Zuma. (This decision will be referred to as the
Pikoli decision.) The matter came before Msimang J on 31 July 2006 for trial on two
corruption counts which mirrored the two Shaik corruption counts. The prosecution
applied for a postponement to complete its investigations and finalise the indictment.
Msimang J refused the postponement and called on the prosecution to proceed with
the trial. When the prosecution indicated that it was not ready to do so, he struck the
matter from the roll.
[6] Mr Pikoli had in the interim been suspended by Mr Mbeki on an unrelated
matter, and Mr Mokotedi Joseph Mpshe, the acting NDPP, decided on 27 December
2007 once again to indict Mr Zuma (herein called the Mpshe decision). That decision
was followed by an indictment of 87 pages with 18 main counts of racketeering,
corruption, money laundering, tax evasion and fraud. Much was based on the same
subject matter that was dealt with in the Shaik trial but, according to the NDPP, the
3 S v Shaik 2007 (1) SACR 142 (D) confirmed on appeal: S v Shaik 2007 (1) SA 240;
[2007] 2 All SA 9 (SCA) and S v Shaik 2008 (2) SA 208 (CC).
4 According to Suetonius, Vita Divi Juli 74, Julius Caesar supposedly said when explaining why he
was divorcing his wife on the ground of a suspicion of adultery that ‘Meos tam suspicione quam
crimine iudico carere oportere.’ (They [my wife, mother and sister] should be as much free from
suspicion of a crime as they are from crime itself.)
facts and circumstances differed materially because the evidence against Mr Zuma
had become more compelling and the legal impediments to charging him had been
reduced.
[7] In the application, which is the subject of this appeal, Mr Zuma sought an
order declaring that both the Pikoli and the Mpshe decisions were invalid and,
consequently, they were to be set aside. Nicholson J obliged by setting aside the
latter decision (the former having lapsed). This brought the prosecution to an end –
at least for the time being.
THE SCOPE OF THE CASE
[8] It would be naïve to pretend that we are oblivious to the fact that Nicholson
J’s judgment has had far-reaching political consequences and that there may be an
attempt to employ this judgment to score political points. It is accordingly necessary
to state at the outset what the case is about as opposed to what it is not about. An
applicant is required to set out his case in the founding affidavit. This Mr Zuma did.
He asserted that his case for the setting aside of the two decisions to prosecute him
was premised on two bases, something he confirmed in his replying affidavit.
[9] He relied in the main on s 179(5)(d) of the Constitution,5 which s 22(2)(c) of
the National Prosecuting Authority Act 32 of 1998 (the NPA Act) repeats. It provides
in summary that the NDPP may ‘review’ a decision to prosecute or not to prosecute,
after consulting the ‘relevant’ Director of Public Prosecutions (the DPP) and after
taking representations from the accused, the complainant and any other relevant
person. His case in this regard was simple: the Pikoli and Mpshe decisions to
prosecute amounted in each instance to a review of the Ngcuka decision not to
prosecute him; they were made without his having been invited to make
representations in fulfilment of a constitutional requirement and they were,
consequently, invalid. It matters not that he was able, if he so desired, to make
representations – his complaint was that he had to be invited to make them.
[10] The second and alternative ground on which he relied was that he had a
legitimate expectation to be invited to make representations before any decision was
taken to change the Ngcuka decision. In this regard he relied principally on s 33 of
the Constitution, which deals with just administrative action. The expectation,
5 Constitution s 179. Prosecuting authority.—(1) There is a single national prosecuting authority in
the Republic, structured in terms of an Act of Parliament, and consisting of—
(a)
a National Director of Public Prosecutions, who is the head of the prosecuting
authority, and is appointed by the President, as head of the national executive; and
(b)
Directors of Public Prosecutions and prosecutors as determined by an Act of
Parliament.
(2) The prosecuting authority has the power to institute criminal proceedings on behalf of the state,
and to carry out any necessary functions incidental to instituting criminal proceedings.
(3) National legislation must ensure that the Directors of Public Prosecutions—
(a)
are appropriately qualified; and
(b)
are responsible for prosecutions in specific jurisdictions, subject to subsection (5).
(4) National legislation must ensure that the prosecuting authority exercises its functions without fear,
favour or prejudice.
(5) The National Director of Public Prosecutions—
(a)
must determine, with the concurrence of the Cabinet member responsible for the
administration of justice, and after consulting the Directors of Public Prosecutions, prosecution policy,
which must be observed in the prosecution process;
(b)
must issue policy directives which must be observed in the prosecution process;
(c)
may intervene in the prosecution process when policy directives are not complied
with; and
(d)
may review a decision to prosecute or not to prosecute, after consulting the relevant
Director of Public Prosecutions and after taking representations within a period specified by the
National Director of Public Prosecutions, from the following:
(i)
The accused person.
(ii)
The complainant.
(iii)
Any other person or party whom the National Director considers to be relevant.
(6) The Cabinet member responsible for the administration of justice must exercise final
responsibility over the prosecuting authority.
(7) All other matters concerning the prosecuting authority must be determined by national legislation.
according to the founding affidavit, arose from the content of Mr Ngcuka’s press
release when he announced his decision not to prosecute him and from some other
non-contentious facts that will be detailed in due course.
[11] From this it is apparent that Mr Zuma’s case depended, as far as the first
ground is concerned, on an interpretation of the Constitution.6 In regard to the
second it depended in essence on whether s 33 of the Constitution applied and, if
so, on the meaning of the Ngcuka press statement. (The ultimate argument was
somewhat different but does not affect the general purport of the point now under
discussion.) These are all legal issues based on common cause facts.
[12] Mr Zuma made it abundantly clear that he did not wish to impugn the
decisions themselves, and that his application was not concerned with the reasons
and motives for the decisions: it related only to the procedural requirements for
making them. He implied that he might attack the merits of the decisions in separate
proceedings. In spite of this explicit statement of intent, Mr Zuma introduced a large
number of facts that related to the merits of the decisions. The NDPP contended that
they were irrelevant.
[13] It follows from this that, as the trial judge recognised, ‘political meddling’ was
not an issue that had to be determined (para 229 of his judgment). Nevertheless, a
substantial part of his judgment dealt with this question; and in the course of this
discussion he changed the rules of the game, took his eyes off the ball and red-
carded not only players but also spectators. Lest his judgment be considered
authoritative it will be necessary to deal with these matters.
[14] However, it must be understood that this aspect of the judgment is not about
the guilt or otherwise of Mr Zuma or whether the decision to prosecute him was
justified. It is even less about who should be the president of the ANC; whether the
decision of the ANC to ask Mr Mbeki to resign was warranted; or who should be the
ANC’s candidate for President in 2009. More particularly, this aspect of the judgment
is not about whether there was political meddling in the decision-making process. It
6 In the event s 22(2)(c) of the NPA Act played no role in the argument because it merely restates the
constitutional provision.
is about whether the findings relating to political meddling were appropriate or could
be justified on the papers.
THE JUDICIAL FUNCTION
[15] It is crucial to provide an exposition of the functions of a judicial officer
because, for reasons that are impossible to fathom, the court below failed to adhere
to some basic tenets, in particular that in exercising the judicial function judges are
themselves constrained by the law. The underlying theme of the court’s judgment
was that the judiciary is independent; that judges are no respecters of persons; and
that they stand between the subject and any attempted encroachments on liberties
by the executive (para 161-162).7 This commendable approach was unfortunately
subverted by a failure to confine the judgment to the issues before the court; by
deciding matters that were not germane or relevant; by creating new factual issues;
by making gratuitous findings against persons who were not called upon to defend
themselves; by failing to distinguish between allegation, fact and suspicion; and by
transgressing the proper boundaries between judicial, executive and legislative
functions.
[16] Judges as members of civil society are entitled to hold views about issues of
the day and they may express their views provided they do not compromise their
judicial office. But they are not entitled to inject their personal views into judgments
or express their political preferences. To illustrate the point I intend to refer to some
instances where the court below in my view overstepped the limits of its authority.
[17] The ‘Society for the Protection of our Constitution’ sought to be admitted as
amicus curiae, asking for an order which the court below charitably interpreted as
one for the appointment of a commission of inquiry into the alleged violation of Mr
7 Citing Lord Atkin in Liversidge v Anderson [1942] AC 206 at 244: ‘In this country, amid the clash of
arms, the laws are not silent. They may be changed, but they speak the same language in war as in
peace. It has always been one of the pillars of freedom, one of the principles of liberty for which on
recent authority we are now fighting, that the judges are no respecters of persons and stand between
the subject and any attempted encroachments on his liberty by the executive, alert to see that any
coercive action is justified in law.’
Zuma’s constitutional rights. The court found, quite rightly, that it was beyond its
competence to make such an order, but it then proceeded to add at length that a
commission of inquiry into the so-called arms deal, which gave rise to some of the
criminal allegations against Mr Zuma, should be appointed ‘to rid our land of this
cancer that is devouring the body politic’ (para 33). Whether or not one agrees with
these sentiments is beside the point. The point is that those personal sentiments
concerning a political decision were, in the context of the judgment, unwarranted.
[18] Then there is its criticism concerning two of Mr Mbeki’s decisions. The first
concerns his dismissal of Mr Zuma as Deputy President in terms of s 91(2) of the
Constitution (para 155-158). The second relates to his decision to stand for re-
election as president of the ANC with the knowledge that he could not serve another
term as President of the country (para 171-173). The propriety and legitimacy of Mr
Mbeki’s decisions were not issues in the case and he was never called upon to
justify them. These matters are also not matters of law – they relate to purely
political questions and, once again, whether or not one agrees with the learned
judge’s sentiments is of no consequence: the findings were gratuitous.8
[19] The independence of the judiciary depends on the judiciary’s respect for the
limits of its powers. Even if, in the words of the learned judge, the judiciary forms a
‘secular priesthood’ (para 161) this does not mean that it is entitled to pontificate or
be judgemental especially about those who have not been called upon to defend
themselves – as said, its function is to adjudicate the issues between the parties to
the litigation and not extraneous issues.
JUDGING FACTS IN MOTION PROCEEDINGS
[20] I have already mentioned that the issues in this case are primarily legal and
based on common cause facts but that is not how the court below approached the
case. Instead it applied a novel approach to motion proceedings which, if left
undisturbed, may serve as a dangerous precedent.
8 His comments on the Selebi/Pikoli matter are dealt with later.
[21] Benevolently interpreted it would appear that the court, in the context of a
striking out application brought by the NDPP, sought to determine whether the
NDPP was influenced by the executive in deciding to prosecute.9
[22] The rule of court in question states that a court may strike out allegations from
an affidavit that are ‘scandalous, vexatious or irrelevant’ provided the objecting party
will be prejudiced if the allegations are not struck out (Uniform Rule r 6(15)). At this
juncture it suffices to deal with the objection to allegations that are said to be
irrelevant. The passages in Mr Zuma’s affidavit to which the NDPP objected dealt in
the main with his allegations concerning a political conspiracy to prosecute him.
[23] The test for irrelevance is whether the allegations do not apply to the matter in
hand or do not contribute one way or another to a decision of that matter.10
Inadmissible evidence is by its very nature irrelevant.11 Mr Zuma said that he
introduced the allegations to show that the decision not to ask for his representations
was deliberate and politically motivated. Whether the failure to provide him with a
hearing was deliberate or politically motivated has nothing to do with his causes of
action. He was, as a matter of law, either entitled to a hearing or he was not. If he
was entitled to one, the reason for the failure to afford him one is completely
immaterial.
[24] The court below did not decide whether the allegations were relevant or not.
Instead it sought to determine whether the allegations were ‘offensive because they
insinuate that there is political meddling’ (para 41). To do that, it looked at the
‘merits’ (para 43), that is, whether there was merit in the allegations (para 238). The
court accordingly analysed the allegations (and some of its own suppositions) to
determine what factual ‘inference’ it could draw (para 191); what ‘the most plausible
inference’ was (para 191, 206); and what ‘seemed’ to have happened (para 196,
9 There is also another possible interpretation of the judgment and that is that the court was of the
view that the possibility of political interference created a duty to apply s 179 of the Constitution (para
218-219) but that is unlikely.
10 Meintjes v Wallachs Ltd 1913 TPD 278 at 285-286 quoted with approval in Beinash v Wixley 1997
(3) SA 721; [1997] 2 All SA 241 (A).
11 Swissborough Diamond Mines (Pty) Ltd v Government of the RSA 1999 (2) SA 279 (T) 336F-G.
209). It found that it ‘was not convinced that [Mr Zuma] was incorrect’ (para 216),
and that political meddling could not be excluded (para 238).
[25] The court erred in its approach to striking out applications. It is correct that
relevance has to be tested with reference to the merits of the case but that does not
mean that relevance depends on the factual merit of the impugned allegations.12
Whether they are true or not is of no moment; their relevance to the merits of the
case is what is of consequence. As mentioned, the court did not consider this
question.
[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 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.13 The court below did not
have regard to these propositions and instead decided the case on probabilities
without rejecting the NDPP’s version.14
[27] The court below imposed an onus on the NDPP to prove a negative. This
appears from the finding that it ‘was not convinced that [Mr Zuma] was incorrect’ in
relation to political meddling (para 216). It reasoned that the question whether there
had been political meddling fell within the peculiar knowledge of the NDPP and was
difficult for Mr Zuma to prove; and so, it held, less evidence would suffice to
12 Elher (Pty) Ltd v Silver 1947 (4) SA 173 (W) 177-178.
13 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) 634-5; Fakie NO v
CCII Systems (Pty) Ltd 2006 (4) SA 326 (SCA) para 55; Thint (Pty) Ltd v National Director of Public
Prosecutions; Zuma v National Director of Public Prosecutions 2008 (2) SACR 421 (CC) para 8-10.
14 Sewmungal NNO v Regent Cinema 1977 (1) SA 814 (N); Trust Bank van Afrika Bpk v Western
Bank Bpk NNO 1978 (4) SA 281 (A).
establish a prima facie case (para 168-169).15 This rule of evidence, namely that if
the facts are peculiarly within the knowledge of a defendant the plaintiff needs less
evidence to establish a prima facie case, applies to trials. In motion proceedings the
question of onus does not arise and the approach set out in the preceding paragraph
governs irrespective of where the legal or evidential onus lies.16 In applying the ‘rule’
the court omitted to determine whether the NDPP had failed to adduce evidence on
the particular issues; it used the ‘rule’ in spite of evidence to the contrary; and it did
so in instances where no answer was called for because the allegations were either
not incorporated into the founding affidavit or were inadmissible. Finally, the court
failed to have regard to another principle, namely that the more serious the
allegation or its consequences, the stronger must be the evidence before a court will
find the allegation established.17
INDEPENDENCE OF THE NPA18
[28] Although it is generally accepted that any prosecution authority ought to be
free from executive or political control, this was and is not necessarily the norm in
Anglo-American countries. It depends on the position of the Attorney-General who,
in many countries, is a political appointee – often at ministerial level. Nevertheless,
an Attorney-General is required by convention to make prosecutorial decisions
without regard to political considerations and may not subject his discretionary
authority to that of government. He is also not responsible to government to justify
the exercise of his discretion because this political office has judicial attributes.19
15 Union Government (Minister of Railways) v Sykes 1913 AD 156 at 173-174; Gericke v Sack 1978
(1) SA 821 (A) 827D-H.
16 Ngqumba v Staatspresident; Damons NO v Staatspresident; Jooste v Staatspresident
1988 (4) SA 224 (A).
17 Gates v Gates 1939 AD 150 at155; R(N) v Mental Health Review Tribunal (Northern Region) [2006]
QB 468 para 62.
18 For useful expositions see JJ Joubert (ed) Criminal Procedure Handbook 8 ed 46 et seq; E Du Toit
et al Commentary on the Criminal Procedure Act (loose leaf ed) ch 1.
19 Ian G Scott ‘The Role of the Attorney General and the Charter of Rights’ 29 Crim L Q (1986-1987)
187; E C S Wade & A W Bradley Constitutional and administrative law 11 ed 402-404; Ex parte
Attorney General, Namibia: In Re the Constitutional Relationship between the Attorney-General and
the Prosecutor-General [1995] 3 LRC 507, 1995 (8) BCLR 1070 (SCNm); Githunguri v Republic of
Kenya [1986] LRC (Const) 618 (HC); Proulx v Quebec (Attorney General) 2001 SCC 66, [2001] 3
SCR 9. For the constitutional crisis about the independence of the Attorney-General in 1924 in the UK
see S A de Smith Constitutional and Administrative Law 4 ed 380-381.
[29] Locally the pre-Union position was exemplified by Ordinance 1 of 1903 (T),
which provided that the right and power of prosecution was ‘absolutely under [the
Attorney-General’s] own management and control’ (s 6). At the time the Attorney-
General was a cabinet minister.20 The South Africa Act of 1909 had a similar
provision (s 139) but the difference was that since Union Attorneys-General were
civil servants.21 The position changed in 1926 when all powers, authorities and
functions relating to the prosecution of crimes and offences were vested in the
Minister.22 However, in terms of a notice published at the time in the Government
Gazette the decision to prosecute or not to prosecute remained with the Attorneys-
General and the Minister exercised an appeal or review function only.23 As from
1935, Attorneys-General had to exercise their authority and perform their functions
under the Criminal Procedure Act subject to the control and directions of the Minister
who could reverse any decision.24 The convention, apparently, remained as set out
in the mentioned government notice.25
[30] The independence of the Attorneys-General’s decision-making concerning
prosecutions was reinstated by the Attorney-General Act 92 of 1992 although the
Minister had to co-ordinate their functions and could request them for information or
a report on any matter, and they had to submit annual reports to him (s 5). The
interim Constitution also recognised that the authority to institute criminal
proceedings vested in the Attorneys-General.26
[31] Section 179 of the Constitution27 creates a single national prosecuting
authority (the NPA) consisting of a National Director, who is head of the prosecuting
authority and a political appointee, and also DPPs and prosecutors. The NPA has
the power to institute criminal proceedings on behalf of the State and to carry out
20 As to political interference in the Transvaal Republic: S v Nellmapius (1886) 2 SAR 121.
21 So, too, the Criminal Procedure and Evidence Act 31 of 1917 s 7.
22 Act 39 of 1926. References to ‘the Minister’ in this judgment refer either to the Minister of Justice
or, where applicable, the Minister of Justice and Constitutional Development.
23 GN 1532/1926. For a discussion: Gardiner & Lansdown SA Criminal Law and Procedure (6 ed
1957) vol 1 190-193.
24 General Law Amendment Act 46 of 1935 s 1. Also the Criminal Procedure Acts 56 of 1955 (s 5)
and 51 of 1977 (s 3(5)).
25 This differs from the historical assumptions made in the judgment (para 78-79): 32 House of
Assembly Debates cols 156-169 (2 February 1971) referred to in (1977) 1 SACC 136 n 6.
26 Act 200 of 1993 s 108(1).
27 See in general Minister of Defence v Potsane; Legal Soldier (Pty) Ltd v Minister of Defence 2002
(1) SA 1 (CC).
any necessary functions incidental thereto. Although national legislation must ensure
that the NPA exercises its functions without fear, favour or prejudice, the Minister
must exercise final responsibility over the NPA and the NDPP must determine
prosecution policy with the concurrence of the Minister.
[32] Accordingly, the Constitution on the one hand vests the prosecutorial
responsibility in the NPA while, on the other, it provides that the Minister must
exercise final responsibility over it. These provisions may appear to conflict but, as
the Namibian Supreme Court held in relation to comparable provisions in its
Constitution, they are not incompatible.28 It held (I am using terms that conform with
our Constitution) that although the Minister may not instruct the NPA to prosecute or
to decline to prosecute or to terminate a pending prosecution, the Minister is entitled
to be kept informed in respect of all prosecutions initiated or to be initiated which
might arouse public interest or involve important aspects of legal or prosecutorial
authority.
[33] The NPA Act, the constitutionality of which is not under attack, shows that the
court below overstated the position when it held without qualification that ‘there
should be no relationship [between the NPA and] the Minister of Justice – certainly
insofar as his decisions to prosecute or not to prosecute anybody from the
Commissioner of Police downwards’ (para 207). (To the extent that the statement
implies that there could be a relationship from the Commissioner of Police upwards it
was probably unintended.)
[34] The Act requires members of the prosecuting authority to serve ‘impartially’
and exercise, carry out or perform their powers, duties and functions ‘in good faith
and without fear, favour or prejudice’ and subject only to the Constitution and the law
(s 32(1)(a)).29 It further provides that no one may interfere ‘improperly’ with the NPA
in the performance of its duties and functions (s 32(1)(b)). (‘Improperly’ may be
tautologous because interference usually implies some or other impropriety.) It
reaffirms that the Minister must exercise final responsibility over the NPA and
28 Ex parte Attorney General, Namibia: In Re the Constitutional Relationship between the Attorney-
General and the Prosecutor-General [1995] 3 LRC 507, 1995 (8) BCLR 1070 (SCNm).
29 S v Yengeni 2006 (1) SACR 405 (T).
obliges the NDPP, at the request of the Minister, to furnish the latter with information
or a report with regard to any case and to provide the Minister with reasons for any
decision taken (s 33(2)). More directly in point is s 22(2)(c), which is the counterpart
of s 179(5)(d) of the Constitution and deals with the NDPP’s review function, read
with s 22(4)(a)(iii). The latter provision states that, in exercising the review power to
prosecute or not to prosecute, the NDPP may advise the Minister ‘on all matters
relating to the administration of justice’, which is hardly compatible with the notion
that there may be no relationship between them.
[35] The court below began its discussion of the legal issues implying in general
terms that a decision to prosecute is an administrative action to which the audi
principle (with its offspring the doctrine of legitimate expectation) applies (para 47-
53). This has never been the law and, as the Constitutional Court held, it is not the
law under the Constitution and the Promotion of Administrative Justice Act 3 of 2000
(PAJA).30 Such a decision is not susceptible to review. There are policy reasons for
this31 that need not be discussed because the constitutionality of the provision of
PAJA,32 which excludes a review of a decision to prosecute,33 is not under attack.34
30 Kaunda v President of the RSA (2) 2005 (4) SA 235 (CC) para 83-84 and the cases there cited.
Compare further Meyer v Law Society, Transvaal 1978 (2) SA 209 (T) 214F-215D; Meyer v
Prokureursorde van Transvaal 1979 (1) SA 849 (T); Huisamen v Port Elizabeth Municipality
1998 (1) SA 477; [1997] 2 All SA 458 (E); Park-Ross v Director: Office for Serious Economic
Offences 1998 (1) SA 108; [1998] 1 All SA 70 (C) para 22-25. As to the meaning of ‘administrative
action’ see President of the RSA v SA Rugby Football Union 2000 (1) SA 1 (CC) also reported as
President of the RSA v SARFU 1999 (10) BCLR 1059 (CC) para 143.
31 In re Smalley [1985] AC 622 at 642-643; In re Ashton [1994] 1 AC 9 at 17; Sharma v. Deputy
Director of Public Prosecutions (Trinidad and Tobago) [2006] UKPC 57 (30 November 2006);
Marshall v Director of Public Prosecutions (Jamaica) [2007] UKPC 4 (24 January 2007).
32 Section 1: ‘“administrative action” . . . does not include . . . a decision to institute or continue a
prosecution.’
33 The review of a decision not to prosecute is not excluded by PAJA and although the Constitutional
Court in Kaunda v President of the RSA (2) 2005 (4) SA 235 (CC) para 84 left the question open the
court below held that it could be reviewed (para 58). As to a decision not to prosecute in the UK:
Corner House Research v The Serious Fraud Office [2008] UKHL 60 (30 July 2008).
34 English law now appears to be ‘that absent dishonesty or mala fides or an exceptional
circumstance, the decision of the DPP to consent to the prosecution of the Respondents is not
amenable to judicial review’: R v Director of Public Prosecutions, Ex Parte Kebeline [1999] UKHL 43;
[2000] 2 AC 326 (per Lord Steyn).
[36] This does not mean, and it was never argued otherwise, that a failure to
comply with a constitutional or statutory requirement to hear a party is not justiciable
under the principle of legality irrespective of whether or not PAJA applies.35
[37] The court dealt at length with the non-contentious principle that the NPA must
not be led by political considerations and that ministerial responsibility over the NPA
does not imply a right to interfere with a decision to prosecute (para 88 et seq). This,
however, does need some contextualisation. A prosecution is not wrongful merely
because it is brought for an improper purpose. It will only be wrongful if, in addition,
reasonable and probable grounds for prosecuting are absent,36 something not
alleged by Mr Zuma and which in any event can only be determined once criminal
proceedings have been concluded.37 The motive behind the prosecution is irrelevant
because, as Schreiner JA said in connection with arrests, the best motive does not
cure an otherwise illegal arrest and the worst motive does not render an otherwise
legal arrest illegal.38 The same applies to prosecutions.39
[38] This does not, however, mean that the prosecution may use its powers for
‘ulterior purposes’. To do so would breach the principle of legality. The facts in
Highstead Entertainment (Pty) Ltd t/a ‘The Club’ v Minister of Law and Order40
illustrate and explain the point. The police had confiscated machines belonging to
Highstead for the purpose of charging it with gambling offences. They were intent on
confiscating further machines. The object was not to use them as exhibits – they had
enough exhibits already – but to put Highstead out of business. In other words, the
confiscation had nothing to do with the intended prosecution and the power to
confiscate was accordingly used for a purpose not authorised by the statute. This is
what ‘ulterior purpose’ in this context means. That is not the case before us. In the
35 Constitution s 2: ‘This Constitution is the supreme law of the Republic; law or conduct inconsistent
with it is invalid, and the obligations imposed by it must be fulfilled.’ President of the RSA v SA Rugby
Football Union 2000 (1) SA 1 (CC) also reported as President of the RSA v SARFU
1999 (10) BCLR 1059 (CC) para 148. See for a recent application in a similar context Naidoo v
National Director of Public Prosecutions 2005 (1) SACR 349 (SCA). It is difficult to comprehend the
reference to ouster clauses at para 58-66 of the judgment below.
36 Beckenstrater v Rottcher & Theunissen 1955 (1) SA 129 (A); Relyant Trading (Pty) Ltd v Shongwe
[2007] 1 All SA 375 (SCA). For Canada: Prouxl v Quebec (Attorney General) 2001 SCC 66, [2001] 3
SCR 9.
37 Thompson v Minister of Police 1971 (1) SA 371 (E) 375A-D.
38 Tsose v Minister of Justice 1951 (3) SA 10 (A) 17.
39 Beckenstrater v Rottcher & Theunissen 1955 (1) SA 129 (A).
40 1994 (1) SA 387 (C). The correctness of this judgment does not arise for decision.
absence of evidence that the prosecution of Mr Zuma was not intended to obtain a
conviction the reliance on this line of authority is misplaced as was the focus on
motive.41
[39] Courts have also interfered with decisions to prosecute in circumstances
where the prosecuting authorities had given an undertaking not to prosecute or had
made a representation to that effect in exchange for a plea or for co-operation.42 The
prosecuting authority has been kept to its bargain. Interesting as the examples may
be, they have no bearing on the facts before us.
THE NGCUKA DECISION
[40] I have already mentioned that during August 2003 Mr Ngcuka, in his capacity
as NDPP, decided to prosecute Mr Shaik but not to prosecute Mr Zuma. He
announced this decision at a press conference in the presence of the then Minister,
Dr Penuel Maduna. In the press release Mr Ngcuka made two statements that are of
consequence to Mr Zuma’s case. The one deals with the legitimate expectation
argument, to which I shall revert under another heading. The second statement was
this:
‘After careful consideration in which we looked at the evidence and the facts
dispassionately, we have concluded that, whilst there is a prima facie case of corruption
against the Deputy President, our prospects of success are not strong enough. That means
that we are not sure if we have a winnable case.’
Mr Zuma expressed his dissatisfaction with this statement because, he said, it
carried the gratuitous and offensive imputation, which he had to endure, that he was
corrupt but had covered his tracks. Apart from this, Mr Zuma, as appears from his
founding affidavit, was quite pleased with the announcement. Indeed, in his replying
affidavit he made it clear that it was common cause that ‘after extensive and
41 Beckenstrater v Rottcher & Theunissen 140B-F.
42 North Western Dense Concrete CC v DPP, Western Cape 2000 (2) SA 78 (C); Van Eeden v DPP,
Cape of Good Hope 2005 (2) SACR 22 (C); R v Croydon Justices, ex parte Dean [1993] 3 All ER 129
(QBD).
thorough investigations’, Mr Ngcuka and his deputy, Mr McCarthy, ‘took a carefully
considered decision’ not to prosecute him.43
[41] It is important to stress that Mr Zuma did not allege that this decision was
politically motivated; he did not say that it was unjustified; and he did not allege that
Dr Maduna had acted improperly by being present at the press conference. In spite
of this, Nicholson J saw it as his duty to determine whether the decision was made
from fear or favour (para 174) and said (para 175):
‘At first blush a decision not to prosecute the Deputy President of the country appears to be
as a favour to the second highest ranking politician in the country. The applicant denies this
and puts quite a different slant on the objective. He says it was all part of a political agenda
that had as its objective the favouring of President Mbeki in his quest for a further term of
office as ANC President.’
[42] The statements in the second and third sentences are puzzling. Mr Zuma was
never called upon to deal with the supposition that the decision not to prosecute was
a favour to him and, accordingly, he never sought to deny it. And although Mr Zuma
perceived a political plot behind the Pikoli and Mpshe decisions, he did not say that
the Ngcuka decision was part of the plot. The trial judge’s later statement that Mr
Zuma maintained that there was a strategy to prosecute Mr Shaik and, when he was
convicted, to dismiss him as Deputy President, does likewise not appear from the
papers (para 196).
[43] Nicholson J also attacked the merits of the Ngcuka decision, finding that it
was ‘bizarre’ and that it brought justice into disrepute (para 150 and 155). The merits
of the decision were, once again, not before him and were irrelevant and in reaching
this conclusion he in any event took no note of the NDPP’s explanation. It is correct
that if there is prima facie evidence of a crime in the sense of reasonable prospects
of success the NPA should, in the absence of other germane considerations, initiate
43 The finding of the court below that the Ngcuka decision was a review and not an original decision
is, accordingly, not fact based (para 117). Had it been a review it would have been void because Mr
Zuma had not been invited to make representations. The effect would then have been that the
objections to the later ‘review’ on which this case is based would have had no merit because one
cannot review a void decision.
a prosecution. But the term ‘prima facie evidence’ has more than one connotation
and may mean, as Mr Ngcuka conveyed, that there may be evidence of the
commission of a crime which is nonetheless insufficient to satisfy the threshold of a
reasonable prospect of success, especially if regard is had to the burden of proof in
a criminal case.44 Although corruption involves two persons, the fact that the one
may be guilty does not mean that the other is also guilty because the intention of
each party must be decided separately, and evidence that may be admissible
against the one may not be admissible against the other.45 In other words, the fact
that Mr Shaik was found guilty does not mean that Mr Zuma is guilty. Having said all
of this, I must emphasise that I am not holding that the Ngcuka decision was right,
simply because I do not have the material to judge what is in the context of this case
a non-issue. Instead, I am simply holding that the court below had erred in this
regard.
[44] I have already mentioned that Mr Zuma never accused Dr Maduna of having
acted improperly, whether in connection with the Ngcuka decision or otherwise.
Nicholson J, again, thought otherwise and without hearing Dr Maduna concluded
that he had done so in attending the press conference. From this he deduced that
there was a suggestion of political interference and then held that Dr Maduna played
a ‘not insignificant part’ in planning the ‘strategy’ not to prosecute in order to have Mr
Zuma dismissed as Deputy President on the conviction of Mr Shaik, and that this
constituted a serious criminal offence (para 196).46 Dr Maduna’s supposed
44 See the discussion by Zeffertt, Paizes and Skeen The SA Law of Evidence (2003) 121-130. R v
Director of Public Prosecutions, ex parte Manning [2000] 3 WLR 463 at 474 (Lord Bingham of
Cornhill):
'In most cases the decision will turn not on any analysis of the relevant legal principles but on the
exercise of an informed judgment of how a case against a particular defendant, if brought, would be
likely to fare in the context of a criminal trial before (in a serious case as this) a jury. This exercise of
judgment involves an assessment of the strength, by the end of the trial, of the evidence against the
defendant and of the likely defences. It will often be impossible to stigmatise a judgment on such
matters as wrong even if one disagrees with it.’
45 Compare Thint Holdings (Southern Africa) (Pty) Ltd v National Director of Public Prosecutions;
Zuma v National Director of Public Prosecutions 2008 (2) SACR 557 (CC) para 58.
46 He also referred to meetings between Dr Maduna and the NDPP around the prosecution of another
co-accused, Thint (para 192-195), and the fact that Mr Ngcuka thanked Dr Maduna at the press
conference for his political leadership. As to the first, the court was not entitled to base its judgment
on something taken from an answering affidavit unless the argument was foreshadowed in the
founding affidavit, which it was not: Administrator, Transvaal v Theletsane 1991 (2) SA 192 (A). As to
machinations around the Ngcuka decision were then extrapolated to cover Mr Mbeki
and the whole cabinet (para 213). (It is a matter of public record that Dr Maduna left
cabinet after the 2004 general elections.) Once again, the ‘strategy’ involving Dr
Maduna, Mr Mbeki and all the other members of cabinet as well as the causal
connection between the Ngcuka decision and Mr Mbeki and the cabinet as found by
the trial judge were not based on any evidence or allegation. They were instead part
of the judge’s own conspiracy theory and not one advanced by Mr Zuma.47 Further,
the finding, by implication or otherwise, that a non-party may have committed a
criminal act where this was not alleged, where it was not in issue and without
hearing that party is incomprehensible.
THE PIKOLI DECISION
[45] It will be recalled that the Pikoli decision to indict Mr Zuma came to nought
when Msimang J struck the case from the roll. This, according to the Constitutional
Court, terminated the proceedings.48 Having fallen away, the Pikoli decision was of
mere academic interest and nothing was left to set aside. The court below realised
this and, consequently, refrained from setting it aside (para 242).
[46] The court nevertheless proceeded to make findings about the decision that
cannot be justified on the record and, once again, I would fail in my duty if I did not
indicate briefly where the court overstepped the mark. It latched onto a paragraph in
an annexure to the NDPP’s answering affidavit on which Mr Zuma had not relied
(para 197-199). It was an answer by Mr Pikoli to an affidavit made by Mr Zuma in the
proceedings before Msimang J. The NDPP alleges that the trial judge
misunderstood the context of Mr Pikoli’s evidence and counsel for Mr Zuma did not
dispute this. The court also relied on the contents of a newspaper article that
speculated that the decision to prosecute was politically motivated (para 200-205).
the second, the statement appeared in an annexure and Mr Zuma did not seek to rely on it and,
accordingly, the court was not entitled to base its judgment on it because the NDPP was not called
upon to deal with it: Minister of Land Affairs & Agriculture v D & F Wevell Trust
2008 (2) SA 184 (SCA); [2007] ZASCA 153 para 43.
47 The fact that cabinet may in law be responsible for the actions of a minister does not establish
without evidence that cabinet knew what the minister did (para 213-216).
48 Thint Holdings (Southern Africa) (Pty) Ltd v National Director of Public Prosecutions; Zuma v
National Director of Public Prosecutions 2008 (2) SACR 557 (CC) para 40-42.
Mr Zuma had attached the article to his founding affidavit to indicate that he believed
that his case was being reviewed by the NDPP. He did not rely on the contents of
the article which, in any event, were no more than inadmissible speculation by a
journalist.
[47] The trial judge, again, failed to comply with basic rules of procedure.49
Judgment by ambush is not permitted. It is not proper for a court in motion
proceedings to base its judgment on passages in documents which have been
annexed to the papers when the conclusions sought to be drawn from such
passages have not been canvassed in the affidavits. The reason is manifest ─ the
other party may well be prejudiced because evidence may have been available to it
to refute the new case on the facts. A party cannot be expected to trawl through
annexures to the opponent’s affidavit and to speculate on the possible relevance of
facts therein contained.50 The position is no different from the case where a witness
in a trial is not called upon to deal with a fact and the court then draws an adverse
conclusion against that witness.51
[48] This criticism also applies in relation to the findings of the court below about
the unrelated investigation concerning the Commissioner of Police, Mr Jackie Selebi.
Its findings that (a) ‘there is no refutation that the Selebi warrants were cancelled by
Mr Mpshe after political interference and that Pikoli was suspended because he
refused to do so’ (para 205); that (b) ‘Mr Pikoli does not deal with the allegation that
the issuing of the warrants against Selebi was not palatable to the President but the
decision to prosecute the applicant was’ (para 206); and that (c) ‘the suspension of
[Mr Pikoli] was a most ominous move that struck at the core of a crucial State
institution’ (para 207) were all likewise based on unconfirmed newspaper
speculation on which Mr Zuma did not and could not rely. Here again the court,
without having all the facts, commented on matters that were not in issue or
canvassed.
49 Compare Minister of Land Affairs & Agriculture v D & F Wevell Trust 2008 (2) SA 184 (SCA); [2007]
ZASCA 153 para 43.
50 Swissborough Diamond Mines (Pty) Ltd v Government of the RSA 1999 (2) SA 279 (T) 324F-G.
51 President of the RSA v SA Rugby Football Union 2000 (1) SA 1 (CC) also reported as President of
the RSA v SARFU 1999 (10) BCLR 1059 (CC) para 61.
[49] Mr Zuma did not note a cross-appeal in relation to the dismissal of his claim
for setting aside the Pikoli decision and, accordingly, the procedural correctness of
this decision does not call for consideration.52 It is, however, necessary to say
something about the allegation of political meddling with Mr Pikoli’s decision. This is
because, although Mr Zuma made a general allegation of ‘political motives and
stratagems’ in the decision to prosecute him, it is only in the case of the Pikoli
decision that he tried to identify role players who were allegedly involved.
[50] The sequence of events was the conviction of Mr Shaik, a visit to Chile by Mr
Mbeki and Mr Pikoli, Mr Mbeki’s dismissal of Mr Zuma, and Mr Pikoli’s decision to
prosecute him. From this Mr Kemp (for Mr Zuma) sought to infer an implied
instruction by Mr Mbeki to Mr Pikoli to prosecute Mr Zuma. That was the high
watermark of the ‘evidence’ on political meddling.
[51] Once again, without deciding that there was or was not political meddling,
fairness requires that these facts and accusations should be put in their proper
perspective. The judgment of the trial judge in the Shaik matter found, albeit not in
those words, that a generally corrupt relationship (to use Mr Kemp’s words during
argument) existed between Mr Shaik and Mr Zuma. He added, quite appropriately,
that his judgment did not hold that Mr Zuma was guilty. I have already mentioned
what the basis of Mr Mbeki’s reaction was and it is difficult to see how Mr Pikoli
could, in the light of the Shaik judgment, have failed to prosecute Mr Zuma. The
evidence about the trip to Chile is clear and Mr Zuma knew this in advance: Mr Pikoli
did not accompany Mr Mbeki although they were on the same mission. They did not
meet and did not discuss the matter. Whether Mr Zuma believes this or not is
another matter; courts are duty-bound to deal with proven facts.
THE MPSHE DECISION
52 Goodrich v Botha 1954 (2) SA 540 (A); Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A)
607; National Union of Metalworkers of SA v Henred Fruehauf Trailers 1995 (4) SA 456 (A) 475;
Municipal Council of Bulawayo v Bulawayo Waterworks Co Ltd 1915 AD 611 at 631; SAR & H v
Sceuble 1976 (3) SA 791 (A).
[52] The legality of the Mpshe decision is the crux of this appeal. Unfortunately,
the court below subjected Mr Mpshe to the same treatment that it had inflicted on
others. It also used the newspaper report referred to above to make a similarly
unfounded finding against Mr Mpshe (para 200-205). Having done this, the court
went on to assume that Mr Mpshe complied with the supposed instructions of Mr
Mbeki to prosecute Mr Zuma fearing that he, like Mr Pikoli, might be suspended or
dismissed should he assert his prosecutorial independence (para 207). All this was
gratuitous and not based on any evidence.53
[53] The court below set aside the Mpshe decision and the indictment that
followed because of his failure to (a) comply with s 179(5) of the Constitution and (b)
accord Mr Zuma a hearing in the light of his legitimate expectation that arose, firstly,
because of the Ngcuka announcement (para 223-224) and, secondly, in view of a
letter written by Mr Zuma’s attorney, Mr Hulley, shortly before the decision was
made and Mr Mpshe’s response to it (para 132-133, 230).54
[54] It is necessary to stress that the NDPP never refused to afford Mr Zuma a
hearing. Mr Zuma knew from June 2005 that he was the subject of an investigation.
He was soon thereafter served with ‘interim’ indictments. He had been told in the
Ngcuka press release that he could make representations under s 22(4)(c) of the
NPA Act and that the NDPP was duty-bound to consider them. He did nothing of the
sort. Instead, he resisted all attempts by the NPA to further their investigation. This
case is accordingly not about the opportunity to be heard – it is about Mr Zuma’s
alleged right to be invited to make representations and, concomitantly, a right to a
statement setting out the criteria that were applied in not prosecuting him and how
these had changed. In other words, he requires with the invitation an analysis of the
case against him as considered by Mr Ngcuka against the facts in possession of Mr
Mpshe.
SECTION 179(5)(d) of the CONSTITUTION
53 The court chose to comment on the timing of the Mpshe decision while Mr Zuma expressly
refrained from doing so (para 210).
54 It is not necessary to comment on the finding, again based on newspaper reports, that because Mr
Mpshe consulted his investigation team this meant that he should have consulted with Mr Zuma (para
120) because Mr Kemp did not rely on it.
[55] The full text of s 179 appears earlier in a footnote but it is convenient at this
juncture to quote the relevant part of sub-sec (5):
‘The National Director of Public Prosecutions—
. . .
(d)
may review a decision to prosecute or not to prosecute, after consulting the relevant
Director of Public Prosecutions and after taking representations within a period specified by the
National Director of Public Prosecutions, from the following:
(i)
The accused person.
(ii)
The complainant.
(iii)
Any other person or party whom the National Director considers to be relevant.’
[56] The main issue between the parties is whether the requirement of ‘taking
representations’ from Mr Zuma applies to the facts of this case. The NDPP argues
that the provision applies only to reviews of decisions of DPPs and their prosecutors
while Mr Zuma contends that it also applies when the NDPP reconsiders one of his
own decisions.
[57] Before dealing with the wording of the provision it must be placed in context.
Section 179 is to be found in chapter 8 of the Constitution, which deals with ‘Courts
and Administration of Justice’. This chapter does not purport to deal with rights of
accused persons – they are contained in chapter 2, the Bill of Rights, more
particularly s 35. I accept that the chapter must be so interpreted that it promotes the
spirit, purport and objects of the Bill of Rights and fits seamlessly into the
Constitution as a whole.
[58] As mentioned before, s 179 created a new prosecutorial structure where,
instead of having a number of Attorneys-General, each with their respective areas of
jurisdiction, one now has an NDPP who is a presidential (political) appointee at the
apex of a single NPA and below him DPPs and prosecutors who are not.
[59] Against this background sub-sec (3)(b) states that DPPs are to be
‘responsible’ for prosecutions in their specific jurisdictions, subject to the contentious
sub-sec (5). ‘Responsible’, as Mr Kemp argued, means in this context ‘answerable,
accountable; liable to account’.55 By virtue of the cross-reference to sub-sec (5), this
implies that DPPs are answerable to the NDPP. Paragraphs (a)-(c) proceed to deal
with three functions of the NDPP in his capacity as head of the NPA and his control
over DPPs and the prosecutors for whom they are in turn responsible. They are to
determine prosecution policy; to issue policy directives; and to intervene in the
prosecution process when policy directives are not complied with.56
[60] Sub-section (5)(d) deals with the procedure that the NDPP must follow in
reviewing a prosecutorial decision. This requires prior consultation with ‘the relevant’
DPP and prior representations from the accused, the complainant and any other
relevant person.
[61] The dictionary meaning of ‘review’ includes the review of an own decision but
as the court below correctly pointed out ‘the concept of a review or reconsideration
assumes a role somewhat elevated to and distant from the person whose decision is
being reviewed’ (para 106).57 It is also in the ordinary course of events done on the
existing record and the facts that were before the person whose decision is being
reviewed. Support for this can be found in legislation such as s 302 of the Criminal
Procedure Act 51 of 1977, s 24 of the Supreme Court Act 59 of 1959, the various
statutes dealing with courts of the same status as the high courts, PAJA and the
Uniform Rules of Court r 53. It is accordingly wrong to argue, as did Mr Kemp, that
regard must simply be had to the dictionary meaning of ‘review’. Dictionary
meanings are only a guide to meaning because the meaning of words depends on
context.58
55 Mweuhanga v Administrator-General of South West Africa 1990 (2) SA 776 (A) 783E-I.
56 ‘The National Director of Public Prosecutions—
(a)
must determine, with the concurrence of the Cabinet member responsible for the
administration of justice, and after consulting the Directors of Public Prosecutions, prosecution policy,
which must be observed in the prosecution process;
(b)
must issue policy directives which must be observed in the prosecution process;
(c)
may intervene in the prosecution process when policy directives are not complied
with; and
(d)
. . ..’
57 Elsewhere the court below had a different view (para 68).
58 Seven Eleven Corporation of SA (Pty) Ltd v Cancun Trading No 150 CC 2005 (5) SA 186;
[2005] 2 All SA 256 (SCA) para 24.
[62] In the context of sub-sec (5), the power to review can only be an ‘apex’
function, in other words, a function of the head of the NPA qua head. Paragraph (d)
accordingly deals only with the review of a decision by the ‘relevant’ DPP – it does
not include a reconsideration of the NDPP’s own decisions. Once this is accepted,
the reference to the ‘relevant’ DPP does not, as submitted by Mr Kemp, refer to the
DPP who is affected because the case may fall within his jurisdiction.
[63] Mr Kemp also submitted that para (d) is an empowering provision, meaning
that the NDPP’s power to review decisions derives solely from its terms. The
corollary of his argument is that the consultation and representation requirement
applies to decisions of the NDPP or else the NDPP would not be entitled to revisit
his own prosecutorial decisions. In the light of the finding in the preceding paragraph
that the provision is an ‘apex’ provision that deals with the control of the NDPP over
the DPPs, the premise of the argument falls away.
[64] There is a more compelling reason why the submission cannot be sustained.
Section 179(2) is the empowering provision. It empowers the NPA to institute
criminal proceedings, and to carry out ‘any necessary functions incidental to
instituting criminal proceedings’. The power to make prosecutorial decisions and to
review them flows from this.59 If it were necessary specially to empower any member
of the NPA to make such decisions and to revisit them, one would have expected
the Constitution to have said so. It would be incongruous to require a special
provision to empower the head of the NPA to review matters but to assume that
other members of the NPA of a lower rank have the power of review by implication.
One would have expected that at the lower level there is greater need for these
requirements but, significantly, the drafters of the Constitution, conscious of the
existing practice, and for good reason, did not think it necessary to include such
safeguards.60
59 It will be recalled that prosecutorial decisions and their internal reconsideration were, except in the
limited sense set out earlier, not subject to procedural limitations or judicial overview. Mr Kemp
accepts that the review of prosecutorial decisions by prosecutors and DPPs is not subject to any
consultation or representation requirement.
60 Called a ‘glaring absurdity’ by the court below (para 75) but the absurdity is not addressed by its
interpretation.
[65] Mr Kemp further argued that the purpose of the provision was to protect the
legitimate reliance an accused and a complainant may place on a duly considered
and announced prosecutorial decision, and that it limits arbitrary changes of
prosecutorial decisions at the NDPP level. This means that any decision reviewed by
the NDPP is subject to the consultation and representation requirements of the sub-
section. The reason, he said, is to be found in the fact that the NDPP is a political
appointee and, consequently, the object of the consultation and representation
requirement is to control the NDPP’s political mindset in decision-making.61
[66] There are several counters to this argument. First, although the NDPP is a
presidential appointee it is fair to assume that the drafters of the Constitution took it
for granted that the NDPP would, as would Attorneys-General in common-law
countries who are also political appointees, act independently and not take political
considerations into account in making prosecutorial decisions. I have dealt earlier
with this aspect. Second, if the object was to prevent the NDPP from taking
decisions without the input of DPPs in order to prevent him from taking politically
motivated decisions, the provision would not have limited the consultation and
representation requirement to cases of review, but would have extended it to all his
prosecutorial decisions. In order to give the submitted rationale sense, counsel had
to introduce a limitation into the text of the Constitution, namely that the decision
under review must have been announced. There is nothing to justify such a
limitation.
[67] Mr Kemp also relied on the equal protection clause in the Constitution. The
argument amounts to this: all accused persons should be treated equally; and the
right to be invited to make representations in the case of a review of a prosecutorial
decision should accordingly be so interpreted as to accrue to all reviews and not
only those of the NDPP’s subordinates. The presumption of equal treatment in
statutory interpretation has always been with us and now has a special status by
virtue of the Bill of Rights.62 The question is whether it is ousted by other
considerations in the circumstances of this section of the Constitution. I am of the
view that it is. The underlying purpose of the provision is not to protect the accused
61 This consideration found favour with the court below (para 77-118).
62 LM du Plessis in 25(1) Joubert (ed) Lawsa (first re-issue) para 322.
or the complainant: it is to define the procedure for the exercise of the power of
control of the NDPP. It would be strange to find such an important right, which is not
known in comparable jurisdictions or in our common law, in a chapter of the
Constitution that deals basically with structures concerned with the administration of
justice and not rights. The Bill of Rights deals in great detail with the rights of
accused persons, and is silent about the right to be invited to make representations
concerning prosecutorial decisions. The main problem though is that s 179 on any
interpretation ‘discriminates’ in the sense that the right to be invited does not extend
to most prosecutorial reviews like those by a DPP or a prosecutor. These
considerations trump in my view the presumption and Mr Kemp’s reliance on the
equal protection clause of the Bill of Rights is, accordingly, misplaced.
[68] Both parties pointed to anomalies flowing from the other’s interpretation. Mr
Trengove (for the NDPP) pointed to these: Why protect an accused when an earlier
prosecution decision is reversed but not when the first prosecution decision is
taken? Why protect him when the NDPP reverses an earlier prosecution decision
but not when the DPP or the prosecutor does so? Who is the relevant DPP with
whom the NDPP must consult when the earlier decision was his own? Why must the
NDPP consult with the accused if he wishes to withdraw and with the complainant if
he wishes to prosecute? Mr Kemp had a shorter list of anomalies. The first can be
disposed of immediately. He suggested that to avoid a review by the NDPP, a DPP
may dishonestly have a prosecutor make the decision to prosecute.63 This is not so:
the ‘relevant’ DPP is the one who is ‘responsible’ for the prosecution under ss (3)(b).
The second concerns the case where the NDPP reviews a decision of a DPP after
hearing representations but then at the request of one of the affected parties decides
to reconsider his decision without hearing anyone. This reductio ad absurdum is but
another formulation of one of Mr Trengove’s anomalies and, as he said, anomalies
will remain irrespective of which interpretation is adopted.
[69] The last aspect that needs mentioning in relation to the interpretation of para
(d) concerns the use by the court below of the ‘reading in reading out’ method of
interpretation (para 123-126). This method is a constitutional remedy which is used
63 Relied on by the court below (para 74) while disregarding the difference between the right to make
representations and the right to be invited to make them.
to prevent a finding that legislation is unconstitutional.64 This case is concerned with
the interpretation of the Constitution itself and not with its constitutionality and the
use of the ‘reading in reading out’ mechanism by the court was inappropriate.
[70] I therefore conclude that s 179(5)(d) does not apply to a reconsideration by
the NDPP of his own earlier decisions but is limited to a review of a decision made
by a DPP or some other prosecutor for whom a DPP is responsible.
[71] Mr Kemp sought to argue on the facts that the Ngcuka decision was not one
by the NDPP but was taken jointly by the NDPP and the head of the Directorate of
Special Operations (the DSO) who, he submitted, was a DPP and, accordingly, that
the Ngcuka decision was one by a DPP. The head of the DSO is a post-Constitution
creation and is not a DPP but a deputy NDPP in terms of the NPA Act (s 7(3)).
Further, the fact that he joined in the decision-making does not mean that the
decision is no longer that of the NDPP. If the argument were correct, it would mean
that the Mpshe decision was also not one made by the NDPP and would fall beyond
the provision and destroy the basis of Mr Kemp’s whole argument because it, too,
was made jointly with the head of the DSO.65
[72] A further aspect of the Ngcuka decision that requires consideration is its
scope. The decision was made in a particular context. The context was the two
counts of corruption levelled against Mr Shaik, Mr Zuma being the recipient of the
alleged bribes. It was not a decision not to prosecute Mr Zuma for any crimes
whenever committed. Mr Ngcuka made it clear that if circumstances were to change
in the sense that more or better evidence became available the decision not to
prosecute would be revisited and reconsidered. This means that the Ngcuka
decision was not intended to be final; it depended on the then available evidence;
and it was limited to the mirror images of the Shaik corruption counts.
[73] The Mpshe decision, on the evidence of the NDPP, was not a review of the
Ngcuka decision. The Ngcuka decision had been overtaken by events. There was
64 National Coalition for Gay and Lesbian Equality v Minister of Home Affairs 2000 (2) SA 1 (CC) para
73-76.
65 The findings of the court below at para 117 are not based on evidence or the provisions of the NPA
Act.
the impact of the evidence and judgment in the Shaik trial; there was the availability
of additional evidence which, apart from strengthening the prima facie case, placed
a different complexion on the corruption counts and in the mind of the NDPP justified
the addition of counts of money laundering and racketeering; there are now four
main corruption counts; and there is evidence about further crimes, such as tax
evasion and fraud on Parliament.66
[74] There is another consideration flowing from the differences between the
counts underlying the Ngcuka decision and the indictment that was ultimately before
Nicholson J. Even on his interpretation of s 179(5)(d) he was obliged to excise the
good from the bad. However, he held that the ‘offer [by Mr Ngcuka] to hear [Mr
Zuma’s] representations probably covered any charges against him should the
[NDPP] decide to charge him’ (para 244). As a finding of fact it is wrong because Mr
Ngcuka’s alleged offer was not open-ended and it also overlooks the fact that a
review by the NDPP of a decision not to prosecute under s 179(5)(d) has nothing to
do with any prior ‘offer’ to hear representations.
[75] In addition, as held by the Constitutional Court, as soon as the matter had
been struck from the roll by Msimang J, the criminal proceedings were terminated
and the proceedings were no longer pending. Removal of a matter from the roll
aborts the trial proceedings.67 The effect of this is that what went before the Mpshe
decision was spent and a new decision to prosecute was required. The Mpshe
decision was not simply a review of the Ngcuka decision, which was no longer
extant. On these facts, s 179(5)(d) had, irrespective of whichever interpretation is
correct, no application, and Mr Zuma’s reliance on it was misplaced.
LEGITIMATE EXPECTATION
66 Mr Zuma’s submission that because he had settled his tax matters after the indictment was served
meant that the prosecution was not justified is not understood and was not presented in argument.
67 Thint Holdings (Southern Africa) (Pty) Ltd v National Director of Public Prosecutions; Zuma v
National Director of Public Prosecutions 2008 (2) SACR 557 (CC) para 41-42.
[76] I now turn to consider the argument based on legitimate expectation, which is
an alternative cause of action. I found it difficult to come to grips with Mr Kemp’s
argument on both the expectation and its legitimacy.
[77] The argument underwent a metamorphosis and ultimately it was that Mr
Zuma ought to have been given an opportunity (more accurately, to have been
invited) to make representations, not about the reversal of the Ngcuka decision but
about the ‘effective decision not to afford [him the opportunity] to make
representations which could or would relate also to issues which have nothing to do
with the merits of the criminal trial’. This sleight of hand was apparently due to a tacit
recognition that decisions to prosecute are not covered by ‘specialised legislative
regulation of administrative action’,68 and that they are not reviewable on the ground
of legitimate expectation by virtue of PAJA. The problem with this argument is that
there is nothing on the papers to suggest that the NDPP decided not to afford Mr
Zuma the opportunity to make representations. To dissect any administrative
decision into discrete sub-decisions as counsel would have it is contrived since, as
Mr Trengove said, any procedural unfairness would then imply a prior decision,
whether express or tacit, not to follow the correct procedure.
[78] It is to be noted that Mr Kemp scuppered the case as presented to and found
by Nicholson J. He no longer sought to rely on the Ngcuka announcement or on the
Hulley/Mpshe correspondence as having created any expectation because, as he
said, he could not point to any representation in them. To indicate how valueless the
Ngcuka announcement was for purposes of extricating from it a promise to invite
representations, it is worth quoting:
‘We have never asked for nor sought mediation. We do not need mediation and we do not
mediate in matters of this nature. However, we have no objection to people making
representations to us, be it in respect of prosecutions or investigations. In terms of section
22(4)(c) of the [NPA] Act, we are duty bound to consider representations.’
As said, Mr Zuma never purported to make representations under the NPA Act.
68 Sidumo v Rustenburg Platinum Mines Ltd 2008 (2) SA 24 (CC); [2007] ZACC 22 para 91-94, 103-
104.
[79] Mr Kemp sought to rely on an accumulation of facts namely that (a) the
Ngcuka decision was preceded by a careful investigation; (b) during that
investigation Mr Zuma, instead of being subjected to a warning statement, was
asked to answer written questions, some of which he did; (c) the NDPP knew that Mr
Zuma suspected political meddling and strenuously denied that there was any real
new evidence; (d) Mr Zuma asserted that s 179(5)(d) applied and Mr Hulley by
implication had requested the NDPP to comply with s 179(5)(d) and the NDPP
refused; and (e) the NPA is bound by its policy directives. If I have omitted any it is
because the written and oral argument on this aspect of the case was rather
opaque.
[80] An expectation can be legitimate only if it is based on a practice of or a clear
and unambiguous representation by the administrator.69 Instead of relying on any
representation, Mr Zuma relies on self-created expectations based on his own
perceptions of the law and the facts, which have always been in dispute. As to
practice, the best Mr Kemp could do was to quote at length from the NPA’s
prosecution policy without pointing to any provision that established any practice or
contained a representation on which Mr Zuma relied.
THE STRIKING OUT
[81] I have already referred to the impugned allegations in the founding affidavit
which were completely irrelevant. It is not necessary to analyse the allegations
objected to by the NDPP because it makes no sense to strike them out at this late
stage of the proceedings. The damage has been done. This does not mean that the
order of the court below should stand. Most of the allegations were not only
irrelevant but they were gratuitous and based on suspicion and not on fact. The
excuse for including them was unconvincing especially in the light of the disavowal
of any intention to rely on them. The prejudice to the NDPP was manifest. Instead of
having a short and simple case, the matter not only ballooned but burst in the faces
of many. There may well be reason to hold that many of the allegations were
69 SA Veterinary Council v Szymanski 2003 (4) SA 42 (SCA) para 19; Minister of Defence v Dunn
2007 (6) SA 52; [2007] ZASCA 75; [2008] 2 All SA 14 [SCA] para 31-32.
vexatious and scandalous but, once again, it is not necessary to do so for present
purposes.
[82] An order on the scale of attorney and client is fully justified, especially since it
is not the first occasion on which Mr Zuma has insisted on including such irrelevant
allegations.70 One cannot escape the impression that the founding affidavit was cut
and pasted from other court papers and that in response the NDPP followed suit. Mr
Kemp submitted that we could not interfere because the court below had exercised
its discretion. However, the court did not exercise any discretion and to the extent
that it purported to do so it relied on incorrect principles and had the facts wrong.
[83] Mr Zuma’s unusual application to strike out the affidavit in support of the
NDPP’s application to strike out was, in the light of this, ill-conceived and should not
have succeeded in the court below.
THE INTERVENTION APPLICATION
[84] It ought to be apparent by now that Mr Mbeki and other members of
Government had ample reason to be upset by the reasons in the judgment which
cast aspersions on them without regard to their basic rights to be treated fairly. It is
not necessary to revisit those issues since they have been dealt with in sufficient
detail. However, they make the applicants’ desire to intervene at the appeal stage
understandable.71
[85] Nevertheless, to be able to intervene in proceedings a party must have a
direct and substantial interest in the outcome of the litigation, whether in the court of
first instance or on appeal.72 The basic problem with the application is that the
applicants have no interest in the order but only in the reasoning. They are in the
position of a witness whose evidence has been rejected or on whose demeanour an
unfavourable finding has been expressed. Such a person has no ready remedy,
especially not by means of intervention. To be able to intervene in an appeal, which
70 See the unreported judgment of Van der Merwe J in a case between the parties dated 14
September 2007 (TPD).
71 See Standard Bank of SA Ltd v Harris [2002] 4 All SA 164; 2003 (2) SA 23 (SCA).
72 United Watch & Diamond Co (Pty) Ltd v Disa Hotels Ltd 1972 (4) SA 409 (C) 415-417.
is by its nature directed at a wrong order and not at incorrect reasoning, an applicant
must have an interest in the order under appeal.73 The applicants do not have such
an interest.
[86] They also sought leave to join as amici curiae. In the light of the NDPP’s
argument their intervention in this regard was not required since it did not add
anything new.
[87] In the result the application stands to be dismissed. The question of its costs
remains. Mr Zuma filed a lengthy answering affidavit which was unnecessary and
inappropriate. Since Mr Kemp fairly conceded that the court below had no grounds
for making (most, if not all) the impugned findings, Mr Zuma’s opposition is not
understood. He had no legal interest in upholding the denigration of the applicants
and in opposing the intervention because it did not affect the order he sought to
uphold. The submission that we should not reconsider these findings because they
are not appealable is cynical. He should therefore bear his own costs in this regard.
THE ORDER
[88] In the light of the foregoing the following order is made:
A
The appeal is upheld with costs including the costs of three counsel.
B
Paragraphs 1 to 4 of the order of the court below are set aside and
replaced with the following:
‘1
The application is dismissed.
The applicant is to pay the respondent’s costs of suit including
those consequent upon the employment of three counsel.
On the respondent’s application to strike out, the applicant is
ordered to pay the costs on the attorney and client scale.
The applicant’s application to strike out is dismissed with costs
on the attorney and client scale.’
C
The application to intervene is dismissed.
73 Western Johannesburg Rent Board v Ursula Mansions (Pty) Ltd 1948 (3) SA 353 (A);
Administrator, Cape v Ntshwaqela 1990 (1) SA 705 (A) 715D-F.
_______________
L T C HARMS
DEPUTY PRESIDENT
For Appellant:
W Trengove SC
B Downer SC
G Baloyi
A Breitenbach
A Steynberg
Instructed by:
Deputy Director of Public Prosecutions
Durban
The State Attorney
Bloemfontein
For Respondent:
K J Kemp SC
M D C Smithers
A A Gabriel
Instructed by:
Hulley & Associates
Durban
Honey Attorneys Inc
Bloemfontein
Advocates for Interveners:
M T K Moerane SC
P Coppin SC
L Gcabashe | 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: 12 January 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
The SCA today delivered judgment in the case of National Director of Public Prosecutions v
Zuma (573/08) [2009] ZASCA 1 (12 Jan 2008). It upheld an appeal by the NDPP against a
judgment by Nicholson J in which he had set aside the indictment of Mr Zuma on 18 main
counts of racketeering, corruption, money laundering, tax evasion and fraud. The effect of
the judgment on appeal is that the prosecution may proceed.
The case concerned in the main the interpretation of section 179 of the Constitution. The
SCA held that the section did not require that the NDPP had to invite Mr Zuma to make
representations as to why he should not be prosecuted before indicting him and to provide
him with a full explanation why a former decision not to prosecute was not adhered to.
The SCA also held that Mr Zuma had no legitimate expectation that he would have received
such an invitation and explanation. It noted that Mr Zuma, knowing that he could make
representations, chose not to make any.
Aware of the possible political implications of the judgment, the SCA emphasised that the
judgment is not about the guilt of Mr Zuma; it is not about the question whether the decision
to prosecute was justified; it is not about who should be the president of the ANC; it is not
about whether the decision of the ANC to ask Mr Mbeki to resign was warranted; and it is
not about who should be the ANC’s candidate for the presidency in 2009. More particularly,
it is not about whether there was political meddling in the decision-making process.
The judgment, however, deals with the question whether the findings by Nicholson J relating
to political meddling were appropriate or could be justified. It came in this regard to the
conclusion that his findings were inappropriate and could not be justified on the papers
before him. The SCA found that the learned judge had failed to have regard to some basic
tenets concerning the judicial function and that he had failed to apply fundamental rules of
procedure. This led to the erroneous findings.
The SCA nevertheless dismissed an application by Mr Mbeki and the Government of the
RSA to intervene on the ground that they had no interest in the relief but only in the reasons
of the court below.
The members of the Court were Harms DP and Farlam, Ponnan, Maya and Cachalia JJA. The
judgment will be available on the Court’s website www.supremecourtofappeal.gov.za or at
www.saflii.org.za.
---ends--- |
2838 | non-electoral | 2012 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 737/11
In the matter between:
JACOBUS JOHANNES LIEBENBERG NO
AND 86 OTHERS
Appellants
and
BERGRIVIER MUNICIPALITY
Respondent
Neutral citation:
JJ Liebenberg NO v Bergrivier Municipality (737/11)
[2012] ZASCA 153 (1 October 2012)
Coram:
Nugent, Lewis, Bosielo, Theron and Wallis JJA
Heard:
7 September 2012
Delivered
1 October 2012
Summary:
Rates imposed on rural landowners by the Municipality in
the years from 2002 to 2009 were lawfully imposed under s 10G(7) of the
Local Government Transition Act 209 of 1993 and under the Local
Government: Municipal Finance Management Act 56 of 2003.
ORDER
On appeal from Western Cape High Court (Cape Town) (Binns-Ward J sitting
as court of first instance):
1 The appeal is dismissed with costs, including those of two counsel, to be
paid by the appellants jointly and severally.
2 The cross appeal succeeds with costs, including those of two counsel.
Those costs and the costs of the application for leave to cross appeal in the
high court are to be paid by the appellants jointly and severally.
3 The orders of the high court are set aside. The following orders are
substituted:
‘a The imposition of rates by the applicant on the respondents in the financial
years from 2002/2003 to 2008/2009 was lawful.
b The respondents are ordered to make payment to the applicant of the
amounts set out against their names, and corresponding municipal account
numbers, on the schedule headed “Uitstaande Belastings”, deposited with the
Registrar of the Supreme Court of Appeal, together with interest a tempore
morae, as provided in the applicant’s credit control policy.
c The defendant or defendants in each action in the magistrates’ courts are
ordered to pay to the applicant the costs of the proceedings for recovery of
the amounts owed by them in the magistrates’ courts.
d The respondents are ordered, jointly and severally, to pay the applicant’s
costs including the costs of two counsel.’
JUDGMENT
LEWIS JA (NUGENT, BOSIELO, THERON AND WALLIS JJA concurring)
[1] The appellants are rural landowners who farm within the area of the
Bergrivier Municipality, the respondent. I shall refer to them as the farm
owners. Their dispute is about rates levied by the Municipality over a number
of years in the last decade, in terms of the new Constitutional and legislative
dispensation that has brought all land in South Africa within the jurisdiction of
municipalities. The Municipality was established pursuant to the Local
Government: Municipal Structures Act 117 of 1998. This is one of the four
statutes that now regulate municipal governance throughout the country.
[2] Prior to the adoption of the interim Constitution of 1993, rural
landowners were not affected by the provincial ordinances that governed the
payment of municipal rates. They did not, therefore, pay municipal rates. That
dispensation changed with the introduction of the Local Government
Transition Act 209 of 1993 (the Transition Act),1 designed to provide
uniformity in local government throughout the Republic and to establish new
municipal structures, and with the enactment of the legislation that eventually
replaced it.
[3] The long title to the Transition Act indicated that one of its purposes
was to establish transitional rural local structures, and part VA dealt with ‘rural
local government’. Section 9D provided for a framework for rural local
government based on the principle that the whole of an area of a province
should fall within the jurisdiction of a council, of which there were a variety
including transitional councils. The very name of the Transition Act indicates
that it was intended to apply in the period between the passage of the interim
Constitution and the time when permanent municipal structures and systems
were put in place. As it happened, the Transition Act was amended on
numerous occasions and remained operative, at least in part, until 2011. I
shall deal with its application in due course.
[4] The farm owners refused to pay amounts claimed from them by the
Municipality over several years, commencing in 2001. Eventually the
Municipality brought actions against them in various magistrates’ courts in the
Western Cape for payment of arrear levies and rates. It became apparent
during the course of these proceedings that the farm owners were defending
the actions on the basis that the levies and rates were not imposed in
accordance with the strictures of the Constitution and the statutes then
1 It came into operation on 2 February 1994.
applicable. The parties thus agreed that the actions in the magistrates’ courts
would be abandoned, and instead, the Municipality would seek declaratory
orders in the high court as to the validity or otherwise of the levies and rates.
[5] In October 2010 the Municipality sought declaratory orders that the
levies and rates imposed by it in the financial years (which ran from 1 July to
30 June each year) from 2001/2002 to 2008/2009 were lawful and valid, and if
so, for an order that the farm owners pay the amounts claimed, set out in a
schedule to the notice of motion. By the time of the hearing in the high court
the farm owners had conceded that rates imposed in the 2003/2004 year
were lawfully imposed and the Municipality conceded that the levies it had
sought to impose in the 2001/2002 year were not lawfully imposed. The
Western Cape High Court, Cape Town (per Binns-Ward J) found that the
levies imposed in the 2001/2002 financial year were not lawfully imposed
although that had been conceded); that the 2002/2003 rates were not lawfully
imposed; that the rates imposed in 2004/2005 and 2005/2006 were lawfully
imposed and that the Municipality could recover the amounts payable from
the farm owners; but that the Municipality had not complied with statutory
requirements in imposing rates in the 2006/2007, 2007/2008 and 2008/2009
years and could thus not recover them. The high court granted leave to the
farm owners to appeal in respect of the 2004/2005 and 2005/2006 years, and
to the Municipality to cross appeal in respect of the other years.
[6] About six weeks before the hearing of the appeal the Minister for Local
Government, Environmental Affairs and Development Planning, Western
Cape sought leave to intervene as a party in the appeal, or to make
representations as an amicus curiae. The court allowed the Minister to argue
whether he had a direct interest entitling him to intervene, or to act as an
amicus. I shall deal with the application after considering the issues on
appeal.
[7] A number of issues are common to all the years under discussion. I
shall thus deal first with the general statutory framework, the continued
application of s 10G(7) of the Transition Act, the pertinent authorities on which
the parties rely and the general principles applicable. I shall then turn to
consider the lawfulness of the imposition of rates in each year under
consideration.
The legislative framework
[8] First, the Constitution itself provides for the objects (s 152) and duties
(s 153) of local government. It requires that national legislation be enacted for
the establishment of municipalities, the determination of the criteria for
distinguishing between different kinds of municipality (s 155), and lays down
the powers and functions of municipalities (s 156). In s 229 the Constitution
enables a municipality to impose rates and levies, and states that the power
to do so may be regulated by national legislation. Where national legislation is
in place, as it was throughout the relevant years, the power to levy rates is
derived from and exercised in terms of that national legislation. Initially the
relevant national legislation was the Transition Act, in particular s 10G(7).
Some of the problems arising in this case stem from the transition from the
Transition Act to the national legislation referred to in the following paragraph.
[9] The national legislation enacted pursuant to s 229 is now to be found in
four statutes. The Local Government: Municipal Structures Act 117 of 1998
(the Structures Act), in terms of which the Municipality was established, was
enacted in 1998. Then followed the Local Government: Municipal Systems
Act 32 of 2000 (the Systems Act), the Local Government: Municipal Finance
Management Act 56 of 2003 (the Finance Act) (which came into operation on
1 July 2004) and lastly the Local Government: Municipal Property Rates Act 6
of 2004 (the Rates Act) (which came into operation on 2 July 2005).
[10] The farm owners contended that the Municipality failed to comply with
a number of provisions of the Transition Act, the Systems Act, the Finance Act
and the Rates Act. They rely on the principle of legality that has formed the
backbone of several decisions of this court and the Constitutional Court in the
last decade.2 The principle is not in issue and I propose to say no more about
2 See for example Fedsure Life Assurance Ltd v Greater Johannesburg Transitional
Metropolitan Council 1999 (1) SA 374 (CC); Gerber v Member of the Executive Council for
Development Planning and Local Government, Gauteng 2003 (2) SA 344 (SCA) and
it: it is accepted that when imposing rates and levies a municipality must
comply with the provisions of the statutes that govern their powers and duties.
The Municipality argued, however, that it acted at all times in compliance with
the provisions of the statutes then in operation. In the alternative it contended
that there had been substantial compliance with the requirements of the
legislation and that any shortcomings did not invalidate the imposition of rates.
[11] There is, however, an important difference between the parties as to
whether s 10G(7) of the Transition Act survived the enactment of the Rates
Act, and thus whether the Municipality could rely on its provisions as the
source of its power to levy rates in the years after 2 July 2005. The high court
held that s 10G(7) was repealed by the enactment of the Rates Act, and I turn
first to whether this finding was correct.
The continued application of s 10G(7) of the Transition Act
[12] The Municipality contended that the provisions of this section applied
throughout the period over which the contested rates were imposed. The
provisions pertinent to this matter read:
‘(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:
. . . .
(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
Kungwini Local Municipality v Silver Lakes Home Owners Association 2008 (6) SA 187
(SCA).
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.
(c) After a resolution as contemplated in paragraph (a) has been passed, the chief
executive officer of the municipality shall forthwith cause to be conspicuously
displayed at a place installed for this purpose at the offices of the municipality as well
as at such other places within the area of jurisdiction of the municipality as may be
determined by the chief executive officer, a notice stating –
(i) the general purport of the resolution;
(ii) the date on which the determination or amendment shall come into operation;
(iii) the date on which the notice is first displayed; and
(iv) that any person who desires to object to such determination or amendment
shall do so in writing within 14 days after the date on which the notice is first
displayed.
(d) Where –
(i) No objection is lodged within the period referred to in paragraph (c) (iv), the
determination or amendment shall come into operation as contemplated in
paragraph (b)(ii);
(ii) an objection is lodged within the period referred to in paragraph (c) (iv), the
municipality shall consider every objection and may amend or withdraw the
determination or amendment and may determine a date other than the date
contemplated in paragraph (b)(ii) on which the determination or amendment shall
come into operation, whereupon paragraph (c)(i) shall with the necessary
changes apply.’
[13] The farm owners do not dispute that these provisions were applicable
in the 2003/2004 and 2004/2005 financial years: they contend, however, that
the Municipality did not comply with the requirements of the section in the
latter year. I shall return to that argument when dealing with those years. But
they argue that when the Rates Act came into operation on 2 July 2005,
s 10G(7) of the Transition Act ceased to apply, and that the Municipality was
required to levy rates in terms of s 14 of the Rates Act. As I have said, the
high court upheld that argument.
[14] The transitional provisions of the four statutes regulating municipal
governance are complex and confusing. On analysis, however, I consider that
they show a clear purpose: to empower rating in every municipality through a
variety of mechanisms until uniform and permanent systems were put in
place.
[15] The Finance Act, in operation from 1 July 2004, dealt with the repeal of
a number of the rating provisions previously in force (the relevant provisions
here were in the Municipal Ordinance 20 of 1974 (C)), as well as s 10G(7) of
the Transition Act. Section 179 of the Finance Act reads:
‘Repeal and amendment of legislation
(1) The legislation referred to in the second column of the Schedule [including s
10G(7)] is hereby amended or repealed to the extent indicated in the third column of
the Schedule
(2) Despite the repeal of section 10G of the Local Government Transition Act, 1993
(Act 209 of 1993), by subsection (1) of this section, the provisions contained in
subsections (6), (6A) and (7) of section 10G remain in force until the legislation
envisaged in section 229(2)(b) of the Constitution is enacted.
. . . .’
[16] The legislation envisaged by s 229(2)(b) was, of course, the Rates Act.
That Act came into operation on 2 July 2005. The farm owners argued thus
that s 10G(7) was repealed by s 179 of the Finance Act with effect from the
date of commencement of the Rates Act. But the argument does not take into
account the transitional provisions of that Act. These provide:
‘Transitional arrangement: Valuation and rating under prior legislation
88(1) Municipal valuations and property rating conducted before the commencement
of this Act by a municipality in an area in terms of legislation repealed by this Act,
may, despite such repeal, continue to be conducted in terms of that legislation until
the date on which the valuation roll covering that area prepared in terms of this Act
takes effect in terms of section 32(1).
. . . .’
‘Transitional arrangement: Use of existing valuation rolls and supplementary
valuation rolls
89 (1) Until it prepares a valuation roll in terms of this Act, a municipality may –
(a) continue to use a valuation roll and supplementary valuation roll that was in force
in its area before the commencement of this Act; and
(b) levy rates against property values as shown on that roll or supplementary roll.
(2) If a municipality uses valuation rolls and supplementary valuation rolls in terms of
subsection (1) that were prepared by different predecessor municipalities, the
municipality may impose different rates based on different rolls, so that the amount
payable on similarly situated properties is more or less similar.
(3) This section lapses four years from the date of commencement of this Act, and
from that date any valuation roll or supplementary valuation roll that was in force
before the commencement of the Act may not be used.’
[17] The period of four years referred to in s 89(3) was extended to six
years. The Municipality argued therefore that the provisions of s 10G(7) of the
Transition Act continued to apply until 2 July 2011. But the high court found
that when the Rates Act came into operation, s 10G(7) was repealed. Rating
provisions of the ordinances previously in force were not. This is because the
Rates Act repealed the Ordinances but did not itself repeal s 10G(7). That
section was repealed by s 179 of the Finance Act, cited above. Section 88(1)
of the Rates Act thus did not keep s 10G(7) alive. The high court found that
one should not read in a reference (in s 88(1)) to s 10G(7) unless failure to do
so resulted in an absurdity.
[18] That interpretation fails, in my view, to give meaning to s 89: that
section specifically states that a municipality may, until it prepares a valuation
roll in terms of the Rates Act, continue to use a valuation roll in force before
the commencement of the Act, and to levy rates against property values as
shown on that roll. The clear implication of this is that the Municipality could
continue to levy rates in terms of s 10G(7) of the Transition Act and to use the
valuation roll prepared pursuant to that section. The rating provisions of the
Transition Act were thus in force until 2 July 2005: and the Transition Act was
designed for the very purpose of bridging the period between the operation of
the provincial ordinances and the enactment of the legislation envisaged in
the Constitution. Moreover, s 10G was introduced to ensure that
municipalities conducted their affairs in an effective fashion, using the rating
provisions to ensure their financial resources, and to meet their
developmental obligations. It would be most odd if its provisions fell away in
2005 whereas those of the Ordinances remained in place. It would be
particularly odd as its effect would be to remove the legislation introduced in
part to enable rating of rural properties that had fallen outside the rating
ordinances, thereby once more excluding those properties from rating. There
is nothing to indicate that it had been decided to exclude rural properties from
rating and that this was the purpose of this provision.
[19] To hold thus that the Ordinances were operative before 2 July 2005,
and were repealed on that date by the coming into operation of the Rates Act,
but that their operation continued because of the transitional provisions,
whereas s 10G was not covered by the transitional provisions, does give rise
to an absurdity. In my view, the transitional provisions of both the Finance Act
and the Rates Act clearly kept the empowering provisions of s 10G alive until
the period referred to in s 89(3) had expired. Throughout the period in issue,
therefore, s 10G(7) empowered the Municipality to impose rates. However,
when the Finance Act came into operation it determined the procedures to be
followed in the municipal budgetary process including rating. I turn to these
now.
Application of the Finance Act
[20] Chapter 4 of the Finance Act regulates the manner of levying of rates
from the date of its commencement – 1 July 2004. After that date the
Municipality determined the rates payable in terms of the provisions of ss 22
to 24 of the Finance Act. Section 22 makes provision for the publication of a
municipality’s annual budget, and requires a municipality to invite the ‘local
community’ to submit representations in connection with the budget
(s 22(a)(ii)). Section 23 requires a municipality to consider the views of the
local community and various bodies, such as the National Treasury. The
municipal council must give the mayor an opportunity to respond to the
submissions and to revise the budget if necessary. Section 24 requires the
municipality to consider approval of the budget at least 30 days before the
start of the budget year (1 July in each year). And the municipal council must
approve the budget before the start of the budget year.
[21] Section 25 regulates the position where a municipal council has failed
to approve a budget ‘including revenue-raising measures necessary to give
effect to the budget’. Clearly rates payable by property owners within its
jurisdiction are the chief source of revenue for any municipality. Non-
compliance with the procedures required to levy rates could thus have serious
consequences for the budget of a municipality. However, in the event of non-
compliance with a provision of chapter 4 of the Act, s 27(4) provides that the
budget for the year is not invalidated. Mechanisms are, however, put in place
to ensure compliance. The provincial government and the national treasury
must be informed of any non-compliance by the mayor, and the provincial
executive may intervene under s 139 of the Constitution in that event.
[22] The Municipality contended that it had complied with all these
provisions in the years post 1 July 2005. It also submitted that there had been
compliance with the provisions of s 10G(7)(c) of the Transition Act. But that
section imposed requirements that are not consistent with the process
determined by the Finance Act, and to the extent that this is so, the later
provisions of the general enactment must prevail.3 This must be especially so
where the provisions of an Act are designedly interim and transitional. The
power to levy rates is thus to be found in s 10G of the Transition Act until
2011, whereas the manner of doing so was regulated by the provisions of the
Finance Act once it had come into operation. Before turning to the specific
years in issue I shall deal with compliance with s 10G(7), in force in the
financial years 2002/2003 and 2004/ 2005.
Compliance with s 10G(7) generally
General purport
[23] One of the attacks on the process followed by the Municipality in all the
years in question (but as I have held, only relevant until the procedural
requirements of the Finance Act were introduced) was that it did not publish a
notice setting out the general purport of the rating resolution adopted by its
3 See, for example, Joseph v City of Johannesburg 2010 (4) SA 55 (CC) para 67 referring to
Government of the Republic of South Africa v Government of KwaZulu 1983 (1) SA 164 (A) at
200C-H.
council. Section 10G(7)(a)(i), set out above, provided that a municipality may
by resolution levy and recover property rates in respect of immovable property
within its jurisdiction. After such a resolution was passed a notice had to be
‘conspicuously displayed’ at the offices of the municipality as well as at other
places stating, amongst other things, the ‘general purport of the resolution’
and that any person who desired to do so could object in writing to such
‘determination’ (of the rate) within 14 days of the date on which the notice was
first displayed.
[24] The farm owners argued that the Municipality had not published a
notice setting out the general purport of the resolution. The meaning of this
phrase has been considered in two decisions of this court recently, and,
according to the high court in this matter, were, at least to some extent, in
conflict with one another. In Kungwini Local Municipality v Silver Lakes Home
Owners Association4 this court held that the object of s 10G(7)(c) – that the
notice set out the general purport of the resolution – was that ratepayers
should ‘know what rates they would have to pay, and from when those rates
would be payable’. They should also know that they could object to the rate
determination. In that case the notice had referred to two different rates, thus
providing conflicting information. It was held not to have set out the general
purport of the resolution.
[26] On the other hand, in Nokeng Tsa Taemane Local Municipality v
Dinokeng Property Owners Association5 this court held that the phrase
‘general purport’ meant that details of the rates resolution did not have to be
set out in the notice. It stated:6
‘The adjective “general” qualifies the noun “purport”. The conjunction was not
accidental but deliberately intended to make clear that specific details are not
required. In this case the requirement was satisfied because interested parties were
advised that the resolutions were available for inspection. This accords with what
4 Kungwini Local Municipality v Silver Lakes Home Owners Association 2008 (6) SA 187
(SCA) paras 53 and 55.
5 Nokeng Tsa Taemane Local Municipality v Dinokeng Property Owners Association [2011] 2
All SA 46 (SCA).
6 Para 24.
Alexander J stated about this phrase in Rampersad v Tongaat Town Board 1990 (4)
SA 32 (D) at 37G:
“ . . . ‘general purport’ then involves an intimation that what follows broadly covers a
specific topic.”’
[27] It was enough, therefore, for the notice to state that the details could be
scrutinised elsewhere. This court thus held, in Nokeng, that where notices of a
rates resolution advised that the resolution was available for inspection at the
town council offices during normal office hours, this was sufficient to meet the
requirement of s 10G(7)(c) of the Transition Act that the general purport of the
resolution be displayed.
[28] The high court in this matter considered that the decision of Nokeng in
this regard is in conflict with Kungwini (to which it referred). But I consider
not. Kungwini turned on specific facts, where the notice contained a
contradiction. It is true that the notice also advised that the resolution was
available for inspection. But given the confusion that may have followed the
notice, I think that the notice in Kungwini is to be distinguished from one that
does not set out details of the rates resolution. It is true that the court there
said that ratepayers are entitled to know what rates they have to pay and from
when. But that they can establish from an inspection of the resolution, as
Nokeng held. In Kungwini an inspection of the resolution may not have
clarified the confusion caused by the notice. The high court in this matter thus
correctly held that where a notice did state that the resolution could be
inspected elsewhere, that was sufficient to indicate the general purport of the
resolution.
Substantial compliance
[29] The Municipality argued that in the event of any notice not being fully
compliant with s 10G(7)(c), there had at least been substantial compliance. It
relied on the decision in Nokeng in this regard as well.7 This court, referring to
Nkisimane v Santam Insurance Co Ltd,8 held that ‘mere failure to comply with
one or other administrative provision does not mean that the whole procedure
7 Para 14.
8 Nkisimane v Santam Insurance Co Ltd 1978 (2) SA 430 (A) 433H-434E.
is necessarily void’. In determining whether a failure should be ‘visited with
nullity’ one must look to whether the legislation in question contemplates that
failure strictly to comply with the requirement should result in the process
being invalidated. The court said, in this regard, that ‘[t]o nullify the revenue
stream of a local authority merely because of an administrative hiccup
appears to me to be so drastic a result that it is unlikely that the Legislature
could have intended it.’
[30] The farm owners’ argument that there had not been substantial
compliance with any of the provisions of the statutes applicable at the relevant
time must be examined in relation to each of the years under consideration. It
should be noted, however, that they have several complaints about all of the
notices, and procedures adopted, in every year.
The 2002/2003 financial year: the cross appeal by the Municipality
[31] On 13 June 2002 the Municipality’s council resolved to impose what it
termed a levy on properties, which was based on the size of the land owned:
the amount levied varied from R300 for properties of less than 75 hectares to
R4 500 for properties of more than 1000 hectares. A maximum of R4 500 was
payable by each owner, irrespective of the number of registered properties
comprising the farm.
[32] A notice setting out the sliding scale with the rates payable in respect
of different property sizes was published in terms of s 10G(7) of the Transition
Act. It called for objections within a two-week period. After considering
objections the council, on 29 July 2002, confirmed the determination but
undertook to conduct valuations in the year and to adjust the amounts
payable on the basis of the valuations. Although described as a levy, this was
clearly a rate and was not lawfully raised or levied: Gerber v Member of the
Executive Council for Development Planning and Local Government,
Gauteng.9 The attempt, in argument, to justify it as a levy foundered on the
fact that it was not, as required by s10G(7)(a)(ii) levied ‘in respect of any
function or service of the municipality’.
9 Gerber v Member of the Executive Council for Development Planning and Local
Government, Gauteng 2003 (2) SA 344 (SCA).
[33] On 26 May 2003, before the financial year end, the council resolved to
levy a true rate of .2474 cents in the rand on the properties, plus interest on
amounts not paid by 25 June 2003, and to set off against the rate whatever
had been paid earlier in the year. In effect, then, amounts claimed pursuant to
the sliding scale were recovered only provisionally. Adjustments, based on
actual values, were made subsequently.
[34] The high court found that the initial ‘levy’ was a rate: it was based on
land ownership and was not permitted by s 10G. The subsequent resolution to
levy a rate on 26 May 2003 for that year was in effect an amendment of the
earlier resolution, for which s 10G(7) did not provide. It was thus ultra vires.
Moreover, no notice was given of the later resolution, nor was there any call
for objections. There was therefore material non-compliance.
[35] The Municipality argued, however, that the valuations were done
pursuant to the objections made to the sliding scale by farm owners. The
second resolution was taken as a result of those objections. The only basis
upon which the farm owners challenged the validity of that resolution was that
it was ultra vires in terms of s 10G(7)(b)(ii). However, that section deals with
amendment or withdrawal of levies and other charges, not rates. The farm
owners cannot, on the one hand, argue that the levy was in truth a rate, and
on the other hand complain, when it was replaced by a lawful rate, that it
should have been amended as if it were a levy. That challenge must
accordingly fail.
[36] I consider that the high court accordingly erred in concluding that the
rates levied on 26 May 2003 were not validly imposed. The Municipality is
entitled to recover the amounts owed in the 2002/2003 financial year and the
cross appeal in respect of this order must be upheld.
The 2004/2005 financial year: appeal by the farm owners
[38] The high court found that the rates levied in terms of s 10G(7) of the
Transition Act were lawfully imposed and that the requirements of publication
were met. The farm owners argued that the rates were payable before the
expiry of the 14-day period for objections. Rates should be imposed
prospectively, not retrospectively. The notice of the resolution was published
in the Cape Times on 7 July 2004, and in Die Burger on 8 July. It set out the
general rate in the rand, stated that rebates were applicable and that the rates
were payable before 30 September 2004 or in monthly instalments. The notice
also stated that a summary of the budget was available for inspection at the
office of the municipal manager. The high court rejected the argument that
ratepayers were faced with a fait accompli. The notice called for objections
and it was thus clear that the resolution was subject to amendment. Any rates
accounts sent out before the final decision was made in respect of the rates
for the year would accordingly be provisional and susceptible to adjustment in
the light of the final decision as to the rates that would be payable.
[39] I do not agree with the minority judgment in Kungwini10 that the
publication of a notice advising of a draft rates resolution, and calling for
objections, amounts to a fait accompli. The resolution is obviously open to
amendment – otherwise there would be no purpose in calling for objections.
[40] The high court also found that there was no merit in the argument that
the notice was defective because it did not state (as it was required to do in
terms of ss 21(4) and 21A of the Systems Act) that persons who could not
read or write could request assistance from a staff member of the
municipality. It could not have been the intention of the legislature that this
feature of non-compliance rendered the whole rates process invalid. The high
court invoked Nkisimane11 in holding that substantial compliance was
sufficient. In that case Trollip JA said that in determining whether exact
compliance with a peremptory provision of a statute was necessary a court
must construe the provision – ‘ascertain the intention of the lawgiver’ – by
having regard to the ‘language, scope and purpose of the enactment as a
whole’. Compliance with a statutory provision might in some cases be
desirable, but not necessary to give effect to the object of the statute. In my
10 Kungwini Local Municipality v Silver Lakes Home Owners Association 2008 (6) SA 187
(SCA) para 31. The majority left open the question whether the levying of a rate before notice
was given was permissible.
11 Above, 433-434.
view, while a municipality should do all it can to ensure effective
communication with its ratepayers, an administrative omission of this kind
should not undermine the entire rates base on which its budget rests. That
cannot have been intended by the legislature.
[41] The appeal against the order that the farm owners pay the rates
imposed in this year must thus fail.
The 2005/2006 financial year: the farm owners’ appeal
[42] In this year the provisions of ss 22 to 24 of the Finance Act were
operative. On 5 May 2005 the Municipality published a notice in terms of s 22
of the Finance Act stating that the draft budget, as well as the draft reviewed
integrated development plan, were open for inspection. Dates, times and
places where these drafts would be discussed were also advertised. On 31
May 2005 the council met and resolved to approve the budget, including, of
course, the rates. On 23 June 2006 a further notice was published setting out
the rates and rebates for rural properties. The high court found that there had
been compliance with the provisions of the Finance Act.
[43] The farm owners argued that the provisions of the Finance Act dealt
not with the levying of rates and the procedures to be followed after the
resolution had been adopted, but with the ‘run-up’ to the adoption of the
budget. They submitted that s 10G(7), on the other hand, laid down the
procedures to be followed after the adoption of the resolution. That section
required an additional notice and comment procedure after the notice of the
draft budget had been given, they argued, and this was still necessary. That
cannot be so. The Finance Act did not impose any requirement other than the
publication, in the prescribed manner, of the draft budget. Its provisions are in
this respect quite different from those of s 10G(7), which they superseded.
[44] The notice complied with the provisions of ss 22 to 24 of the Finance
Act. It stated that the draft budget was open for inspection and that written
objections should be lodged with the municipal manager by 27 May 2005.
Moreover, on 31 May 2005, the mayor described the public participation
process and noted the objections. As the Municipality adhered to the
provisions of the Finance Act –and it was not suggested that it had not done
so – the rates were lawfully determined and levied.
[45] The high court correctly found, thus, that the proper procedures were
followed in imposing the rates in the 2005/2006 financial year. The appeal
against the order that the farm owners pay the rates for this year must fail.
The 2006/2007 financial year: the Municipality’s cross appeal
[46] The principal objection to the process of imposing rates in this and
subsequent financial years was that s 14(2) of the Rates Act, in force from 2
July 2005, required promulgation of the rates resolution in the provincial
gazette. Section 14(1) provides that a rate is levied by resolution passed by
the municipal council. Section 14(2) states that the resolution must be
promulgated, and s 14(3) requires that it be displayed in specified places and
advertised in the media.
[47] The Municipality did not comply with the requirement of promulgation.
Instead, it published a notice in the press on 13 April 2006 stating what the
rates resolution provided, in broad terms, where it was to be found, and that
objections could be made before 15 May 2006. (The notice also stated that
persons who could not write could request assistance from the municipal staff,
thus complying with s 21(4) of the Systems Act.) The notice was published in
terms of s 22 of the Finance Act.
[48] The high court held that promulgation was necessary and that the
Municipality, having failed to ensure promulgation in the provincial gazette,
was not entitled to claim in respect of the rates in this year. I have already
found that s10G was not repealed (save to the extent that it was incompatible
with the provisions of the Finance Act) until July 2011 (s 89(3) of the Rates
Act). It therefore continued to apply in this and subsequent years until 2 July
2011. That section, and not the Rates Act, was accordingly the source of the
power to levy rates and it was therefore unnecessary for the Municipality to
satisfy the requirements of the Rates Act in order to set a rate and levy it.
Promulgation was thus not necessary for the rates to have been validly
imposed. The farm owners nonetheless argued that the notice had still to
comply with the provisions of s 10G(7) of the Transition Act. In my view, for
the reasons already discussed, it did not have to.
[49] One further objection made by the farm owners was that the notice
stated that the executive mayor would consider the objections, not the council
itself. Section 23 of the Finance Act provides that the council must consider
submissions and if necessary revise the budget. But the mayor reported to the
council and it took the final decision. There is no merit in the objection.
[50] The high court thus erred in finding that the rates were not validly
imposed, and the appeal against this order must be upheld.
The 2007/2008 and 2008/2009 financial years: the Municipality’s cross appeal
[51] The objections to the rating processes and the principles applicable to
the 2006/2007 year are the same in these years as those in the previous one.
Again, s 10G of the Transition Act (in so far as it conferred the power on the
Municipality to levy rates) and the provisions of the Finance Act dealing with
procedures applied. Notices were published under the Finance Act, the draft
budget and rates resolutions were available for inspection and objections
were called for. The council of the Municipality met representatives of the
farmers to discuss the budgets and little or no objection was made to their
substance. The council approved the respective budgets at its meetings. In
my view, the Municipality complied with the provisions of the Finance Act and
the rates were lawfully imposed.
[52] The farm owners’ challenges to the imposition of rates in these years
must also be rejected and the Municipality’s appeal against the orders for
these years upheld.
The Minister’s application for leave to intervene or to be admitted as an
amicus curiae
[53] The Minister for Local Government, Environmental Affairs and
Development Planning, Western Cape applied for leave to intervene, or to
advance submissions as an amicus curiae at the hearing of the appeal. The
farm owners opposed the application. The Municipality did not. The court
heard argument on the application, and has decided to grant leave to the
Minister to act as an amicus curiae.
[54] The essence of the argument on the right to intervene was that the
provincial government would, in the event of the Municipality not being
financially sustainable because of the farm owners’ refusal to pay the rates in
the years in question, be required to fund the Municipality itself. That
obligation arises from s 139(b) of the Constitution. The primary response of
the farm owners was that the Municipality was not in financial difficulty. It
sought to adduce evidence to this effect and the Minister responded with
other evidence. The farm owners’ response – to the effect that the
Municipality was financially sound despite their refusal and failure to pay rates
(on purely technical objections to the rating processes) – is cynical.
[55] The Minister argued also that should it be found that the rates had not
been lawfully imposed (as to which he made no argument) then the court
should grant an order in terms of s 172(1) of the Constitution on the basis that
the Municipality’s conduct was inconsistent with the Constitution, but that a
just and equitable order should be imposed rather than declaring that the
rates were not payable. That order might have had the consequence that the
rates paid by other property owners in the jurisdiction of the Municipality, in
the years under consideration, were repayable, or could be set off against
future rates imposed.
[56] In view of the conclusions that I have reached, it is not necessary to
consider the evidence sought to be adduced. And the consequence of this
court’s decision is that the provincial government will not be the funder of last
resort. Should that not have been the case, however, it is my view that the
Minister’s submissions as to the kind of order that this court could have made
were in the public interest and of assistance to the court. Hence the decision
to admit the Minister as an amicus.
The Municipality’s schedule of debtors
[57] The Municipality attached to its notice of motion a schedule of debtors
– the farm owners who had failed to pay rates over the years in question –
reflecting the details of the owners, their municipal account numbers and the
amounts they owed. In making its orders the high court gave the parties the
opportunity to correct any errors in the schedule. The Municipality has
attached a corrected schedule in respect of all the years in question to its
heads of argument on appeal. That schedule is accepted as correct and the
order that is made on appeal refers to it.
Costs
[58] The Municipality has had complete success in this appeal. There is no
reason to deprive it of its costs either in this court or that of the high court
where it should not have been non-suited in respect of several years.
Order
[59] 1 The appeal is dismissed with costs, including those of two counsel, to
be paid by the appellants jointly and severally.
2 The cross appeal succeeds with costs, including those of two counsel.
Those costs and the costs of the application for leave to cross appeal in the
high court are to be paid by the appellants, jointly and severally.
3 The orders of the high court are set aside. The following orders are
substituted:
‘a The imposition of rates by the applicant on the respondents in the financial
years from 2002/2003 to 2008/2009 was lawful.
b The respondents are ordered to make payment to the applicant of the
amounts set out against their names, and corresponding municipal account
numbers, on the schedule headed “Uitstaande Belastings”, deposited with the
Registrar of the Supreme Court of Appeal, together with interest a tempore
morae, as provided in the applicant’s credit control policy.
c The defendant or defendants in each action in the magistrates’ courts are
ordered to pay to the applicant the costs of the proceedings for recovery of
the amounts owed by them in the magistrates’ courts.
d The respondents are ordered, jointly and severally, to pay the applicant’s
costs including the costs of two counsel.’
_____________
C H Lewis
Judge of Appeal
APPEARANCES:
For Appellant:
A M Breitenbach SC (with him M Schreuder),
Instructed by Malan Lourens Lemmer Viljoen Inc,
Cape Town,
Webbers Attorneys,
Bloemfontein.
For Respondent:
J C Heunis (with him EF van Huysteen),
Instructed by De Klerk & van Gend,
Cape Town,
McIntyre and van der Post Attorneys,
Bloemfontein.
For the Amicus Curiae :
G Budlender SC (with him M Bishop),
Instructed by State Attorney CJ Benkenstein,
Cape Town. | SUPREME COURT OF APPEAL OF SOUTH AFRICA
PRESS RELEASE
1 October 2012
STATUS: Immediate
JJ Liebenberg NO v Bergrivier Municipality (737/11) [2012] ZASCA 153 (1 October 2012)
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 dismissed an appeal against a decision of the
Western Cape High Court, Cape Town, which had held that rates had been validly
imposed by the Bergrivier Municipality on the owners of rural properties in two financial
years (2002/2003 and 2004/2005). But it upheld the cross appeal of the Municipality
against the orders of the high court that rates imposed in subsequent years, until the
2008/2009 financial year, had been unlawfully imposed. The SCA ordered the farm
owners to pay the amounts owed by them to the Municipality, together with all costs
incurred in the litigation that the Municipality had had to embark upon to recover the
arrear rates.
Rates were imposed on rural land in South Africa for the first time when the Local
Government Transition Act of 1993 brought all land in the country under the jurisdiction
of municipal councils. When the Bergrivier Municipality imposed levies and rates under
that Act in 2001/2002, and in subsequent years, the farm owners refused to pay them
on the basis that there had not been compliance with the Transition Act. The complaints
were all of a technical nature.
The Transition Act, which empowered the levying of rates, and regulated the manner of
imposition, was replaced over a number of years with four statutes which together now
regulate local government. The farm owners argued that once the Local Government:
Municipal Property Rates Act of 2004 came into operation (on 2 July 2005), the rating
provision of the Transition Act ceased to apply and that the Municipality was obliged to
follow the procedures laid down in that Act, which included promulgation in a provincial
gazette.
Transitional provisions in the Rates Act, as well as in the Local Government: Municipal
Finance Act (which came into operation in July 2004), had, however, kept alive the
provision of the Transition Act enabling the levying of rates until 2011. The Municipality
had acted in terms of that provision, and complied with the procedures laid down in the
Finance Act, in the years after 2005. The farm owners’ complaints that the requirements
of the Rates Act had not been met, and that there were minor flaws in the publication of
rates resolutions and draft budgets, were held by the SCA to be unfounded.
The Municipality had acted under the provisions of the Transition Act, and then later the
Finance Act, in levying rates and had complied with the requirements of the legislation
in the years in issue. The appeal by the farm owners was thus dismissed, but the cross
appeal by the Municipality upheld.
-------------------------- |
3911 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 497/2021
In the matter between:
GOLDEN FRIED CHICKEN (PTY) LTD
APPELLANT
and
DINO VLACHOS
FIRST RESPONDENT
SOUL SOUVLAKI (PTY) LTD
SECOND RESPONDENT
Neutral citation: Golden Fried Chicken (Pty) Ltd v Vlachos and Another
(497/2021) [2022] ZASCA 150 (3 November 2022)
Coram:
PETSE
AP,
MAKGOKA,
GORVEN
AND
MABINDLA-
BOQWANA JJA and BASSON AJA
Heard:
2 September 2022
Delivered: 3 November 2022
Summary: Intellectual Property – Trade Marks Act 194 of 1993 – infringement
proceedings – registered mark – test for deception or confusion under s 34(1)(a) of
Trade Marks Act – sufficient distinction between the marks – deception or confusion
not 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.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Gorven JA (Petse AP, Makgoka and Mabindla-Boqwana JJA and Basson AJA
concurring)
[1] This appeal concerns the alleged infringement of a registered trade mark under
the Trade Marks Act 194 of 1993 (the Act). The parties trade in food services in the
restaurant sector. The appellant, Golden Fried Chicken (Pty) Ltd, trades as ‘Chicken
Licken’ through a number of food outlets. It began trading in 1981. It has registered
the words ‘Soul’ and ‘Soul Food’ under classes 29, 30, 35 and 43 of the Act. They
are used extensively in its branding. It is only the registration in class 43 as a service
trade mark which remains relevant in this appeal.
[2] The first respondent, Mr Dino Vlachos, is the guiding mind behind the second
respondent, Soul Souvlaki (Pty) Ltd, which has traded in Greek food from two
outlets under the name ‘Soul Souvlaki’ since 2012. The second respondent has
applied to register the trademark ‘Soul Souvlaki’ in classes 35 and 43. Although
there was some dispute as to the joinder of the first respondent, the two respondents
made common cause and, for the sake of convenience, I shall refer to them jointly
as the respondents unless it is necessary to distinguish them.
[3] The appellant regards the use by the respondents of ‘Soul Souvlaki’ as
infringing its mark. It accordingly approached the Gauteng Division of the High
Court, Johannesburg (the high court) to interdict the respondents from doing so. This
was met by a counter-application to remove the trade marks of the appellant from
the register in all four classes as being non-distinctive. The high court dismissed both
the application and counter-application with costs and refused the appellant leave to
appeal. The respondents sought leave to cross-appeal. The high court said that the
application for leave to cross-appeal was conditional and held that it was therefore
unnecessary to decide it. This Court granted the appellant leave to appeal against the
dismissal of its application. The respondent did not pursue its application for leave
to cross-appeal. This renders final the judgment on the counter-application.
[4] Paragraph 1 of the Notice of Motion had sought interdicts against the
respondents restraining them from infringing the marks of the appellant in classes
29, 30, 35 and 43 along with the usual ancillary relief. Before us, the appellant
abandoned any relief in all but the registrations in class 43. The registration of the
‘Soul’ mark in the various classes took place in 1994, 1996 and 2001, whereas the
‘Soul Food’ mark was registered in 2001. It should be mentioned that, before us, the
appellant did not develop its argument concerning the ‘Soul Food’ mark. It contented
itself with limiting its submissions to ‘Soul’.
[5] The relief now sought is limited to that under s 34(1)(a) of the Act which
reads:
‘(1) The rights acquired by registration of a trade mark shall be infringed by-
(a) the unauthorised 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.’1
It has been held that in order to succeed in an infringement claim under s 34(1)(a),
the appellant had to establish:
‘(i) its trade mark registrations; (ii) unauthorised use in the course of trade by the respondent of an
identical mark or a mark so nearly resembling its registered trade mark as to be likely to deceive
or cause confusion; and (iii) in relation to the goods in respect of which the mark is registered.’2
The trade mark of the appellant is registered in relation to services which cover:
‘Restaurants, snack bars, cafes, fast food outlets, canteens and roadhouses; services
connected with the sale and distribution of foodstuffs and refreshments; catering.’
The respondents’ mark relates to two food outlets which fall within this class. Their
use takes place in the course of trade and is not authorised by the appellant. It is
therefore the balance of the second of the requirements set out above which had to
be established by the appellant. That is, use of ‘an identical mark or a mark so nearly
resembling its registered trade mark as to be likely to deceive or cause confusion’.
This appeal turns on whether the appellant established this.
1 An alternative claim was framed under s 34(1)(c) of the Act which reads:
‘the unauthorised 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).’
This aspect of the matter was not pressed in the appeal.
2 Lucky Star Ltd v Lucky Brands (Pty) Ltd [2016] ZASCA 77 para 4. This related to goods but the same principles
apply to service marks. See also Commercial Auto Glass (Pty) Ltd v BMW AG [2007] SCA 96; 2007 (6) SA 637 (SCA)
[2007] 4 All SA 1331 (SCA) para 3.
[6] A trade mark serves as a badge of origin of the services offered.3 Persons
seeing the mark can rest assured that the appellant is the source of the services
offered under it. For that reason, a trademark constitutes a monopoly. Due, no doubt,
to a trade mark functioning as a monopoly, it cannot ‘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’.4 The proper approach
to this assessment was set out by this Court:
‘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 the impression of a material link between the
product and the owner of the mark there is infringement; otherwise there is not.’5
[7] If the marks were identical, the use of the impugned mark is taken to deceive
and confuse.6 The appellant submitted that this was the case, seeking support for that
contention in Commercial Auto Glass.7 In that matter the appellant had listed cars
which its windscreens would fit. In doing so, it used the BMW mark without
authorisation. The defence in that matter was not that the marks were not identical
but that the appellant was simply informing customers that those particular
windscreens could be used on those BMW cars. As a result, it said, it was not using
the lettering on its windscreens as trade marks. This Court rejected that contention.
To meet the submission that the marks in the present matter were identical, the
respondents called in aid the matter of Century City Apartments Property Services
CC and Another v Century City Property Owners’ Association (Century City).8 In
3 Verimark (Pty) Ltd v BMW AG; BMW AG v Verimark (Pty) Ltd [2007] ZASCA 53; 2007 (6) SA 263 (SCA) para 5.
4 Ibid para 5.
5 Ibid para 7.
6 Berman Brothers (Pty) Ltd v Sodastream Ltd 1986 (3) SA 209 (A) at 232H-233A.
7 Commercial Auto Glass fn 2.
8 Century City Apartments Property Services CC and Another v Century City Property Owners [2009] ZASCA 157;
2010 (3) SA 1 (SCA); [2010] 2 All SA 409 (SCA).
that matter, this Court referred with approval to the European Court of Justice when
it held that ‘(t)he criterion of the identity of the sign and the trademark must be
interpreted strictly. The very definition of identity implies that the two elements
compared should be the same in all respects’.9
[8] Only one aspect of the two marks is identical; the word ‘Soul’. But even
though this element forms part of the respondent’s mark, the word ‘Souvlaki’ is not
common to them. In Century City, this Court found that the marks ‘Century City’
and ‘Century City Apartments’ were not identical. This applies equally to the
comparison between ‘Soul’ and ‘Soul Souvlaki’. The marks are not identical.
[9] The question, then, is whether the appellant made out a case under the second
aspect. Here the appellant bore the onus of proving the probability of deception or
confusion. As was said by this Court:
‘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.’10
This dictum applies equally to services. It is important to recognise what should be
compared:
‘[In] considering the question of infringement the Court should have regard not only to the
plaintiff's actual use of his registered mark, but also to notional use, that is to all possible fair and
normal applications of the mark within the ambit of the monopoly created by the terms of the
registration’.11
9 Ibid para 12, citing LTJ Diffusion SA v Sadas Vertbaudet SA [2003] ETMR 83 (European Trade Mark Reports) para
50.
10 Verimark fn 3 para 5. Emphasis in the original.
11 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 641G-H, confirming the
acceptance of Botha J in Adidas Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty) Ltd 1976 (1) SA 530
(T) at 535A-D of the approach set out in the matter of Lever Brothers, Port Sunlight, Ltd v. Sunniwite Products Ltd
The actual and notional use of the owner is then compared to the actual use by the
alleged usurper to establish whether or not there has been infringement.
[10] As mentioned, the registration under class 43 relates to services including:
‘Restaurants, snack bars, cafes, fast food outlets, canteens and roadhouses; services
connected with the sale and distribution of foodstuffs and refreshments; catering.’
The appellant is thus entitled to use the mark in any of these undertakings,
irrespective of past and present uses. If it does so, its trade mark affords it protection
against infringement. The only rider is ‘that one has to assume reasonable notional
use by a trademark owner’.12 The appellant thus correctly submitted that in the
comparative exercise between the registered and impugned marks, the services in
respect of which the registered mark were actually used are ‘completely irrelevant’.
[11] Our courts have consistently applied the test set out in Plascon-Evans Paints
Ltd v Van Riebeeck Paints (Pty) Ltd13 for the approach to s 34(1)(a). It is not
necessary to repeat that entire passage since it was summed up in Bata:
‘It suffices to say that not only should the marks be compared side by side but consideration must
be given to whether the average customer in the marketplace would probably be deceived or
confused by their similarity. Corbett JA made it clear that the main or dominant features of the
marks in question as well as the general impression and any striking features were all factors to be
considered in deciding whether there was a likelihood of confusion or deception.’14
When applying the similar test in Adidas to the present matter, the approach is:
(1949) 66 R.P.C. 84. See also Bata Ltd v Face Fashions CC and Another [2000] ZASCA 192; 2001 (1) SA 844 (SCA
para 7; Puma AG Rudolf Dassler Sport v Global Warming (Pty) Ltd [2010] ZASCA 140; 2010 (2) SA 600 (SCA) para
10; Lucky Star Ltd v Lucky Brands (Pty) Ltd [2016] ZASCA 77 para 9.
12 Century City fn 8 para 14.
13 Plascon-Evans at 640G-641D.
14 Bata fn 11 para 9.
‘The onus can be discharged by showing that there is a likelihood that a substantial number of
people who . . . are interested in [restaurants] will be confused as to whether the [respondents’
restaurants] are the [restaurants] of the [appellant], or as to the existence or non-existence of a
material connection between the [respondents’ restaurants] and the [appellant as an operator of
restaurants].’15
[12] No disclaimer was required on registration of ‘Soul’.16 In trade mark law the
effect is that, for purposes of matters such as this, unless or until that mark is
expunged, it must be accepted that ‘Soul’ is inherently distinctive and, in the case of
those registrations after 1994, capable of distinguishing by reason of the prior use
thereof. This is despite the word ‘soul’ being in common, everyday use.
[13] In the present matter, there is no dispute that ‘Soul Souvlaki’ is a trade mark.
Indeed, the respondents sought registration of that mark. In opposing the merits of
the main application, the respondents relied on two bases. They first contended that
the two marks were ‘visually, conceptually and phonetically different’. As a
consequence, they submitted, there was no likelihood of deception or confusion
caused by the use of their mark. Secondly, they claimed that the businesses of the
appellant and the second respondent differed substantially from each other. It is clear
15 Adidas fn 11 at 533C-E.
16 Section 15 of the Act provides:
‘If a trade mark contains matter which is not capable of distinguishing within the meaning of section 9, the registrar
or the court, in deciding whether the trade mark shall be entered in or shall remain on the register, may require, as a
condition of its being entered in or remaining on the register-
(a) that the proprietor shall disclaim any right to the exclusive use of all or any portion of any such matter to the
exclusive use of which the registrar or the court holds him not to be entitled; or
(b) that the proprietor shall make such other disclaimer or memorandum as the registrar or the court may consider
necessary for the purpose of defining his rights under the registration:
Provided that no disclaimer or memorandum on the register shall affect any rights of the proprietor of a trade mark
except such as arise out of the registration of the trade mark in respect of which the disclaimer is made.’
For an illustration of a disclaimer see Cochrane Steel Products (Pty) Ltd v M-Systems Group [2017] ZASCA 189.
from what has been said above about notional use that the second of these is of no
moment.
[14] In Century City, this Court referred to Compass Publishing BV v Compass
Logistics Ltd,17 and explained:
‘The registered mark was the word “Compass” in relation, in simplified terms, to computer and
computer-related services. The defendant traded in the same fields under the name Compass
Logistics. After pointing out that the two marks were not identical in the light of LTJ Diffusion SA
v Sadas Vertbaudet SA the court proceeded to consider whether they were confusingly similar.
Laddie J said this (paras 24 - 25):
“[24] . . . The likelihood of confusion must be appreciated globally, taking account of all relevant
factors. It must be judged through the eyes of the average consumer of the goods or services in
question. That customer is to be taken to be reasonably well informed and reasonably circumspect
and observant, but he may have to rely upon an imperfect picture or recollection of the marks. The
court should factor in the recognition that the average consumer normally perceives a mark as a
whole and does not analyse its various details. 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. Furthermore, if the association between the
marks causes the public to wrongly believe that the respective goods come from the same or
economically linked undertakings, there is a likelihood of confusion.
[25] Applying those considerations to the facts of this case, there can be little doubt that a
likelihood of confusion exists between the Defendant's use of the sign or mark COMPASS
LOGISTICS in relation to its business consultancy services and the notional use of the mark
COMPASS used in relation to business consultancy services, including those in relation to which
the Defendant specialises. The dominant part of the Defendant's mark is the word compass. For
many customers, the word logistics would add little of significance to it. It alludes to the type of
area of consultancy in which the services are carried out.”’18
This Court then applied the notional use test in Century City:
17 Compass Publishing BV v Compass Logistics Ltd [2004] EWHC 520 (Ch) ([2004] RPC 41).
18 Century City fn 8 para 13.
‘This means that one has to assume reasonable notional use by a trademark owner of the name
Century City for purposes of providing services for reserving and maintaining accommodation at
apartments. The appellant's use of Century City Apartments would to my mind have given rise to
the likelihood of confusion.’19
[15] The question before us is whether notional customers would associate
restaurant services called ‘Soul Souvlaki’ with those of the appellant if the latter was
trading in the same market and selling Greek cuisine under the name ‘Soul’. Put
differently, in that scenario, would the use of the mark ‘Soul Souvlaki’ be likely to
lead to deception or confusion in the minds of a substantial number of customers?
This is the crisp issue as I see it.
[16] The appellant set great store by PepsiCo v Atlantic Industries.20 In that matter,
Atlantic had registered the marks ‘Twist’, ‘Lemon Twist’ and ‘Diet Twist’. Pepsico,
which had registered the marks ‘Pepsi’ and ‘Pepsi-Cola’, applied to register the mark
‘Pepsi Twist’ as both a word and a device mark in the same class as those of Atlantic.
Atlantic opposed the registration whereupon Pepsico applied for the expungement
of the marks of Atlantic. The expungement application was refused but the court of
first instance upheld Pepsico’s application to register the mark ‘Pepsi Twist’. The
full court upheld the appeal of Atlantic and set aside the order allowing Pepsico to
register the mark. This Court dismissed the appeal against the order of the full court
on the basis that such registration would be likely to cause confusion among a
substantial number of consumers. It held that this conclusion was strengthened by
the fact that ‘Twist’ is non-descriptive and thus ‘has the same ability as the made-up
word ‘Pepsi’ to be memorable and distinguishing.’21
19 Ibid para 14.
20 PepsiCo v Atlantic Industries [2017] ZASCA 109.
21 Ibid para 26.
[17] The respondents urged us to take into account that there are a number of
pending applications for registration of marks containing ‘Soul’ in combination with
other words. They contended that this would serve to show that confusion is unlikely
to arise with the appellant’s mark. Reliance for this submission was placed on three
matters: Distillers Corporation (SA) Ltd v SA Breweries Ltd and Another; Oude
Meester Groep Bpk and Another v SA Breweries Ltd (Distillers);22 Dinnermates
(Tvl) CC v Piquante Brands International and Another (Dinnermates);23 and Bata.24
[18] In Distillers, evidence that some 50 marks on the register contained the word
‘Master’ or ‘Meester’ as part of the mark was admissible as one of the factors to
determine distinctiveness. And in Dinnermates, this Court held:
‘[T]he respondents are not the only entity using the word PEPPA as its prominent element. There
are other trade marks such as PICKAPEPPA and PEPPAMELT. These trade marks predate the
respondents’ marks. Proprietors or owners of these trade marks have rightly not claimed exclusive
use of the word PEPPA. In my view the use of the word PEPPA by other entities dispels the notion
that the respondents have the exclusivity or monopoly in the prefix PEPPA. I can see no reason
why the respondents’ trade mark cannot coexist with the appellant’s trade mark.’25
Finally, in Bata, evidence was led that there were numerous trade mark registrations
in South Africa in respect of clothing which included the word ‘Power’. In all three
matters, the complaint that the competing mark deceived and confused was rejected.
[19] The comparison drawn by the respondents with those matters does not hold
water. Put simply, in the present matter, the applications for registration of the mark
‘Soul’ are still pending. Unlike in those three matters, there are not a number of
22 Distillers Corporation (SA) Ltd v SA Breweries Ltd and Another; Oude Meester Groep Bpk and Another v SA
Breweries Ltd 1976 (3) SA 514 (A).
23 Dinnermates (Tvl) CC v Piquante Brands International and Another [2018] ZASCA 43.
24 Footnote 11.
25 Ibid para 21.
competing marks using the word ‘Soul’. The respondents pointed to the evidence
that, in addition to the pending applications for registration, some 200 registered
companies contain the word ‘Soul’ in their names. And 300 registered companies
have names beginning with ‘Soul’. The frequency of use in the marketplace might
be relevant on some level. In the view I take of the matter, however, it is not
necessary to decide this point.
[20] I see the present matter as distinguishable from that of Century City. As I have
indicated, this Court there held that, if the respondent trade mark owner used the
name ‘Century City for purposes of providing services for reserving and maintaining
accommodation of apartments . . . (the) appellant’s use of Century City Apartments
would to my mind have given rise to the likelihood of confusion.’ If, in the present
matter, the respondents used the mark ‘Soul Restaurants’ the same reasoning would
undoubtedly apply. That, however, is not the case. The question remains whether it
can be said that, if the appellant used the mark ‘Soul’ in restaurant services providing
Greek cuisine, customers would view the appellant as the source of the services
offered under the trade mark ‘Soul Souvlaki’.
[21] This brings into focus the marks themselves. The appellant submitted that,
since PepsiCo dealt with two non-descriptive marks, ‘Pepsi’ and ‘Twist’, the use of
‘Soul Souvlaki’ by the respondents was even more likely to cause deception or
confusion. This was so, it said, because the word ‘souvlaki’ appears in South African
dictionaries, has a meaning and is therefore descriptive. It is correct that ‘souvlaki’
is defined in the Concise Oxford Dictionary.26 It is defined as ‘a Greek dish of pieces
of meat grilled on a skewer’ and the word is said to originate from modern Greek.
26 Stevenson and Waite (eds) Concise Oxford English Dictionary 12 ed (2011) at 1381.
But this does not necessarily mean that it functions as descriptive without evidence
of widespread knowledge of that word among South African restaurant customers.
It is not used in the mark to describe the services of the respondents since a range of
Greek dishes, and not only souvlaki, is on offer at their outlets. It certainly does not
function as descriptive on the same level as do ‘Lemon’ or ‘Diet’.
[22] A comparison of the marks must be undertaken. In Bata,27 the appellant had
registered a number of trade marks including the word mark ‘Power’ and the
combination of ‘Power’ and a device mark in relation to footwear and articles of
clothing. Those marks likewise are distinctive as having been registered. The first
respondent used the marks ‘Power House’ or ‘Powerhouse’, mostly accompanied by
a distinctive dog device. The appellant sought to restrain them on the basis that their
use infringed three of the appellant’s marks under s 34(1)(a) of the Act. Dealing first
with the word ‘Power’, this Court said:
‘It is an ordinary word in everyday use, as distinct from an invented or made-up word, and it cannot
follow that confusion would probably arise if it is used in combination with another word.’28
And:
‘What has to be considered, therefore, is whether the notional customer of average intelligence,
viewing the marks as a whole or looking at the dominant features of each mark, is likely to be
confused or deceived into believing that clothing bearing the words “Power House” have a
connection in the course of trade with the “Power” trade mark.’29
The conclusion was:
‘It is not possible to ignore the word “House” in the first respondent's mark. I have considerable
difficulty in imagining that the notional purchaser of the first respondent's clothing would focus
27 Bata fn 11.
28 Ibid para 10.
29 Ibid para 11.
attention only on the word “Power”. The word “House” is as significant as the word “Power” and
the two words used together sufficiently distinguish the first respondent's clothing from that of the
appellant.’30
[23] Similar reasoning applied in Lucky Star31 where, having referred to Bata, this
Court said:
‘In my view, the common elements of the appellant’s and the respondents’ marks being the word
“Lucky” is of minor significance when the marks are looked at as a whole. The word “Fish” as
opposed to the word “Star” is distinctive and cannot be ignored. When the marks are compared
side by side, and the main or dominant features of the marks are considered, namely the words
“Star” and “Fish”, there is no likelihood of deception or confusion.’32
[24] As in Bata, the word ‘Soul’ is a common word in everyday use. The appellant
based its choice on specific uses in the wider context, saying:
‘The meaning the SOUL brand communicates to Applicant’s consumers is of African cool, a pride
in an Afrocentric heritage typified by success against adversity, a rising above racial prejudice and
stereotypes where “blackness” is not a shortcoming but a positive advantage.
The sense of self validity was typified in the 1960s in the United States by the civil rights
movement, Martin Luther King, Malcolm X and the great “soul” singing artists such as Percy
Sledge, Isaac Hayes, Barry White, Otis Redding, Whitney Houston, Dusty Springfield and Ertha
Kitt . . . .’
From this it is clear that the appellant chose its mark in a specific social context in
which the word had meaning.
[25] In this matter, the word ‘Souvlaki’ is at least as significant as the word ‘Soul’.
It strikes me, if anything, as the more dominant of the two. It certainly cannot be
30 Ibid para 11.
31 Lucky Star fn 2.
32 Ibid para 10.
ignored. When the marks are compared side by side, the word ‘Souvlaki’ clearly
distinguishes the respondents’ mark from ‘Soul’. In my estimation, the likelihood of
deception or confusion is far more remote than in the case of ‘Pepsi Twist’ as
compared to ‘Lemon Twist’ or ‘Diet Twist’. There, all the marks comprised two
words. All were prefixes. All contained the same number of syllables. Here we have
the single word ‘Soul’. ‘Soul Souvlaki’ is far more likely to operate as did ‘Power
House’ in relation to ‘Power’ and ‘Lucky Fish’ in relation to ‘Lucky Star’. It is
unlikely that the notional restaurant customer would confuse it with a restaurant
called ‘Soul’.
[26] In summary, therefore, the direct comparison between the marks shows no
likelihood of deception or confusion. The fact that ‘Soul’ has social meaning beyond
the distinctive meaning of the appellant’s mark also serves to dilute any likelihood
of confusion between the marks. In the light of all of these considerations, I do not
view the respondents’ mark as so nearly resembling that of the appellant as to be
likely to deceive or confuse. In my view, accordingly, the mark ‘Soul Souvlaki’
sufficiently distinguishes the respondents’ services from those of the appellant in the
context of the restaurant and food sector. That being the case, the appellant failed to
establish infringement under the provisions of s 34(1)(a) of the Act.
[27] It is trite that an appeal lies against the order of a court and not its reasoning.
In the high court, the learned judge unfortunately erred in several respects. She
conflated trade mark and passing off principles. In doing so, she misdirected herself
on the law. In addition, she considered irrelevant issues. Despite this erroneous
approach and reasoning, however, the application was rightly dismissed. As a result,
the appeal must likewise fail. There is no reason why the costs should not follow the
result.
[28] In the result, the appeal is dismissed with costs.
____________________
T R GORVEN
JUDGE OF APPEAL
Appearances
For appellant:
R Michau SC
Instructed by:
Ron Wheeldon Attorneys, Johannesburg
Webbers Attorneys, Bloemfontein
For respondents:
P Cirone
Instructed by:
Christodoulou & Mavrikis Incorporated, Johannesburg
Symington & De Kok, 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:
3 November 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.
Golden Fried Chicken (Pty) Ltd
v
Vlachos and Another
Today the Supreme Court of Appeal dismissed an appeal from the Gauteng Division
of the High Court, Johannesburg (per Yacoob J). This appeal concerned the alleged
infringement of a registered trade mark under the Trade Marks Act 194 of 1993 (the
Act). Both parties trade in food services in the restaurant sector. The appellant trades
as ‘Chicken Licken’ through a number of food outlets and has registered the word
‘Soul’ under class 43 of the Act as a service trade mark. The respondents have
operated two Greek food outlets under the name ‘Soul Souvlaki’ since 2012. The
appellant brought infringement proceedings under s 34(1)(a) of the Act asserting that
‘Soul Souvlaki’ infringed its mark ‘Soul’ as being ‘a mark so nearly resembling it as
to be likely to deceive or cause confusion.’
With reference to the principles applicable to trade mark law, it was necessary to
determine this question on the basis that the appellant notionally used the mark to
trade in Greek food under the name ‘Soul’ and not only its present basis. The
question was whether members of the restaurant going public would be likely to
believe that the service offered by the respondents emanated from the appellant.
The Supreme Court of Appeal considered previous matters and conducted an
analysis of this question but concluded that the appellant had not proved that the
use of ‘Soul Souvlaki’ would be likely to so deceive or confuse.
Despite the high court having erred in conflating principles of passing off with trade
mark infringements and considering a number of irrelevant factors, it had correctly
dismissed the application. For this reason the Supreme Court of Appeal dismissed
the appeal with costs. |
2806 | non-electoral | 2012 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 775/11
Not reportable
In the matter between:
CITY OF JOHANNESBURG Appellant
and
CANTINA TEQUILA First Respondent
BOWLWEB INVESTMENTS CC Second Respondent
Neutral citation: City of Johannesburg v Cantina Tequila (775/2011) [2012]
ZASCA 121 (20 September 2012).
Coram:
Brand, Lewis, Cachalia, Bosielo and Theron JJA
Heard:
6 September 2012
Delivered:
20 September 2012
Summary: Where a Town Planning Scheme includes among its primary
rights the conduct of a hotel business, the scheme cannot be interpreted to
permit a stand alone restaurant and bar.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Kolbe AJ sitting as
court of first instance):
The appeal succeeds with costs including the costs of two counsel. The
order of the high court is set aside and the following order is substituted in its
place:
‘(a)
The first and second respondents are interdicted and restrained from
using or causing or permitting the use of Erf 1918 Witkoppen Extension 85
Township, Registration Division IQ, Gauteng and situate at Unit 13 Valley View
Centre, Campbell Road, Fourways (the property), for the purpose of a restaurant
or bar.
(b)
The first and second respondents are ordered to forthwith cause the
demolition of the corrugated iron structure erected at the entrance to and
enclosing the outside patio of the property.
(c)
Failing compliance in full by the respondents with the terms and provisions
of the order in para (b) above within one week from date hereof, the sheriff of the
court is authorised and directed to attend to the necessary demolition and the
removal of the rubble arising from the demolition.
(d)
The first and second respondents are ordered to pay the costs of and in
connection with the necessary demolition and removal of the rubble, jointly and
severally.
(e)
The first and second respondents are ordered to pay the costs of this
application, jointly and severally.’
The date contemplated in (c) above is the date of this court’s order.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Brand, Lewis, Bosielo and Theron concurring):
[1] This is an appeal against a decision of the South Gauteng High Court
(Kolbe AJ) dismissing an application by the appellant, a metropolitan
municipality, to interdict the respondents from conducting a restaurant and bar
business on a property in Sandton allegedly in contravention of the Sandton
Town Planning Scheme (the scheme). The high court upheld the respondents’
assertion that the business did not contravene the scheme. The appellant seeks
to reverse this finding and comes before this court with leave of the high court.
The essential dispute between the parties is whether the scheme, properly
interpreted, permits the operation of a restaurant and bar business on the
property.
[2] The municipality’s authority to regulate land use within the Sandton area
comes from the Town-Planning and Townships Ordinance 15 of 1986. The
principal instrument for carrying out this function is a town-planning scheme.1 The
general purpose of a town-planning scheme – sometimes referred to as a ‘zoning
scheme’ – must be directed towards:
‘the co-ordinated and harmonious development of the area to which it relates in such a
way as will most effectively tend to promote the health, safety, good order, amenity,
convenience and general welfare of such area as well as efficiency and economy in the
process of such development.’2
1 Provided for in Chapter II.
2 Section 19.
[3] Clause 12 of the scheme is relevant to this appeal. Appendix III to this
clause indicates the purposes for which land may be used or on which buildings
may be erected and used. The property that is the subject of this dispute is
zoned ‘Special’ in terms of the scheme. This means that the property may be
used only for the special purposes identified in the scheme. These special
purposes are referred to as ‘primary rights’ or more appropriately as ‘primary use
rights’ – as the municipality refers to it – and may be exercised without the
consent or permission of the municipality. Certain other rights referred to as
consent rights may be exercised with the consent of the municipality – an issue
that is relevant to the respondents’ alternative contention discussed below at
paras 10-12.
[4] The annexure to the scheme, referred to in the papers as the amendment
scheme 02-1649 (the amendment scheme), identifies the following primary use
rights and consent rights that are applicable to this property.
‘Offices, showrooms, including motor showrooms, public garages and motor cities,
hotels, specialised extensive retail facilities including factory shops, value centres, flea
markets, home and garden improvement centres and DIY centres, and with the consent
of the local authority, light industrial/commercial purposes, places of amusement, places
of instruction, recreational purposes as may be permitted with the written approval of the
Council and which do not create any nuisance, noise, dust, smoke or smells.’ (Emphasis
added.)
[5] It is apparent from a plain reading of the amendment scheme that the
primary land use rights identified do not include a restaurant or bar. However,
one of the rights identified is that of a hotel. The high court upheld the
respondents’ contention that because hotels usually also have restaurants and
bars it follows that the amendment scheme also permits stand alone restaurants
and bars. The learned judge reasoned that it would lead to absurdity and
anomaly to interpret the primary use rights to exclude a restaurant or bar
because this would mean that a hotel would not be able to have, as an ancillary
use, a restaurant or bar.
[6] I disagree with this approach. The language of the clause is plain and
unambiguous. It permits only identified primary use rights, not any other uses.
Significantly, excluded from the identified uses is any reference to a ‘place of
refreshment’, which the scheme defines as including a restaurant, but not a bar.3
This must mean that drafters of the amendment scheme probably consciously
excluded any ‘place of refreshment’ – including a restaurant – from the clause.
[7] Had the restaurant and bar business been part of a hotel, there would
have been merit in the submission that the business is ancillary to the hotel, and
does not detract from the primary right of a hotel. But it does not follow that
because a restaurant and bar may be part of the ancillary uses of a hotel, they
may also be read into the list of primary rights, as the high court found.
[8] A court is entitled to find that an interpretation is absurd if an omission is
so glaring or out of kilter with the overall purpose of the scheme that the result
could simply not have been contemplated. But a court may not, under the guise
of a concern to avoid absurdity, ignore the clear language of a provision simply
because of any perceived harshness or lack of wisdom.4 Nor may it construe the
provision in a manner that the language does not permit, for in so doing it is
improperly substituting its will for that of the lawmaker.
3 ‘Place of refreshment’ includes a restaurant, tea room and coffee house, the retail sale of meals
and refreshments, fresh produce, cold drinks, foodstuffs and reading matter, but excludes a hotel,
residential club, drive-in restaurant and boarding house, and also excludes the sale or supply of
liquor other than at tables at which an ordinary meal (as defined in the Liquor Act No 87 of 1977)
is being actually supplied to customers.’
4 Geue & another v Van der Lith & another 2004 (3) SA 333 (SCA) para 15.
[9] By concluding that a restaurant and bar should be added to the
lawmaker’s list of permissible uses so as to avoid absurdity and anomaly, the
learned judge improperly substituted her will for that of the lawmaker. Although it
may appear odd that the primary rights include hotels but not restaurants and
bars, I do not think that this omission is so glaring or out of kilter with the purpose
of the scheme that it can be said that such a result could never have been
contemplated. On the contrary there may be sound policy reasons why the
lawmaker would permit hotels but not bars and ‘places of refreshment’ such as
restaurants. It follows that the high court erred in its conclusion that the primary
use rights in the scheme permitted the conduct of the business of a restaurant
and a bar.
[10] The respondents contend in the alternative that even if the scheme did not
permit these uses, the municipality consented to the first respondent conducting
a restaurant business on the property. There is no factual basis for the
contention.
[11] These are the facts: On 30 March 2006 Mr H P Roos, a town planner,
wrote to the municipality on behalf of the respondents to enquire whether a bottle
store, butcher or restaurant is included in the list of permissible uses or whether a
rezoning or consent use application would be required for these uses. The
municipality responded to the ‘query’ in the following terms:
‘Your query dated 30 March 2006 regarding the inclusion of bottlestore, butcher and
restaurant in the current zoning, was discussed [at] a Planning Permission Meeting
(PPM) held on the 11 May 2006.
Based on the information provided, the above uses are included in terms of the
approved rights.
The applicant’s attention is drawn to the following:
This information does not bind the Municipality in anyway whatsoever to approve any
application on the subject property.
The information in the above regard should not be seen or interpreted as approval in
principal of any application that may follow suit on the subject property.’
[12] Relying on this exchange of correspondence, the respondents contend
that the municipality’s response amounted to a formal approval or consent for a
restaurant on the property. The contention is utterly without any merit: first, the
letter from the town planner was not an application for the approval of a
restaurant business, but merely a ‘query’ as to permissible uses under the
scheme; second, the municipality conveyed the information to the respondents
specifically on the basis that it was not bound to approve any future application
based on this information. At best for the respondents the municipality gave them
a non-binding opinion on their prospects for approval of a restaurant – nothing
more.
[13] What remains is a dispute over whether the respondents must demolish a
structure clad with corrugated iron, which they erected at the entrance to and
enclosing the patio of the restaurant, without the municipality’s permission.
[14] In terms of s 4 of the National Building Regulations and Building
Standards Act 103 of 1977, no structure that falls within the ambit of the definition
of a building may be erected without the written approval of the local authority.
No approval was obtained for the erection of the structure. The Act defines a
building as including:
‘(a) any other structure, whether of a temporary or permanent nature and irrespective of
the materials used in the erection thereof, erected or used for or in connection with –
(i) the accommodation or convenience of human beings or animals;
. . .’
[15] The structure obviously falls within the definition of a ‘building’. However,
the high court refused to order the demolition of the structure after it found that
there was a dispute of fact on the papers as to whether the structure was a
building or merely a pergola, for which permission was not required, as the
respondents contended. Counsel for the respondents wisely did not press this
contention before us as it too is devoid of any merit.
[16] In the result the following order is made:
The appeal succeeds with costs including the costs of two counsel. The
order of the high court is set aside and the following order is substituted in its
place:
‘(a)
The first and second respondents are interdicted and restrained from
using or causing or permitting the use of Erf 1918 Witkoppen Extension 85
Township, Registration Division IQ, Gauteng and situate at Unit 13 Valley View
Centre, Campbell Road, Fourways (the property), for the purpose of a restaurant
or bar.
(b)
The first and second respondents are ordered to forthwith cause the
demolition of the corrugated iron structure erected at the entrance to and
enclosing the outside patio of the property.
(c)
Failing compliance in full by the respondents with the terms and provisions
of the order in para (b) above within one week from date hereof, the sheriff of the
court is authorised and directed to attend to the necessary demolition and the
removal of the rubble arising from the demolition.
(d)
The first and second respondents are ordered to pay the costs of and in
connection with the necessary demolition and removal of the rubble, jointly and
severally.
(e)
The first and second respondents are ordered to pay the costs of this
application, jointly and severally.’
The date contemplated in (c) above is the date of this court’s order.
________________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
For Appellant:
J Both SC (with him A W Pullinger)
Instructed by:
Moodie & Robertson, Johannesburg
Claude Reid Inc, Bloemfontein
For Respondent:
L G F Putter
Instructed by:
Kuilman Mundell & Arlow, Johannesburg
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:
20 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.
CITY OF JOHANNESBURG v CANTINA TEQUILA
The Supreme Court of Appeal (SCA) today held that the primary use rights in the Sandton
Town Planning Scheme do not permit Cantina Tequila and Bowlweb Investments cc (the
respondents) to conduct the business of a restaurant and a bar on their hotel property in
Sandton. The SCA upheld an appeal by the City of Johannesburg against an order of the
South Gauteng High Court, Johannesburg, dismissing its application to interdict the
respondents from conducting the business.
The property was zoned ‘Special’ in terms of the scheme, which meant that it may be used
only for the special purposes identified in the scheme. These were referred to as ‘primary
rights’ or more appropriately as ‘primary use rights’. Certain other rights, which may be
exercised with the consent of the municipality, were referred to as consent rights. The
annexure to the scheme identified the primary use rights and consent rights that were
applicable to the property. These included, amongst other things, hotels but excluded a
restaurant or a bar. In dismissing the application the high court reasoned that it would lead
to absurdity and anomaly to interpret the primary use rights to exclude a restaurant or bar
because this would mean that a hotel would not be able to have, as an ancillary use, a
restaurant or a bar.
The SCA held that the language of the clause containing the primary use rights was plain
and unambiguous. It permitted only identified primary use rights, not any other uses. The
SCA stated that by concluding that a restaurant and a bar should be added to the
lawmaker’s list of permissible uses so as to avoid absurdity and anomaly, the high court
had improperly substituted its will for that of the lawmaker. It then made the finding
referred to above. The SCA also dismissed the respondents’ alternative argument that the
municipality had consented to Cantina Tequila conducting a restaurant business on the
property as having no factual basis. It further ordered the respondents to demolish the
corrugated iron structure which they had erected at the entrance to and enclosing the patio
of the restaurant without the municipality’s consent. |
1899 | non-electoral | 2011 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 650/2010
In the matter between:
HUGO WIEHAHN LOUW N.O.
First Appellant
CORNELIA JOHANNA ELIZABETH LOUW N.O.
Second Appellant
IGNATIUS VILJOEN N.O.
Third Appellant
IZAK BARTHOLOMEAS VAN DER VYFER N.O.
Fourth Appellant
ELSANA QUARRY (PTY) LIMITED
Fifth Appellant
MINISTER OF MINERAL RESOURCES
Sixth Appellant
and
SWARTLAND MUNICIPALITY
Respondent
Neutral citation: Louw NO v Swartland Municipality (650/10) [2011] ZASCA 142
(23 September 2011)
Coram:
HARMS AP, CLOETE, SHONGWE and WALLIS JJA and
PLASKET AJA
Heard:
16 August 2011
Delivered:
23 September 2011
Summary:
Mining and municipal planning – whether holder of mining right
in terms of Minerals and Petroleum Resources Development Act
28 of 2002 also requires land use planning authorisation in
terms of Land Use Planning Ordinance 15 of 1985 (C)
ORDER
On appeal from: Western Cape High Court, Cape Town (Le Grange J sitting as
court of first instance):
(a) The appeal is dismissed.
(b) The sixth appellant is ordered to pay the respondent’s costs, including the costs
of two counsel, and in regard to the costs incurred on or before 21 July 2011,
jointly and severally with the first to fourth appellants and the fifth appellant.
JUDGMENT
PLASKET AJA (HARMS AP, CLOETE, SHONGWE and WALLIS JJA concurring)
[1] This appeal from the Western Cape High Court, Cape Town concerns a
single issue. It is whether the grant of a mining right issued by the Minister of
Mineral Resources in terms of s 23 of the Minerals and Petroleum Resources
Development Act 28 of 2002 (the MPRDA) entitles the holder of that right to
undertake mining operations without obtaining authorisation in terms of the Land
Use Planning Ordinance 15 of 1985 (C) (LUPO). This ordinance, operative in the
provinces that formerly comprised the province of the Cape of Good Hope,
empowers municipalities to determine and enforce the use to which land in their
areas of jurisdiction may be put. Le Grange J found that LUPO applied in these
circumstances.1 The appeal against that decision is with his leave.
[2] The material facts are not in dispute. The first to fourth appellants are the
trustees of the Hugo Louw Trust which owns the farm Lange Kloof near
Malmesbury within the area of jurisdiction of the respondent, the Swartland
Municipality. The fifth appellant (Elsana) is the holder of a mining right issued in
terms of s 23(1) of the MPRDA by the sixth respondent, the Minister of Mineral
Resources, authorising it to mine granite on Lange Kloof.
1 Swartland Municipality v Louw NO & others 2010 (5) SA 314 (WCC).
[3] In terms of LUPO, Lange Kloof was and is zoned ‘agricultural 1’ which
means that the land may be used for the cultivation of crops or plants, the breeding
of animals or be left as natural veld.2
[4] On 30 May 2008, the Hugo Louw Trust gave its consent to Elsana to mine
granite on Lange Kloof. On 3 June 2008 an application was made to the Swartland
Municipality for the rezoning of the land from ‘agricultural I’ to ‘industrial III’ (which
includes mining as a use)3 for the purpose of establishing a ‘granite quarry subject
to the issuing of a mining right’ in terms of the MPRDA.
[5] The rezoning application was made on the assumption that a rezoning in
terms of LUPO was necessary before mining operations could commence. Having
been advised later by the Department of Mineral Resources that ‘the granting of
mining rights and the control over mining activities was the exclusive preserve of
national government’ as represented by the Department, Elsana withdrew the
rezoning application before it was considered by the Swartland Municipality.
[6] On 17 February 2009 the Minister granted Elsana a mining right, authorising
it to mine granite for 30 years on Lange Kloof. It commenced its preparations for its
mining operations. In June 2009 the Municipal Manager of the Swartland
Municipality wrote to the Hugo Louw Trust to say that it had come to the attention
of the municipality that Lange Kloof was being prepared for mining. He said that
this was not authorised as the land was zoned for agricultural use. The trust was
requested to cease its unlawful activities and, instead, to apply to the municipality
for a rezoning that would allow for the mining operations to proceed.
[7] The trust’s attorneys wrote to the municipality to inform it that Elsana had
been granted a mining right in terms of s 23(1) of the MPRDA, that its mining
operations were being conducted on the strength of this mining right and that the
demand that mining operations should cease had ‘no basis in law’. On 9 July 2009,
the municipality launched an urgent application against the trustees of the trust,
Elsana and the Minister to interdict mining operations on Lange Kloof until it had
been rezoned in terms of LUPO to permit mining.
2 See Scheme Regulations made in terms of s 8 of LUPO s 1.0 (definition of ‘agriculture’).
3 See Table B of the Scheme Regulations made in terms of s 8 of LUPO.
[8] On 21 December 2009, Le Grange J made an order in the following terms:
‘(a) The first to fourth respondents, in their capacity as trustees of the Hugo Louw Familie
Trust, and fifth respondent, are interdicted and restrained from conducting mining activities
and/or permitting others to conduct mining activities on the immovable property described
as the remainder of the Lange Kloof farm, No 701, Malmesbury Division, Western Cape
Province, unless and until the said immovable property is rezoned from Agricultural I to
Industrial III, or any such other rezoning which permits mining activities.
(b) The first to sixth respondents to pay the costs of this application, jointly and severally,
including the costs occasioned by the employment of two counsel.’
[9] Le Grange J found that the MPRDA and LUPO regulated different
undertakings – mining, on the one hand, and land use planning, on the other – and
that there was no conflict between the two that required resolution: once a person
has been granted a mining right, he or she can only begin mining operations if
mining is permitted as a land use in terms of LUPO.
[10] Shortly before this appeal was to be heard, the trustees of the trust and
Elsana withdrew their appeal and tendered the costs of the Swartland Municipality.
The Minister persisted with the appeal.
[11] This appeal was argued together with a similar matter, Maccsand v City of
Cape Town.4 As that judgment determines the outcome of this appeal, I do not
intend to set out the reasoning in any detail. Suffice it to say that for the reasons
set out from paragraphs [10] to [35] of the Maccsand judgment this court
concluded that the MPRDA does not concern itself with land use planning and the
Minister, when she considers the grant of a mining permit, does not, and probably
may not, take into account such matters as a municipality’s integrated
development plan or its scheme regulations. As a result, the MPRDA does not
provide a surrogate municipal planning function in place of LUPO and does not
purport to do so. Its concern is mining, not municipal planning.
[12] LUPO thus operates alongside the MPRDA with the result that once a
person has been granted a mining right in terms of s 23 of the MPRDA he or she
will not be able to commence mining operations in terms of that right unless LUPO
allows for that use of the land in question.
4 Maccsand v City of Cape Town (709/2010; 746/2010) [2011] ZASCA 141 (23 September 2011).
[13] The appeal in this matter must accordingly fail. As stated above, the first to
fifth respondents withdrew their appeal and tendered costs. The Minister persisted
with the appeal. There is no reason why costs should not follow the result.
[14] The following order is made:
(a) The appeal is dismissed.
(b) The sixth appellant is ordered to pay the respondent’s costs, including the costs
of two counsel, and in regard to the costs incurred on or before 21 July 2011,
jointly and severally with the first to fourth appellants and the fifth appellant.
_____________________
C. Plasket
Acting Judge of Appeal
APPEARANCES
Sixth appellant: MM Oosthuizen SC (with him K Warner)
Instructed by:
State Attorney, Cape Town
State Attorney, Bloemfontein
Respondent: J Newdigate SC (with him P Vivier)
Instructed by:
Terblanche Slabber Pieters, Cape Town
Hill, McHardy and Herbst, 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
23 September 2011
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Louw NO v Swartland Municipality
(650/10) [2011] ZASCA 142 (23 September 2011)
Media Statement
Today the Supreme Court of Appeal (SCA) delivered judgment dismissing the appeal by the
appellants against the finding of the Western Cape High Court, Cape Town that the grant of a
mining right issued by the Minister of Mineral Resources in terms of s 23 of the Minerals and
Petroleum Resources Development Act 28 of 2002 (the MPRDA) does not entitle the holder
of that right to undertake mining operations without obtaining authorisation in terms of the
Land Use Planning Ordinance 15 of 1985 (LUPO). This ordinance, operative in the provinces
that formerly comprised the province of the Cape of Good Hope, empowers municipalities to
determine and enforce the use to which land in their areas of jurisdiction may be put.
The facts and history of this matter can be summarised as follows:
In terms of LUPO, Lange Kloof was and is zoned ‘agricultural 1’ which means that the land
may be used for the cultivation of crops or plants, the breeding of animals or be left as natural
veld. Hugo Louw Trust, owners of the farm Lange Kloof, gave consent to Elsana Quarry (Pty)
Ltd to mine granite on the farm. An application for rezoning of the property from 'agricultural I'
to 'industrial III" was made to the Swartland Municipality but was withdrawn after the
Department of Mineral Resources advised the parties that the granting of mining rights was
the exclusive preserve of the national government and authorisation under LUPO was not
required.
Elsana commenced preparations to mine granite on Lange Kloof. The Municipal Manager of
the Swartland Municipality informed the Hugo Louw Trust that the land was not zoned for
mining, that the mining activities had to cease and that they had to apply for rezoning of the
land. The trust's attorneys wrote to the municipality to inform it that Elsana had been granted
a mining right and that as a result the demand that mining operations should cease had no
basis in law. An urgent application was launched by the Minister against the trustess of the
trust, Elsana and the Minister seeking to interdict mining operations until the property had
been rezoned in terms of LUPO. The interdict was granted by the court below.
The SCA held that MPRDA does not concern itself with land use planning and the Minister,
when she considers the grant of a mining permit, does not, and probably may not, take into
account such matters as a municipality’s integrated development plan or its scheme
regulations. As a result, the MPRDA does not provide a surrogate municipal planning function
in place of LUPO and does not purport to do so. Its concern is mining, not municipal planning.
LUPO thus operates alongside the MPRDA with the result that once a person has been
granted a mining right in terms of s 23 of the MPRDA he or she will not be able to commence
mining operations in terms of that right unless LUPO allows for that use of the land in
question.
The appeal was as a result dismissed with costs.
--- ends --- |
3864 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 557/2021
In the matter between:
EARL RENSBURG
APPELLANT
and
THE MINISTER OF POLICE
FIRST RESPONDENT
THE NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS
SECOND RESPONDENT
Neutral citation:
Earl Rensburg v Minister of Police and Another (557/2021) [2022]
ZASCA 105 (29 June 2022)
Coram:
MOLEMELA, CARELSE and MOTHLE JJA and TSOKA and
PHATSHOANE AJJA
Heard:
6 May 2022
Delivered:
29 June 2022
Summary:
Criminal law and procedure – section 40(1)(b) of the Criminal
Procedure Act 51 of 1977 – arrest without a warrant – whether respondents’ conduct in
arresting and detaining the appellant was wrongful, unlawful and unjustified.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Eastern Cape Division of the High Court, Grahamstown (Revelas J and
Notyesi AJ, sitting as a court of appeal):
The appeal is dismissed with costs.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Tsoka AJA (Molemela, Carelse and Mothle JJA and Phatshoane AJA concurring):
[1] At issue in this appeal is whether the arrest of the appellant, Mr Earl Rensburg
(Mr Rensburg), without a warrant on 15 September 2016 by members of the South
African Police Service (the police) and his detention until his first court appearance on
19 September 2016 was wrongful, unlawful and unjustified. Linked to this issue is whether
his subsequent detention after his first court appearance until his release from detention
on warning on 23 September 2016 was also wrongful, unlawful and unjustified.
[2] Mr Rensburg, as the plaintiff, instituted a delictual claim for damages for his alleged
unlawful arrest and detention in the Eastern Cape Regional Court, Port Elizabeth (the
regional court), against the first respondent, the Minister of Police (the Minister), as the
first defendant, and the second respondent, the National Director of Public Prosecutions
(the NDPP), as the second defendant.
[3] At the conclusion of the trial in the regional court, the magistrate found in favour of
Mr Rensburg, as she concluded that Mr Rensburg’s arrest and detention from
15 September 2016 until his first court appearance on 19 September 2016 was wrongful,
unlawful and unjustified. The magistrate, however, found that Mr Rensburg’s subsequent
detention from 19 September 2016 until his release on warning on 23 September 2016
was not wrongful and unlawful, and thus absolved the NDPP.
[4] In respect of the unlawful arrest and detention, Mr Rensburg was awarded the
amount of R300 000 as damages. Despite the fact that the NDPP was successful in
defending the action against it, the magistrate did not make an order of costs in its favour.
[5] Aggrieved by the judgment and order of the regional court, the Minister and the
NDPP appealed to the Eastern Cape Division of the High Court, Grahamstown (the high
court). The NDPP’s appeal was only directed at being denied an order of costs despite
being a successful party. The high court upheld the appeal with costs.
[6] Dissatisfied with the outcome of the order of the high court, Mr Rensburg brought
an application for leave to appeal, which application was unsuccessful. He then petitioned
this Court for special leave to appeal order of the high court, which petition for leave to
appeal was granted by this Court on 5 May 2021.
[7] The facts underpinning the appeal are, in the main, common cause. They are as
follows. On Thursday, 15 September 2016, Mr Rensburg was brought to Humewood
Police Station by three male persons, Mr Kirsten Ingram, Mr Renaldo Jaftha and
Mr Christeden Williams, who alleged that he had stolen a laptop. The trio were referred
to Humewood Police Station by another police station (Mount Road Police Station).
[8] At Humewood Police Station, the trio spoke to Sergeant Nomakosazana Cimani
(Sgt Cimani). Mr Ingram explained to Sgt Cimani that they brought Mr Rensburg to her
for the theft of the laptop. However, Sgt Cimani, dissatisfied that the owner of the laptop
was not among the three male persons, refused to arrest Mr Rensburg. She demanded
that the owner of the laptop be brought to her to be interviewed and for confirmation that
her laptop was stolen. Mr Ingram fetched the complainant, Ms Gwendoline Camelia
Mohamed (Ms Mohamed), who confirmed to Sgt Cimani that Mr Rensburg admitted to
her that he stole her laptop and that he apologised to her for stealing the laptop.
Mr Ingram, Mr Jaftha and Mr Williams informed Sgt Cimani that, in the motor vehicle,
while driving to the police station, Mr Rensburg also admitted to them that he stole
Ms Mohamed’s laptop. As she reasonably suspected that Mr Rensburg had committed
an offence, she arrested and detained him. She further testified that, as theft is a schedule
1 offence in terms of the Criminal Procedure Act 51 of 1977 (the CPA), she, without a
warrant, arrested and detained Mr Rensburg in terms of the provisions of s 40(1)(b) of the
CPA. She opened a docket, which docket contained the statements of Mr Ingram and
Ms Mohamed.
[9] The following day, 16 September 2016, the docket was handed over to Lieutenant
Colonel Marlene Lynette Burger (Lt Col Burger). Lt Col Burger testified that, upon
perusing the docket, she realised that there was still outstanding investigations that
needed to be finalised. The further investigations included witnesses’ statements and the
warning statement of Mr Rensburg. She also needed to take Mr Rensburg’s fingerprints,
verify his profile and establish whether he had previous convictions or other pending
cases. She had to also verify Mr Rensburg’s residential address that he had furnished to
the police.
[10] She stated further that, once the outstanding information was obtained, with the
exception of the verification of Mr Rensburg’s residential address, she was satisfied that
the matter was ready to serve before court on 19 September 2016. Although the address
furnished to the police by Mr Rensburg, which was contained in the bail information form,
was confirmed, it had not yet been verified. According to Lt Col Burger, the verification of
an address entails visiting the address in order to verify that the address furnished to the
police was indeed correct and that Mr Rensburg lived thereat. He pertinently stated that
a telephonic confirmation of an address is not the same as a verification of an address.
That is the reason why Warrant Officer Arthur Smouse (W/O Smouse) visited
Mr Rensburg’s address on 21 September 2016 in order to verify same. On that day,
W/O Smouse found no one at home, with the result that the address could not be verified.
[11] On 19 September 2016, Mr Rensburg appeared in court for the first time. The court
explained to him that, since his address had not yet been verified, he could not be
considered for bail. On 21 September 2016, W/O Smouse visited number 3 Serona
Street, Gelvandale, Port Elizabeth, where he found the owner of the premises, who
confirmed that Mr Rensburg is her grandson, but that he did not live with her.
Mr Rensburg’s grandmother informed W/O Smouse that Mr Rensburg resided with his
girlfriend at an address unknown to her.
[12] It is not disputed that on 19 September 2016, when Mr Rensburg appeared in court
for the first time his legal rights were explained to him and he elected to engage the
services of a Legal Aid attorney to conduct his defence. According to the public
prosecutor, on perusing the docket, she was satisfied that the charge against
Mr Rensburg was a schedule 1 offence in terms of the CPA, and that the State had a
prima facie case against him. The public prosecutor stated that the presiding magistrate
had, in terms of s 60(11)B of the CPA, enquired from Mr Rensburg whether he had
previous convictions or other pending cases. His attorney informed the magistrate that
his client had neither previous convictions, nor pending cases. However, the public
prosecutor testified that, on perusing the docket, she discovered that Mr Rensburg has
previous convictions for possession of dagga. According to her, this information still had
to be verified before Mr Rensburg could be considered for bail. It was on this basis that
she applied to court for the matter to be postponed to 28 September 2016, to verify the
information in her possession. As a result, neither Mr Rensburg’s attorney, nor the public
prosecutor considered the issue of bail. The magistrate, in exercising her judicial
discretion, refused to postpone the matter to 28 September 2016, but stood the matter
down until 20 September 2016 instead.
[13] On 20 September 2016, Mr Rensburg was still represented by an attorney from
Legal Aid, and the State represented by Ms Melanie Hammet (Ms Hammet). Ms Hammet
testified that on perusing the docket, she also concluded that there was a prima facie
case against Mr Rensburg. And, as Mr Rensburg’s address had still not yet been verified,
the matter stood down to the following day for the purposes of bail application. Given that
the address had still not been verified by 21 September 2016, the matter was postponed
to 23 September 2016, on which date Mr Rensburg’s cousin, Ms Maurisha Alexander,
gave an undertaking to the court that Mr Rensburg could be released into her custody.
The undertaking was accepted by the court. Mr Rensburg was released on warning on
the same date. The matter was then postponed to 12 October 2016, ostensibly, for the
purposes of trial.
[14] On 12 October 2016, the charges against Mr Rensburg were withdrawn. He
subsequently instituted a damages claim against the Minister and the NDPP for unlawful
arrest and detention from 15 September 2016 until his first court appearance on
19 September 2016, and for his further unlawful arrest and detention from
19 September 2016 until his release on warning on 23 September 2016. As already
mentioned, these claims were partially successful. Consequently, the Minister and the
NDPP appealed the regional court’s order to the high court. The matter served before
Notyesi AJ and Revelas J. The high court upheld the appeal and set aside the regional
court’s order by replacing it with an order dismissing Mr Rensburg’s claims with costs.
The high court further made an order disentitling the Minister and the NDPP to recover
more than 25% of counsel’s fees in respect of preparation of their heads of argument.
This was on the basis that such heads of argument, though helpful, were prolix. The
Minister and the NDPP, however, did not seek leave to cross-appeal the order depriving
them of 75% of their legal fees in respect of the drawing of the heads of argument.
Accordingly, this aspect should not detain this Court any further. The only issue for
determination is whether Mr Rensburg’s arrest and detention was unlawful.
[15] The Minister’s defence, as set out in his plea, was that the arrest was lawful, as it
was carried out within the contemplation of s 40(1)(b) of the CPA, which 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.’
[16] In Minister of Safety and Security v Sekhoto and Another,1 the court reasoned thus:
‘As was held in Duncan v Minister of Law and Order, the jurisdictional facts for a section 40(1)(b)
defence are that (i) the arrestor must be a peace officer; (ii) the arrestor must entertain a suspicion;
(iii) the suspicion must be that the suspect (the arrestee) committed an offence referred to in
Schedule 1; and (iv) the suspicion must rest on reasonable grounds.’
[17] It is now convenient to assess whether the arrest effected by the arresting officer,
namely Sgt Cimani, passes muster. It is undisputed that Sgt Cimani is a peace officer
who, after interviewing Mr Ingram and his friends, including Ms Mohamed, entertained a
reasonable suspicion that Mr Rensburg committed theft of Ms Mohamed’s laptop, which
offence, in terms of the CPA, is a schedule 1 offence. That, having regard to the
statements obtained from Mr Ingram and Ms Mohamed, the suspicion of Sgt Cimani was
rested on reasonable grounds, is beyond any doubt. It must be borne in mind that, at the
beginning, when the report was made to her by Mr Ingram that Mr Rensburg stole
Ms Mohamed’s laptop, Sgt Cimani was not keen to effect the arrest until the owner of the
laptop had been interviewed and a statement obtained from her confirming that her laptop
was indeed stolen by Mr Rensburg. In addition, Mr Ingram and his friends told Sgt Cimani
that, while travelling to the police station with Mr Rensburg, in the motor vehicle, he
admitted that he in fact stole the laptop, which information corroborated Ms Mohamed’s
allegations against him. When Mr Rensburg was confronted with these serious
allegations, implicating him in the theft of the laptop, instead of him refuting them, as one
would have expected, he elected to remain silent. In these circumstances, it cannot
therefore be contended that Sgt Cimani’s suspicion was unreasonable.
[18] In my view, Mr Rensburg’s arrest without a warrant was justified. Sgt Cimani’s
suspicions were rested on reasonable grounds. The Minister can, therefore, not be held
liable for the contended damages resulting in Mr Rensburg’s alleged wrongful, unlawful
and unjustified arrest. The high court cannot, thus, be faulted for concluding that
1 Minister of Safety and Security v Sekhoto and Another [2010] ZASCA 141; [2011] 2 All SA 157 (SCA);
2011 (5) SA 367 (SCA) para 6.
Mr Rensburg’s arrest in terms of s 40(1)(b) of the CPA was not unlawful, and for finding
that the claim against the Minister ought to have been dismissed by the regional court.
[19] Counsel for Mr Rensburg submitted that the Minister should be held liable for the
contended damages suffered by Mr Rensburg after his first appearance in court, since
the police were remiss in not agreeing to him being released on bail. The contention was
that because Sergeant Pumza Vinjwa had telephonically confirmed Mr Rensburg’s
address, the further postponements after 19 September 2016 until 23 September 2016,
when he was released on warning, were unreasonable. Counsel’s contentions are
unfounded. As it turned out, on 21 September 2016, when W/O Smouse visited
Mr Rensburg’s address, his grandmother reported to the police that her grandson was
not living with her even though Mr Rensburg’s address, as stated in the bail form, was
telephonically confirmed. The police cannot, therefore, be faulted for detaining
Mr Rensburg until his residential address had been verified.
[20] Having found that prior to 19 September 2016 the police acted lawfully, could it
then be contended that the subsequent postponements that resulted in Mr Rensburg
being remanded in custody without being released on bail be attributable to the unlawful
conduct of the police? In my view, the answer to this question is that the police, did not
act unlawfully in detaining him and thus depriving him of his liberty. This view is fortified
by the following observation made by the Constitutional Court in De Klerk v Minister of
Police:2
‘. . . The deprivation of liberty, through arrest and detention, is per se prima facie unlawful. Every
deprivation of liberty must not only be effected in a procedurally fair manner but must also be
substantively justified by acceptable reasons. Since Zealand, a remand order by a Magistrate
does not necessarily render subsequent detention lawful. What matters is whether, substantively,
there was just cause for the later deprivation of liberty. In determining whether the deprivation of
liberty pursuant to a remand order is lawful, regard can be had to the manner in which the remand
order was made.’
And the Constitutional Court further stated that:
2 De Klerk v Minister of Police [2019] ZACC 32; 2019 (12) BCLR 1425 (CC); 2021 (4) SA 585 (CC) paras
62 and 63.
‘In cases like this, the liability of the police for detention post-court appearance should be
determined on an application of the principles of legal causation, having regard to the applicable
tests and policy considerations. This may include a consideration of whether the post-appearance
detention was lawful. It is these public policy considerations that will serve as a measure of control
to ensure that liability is not extended too far. The conduct of the police after an unlawful arrest,
especially if the police acted unlawfully after the unlawful arrest of the plaintiff, is to be evaluated
and considered in determining legal causation. In addition, every matter must be determined on
its own facts – there is no general rule that can be applied dogmatically in order to determine
liability.’
[21] When the court stood the matter down until the following day, it was with the
consent of Mr Rensburg and his attorney. At no stage did Mr Rensburg or his attorney
raise the issue of bail with the magistrate. Furthermore, the issue of Mr Rensburg’s
previous convictions had still not been resolved and his address had not been verified,
with the result that he could not therefore be considered for bail until these issues had
been resolved. Once those outstanding issues had been resolved, and the undertaking
given to the court by his cousin to reside with her, the court, in the exercise of its
discretion, released him on warning.
[22] The conclusion reached is that the Minister can, thus, not be found to have acted
unreasonably, wrongfully, unlawfully and unjustifiably in depriving Mr Rensburg of his
liberty. The actions of the police, post the first court appearance were, in my view, lawful.
[23] The further contention that Mr Rensburg should have been released on bail earlier,
or at his first court appearance on 19 September 2016 is also unfounded and without
merit. Section 50 of the CPA provides that:
‘(1)(a) Any person who is arrested with or without warrant for allegedly committing an offence, or
for any other reason, shall as soon as possible be brought to a police station or, in the case of an
arrest by warrant, to any other place which is expressly mentioned in the warrant.
(b)
A person who is in detention as contemplated in paragraph (a) shall, as soon as
reasonably possible, be informed of his or her right to institute bail proceedings.
(c)
Subject to paragraph (d), if such an arrested person is not released by reason that –
(i)
no charge is to be brought against him or her; or
(ii)
bail is not granted to him or her in terms of section 59 or 59A,
he or she shall be brought before a lower court as soon as reasonably possible, but not later than
48 hours after the arrest.’
[24] In the present matter, Mr Rensburg was brought to court within a reasonable time,
having regard to the fact that he was arrested late on Thursday, 15 September 2016.
When he appeared in court on 19 September 2016, the 48-hour period referred to in terms
of s 50 of the CPA had not yet expired, as the previous two days fell on a weekend and
were dies non for the calculation of this period. Soon thereafter, the police took steps to
verify his address, but could not do so, for reasons already alluded to earlier in the
judgment. The result reached is that the police cannot be faulted for bringing Mr Rensburg
to court on 19 September 2016, which, in my view, was within a reasonable time.
Mr Rensburg appeared in court on the first available court day being Monday, 19
September 2016.
[25] In my view, the police acted correctly, lawfully and justifiably in effecting the arrest
of Mr Rensburg without a warrant authorising such arrest. So was his further detention
until his release on 23 September 2016. The Minister cannot, therefore, in the
circumstance of this matter, be said to be the cause of Mr Rensburg’s contended
damages.
[26] Although s 12(1)(a) of the Constitution enshrines the right to freedom and security
of a person, which right includes the right not to be deprived of that freedom arbitrarily or
without just cause, this does not mean that if any person, such as Mr Rensburg, contends
that their right to freedom and security has been infringed, they should necessarily be
compensated. Where, such as in the present matter, the police acted within the prescript
of the law in preventing, combating and investigating crime, maintaining public order,
protecting and securing the inhabitants of the Republic and their property, and to uphold
and enforce the law,3 no fault should be attributed to them. To hold otherwise would be
3 See s 205(3) of the Constitution of the Republic of South Africa, 1996.
placing unreasonable constraints on the police when carrying out their duties to enforce
the law for the benefit of all.4
[27] The Ministry of the Police is an organ of state which is obliged, in terms of the
Constitution, to uphold the law, protect and promote the rights enshrined in the Bill of
Rights. It is, however, not a court of law. Its function is to act reasonably and within the
confines of the law. And, in appropriate circumstances, to arrest any person suspected of
committing a schedule 1 offence without a warrant. If the suspicion is founded on
reasonable grounds, that is sufficient. It is only courts of law that are obliged to apply a
higher standard of proof in either a civil or criminal trial, on a balance of probabilities or
beyond reasonable doubt respectively, before returning a verdict, not the police. Where
in a case such as the present, a police officer acted, objectively viewed, on reasonable
suspicion, that is the end of the matter. Such police officer cannot by any stretch of the
imagination be said to have acted wrongfully, unlawfully and unjustifiably, and thus be
liable for damages.
[28] To conclude, I find no misdirection in any of the findings of the high court. The
finding of the high court that the police acted correctly and lawfully cannot be faulted.
There is thus no reason to hold the Minister liable for the contented unlawful arrest and
detention of Mr Rensburg until 23 September 2016. In the result, the appeal must fail. In
my view, there is no reason to depart from the general rule that costs must follow the
result. But, given the simplicity of the matter, the employment of two counsel was
therefore unreasonable. There is therefore no justification for the costs of two counsel.
[29] In the result, the following order is made:
The appeal is dismissed with costs.
_________________________
M TSOKA
ACTING JUDGE OF APPEAL
4 Minister of Police v Bosman and Others [2021] ZASCA 172 (SCA) para 32.
Appearances
For the appellant:
M du Toit
Instructed by:
Carol Geswint Attorneys, Port Elizabeth
Webbers Attorneys, Bloemfontein
For the respondents:
F Peterson (with L Hesselman and B Ndamase)
Instructed by:
State Attorney, Port Elizabeth
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 June 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
Earl Rensburg v Minister of Police and Another (557/2021) [2022] ZASCA 105 (29
June 2022)
The Supreme Court of Appeal (SCA) today dismissed an appeal with costs against
the judgment and order of the Eastern Cape Division of the High Court, Grahamstown
(the high court), wherein the appellant’s arrest and detention was held to be lawful.
At issue in the appeal was whether the arrest of the appellant, Mr Earl Rensburg
(Mr Rensburg), without a warrant on 15 September 2016 by members of the South
African Police Service (the police) and his detention until his first court appearance on
19 September 2016 was wrongful, unlawful and unjustified. Linked to this issue was
whether his subsequent detention after his first court appearance until his release from
detention on warning on 23 September 2016 was also wrongful, unlawful and
unjustified.
The facts underpinning the appeal were as follows. On Thursday, 15 September 2016,
Mr Rensburg was brought to Humewood Police Station by three male persons, Mr
Ingram, Mr Jaftha and Mr Williams, who alleged that he had stolen a laptop. At
Humewood Police Station, the trio spoke to Sgt Cimani. However, Sgt Cimani
demanded that the owner of the laptop be brought to her to be interviewed and for
confirmation that their laptop was stolen. Mr Ingram fetched the complainant, Ms
Mohamed, who confirmed to Sgt Cimani that Mr Rensburg admitted to her that he had
stolen her laptop and that he had apologised to her for stealing the laptop. Thereafter,
Sgt Cimani, without a warrant, arrested and detained Mr Rensburg in terms of the
provisions of s 40(1)(b) of the Criminal Procedure Act 51 of 1977 (CPA).
The SCA held that Mr Rensburg’s arrest without a warrant was justified. The SCA
found that Sgt Cimani’s suspicions were rested on reasonable grounds; and that the
Minister could, therefore, not be held liable for the contended damages resulting in Mr
Rensburg’s alleged wrongful, unlawful and unjustified arrest; and that the high court
could not, thus, be faulted for concluding that Mr Rensburg’s arrest in terms of s
40(1)(b) of the CPA was not unlawful, and for finding that the claim against the Minister
ought to have been dismissed by the regional court.
The SCA held further that the police did not act unlawfully in detaining Mr Rensburg
and thus depriving him of his liberty. Mr Rensburg was brought to court within a
reasonable time and the 48-hour period referred to in terms of s 50 of the CPA had
not yet expired. The SCA found further that the actions of the police, post the first court
appearance, were lawful. This was because, inter alia, the issue of Mr Rensburg’s
previous convictions had still not been resolved and his address had not been verified,
with the result that he could not therefore be considered for bail until these issues had
been resolved. Once those outstanding issues had been resolved, and the
undertaking given to the court by his cousin to reside with her, the court, in the exercise
of its discretion, released him on warning. The SCA held that the Minister could, thus,
not be found to have acted unreasonably, wrongfully, unlawfully and unjustifiably in
depriving Mr Rensburg of his liberty.
The SCA found that where, such as in this matter, the police acted within the prescript
of the law, no fault should have been attributed to them. To hold otherwise would have
been placing unreasonable constraints on the police when carrying out their duties to
enforce the law for the benefit of all. Thus, the SCA held that the finding of the high
court that the police acted correctly and lawfully could not be faulted. There was thus
no reason to hold the Minister liable for the contented unlawful arrest and detention of
Mr Rensburg until 23 September 2016.
~~~~ends~~~~ |
2336 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 484/08
In the matter between:
SUBLIME TECHNOLOGIES (PTY) LTD
Appellant
and
JOHAN JONKER
First Respondent
STEVEN ROCCO WILKINSON
Second Respondent
Neutral citation:
Sublime Technologies v Jonker and Wilkinson (484/2008)
[2009] ZASCA 149 (27 November 2009)
Coram:
Mthiyane, Lewis, Malan, Bosielo JJA and Griesel AJA
Heard:
23 November 2009
Delivered:
27 November 2009
Summary:
Costs – whether correct exercise of judicial discretion in
relation to award of wasted costs arising from a post-
ponement of the trial. Court’s imposition of undertaking by
party to pay costs, especially punitive costs, should trial
not finish within estimated time an undersirable practice.
ORDER
On appeal from: North Gauteng High Court, Pretoria (Rasefate AJ).
Order:
1.
The appeal is upheld with costs.
2.
The order of the court below is set aside and substituted with the
following:
‘The matter is postponed sine die. The wasted costs occasioned by the
postponement shall stand over for later determination.’
JUDGMENT
GRIESEL AJA (MTHIYANE, LEWIS, MALAN, BOSIELO JJA concurring):
[1] This is an appeal against a costs order granted by the North Gauteng
High Court, Pretoria. It concerns the wasted costs occasioned by a postpone-
ment of the trial at the behest of the appellant (as plaintiff). The high court
ordered the appellant to pay the costs of the postponement on a punitive scale,
thus giving rise to the present appeal, which comes before us with leave of this
court.
[2] It is trite that the award of costs is a matter wholly within the discretion
of the trial court. An appeal court will only interfere with discretionary orders
granted by a lower court where it is shown that –
‘. . . the lower court had not exercised its discretion judicially, or that it had been
influenced by wrong principles or a misdirection on the facts, or that it had reached 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.’ 1
[3] With regard to costs occasioned by a postponement, the general rule is
that the party which is responsible for a case not proceeding on the day set
down for hearing must ordinarily pay the wasted costs.2 It is important to bear in
mind, however, that a litigant is not necessarily ‘responsible’ for the case not
proceeding merely because he or she applies for a postponement. In certain
circumstances, a litigant may be forced to apply for a postponement as a result
of the conduct of an opponent, eg through inadequate discovery; a late
amendment or any number of other reasons. The ‘normal rule’ only applies to
‘the party who was at fault or in default’.3
[4] When a trial court is likely to be in a better position than the court
hearing the application for postponement to ascertain the facts and to decide
who should be liable for the costs of a postponement, it is a salutary rule that
costs should be reserved for later determination.4
[5] Turning to the facts of this case, the appellant is a company involved in
the processing of mineral ore at a large plant in Vereeniging. The first and
second respondents were two of the appellant’s most senior employees, being
its financial manager and logistics manager respectively. The appellant’s case
as it emerges from the pleadings is that the respondents, in breach of their
fiduciary duties, dishonestly presented fictitious invoices in the names of Econo
Hire (‘Econo’) and Nyala Contractors (‘Nyala’) for payment by the appellant.
Through the dishonest presentation of these invoices, so it was alleged, the
appellant was induced to pay amounts of approximately R3 million and
1 National Coalition for Gay and Lesbian Equality & others v Minister of Home Affairs & others
2000 (2) SA 1 (CC) para 11. See also Naylor & another v Jansen 2007 (1) SA 16 (SCA) para 14
and the authorities referred to therein.
2 A C Cilliers Law of Costs (Service issue 17), para 8.11; H J Erasmus Superior Court Practice
B1-306D–E (Service 28, 33).
3 Burger v Kotze & another 1970 (4) SA 302 (W) at 304E–F.
4 Cf Erasmus loc cit.
R1,2 million to Econo and Nyala respectively. The appellant further alleged
that Econo and Nyala did not exist, but that they were simply the alter egos of
the respondents. In this regard, the appellant claims that the bank accounts
reflected on the invoices into which payments were to be made were, in respect
of Nyala, the bank account of Mrs Jonker, the wife of the first respondent. In
respect of the Econo invoices, three different bank accounts had been used
from time to time: the first account belonged to a Ms Visagie, to whom one pay-
ment was made, whilst the balance of the payments were made to two bank
accounts held in the name of a Mr C H Steyn. According to the appellant,
payments were redistributed from these accounts to various other accounts
held or controlled by the respondents.
[6] Copies of the various bank statements were obviously vital for the proof
of the appellant’s case. In the course of a criminal investigation against the
respondents, the appellant obtained copies of the relevant bank statements
from the police docket. The appellant sought to use these documents at the trial
and further sought discovery from the respondents of the relevant bank
statements. The discovery measures were strenuously resisted by the
respondents who raised several objections, including an alleged violation of
their constitutional right to privacy and lack of relevance.
[7] After many months of interlocutory skirmishes, the appellant eventually
obtained an order compelling the respondents to make discovery. Notwith-
standing such order, however, discovery of the bank statements was still not
forthcoming, the respondents claiming that they were no longer in possession of
such statements. At a pre-trial conference, held during the week preceding the
trial, the appellant’s legal representatives also unsuccessfully sought the
respondents’ agreement that copies of the bank statements could be produced
at the trial by consent. Instead of obtaining the cooperation it had hoped for, the
appellant was pointedly informed that the respondents would oppose the use of
bank statements at the trial.
[8] The appellant thereupon served subpoenas duces tecum on the
managers of the various branches of the banks at which the relevant accounts
were held. Copies of the bank statements had been received from the banks
and placed into a trial bundle a few days prior to the trial.
[9] The action was enrolled for trial in the high court on Tuesday, 31 July
2007. When the roll was called before the Deputy Judge President (‘DJP’) on
that day, counsel for the appellant indicated that the trial was expected to run
for not more than three days. Counsel for the respondents was less optimistic,
estimating that it would run for at least five days. It appears that there is a rule
of practice in the North Gauteng High Court that a trial requiring more than five
days ought not to be enrolled except on a date specifically allocated by the
Judge President or a judge delegated by him. From this rule, a practice has
apparently developed in that court, adopted by the DJP, that unless counsel for
both parties could give an undertaking at the calling of the roll that the trial
action would not endure for more than five days, the matter would not be
allocated to a judge and a new enrolment would have to be sought, resulting in
a delay of anything up to two to three years before a new trial date can be
obtained.
[10] In relation to the present matter, and in view of the conflicting estimates
of the duration of the trial, the DJP enquired of counsel for the appellant
whether the appellant would be prepared to accept the risk that if the matter
was allocated for hearing and did not finish within the estimated time, the matter
would be postponed sine die, that the trial would have to commence de novo
before a new judge, and the appellant would have to pay the costs occasioned
by the postponement on an attorney and client scale. Faced with Hobson’s
choice, the appellant agreed to the allocation of a judge on the basis as
stipulated by the DJP and authorised counsel to give an undertaking to that
effect.
[11] It should be said that the practice that has evolved in the high court
appears to be highly prejudicial to litigants. Whilst the difficulties of preparing an
efficient trial roll are understood, the inflexibility of the approach adopted by the
DJP may lead to serious prejudice to litigants, as is demonstrated in this case.
Whether it is within the power of the court to order that a trial that is part-heard
is a nullity is doubtful. And instructing a trial judge to cease hearing a matter
once seized of it is an unacceptable interference with judicial independence.
Furthermore, imposing an undertaking to pay costs, especially on a punitive
scale, in the event of counsel’s estimate turning out to be incorrect, is
undesirable.
[12] When the trial commenced before Rasefate AJ, who had been
designated to hear the matter, the appellant’s counsel gave a short opening
address. Thereafter he called his first witness, an officer in the service of Absa
Bank, to identify and authenticate copies of bank statements which had been
printed from the bank’s computers. After the witness’s evidence in chief, the first
respondent’s counsel sought an adjournment on the basis that he had been
‘taken by surprise’ and wished to consider the bank statements prior to any
cross-examination. It appears that although indexes, which included and
referred to the bank statements in the bundles, had been furnished to the
respondents on the preceding Friday, copies of the actual bank statements
were only delivered on the day before the trial.
[13] Upon the resumption of the trial after the luncheon adjournment,
counsel for the respondents objected, on a number of different grounds, to the
evidence proposed to be led on behalf of the appellant. One of the grounds
raised was based on the provisions of s 30(1) of the Civil Proceedings Evidence
Act 25 of 1965, which require ten days’ notice to be given of the appellant’s
intention to adduce evidence of accounting records of a bank, which
requirement had not been complied with.5 Counsel for the appellant attempted
to counter this argument by relying on the provisions of s 15(4) of the Electronic
Communications and Transactions Act (‘ECTA’) 25 of 2002 which, so it was
5 Section 30(1) provides:
‘No ledger, day-book, cash-book or other account book of any bank, and no copies of entries
therein contained, shall be adduced or received in evidence under this Part, unless at least ten
days' notice in writing, or such other notice as may be ordered by the person presiding at the
proceedings concerned, containing a copy of the entries proposed to be adduced in evidence,
has been given by the party proposing to adduce the same in evidence to the other party.’
submitted, enabled the appellant to place the relevant documents before the
court without complying with any notice period.6
[14] ‘Data message’, as defined in s 1 of ECTA, means ‘data generated,
sent, received or stored by electronic means and includes . . . a stored record’.
It was common cause that these provisions are wide enough to include copies
of bank statements.
[15] After hearing argument, the trial judge adjourned the matter to the
following day, when he announced his ruling upholding the respondents’
objection. In the result, he held that ‘evidence of the bank records will be
inadmissible unless the prescribed notice has been given’.
[16] Faced with this ruling, the appellant found itself on the horns of a
dilemma: it could either decide to press on without such evidence, which would
inevitably have resulted in the demise of its case; or it could apply for a post-
ponement in order to give the requisite notice in compliance with the court’s
directive. Understandably, counsel for the appellant opted for the latter course,
moving for a postponement and asking that the question of liability for the
wasted costs be reserved for later determination.
[17] This application was vigorously opposed on behalf of the respondents,
who asked that the application for postponement be refused; alternatively, if the
court were minded to grant a postponement, that the appellant be ordered to
pay costs of three days of trial on a punitive scale in accordance with its earlier
undertaking.
[18] The trial judge, after a further adjournment to consider the issue,
granted the postponement and issued an order in the following terms:
6 Section 15(4) reads as follows:
‘A data message made by a person in the ordinary course of business, or a copy or printout of
or an extract from such data message certified to be correct by an officer in the service of such
person, is on its mere production in any civil, criminal, administrative or disciplinary proceedings
under any law, the rules of a self regulatory organisation or any other law or the common law,
admissible in evidence against any person and rebuttable proof of the facts contained in such
record, copy, printout or extract.’
‘. . . [T]he plaintiff is ordered to pay the wasted costs of both . . . the first and the
second defendant, and also the reservation of counsel for the three days that were
reserved, on an attorney and client scale.’
[19] In coming to his conclusion, the trial judge accepted the respondents’
argument that the postponement was wholly attributable to the fault of the
appellant in that it ‘did not comply with the rules and requirements of s 30 of the
Civil Proceedings Evidence act as it should have’. In fact, so the learned trial
judge held, the postponement was due to the ‘recklessness’ of the appellant
because, despite prior warning, it elected to proceed with the matter without
complying with the provisions of the Civil Proceedings Evidence Act, knowing
that its case would rest on the production of bankers’ books.
[20] Secondly, the court referred to the fact that the appellant had given an
undertaking that if the matter was not finalised within three days, then it
tendered to pay the costs on an attorney and client scale and the matter would
lapse and proceed de novo on a future date.
[21] Counsel for the appellant took issue with the reasons furnished by the
trial court, submitting that the court failed to exercise its discretion judicially. He
submitted inter alia that it amounts to a misdirection to find, as the trial court did,
that the appellant was reckless in seeking to circumvent the provisions of the
Civil Proceedings Evidence Act by invoking the provisions of ECTA. In the light
of my conclusion with regard to the exercise of the court’s discretion, I do not
find it necessary to undertake any detailed analysis of the provisions of s 15(4)
of ECTA, which have been described as ‘controversial’.7
[22] The present case is, in my view, an instance where the trial court is
likely to be in a better position than the court hearing the application for
postponement to decide who should be liable for the costs of the postponement.
7 See for example the judgment of the full bench of the South Gauteng High Court in LA
Consortium & Vending CC t/a LA Enterprises v MTN Service Provider (Pty) Ltd (Case No
A5014/08, 17 August 2009, not yet reported) paras 12–13.
The mere fact that the appellant may, with the benefit of hindsight, be criticised
for the fact that it did not, at an earlier stage give the requisite notice in terms of
s 30 of Act 25 of 1965, or that it did not timeously utilise its remedies in terms of
rule 38 to obtain copies of the bank statements, may or may not be decisive at
the end of the trial when it comes to the costs of the postponement. On the
other hand, it may appear in the fullness of time and after all the evidence has
been heard, that the postponement was precipitated by a spurious objection on
the part of the respondents; or that they had lied about their possession of the
documents in question; or that they had been obstructive and had deliberately
adopted delaying tactics throughout the process (as claimed by the appellant),
in which event it would work great injustice to have rewarded them at this stage
with an irrevocable order for costs arising from the postponement.
[23] To sum up, should it appear at the end of the trial that the appellant
itself was entirely to blame for the postponement, or that it was pursuing
vexatious and baseless claims against the respondents (as they allege), then
the court can fully give effect to such a finding at that stage by mulcting the
appellant in costs, in which event the respondents would have lost nothing.8
Looked at in its totality, it is clear to me that the trial court will be in a far better
position properly to assess the liability for the wasted costs occasioned by the
postponement once it has all the evidence before it.
[24] With regard to the appellant’s undertaking – leaving aside the propriety
of requiring the appellant to furnish such an undertaking in order to be afforded
access to the court – it seems to me that the undertaking to pay the costs of a
postponement was given on the basis of the appellant’s estimate of the time
necessary for the conduct of the trial being inadequate; it was not given on the
basis that the costs of a postponement – for whatever reason – would inevitably
be for the appellant’s account. To put it differently, the undertaking would be
triggered if the trial could not finish within the estimated time; not if it could not
even start. I accordingly conclude that the trial judge erred in relying on the
undertaking furnished on behalf of the appellant.
8 Compare the remarks of Marais JA in Williams v Harris 1998 (3) SA 970 (SCA) at 984F in
similar circumstances.
[25] In these circumstances, I am of the view that an order reserving the
wasted costs for later determination would undoubtedly have been the proper
order to have made. In failing to make such an order the trial judge, in my
respectful opinion, failed to exercise his discretion judicially. It follows that this
court is at large to interfere with the exercise of the trial court’s decision, that the
appeal should succeed and the order of the high court should be changed to
reflect the views expressed above.
[26] The following order is granted:
1.
The appeal is upheld with costs.
2.
The order of the court below is set aside and substituted with the
following:
‘The matter is postponed sine die. The wasted costs occasioned by the
postponement shall stand over for later determination.’
B M GRIESEL
Acting Judge of Appeal
APPEARANCES:
FOR APPELLANT:
John Peter
Instructed by:
Schindlers Attorneys
c/o Friedland Hart Inc
Pretoria
Webbers Attorneys
Bloemfontein
FOR RESPONDENTS:
Gerhard Wagenaar (attorney)
Instructed by:
Gerhard Wagenaar Attorneys (First Respondent)
Pretoria
Symington & De Kok
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 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.
* * *
SUBLIME TECHNOLOGIES (PTY) LTD v JONKER AND ANOTHER
The Supreme Court of Appeal today upheld an appeal against a judgment in the
North Gauteng High Court, Pretoria, in terms of which that court ordered the
plaintiff, Sublime Technologies, to pay the wasted costs arising from the post-
ponement of the trial. The SCA held that the trial court would be in a better position
to decide the question of liability for the wasted costs.
In the course of its judgment, the SCA also criticised the practice followed in the
Pretoria High Court of requiring an undertaking from a party that the trial would not
run for more than a certain number of days – in this case three days – failing which
the trial would have to be postponed; it would have to recommence afresh before
another judge; and the plaintiff would have to pay the costs on a punitive scale. |
1460 | non-electoral | 2010 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 86/10
In the matter between:
THE LAW SOCIETY OF THE NORTHERN PROVINCES Appellant
v
ROCHELLE MAHON Respondent
Neutral citation:
The Law Society of the Northern Provinces v Mahon
(86/2010) [2010] ZASCA 175 (2 December 2010).
Coram:
Lewis, Cachalia, Leach, Tshiqi JJA and Ebrahim AJA
Heard:
23 November 2010
Delivered:
2 December 2010
Summary: Section 13(2) of the Attorneys Act 53 of 1979 permits a court to
condone irregular service by a candidate attorney only if he or she has entered
into a valid agreement of articles – constitutional law – interpretation – the
concepts of ‘fairness’ and ‘justice’ are not freestanding requirements against
which the constitutionality of a statute, its interpretation or its application to the
particular facts of a case, may be tested – whether a high court is bound by this
court’s pre-constitutional interpretation of a statute.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: North Gauteng High Court, Pretoria (Bertelsmann and Rabie JJ
sitting as court of first instance).
The following order is made:
1.
The appeal is upheld.
2.
The order of the court a quo admitting and enrolling the respondent as an
attorney of the high court is set aside and the following order is substituted
in its place:
‘2.1
The applicant’s application for her admission and enrolment as an
attorney of the high court is postponed sine die.
2.2
Her application for condonation in terms of s 13(2) of the Attorneys
Act 53 of 1979 for the period served from 3 January 2006 to
28 May 2006 before the conclusion of her articles of clerkship on
28 May 2006 is dismissed.
2.3
Upon successful completion of her articles of clerkship for a further
period of at least three (3) months, either with her former principal
or any other attorney duly qualified to act as her principal,
alternatively, upon successful completion of a period of at least
three (3) months of community service as envisaged by s 2(1A)(b)
of the Attorneys Act, the applicant may apply to court on the same
papers, duly supplemented, for an order in terms of s 11(2) or,
depending on the circumstances, any other applicable provision in
terms of the Attorneys Act for her admission as an attorney of the
high court.
2.4.
The further period of three (3) months of articles of clerkship is to
be served or community service to be performed within a period of
twenty four (24) months from the date of this order.
2.5.
The order granted by the court a quo condoning the applicant’s
period of absence of leave for 17 days in excess of the 30 days
allowed during any year of her articles of clerkship is not affected
by this order.
2.6.
The applicant is ordered to surrender her certificate of enrolment as
an attorney of the high court to the respondent forthwith.’
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Lewis, Leach, Tshiqi JJA and Ebrahim AJA concurring):
[1] This appeal, against a judgment of the North Gauteng High Court
(Bertelsmann J, Rabie J concurring),1 with its leave, concerns the proper
interpretation of s 13(2) of the Attorneys Act 53 of 1979. The facts of the case are
these.
[2] In September 2005 the respondent, Ms Rochelle Mahon, accepted an
offer of employment from Attorneys D M Kisch Inc. Her contract was signed on
27 December. It described her position as that of a ‘Candidate Trademark
Attorney’, and took effect as from 3 January 2006. I shall refer to this agreement
as the ‘first agreement’. In addition to the usual provisions relating to salary,
working hours, leave, membership of a provident fund and medical aid, her
agreement also provided, uncommonly, for a three-month probationary period
and an undertaking by the employer to sign her articles of clerkship agreement
1 The judgment is reported as Ex Parte Mahon 2010 (2) SA 511 (GNP).
(the clerkship agreement) only if she successfully completed her probation
phase.2 However, when the period ended her principal, Mr A K Van der Merwe,
deferred the conclusion of the agreement until she had obtained an outstanding
credit (Criminal Law) for her LLB degree so that they could enter into an
agreement for a two-year period, which is provided for in s 2(1) of the Act.3 She
passed her Criminal Law examination in April 2006. The clerkship agreement
was then signed on 28 May 2006, duly lodged with the Law Society of the
Northern Provinces on 27 July 2006, and registered in good time as s 5 of the
Act requires.
[3] On 4 February 2008, Ms Mahon accepted another employment offer as a
legal adviser for a bank, where she began working on 5 March 2008. Her
employment with D M Kisch came to an end on 28 February 2008, approximately
two years and two months after she had started working there. The duration of
her service under her clerkship agreement was, however, for three months less
than the two year period that s 2(1)(a) of the Act requires for admission as an
attorney. So, to overcome this problem, and acting on the premise that the period
between 3 January 2006 to 28 May 2006 was ‘irregular service’ as a ‘candidate
attorney’ as contemplated by s 13(2), she applied to the high court to condone
this period of service as ‘substantially equivalent to regular service’ the effect of
which would, if granted, exempt her from having to serve the full period of two
years in terms of her clerkship agreement in order to qualify for admission as an
attorney.
[4] The Law Society of the Northern Provinces, the appellant in these
proceedings, opposed her application. It did so on the ground that the time spent
before Ms Mahon entered into her clerkship agreement was ‘not served regularly
2 The court below stated that the probationary period ‘certainly did not reflect the applicant’s
wishes’ (para 23(k)) and that she ‘was given little choice . . . and could only accept her fate’ (para
13). But no such averments were made in the papers.
3 The court below described Mr Van Der Merwe’s decision to delay signing the clerkship
agreement until Ms Mahon had passed her Criminal Law exam as a refusal to do so (para 11).
This is inaccurate.
as a candidate attorney’ within the meaning of s 13(2), and therefore, was not
capable of being condoned. The high court, however, granted Ms Mahon’s
application. The Law Society appeals against that order.
[5] On behalf of Ms Mahon it was contended that the first agreement was, in
substance, one entered into in accordance with the Act and, therefore, that
condonation was not required. Put another way, the argument was that there was
‘substantial compliance’ with the requirements of the Act. In the alternative, and if
we were to hold that the first agreement was not one that the Act contemplates
then, it was contended, her period of employment under it was nevertheless
‘irregular service’ that was capable of being condoned. Finally, if the first two
submissions failed, it was submitted that the interpretation of s 13(2) raises a
constitutional issue, which is that if the section is interpreted literally, the effect
will be to violate Ms Mahon’s constitutional right to choose and practise a
profession of her choice under s 22 of the Constitution. The court below upheld
this submission.
[6] I turn to consider the proper construction of s 13(2). There was no
challenge to the constitutionality of the section, a point I will revert to later in this
judgment. To interpret the section requires a consideration of its language in the
light of its context and purpose. The section provides:
‘If any person has not served regularly as a candidate attorney, the court, if satisfied that
such irregular service was occasioned by sufficient cause, that such service is
substantially equivalent to regular service, and that the society concerned has had due
notice of the application, may permit such person, on such conditions as it may deem fit,
to apply for admission as an attorney as if he had served regularly under articles or a
contract of service.’
[7] I commence with the language. The words ‘regular service’ and ‘irregular
service’ in the section both refer to service ‘as a candidate attorney’. Section 1
defines a ‘candidate attorney’ as ‘any person bound to serve under articles of
clerkship . . .’. And, ‘articles of clerkship’, also defined in s 1, means ‘any contract
in writing under which any person is bound to serve an attorney for a specified
period in accordance with this Act’. Plainly, it is only the irregular service of a
candidate attorney (as defined), which may be normalised – not irregular service
generally. If there was the slightest doubt that this is so, it is dispelled by the
signed Afrikaans text, which can hardly be clearer. It reads:
‘Indien iemand nie gereeld diens as kandidaat-prokureur verrig het nie . . . dat daar
gegronde rede vir die ongereelde diens was, dat daardie diens in hoofsaak gelykstaande
met gereelde diens is . . . .’
[8] This construction of s 13(2) is buttressed by its statutory context. In this
regard Chapter 1 of the Act, which creates the regulatory regime for candidate
attorneys, is relevant. Section 2(1) prescribes the duration of service under
articles of clerkship that must be served before a person is eligible for admission
as an attorney. The period to be served depends on the qualification obtained.
Where a person has satisfied the requirements for the baccalaureus legum (LLB)
degree, the period prescribed is two years.4 In the case of a person who does not
have an LLB qualification, but does have another degree, the period is three
years,5 and for a person who has only passed the matriculation examination, as
in Ms Mahon’s case, five years.6 In other instances, none of which bear on this
matter, the period may be shortened to a year7 or the person may be exempt
from service under articles of clerkship.8 The Act contains no other provision to
accommodate a shorter period for a clerkship agreement. Before concluding a
clerkship agreement an aspirant candidate attorney must submit proof of his or
her qualifications to the Law Society.9 And, once concluded, it must be lodged
with the Law Society within two months to be registered.10
4 Section 2(1)(a) and s 2(1)(aA).
5 Section 2(1)(c).
6 Section 2(1)(e).
7 Section 2(1A).
8 Section 2A.
9 Section 4(b).
10 Section 5.
[9] The termination of a clerkship agreement is dealt with in s 11. It provides
that if a clerkship agreement is cancelled or abandoned before completion, a
court may add the period served under that agreement to any other period that
the candidate attorney has served.11 The purpose of the section is to ensure that
the requirement that clerkship agreements comply with the period requirements
in s 2(1) is made easy.
[10] Section 13(3) gives further contextual assistance for the choice of
language employed in s 13(2). It provides that where a candidate attorney has
satisfied the degree requirements in s 2(1), a period served by the candidate
attorney under a clerkship agreement before achieving this shall for purposes of
admission as an attorney be regarded as having been served after the
qualification was obtained. The effect of this section is that a candidate attorney
may be credited for a period of articles served before satisfying the degree
requirements, and therefore suffers no prejudice, because his or her initial
clerkship agreement was concluded for a longer period. I will revert to this point
later in the judgment.
[11] The provisions of chapter 1, with reference to articles of clerkship, must be
read with rule 58 of the rules of the Law Society, which requires an agreement to
substantially comply with the form in the Second Schedule to the rules. The rule
gives the Law Society the right to reject any agreement, submitted to it for
registration, which does not comply with the Act, the rules or has other improper
or objectionable provisions.
[12] What emerges from this analysis is that the legislature intended the terms
of the clerkship agreement to be the bedrock of the regulatory regime governing
candidate attorneys. But it recognized that the strict application of this regime
may sometimes cause hardship. It thus gave the high court the authority to
11 Section 11(2) and s 11(3).
condone, on sufficient grounds, the irregular service of a candidate attorney.
What the legislature had in mind by ‘irregular service’ were ‘breaks in service
either through accident, as in the case of illness of the clerk, or through a bona
fide mistake, or through other sufficient cause’.12 But, it is plain that the high
court’s authority to excuse any irregular service is conditional upon the candidate
attorney having concluded a clerkship agreement in accordance with the Act – in
other words a valid contract of articles.
[13] Although the section has been amended over the years it has been
interpreted for well over a century to convey the same idea: ‘that no service could
be taken into computation as qualifying for admission, except service subsequent
to the date of a written contract’.13 In addition, a string of cases from provincial
divisions have said emphatically that service of articles can only be service of
articles under a valid contract and that a court may only consider condoning any
irregular service once the validity of the contract has been established.14 In Ex
Parte Singer; Law Society, Transvaal, Intervening,15 this court gave its
imprimatur to this interpretation.
[14] This brings me to Ms Mahon’s first point – that the first agreement
complied, or substantially complied, with the Act. As I have mentioned a contract
of ‘articles of clerkship’ means ‘any contract in writing under which a person is
bound to serve an attorney for a specified period in accordance with the Act’. The
agreement described her position as a ‘Candidate Trademark Attorney’. But
beyond that it bore no resemblance to an agreement that the Act envisages. It
did not specify the duration of service as s 2 requires; nor did it conform in any
material respect to the form in the Second Schedule to the rules. Most
12 Ex Parte Couzyn 1929 TPD 238 at p 240. This case was decided under s 21 of Ordinance 1
(Private) of 1905.
13 In re Berrangé 3 M 458. This case was decided under Rule of Court 149 in 1837.
14 Ex Parte Traverso 1977 (1) SA 791 (C) p 793A-D. This case was decided under s 19(1) of the
Attorneys, Notaries and Conveyancers Admission Act 23 of 1934. Bosman v Prokureursorde van
Transvaal 1984 (2) SA 633 (T) p 636F-G; Tshabalala v Natal Law Society 1996 (4) SA 150 (N) p
152C-G.
15 1984 (2) SA 757(A).
significantly, it provided for a three-month probationary period and only then,
after the ‘successful completion of the probationary period’, would the clerkship
agreement be signed. So it is clear that the first agreement anticipated a proper
agreement being signed later – and this is what happened. The parties did not
intend the first agreement to be a clerkship agreement and it clearly was not.
There is therefore no merit in the submission that the first agreement complied
substantially or at all with the provisions of the Act.
[15] That ought to have been the end of the matter. However, counsel for
Ms Mahon pressed the argument that s 13(2) is ambiguous, despite the fact that
the interpretation of the section appears to have been settled. The ambiguity, he
submitted, permitted an interpretation that would allow the period of articles
served under the first agreement to be treated as irregular service which was
capable of being condoned. For this submission he relied on Ex Parte Edwards,16
a decision of the Cape Provincial Division (Farlam J, Van Niekerk J concurring).
That court took the view that the words ‘not served regularly as a candidate
attorney’ were ambiguous, the ambiguity, it said, arising from the fact that it was
not clear whether the words governed by the word ‘not’ related only to the words
‘served regularly’ or included the words ‘as a candidate attorney’ so that only a
candidate attorney who had entered into a valid contract could apply for relief
under the section.17
[16] The court in Edwards found support for its view in the change of wording
in s 13(2) from its predecessor, s 19(1) of the Attorneys, Notaries and
Conveyancers Admission Act 23 of 1934. That section read as follows:
'Where any person articled to an attorney has not served under such articles strictly in
accordance with the provisions of this Act, the Court, upon being satisfied that such
irregular service was occasioned by sufficient cause, and that such service although
irregular, is substantially equivalent to regular service, and that the law society
16 1995 (1) SA 451 (C).
17 Ibid p 454B-D.
concerned has had due notice of the application, may, subject to the provisions of clause
6 of the First Schedule, permit such person, upon such conditions as it may deem fit, to
present (if otherwise qualified) his petition for admission as an attorney in the same
manner as if the service in question had been regular and in conformity with the
provisions of this Act.' (Emphasis added by the court.)
[17] The court reasoned that the fact that s 19(1) of the previous Act used the
words ‘(w)here any person articled to an attorney’, and s 13(2) of the current Act
did not, gave a ‘strong indication’ that Parliament did not intend s 13(2) to be
limited in its operation to service of persons already articled.
[18] However, in a carefully reasoned judgment, the Natal Provincial Division
(Howard JP, Levinsohn J concurring) in Tshabalala v Natal Law Society18 firmly
rejected this reasoning in Edwards. It accepted that the word ‘not’ governs the
entire phrase, but considered that unless one ignored the words ‘as a candidate
attorney’ the section could not be construed to cover irregular service by persons
other than candidate attorneys, that is by persons who have not concluded valid
clerkship agreements.19 And, as I have explained earlier, because the clerkship
agreement lies at the heart of the admission of persons as attorneys, it is not
possible to construe the section to refer to irregular service generally. The
reasoning in Tshabalala is in my view correct. For the same reason I do not think
that the change of wording from the 1934 Act to the present one constitutes
sufficient evidence of a change of intention on the legislature’s part.20
[19] One more point must be made about Edwards. The court attempted to
distinguish this court’s decision in Singer by holding that there the irregular
service was rendered pursuant to articles that were null and void because the
applicant entered into them at a time when he was enrolled as an advocate,
18 1996 (4) SA 150 (N).
19 Ibid p 153F-G.
20 Ibid p 153G-H.
which disqualified him from doing so.21 However, in Edwards the person who
served articles was properly qualified to enter into a clerkship agreement but did
not do so through no fault on her part. The distinction is one without a difference.
In my view it matters not whether the person was qualified. The real question, as
this court said in Singer, was whether the irregular service was capable of
producing legal consequences or, put another way, was capable of being
condoned. And it is only a valid contract of articles that can produce legal
consequences. Had the court in Edwards approached the issue in this way,
which I think it should have in the light of the ratio in Singer, it would have come
to another conclusion. It follows that Ms Mahon’s reliance on Edwards must
founder.
[20] I now turn to consider the third ground that counsel for Ms Mahon relied
upon: that if s 13(2) is interpreted in the manner that I have done here, and the
courts have consistently done over many years, it would violate Ms Mahon’s
constitutional right to choose her profession freely – a right that s 22 of the
Constitution now protects.22 Counsel for Ms Mahon found support for his
submission in the reasoning of the court below. For its part the court below, in
turn relied on a decision of the Cape Provisional Division (Traverso DJP, Hlophe
JP concurring) in Ex Parte Ndabangaye.23 It is, therefore, necessary to examine
Ndabangaye more closely.
[21] The Ndabangaye court was confronted with facts almost identical to those
in Singer. The applicant for admission as an attorney had not removed her name
from the roll of advocates at the time she registered her clerkship agreement with
the Law Society of the Cape of Good Hope. She was thus precluded from
21 Edwards above p 455A-D.
22 Section 22 of the Constitution provides: ‘Freedom of trade, occupation and profession
Every citizen has the right to choose their trade, occupation or profession freely. The practice of a
trade, occupation or profession may be regulated by law.’
23 2004 (3) SA 415 (C).
registering her articles by s 12 of the Act.24 When she discovered the problem,
she successfully applied to court to have her name removed from the roll of
advocates. She then applied to court to be admitted as an attorney, and asked
the court to condone the fact that she was still enrolled as an advocate while
doing her articles.
[22] The court found that there was ‘sufficient cause’, as s 13(2) contemplates,
to condone the applicant’s non-compliance with s 12 (in contrast to Singer, which
decided that the clerkship agreement concluded contrary to s 12 was a nullity
incapable of being condoned). It also held that it was no longer bound by Singer
on two grounds: first, because s 13(2) had been amended since that case was
decided and, secondly, for the reason that it predated the Constitution.25
[23] It is convenient to dispose of the first ground briefly. When Singer was
decided, s 13(2) read:
'If any person has not served regularly as an articled clerk, the Court, if satisfied that
such irregular service is substantially equivalent to regular service, and that the society
concerned has had due notice of the application, may permit such person, on conditions
as it may deem fit, to apply for admission as an attorney as if he had served regularly
under articles.'
[24] For present purposes the only relevant difference between the wording
then and now is that in the present Act the phrase ‘was occasioned by sufficient
cause’ is added to the requirement that the court be ‘satisfied’. I respectfully
disagree that the additional words change the substance of the section’s
meaning. In both cases the section confers a broad discretion on the court to
condone ‘irregular service’ – in the former case ‘as an articled clerk’ and in the
24 Section 12 provides: ‘Registration of articles or contract of service entered into by
advocate Any person admitted to practice as an advocate shall not be allowed to register articles
or a contract of service in terms of the provisions of this Act, unless his name has on his own
application been removed from the roll of advocates.’
25 Ndabangaye above n 23 para 11.
latter, ‘as a candidate attorney’. This discretion can only be exercised if the
prerequisite of a valid contract of clerkship exists26 – a requirement in both the
earlier and the amended section. There was therefore no proper basis to
distinguish Singer on this ground.
[25] I turn to consider the second ground: that the court in Ndabangaye was
not bound by this court’s construction of s 13(2) in Singer because, to use its
words, ‘the . . . case preceded the Constitution’.27 If the court intended to hold
that Singer was not binding on it merely because it was decided before the
advent of the Constitution, I must respectfully disagree with this proposition for
two reasons: first, there was no direct challenge to the constitutionality of s 13(2),
which means that the court had to accept that the section was constitutionally
valid, and secondly, because the section is not ambiguous or otherwise
reasonably capable of being given any other meaning, it logically could not have
been read in a way which better ‘promote[s] the spirit, purport and objects of
[s 22 of] the Bill of Rights’. The Ndabangaye court thus ought to have considered
itself bound by the decision in Singer.28
[26] But, as I have said, it did not. And, having thus freed itself of the binding
force of this court’s judgment it proceeded as follows; it accepted that the
applicant had acted contrary to the provisions of s 12 when she registered her
articles while still being on the roll of advocates29 and, by implication, that her
clerkship agreement was therefore invalid on an ordinary reading of s 13(2).
26 Singer above p 761H-762A.
27 See Ndabangaye above n 23 para 11.
28 There is some uncertainty whether in the light of the decisions in Ex Parte Minister of Safety
and Security: In re S v Walters 2002 (4) SA 613 (CC) and Afrox v Strydom 2002 (6) SA 21 (SCA)
high courts, when interpreting legislation in accordance with s 39(2) of the Constitution, are bound
by pre-constitutional decisions of this court. (See Stuart Woolman and Danie Brand ‘Is there a
Constitution in this courtroom? Constitutional jurisdiction after Afrox and Walters’ (2003) 18
SAPR/PL 49. It is not necessary to resolve this question in this case.
29 Ndabangaye above n 23 para 12.
[27] But having acknowledged this to be the case, the court confusingly said
that the two sections must be interpreted against the injunction in s 39(2) of the
Constitution to promote the spirit, purport and objects of s 22 of the Bill of
Rights;30 and also that in interpreting ss 12 and 13(2) it must be borne in mind
that they must serve a purpose envisaged by s 22 of the Constitution. In regard
to s 12 it observed:
‘(O)ne of the reasons why . . . an attorney wishing to become an advocate is obliged to
sever all ties with the attorneys’ branch of the profession may be to prevent him from
using undue influence to channel work in his direction.’31
[28] The judge found, on the facts, that the applicant had attempted to have
her name removed from the roll of advocates but, through no fault on her part,
the attorneys who she had instructed had not done so. It also found that she was
in no position to channel work in her direction. She would thus, said the judge, be
denied her constitutional right to choose her profession freely by not being
admitted to practise as an attorney if the question whether she had complied with
the relevant sections were approached in a ‘legalistic’ manner.32 Furthermore,
said the judge, she could think of no ‘rational reason why an interpretation should
be afforded to s 13(2) of the Act which will result in such drastic consequences . .
.’. The judge concluded that ‘the interpretation adopted in the Singer case was so
strictly legalistic that it must, in view of the . . . provisions of the Constitution and
the Bill of Rights and the underlying aims of fairness and justice be departed
from’.33 Accordingly, she found ‘sufficient cause’ to condone the irregular service
of the applicant’s contract of articles of clerkship.
[29] The court below adopted the reasoning in Ndabangaye. It approached the
question whether Ms Mahon’s service should be regarded as service
‘substantially equivalent to regular service’ as contemplated by s 13(2) as one to
30 Ibid para 18.
31 Ibid para 22, citing In re Rome 1991 (3) SA 291 (A) at 309C.
32 Ibid paras 23 and 24.
33 Ibid paras 28 and 29.
be determined against the factual background of the matter.34 It then, as the
court in Ndabangaye approached the issue, said that the stated purposes of the
Act included the protection of the integrity of the profession, the safeguarding of
the public from unqualified and unscrupulous individuals entering the profession
and also to ensure that candidate attorneys received proper training from their
employers and were not exploited by them.35 And, that neither these purposes,
nor any purpose sanctioned by s 22 of the Bill of Rights, would be served by
adopting an ‘unduly legalistic approach’ to the interpretation of s 13(2).36 Instead,
said the judge, the matter had to be approached in a manner that ensures that
‘substantive justice’ is done.37 It thus concluded, as did Ndabangaye, that it
would be ‘unfair’ on the facts of this case not to recognize Ms Mahon’s prior
service because she had received ‘appropriate instruction’ during this period.38
[30] I have already indicated that in the absence of any direct constitutional
challenge to s 13(2) under s 36 of the Constitution,39 or a proper case that the
section was reasonably capable of any other interpretation, the court in
Ndabangaye and the court below were bound by Singer. It appears, however,
that they both had s 36 in mind when they emphasised that a statutory provision
– in this case s 13(2) – must serve a purpose that the Bill of Rights sanctions. But
by doing so they conflated s 36 of the Constitution, which deals only with direct
challenges to the constitutionality of a law (in this case a statute), with s 39(2),
34 Ex parte Mahon 2010 (2) SA 511 (GNP) para 23.
35 Ibid paras 24 and 25.
36 Ibid paras 24 and 26.
37 Ibid para 27.
38 Ibid para 28.
39 ‘Limitation of rights
1.
The rights in the Bill of Rights may be limited only in terms of law of general application to
the extent that the limitation is reasonable and justifiable in an open and democratic society
based on human dignity, equality and freedom, taking into account all relevant factors, including-
a.
the nature of the right;
b.
the importance of the purpose of the limitation;
c.
the nature and extent of the limitation;
d.
the relation between the limitation and its purpose; and
e.
less restrictive means to achieve the purpose.
2.
Except as provided in subsection (1) or in any other provision of the Constitution, no law
may limit any right entrenched in the Bill of Rights.’
which is concerned only with the interpretation of law in a manner that is
consistent with the Constitution.40 More fundamentally, they erred in considering
that the subjective positions of the applicants for admission as attorneys had any
bearing on how s 13(2) was to be interpreted.41 This led both courts, with respect
wrongly, to conclude that a ‘legalistic interpretation’42 of s 13(2) would, in these
cases, be contrary to a purpose sanctioned by s 22 of the Constitution and thus
unjustifiably infringe the applicants’ rights. This brings me to the question of
whether fairness and justice in and of themselves afford constitutional grounds to
impugn legislation.
[31] The statement by the court in Ndabangaye that fairness and justice are
underlying aims of our constitutional order is uncontroversial.43 Most legal
systems would subscribe to these values. Central to the idea of fairness, writes
Amartya Sen, is:
‘[A] demand to avoid bias in our evaluations, taking note of the interests and concerns of
others as well, and in particular the need to avoid being influenced by our respective
vested interests, or by our personal priorities or eccentricities or prejudices. It can
broadly be seen as a demand for impartiality.’44
In a similar vein ‘justice’, according to Plato, requires us to treat equals equally
and unequals unequally. There are, however, many theories and conceptions of
justice and the search for any exact idea of justice has escaped philosophers as
40 Section 39(2) provides: ‘When interpreting any legislation, and when developing the common
law or customary law, every court, tribunal or forum must promote the spirit, purport and objects
of the Bill of Rights.’
41 Ferreira v Levin NO; Vryenhoek v Powell NO 1996 (1) SA 984 (CC) para 26.
42 The courts in Ndabangaye (para 24) and the court below (para 26) cited Ex Parte Mothuloe
(Law Society, Transvaal, Intervening 1996 (4) SA 1131 (T)) to support this proposition. But Ex
Parte Mothuloe did not deal with s 13(2); nor does it refer to the Constitution. The case merely
confirms a trite principle of statutory interpretation, which predates the Constitution, that when
considering whether a statutory provision has been complied with the answer is to be found by
having regard to the intention of the legislature as ascertained not only from the language, but
also from the scope and purpose of the enactment as a whole. The approach has been confirmed
by a long line of authority. This ‘trend in interpretation’, said Van Dijkhorst J, is ‘away from the
strict(ly) legalistic to the substantive . . .’.
43 Above n 23 para 29.
44 Amartya Sen The Idea of Justice (2009) 54.
it has judges. It often boils down to what in the Afrikaans language would be
one’s ‘regsgevoel’ – one’s personal sense of justice.
[32] But fairness and justice are inherently malleable concepts and cannot be
freestanding requirements against which to test the constitutionality of a statute,
its interpretation or its applicability to the facts of a particular case.45 Because if
they were, statutes would be declared unconstitutional or applied differently
depending on an individual judge’s perception of what is fair or just in a particular
case, which is what happened in the two cases now under consideration.
Obviously, when interpreting laws judges are assisted by the presumption that
the legislature does not intend to enact laws that produce unfair, unjust or
unreasonable results.46 But laws have general application and their meaning
cannot change to accommodate individuals. A statute, just like the Constitution,
does not mean whatever we wish it to mean. Cases must be decided on a
principled basis.47 The statements in the judgments of Ndabangaye and of the
court below that suggest the contrary should consequently not be followed.
[33] I return to the instant matter. I have held that Ms Mahon’s first agreement
was not a valid agreement as contemplated by the Act and for that reason the
period that she served under it was not capable of being condoned. I should add
that it is not as if the Act did not permit her to conclude a clerkship agreement
that conformed to the Act. Before obtaining all her credits for her LLB degree she
could have entered into a five-year contract in terms of s 2(e) and, once she had
completed two years, applied to court under s 13(3)48 to permit her to be
45 Cf Bredenkamp v Standard Bank 2010 (4) SA 468 (SCA) para 53.
46 L C Steyn Die Uitleg van Wette (5 ed) 101.
47 Minister of Safety and Security v Sekhoto (131/10) [2010] ZASCA 141 para 14.
48 ‘The court may, on the application of a candidate attorney who has satisfied all the
requirements for a degree referred to in paragraph (a) or (c) of section 2(1), or for the degrees
referred to in paragraph (aA) of that section, or for a degree or degrees referred to in paragraph
(aB) or (cA) of that section in respect of which a certification in accordance with those respective
paragraphs has been done, and subject to such conditions as the court may impose, order that
the whole or any part of the period served by that candidate attorney under articles before he or
she satisfied such requirements, shall, for the purpose of his or her admission and enrolment as
enrolled. The court below was understandably concerned that applying the law in
its terms would result in some hardship to her. This is because she had already
performed functions of a candidate attorney for a two-year period. Courts should
be compassionate: but legal questions, as a judge said many years ago, must be
resolved without regard to sentiment or sympathy.49
[34] Courts should bear in mind too that certain consequences flow from
articles of clerkship and that these are professionally important. These include
the Law Society’s supervisory and regulatory function of the work of a candidate
attorney and the fact that legal privilege is afforded to clients of an attorney and a
candidate attorney. Service other than under valid articles of clerkship would
undermine these features and could impact adversely on the public.
[35] There is, however, a matter arising from this case that requires the
attention of the Law Society. I am not aware of any consistent practice where
attorneys enter into clerkship agreements, which include a period of probation as
in the instant case. Such contracts, as the court below correctly observed, must
be discouraged as they are open to abuse.
[36] The Law Society has, at the request of the court, and in collaboration with
Ms Mahon’s legal representatives, very helpfully proposed a draft order. That
order will be made an order of court. The Law Society has appropriately not
asked for a costs order in the event that it is successful in the appeal. I
accordingly make the following order.
1.
The appeal is upheld.
2.
The order of the court a quo admitting and enrolling the respondent as an
attorney of the high court is set aside and the following order is substituted
in its place:
an attorney, be regarded as having been served after and under articles entered into after he or
she satisfied such requirements.’
49 Ex parte Venter 1954 (3) SA 567 (O) at 569D-F.
‘2.1
The applicant’s application for her admission and enrolment as an
attorney of the high court is postponed sine die.
2.2
Her application for condonation in terms of s 13(2) of the Attorneys
Act 53 of 1979 for the period served from 3 January 2006 to
28 May 2006 before the conclusion of her articles of clerkship on
28 May 2006 is dismissed.
2.3
Upon successful completion of her articles of clerkship for a further
period of at least three (3) months, either with her former principal
or any other attorney duly qualified to act as her principal,
alternatively, upon successful completion of a period of at least
three (3) months of community service as envisaged by s 2(1A)(b)
of the Attorneys Act, the applicant may apply to court on the same
papers, duly supplemented, for an order in terms of s 11(2) or,
depending on the circumstances, any other applicable provision in
terms of the Attorneys Act for her admission as an attorney of the
high court.
2.4.
The further period of three (3) months of articles of clerkship is to
be served or community service to be performed within a period of
twenty four (24) months from the date of this order.
2.5.
The order granted by the court a quo condoning the applicant’s
period of absence of leave for 17 days in excess of the 30 days
allowed during any year of her articles of clerkship is not affected
by this order.
2.6.
The applicant is ordered to surrender her certificate of enrolment as
an attorney of the high court to the respondent forthwith.’
_____________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
APPELLANTS:
A T Lamey (Attorney)
Instructed by Rooth & Wessels Inc, Brooklyn
Naudes, Bloemfontein
RESPONDENT:
J E Ferreira
Instructed by Mothle Jooma Sabdia Inc, Pretoria
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:
2 December 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.
* * *
THE LAW SOCIETY OF THE NORTHERN PROVINCES V MAHON
The Supreme Court of Appeal (SCA) today held that section 13(2) of the Attorneys
Act 53 of 1979 permits a court to condone irregular service by a candidate attorney
only if he or she has entered into a valid agreement of articles. This means that
service rendered before the conclusion of a valid agreement of articles cannot be
condoned under the section.
The Pretoria High Court had condoned service rendered by Ms Rochelle Mahon, a
candidate attorney, for a period of five months before she concluded a valid contract
of articles as the Act contemplates as ‘irregular service’. After stating that the
respondent had a constitutional right to enter her chosen profession (section 22 of
the Bill of Rights), it held that substantive justice would not be achieved and that it
would be unfair to the respondent, if her service was not condoned. This was
because she had performed duties of a candidate attorney for the five month period,
albeit not under a valid contract of articles
The SCA held that the concepts of ‘fairness’ and ‘justice’ were not freestanding
requirements against which the constitutionality of a statute, its interpretation or its
application to the particular facts of a case, may be tested. It further held that where
there was no direct challenge to the constitutionality of section 13(2) and where the
section could not be read in a way which better promotes the spirit, purport and
objects of section 22 of the Bill of Rights, the high courts were bound to follow a
pre-constitutional decision of the Appellate Division. The SCA ordered the
respondent to surrender her certificate of enrolment and to serve the further period
of three months as a candidate attorney in order to qualify for admission as an
attorney. |
550 | non-electoral | 2016 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 800/2015
In the matter between:
TREVOR GUMEDE
APPELLANT
and
THE STATE
RESPONDENT
Neutral Citation: Gumede v The State (800/2015) [2016] ZASCA 148
(30 September 2016)
Coram:
Bosielo, Swain, Zondi and Mocumie JJA and Dlodlo AJA
Heard:
24 August 2016
Delivered:
30 September 2016
Summary:
Evidence obtained as a result of an unlawful search in
violation of right to privacy – evidence of pointing out obtained after failure to
explain consequences of not remaining silent and co-ercion – detrimental to
administration of justice – evidence inadmissible in terms of s 35(5) of the
Constitution.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from Natal Provincial Division of the High Court (P C Combrinck
and Theron JJ concurring and Kondile J dissenting, sitting as a court of
appeal).
The appeal succeeds and the convictions and sentences imposed
pursuant thereto are set aside.
______________________________________________________________
JUDGMENT
______________________________________________________________
Zondi JA (Bosielo, Swain and Mocumie JJA and Dlodlo AJA concurred):
[1] The appellant was indicted in the Durban and Coast Local Division,
Durban, on charges of murder, robbery with aggravating circumstances,
unlawful possession of a firearm and ammunition. Originally, there were 4
accused but charges were withdrawn against accused 2 and 3. The appellant
was accused 1 and his remaining co-accused, Sipho Patrick Magwaza
(Magwaza) was accused 4. Magwaza was only charged with murder and
robbery with aggravating circumstances.1
[2] The State‟s case against the appellant was based on two pieces of
evidence namely a firearm with ammunition allegedly discovered by the police
during search and seizure operation at the appellant‟s house and verbal
statements that he had allegedly made at a pointing out. The appellant
pleaded not guilty to all of the charges preferred against him. In a written
statement in terms of s 115(1) of the Criminal Procedure Act 51 of 1977 (the
CPA), he contended that the two sets of evidence, one arising from the
search conducted at his home at 26 Portadown Place, Wiggins Estate, Cato
Manor on 16 May 2000; and the other from the pointing out, were
1 Magwaza‟s convictions and sentence were set aside on 25 March 2015 by this Court and
the case is reported as S v Magwaza 2016 (1) SACR 53 (SCA).
inadmissible. He alleged that the search pursuant to which a firearm was
allegedly discovered was unlawful and that he was assaulted by police
officials resulting in him making a pointing out which was done under duress.
[3] At the commencement of the trial, the State informed the trial court that
it intended to rely on two pointings out that were done by the appellant and
Magwaza, as well as the contents thereof, the admissibility of which the
appellant had forewarned he would challenge. Despite this warning, the State,
instead of holding a trial-within-trial proceeded to lead evidence in the main
trial about the search and the finding of a firearm and ammunition. In an
attempt to correct this apparent procedural irregularity a trial-within-trial was
subsequently held with several police officers, the appellant and Magwaza
testifying under oath. It was agreed that the evidence already led in the main
trial would be regarded as having been given in the trial-within-trial.
[4] The trial court ruled admissible both sets of evidence, namely evidence
of the pointing out by the appellant, and the evidence of the finding of the
firearm and ammunition. The main trial proceeded and at the conclusion of
which the appellant was convicted of all the charges preferred against him. He
was sentenced to life imprisonment on count 2 (murder); 15 years‟
imprisonment on count 3 (robbery with aggravating circumstances) and three
years‟ imprisonment on counts 4 and 5 (possession of an unlicensed firearm
and ammunition) which were taken together for the purposes of sentence.
[5] The appellant appealed to the full court of the Natal Provincial Division
against the convictions. The appeal was dismissed in a majority judgment
delivered by P C Combrinck J with Theron J concurring. Kondile J dissented. I
will revert to the court below‟s findings later in this judgment.
[6] The events giving rise to the appellant‟s convictions and sentences are
briefly as follows: During the morning of 13 April 2000, a pension pay-out
point at Klaarwater Community Centre was attacked by a group of armed men
during which approximately R460 000 was taken. In the course of the robbery,
the perpetrators opened fire and as a result, one of the security guards at the
scene, Mr Bhekinkosi Zulu (the deceased), was fatally wounded and
dispossessed of his firearm with ammunition. The deceased later passed
away at hospital. The robbers departed from the scene and shortly thereafter
several police officers arrived. Inspector Sagren Govender (Govender) from
Westmead Murder and Robbery Unit, Pinetown, who formed part of the
investigating team, arrived at the crime scene around 10h00. Govender
observed and identified the spent cartridge casings as belonging to a 9mm
pistol and was present when the photos of the scene were taken. No weapons
were found at the scene and the information he received was that the pistols
of the deceased and the erstwhile second accused, who was a security guard,
had been taken by the robbers. He was also told that they had fled in a red
Ford Bakkie. Later that afternoon, Govender together with other police
officials found this vehicle abandoned at Nagina Township in the Mariannhill
area.
[7] A month later, on 16 May 2000 at about 01h00 a team of detectives,
including the investigating officer, Inspector Nkosinathi Mbatha (Mbatha), led
by Govender, acting on the strength of information provided to them by a
police informer, proceeded to the appellant‟s home. They gained entry into the
house by forcing open the front door. Once they were inside the house they
conducted a search, during which a 9mm pistol was found under the
appellant‟s pillow. The appellant, who was found sleeping in the bedroom,
was arrested and taken away by the police. It is common cause that the
search at the appellant‟s home and his arrest were conducted and effected
without a warrant.
[8] Later that morning at about 03h00, Govender and Mbatha interviewed
the appellant at the Westmead Murder and Robbery Unit offices. Mbatha
acted as an interpreter for the appellant from English to isiZulu. According to
Govender, before the start of the interview he informed the appellant of his
rights in terms of s 35 of the Constitution and did so by reading them from the
notice of rights form. The appellant signed the form to confirm that he was
informed of his rights. During the course of the interview, so testified
Govender, the appellant incriminated himself which prompted him to stop the
interview. He thereafter informed the appellant that, if he wished to, he could
make a statement to a magistrate or to a police officer of the rank of Captain
and point out certain points to that police officer. The appellant, Govender
stated, did not wish to make a statement to a magistrate, but elected rather to
do a pointing out with a police officer.
[9] Following what the appellant told Govender during the interrogation,
Captain Edward van Rensburg (Van Rensburg) from Serious Violent Crimes
Unit, Durban, was approached and he agreed to conduct a pointing out with
the appellant. According to the pointing out form completed by Van Rensburg
the appellant was brought to him for a pre-pointing out interview at Westmead
Murder and Robbery Unit office on 16 May 2000 at 13h30 during which he
asked the appellant pertinent questions regarding his willingness to do the
pointing out and also explained what would occur at the pointing out.
Sergeant Magwaza (Magwaza) acted as an interpreter for the appellant from
English to isiZulu. Van Rensburg denied that the appellant had told him that
the pointing out was not voluntary and that he had, prior thereto, been taken
to the crime scene by Govender and Mbatha who told him what to point out to
Van Rensburg. According to van Rensburg, during the pointing out, the
appellant directed him to the scene of the crime in Klaarwater where he
pointed out a white building with post boxes outside which the appellant
identified to be the place where he and „others robbed the pension money
from the security guards‟.
[10] As mentioned, the appellant denied the charges against him. In relation
to the search at his home on 16 May 2000, he testified that in the early hours
of that morning while sleeping in his bedroom (with his wife and small child),
he was woken up by a number of police officers with firearms pointed at him.
He was asked who Trevor was, and ordered to lie on the floor. The police
started to search his home, and also escorted his wife and his youngest child
out of the room. During the search he was taken to the bathroom and in the
passage way, he met Govender who asked him about a firearm and an AK47.
He informed Govender that he did not know anything about a firearm and an
AK47. He denied that a firearm was found under the pillow in his bedroom. He
was arrested and taken away.
[11] The appellant‟s denial that a firearm was found in his bedroom is
contrary to the version which his legal representative had put to Govender at
the trial. The following was put:
„MS PUNGULA . . . And if he comes to the box he will say that firearm was recovered
in his presence or in the presence of his wife, in the bedroom that they were sleeping
in. --- M‟Lord, the accused was sleeping alone and I recovered the firearm that I
found in that bedroom‟
[12] With regards to the events leading to a pointing out, the appellant
testified that after his arrest, he was taken from his home in Mayville to
Umlazi. It was only after going to Umlazi, so he testified, that he was taken to
the detectives‟ offices at Westmead where he was interrogated by the police
officers, including Govender and Mbatha. There he was tortured. He was
made to undress, to don a black plastic bag and to lie down. A tube was
pulled tightly over his face causing him to suffocate. During this torture, he
was told to disclose where the money was. He had no knowledge of the
money but, to save his life, he lied and said the money was at his father‟s
house at Chesterville. It was only then that he was taken to his father‟s house.
He added that, in saying that the money was there, his motive was to be
taken to his father‟s house, not to inform his father of his arrest, but to tell his
father that he thought he was going to be killed. The police went with him to
his father‟s house and when they arrived, he went into the house with several
police men. He told his father that he feared that he would be killed, and that
he had informed the police that he had stored money there. Govender and
Mbatha were amongst the police officials present, and Mbatha shortly after
they went inside the house, took the appellant outside to wait in the police
vehicle.
[13] The police remained in the house for some time, and having found
nothing, returned to the vehicles and drove away with the appellant. After
driving to different destinations again with Govender and Mbatha, he was then
taken to a certain spot in Klaarwater, which he claimed he was told to point
out to Van Rensburg later that day, as the place where the robbery occurred.
This is what he pointed out to Van Rensburg, when the latter accompanied
him to do a pointing out later that day. The appellant maintained that he was
forced to point out the scene to Van Rensburg. Govender and Mbatha
threatened him with torture if he failed to do so. The appellant alleged that
before he was taken to the pointing out, Govender made him to sign a blank
form with dotted lines on it.
[14] As I have pointed out in paragraph 4 above, the trial court ruled that the
evidence of the discovery of a firearm with ammunition and pointing out was
admissible and rejected the appellant‟s contention that it ought to be
excluded. In relation to the search and seizure operation conducted at the
appellant‟s house without a search warrant, the trial court was prepared to
assume that despite the urgency, a search warrant could have been obtained
and that the illegal entry was unnecessary. Although the trial court was of the
view that in circumstances the evidence concerned would be inadmissible it
nevertheless regarded it to be admissible because of the provisions of s 35(5)
of the Constitution. The trial court reasoned that the exclusion of the
impugned evidence would, on the facts of the case, have brought the
administration of justice into disrepute. As to the evidence of pointing out the
trial court admitted it because it was satisfied that the pointing out had been
done freely and voluntarily, that the appellant had full knowledge of his rights
and that he had waived them. It found the appellant‟s version to have been
wholly improbable as to be plainly untruthful and rejected it. The trial court
held that the evidence of the discovery of the firearm and ammunition was
corroborated by the evidence of the pointings out and the confession made at
the time by the appellant.
[15] The findings of the trial court found favour with the majority in the court
below and were endorsed on the reasoning that any delay in obtaining a
warrant would have defeated the object which the police sought to achieve,
namely the arrest of the appellant. The court below referred to s 25(3) of the
Criminal Procedure Act in support of its reasoning. As to the evidence of
pointing out, the court below held that it was properly admitted. Accordingly,
the court below dismissed the appellant‟s appeal. The current appeal is with
the special leave of this court.
[16] Before us the appellant submitted that the evidence concerning the
discovery of the firearm ought to have been declared inadmissible on the
grounds that the search and seizure operation was patently unlawful and fell
to be excluded in terms of s 35(5) of the Constitution. It was argued that the
search in the appellant‟s home was illegal and irregular because it was
conducted without a search warrant and after entry into the house had been
illegally obtained. In relation to the pointing out and confession, it was
submitted that the State failed to prove that the appellant‟s constitutional
rights were explained to him prior to and during the pointing out and
confession. It was further submitted by the appellant that the State failed to
prove that the pointing out and confession were freely and voluntarily made.
[17] Although the State in its heads of argument had submitted that the
search and seizure operation conducted at the appellant‟s house was lawful
and that the firearm and ammunition found were properly admitted it
conceded during the hearing that the search was unlawful and that the police
ought to have obtained a search warrant. In relation to the pointing out, the
State sought to justify the admission of the evidence emanating from the
pointing out on the ground that the appellant did the pointing out freely and
voluntarily.
[18] The issue before us therefore is whether the trial court was correct in
ruling that the evidence of both the search and seizure operation and the
pointing out and confession, was admissible.
[19] In South Africa, prior to 1994, the admissibility of improperly obtained
evidence was determined on the basis of its relevancy and the court was not
concerned how that evidence was obtained.2 It would appear that the court,
however, had a discretion to exclude evidence if the strict rules of admissibility
would operate against the accused.3 That approach changed with the advent
of the interim Constitution which came into force on 27 April 1994. Since that
date the Constitution has required criminal trials to be conducted in
accordance with notions of basic fairness and justice, but it is for all courts
hearing criminal trials or criminal appeals to give content to those notions.4
(See also S v Zuma & others 1995 (1) SACR 568 (CC) para 16; 1995 (2) SA
642; 1995 (4) BCLR 401)).
[20] The interim Constitution did not expressly deal with the admissibility of
improperly obtained evidence.5 If it was found that there had been a violation
of the accused‟s rights (which were guaranteed by s 25 of the interim
Constitution), that entitled the accused to approach the court for an
appropriate relief. In other words, it did not prescribe a remedy for treating
unconstitutionally obtained evidence. The remedy now lies in s 35(5) which
provides as follows:
„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.‟
[21] In other words, s 35(5) requires the court to exclude evidence obtained
in a manner that violates any right in the Bill of Rights6 if either the admission
of that evidence will render the trial unfair or otherwise be detrimental to the
administration of justice.
[22] In Key v Attorney-General, Cape Provincial Division and another 1996
(4) SA 187 (CC) para 13 the Constitutional Court set out the general approach
as to what constitutes a fair trial as follows:
2 D T Zeffertt and A P Paizes The South African Law of Evidence 2ed (2009), at 716; Jean
Campbell „Illegally obtained evidence: A reappraisal‟ (1968) 85 SALJ at 246.
3 Mthembu v S [2008] ZASCA 51; [2008] 3 All SA 159 (SCA) para 22.
4 See S v Magwaza [2015] ZASCA 36; 2016 (1) SACR 53 para10, and the cases cited
therein.
5 S v Tandwa & others [2007] ZASCA 34; 2008 (1) SACR 613 (SCA) para 115.
6 Ian Currie and Johan de Waal The Bill of Rights Handbook 6 ed (2013) at 309.
„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, 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.‟ (Footnotes
omitted.)
[23] This court in S v Tandwa7 made it clear that s 35(5) does not provide
for automatic exclusion of unconstitutionality obtained evidence. In this regard
it had this to say (paras 116 to 117):
„[116] . . . .
Evidence must be excluded only if it (a) renders the trial unfair; or (b) is otherwise
detrimental to the administration of justice. This entails that admitting impugned
evidence could damage the administration of justice in ways that would leave the
fairness of the trial intact: but where admitting the evidence renders the trial itself
unfair, the administration of justice is always damaged. Differently put, evidence must
be excluded in all cases where its admission is detrimental to the administration of
justice, including the subset of cases where it renders the trial unfair. The provision
plainly envisages cases where evidence should be excluded for broad public policy
reasons beyond fairness to the individual accused.
[117] In determining whether the trial is rendered unfair, courts must take into
account competing social interests. The court‟s discretion must be exercised “by
weighing the competing concerns of society on the one hand to ensure that the guilty
are brought to book against the protection of entrenched human rights accorded to
accused persons”. Relevant factors include the severity of the rights violation and the
7 See footnote 5 above.
degree of prejudice, weighted against the public policy interest in bringing criminals
to book. Rights violations are severe when they stem from the deliberate conduct of
the police or are flagrant in nature. There is a high degree of prejudice when there is
a close causal connection between the rights violation and the subsequent self-
incriminating acts of the accused. Rights violations are not severe, and the resulting
trial not unfair, if the police conduct was objectively reasonable and neither deliberate
nor flagrant.‟ (Footnotes omitted)
[24] There is a great similarity between s 35(5) of our Constitution and s
24(2) of the Canadian Charter of Rights and Freedom8 and it is therefore not
surprising that the impact of Canadian law, on South African jurisprudence, in
this area has been substantial more especially when it comes to the treatment
of derivative evidence. Thus in S v Pillay 2004 (2) SACR 419 (SCA) para 89
this Court after a thorough review of Canadian cases dealing with s 24(2)
such as R v Collins (1987) 28 CRR 122 (SCC); Thomson Newspapers Ltd et
al v Canada (Director of Investigation and Research, Restrictive Trade
Practices Commission) et al (1990) 47 CRR 1 (SCC) and R v Burlingham 28
(1995) CRR (2nd) 244 (SCC) summed up the Canadian position as follows:
„. . . . What emerges from this is that evidence derived (real or derivative evidence)
from conscriptive evidence, ie self-incriminating evidence obtained through a
violation of a Charter right, will be excluded on grounds of unfairness if it is found
that, but for the conscriptive evidence, the derivative evidence would not have been
discovered. In the present case the information sourced from the illegal monitoring of
accused 10's telephone line, which ultimately led to the discovery of the robbery
money in her house, was not conscriptive evidence.‟
[25] In S v Magwaza 2016 (1) SACR 53 para 15 this court held:
„[15] Although s 35(5) of the Constitution does not direct a court, as does s 24(2) of the
Charter, to consider “all the circumstances” in determining whether the admission of evidence
will bring the administration of justice into disrepute, it appears to be logical that all relevant
circumstances should be considered (Pillay at 433h). Collins lists a number of factors to be
8 The Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11.
Section 24(2) reads:
„(2) Where, in proceedings under subsection (1), a court concludes that evidence was
obtained in a manner that infringed or denied any rights or freedoms guaranteed by this
Charter, the evidence shall be excluded if it is established that, having regard to all the
circumstances, the admission of it in the proceedings would bring the administration of justice
into disrepute.‟
considered in the determination of whether the admission of evidence will bring the
administration of justice into disrepute, such as, for example, 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. In Collins (at 282)
Lamer J reasoned that the concept of disrepute necessarily involves some element of
community views, and “thus requires the Judge to refer to what he conceives to be the views
of the community at large”. Pillay (at 433d – e) accepted that whether the admission of
evidence will bring the administration of justice into disrepute requires a value judgment,
which inevitably involves considerations of the interests of the public.‟
[26] With these principles in mind, I revert to the facts of the case. In regard
to the absence of a search warrant, Govender testified that due to the urgency
of the matter, he did not have adequate time to obtain one. He explained that,
on 15 May 2000, at about 22h00, he was informed by a police informer that
the appellant was implicated in the Klaarwater robbery, and was at his house
after he had been away since the robbery. The informer warned that there
was a possibility that the appellant would not be at his home the following day.
According to the informer the appellant was armed. With this at hand, at about
01h00, Govender and about nine other police officers, including Mbatha,
proceeded to the appellant‟s house and forcefully entered it.
[27] Once they were inside the house, which was a three bedroomed
house, Govender proceeded to one of the bedrooms where he found the
appellant lying on a bed. He switched the light on. The appellant was alone in
the room and his wife and two minor children were in another room, not in the
same room, as was suggested by the appellant. It was Govender‟s evidence
that before arresting the appellant, he identified himself and informed the
appellant of the purpose for which he was at the appellant‟s residence. He
searched the appellant‟s room and found a firearm containing rounds of
ammunition under his pillow. He alerted Mbatha of his find, and then seized
and gave the weapon to Mbatha who had then joined him in the room.
Govender thereafter warned the appellant that he was under arrest and
informed him of his rights in terms of s 35 of the Constitution before driving
away with him.
[28] What gave rise to the pointing out and the confession made at the
pointing out, is the interview Govender, assisted by Mbatha had with the
appellant at Westmead Murder and Robbery Unit office at 03h00 in the
morning of his arrest. Govender‟s evidence regarding what occurred during
the interview and as to what had led to the appellant expressing an intention
to do a pointing out, was to the following effect:
„Yes. --- M‟Lord, the accused was prepared to proceed with the interview and that he
was prepared to proceed, he did not require any services of any legal representative.
M‟Lord, during the course of the interview I put various questions orally to the
accused, and Mr Mbatha was also asking him questions. M‟Lord, it came to a point
that I had to stop the accused from proceeding further as the replies given by him
incriminated himself in the offence. It was at that point that I informed him to stop and
I said that what has been told to me cannot go further by myself, in that it‟s
inadmissible. However, M‟Lord, if he wanted to mention what was said by himself, he
could address that, firstly, by making a statement to a Magistrate or that he could
mention that to an independent police officer of the rank of Captain and above and,
M‟Lord, in this regard he could point out certain points to that policeman. The
accused understood this, from his reply, and after a while indicated that he was
prepared to see a police officer in respect of a pointing out. He did not want to see a
Magistrate. M‟Lord, this interview with the accused took about 45 minutes.‟ (Own
emphasis.)
I must point out that, according to Mbatha, the interrogation took about an
hour or an hour and 15 minutes, not 45 minutes as suggested by Govender.
[29] The following exchange occurred between the trial court and Govender
regarding how it came about that the appellant offered to point out certain
spots in connection with the offences:
„GALGUT DJP
Tell me something, you say in regard to accused No 1 that you
told him he could do a pointing out to an independent policeman of sufficient rank? ---
That is correct, sir.
So was it your idea that he should do a pointing out? --- No, it was not. What I said –
could I explain, M‟Lord?
Well, I wanted to ask you because the way you put it I got the impression that you
suggested to him that he should do a pointing out. --- No, no, M‟Lord. What I
…[intervention]
How did it happen? --- What I said to him is that he could make a statement to what
he said to a Magistrate or he could say that, what he was saying, to a police officer of
sufficient rank or point out certain places to that officer.
Well then, as I understand it, it was you that put the idea into his head to do a
pointing out? --- If that‟s what the Court is saying, M‟Lord, yes, I said that to him from
the replies he had given me.
Well, let‟s make no secret of it. What were those replies then?
--- From the accused?
What is bothering me, you‟ve not suggested that he said to you that he wanted to
point something out to you. --- If I can explain to the Court, M‟Lord.
Yes. --- From the replies of the accused, regarded the places where this offence
happened. From that reply I then canvassed the issue regarding a pointing out. The
pointing out to an officer is about pointing certain places out. That‟s what was said.
On that explanation then, it was not a case of him saying to you that he wanted to
point something out to you? --- Not to me, no.
What …[intervention]
The question of a pointing out arose because you said to him that, if he wanted to, he
could point out whatever to a policeman, an independent policeman? --- That is
correct. That is correct.‟
[30] Mbatha, who was present when the appellant was interrogated at
03h00 in the morning, testified that during the course of the interrogation the
appellant made a number of disclosures which amounted to a confession. His
evidence as to what led to the appellant allegedly offering to point out certain
spots relating to the offence, however, is not clear. When the trial court asked
Mbatha what gave rise to the alleged offer, he said it was because of the
questions that were put to him.
[31] The first question is whether the admission of the impugned evidence
rendered the trial unfair under s 35(5). This is the first leg of an inquiry under s
35(5). The evidence relating to the discovery of a firearm and one emanating
from the pointing out was the only evidence on which the State relied to prove
its case against the appellant. The evidence of a firearm came to light as a
result of a search the police conducted at the appellant‟s home. That search
was unlawful as it occurred without a search warrant. The explanation
proffered by Govender for only arriving at 01h00 at the appellant‟s home
without a warrant cannot be reasonably possibly true if regard is had to the
fact that, already on 12 May 2000, Mbatha, with whom Govender worked
closely on the case, had obtained a written statement from a certain Bongani
Madlala (Madlala) stating that Sammy Gumede of Portadown Place was
involved in the robbery. Mbatha‟s claim that he did not know that Sammy
Gumede referred to in that statement was the appellant cannot be true. In
opposing the appellant‟s application for bail on 11 July 2000 Mbatha relied on
Madlala‟s statement. Portadown Place was, incidentally, the address of the
appellant. It is therefore clear, as submitted by the appellant, that Mbatha and
Govender were aware of the appellant‟s alleged involvement in the offence as
early as 12 May 2000, but did not disclose this.
[32] On the evidence, I am satisfied that a search warrant ought to have
been sought and obtained and there was sufficient time for it to be obtained.
The police were not faced with circumstances of urgency or emergency. The
illegality of a search is therefore beyond question and that much was
conceded by the State. The firearm was obtained by means of the search
which because of its illegality violated the appellant‟s right to privacy.9 But the
fact that the evidence of a firearm was obtained in that manner did not, in my
view, affect the fairness of the trial. This is so because the firearm is real
evidence that the police probably would have found if they had entered the
premises lawfully in terms of a search warrant and without breaching the
appellant‟s right to privacy. The existence of the firearm would have been
revealed independently of the infringement of the appellant‟s right to privacy.
Consequently, the fact that the evidence of a firearm was unfairly obtained did
not necessarily result in unfairness in the actual trial. I am satisfied therefore
that the admission of the evidence of the discovery of the firearm under the
pillow did not render the appellant‟s trial unfair.
[33] The second question is whether the firearm evidence should in any
event have been excluded on the ground that its admission was detrimental to
9 Section 14 of the Constitution.
the administration of justice. This is the second leg of an inquiry under s 35(5)
and it involves public policy. In S v Mphala & another 1998 (1) SACR 654 (W)
at 657f-h (which was quoted with approval by Scott JA in S v Pillay para 10,
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.‟
[34] This Court in Mthembu v S para 26, stated that public policy involves
amongst others „a consideration of the nature of the violation and the impact
that evidence obtained as a result thereof will have, not only on a particular
case, but also on the integrity of the administration of justice in the long term.‟
As pointed out Govender and Mbatha did not disclose that they were aware of
the appellant‟s alleged involvement in the crime, several days before they
unlawfully entered his premises. I agree with the submission of the appellant
that where the police deliberately mislead a court in an attempt to justify a
serious rights violation, the administration of justice is brought into disrepute.
[35] In any event, in considering the second leg of the s 35(5) inquiry both
evidence concerning the firearm and the pointing out must be analysed
together as the trial court convicted the appellant on the basis of its finding
that the discovery of the firearm and ammunition was corroborated by the
evidence of the pointings out and the confession made. There was therefore
an inextricable link between the firearm evidence and the pointing out
evidence, which was obtained by some degree of co-ercion.
[36] The appellant‟s right to privacy and the right against self-incrimination
were flagrantly violated by the police during the investigation. Following upon
an illegal search at his home the appellant was interrogated by the police
officers including Govender and Mbatha at their offices. This led to the
appellant allegedly offering to do a pointing out. As in the case of Magwaza,10
the evidence of Govender and Mbatha of what transpired from the time of the
appellant‟s arrest until he arrived at a confessing state of mind was unclear
and far from satisfactory. The appellant‟s version was that the pointing out
was not free and voluntary. The appellant alleged that he was severely
tortured by the police during the course of the interrogation and to save his
life, he had to lie about the money by saying that it was at his father‟s house.
It is common cause that the police took the appellant to his father‟s house in
Chesterville though they denied that they did so for the reasons advanced by
the appellant. His father corroborated the appellant when testifying that the
reason why the police took the appellant to his home was in order to conduct
a search of those premises.
[37] Govender and Mbatha contradicted each other on the duration of
interrogation. Govender said it lasted about 45 minutes while Mbatha said it
lasted about an hour or an hour and 15 minutes. This contradiction
undermined the reliability and integrity of Govender and Mbatha‟s evidence
concerning what it was that led to the appellant wanting to do a pointing out of
the crime scene and confessing to his participation in the robbery. In addition,
I find Govender‟s evidence implausible that when he asked the appellant
whether he was involved in the commission of the crime, the appellant simply
answered „yes‟ without any form of co-ercion being applied to the appellant.
[38] The police appeared to have been over zealous in conducting their
investigation and by so doing, violated the appellant‟s constitutional rights.
They entered the appellant‟s house by forcing open the front door at 01h00 in
the morning of 16 May 2000. At about 03h00 they started interrogating him at
their office in Westmead. According to Govender by 04h00 of the same
morning the appellant was ready to confess to the crime and to point out to
the police the scene of the crime. At about 11h00 Captain Van Rensburg was
approached to conduct a pointing out with the appellant and he began a pre-
10 Supra para 19.
pointing out interview with the appellant at 13h30. The pointing out process
was finalised at 14h40.
[39] As pointed out above, the appellant‟s s 35 rights were read out to him
as set out in the form headed „Section 35 of Constitution Arrested, Detained
and Accused Persons‟ which was an exhibit at the trial. This form in para
1(b)(ii) records the right of an arrested person to be informed of the
consequences of not remaining silent. Neither Govender nor Mbatha stated
that when this form was read out to the appellant, this was explained to him.
Although Govender maintained that he had explained this to the appellant
when he was arrested, Mbatha who was present, simply said Govender had
advised the appellant of his right to remain silent. The appellant‟s right to
remain silent and his right to be protected against self-incrimination were not
protected. The investigation was conducted with haste and was completed
almost within twelve hours of his arrest. In my view, given the serious nature
of the allegations against the appellant, Govender and/or Mbatha should have
informed him of the consequences of not remaining silent.
[40] When regard is had to the manner in which Govender and Mbatha
sought to justify their failure to obtain a search warrant, followed by their
inadequate and in certain respects contradictory explanation of how the
appellant‟s rights were explained to him on arrest and before interrogation,
and why after a very short and straightforward interrogation at 3am, the
appellant admitted his guilt and wished to do a pointing out, but not tell his
story to a magistrate, it is clear he must have been subjected to a
considerable degree of co-ercion, such that his conduct was neither free nor
voluntary.
[41] In my view, having regard to all of the circumstances of this case, the
admission of the evidence of the discovery of the firearm and the pointing out
evidence, was detrimental to the administration of justice under s 35(5) and it
ought to have been excluded. Public policy requires the police to observe and
respect the law in the conduct of their investigation. Police officers are not
above the law and must conduct their investigations within the parameters of
the law, which includes the Constitution. As the discovery of a firearm and the
pointing out and confession made at the pointing out were the sole evidence
against the appellant, and ought not to have been admitted, he should not
have been convicted. Therefore the appeal must succeed.
[42] In the result I make the following order:
The appeal succeeds and the convictions and sentences imposed
pursuant thereto are set aside.
________________
D H ZONDI
JUDGE OF APPEAL
APPEARANCES:
For appellant:
J E Howse
Instructed by:
Nyandeni & Partners, Durban
Honey Attorneys, Bloemfontein
For respondent:
R Xaba
Instructed by:
The Director of Public Prosecutions,
Pietermaritzburg
The 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
30 September 2016
STATUS
Immediate
Gumede v The State (800/15) [2016] ZASCA 148 (30 September 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 Mr Trevor Gumede against his conviction on
one count each of murder, robbery and possession of an unlicensed firearm and
ammunition.
During the morning of 13 April 2000, a pension pay-out point at Klaarwater
Community Centre was attacked by a group of armed men during which
approximately R460 000 was taken. In the course of the robbery, the perpetrators
opened fire and as a result, one of the security guards at the scene was fatally
wounded and dispossessed of his firearm with ammunition. The perpetrators fled the
scene of the crime and no one at the scene was able to identify them.
A month later, on 16 May 2000 at about 01h00 Mr Gumede was arrested at his
home on the strength of the information the police received from a police informer.
The police, without a search warrant, gained entry into the house by forcing open the
front door. Once they were inside the house they conducted a search, during which a
9mm pistol was found under the appellant’s pillow. After Mr Gumede’s arrest he was
interrogated by the police at 03h00 and by 04h00 he was ready to participate in a
pointing out. Some few hours later he participated in a pointing out during which he
pointed out to a police Captain certain spots and made certain statements to him,
amounting to a confession. Mr Gumede’s contention was that the evidence which the
State tendered, was inadmissible. This was rejected by the Durban High Court and it
convicted him on all of the counts. His appeal to the Full Court in Pietermaritzburg
was dismissed.
The SCA held that the evidence on which the State relied should have been ruled
inadmissible as it was obtained through the violation of his constitutional right to
privacy and his right against self-incrimination. The police evidence of what
transpired from the time Mr Gumede was arrested until he arrived at a confessing
state of mind was unclear and far from being satisfactory. Our Constitution, stated
the SCA, now requires criminal trials to be conducted in accordance with notions of
basic fairness and justice. In terms of s 35(5) of the Constitution: ‘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 detrimental to
the administration of justice.’ The SCA found the admission of the evidence
concerned to have been detrimental to the administration of justice.
The SCA concluded that as the evidence ought not to have been admitted, Mr
Gumede should not have been convicted. Mr Gumede’s convictions were
accordingly set aside.
---ends--- |
1793 | non-electoral | 2011 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 266/10
In the matter between:
M VAN DER WESTHUIZEN
Appellant
and
THE STATE
Respondent
Neutral citation: Van der Westhuizen v S (266/10) [2011] ZASCA 36
(28 March 2011).
Coram:
CLOETE, SNYDERS and THERON JJA
Heard:
23 FEBRUARY 2011
Delivered:
28 MARCH 2011
Summary:
Criminal Procedure: the requirement (in s 32 of the National
Prosecuting Authority Act) that a prosecutor must act impartially, explained;
held that an accused can waive the prohibition (contained in s 105A(10) of the
Criminal Procedure Act, 51 of 1977) on disclosure of plea-bargain
negotiations where no agreement is reached; held that where a special entry
in terms of s 317(1) of the Criminal Procedure Act is sought on the basis that
cross-examination of a State witness was unjustifiably curtailed, the court can
avoid making a special entry by recalling the witness for further cross-
examination; the effect of a formal admission made under s 220 of the
Criminal Procedure Act decided and the circumstances when such an
admission may be withdrawn, discussed. Sentence: Deterrence and
retribution do not recede into the background as purposes of sentencing
where an accused has not acted with substantial diminished responsibility.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: Western Cape High Court (Cape Town) (Louw J sitting as
court of first instance):
The appeal is dismissed.
______________________________________________________________
JUDGMENT
______________________________________________________________
CLOETE JA (SNYDERS and THERON JJA concurring):
Introduction
[1] On 28 July 2006 the appellant shot and killed his three children. He
was found guilty of three counts of murder by the Western Cape High Court
(Louw J) and sentenced to 14 years' imprisonment on each count. Nine years
of each of the sentences on the second and third counts was ordered to run
concurrently with the sentence on the first count. The effective term of
imprisonment was therefore 24 years. The appellant has appealed, with the
leave of the court a quo, against both his conviction and the sentence
imposed. This judgment addresses two questions:
(1)
whether the appellant had a fair trial; and
(2)
whether, having consented to admissions being recorded formally in
terms of s 220 of the Criminal Procedure Act (the CPA),1 the appellant was
entitled, without more, to lead evidence and advance argument in
contradiction of such admissions.
Fair trial
[2] The submission that the appellant had not been accorded a fair trial
was based on an argument that the prosecutor had not been impartial, and on
specific instances of alleged misconduct on the part of the prosecutor and the
court.
1 51 of 1977.
Impartiality of the prosecutor
[3] I shall deal first with the impartiality of the prosecutor. The appellant's
attorney submitted:
(a)
that the prosecutor had called Inspector Koekemoer, a sniper and part
of the special task force deployed at the appellant's house after he had shot
his children, to give evidence prejudicial to the appellant when the prosecutor
could have called the hostage negotiators, especially the senior negotiator
Superintendent Herman Bosman, whose evidence, it was submitted, would
have been less prejudicial to the appellant and important for the court to
appreciate the appellant's mental state; and
(b)
that the prosecutor had not called:
(i)
Ronel Arendse, the psychologist to whom Mrs van der Westhuizen had
been referred on the date of the shootings, who was still treating her when
she gave evidence and whose summary of what was told to her allegedly
differed from Mrs van der Westhuizen's evidence as to what had happened on
the night of the shootings;
(ii)
Tanya Swart (a psychologist at Valkenberg and part of the team that
observed the appellant when he was referred there for an inquiry into his
mental state and a report as contemplated in chapter 13 of the CPA) whose
notes contained material which the defence considered to be of assistance to
the appellant, which were used to cross-examine State witnesses and which
were handed in as an exhibit by the defence;
(iii)
Ronel Kemp (née Ollewagen), a psychologist consulted by the
appellant and Mrs van der Westhuizen in 2004; and
(vi)
Captain Marinda van Zyl, a social worker from the Employee
Assistance Services of the police, whom both the appellant and Mrs van der
Westhuizen consulted during the year in which the shootings took place.
[4] The appellant's attorney asked this court to draw the inference that
witnesses that could support the appellant's case, were not called; and that
the State had gone out of its way to obtain and place before the court
evidence that showed the appellant in a bad light. At the heart of this
argument is a fundamental misconception of the duties and function of a
prosecutor in a criminal case.
[5] Section 179(4) of the Constitution2 provides that:
'National legislation must ensure that the prosecuting authority exercises its functions
without fear, favour or prejudice.'
The national legislation concerned, is the National Prosecuting Authority Act.3
Two sections of that Act are relevant for present purposes, namely s 32 and
s 22(6). The former section provides:
'(1)(a) A member of the prosecuting authority shall serve impartially and exercise,
carry out or perform his or her powers, duties and functions in good faith and without
fear, favour or prejudice and subject only to the Constitution and the law.'
The oath and affirmation prescribed in subsec (2)(a) of the same section also
contain the words 'enforce the Law of the Republic without fear, favour or
prejudice'. Section 22(6) of the National Prosecuting Authority Act requires the
National Director of Public Prosecutions (in consultation with the Minister and
after consultation with Deputy National Directors and Directors) to frame a
code of conduct, and provides that such code shall be complied with by the
prosecuting authority.4
[6] The Code of Conduct for Members of the National Prosecuting
Authority was recently published by GN R1257 in GG 33907 of 29 December
2010. It contains the following provisions relevant for present purposes:
'B.
INDEPENDENCE
The prosecutorial discretion to institute and to stop criminal proceedings should be
exercised independently, in accordance with the Prosecution Policy and the Policy
Directives, and be free from political, public and judicial interference.
C.
IMPARTIALITY
Prosecutors should perform their duties without fear, favour or prejudice. In
particular, they should ─
(a)
carry out their functions impartially and not become personally, as opposed to
professionally, involved in any matter;
(b)
avoid taking decisions or involving themselves in matters where a conflict of
interest exists or might possibly exist;
2 Constitution of the Republic of South Africa, 1996.
3 32 of 1998.
4 Which, in terms of s 4 of the Act, comprises the National Director, Deputy National Directors,
Directors, Deputy Directors and prosecutors.
(c)
take into consideration the public interest as distinct from media or partisan
interests and concerns, however vociferously these may be presented;
(d)
avoid participation in political or other activities which may prejudice or be
perceived to prejudice their independence and impartiality;
(e)
not seek or receive gifts, donations, favours or sponsorships that may
compromise, or may be perceived to compromise, their professional integrity;
(f)
act with objectivity and pay due attention to the constitutional right to equality;
(g)
take into account all relevant circumstances and ensure that reasonable
enquiries are made about evidence, irrespective of whether these enquiries are to
the advantage or disadvantage of the alleged offender;
(h)
be sensitive to the needs of victims and do justice between the victim, the
accused and the community, according to the law and the dictates of fairness and
equity; and
(i)
assist the court to arrive at a just verdict and, in the event of a conviction, an
appropriate sentence based on the evidence presented.'
[7] The Code was not in operation at the time of the appellant's
prosecution but it is consistent with the United Nations Guidelines on the Role
of Prosecutors5 as well as the Standards of Professional Responsibility and
Statements of the Essential Duties and Rights of Prosecutors of the
International Association of Prosecutors.6 Clause 13 of the UN Guidelines
provides:
'In the performance of their duties, prosecutors shall:
(a)
Carry out their functions impartially and avoid all political, social, religious,
racial, cultural, sexual or any other kind of discrimination;
(b)
Protect the public interest, act with objectivity, take proper account of the
position of the suspect and the victim, and pay attention to all relevant
circumstances, irrespective of whether they are to the advantage of the suspect.'
[8] The International Association of Prosecutors' Standards contains the
following provisions relevant for present purposes:
'3.
Impartiality
Prosecutors shall perform their duties without fear, favour or prejudice.
5 Adopted by the 8th United Nations Congress on the Prevention of Crime and the Treatment
of Offenders, in Havana, 27 August to 7 September 1990.
6 Adopted in Amsterdam in April 1999.
In particular they shall:
carry out their functions impartially;
remain unaffected by individual or sectional interests and public or media pressures
and shall have regard only to the public interest; act with objectivity;
have regard to all relevant circumstances, irrespective of whether they are to the
advantage or disadvantage of the suspect;
in accordance with local law or the requirements of a fair trial, seek to ensure that all
necessary and reasonable enquiries are made and the result disclosed, whether that
points towards the guilt or the innocence of the suspect;
always search for the truth and assist the court to arrive at the truth and to do justice
between the community, the victim and the accused according to law and the
dictates of fairness.
4.
Role in criminal proceedings
4.1
Prosecutors shall perform their duties fairly, consistently and expeditiously.
. . .
(d)
in the institution of criminal proceedings, they will proceed only when a case
is well-founded upon evidence reasonably believed to be reliable and admissible,
and will not continue with a prosecution in the absence of such evidence; throughout
the course of the proceedings, the case will be firmly but fairly prosecuted; and not
beyond what is indicated by the evidence.'
[9] I pause to emphasise that the concept of impartiality in the South
African code, the UN Guidelines and the Standards of the International
Association of Prosecutors is not used in the sense of not acting adverserially,
but in the sense of acting even-handedly, ie avoiding discrimination; and the
duty to act impartially is therefore part of the more general duty to act without
fear, favour or prejudice.
[10] Against this local and international background, it would be apposite to
quote from the judgment of Rand J of the Supreme Court of Canada in
Boucher v The Queen:7
'It cannot be over-emphasized that the purpose of a criminal prosecution is not to
obtain a conviction, it is to lay before a jury what the Crown considers to be credible
evidence relevant to what is alleged to be a crime. Counsel have a duty to see that
7 Boucher v The Queen [1955] SCR 16 at 23-4.
all available legal proof of the facts is presented: it should be done firmly and pressed
to its legitimate strength but it must also be done fairly. The role of prosecutor
excludes any notion "of winning or losing"; his function is a matter of public duty than
which in civil life there can be none charged with greater personal responsibility. It is
to be efficiently performed with an ingrained sense of the dignity, the seriousness and
the justness of judicial proceedings.'
The passage has been repeatedly referred to by that court in subsequent
decisions, see eg Nelles v Ontario,8 CanadianOxy Chemicals Ltd v Canada
(Attorney General),9 R v Stinchcombe,10 Proulx v The Queen;11 and it has
been quoted with approval by our Constitutional Court in S v Shaik & others,12
by the House of Lords and the Judicial Committee of the Privy Council in R v
H,13 Randall v The Queen,14 Benedetto v The Queen; Labrador v The
Queen,15 by the High Court of Australia in Libke v R16 and by the Supreme
Court of Ireland in D O v DPP.17
[11] The initial remarks of Rand J in Boucher in the passage quoted above
must not, however, be misunderstood. In our practice it is not the function of a
prosecutor disinterestedly to place a hotchpotch of contradictory evidence
before a court and then leave the court to make of it what it wills. On the
contrary, it is the obligation of a prosecutor firmly but fairly and dispassionately
to construct and present a case from what appears to be credible evidence,
and to challenge the evidence of the accused and other defence witnesses
with a view to discrediting such evidence, for the very purpose of obtaining a
conviction.18 That is the essence of a prosecutor's function in an adversarial
system and it is not peculiar to South Africa:
8 Nelles v Ontario [1989] 2 SCR 170.
9 CanadianOxy Chemicals Ltd v Canada (Attorney General) [1999] 1 SCR 743 para 25.
10 R v Stinchcombe [1991] 3 SCR 326 p 10.
11 Proulx v The Queen 2001 SCC 66, [2001] 3 SCR 9 para 41.
12 S v Shaik & others [2007] ZACC 19, 2008 (1) SA 1 (CC) para 67.
13 R v H [2004] UKHL 3, [2004] 2 AC 134, [2004] 1 All ER 1269 (HL) para 13.
14 Randall v The Queen [2002] UKPC 19, [2002] 1 WLR 2237 (PC) para 10.
15 Benedetto v The Queen; Labrador v The Queen [2003] UKPC 27, [2003] 1 WLR 1545 (PC)
para 54.
16 Libke v R [2007] HCA 30; (2007) 235 ALR 517 para 71.
17 D O v DPP [2006] IESC 12.
18 The South African Code for Members of the National Prosecuting Authority makes it clear
in para D1(e) that 'throughout the course of the proceedings the case should be firmly but
fairly and objectively prosecuted'.
(a)
Lord Bingham said in Randall:19
'Fairness
A contested criminal trial on indictment is adversarial in character. The prosecution
seeks to satisfy the jury of the guilt of the accused beyond reasonable doubt. The
defence seeks to resist and rebut such proof. The objects of the parties are
fundamentally opposed. . . .
. . . The adversarial format of the criminal trial is indeed directed to ensuring a
fair opportunity for the prosecution to establish guilt and a fair opportunity for the
defendant to advance his defence. . . .
(I)
The duty of prosecuting counsel is not to obtain a conviction at all costs but to
act as a minister of justice: R v Puddick (1865) 4 F & F 497, 499; R v Banks [1916] 2
KB 621, 623. The prosecutor's role was very clearly described by Rand J in the
Supreme Court of Canada. . . .'
and the learned Law Lord then went on to quote the remarks of Rand J in
Boucher set out above.
(b)
Justice Sutherland said in Berger v US:20
'The United States Attorney is the representative not of an ordinary party to a
controversy, but of a sovereignty whose obligation to govern impartially is as
compelling as its obligation to govern at all; and whose interest, therefore, in a
criminal prosecution is not that it shall win a case, but that justice shall be done. As
such, he is in a peculiar and very definite sense the servant of the law, the twofold
aim of which is that guilt shall not escape or innocence suffer. He may prosecute with
earnestness and vigour ─ indeed, he should do so. But, while he may strike hard
blows, he is not at liberty to strike foul ones. It is as much his duty to refrain from
improper methods calculated to produce a wrongful conviction as it is to use every
legitimate means to bring about a just one.'
(c)
Madame Justice L'Heurex-Dubé said in R v Cook:21
'Nevertheless, while it is without question that the Crown performs a special function
in ensuring that justice is served and cannot adopt a purely adversarial role towards
the defence (Boucher v The Queen, [1955] SCR 16; Power, supra, at p 616), it is well
recognized that the adversarial process is an important part of our judicial system
and an accepted tool in our search for the truth: see, for example R v Gruenke,
[1991] 3 SCR 263, at p 295, per L'Heureux-Dubé J. Nor should it be assumed that
19 Above, n 14 paras 9 and 10.
20 Berger v US (1935) 295 US 78 at 88.
21 R v Cook [1997] 1 SCR 113, (1997) 114 CCC (3d) 481 (SCC) para 21.
the Crown cannot act as a strong advocate within this adversarial process. In that
regard, it is both permissible and desirable that it vigorously pursue a legitimate result
to the best of its ability. Indeed, this is a critical element of this country's criminal law
mechanism: R v Bain, [1992] 1 SCR 91; R v Jones, [1994] 2 SCR 229; Boucher,
supra. In this sense, within the boundaries outlined above, the Crown must be
allowed to perform the function with which it has been entrusted; discretion in
pursuing justice remains an important part of that function.' (Underlining in the
original judgment.)
[12] Where an accused is represented, it is not the function of a prosecutor,
as suggested by the appellant's attorney, to call evidence which is destructive
of the State case or which advances the case of the accused.22 The
prosecutor is not obliged to play chess against him ─ or herself. In England,
the Privy Council in the case of Seneviratne v R23 allowed the accused's
appeal on a narrow ground not relevant for present purposes, but rejected the
accused's more general submission that the Crown had an obligation to call
every eyewitness to the crime by saying:24
'Their Lordships do not desire to lay down any rules to fetter discretion on a matter
such as this which is so dependent on the particular circumstances of each case. Still
less do they desire to discourage the utmost candour and fairness on the part of
those conducting prosecutions; but at the same time they cannot, speaking generally,
approve of an idea that a prosecution must call witnesses irrespective of
considerations of number and of reliability, or that a prosecution ought to discharge
the functions both of prosecution and defence. If it does so confusion is very apt to
result, and never is it more likely to result than if the prosecution calls witnesses and
then proceeds almost automatically to discredit them by cross-examination.
Witnesses essential to the unfolding of the narratives on which the prosecution is
based, must, of course, be called by the prosecution, whether in the result the effect
of their testimony is for or against the case for the prosecution.' (Emphasis added.)
Madame Justice L'Heurex-Dubé in R v Cook,25 having quoted this passage,
with the emphasis added, continued:
22 It has been held in Zimbabwe that the converse is the case where an accused is not
represented: Smith v Ushewokunze & another 1998 (3) SA 1125 (ZSC) at 1130J-1131H;
1997 (2) ZLR 544; 1998 (2) BCLR 170.
23 Seneviratne v R [1936] 3 All ER 36.
24 At pp 48-49.
25 Above, n 21 para 25.
'This obiter ruling, apparently intended to clarify the existing law in this area, did not
quite accomplish its desired task. Instead, it would seem to have heightened the level
of confusion. It was primarily the combined effect of the two portions highlighted
above which has given rise to the most concern. At first, the Privy Council appears to
be approving of a broad discretion and a reluctance to impose a need for the Crown
to call witnesses for both sides. In the second portion, however, it would seem that
the Court is indicating that certain witnesses, those "essential to the … narrative",
must be called in every case. On the surface at least, these opposing comments are
not easily reconcilable.'
The learned justice then referred to the Privy Council case of Adel
Muhammed El Dabbah v Attorney-General for Palestine26 and Canadian
cases including Lemay v The King27 and R v Yebes.28 In the Yebes matter
McIntire J said:29
'The Crown has a discretion as to which witnesses it will call in presenting its case to
the court. This discretion will not be interfered with unless the Crown has exercised it
for some oblique or improper reason: see Lemay v The King, supra. No such
improper motive is alleged here. While the Crown may not be required to call a given
witness, the failure of the Crown to call a witness may leave a gap in the Crown's
case which will leave the Crown's burden of proof undischarged and entitle the
accused to an acquittal. It is in this sense that the Crown may be expected to call all
witnesses essential to the unfolding of the narrative of events upon which the
Crown's case is based.'
In Cook30 Madam Justice L'Heureux-Dubé said of this passage, referring back
to the second passage emphasised in Seneviratne:
'"[E]ssential to the . . . narrative" does not mean, as many have attempted to suggest,
that all witnesses with relevant testimony have to be called by the prosecution. On
the contrary, it refers solely to the Crown's burden of proof in a criminal proceeding.
Where the "narrative" of a given criminal act is not adequately set forth, elements of
the offence might not be properly proven, and the Crown risks losing its case.'
[13] It is therefore within the discretion of the prosecutor to decide which
witnesses to call as part of the State case. The duty of the prosecutor 'to see
26 Adel Muhammed El Dabbah v Attorney-General for Palestine [1944] AC 156.
27 Lemay v The King [1952] 1 SCR 232.
28 R v Yebes [1987] 2 SCR 168.
29 Para 28.
30 Above, n 21 para 31.
that all available legal proof of the facts is presented', in the words of Rand J
in Boucher, is discharged by making the evidence (and not only the witnesses
subpoenaed by the State) available to the accused's legal representatives.
The South African Code of Conduct for Members of the National Prosecuting
Authority provides in chapter D, which deals with 'Role in Administration of
Justice':
'2.
Prosecutors should, furthermore ─
. . .
(g)
as soon as is reasonably possible, disclose to the accused person relevant
prejudicial and beneficial information, in accordance with the law or the requirements
of a fair trial.'
I respectfully agree in this regard with the remarks of Justice Sopinka who
delivered the judgment of the Supreme Court of Canada in Stinchcombe:31
'As long ago as 1951, Cartwright J stated in Lemay v The King, [1952] 1 SCR 232, at
p 257:
"I wish to make it perfectly clear that I do not intend to say anything which might be
regarded as lessening the duty which rests upon counsel for the Crown to bring
forward evidence of every material fact known to the prosecution whether favourable
to the accused or otherwise. . . ."
This statement may have been in reference to the obligation resting on counsel for
the Crown to call evidence rather than to disclose the material to the defence, but I
see no reason why this obligation should not be discharged by disclosing the material
to the defence rather than obliging the Crown to make it part of the Crown's case.'
(Emphasis by Sopinka J.)32
I would emphasise, however, that it is not necessarily sufficient for the
prosecutor to tender State witnesses to the defence at the end of the State
case, nor does the prosecutor necessarily discharge the duty of disclosure by
making available the contents of the dossier: if there is evidence which the
prosecutor knows or ought reasonably to suspect is or may be destructive of
the State case, or which tends or might tend to support the defence case, and
which the prosecutor knows or ought reasonably to suspect is not known to
the defence, it is the prosecutor's duty to bring this evidence specifically to the
attention of the accused's legal representatives. It would therefore, for
31 Above, n 10 p 15.
32 This passage was approved in Cook above, n 21 para 36.
example, not be necessary for a prosecutor to draw attention to a specific
witness's statement favourable to the accused in the dossier made available
to the defence, for he who runs may read; but the prosecutor would be
obliged to inform the defence that a particular witness, who has not given a
statement, might to the defence's advantage be consulted and why, and also
to assist, where necessary, in making such a witness available; and the
prosecutor would also be obliged to furnish the defence with a document
which is not in the dossier, which favours the accused's case or which is
destructive of the State case, which the prosecutor believes or ought
reasonably to believe is not in the possession of the defence. But the
prosecutor's obligation is not to put the information before the court.
[14] I therefore conclude that there is no substance in the argument that the
appellant did not receive a fair trial because the State called some witnesses,
and not others. Nor did the prosecutor simply make State witnesses not called
by the State available to the defence: the prosecutor placed on record that he
would assist the defence in locating and consulting with such witnesses. And
if the appellant's attorney did not insist that subpoenas issued at the suit of the
defence were enforced, that cannot be laid at the door of the prosecution.
[15] I turn to consider the specific complaints made by the appellant's
attorney in support of the argument that the appellant did not receive a fair
trial. For reasons which will become apparent, it is not necessary to deal with
all of them.
Section 105A of the CPA
[16] Plea negotiations as contemplated in s 105A of the CPA took place
between the State and the appellant's legal representatives. Nothing came of
these negotiations but in the course of them the appellant's legal
representatives furnished the prosecution with reports on the appellant
authored by a psychiatrist, Dr Neil Fouché, and a psychologist, Mrs Charlotte
Hoffman. Those reports were sent by the prosecution to Dr Killisky (a member
of the team at Valkenberg Hospital which inquired into, and reported on, the
appellant's mental state in terms of chapter 13 of the CPA) and were seen by
Dr Panieri-Peter (a member of the same team) about two days before she
was due to give evidence. She had regard to them and intended referring to
them in her evidence. The appellant's attorney submitted that this constituted
an irregularity inasmuch as s 105A(10)(a)(i) provides:
'Where a trial starts de novo as contemplated in subsec (6)(c)33 or (9)(d)34 ─
(a)
the agreement shall be null and void and no regard shall be had or reference
made to ─
(i)
any negotiations which preceded the entering into the agreement.'
The section contains no reference to a situation such as the present where
there was no agreement, but it must apply equally in such a case. Normally,
an accused cannot consent to an incorrect procedure being followed: S v
Lapping;35 but the section contains a proviso in the following terms:
'Unless the accused consents to the recording of all or certain admissions made by
him or her in the agreement or during any proceedings relating thereto and any
admissions so recorded shall stand as proof of such admission.'
The effect of the proviso is that an accused may waive the protection afforded
by the section and agree to the recording of admissions. A fortiori, then, can
an accused agree to the use of documents brought into existence for the
purposes of s 105A proceedings which do not contain admissions, but which
are unfavourable or, for that matter, favourable to the accused. And that is
exactly what happened here.
[17] After Dr Panieri-Peter had read her report into the record, the
appellant's attorney pointed out that the reports of the appellant's experts sent
to the prosecution as part of the s 105A proceedings, had come into her
hands. The court then adjourned for the day. The following morning at the
commencement of proceedings the appellant's attorney said:
'Edele, dit is nog steeds my submissie dat die verslae was ingehandig in Artikel 105A
verrigtinge, en dat dit bespreek was in daardie omstandighede. Ek gaan egter, of ek
was gister geskok gewees dat hierdie getuie dit genoem het, dat hierdie verslae
33 'If the court has recorded a plea of not guilty, the trial shall start de novo before another
presiding officer: Provided that the accused may waive his or her right to be tried before
another presiding officer.'
34 'If the prosecutor or the accused withdraws from the agreement as contemplated in
paragraph (b)(ii), the trial shall start de novo before another presiding officer: Provided that
the accused may waive his or her right to be tried before another presiding officer.'
35 S v Lapping 1998 (1) SACR 409 (W) and cases cited at 411g-412h.
oorhandig aan haar was. Ek het dit egter met die Staat bespreek, die Staat het my 'n
verduideliking daaroor gegee. Ek gaan nie beswaar maak dat sy dan getuienis
daaroor gee nie. Indien daar enige aspekte is wat ek voel wat verkeerdelik genoem
word, of 'n verkeerde afleiding uit daardie verslae, dan sal ek dit laat uitblyk in
kruisondervraging.'
After further discussions the court, addressing the prosecutor, said that the
appellant's attorney did not object to Dr Panieri-Peter continuing with her
evidence, obviously by dealing with the appellant's expert reports, but that he
(the appellant's attorney) would deal with that evidence in cross-examination.
The prosecutor confirmed that that was so. The learned judge then asked the
appellant's attorney whether the position as had just been explained, was
correct, and the appellant's attorney confirmed that it was. Dr Panieri-Peter
continued with her evidence but before dealing with the reports from the
defence, said:
'I have deliberately left out the inconsistencies in this Psychologist and the
Psychiatrist reports about memory. I don't know, can I comment on those, because
that is also relevant to the inconsistency of memory, but I just want to be clear,
because there was a dispute about documents. I want to be clear on that information
first.'
The judge then addressed the appellant's attorney and enquired: 'Ek wil net
seker maak wat u houding is daaromtrent.' The appellant's attorney asked for
an opportunity to take instructions, to which the judge responded:
'Ja, maar u moet nou besluit, meneer, watter kant toe u wil gaan daarmee, want ek
verstaan u het dit oorweeg om te sê u het nie 'n beswaar as daar na verwys word
nie, want u gaan in elk geval daarmee handel in kruisverhoor. Nou kom dit nou by die
punt, en volgens die getuie is daar belangrike inligting daarin, feitlike weergawes wat
vir haar van belang is om 'n mening uit te spreek.'
The court then adjourned at the request of the appellant's attorney and on
resumption, the latter said:
'Dit is my instruksies om nie beswaar te maak teen die getuienis wat gelei word nie,
maar versoek spesifiek dat daar spesifieke verwysing gemaak sal word na 'n
persoon se verslag . . . . dat die verslae nie in een bespreek word, hetsy van
Charlotte Hoffman of van Niel Fouché nie, maar indien sy dan net 'n verwysing sal
maak van 'n spesifieke verslag, na wat verwys word.'
[18] In the circumstances, the proposition that the appellant did not have a
fair trial because reports handed to the State in the course of s 105A
proceedings had come into the hands of a State witness and were
commented on by the State witness, is untenable. The attitude of the
appellant's attorney as reflected in the exchanges summarised above was
eminently sensible if the defence intended to call the witnesses whose reports
had been handed to the prosecution. It would have been the duty of the
appellant's attorney to put the contents of the reports to State witnesses who
could comment thereon and that included Dr Panieri-Peter. Allowing the State
to lead such comments in her evidence in chief had the advantage that the
defence could consult its expert witnesses after her comments were known,
and then put the reply of the defence witnesses to her criticism of their reports
in cross-examination, so obviating the necessity for an adjournment during
cross-examination to enable the defence to take instructions.
Special entries
[19] The next complaint advanced by the appellant's attorney was that his
cross-examination of Mrs van der Westhuizen had been unjustifiably limited
by the court a quo, and that the court had refused to make a special entry in
terms of s 31736 of the CPA in this regard. It is convenient to consider this
point together with the further complaint by the appellant's attorney that a
statement by Ms Ronel Arendse was not timeously disclosed to the defence
and that the court refused to make a special entry in this regard as well.
[20] As I have said, Ms Ronel Arendse is a psychologist, to whom Mrs van
der Westhuizen was referred on the date of the incident and who was still
36 Section 317(1) of the CPA provides:
'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 a special entry is made is of the opinion that the application is not made bona
fide or that it is frivolous or absurd or that the granting of the application would be an abuse of
the process of the court.'
treating her when Mrs van der Westhuizen gave evidence. These facts
emerged during cross-examination of Mrs van der Westhuizen on Thursday 6
November 2008. After the court had adjourned, the prosecutor looked at a
report from Ms Arendse, saw that it referred to other reports, obtained those
reports from her and forwarded same to the appellant's attorney because they
contained references to what had happened during the night of the shootings.
The reports were received by the appellant's attorney during the afternoon of
Friday 7 November 2008. The following Monday, 10 November 2008, the
appellant's attorney asked for a special entry to be made in terms of s 317
because the defence had not had an opportunity to cross-examine Mrs van
der Westhuizen on the alleged differences between the report and Mrs van
der Westhuizen's evidence on the events of the night in question. The
prosecutor suggested that Mrs van der Westhuizen be recalled for such
cross-examination.
[21] The appellant's attorney had by then indicated to the court that he
would apply for a special entry also on the basis that he had been prevented
from properly cross-examining Mrs van der Westhuizen. The court indicated
that Mrs van der Westhuizen would be recalled for further cross-examination
and instructed the appellant's attorney to cover both aspects ─ the alleged
differences between Ms Arendse's report and Mrs van der Westhuizen's
evidence, as well as any other aspects he wished to canvass with Mrs van der
Westhuizen which would have given rise to a special entry. The further cross-
examination of Mrs van der Westhuizen stood over for three days at the
request of the appellant's attorney to enable him to prepare and other
witnesses were called by the State in the meantime. Before the cross-
examination commenced, the presiding judge again instructed the appellant's
attorney to cross-examine Mrs van der Westhuizen on aspects that the latter
claimed he had been prevented from putting to her, in order to avoid a special
entry and it is clear from the record that the appellant's attorney understood
the court's attitude.
[22] The appellant's attorney then cross-examined Mrs van der Westhuizen
until after the tea adjournment and said to the court:
'U Edele, dit sluit my kruisondervraging af.'
The learned judge then said:
'Nou soos ek vroeër gesê het u het aangedui dat u wil aansoek doen vir spesiale
inskrywing dat wat die kruisverhoor van hierdie getuie betref daar onreëlmatigheid
was of dat die prosedure in stryd met die reg is. Nou die getuie is nou hier in die
getuiebank. Is daar enige ander aspekte wat u met die getuie wil opvat? Wat u
vroeër oënskynlik onder die indruk was dat u nie toegelaat is om behoorlik te
kruisverhoor nie. Onreëlmatig nie toegelaat is nie. Of in stryd met die reg nie
toegelaat is om volledig te kruisverhoor.'
The appellant's attorney began replying, and was interrupted by the court who
said:
'Ja, maar nou wat is nou die posisie? Is daar nog aspekte wat u meen u nie op 'n
onreëlmatige wyse of strydig met die reg nie toegelaat is om te kruisverhoor nie?'
The appellant's attorney replied:
'U Edele ek sal dit daar laat. My instruksies [is] om dit nie verder te kruisondervra.'
The court then said:
'Verstaan ek u dan dat u het die geleentheid gehad om ten volle, soos u dit sien, te
kruisverhoor?'
A further discussion ensued and the court then said:
'Kyk, ek verstaan u het instruksies, maar u is die regsverteenwoordiger. U moet 'n
besluit neem.'
Again, the court made its attitude clear:
'Want ek wil nie later laat ons sit met 'n situasie dat daar 'n aansoek vir 'n spesiale
aantekening is dat daar nie behoorlik gekruisverhoor is nie of dat die kruisverhoor
onreëlmatig of in stryd met die reg gekortwiek is nie. So as daar is dan moet u dit vir
my noem dat ek ─ dan kan u vir my toespreek oor die relevansie daarvan en dan kan
daar 'n besluit geneem word. Maar ek kan dit nie in die lug laat hang nie meneer.
Verstaan u?'
It appears from the record that the appellant's attorney then had discussions
with the prosecutor and Mrs van der Westhuizen was cross-examined further,
in camera. Thereafter the appellant's attorney again said that his cross-
examination was concluded.
[23] It is unnecessary to consider whether, initially, the court unjustifiably
limited cross-examination of Mrs van der Westhuizen. Any irregularity that
there may have been in that regard was cured by the court allowing further
cross-examination. The same applies to the complaint that the report of Ms
Arendse was made available only after Mrs van der Westhuizen had already
given evidence. The submission on appeal that the procedure followed by the
court was irregular and that the court was obliged to make the special entries,
is devoid of authority, logic and merit.
Bias of the judge
[24] The appellant's attorney accused the trial judge of bias towards the
appellant. He did not wish to answer the question from the bench whether he
relied on actual bias or on facts that could reasonably give rise to an inference
of bias but, when pressed, he alleged actual bias. I do not propose dignifying
this allegation by analyzing the submissions made in support of it. It is entirely
without merit and the best proof of this is the fact that, as the appellant's
attorney confirmed, no application was made at any time, in court or in
chambers, for the judge a quo to recuse himself.
[25] Further arguments by the appellant's attorney in support of the
submission that the appellant did not receive a fair trial that were contained in
the heads of argument, were either abandoned in argument before us37 or
require no serious consideration.
[26] I therefore conclude that there is no substance in the submission that
the appellant did not receive a fair trial. I turn to consider the effect of the
formal admissions made by the appellant.
Section 220 admissions
[27] At the commencement of the trial, the appellant pleaded guilty to each
of the three murder charges. He was then represented by an advocate and
his present attorney. A written statement setting out the facts on which he
pleaded guilty and signed by himself, his advocate and his attorney was read
out in full by his advocate and handed in as exhibit A. The appellant, in
37 Those in regard to the calling of Koekemoer and Joubert and the non-production or late
production of documents by the State.
response to a question by the court, thereupon confirmed that exhibit A
contained his plea and explanation of his plea. The following paragraphs of
that document are relevant for present purposes:
'Ad Aanklag 1
4.1
Ek erken dat ek op 28 Julie 2006 en naby Kingstraat 8, Brackenfell vir Bianca
van der Westhuizen, 'n vroulike persoon, gedood het deur haar een maal met 'n
vuurwapen, te wete 'n Z88 pistool, in die kop te skiet.
Ek erken dat ek geweet het toe ek so opgetree het dat ek verkeerd optree en
dat ek daarvoor gestraf kan word.
4.2
Ek erken voorts dat die oorsaak van dood "'n skoot aan die kop is" soos
vervat in die regsgeneeskundige lykskouingsverslag van Jacob Johannes Dempers.
4.3
Ek erken voorts dat die oorledene geen verdere beserings opgedoen het na
die toedien van die noodlottige skoot tot die uitvoering van die regsgeneeskundige
lykskouing.
4.4
Vir doeleindes van volledigheid erken ek ook dat die identiteit van die
oorledene Bianca van der Westhuizen was.
5.
Ad Aanklag 2
5.1
Ek erken dat ek op 28 Julie 2006 en naby Kingstraat 8, Brackenfell vir Marius
Eben van der Westhuizen, 'n manlike persoon, gedood het deur hom een maal met
'n vuurwapen, te wete 'n Z88 pistool, in die kop te skiet.
Ek erken dat ek geweet het toe ek so opgetree het dat ek verkeerd optree en
dat ek daarvoor gestraf kan word.
5.2
Ek erken voorts dat die oorsaak van dood "'n skoot aan die kop is" soos
vervat in die regsgeneeskundige lykskouingsverslag van Jacob Johannes Dempers.
5.3
Ek erken voorts dat die oorledene geen verdere beserings opgedoen het na
die toedien van die noodlottige skoot tot die uitvoering van die regsgeneeskundige
lykskouing.
5.4
Vir doeleindes van volledigheid erken ek ook dat die identiteit van die
oorledene Marius Eben van der Westhuizen was.
6.
Ad Aanklag 6
6.1
Ek erken dat ek op 28 Julie 2006 en naby Kingstraat 8, Brackenfell vir
Antoinette van der Westhuizen, 'n vroulike persoon, gedood het deur haar een maal
met 'n vuurwapen, te wete 'n Z88 pistool, in die kop te skiet.
Ek erken dat ek geweet het toe ek so opgetree het dat ek verkeerd optree en
dat ek daarvoor gestraf kan word.
6.2
Ek erken voorts dat die oorsaak van dood "'n skoot aan die kop is" soos
vervat in die regsgeneeskundige lykskouingsverslag van Jacob Johannes Dempers.
6.3
Ek erken voorts dat die oorledene geen verdere beserings opgedoen het na
die toedien van die noodlottige skoot tot die uitvoering van die regsgeneeskundige
lykskouing.
6.4
Vir doeleindes van volledigheid erken ek ook dat die identiteit van die
oorledene Antoinette van der Westhuizen was.
7.
Nieteenstaande die feit dat ek voor en ten tye van die voorval aan erge
depressie gely het en nieteenstaande die feit dat ek geen geheue het oor die
betrokke voorval, welke geheueverlies toegeskryf word aan post traumatiese
spanning (stress) disfunksie:
7.1
Erken ek die feite soos uiteengesit in die klagstaat;
7.2
Erken ek dat alhoewel my insig beperk was deur die depressie, ek
nieteenstaande die beperkte insig, die verkeerdheid van my handelinge besef het;
7.3
Erken
ek
spesifiek
dat
die
depressie
en/of
geheueverlies
geen
regverdigingsgrond daarstel nie maar slegs verminderde toerekeningsvatbaarheid
daar mag stel;
7.4
Erken dat die geheueverlies toegeskryf word aan post traumatiese spannings
disfunksie en dat dit nie 'n verweer daarstel soos uiteengesit in Artikel 77 en 78 van
die Strafproseswet;
7.5
Ek erken dat my depressie en geheueverlies vanweë post traumatiese
spannings disfunksie volledig met my bespreek is deur my regsverteenwoordigers,
sielkundige en psigiater, dat ek die omvang daarvan begryp en weereens erken ek
onomwonde dat dit nie 'n verweer daarstel en dat ek erken dat my optrede verkeerd
was en dat ek die nodige insig gehad het.
8.
Gevolglik erken ek dat ek die nodige vermoë gehad het om tussen reg en
verkeerd te onderskei en voorts dat ek die vermoë gehad het om ooreenkomstig
daardie onderskeidingsvermoë te handel.'
[28] The prosecutor placed on record that the State did not accept the
allegations in para 7 of exhibit A. For the rest, the admissions were accepted.
The learned judge a quo noted that there was no admission that the
appellant's conduct was accompanied by an intention to kill, but merely that
the shots the appellant fired had caused death and that there was criminal
responsibility. The court then entered a plea of not guilty on all three counts.
In doing so, it acted in terms of s 113(1) of the CPA which provides:
'If the court at any stage of the proceedings under section 112(1)(a) or (b) or 112(2)
and before sentence is passed is in doubt whether the accused is in law guilty of the
offence to which he or she has pleaded guilty or if it is alleged or appears to the court
that the accused does not admit an allegation in the charge or that the accused has
incorrectly admitted any such allegation or that the accused has a valid defence to
the charge or if the court is of the opinion for any other reason that the accused's
plea of guilty should not stand, the court shall record a plea of not guilty and require
the prosecutor to proceed with the prosecution: Provided that any allegation, other
than an allegation referred to above, admitted by the accused up to the stage at
which the court records a plea of not guilty, shall stand as proof in any court of such
allegation.'
In accordance with the proviso, once the plea of not guilty had been entered,
the admissions in exhibit A stood 'as proof' of the allegations admitted.
[29] After the prosecutor had placed on record further admissions made by
the appellant and handed in exhibits to which they related, he asked that,
despite the fact that the court had recorded a plea of not guilty, the
admissions made in exhibit A should stand as formal admissions in the trial.
The appellant's advocate indicated that there was no objection to this being
done. The court nevertheless explained the position to the appellant and
asked him, twice, whether he made the admissions; and twice, the appellant
said that he did. It is quite clear from the record that the admissions were
sought and made in terms of s 220 of the CPA. That section provides:
'An accused or his or her legal adviser or the prosecutor may in criminal proceedings
admit any fact placed in issue at such proceedings and any such admission shall be
sufficient proof of such fact.'
[30] The distinction between ss 113(1) and 220 is this. When the plea of
guilty was tendered, there was no dispute between the State and the defence
and hence (to use the words of s 220) there was no 'fact placed in issue'.
Once the plea of not guilty had been entered, all the allegations in the
indictment were placed in issue (save that in terms of the proviso to s 113(1),
the admissions stood 'as proof' of the allegations admitted) and admissions in
terms of s 220 could be made. The difference in effect between the two
sections is that whilst an allegation, admitted by an accused up to the stage at
which the court records a plea of not guilty, stands 'as proof' of such
allegation, and therefore forms part of the probative material before the court,
an admission of a fact in terms of s 220 is 'sufficient proof' of such fact and no
further evidence is necessary.
[31] The significance of the admissions made in terms of s 220 is this: The
appellant admitted in respect of each count, and therefore three times, that
when he shot each deceased he knew that he was acting wrongfully and that
he could be punished therefor; and the appellant recorded that he had the
capacity to distinguish between right and wrong and that he further had the
capacity to act in accordance with such appreciation. The effect of the
admissions is that the appellant acknowledged criminal responsibility because
the admissions are inconsistent with a defence of criminal incapacity, whether
non-pathological or caused by mental illness or mental defect ─ although the
admissions are not inconsistent with diminished responsibility, which is
relevant to mitigation of sentence. The distinction is explained by Prof
Snyman38 in comparing s 78(1)39 of the Criminal Procedure Act, which
excludes criminal responsibility caused by mental illness or mental defect,
with s 78(7),40 which allows a court to take into account diminished
responsibility resulting from either cause in sentencing the accused. The
learned author, with reference to s 78(7), says:
'This subsection confirms that the borderline between criminal capacity and criminal
non-capacity is not an absolute one, but a question of degree. A person may suffer
from a mental illness yet nevertheless be able to appreciate the wrongfulness of his
conduct and act in accordance with that appreciation. He will then, of course, not
succeed in a defence of mental illness in terms of section 78(1). If it appears that,
38 Criminal Law 5 ed (2008) para 12 at 176-7.
39 'A person who commits an act or makes an omission which constitutes an offence and who
at the time of such commission or omission suffers from a mental illness or mental defect
which makes him or her incapable─
(a)
of appreciating the wrongfulness of his or her act or omission; or
(b)
of acting in accordance with an appreciation of the wrongfulness of his or her act or
omission,
shall not be criminally responsible for such act or omission.'
40 'If the court finds that the accused at the time of the commission of the act in question was
criminally responsible for the act but that his capacity to appreciate the wrongfulness of the
act or to act in accordance with an appreciation of the wrongfulness of the act was diminished
by reason of mental illness or mental defect, the court may take the fact of such diminished
responsibility into account when sentencing the accused.'
despite his criminal capacity, he finds it more difficult than a normal person to act in
accordance with his appreciation of right and wrong, because his ability to resist
temptation is less than that of a normal person, he must be convicted of the crime
(assuming that the other requirements for liability are also met), but these
psychological factors may be taken into account and may then warrant the imposition
of a less severe punishment.'
The same distinction applies where mental illness is not present, as appears
from a number of judgments of this court eg S v Smith,41 S v Shapiro,42 and S
v Ingram.43 According to these cases, the fact that the defence of temporary
non-pathological criminal incapacity fails, or is not raised, does not have the
consequence that the accused must be sentenced as if he/she was acting
normally. The contrary is the case. A person who acted with diminished
responsibility is guilty, but his/her conduct is morally less reprehensible
because the criminal act was performed when the accused did not fully
appreciate the wrongfulness of the act or was not fully able to act in
accordance with an appreciation of such wrongfulness.
[32] The consequence of the admissions was to put the appellant's criminal
capacity beyond issue. Cameron JA said in S v Groenewald:44
'An admission is an acknowledgment of a fact. When proved or made formally during
judicial proceedings, it dispenses with the need for proof in regard to that fact.
Wigmore on Evidence calls it "a method of escaping from the necessity of offering
any evidence at all": a "waiver relieving the opposite party from the need of any
evidence".45 Section 220 of the Act, accordingly, makes it possible for a contested
fact to be put beyond issue since, once made, the admission constitutes "sufficient
proof" of it.'
Therefore, as pointed out by Rumpff CJ in S v Seleke & 'n ander:46
'Wanneer 'n erkenning kragtens art 220 gemaak word, beteken dit dat 'n beskuldigde
nie later kan beweer dat wat erken is, nog deur die Staat bewys moet word nie. Die
woorde "voldoende bewys" onthef dus die Staat van die las om die betrokke feit wat
41 S v Smith 1990 (1) SACR 130 (A) at 135b-e.
42 S v Shapiro 1994 (1) SACR 112 (A) at 123c-f.
43 S v Ingram 1995 (1) SACR 1 (A) at 8d-i.
44 S v Groenewald 2005 (2) SACR 597 (SCA) para 33.
45 John Henry Wigmore Evidence in Trials at Common Law, revised by James Chadbourn
(1972) vol 4 para 1058.
46 S v Seleke & 'n ander 1980 (3) SA 745 (A) at 754F-H.
erken is, op enige ander manier te bewys, tensy die Staat, om spesiale redes, nog
ander getuienis omtrent die feit aan die Verhoorhof wil voorlê.'
[33] The appellant, having made the admissions formally, was not entitled
to require the State to cross the hurdle the admissions were intended to
eliminate. And much less was it open to the appellant, having made the
admissions, himself to create a hurdle by leading evidence inconsistent with
the admissions, for the same reason. But that is precisely what the appellant's
attorney, once the appellant's counsel had been relieved of his mandate,
sought to do. When the prosecutor put paragraph 7.3 of exhibit A to Dr
Panieri-Peter, the psychiatrist called by the State, and the witness had replied
'it is a question of diminished responsibility', the judge intervened, rehearsed
the facts leading to the State's non-acceptance of the plea explanation and
pointed out that the appellant's attorney had previously indicated in cross-
examination of State witnesses that he would argue that a verdict of not guilty
should be returned; and the judge at the end of the case permitted argument
to this effect. The admissions made formally in terms of s 220 were simply
ignored. None of this should have been allowed.
[34] For so long as a formal admission stands, it cannot be contradicted by
an accused whether by way of evidence or in argument. To hold otherwise
would defeat the purpose of s 220, eliminate the distinction between a formal
admission in terms of that section and an informal admission which may be
qualified or explained away, and thereby lead to confusion in criminal trials.
As Viljoen JA said in S v Mjoli47 in a concurring judgment:
'By reason of the fact that an admission formally made by or on behalf of the accused
is "sufficient evidence", the effect is that such fact virtually becomes conclusive proof
against him because the accused himself or his legal representative on his behalf
has made the admission and any effort by him or on his behalf to adduce evidence
countervailing such fact would be inconsistent with his having made the admission.'
47 S v Mjoli 1981 (3) SA 1233 (A) at 1247B-C.
[35] There is no authoritative pronouncement as to how an accused may
escape the consequences of a formal admission, once made. Rumpff CJ said
in Seleke after the passage quoted above:
'Voldoende bewys is natuurlik nie afdoende bewys (conclusive evidence) nie en kan
later deur die beskuldigde, bv, weens dwang of dwaling of deur ander regtens
aanneemlike feite, weerlê word.'
In S v Daniëls & 'n ander48 Nicholas AJA and Botha JA adopted different
approaches. Nicholas AJA (having quoted the provisions of s 220)
continued:49
'The words "sufficient proof" relieve the State of the onus of proving the admitted fact
in any other way (S v Seleke en 'n Ander (supra at 754G-H)).
In a civil case the Court has a discretion to relieve a party from the
consequences of an admission made in error in a pleading (see Gordon v Tarnow
1947 (3) SA 525 (A)). So too in a criminal case the Court has a discretion to relieve
an accused from the consequences of a formal admission on a ground recognised by
law. Examples are where an admission was made as a result of compulsion or
mistake (see S v Seleke en 'n Ander (supra at 754H)), or where the making of it has
been attended by an irregularity.'
Botha JA said:50
'Ter wille van duidelikheid moet ek ook verwys na die analogie wat my Kollega
Nicholas vind tussen die terugtrekking van 'n erkenning in 'n siviele saak, soos
bespreek in Gordon v Tarnow 1947 (3) SA 525 (A) op 531-2, en die moontlikheid om
'n beskuldigde te verlos van die gevolge van 'n erkenning in 'n strafsaak, soos
bespreek in S v Seleke en 'n Ander 1980 (3) SA 745 (A) op 754G. Ek is met eerbied
nie oortuig daarvan dat die analogie volkome suiwer is nie. In 'n siviele saak word die
party wat 'n erkenning gedoen het nie toegelaat om getuienis in stryd met die
erkenning voor te lê nie, tensy hy eers verlof kry om die erkenning terug te trek. 'n
Soortgelyke standpunt kan op die gebied van die strafreg in verband met die
toepassing van art 220 gehuldig word (vgl bv, Schmidt Bewysreg 2de uitg op 217-8),
maar na my mening is daar veel te sê vir 'n ander benadring, ten minste in die geval
waar art 220 ter sprake kom as gevolg van die toepassing van art 115 uit hoofde van
arts 119 en 122. Om 'n uiterste voorbeeld te neem: 'n beskuldigde op 'n aanklag van
moord erken, ingevolge die genoemde artikels, dat hy die oorledene doodgemaak
48 S v Daniëls & 'n ander 1983 (3) SA 275 (A)
49 At 298G-H.
50 At 318C-319A.
het; by sy verhoor kom daar getuienis vorendag (hoe ook al) wat bewys dat hy op die
betrokke dag in die gevangenis was en dat dit onmoontlik is dat hy die oorledene kon
gedood het; maar die beskuldigde bied geen verklaring aan waarom hy die erkenning
gedoen het nie. Ek kan my dit nie indink dat enige Hof die weerleggende getuienis
van oorweging sal uitsluit nie, selfs al voer die beskuldigde nie aan dat hy sy
erkenning gedoen het as gevolg van dwang, dwaling, onbehoorlike beïnvloeding of
dies meer nie. Artikel 220 se verwysing na "voldoende bewys" kan nie beteken dat
die Wetgewer beoog het of dat 'n hof sy oë of ore vir die waarheid moet sluit nie. In
die geval van buite-geregtelike bekentenisse is dit nog altyd aanvaar dat 'n hof aan
die einde van die saak, selfs waar die toelaatbaarheid van die bekentenis buite twyfel
is en daar aan die vereistes van art 209 voldoen is, bo redelike twyfel seker moet
wees dat die bekentenis die waarheid is alvorens 'n skuldigbevinding geregverdig is
(S v Mlambo 1975 (2) SA 549 (A) op 554C en S v Kumalo, 31 Augustus 1982 (A),
ongerapporteer). Volgens my mening is dit goed argumenteerbaar dat dieselfde
benadering toepaslik is waar daar in die samehang van arts 115, 119, 122 en 220
rede ontstaan, op watter wyse ook al, om die juistheid te betwyfel van 'n erkenning
wat 'n beskuldigde gemaak het. . . . . As dit so is, sal dit op die feite van die huidige
saak geen verskil maak of beskuldigde 2 se uitlatings voor die landdros beskou word
as erkennings of slegs as bewysmateriaal nie.'
[36] It may be noted that there is a fundamental difference between s 220 of
the CPA, and s 15 of the Civil Proceedings and Evidence Act51 which
provides:
'It shall not be necessary for any party in any civil proceedings to prove, nor shall it
be competent for any such party to disprove any fact admitted on the record of such
proceedings.' (Emphasis supplied.)
[37] In my view, the minimum that an accused who wishes to lead evidence
or advance argument inconsistent with a formal admission in terms of s 220
would first have to show, before being allowed to do so, is that there is an
explanation consistent with bona fides why the admission was made in the
first place and why he or she now wishes to resile from it. No doubt, as
pointed out by Botha JA in the passage quoted above from the Daniëls case,
a court will not in a criminal matter close its eyes and ears to the truth and
51 25 of 1965.
convict an accused based on an admission where the admission is clearly
wrong ─ as Hiemstra puts it:52
'The purpose of the process is and remains to get to the truth, namely what
happened, and not to determine what was said about it';
but that is a far cry from allowing the accused himself or herself without more
to lead evidence or advance argument contrary to an admission he or she has
formally made.
[38] In the present matter the appellant's attorney delivered further heads of
argument, in response to a request by the court, on whether, in view of the
admissions contained in the appellant's plea explanation formally recorded in
terms of s 220, he was entitled to argue that the appellant was not criminally
responsible for his actions in shooting the three deceased. The appellant's
attorney submitted that the appellant had made the admissions in
circumstances where:
(i)
he had loss of memory in respect of the shooting incidents;
(ii)
he had a defence available when he pleaded;
(iii)
he is a lay person in psychiatry and psychology;
(iv)
he pleaded on the advice of his legal representatives, who are not
experts in the fields of psychiatry and psychology;
(v)
he acted bona fide on the strength of incorrect findings in expert
reports and was guided by the findings therein contained; and
(vi)
there was prima facie an evidential burden on him to prove his lack of
criminal responsibility.
First, this explanation is irreconcilable with the admission by the appellant in
para 7.5 of his plea explanation that his mental state had been fully discussed
with him by both of his legal representatives and his psychiatrist and his
psychologist, and that he fully appreciated its ambit. Second, there is no
factual foundation for the submission that at the time he pleaded, the
appellant had a defence. The appellant's attorney relied for this submission on
the report of the psychiatrist consulted by the appellant, Dr Neil Fouché. In
that report Dr Fouché wrote:
52 Kruger Hiemstra's Criminal Procedure sv s 220.
'It would, therefore, be fair to conclude that this gentleman, for the period preceding
the incident on 28 July 2006, was mentally ill and that his mental state certainly
impaired his functioning and judgment.'
The word 'impaired' connotes 'rendered worse', 'damaged' or 'weakened'53 or,
to use the word in s 78(7), 'diminished'. It does not mean 'excluded' or
'prevented' and the report cannot be read as meaning that the appellant was,
by reason of his mental state and as required by s 78(1) of the CPA or the
defence of temporary non-pathological incapacity,54 rendered 'incapable' of
appreciating the wrongfulness of his acts or acting in accordance with such
appreciation at the time he shot the three deceased.
[39] It is unfortunately necessary, although the law is clear, to deal with the
submission by the appellant's attorney that impairment sufficed to bring his
client within the provisions of s 78(1)(b). For that submission, reliance was
placed on the following passage in Burchell Principles of Criminal Law55 in the
section headed 'Capacity to act in accordance with such appreciation (self-
control)':
'The test was originally described melodramatically as the "irresistible impulse" test.
However, the description was misleading since the illnesses concerned did not
necessarily manifest themselves in impulsive actions. Further, the notion of
"irresistible" suggested that the victim had to have been subjected to an
overpowering force, while the true issue is whether his normal capacity for self-
control has been substantially impaired.'
But the paragraph immediately following the paragraph just quoted begins:
'The formulation of this test of insanity in South African law requires that the mental
illness or defect should have caused the accused to be incapable of acting "in
accordance with an appreciation of the wrongfulness of his act". The general effect of
s 78(1)(b) of the Criminal Procedure Act is thus that although the accused was
capable of appreciating (and even if he did appreciate) the wrongfulness of his act,
he is still not criminally responsible if at the time of its commission he suffered from
mental illness or mental defect which made him "incapable of acting in accordance
with" such appreciation.'
53 OED 2 ed vol VII.
54 See the authorities quoted in the next para below.
55 3 ed (2005) p 382 and see also p 378.
Section 78(1) is clear in its terms: for it to be applicable, the accused must
have been 'incapable' of either appreciating the wrongfulness of his or her act
or omission or of acting in accordance with an appreciation of such
wrongfulness. That is the very distinction between s 78(1), and s 78(7) which
provides for the situation where the accused's capacity to appreciate the
wrongfulness of his or her act or omission or of acting in accordance with
such appreciation, was 'diminished' by reason of mental illness or mental
defect. A similar distinction exists in regard to the defence of temporary non-
pathological criminal incapacity. Smallberger JA said in Ingram:56
'The guilt or innocence of the appellant depends upon whether, as put forward in his
defence, he was suffering from a temporary non-pathological incapacity when he
shot the deceased and was therefore criminally unaccountable for his conduct.
Accountability in this context depends upon a person's ability to (1) distinguish
between right and wrong and (2) exercise restraint or control over his or her actions
which are unlawful. If either of these psychological characteristics is absent the
person concerned would not be criminally responsible for his conduct (S v Laubscher
1988 (1) SA 163 (A) at 166F-J).' (Emphasis supplied.)
And Kumleben JA said in S v Smith:57
'In the light of this evidence it cannot be said that at the critical time the appellant was
bereft of her senses or was not on any other ground criminally responsible for her
actions.
Having said this, it is nevertheless clear that her shooting of the deceased
was the final result of a prolonged period of sustained and mounting mental strain, of
which the deceased was the cause. Whether it was the result of anger, frustration or
humiliation, or more than one of these emotions, is immaterial. What is plain is that
they must have substantially reduced her power of restraint and self-control. This
fact, though highly relevant to the question of sentence, cannot affect her criminal
liability. The conviction of murder was, in my view, fully justified.'58
[40] The appellant on his own version as recorded in his plea explanation
exercised a fully informed choice. And he made no mistake. He knew exactly
what he was doing. He also knew what the consequence was ─ this was spelt
56 Above, n 43 at 4E-G.
57 Above, n 41 at 135E-G.
58 See also S v Kalogoropoulos 1993 (1) SACR 12 (A) at 24b-c and 25i and the dissenting
judgment in DPP, Transvaal v Venter 2009 (1) SACR 165 (SCA) para 51.
out in his plea explanation over and over again: he had no defence based on
his alleged mental state.
[41] The position is therefore that the appellant has advanced no
acceptable explanation consistent with bona fides as to why he should be
relieved of the consequences of his formal admission. I accordingly conclude
that the trial should have been conducted, and that the appeal should be
approached, on the basis that the appellant was able to appreciate the
wrongfulness of his acts and act in accordance with such appreciation; and
that the only issue, which is relevant solely to sentence, is the extent to which
he acted with diminished responsibility. In any event, however, as my
colleague Snyders has demonstrated, the defence raised by the appellant is
without merit. I concur in her judgment.
Order
[42] The appeal is dismissed.
________________
T D CLOETE
JUDGE OF APPEAL
SNYDERS JA (CLOETE and THERON JJA concurring):
[43] Despite the appellant’s admission of criminal capacity at the
commencement of the trial, full ventilation of that issue was allowed by the
trial court. The appellant persisted in that defence during the trial and on
appeal by contending that the evidence entitles him to an acquittal in terms of
s 78(6) of the Criminal Procedure Act 51 of 1977 (the Act).59 In order to avoid
any possible prejudice to the appellant I will now explore whether the
evidence shows that it is reasonably possibly true that the appellant had no
criminal capacity at the time that he committed the crimes in question.60
[44] On Friday evening of 28 July 2006 the appellant, a superintendent in
the South African Police Service, shot and killed his three children with his
service pistol. All three children, Bianca, a nearly 17 year old cerebral palsied
girl, Marius Eben, an almost six year old boy, and Antoinette, a 19 month old
toddler, were asleep in their beds when they were shot in their heads by their
father. Bianca was a child from the appellant’s previous marriage of whom he
enjoyed custody. The two younger children were of the appellant’s marriage
to police captain Charlotte van der Westhuizen to whom he was still married
and with whom he was still living at the time of the incident.
[45] The appellant claims amnesia in relation to the critical events of that
evening.61 As a result of this claim his wife was the only witness that gave a
version of the shooting. Insofar as the appellant does remember certain facts,
his version does not present a materially different scenario. Mrs van der
Westhuizen’s version is reconcilable with all the objective facts and contains
no inherent improbabilities. She was a good witness that testified
59 An acquittal in terms of s 78(6) presupposes a finding of a lack of criminal responsibility in
terms of s 78(1).
Section 78(1) is quoted in footnote 39 above.
Section 78(6) reads: ‘If the court finds that the accused committed the act in question and that
he or she at the time of such commission was by reason of mental illness or intellectual
disability not criminally responsible for such act – (a) the court shall find the accused not
guilty; or (b) if the court so finds after the accused has been convicted of the offence charged
but before sentence is passed, the court shall set the conviction aside and find the accused
not guilty,. . . .’. The rest of the ss deals with the directions a court would be capable of
making regarding the detention of such an accused in a hospital, institution or conditions of
release.
60 The trial court applied the usual standard of proof in criminal cases to avoid the appellant’s
objections to the provisions of s 78(1A) insofar as those could potentially have been
applicable.
61 Whether the appellant actually has amnesia is not an issue on which the trial court had to
make a finding as it does not constitute a defence. At worst for the appellant it may reflect on
his credibility and at best it may be a mitigating factor. The psychiatrist that testified on behalf
of the State, Dr Panieri-Peter, questioned the claim of amnesia, primarily due to the
patchiness and inconsistency of the appellant’s recollection being irreconcilable with amnesia.
The psychiatrist, Dr Fouché, and clinical psychologist, Mr Scholtz, that testified on behalf of
the appellant, accepted his claim without question.
spontaneously, realistically, maturely and to the point. She withstood
prolonged and harrowing cross-examination. Criticism of her evidence as
untruthful and overly dramatic is without any merit. The trial court was correct
in accepting her version of the events as satisfactory in all material respects.
[46] The Van der Westhuizen couple had a long standing history of marital
discord. It manifested yet again that Friday evening. The appellant was
discontent because Mrs van der Westhuizen arrived later than he expected
her to, from work. Their differences did not develop into a full argument, but
rather silence filled with portent. She and the children went to bed early whilst
he continued with a do-it-yourself project. During the course of the evening he
discovered that she had given him a dishonest explanation for her lateness.
She told him that on her way home she had had to turn back because she
had forgotten Antoinette’s milk that she had bought earlier that day, at her
office. He discovered this to have been a dishonest explanation because he
checked the vehicle’s odometer reading and knew that she had only travelled
a sufficient number of kilometres that day to have travelled to work and back
home. According to him, this made him very angry, sad, frustrated and
disappointed. In truth she had volunteered to work late, but because her
relationship with her work and colleagues had become such a hugely
contentious issue in their marriage, she did not feel free to tell him the truth.
[47] Shortly before 10 o’clock that evening the appellant went to the main
bedroom where his wife was sleeping. He woke her and insisted that she
make a choice between him and her job. She responded irritably that it was
not a matter of choice and that she wanted to go back to sleep. He insisted
that she make a choice and she refused. He then jumped to the conclusion
that her lack of response amounted to her choosing her job and he verbalised
that conclusion. He got off the bed, switched on the light and went to the gun
safe with keys in hand. He unlocked the safe and took out his service pistol.
Still in bed, she asked him what he was going to do. He repeated that she had
chosen her job. He took her mobile telephone from the bedside table next to
her, walked out of the bedroom and shut the door. She jumped up and
followed him. When she opened the door he was in the passage next to the
door of the two girls’ bedroom. He switched on the passage light, repeated to
her that she had made her choice and said that she was going to have to bear
the consequences of her choice. He lifted the firearm, cocked it, turned and
entered the girls’ bedroom. He switched on the light and walked inside. He
first walked to Bianca’s bed, and aimed the firearm at her head. Mrs van der
Westhuizen entered the bedroom. The appellant looked at her and shot his
eldest daughter in her head. He turned, lifted his hand over the railing that
prevented Antoinette from falling out of bed and shot her in her head, after
again repeating to Mrs van der Westhuizen that she had made her choice and
that she was going to bear the consequences of her choice. He did all of this
despite her screams of protestation.
[48] The appellant walked calmly past Mrs van der Westhuizen, went down
the passage, switched on a further light in the passage, and also the light of
their son’s bedroom. She followed him, screaming at him to stop. He waited
for her to enter Marius Eben’s bedroom, and when she did, he shot their son
in his head. He looked at her and shouted: ‘You see, now your children are
dead’.62
[49] The appellant handed Mrs van der Westhuizen’s telephone back to her
and said she would probably now telephone her superior officer, Senior-
Superintendent Brand, for help. She went back to her bedroom and dialled
Brand’s number. The appellant came to the bedroom door with both of his
mobile telephones in his one hand and the firearm still in the other. He told
her not to fear as he was not going to shoot her. He then left. Moments later
when Mrs van der Westhuizen tried to leave the house she discovered that he
had locked her inside the house with the dead children.
[50] Hours after the appellant had shot his children and whilst hiding in the
garden, he shot himself. He put the pistol under his chin and pulled the
trigger, but missed all vital organs.
62 Direct translation of Mrs van der Westhuizen’s evidence: ‘Sien jy, jou kinders is nou dood’.
[51] The appellant was referred to Valkenburg psychiatric hospital in terms
of s 78(2) for enquiry and report in terms of s 79 of the Act.63 Dr Panieri-Peter,
the specialist psychiatrist appointed by the Medical Superintendent of
Valkenburg on the panel that was to enquire into the mental condition of the
appellant, presented the unanimous findings of the panel in court. The experts
made the following findings in terms of s 79 of the Act:
‘79(4)(b)
1.
Clinical Diagnosis: not mentally ill
2.
He is NOT certifiable in term of the Mental Health Act.
79(4)(c)
He is fit to stand trial in terms of Section 77(1).
79(4)(d)
He was able to appreciate the wrongfulness of the alleged offence,
and act accordingly.’64
[52] Dr Panieri-Peter did not hesitate to express her professional opinion on
the facts available to her during the enquiry and as supplemented during her
evidence. She held the view that the appellant, at the time of the commission
of the murders, was able to appreciate the wrongfulness of his actions and
was able to act in accordance with that appreciation. The trial court accepted
those findings.
[53] In this court the appellant repeated a gratuitous attack on the integrity
of Dr Panieri-Peter. As the trial court did, I find no foundation whatsoever for
such an attack. It is regrettable that professionals in conducting a trial should
perceive the need for gratuitous attacks on the integrity of a professional
expert witness who properly performs a vital function in the interests of the
63 Section 78(2) reads: ‘If it is alleged at criminal proceedings that the accused is by reason of
mental illness or mental defect or for any other reason not criminally responsible for the
offence charged, or if it appears to the court at criminal proceedings that the accused might
for such a reason not be so responsible, the court shall in the case of an allegation or
appearance of mental illness or mental defect, and may, in any other case, direct that the
matter be enquired into and be reported on in accordance with the provisions of section 79.’
Section 79 is a lengthy section that deals, inter alia, with the composition of the panel for the
purpose of the enquiry, the committal of the accused to a psychiatric hospital for that purpose,
the furnishing of information to the panel and the nature of the report.
64 Section 79(4) reads: ‘The report shall – (a) include a description of the nature of the
enquiry; and (b) include a diagnosis of the mental condition of the accused; and (c) if the
enquiry is under section 77(1), include a finding as to whether the accused is capable of
understanding the proceedings in question so as to make a proper defence; or (d) if the
enquiry is in terms of section 78(2), include a finding as to the extent to which the capacity of
the accused to appreciate the wrongfulness of the act in question or to act in accordance with
an appreciation of the wrongfulness of that act was, at the time of the commission thereof,
affected by mental illness or mental defect or by any other cause.’
administration of justice. Dr Panieri-Peter expressed her opinions in a firm,
clear, well motivated and reasoned manner. By doing so she fulfilled the
function of an expert witness to the letter.65
[54] The expert witnesses that testified for the appellant did not challenge
her conclusion that the appellant had criminal capacity when he murdered his
children. Dr Fouché, a psychiatrist, testified on behalf of the appellant. The
appellant was referred to Dr Fouché for treatment at the end of August 2006
by the physician who treated him after he shot himself. Dr Fouché entered
into a therapeutic relationship with the appellant for a period of approximately
two years. A therapeutic role is substantially different to the forensic role Dr
Panieri-Peter and her colleagues were called upon to perform. The inherent
difference between the two functions is obvious. As therapist Dr Fouché was
expected to accept information furnished by the appellant to him and provide
therapy on the strength thereof, whereas Dr Panieri-Peter was meant to
investigate, question and enquire with a view to objectively and factually
ascertain the appellant’s mental health at the time of the incident. This
distinction serves to illustrate why there is a substantial difference in
objectivity when the views of the two psychiatrists are compared.
[55] Despite that distinction Dr Fouché did not come to a conclusion that the
appellant did not have criminal capacity when he committed the murders. In
his report, compiled during November 2008, he addressed a substantially
different issue to that contained in s 78(2) of the Act, as his conclusion
reflects:
‘79(4)(b)
1.
He has a Recurrent Depressive Disorder current episode mild
Post Traumatic Stress Disorder of moderate severity
Abnormal Bereavement Process.
2.
He is not certifiable in terms of the Mental Health Act.
79(4)(c)
He is fit to stand trial according Section 77(1).
65 Insofar as it is necessary to refer to the purpose of opinion evidence by an expert witness
and the approach a court is to adopt regarding such evidence, I draw attention to the following
authorities: S v Adams 1983 (2) SA 577 (A) at 586C; S v Kleynhans 2005 (2) SACR 582 (W)
at
585a-g;
Coopers
(South
Africa)
(Pty)
Ltd
v
Deutsche
Gesellschaft
Für
Schädlingsbekämpfung Mbh 1976 (3) SA 352 (A) at 371G-H.
79(4)(d)
He has the ability to appreciate the wrongfulness of the alleged
offence and act accordingly.’
[56] Dr Fouché in his report addressed the appellant’s mental condition
prior and subsequent to the incident. The latter is not particularly helpful when
criminal capacity at the time the murders were committed, is considered. In
relation to the former he accepted that the appellant suffered from depression
and anxiety prior to the incident and stated that the appellant’s ability to act in
accordance with his appreciation of wrongfulness was impaired. He repeated
this view during cross examination, but then explained it to mean that the
appellant had the ability to distinguish between right and wrong, but was
unable to act in accordance with that distinction. He formed this view because
the appellant, after he shot his children, tried to commit suicide. Dr Fouché felt
that an attempt to commit suicide is indicative of the absence of the ability to
act in accordance with insight into right and wrong. The difficulty with this view
is that it again relates to the period after the appellant shot the children
whereas the true investigation should focus on the time prior to and at which
he did so. Dr Fouché’s attempt to typecast the events surrounding the
murders as an extended suicide is not supported by any evidence, not even
that of the appellant.66 He conceded that his evidence in this regard was a
mere theory to try and understand why the appellant did what he did.
[57] Dr Fouché’s evidence reveals that he was not fully comfortable in
dealing with the concept of criminal capacity and the distinctions drawn in
s 78(1) of the Act. He struggled to express a consistent and clear opinion on
the appellant’s ability or inability to have acted in accordance with his
appreciation of right and wrong. Towards the end of his cross examination, Dr
Fouché reverted to the position that the appellant’s ability to have acted in
accordance with his appreciation of right and wrong was seriously diminished,
not absent. It is fair to say that Dr Fouché spoke rather loosely and was not
qualified to venture a forensic view from his therapeutic perspective, but even
66 Crudely described as a parent wanting to take his own life and killing his children because
he does not want to leave them behind in a helpless state.
so, he did not advance the view that the appellant did not have the ability to
act in accordance with his appreciation of right and wrong. Dr Fouché’s
evidence, with all its shortcomings, was the highwater mark of the appellant’s
defence.
[58] Mr Scholtz, a clinical psychologist, was consulted by the appellant
during November 2008 on an ad hoc basis to make a clinical assessment of
him. His report does not address the appellant’s criminal capacity. It states
that the appellant suffered from clinical depression and post traumatic stress
disorder prior to the incident. His report is based on information from the
appellant obtained during one three-hour consultation. During that
consultation Mr Scholtz explained that he had deliberately refrained from
enquiring from the appellant about the events of the evening, for fear of losing
his objectivity. In his report he states:
‘Clinical Depression and Post Traumatic Stress Disorder can significantly effect a
person’s personal, social and occupational functioning. It could also lead to a degree
of distorted thinking and impaired judgment.’
[59] Mr Scholtz also testified. Understandably he was hesitant to express a
firm view on the appellant’s criminal capacity on the strength of his
consultation. His strongest evidence for the appellant was that the appellant’s
ability to act in accordance with acceptable norms was probably diminished
because he suffered from depression and post traumatic stress at the time of
the incident.
[60] All the expert witnesses were confronted with the facts that the
appellant relies on for his persistent contention that he had no criminal
capacity. None of the expert witnesses changed their opinions to support the
appellant’s contention. At best for the appellant their evidence supports a view
that his ability to act in accordance with an appreciation of wrongfulness was
impaired or diminished. In para 39 of my colleague Cloete’s judgment it is
made clear that the argument that impairment is sufficient for a finding in
terms of s 78(1)(b) is without any substance. The trial court’s finding of
diminished criminal capacity was not challenged by the State on appeal. It is
therefore not necessary to consider the contrary opinion of Dr Panieri-Peter.
[61] The next enquiry is to ascertain whether the trial court should have
rejected the unanimous s 79 finding and the unanimous view of the expert
witnesses in favour of a finding that the appellant did not have the ability to act
in accordance with his appreciation that what he was doing was wrong.
[62] The attorney for the appellant argued that the appellant suffered from a
pathological incapacity that negated his ability to act in accordance with his
appreciation of the wrongfulness of his actions. He argued that the
depression, anxiety and post traumatic stress disorder that he suffered from
each constituted a pathology. The submission was further that the existence
of a pathology taken together with the fact that the murders were irrational
and contrary to the appellant’s loving, kind and soft hearted personality,
compels the conclusion that the appellant had no ability to control himself.
The argument went so far as to state that once it is accepted that the
appellant suffered from a pathology it becomes irrelevant whether his actions
in committing the murders appeared deliberate and goal directed.
[63] The latter contention is to be rejected because of the wording of
s 78(1). The section prescribes that two questions be answered irrespective of
whether the appellant suffered from a pathological or non-pathological
condition at the time of the commission of the murders. That the appellant
appreciated the wrongfulness of his actions was never disputed. His actions
before, during and after the murders need to be scrutinised to determine
whether he was able to act in accordance with his appreciation of
wrongfulness.
[64] The attorney on behalf of the appellant strongly relied on S v Kavin
1978 (2) SA 731 (W) and S v McBride 1979 (4) SA 313 (W) as analogous to
this matter. This reliance is unfounded. In both those cases the panel of
psychiatrists made a unanimous report in terms of s 79(4) that the accused, at
the time that the crime that was committed, was unable to act in accordance
with an appreciation of wrongfulness. In Kavin it was reported that the
accused suffered from ‘[s]evere reactive depression super-imposed in a type
of personality disorder displaying immature and unreflective behaviour . . .
[which] produced a state of dissociation’. In McBride the unanimous report
was that the accused suffered from endogenous depression.
[65] The appellant introduced evidence of all the stress factors that
operated in his life leading up to the incident. Much of this evidence was
common cause or undisputed and even insofar as disputed, was taken into
account in the appellant’s favour by the trial court. The appellant occupied a
stressful position of leadership in the SAPS. He held the rank of
superintendant and was stationed at a large and very busy police station,
Claremont, in the Western Cape. Due to duties that frequently took his
commanding officer away from the station the appellant was in effect the
commander of the station. He was described by many witnesses as a
perfectionist in his work. Dr Fouché and Mr Scholtz supported that evidence in
that they found him to have obsessive-compulsive personality traits which
caused him to expect a very high level of performance from himself. The
extensive duties he was expected to perform and his own requirement to do
so to perfection placed a great deal of stress on him. As his workload
increased he reached the stage that he simply could no longer perform all his
duties or could not perform at the level he wanted to. This state of affairs
caused him to feel out of control which in turn caused him a measure of
depression and anxiety. He was no longer the calm, kind, strict perfectionist
that tried to be everything to everybody in his workplace. From about
December 2005 he was seen to behave uncharacteristically at work by hitting
his head against the wall, being abrupt with colleagues, being forgetful,
rushing around, gripping his chest in pain, looking worn out and stressed,
locking himself in his office, being withdrawn and being irritable and impatient.
[66] The appellant’s experiences as a policeman during his entire career
contributed to his emotional condition and depression. Throughout his career,
in the day to day execution of his duties he encountered very traumatic
events. Some of those involved colleagues, to whom he was emotionally
close, being killed virtually next to him. He was shot at on numerous
occasions and on several occasions his life was endangered in other ways.
[67] The appellant's marriage was another source of depression and
anxiety. There existed long standing marital discord between him and his wife.
She was stationed at the Kuils River police station. He had enormous
difficulties with the way she managed her working hours and they had
constant arguments about that. The appellant resented his wife working any
form of overtime without insisting on either payment or time off as
compensation as he believed she should have. However, not only did she
regard her situation as an administrative officer as being different to his, she
was reluctant to do what he wanted. She enjoyed her career and walked the
extra mile voluntarily and with good results. She progressed to the rank of
captain in a short period of time and had an excellent relationship with her
colleagues and commanding officer. These relationships were a source of
resentment for the appellant who perceived that she obtained more joy and
satisfaction from those relationships than from her marital relationship. The
evening that he shot the children it was her relationship with her work that
figured prominently in his decision to kill them.
[68] The appellant started suspecting his wife of having an extra-marital
relationship. Although he never confronted her with this and it objectively
appeared that he was wrong, he subjectively believed it and silently gathered
many pieces of information in support of his belief. He testified that she was
verbally and physically abusive towards him and the children and recounted
many examples of her behaviour.
[69] Taken with his obsessive-compulsive personality traits the appellant
experienced his disintegrating marriage more keenly than would objectively
be expected. It motivated him to do irrational things to her in an attempt to
dissuade her from following her own head but rather succumb to his wishes.
He took away the keys of their only vehicle, her means of transport to work, or
removed the rotor from the engine after she had come home late from work.
He did this under the pretext of needing the car to be available at home in the
event of an emergency arising with Bianca, his cerebral palsied daughter who
regularly developed emergency health issues. He hid the battery of her work
laptop computer when he felt that she had spent too much time working over
the weekend, depriving the family of her time. He also did so after she
charged the battery of the computer at home, using the electricity that he was
paying for. He locked sweets in the safe when he decided that she ate too
many of them. He took away her credit and bank cards when she spent her
own money, even her bonus, contrary to their agreed financial planning.
[70] The trial court accepted the evidence by and on behalf of the appellant
about all of the stresses, strains and anxieties that affected him in the period
preceding the killing of his children. In a benevolent approach to the appellant
the trial court did not pay any attention to the dramatic development of the
appellant’s version during the course of the proceedings. This development
took place in two respects. First, the allegations of violent and abusive
behaviour of his wife increased and became more serious as the trial
progressed. Second, the seriousness and extent of the stresses and strains
that influenced him escalated during the proceedings. I will similarly ignore
those inconsistencies. The trial court accepted that these factors caused the
appellant to have been depressed, anxious and suffering from post traumatic
stress disorder. The evidence of Dr Panieri-Peter and Dr Fouché was that it is
recognised in their field of discipline that post traumatic stress disorder only
arises for victims of traumatically fearful and threatening events and it was
unlikely that the appellant suffered from post traumatic stress disorder prior to
the incident. The trial court ignored this evidence and found that the appellant
suffered from post traumatic stress disorder prior to the event. There was,
however, no cross-appeal.
[71] The facts that provide a clear picture contrary to that of a man that
behaved uncharacteristically and out of control, and therefore without criminal
capacity, were also taken into account by the trial court. As mentioned earlier
in this judgment, the appellant consistently and persistently over a period of
years took action to punish his wife and try and manipulate her into doing as
he wished her to do. He felt justified in his behaviour because of what he
perceived to be her errant behaviour. His manipulative behaviour became
increasingly serious. During March 2006 an incident occurred that motivated
Mrs van der Westhuizen to obtain an interim interdict against the appellant in
terms of the Family Violence Act 116 of 1998. She was late from work
because she had taken Antoinette to the doctor after fetching the children
from crèche. The appellant was furious when she came home later than
expected. She noticed that he had been drinking. He refused her the use of
the car to go to a chemist to buy the medicine that the doctor prescribed. His
verbal aggression scared her. She asked a neighbour to take her to a friend.
She telephoned her parents to fetch her from her friend and take her to the
chemist. After the medicine had been collected her parents took her home,
where an altercation occurred between the appellant and her father. The
appellant was aggressive and she described him as drunk. He locked his wife,
her parents and the sick child out of the house whilst the other two children
were with him inside the house. When she begged him to open the door he
told her to choose between her work and her parents on the one hand and
him on the other. Ultimately one of the appellant’s superiors, Director Roberts,
spent hours reasoning with him to calm him down and only in the early hours
of the morning did he allow his wife and the sick child back into the house.
The appellant was persuaded to leave with Roberts for the rest of the night.
The interim interdict that Mrs van der Westhuizen obtained after this incident
was withdrawn by her during May 2006 after the appellant apologised for his
behaviour.
[72] On the evening of 20 July 2006 whilst in bed with his wife the appellant
told her that he had been contemplating burning the house down with him
inside, but only after informing the fire brigade and the insurance that he had
started the fire. Such action would obviously have left her and the children
without a home and without any financial recompense.
[73] On occasion the appellant telephoned and had a meeting with Mrs van
der Westhuizen’s commanding officer, Brand, a superior officer to him, and
sought to interfere in his wife’s working conditions. His interaction with Brand
resulted in her demanding, via his superiors, an apology from him for his
disrespectful treatment of her. The appellant apologised.
[74] The evening of the murders was no different to many others. The long-
standing disagreement between the appellant and his wife about her working
hours re-surfaced. They both seemed to have resolved rather to keep quiet
than fight about it. He was having a few drinks, as was his habit. He continued
working on a do-it-yourself project after she and the children had gone to bed.
He was looking forward to the celebration of his birthday in two days’ time and
the company of guests whom they had invited for the occasion. He was also
looking forward to receiving his bonus and was pleased that his dream of
purchasing a double cab bakkie, the fruit of years of financial planning and
discipline, was within his grasp. According to him his wife’s lie about having
had to return to work to fetch the milk she had forgotten only became
apparent to him after she had gone to bed. This, he said, provided the trigger
that made him very angry, to the extent that he felt a glowing sensation over
his whole body. It also made him feel despondent and hurt. Whether this so-
called trigger event occurred later rather than earlier in the evening as told by
his wife is immaterial. The appellant at no stage claimed to have acted in a
state of sane automatism induced by this trigger. Quite the contrary, he still
remembers going back into the house, putting his glass in the kitchen, going
to the bedroom and removing the firearm from the safe and the fact that his
firearm jumped in his hand when he shot Bianca.
[75] He also remembers asking his wife to make a choice between him and
her work. They put this at different times in relation to the first shot that he
fired, but for reasons already mentioned, that is irrelevant. According to him
her answer, which he interpreted as a choice for her work, again brought the
warm glow all over his body. The appellant acted in a manner that illustrates
deliberate, reasoned and complex behaviour. He put a choice to her and
when her answer was not what he wanted to hear he commenced behaviour
that resulted in the ultimate punishment for her. He took her mobile telephone,
preventing her from telephoning for help. He opened and closed doors and
switched on lights as he went. He waited for her to arrive in the bedrooms of
the children before he pulled the trigger. He ignored her screams and pleas to
stop. The horror of his first, nor for that matter his second, shot did not throw
him off course. He kept on repeating to her that his actions were the
consequences of her choice. He told her that she should not fear as he was
not going to shoot her. He only handed her mobile telephone back to her after
all three children were killed and then, in line with his resentment about her
work and good working relationship with Brand, he remarked that she was
probably going to telephone her commanding officer for help. This remark,
given the context, was an ironical taunt. The appellant then locked his wife in
the house with the dead children and went and hid in the back garden.
[76] From his position of hiding he telephoned several people and told them
that he had shot his children. He telephoned a friend and colleague that was
invited for his birthday celebrations and told him that the event had been
cancelled because he had shot his children. He told his commanding officer
that he was not prepared to go to jail. He misled the police as to his position
and ultimately, when they found him, and the task force moved in, ready to
shoot him if necessary, the appellant shot himself under the chin, more than
three hours after he killed his children. At no stage after the murders and
before he shot himself did the appellant act in a surprised, shocked,
bewildered or distraught state as would have been expected had the
realisation of what he had done only dawned on him after his actions were
complete.
[77] The manner in which the appellant executed his children, his behaviour
and communication during and after the incident and the ordinariness of the
events earlier that evening all indicate that the appellant acted in a controlled,
deliberate and reasoned manner in perfect keeping with his usual pattern of
behaviour viz-a-viz his wife. The trial court’s finding that the appellant was
criminally capable when he murdered his children is consistent with all the
evidence and cannot be faulted.
[78] The trial court accepted in the appellant’s favour that he acted with
diminished responsibility. A finding as to the degree of diminution was not
expressly made. A finding that the degree of diminution was substantial or
severe, is not possible. At best, it is borderline and the appellant received the
benefit of any doubt. The appellant did not find himself in a position, as in all
reported cases of diminished responsibility, where he faced a choice – to
continue suffering emotional pressures or act against the person creating that
pressure. His situation is in reality no different to that of an accused that relies
on many mitigating factors.
[79] The fact of diminished responsibility was accepted by the trial court as
a substantial and compelling circumstance within the meaning of s 51(3) of
the Criminal Law Amendment Act 105 of 1997. That is why the prescribed
minimum sentence of 15 years’ imprisonment for each of the murders was not
imposed.
[80] The appellant’s attack on the sentence was that it is shockingly
inappropriate in the circumstances. In support of this contention the
appellant’s attorney specifically referred to the following circumstances: he
had already suffered enough and will continue to suffer because he killed his
own children, he was not to blame for the state of diminished responsibility
that he was in, his remorse was not adequately taken into account, he is a
suitable candidate for correctional supervision and private treatment for his
depression and related issues would be more effective outside of prison in a
more supportive and conducive environment.
[81] The trial court dealt with each and every mitigating factor, including the
circumstances emphasized on appeal. A repetition of all those facts is
unnecessary and I will confine this judgment to mentioning the ones that give
the balanced picture.
[82] The appellant was a 44 year old police superintendant at the time of
the incident. He has had a very successful career. He was respected by all his
colleagues. He was known as a disciplined, dedicated, astute police officer.
He insisted on discipline at his police station from all his subordinates, but
always acted fairly, reasonably and even-handedly. He had the community’s
interests at heart and showed that by dedication beyond the call of duty. He
devoted himself to the community policing trauma centre attached to the
Claremont police station. He was always ready and prepared to assist
colleagues with personal issues.
[83] The substantial support that he has received since the incident from
friends, former colleagues and members of the community bears testimony to
the high regard in which he is held. Many witnesses testified to what a good
man he is and what a dedicated, loving father he was.
[84] In the performance of his police duties over his years of service he had
encountered many situations that left him with distressing emotional
impressions. He had lost colleagues in the line of duty and encountered
several life threatening situations.
[85] The demands of his job became inordinate and overbearing. What he
used to do with dedication and care became a source of stress. He felt he
could no longer perform his functions in the manner he wanted to. The
deterioration of his marriage relationship also caused him distress. The
problems between him and his wife were of long standing. No prospect of
improvement was evident. As a result of his obsessive-compulsive personality
traits these circumstances caused him depression, anxiety and post traumatic
stress disorder.
[86] Since the incident the appellant has lost the life he knew previously. He
resigned from the police force, he lost his wife and children, his home, hopes,
dreams and ambitions. There is no doubt that the appellant has been
experiencing a great deal of sorrow. He will no doubt continue to suffer for he
has to live with the knowledge that he murdered his children.
[87] Whatever level of depression he experienced before the incident, it has
been deepened by the consequences of the incident. He suffered a serious
head injury, albeit by his own hand. He has been receiving psychiatric
treatment since shortly after the incident and continues to be in need of such
treatment. It was argued that he would be unable to receive appropriate
treatment in prison and that the prison environment is not conducive to his full
recovery. To succumb to such an argument would place the emphasis of the
sentence exclusively on the appellant’s interests. Requiring psychiatric
treatment is hardly a reason not to be imprisoned. The prison authorities are
statutorily obliged to provide the necessary health care to inmates.67 Mr
Joseph, the regional coordinator of health services within the Department of
Correctional Services in the Western Cape, testified that psychiatric and
psychological services are available to inmates. His evidence in this regard
was uncontroverted and confirms the practical implementation of the statutory
duty.
[88] The evidence before the trial court was that the appellant is an
appropriate candidate for correctional supervision. That does not mean for a
moment that correctional supervision would be an appropriate sentence in the
circumstances. The appellant’s attorney relied on S v Marx68 for the
submission that correctional supervision would be an appropriate sentence.
The attempted analogy is completely inappropriate. In Marx it was found that
the accused acted with severely diminished responsibility when he shot his
wife after she had been unfaithful to him, humiliated, belittled and emotionally
taunted him over an extensive period of time.
67 Section 12 of the Correctional Services Act 111 of 1998.
68 S v Marx 2009 (2) SACR 562 (ECG).
[89] I accept, as the trial court did, that the appellant deeply regrets the
death of his children. It is however alarming that he has persistently tried to
put some blame for the incident on his wife. He also continues to claim that he
was not to blame for the depression, anxiety and post traumatic stress
disorder that influenced his actions, firstly, because factors and events
external to him put stresses and strain on him and secondly, that because of
his particular personality traits he responded to those stresses and strains in a
way that caused the diminished responsibility.
[90] During her cross examination it was put to Mrs van der Westhuizen
that she contributed to the incident and could have avoided it. During the
hearing of this appeal the appellant’s attorney again argued that not only was
the appellant not to blame for the condition that motivated him to commit the
murders, but that his wife and the SAPS could have avoided the incident. This
attitude resonates with the reason why the appellant killed his children – to
punish his wife for a choice she seemingly made.
[91] Despite years of reflection and treatment, the appellant does not
realise that the way he handles life needs to change to avoid a similar
incident. Everyday life for the average individual presents stresses and
strains. The appellant is never going to escape that reality. If he continues to
blame others and to handle those stresses and strains inappropriately he
continues to present a potential danger to those closest to him and a similar
situation could present itself in the future. In view of his lack of insight and
relatively minor degree of diminished responsibility, deterrence and retribution
as purposes of sentencing do not recede into the background as in cases of
substantial diminished responsibility.69
[92] Although we are not necessarily to blame for our personality traits, we
are expected to live appropriately despite them. If we do not, the
consequences of our aberrant behaviour are punished. The appellant knew
best how the stresses and strains of his reality were impacting on him and
69 S v Shapiro 1994 (1) SACR 112 (A).
made him feel. He was the only one who could have known how necessary it
was to take appropriate action to help him in the circumstances. He was no
stranger to seeking professional help to cope with emotional issues. He did so
shortly after his first divorce when he took time off work and consulted a
psychologist for depression. He had been to consult psychologists with Mrs
van der Westhuizen for problems they experienced during the course of their
marriage. He was devoted to the trauma centre attached to his police station
where the main focus was the provision of emotional and psychological
assistance to victims of crime. The SAPS had and still has a dedicated
emotional and social services unit available to its members. His evidence that
he sought help form various professionals prior to the incident but was either
turned away or ignored rings hollow in the circumstances.
[93] I am satisfied that the trial court took all possible mitigating factors into
account and explored all the relevant facts in arriving at the sentence it
imposed. If only the mitigating factors and the interests of the appellant are
taken into account one could conceivably arrive at a sentence that does not
amount to long term imprisonment. However, if only the aggravating
circumstances are considered it is evident that a sentence of life
imprisonment would potentially have been appropriate.
[94] The crime that the appellant committed is abhorrent and the enormity
of it can hardly be over-emphasized. His three defenceless children were
executed in their sleep by their own father, a policeman, despite the screams
of protestation by their mother. Unlike any other reported case of diminished
responsibility they, the victims, did not contribute in any way whatsoever to
any of the stressors that the appellant said caused him to take their lives. The
only explanation for their murders came from the appellant’s own mouth as he
was murdering them. He punished his wife. The appellant has never tried to
explain his actions. During his evidence in the trial he said he wanted to shoot
himself and only went to the children’s rooms to say goodbye to them. How,
why and when his intention changed so that he took his ire out on his innocent
children, he has never even tried to explain.
[95] The appellant has in fact achieved what he set out to achieve. He has
caused his wife the ultimate agony, as her evidence revealed. For the rest of
her life she will have to contend with the horrific images of what occurred. Not
surprisingly she, too, has been under continued psychological treatment since
the incident.
[96] There is no question that the nature of the appellant’s crimes requires
the imposition of long term imprisonment. By imposing a sentence of one year
less than the prescribed minimum of 15 years’ imprisonment on each of the
murders and ordering nine years of the sentence on two of the convictions to
run concurrently with the other, the trial court adequately provided for all of the
mitigating factors and the diminished responsibility it found proved. There is
no basis upon which this court is entitled to interfere.
________________
S SNYDERS
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS:
M de la Harpe
Instructed by Legal Aid Board, Cape Town
Legal Aid Board, Bloemfontein
RESPONDENTS:
M O Julius
Instructed by The Director of Public Prosecutions,
Cape Town
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: 28 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
M VAN DER WESTHUIZEN v THE STATE
1.
In 2006 the appellant, Mr van der Westhuizen, a high ranking police officer, killed his
three children in the presence of his wife to punish her. He shot them with his service pistol
at the family home in Brackenfell, Cape Town. Hours later he tried to commit suicide, but
failed. As he shot the children he explained to his wife that he did so to make her suffer the
consequences of having chosen her work as a police woman above him. The choice that he
referred to was his perception of her attitude.
2.
His defence to the murders was that depression, anxiety and post traumatic stress
disorder from which he suffered as a result of the nature and extent of his police work and the
disintegration of his marriage, caused him not to be criminally responsible for what he did.
This defence failed in the Western Cape High Court and failed in the Supreme Court of
Appeal.
3.
The Supreme Court of Appeal confirmed the finding of the high court that, at best for
the appellant, his depression, anxiety and post traumatic stress disorder diminished his
criminal responsibility which, in turn, justified the imposition of a lesser sentence than that
prescribed by law. The effective sentence of 24 years' imprisonment was confirmed on
appeal.
4.
The judgment of the Supreme Court of Appeal includes various significant decisions
on criminal procedure. These include an interpretation of the requirement that a prosecutor
must act impartially. Essentially the Supreme Court of Appeal decided that this does not
mean that a prosecutor is obliged to play chess against him- or herself, ie call evidence which
is destructive of the State case; but a prosecutor must act fairly and dispassionately.
5.
The judgment also makes it clear, for the first time in relation to a criminal matter,
that when an accused makes a formal admission, that admission stands and cannot be
contradicted by an accused, whether by way of evidence or in argument, until there is an
honest explanation why the admission was made and why the accused wishes to resile from
it.
--ends-- |
3738 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 879/2020
In the matter between:
CORNERSTONE LOGISTICS (PTY) LTD
FIRST APPELLANT
PRESTON CHESLIN AITKEN
SECOND APPELLANT
and
ZACPAK CAPE TOWN DEPOT (PTY) LTD
RESPONDENT
Neutral citation: Cornerstone Logistics (Pty) Ltd and Another v Zacpak
Cape Town Depot (Pty) Ltd (Case no 879/2020) [2022] ZASCA
12 (25 January 2022)
Coram:
ZONDI,
GORVEN
and
MOTHLE
JJA
and
SMITH
and
PHATSHOANE AJJA
Heard:
22 November 2021
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 25 January 2022.
Summary: Interpretation of contractual provisions intended to indemnify licensee
of a customs warehouse against liability for customs duty, VAT, and other charges
in terms of the Customs and Excise Act 91 of 1964 – conditions for indemnity
coming into effect – whether licensee acted on client’s instructions and liability
caused by its own fault – whether surety’s liability was limited to charges in respect
of storage – client issued instructions regarding release of goods to third party –
licensee held liable by SARS because it submitted falsified documents – no evidence
of licensee’s complicity in the falsification of documents – liability thus not as a
result of any fault on its part – surety’s liability accessory to that of the principal
debtor – surety also liable to indemnify licensee in respect of customs duty, VAT,
penalties and other charges.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Tiry AJ,
sitting as court of first instance):
The appeal is dismissed with costs, including the costs of senior counsel.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Smith AJA (Zondi, Gorven and Mothle JJA and Phatshoane AJA concurring)
Introduction
[1] The licensee of a customs warehouse assumes various onerous obligations in
terms of the Customs and Excise Act, 91 of 1964 (the Act). In terms of s 19(6) of
the Act, a licensee is liable, inter alia, for the customs duties and VAT on all goods
stored in its warehouse, from the time the goods are received into the warehouse.
The liability only ceases when it is proved that the goods in question have been duly
entered in terms of s 20(4) of the Act, either for home consumption or export (as the
case may be), and have been delivered or exported in terms of such entry. The astute
licensee would thus strive to avoid financial ruin by requiring clients to indemnify it
against claims arising out of processes over which it has no control. This appeal
concerns the appellants’ obligation to indemnify the respondent under such a clause.
[2] The first appellant, Cornerstone Logistics (Pty) Ltd (Cornerstone), is a
licensed clearing agent and remover of goods in bond, with its principal place of
business in Cape Town. The second appellant, Preston Cheslin Aitken (Mr Aitken),
was cited in his capacity as surety for and co-principal debtor with Cornerstone.
Although the South African Revenue Service (SARS) was cited as the third
respondent, no relief was sought against it. It neither opposed the application, nor
was it involved in the appeal. The respondent, Zacpak Cape Town Depot (Pty) Ltd
(Zacpak), is the licensee of a customs and excise warehouse situated in Epping
Industria, Cape Town.
[3] On 20 September 2017, Cornerstone, duly represented by Mr Aitken,
submitted an application to Zacpak for credit facilities in respect of warehousing
services. After Zacpak had provided Cornerstone with a quotation for the services,
Mr Aitken signed Zacpak’s credit application form, both in his representative
capacity and as surety and co-principal debtor, renouncing, inter alia, the benefits of
excussion and division. Zacpak approved the application, and on 4 December 2017,
stipulated a credit limit of R30 000.00 and payment terms of 30 days. In terms of the
suretyship clause, Zacpak would be entitled to recover payment from Mr Aitken in
his personal capacity, in the event of Cornerstone failing ‘to timeously pay any
amount due’.
[4] Between August 2017 and November 2018, Cornerstone instructed Zacpak to
store various consignments of alcohol in its customs warehouse. It is common cause
that Zacpak subsequently released the goods to Bridge Shipping, a road carrier, who
was supposed to export the goods to Mozambique. Although the consignments were
entered for export to Mozambique, they were impermissibly diverted, thus entering
for home consumption in the Republic of South Africa.
[5] During December 2018, SARS addressed a letter to Zacpak demanding
payment of duties, VAT and other related charges, in the sum of R37 416 153.27.
The letter stated, inter alia, that Zacpak had failed to provide proof that the goods
had been duly exported to Mozambique, and they were, accordingly, deemed to have
been impermissibly diverted for home consumption.
[6] Zacpak, thereafter, lodged an internal appeal and applied for a suspension of
its obligations towards SARS. Following an alternative dispute resolution process,
Zacpak’s appeal was dismissed. It, thereafter, gave notice to SARS of its intention
to institute legal proceedings in terms of s 90 of the Act for an order setting aside the
letter of demand. In the interim, it launched proceedings in the court a quo following
Cornerstone’s and Mr Aitken’s resistance to its attempts to enforce the indemnity
and suretyship clauses.
[7] Cornerstone disputed both in this Court and in the court a quo that the goods
were removed from Zacpak’s warehouse on its instructions. It contended that once
the goods were acquitted into Zacpak’s warehouses, it had nothing further to do with
them. It also had no further control over any processes relating to the goods. It
contended, furthermore, that the indemnity did not apply where the liability for
which it was sought arose as a result of Zacpak’s negligence, or was caused through
its fault. In this regard it asserted that the liability arose as a result of Zacpak’s failure
to keep proper records, as it was enjoined to do in terms of rule 19.05 of the Customs
and Excise Rules, promulgated under the Act. In respect of the suretyship, Mr Aitken
contended that it did not cover the liability to SARS, but was instead limited to
charges in respect of the warehousing services which Cornerstone had failed to pay;
and then only up to the maximum of the R30 000.00 credit facility.
[8] In addition, the appellants contended that the matter lacked urgency and that
the founding affidavit constituted inadmissible hearsay evidence. It also opposed the
admission of the replying affidavit, which had been filed out of time.
[9] On 22 October 2019, the Western Cape Division (per Tiry AJ), upheld
Zacpak’s claim. Cornerstone was held liable on the basis of the indemnity and Mr
Aitken on the basis of the suretyship. They were ordered (jointly and severally) to
pay whatever amount Zacpak was required to pay SARS, arising out of the demand
for payment made by the latter on 7 December 2018. The appellants appeal that
judgment with the leave of this Court.
[10] Because Zacpak has launched proceedings for an order setting aside SARS’s
letter of demand, it is necessary to state that the issue of its liability vis-à-vis SARS
does not fall for decision in this appeal. That matter is still pending in another court
and nothing contained in this judgment should therefore be construed as
pronouncing on SARS’s entitlement to hold Zacpak liable for customs duties, VAT
or other related charges.
The facts
[11] It is common cause that Zacpak rendered the warehousing services to
Cornerstone on the terms and conditions contained in the letter confirming the credit
facility as well as the former’s Standard Terms and Conditions.
[12] In terms of clauses 14.1 and 14.6 of the Standard Terms and Conditions,
Cornerstone indemnified Zacpak against ‘all liability, claims, loss, damages,
penalties, costs and expenses incurred or suffered’ by Zacpak arising directly or
indirectly in connection with:
‘14.1 Zacpak complying with the Customer's express or implied instructions;
. . .
14.6 Unless caused by the fault of Zacpak, duty, Value Added Tax, fines, penalties or amounts
raised in forfeiture in respect of Goods stored at the Depot.’
[13] Since a number of different companies were involved in the processing of the
goods, it is necessary to explain their respective roles and capacities. Cornerstone
was the clearing agent for the owner of the goods, Real Africa Trading CC. It was
in that capacity that it contracted with Zacpak to provide the warehousing services.
Real Africa Trading CC had sold the consignments to Full Boost LDA, c/o Manzaro
Trading (Manzaro Trading). Sonic Clearing (Pty) Ltd was the clearing agent for
Manzaro Trading and Bridge Shipping, the road carrier to whom Zacpak had
released the goods.
[14] As mentioned, in instructing Zacpak to store the consignments of alcohol in
its customs warehouse, Cornerstone was acting as an agent on behalf of its principal,
Real Africa Trading CC. Cornerstone duly provided the requisite Electronic Data
Interchange (paperless EDI notification), an authorisation issued by SARS for the
release of bonded goods by a customs warehouse, either for domestic consumption
or for export.
[15] While it is common cause that Zacpak eventually released the goods for
transportation to Bridge Shipping, Cornerstone has disputed that Manzaro Trading
was its client and that it instructed Zacpak to release the goods to the former.
[16] Zacpak’s assertion that it was acting on instructions from Cornerstone when
releasing the goods to Bridge Shipping is founded upon a series of emails sent to it
by a Mr Mahlangu, who purported to act on behalf of Cornerstone. These were:
(a) In an email dated 19 January 2018, at 13h40, Mr Mahlangu wrote: ‘Please note
my client’s transporter can only be able to load the stock that we delivered yesterday
today . . . are you able to arrange staff to facilitate the loading . . .’.
(b) Later that same day, at 14h05, Mr Mahlangu said: ‘. . . we accept the charges so
please have your men ready for our client’s transporter around 17:00 hrs. . .’.
(c) On 22 January 2018, at 12h46 Mr Mahlangu told Zacpak that: ‘We are still
waiting for my client’s client to provide export documents. . .’.
(d) Later at 17h06 that same day he said that: ‘. . . the export loading will not happen
today as client has not provided export documents yet. Will advise in good time once
documents are available’.
(e) On 23 January 2018, at 09h11, he said that: ‘[t]he export agent has confirmed
that customs export documents were released last night, they will e-mail them
directly to you this morning and the truck will be there in the next 30-45 minutes to
load’.
[17] Zacpak contended that these emails established that Mr Mahlangu, acting on
behalf of Cornerstone, issued specific and direct instructions regarding to whom and
when the goods should be released. In addition, Zacpak asserted that Cornerstone
had accepted responsibility to pay invoices, which included charges in respect of the
loading of the goods by Bridge Shipping. This, Zacpak contended, is a further
indication of Cornerstone’s continued involvement with the goods after they were
acquitted into the warehouse. After releasing the goods from its warehouses, Zacpak
presented those invoices for payment to Cornerstone. At the time of deposing to the
founding affidavit Cornerstone had paid all but four of those invoices.
[18] While Zacpak was able to produce the relevant forms authorising it to release
the goods to Bridge Shipping, it was unable to produce various final bills of entry.
The Commissioner of the South African Revenue Service (Commissioner) notified
Zacpak that the proof of exports (the CN2 forms) submitted in respect of each of the
consignments entered and released from its warehouse had either been forged or
fraudulently obtained. Zacpak was unable to verify these allegations.
[19] On 7 November 2018, the Commissioner addressed a letter to Zacpak stating
that he had conducted verification of the export bills of entry to establish if the goods
were in fact exported in accordance with the declarations. He had established that
whilst the goods were cleared on bills of entry, according to his digital system, the
goods were never exported out of South Africa and were, therefore, deemed to have
been entered for home consumption. In the absence of proof that the goods had in
fact been exported, the liability for duty, including that of Zacpak, had not ceased.
The Commissioner, consequently, gave notice of his intention to demand forfeiture
in lieu of seizure of an amount equal to the value for duty purposes of the goods
deemed to have been diverted. Zacpak was afforded an opportunity to respond.
[20] In response, Zacpak argued, inter alia, that it had received the goods in bond
and subsequently released them on instructions of Cornerstone. At the time it could
not reasonably have been expected to know that the goods would not be exported,
but would be unlawfully diverted. The exporter had furnished it with the approved
export forms which it had passed on to the Commissioner and as far as Zacpak was
concerned, the goods had in fact been exported to Mozambique and had,
accordingly, not been unlawfully diverted.
[21] The Commissioner, nonetheless, issued a letter of demand wherein he stated,
inter alia, that the CN2 forms produced by Zacpak were false and invalid, as the
reference numbers appearing thereon related to different goods processed at other
border posts. The Commissioner pointed out that the reference numbers were unique
to each specific export and could not be duplicated. He stated, furthermore, that the
company reflected on the CN2 forms produced by Zacpak, namely Bridge Shipping,
had notified him that it did not authorise either Sonic Clearing, Manzaro Trading or
Zacpak to use its codes to remove the goods to Mozambique. It was, accordingly,
not liable for the payment of customs duties, VAT or penalties.
[22] The Commissioner stated that the aforementioned companies, including
Zacpak, had impermissibly diverted the consignments of alcohol bound for export
to Mozambique and in order to conceal these diversions had forged the relevant
proof of export forms. He, accordingly, held them jointly and severally liable for the
payment of R37 242 774.42.
Findings of the court a quo
[23] The court a quo found that the evidence established, on a balance of
probabilities, that Zacpak released the goods to Bridge Shipping on Cornerstone’s
instructions. It found support for this finding in the contents of the emails Mr
Mahlangu sent to Zacpak and the fact that invoices presented to Cornerstone
included charges relating to services rendered in respect of the release of the goods
to Bridge Shipping.
[24] Regarding Cornerstone’s liability to indemnify Zacpak against the claim by
SARS, the court a quo found that ‘. . . because the wording of the agreement broadly
establishes the First Respondent’s [Cornerstone] liability to indemnify the Applicant
[Zacpak]: (a) the said contractual indemnity did not cease when the goods were
acquitted, (b) consequently, liability was not limited to the storage costs and (c) thus,
the said liability encompasses the SARS claim’.
[25] And regarding Cornerstone’s contention that Zacpak had attracted liability
because of its failure to prove that the goods had been duly exported, the court held
that Cornerstone and Mr Aitken had failed to establish that the SARS claim was
caused by Zacpak’s failure to produce the required documents.
[26] In dealing with the appellant’s contention that Mr Aitken only bound himself
in respect of storage costs to the maximum of R30 000.00, the court a quo found that
the phrase ‘to timeously pay any amount due’ expanded Mr Aitken’s liability as a
surety and co-principal debtor beyond Cornerstone’s liability for storage costs, and
included liability in respect of the SARS claim.
Urgency and other points raised by the appellants
[27] Before I consider the submissions relating to the interpretation of the
indemnity and suretyship clauses, it is necessary to consider the various points raised
by the appellants, to which I have alluded earlier.
[28] The appellants contended that the application in the court a quo was not urgent
and constituted an abuse of the process of the court. In this regard they asserted that
Zacpak had been aware of the intended action by SARS by 7 December 2018. It only
issued papers on 31 December 2018, and only served on them on 14 January 2019,
in respect of an event that was supposed to have occurred on 4 January 2019. There
was no indication on the papers as to why the matter remained urgent, despite the
fact that the deadline had come and gone. The notice of motion thus sought relief on
an urgent, alternatively semi-urgent basis, without establishing any factual basis for
either. They contended furthermore that although Zacpak alleged that it would suffer
bankruptcy if the relief were not granted, it failed to provide any facts regarding its
financial position, or to show why there was a danger that it would become bankrupt.
[29] In dealing with the issue of urgency, the court a quo took into account all the
relevant factors, including the fact that SARS would have been entitled to enforce
its claim against Zacpak, notwithstanding its challenge to the claim. It found that
commercial urgency had been established and there were grounds for semi-urgency.
[30] It is trite that in pronouncing on the issue of urgency, the court a quo was
exercising a wide discretion. This court can only interfere with that discretion if it is
manifest that the judge misdirected herself. I can find no evidence of such
misdirection or irregularity, and this court is, accordingly, not at liberty to interfere.
In any event, in my view, the urgency issue is moot. The court a quo had decided to
hear and dispose of the matter on a semi-urgent basis. That cannot be undone.
[31] Cornerstone objected to the admission of the replying affidavit because the
emails which that affidavit sought to introduce related to only one of 33 shipments
and to a transaction concluded prior to the approval of the credit application. The
court a quo, however, found that there was no apparent prejudice in admitting the
emails as evidence, as they were relevant to the fair adjudication of the dispute. In
this regard, as well, the court a quo was exercising a wide discretion. It is clear that
the judge considered the arguments advanced on behalf of the parties and gave
compelling reasons for her ruling. There is accordingly also no basis upon which
this court can disturb that ruling.
[32] Regarding the contention that the contents of the founding affidavit
constituted inadmissible hearsay evidence because the deponent, namely
Mr Petersen, did not have personal knowledge of the facts to which he deposed, the
court a quo found that in his capacity as Zacpak’s financial manager, Mr Peterson
had access to the relevant records and documentation upon which Zacpak’s claim
was founded. In that capacity he had sufficient knowledge of the facts, and his
affidavit, consequently, did not constitute hearsay evidence.
[33] To my mind, there is also no merit in this point. The court a quo has provided
compelling reasons for its finding that Mr Petersen’s affidavit did not amount to
hearsay evidence and its reasoning cannot be faulted. In any event, although the
emails sent by Mr Mahlangu were addressed to a Mr Simpson, they were also
circulated to Ms Tammy Lee Petersen, who had filed a confirmatory affidavit.
[34] Regarding the submission that there were irresoluble disputes of fact on the
papers, the court a quo found that the papers did not raise any material disputes
which could have justified the dismissal of the matter. The factual disputes, to the
extent that there were any, appeared to have related mainly to the emails sent by Mr
Mahlangu and Mr Aitken’s assertion that he intended to limit the suretyship to
Cornerstone’s liability in respect of storage charges. I am not convinced that the
version put up by the appellants in their answering papers raised bona fide and
material disputes of fact in respect of either of these issues. The appellants did not
deny that Mr Mahlangu sent the emails, but took issue with Zacpak’s construction
of their contents. And, as I demonstrate below, Mr Aitken’s assertions regarding
what he intended when he signed the credit application, offends the integration rule
and are consequently inadmissible. I am accordingly of the view that none of these
points is sustainable.
Cornerstone’s liability in terms of the indemnity clauses
[35] It is against the backdrop of the abovementioned factual matrix that the
following issues fall for decision:
(a) Did Cornerstone give instructions to Zacpak regarding the release of the goods
to Bridge Shipping?
(b) Did Zacpak’s liability vis-à-vis SARS arise as a result of its own fault?
(c) Was Mr Aitken’s liability as surety limited to charges in respect of storage
services?
[36] The appellants’ case can be summarised as follows:
(a)
Cornerstone was acting as the clearing agent for the owner of the goods,
namely Real Africa Trading CC. It was in that capacity that it contracted with
Zacpak to provide the warehousing services. Once the goods had been duly
entered into Zacpak’s warehouses, the latter, in its capacity as licensee of a
customs warehouse, assumed statutory obligations in respect of the storage
and release of the goods and Cornerstone’s liability in respect of the goods
ceased.
(b)
Zacpak was at all material times aware of these statutory obligations and had
known that it was required to provide proof, upon being called by SARS, to
show that the goods were acquitted at the South African border, failing which
the goods would be deemed to have been impermissibly diverted and that it,
together with Sonic Clearing, Bridge Shipping and Manzaro Trading, would
be liable in terms of the Act. Despite this knowledge, Zacpak had over a period
of three months, allowed goods to be removed from its warehouses by Bridge
Shipping without keeping records in compliance with its statutory obligations
as licensee of a customs warehouse.
(c)
And since the indemnity is unenforceable against Cornerstone, it is also not
enforceable against Mr Aitken, whose liability as a surety is accessory to that
of Cornerstone as principal debtor.
(d)
In the event, the suretyship clause was intended to deal only with invoices
payable by Cornerstone in respect of the warehousing services, and did not
extend to liability in respect of the indemnity.
[37] The indemnity and suretyship clauses must be construed on the basis of the
principles enunciated in Natal Joint Municipal Pension Fund v Endumeni
Municipality (Endumeni).1 They must thus be given meaning and business-like
efficacy by having regard ‘. . . 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’.
[38] When construed in accordance with the aforementioned principles, there can
be little doubt that in terms of clause 14.1 of the Standard Terms and Conditions,
Cornerstone indemnified Zacpak against any ‘claims, loss, damages, penalties or
expenses’ incurred by Zacpak, as a result of Zacpak complying with Cornerstone’s
express or implied instructions. The indemnity provided for by this clause is not
qualified by reference to liability caused by Zacpak’s negligence or fault. Thus, for
the indemnity to become effective it was only incumbent on Zacpak to establish, on
a balance of probabilities, that it had released the goods to Bridge Shipping on
Cornerstone’s instructions.
[39] As explained earlier, the statutory obligations which Zacpak assumed in its
capacity as licensee of a customs warehouse are quite burdensome, and non-
compliance results in grave financial consequences. For instance, where, in a case
such as this, the goods were destined for export to a neighbouring country, the
liability for payment of customs duty and VAT arose immediately, but actual
payment was deferred on the condition that liability would cease if it were proved
that the goods had been either delivered or exported. Zacpak is wholly dependent on
1 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012
(4) SA 593 (SCA) para 18.
third parties insofar as the export of goods are concerned. Other than ensuring that
the necessary documents authorising it to release the bonded goods lawfully are
presented to it, it has no control over whether the goods are in fact exported or not.
Thus, as mentioned earlier, it is not surprising that Zacpak adopted a belt and braces
approach, and incorporated two different indemnity clauses in terms of its Standard
Terms and Conditions.
[40] In my view, Cornerstone’s assertion that it had nothing further to do with the
processing of the goods once they had been acquitted into Zacpak’s warehouses, is
soundly defeated by the contents of the emails which Mr Mahlangu sent to Zacpak.
And Cornerstone’s assertion that Mr Mahlangu did no more than provide
information to Zacpak, and its denial that the provision of the information amounted
to instructions regarding the release of the goods, ring hollow. It is evident from
those emails that Mr Mahlangu was arranging for the goods to be loaded on behalf
of Cornerstone’s client, namely, Manzaro Trading; that he informed Zacpak when
the goods would be loaded; gave specific instructions regarding the loading; and
repeatedly mentioned that Manzaro Trading was Cornerstone’s client. I am therefore
of the view that the court a quo correctly found that Zacpak released the goods to
Bridge Shipping on Cornerstone’s express instructions.
[41] In addition, Cornerstone’s continued involvement with the goods beyond their
entry into Zacpak’s warehouse is further evidenced by the fact that it paid for
invoices which included charges in respect of the loading of the goods onto
Bridge Shipping’s trucks. As a result, there can be little doubt that the evidence
established, on a balance of probabilities, that Cornerstone was still involved with
the processing of the goods after they were acquitted into Zacpak’s warehouse and
had instructed Zacpak to release the goods to Bridge Shipping. Any liability that
Zacpak attracted as a consequence of it acting on those instructions is, consequently,
covered by the indemnity provided for in clause 14.1 of the Standard Terms and
Conditions.
[42] Even if I am wrong in my findings regarding the import of clause 14.1, Zacpak
was in any event also entitled to rely on the indemnity provided for in terms of clause
14.6, unless of course its liability to SARS arose as a result of its own fault. As
mentioned earlier, in this regard, Cornerstone contended that Zacpak allowed
Bridge Shipping to remove the goods from its warehouse without complying with
its statutory obligations to keep proper records. It contended, furthermore, that if
Zacpak had kept proper records, it would have been able to prove – as it was enjoined
to do in terms of s 19(7) of the Act – that the goods had been duly entered in terms
of s 20(4) and had been delivered or exported in terms of such entry. Its liability
would then have ceased.
[43] To my mind, this argument loses sight of the fact that SARS did not seek to
hold Zacpak liable because of its failure or inability to produce the requisite
documents, but because the documents provided to SARS appeared to have been
forged or fraudulently obtained. Those documents were produced by
Manzaro Trading and it has not been suggested that Zacpak was complicit in the
diversion of the goods or the falsification of the release forms.
[44] As the licensed operator of a customs warehouse, Zacpak’s statutory
obligations were to ensure that proper bills of entry are presented when receiving the
goods into its warehouses, and when releasing the goods for transportation, to do so
only upon receipt of the prescribed authorisation.
[45] The SARS letter of demand unambiguously stated that Zacpak was held liable
because SARS system administrators ‘. . . confirmed that the CN2’s produced by
Zacpak were false and invalid due to the Reference numbers on the CN2’s relating
to different exports/imports processed at various border posts. . .’. As mentioned
earlier, it is, thus, manifest that it was not Zacpak’s inability to produce documents
that had attracted the liability, but rather the fact that the documents presented to
SARS had been forged or fraudulently obtained. It is axiomatic that those
documents, but for the fact that they were regarded as being ‘false and invalid’ by
SARS, would have constituted acceptable proof of the discharge of Zacpak’s
statutory obligations in terms of s 19(7) of the Act.
[46] It was also contended on behalf of Zacpak that the stipulation in s 19(7) of
the Act to the effect that the licensee’s liability ceases once it is able to prove that
the goods had either been ‘delivered or exported in terms of such entry’, means that
it was in any event only necessary for it to prove that it delivered the goods to
Bridge Shipping. Cornerstone, on the other hand, argued that the term ‘delivered’
refers only to goods entered for domestic consumption. I do not believe that it
necessary to decide that issue, since it is manifest that the documents produced by
Zacpak, but for the fact that they had been falsified, would have constituted
satisfactory proof of either delivery or export.
[47] Cornerstone is, accordingly, also liable to indemnify Zacpak in respect of the
SARS claim in terms of 14.6 of the Standard Terms and Conditions.
Mr Aitken’s liability in terms of the suretyship clause
[48] The suretyship clause reads as follows:
‘11.
IN ADDITION, THE SIGNATORY HERETO BINDS HIM/HERSELF AS SURETY
AND CO-PRINCIPAL DEBTOR, ENTITLING THE COMPANY TO RECOVER PAYMENT
FROM HIM/HER IN HIS/HER PERSONAL CAPACITY IN THE EVENT THAT THE
APPLICANT FAILS TO TIMEOUSLY PAY ANY AMOUNT DUE.’
[49] Mr Aitken asserted that he only bound himself as surety in respect of
payments for warehousing services procured by Cornerstone, and the indemnity was
only to a maximum of R30 000.00. He stated, in addition, that he intended to limit
his suretyship in this manner when he signed the credit application form, and that
Zacpak has not produced any evidence to contradict that assertion. Essentially then,
he contended for a construction of the terms of the credit application without any
reference to Zacpak’s Standard Term and Conditions. Other than his ipse dixit, he
has not proffered any extrinsic evidence to establish the context and purpose of the
suretyship clause in support of such a construction.
[50] In my view, therefore, Mr Aitken’s assertion as to what he intended when he
signed the application form amounts to parol evidence and is, accordingly,
inadmissible. As Harms DP (as he then was) held in KPMG Chartered Accountants
(SA) v Securefin Limited and Another,2
‘. . . the integration (or parol evidence) rule remains part of our law. However, it is frequently
ignored by practitioners and seldom enforced by trial courts. If a document was intended to provide
a complete memorial of a jural act, extrinsic evidence may not contradict add to or modify its
meaning (Johnson v Leal 1980 (3) SA 927 (A) at 943B). Second, interpretation is a matter of law
and not of fact and, accordingly, interpretation is a matter for the court and not for witnesses. . . .’
2 KPMG Chartered Accountants (SA) v Securefin Limited and Another [2009] ZASCA 7; [2009] 2 All SA 523 (SCA);
2009 (4) SA 399 (SCA) para 39.
[51] And while the Constitutional Court in University of Johannesburg v Auckland
Park Theological Seminary and Another3 held that parties will invariably be allowed
to lead evidence to establish the context and purpose of the relevant contractual
clauses, Khampepe J was at pains to point out that this does not mean that extrinsic
evidence is always admissible. Clarifying this dictum further, the learned judge said
that extrinsic evidence should be used ‘as conservatively as possible’,4 because
‘interpretation is a matter for the courts and not for the witnesses’5.
[52] To my mind, Mr Aitken’s assertions regarding what he intended when
concluding the agreement, cannot, in the circumstances of this case, assist in its
interpretation. That evidence was clearly not proffered to provide context or to
establish the purpose of the relevant clauses, but rather to amend or alter their
unambiguous meaning and import.6 In any event, Mr Aitkin’s declaration regarding
what was in his mind when he concluded the agreement cannot trump the manifestly
clear and unambiguous meaning of the suretyship clause, when construed in the
context of the entire agreement. His assertion that the suretyship clause must be
construed only in the context of the credit application form, is manifestly at odds
with the explicit and unambiguous contractual provisions, which include the
Standard Terms and Conditions.
[53] It was, furthermore, submitted on behalf of Mr Aitken that the phrase ‘to
timeously pay any amount due can, on a proper construction, only relate to the
payment of invoices in respect of warehousing services issued from time to time by
3 University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (8) BCLR
807 (CC); 2021 (6) SA 1 (CC).
4 Ibid para 68.
5 Ibid para 68.
6 Ibid paras 67 and 68.
Zacpak. In terms of the credit facility, those invoices had to be paid within 30 days.
His liability as surety, accordingly, related only to the timeous payment of invoices
in respect of those services raised by Zacpak from time to time, and then only to the
extent of credit facility, namely R30 000, or so the argument went.
[54] When construed on the basis of the principles enunciated in Endumeni,
Mr Aitken’s assertion that the suretyship is limited to storage costs payable to
Cornerstone does not find any support in the ordinary grammatical meaning and
syntax of that clause. There is nothing in the terms of the application for credit or
Standard Terms and Conditions that limits the surety in this manner.
[55] In my view, the incorporation of the Standard Terms and Conditions into the
agreement means that Mr Aitken’s liability as surety for ‘any amount due’ must
include any amount payable by Cornerstone in terms thereof. And in terms of clause
16.1, Cornerstone was also liable for ‘. . . any duties, taxes, imposts, levies, deposits
or outlays of whatever nature by or payable to the authority, intermediaries or other
parties at any port or place or in connection with the goods, and whether time of
entry and/or at any subsequent time, for any payments, fines penalties expenses, loss
or damage incurred or sustained by Zacpak in connection therewith, except where
such was caused by the sole negligence of Zacpak, or where these conditions
provide[d] otherwise’.
[56] Cornerstone’s contractual obligations in terms of this clause were separate and
in addition to its liability in terms of clauses 14.1 and 14.6. Since Mr Aitken’s
liability as surety was accessory to that of Cornerstone,7 the obligation to ‘pay any
7 Kilroe-Daley v Barclays National Bank 1984 (4) SA 609 (A).
amount due’ by Cornerstone would also have extended to the liability in terms of
clause 16.1. Mr Aitken is, therefore, also liable as surety and co-principal debtor for
any amount that Cornerstone would be obliged to pay in terms of the indemnity
clauses or clause 16.1.
[57] The reasoning and findings of the court a quo can, accordingly, not be faulted
and the appeal must fail. There is no reason why costs should not follow the result.
[58] In the result the appeal is dismissed with costs, including the costs of senior
counsel.
__________________________
J E SMITH
ACTING JUDGE OF APPEAL
APPEARANCES
For appellants:
A A S A Bava SC
Instructed by:
Sikander Tayob Attorneys, Johannesburg
Claude Reid Inc., Bloemfontein
For respondent:
J P V McNally SC
Instructed by:
Prinsloo Inc., Johannesburg
Rosendorff Reitz Berry 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 January 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
Cornerstone Logistics (Pty) Ltd and Another v Zacpak Cape Town Depot (Pty) Ltd
(Case no 879/2020) [2022] ZASCA 12 (25 January 2022)
Today the Supreme Court of Appeal dismissed an appeal by the appellant from the Western
Cape Division of the High Court, Cape Town, (the high court) with costs.
On 20 September 2017, the first appellant, Cornerstone Logistics (Pty) Ltd, duly represented
by the second appellant, Preston Aitken, submitted an application to the respondent, Zacpak
Cape Town Depot (Pty) Ltd for credit facilities in respect of warehousing services. The
respondent provided a quotation for the services and the second appellant had signed the credit
application form as surety and co-principle debtor, thereby renouncing the benefits of
excussion and division. The application was approved with a stipulated credit limit of
R30 000.00 and 30 days payment. Upon default, payment may be exacted from the second
appellant in his personal capacity as surety.
Sometime between August 2017 and November 2018, the first appellant instructed the
respondent to store various consignments of alcohol in its customs warehouse. The respondent
subsequently released the goods to Bridge Shipping, a road carrier, who was supposed to export
the goods to Mozambique. However, the good were impermissibly diverted and ended up being
utilised for home consumption in the Republic. The South African Revenue Service (SARS)
sent a letter to the respondent demanding payment of duties, value-added tax and other related
charges totalling 37 416 153.27. The respondent lodged an internal appeal, which was
dismissed. Thereafter, it launched proceedings in the high court for an order setting the letter
of demand. In the interim, proceedings were launched to enforce the indemnity and surety
clauses against the first and second appellants.
The high court upheld the respondent’s claim – the first appellant was held liable on the basis
of indemnity and the second appellant on the basis of suretyship, and ordered to pay what was
required to SARS. This Court granted leave to appeal the order.
This Court found that the respondent held goods on behalf of the first appellant’s client,
Manzaro Trading, and released the goods to Bridge Shipping on instruction of the first
appellant’s express instructions. Any liability that the respondent could have incurred by
releasing the goods as a consequence of acting on instructions by the first appellant was covered
by the indemnity agreement. The appellants contended that they could not have been held liable
as liability would never have been incurred had the respondent kept proper records of their
paperwork. This contention, however, was rejected, as the allegations levelled by SARS did
not revolve around the respondent’s inability to provide SARS with documentation, but rather
that the documents provided were forged or fraudulently obtained. As the licensed operator of
a customs warehouse, the respondent was to ensure that proper bills of entry was presented
when receiving goods, and when releasing the goods for transportation, to do so only upon
receipt of the prescribed authorisation.
The second appellant, in turn, contended that he had only bound himself as surety for
warehousing services and only to a stipulated maximum. His intention had been to limit his
suretyship when the agreement was entered into and the respondent had failed to indicate that
his assertion was untrue. However, this Court found the second appellant’s assertions
inadmissible and at odds with the clear stipulations of the agreement.
Ultimately, the first appellant’s contractual obligations were separate and in addition to its
liability in terms of other clauses of the agreement. Because the second appellant’s liability as
surety was accessory to the first appellant, the obligation incurred by the first appellant
extended to the second appellant. The second appellant was therefore liable as surety and co-
principle debtor for any amount that the first appellant was obliged to pay in terms of the
agreement.
In the result, the order of the high court is upheld and the appeal is dismissed with costs.
--------oOo-------- |
2207 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 177/2008
JOHN WILLIAM CARTER
Appellant
and
KATHLEEN SHIRLEY HAWORTH
Respondent
Neutral citation: Carter v Haworth (177/2008) [2009] ZASCA 19 (20
March 2008)
Coram:
Mthiyane, Maya, Snyders JJA, Leach and Bosielo
AJJA
Heard:
16 February 2009
Delivered:
20 March 2009
Summary:
Whether a ‘judgment’ of a trial court ‘allowing
damages’ and other relief, and determining certain
factual findings to be referred to an actuary to
facilitate the calculation of an item of damage,
which was to be thereafter referred back to the
judge, is appealable.
___________________________________________________________
ORDER
On appeal from: Cape of Good Hope Provincial Division (Erasmus J
sitting as court of first instance).
‘The appeal is struck from the roll.’
JUDGMENT
MTHIYANE JA (MAYA, SNYDERS JJA, LEACH and BOSIELO AJJA
concurring):
[1] This appeal is concerned with the question whether the ‘judgment’
of the trial court in which damages and other relief were ‘allowed’ and
certain findings of fact were referred to an actuary to facilitate the
calculation of an item of damage, which was to be thereafter referred
back to the judge if the matter is not settled, is appealable.
[2] The appeal, with leave of this Court, is from the decision of the
Cape High Court (NC Erasmus J) in which the court ‘allowed’ damages
and other relief and made certain factual findings in favour of the
respondent, as plaintiff. The respondent claimed damages against the
appellant arising out of bodily injuries she sustained in a motor collision
on 30 April 2001, while she was on a visit to South Africa. The claim was
advanced under different heads which included general damages, future
medical expenses and future loss of earnings. The appellant conceded
liability in respect of the merits of the claim, leaving only the quantum of
the respondent’s damages to be determined by the trial court. By
agreement between the parties the learned judge was asked to determine
only questions relating to the quantum of the respondent’s damages. In
addition the court was asked to make certain ‘factual assumptions’ which
would then be furnished to an actuary for the purpose of the calculation
of the claims for past and future loss of earnings.
[3] In respect of the claim for future medical expenses the court found
that the amount of R100 500 was ‘reasonable and should be allowed’. As
to general damages it found that the amount of R100 000 ‘would
constitute a fair and reasonable’ compensation. No order was however
made directing the appellant to compensate the respondent in either of
these amounts.
[4] As regards the claim for past loss of earnings the court indicated
that the parties had accepted a contingency deduction of five per cent as
reasonable. The judge then went on to deal with the ‘factual assumptions’
he made for submission to an actuary to facilitate the calculation of the
respondent’s claim for future loss of earnings.
[5] Ultimately the respondent was ‘awarded costs on a party and party
scale, either as taxed or agreed. . .’. But the costs of the postponement of
the matter on 13 April 2005, were allowed ‘to stand over for later
determination’.
[6] Because the question of appealability was raised from the bench at
the commencement of the appeal and counsel were caught somewhat
unawares, we afforded them the opportunity to file supplementary heads
of argument on this question in due course.
[7] It is convenient to deal first with the question of appealability,
because if it should prevail a decision on the merits of the appeal would
be premature. During argument both counsel contended that the judgment
is appealable. Counsel for the respondent in particular submitted that, in
the Cape of Good Hope Provincial Division, matters are routinely
disposed of as the trial court had done. I have not been able to find any
authority to support this contention. I have found at least two cases which
suggest the contrary. These cases indicate that where a judge is required
to determine certain issues, be they legal or factual, he or she will in
conclusion at the very least make an order. See Consol Ltd t/a Consol
Glass v Twee Jonge Gezellen (Pty) Ltd; D’Ambrosi v Bane. 1 Where, for
example, a litigant claims compensation on the basis of negligence which
is admitted by the wrongdoer ─ as the respondent has done in the present
matter ─ it is difficult to see how an assertion to the effect that a
particular amount should be ‘allowed’ or is ‘fair, equitable or reasonable’
─ without such finding culminating in an order ─ would be of any
assistance to a successful party. This is not to say that a court may not be
required by the litigants to determine certain factual or legal issues to
enable them to thereafter either settle or move onto the next stage of their
dispute based on the finding of the court. The three Consol cases referred
to above illustrate the point. In each one of them the issues referred to the
judge for decision were dealt with, answered and an order subsequently
made.
[8] This is unfortunately not what happened in the present matter. I
have already indicated how the respective claims for future medical
expenses and general damages were dealt with. As to the ‘factual
assumptions’ made by the judge in respect of the past and future loss of
1 2002 (6) SA 256 (C) paras 58 and 59; 2005 (6) SA 1 (SCA) para 62; 2005 (6) SA 23 (C) para 63;
2006 (5) SA 121 (C) para 46.
earnings which were to be referred to the actuary for the calculation of
the loss of earnings, there is no indication in the judgment as to what was
to happen after the actuary had completed the calculation. Would the
calculations be referred back to the judge for finalisation? Or was the
judge still engaged in what Howie JA referred to as ‘merely steps along
the way towards the final conclusion and consequent order’. (See
Guardian National Insurance Co Ltd v Searle NO. 2 ) During argument,
counsel expressed the hope that the matter would settle once the actuaries
of the respective sides had made their calculations, but conceded that if
settlement was not reached it would be necessary to revert to the trial
court for it to determine the amount to be allowed in respect of loss of
earnings. Until that stage, the trial court would neither to able to assess
the total amount of the respondent’s damages nor issue an order holding
the appellant liable to the respondent in that sum. The proceedings in the
trial court in respect of the issue of damages have therefore clearly not
finally concluded, and an appeal to this court is premature.
[9] There is yet a further conundrum in the judgment. The wasted costs
of the postponement on 13 April 2005 were reserved by the judge for
later determination. Again, was the matter to be referred back to the judge
for finalisation? These factors militate against the judgment of the court
below having finally disposed of the issues and against the judgment
being final and therefore appealable.
[10] An appealable ‘judgment or order’ as intended by s 20(1) of the
Supreme Court Act 59 of 1959 has three attributes. First, it must be final
in effect and not susceptible to alteration by the court of first instance.
Second, it must be definitive of the rights of the parties in the sense that
2 1999 (3) SA 296 (SCA) at 301G.
the person seeking relief has, for example, been granted definite and
distinct relief. Third, the ‘judgment or order’ must have the effect of
disposing of at least a substantial portion of the relief claimed. (See Zweni
v Minister of Law and Order; Ndlovu v Santam Ltd. 3 )
[11] But this litmus test only finds application when the court concerned
has pronounced conclusively on the issues submitted to it for
determination. The difficulty with the judgment of the court below is that
we do not even get to the application of test in Zweni because upon a
proper reading of the judgment the issues in the case do not appear to
have been brought to final conclusion. I have already alluded to the
absence of any indication as to what was to happen after the calculation
of loss of future earnings by the actuary.
[12] In my view the weakest link in the judgment lies in the absence of
an order. I do not think there is a part of a judgment that provides a
stronger indication of finality than an order at the end. If the order is
removed or omitted the judgment is rendered ineffective and so, too, its
element of finality. It is incapable of execution by the Sheriff or
Messenger of the court in the case of proceedings in the magistrate’s
court. I cannot emphasize the importance of the order more than was
done by this court in SA Eagle Versekeringsmaatskappy Bpk v Harford 4
where it was said an order is the operative part of the judgment. It is what
a losing party appeals against. The court also stressed that a duty rests on
a court to formulate a clear order and for the registrars to ensure that the
order so issued is clear and corresponds with the judgment. On the same
theme this court in Administrator, Cape, and Another v Ntshwaqela and
3 1993 (1) SA 523 (A) at 532I533B; 2006 (2) SA 239 (SCA) para 9.
4 1992 (2) SA 786 (A) at 792CD.
Others 5 declared that there can be an appeal only against a substantive
order made by a court, not against the reasons for judgment.
[13] Given the uncertainty regarding the fate of the actuarial
calculations and the absence of an order, the conclusion is unavoidable
that the judgment of the court below is not appealable. Having come to
this conclusion it would be inappropriate to express any views on the
merits of the appeal. For the above reasons the matter falls to be struck
from the roll.
[14] I turn to the question of costs. To the extent that both parties failed
to appreciate the appealability point ─ and indeed persisted in arguing
that the ‘matter’ was appealable ─ it seems fair that each should shoulder
responsibility for its own costs.
[15] In the result the following order is made:
‘The appeal is struck from the roll.’
____________________________
KK MTHIYANE
JUDGE OF APPEAL
5 1990 (1) SA 705 (A) at 715D.
Appearances:
For Appellant:
D Stephens
Instructed by:
Michael Ward Attorney Cape Town
Honey Attorneys Bloemfontein
For Respondent:
PA Corbett
Instructed by:
Malcolm Lyons & Brivik Inc Cape Town
Matsepes Inc Bloemfontein | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
20 March 2009
STATUS:
Immediate
Carter v Haworth (177/2008) [2009] ZASCA 19 (20 March 2009)
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 SCA today made an order striking from the roll, an appeal by Mr John William
Carter against the decision of the Cape High Court (NC Erasmus J), in which certain
damages arising out of injuries suffered by a UK doctor, Ms Kathleen Shirley
Haworth who was a passenger in a vehicle driven by Carter, were ‘allowed’.
It appeared that certain factual findings made by the trial judge in connection with
Haworth’s claim for future loss of earnings were, by agreement, referred for actuarial
calculation and were to be thereafter referred back to the trial judge for a decision, if
the matter was not settled.
In the light of the above the SCA considered that the judicial process in the High
Court had not been completed and that the appeal against the decision was therefore
premature.
The appeal was accordingly struck from the roll. |
2284 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 572/08
THE MINISTER OF SAFETY AND SECURITY
First Appellant
THE CHARGE OFFICE COMMANDER OF THE
Second Appellant
HAMMARSDALE POLICE STATION
MUSAWAKHE MORRIS MWANDLA
Third Appellant
and
LORAINE CRAIG
First Respondent
LORAINE CRAIG NO
Second Respondent
LORAINE CRAIG NO
Third Respondent
LORAINE CRAIG NO
Fourth Respondent
________________________________________________________________
Neutral citation:
Minister of Safety and Security and others v Loraine Craig
(572/08) [2009] ZASCA 97 (17 September 2009)
CORAM:
Navsa, Brand, Ponnan, Mlambo and Mhlantla JJA
HEARD:
27 August 2009
DELIVERED:
17 September 2009
CORRECTED:
SUMMARY:
Delict - wellbeing of arrested persons ─ duty of police officers discussed ─
examination by district surgeon prior to detention at police station ─ cause of death
delayed rupture of descending aorta ─ in totality of circumstances police not negligent.
________________________________________________________________
______________________________________________________________
ORDER
______________________________________________________________
On appeal from:
High Court, Pietermaritzburg (Koen J sitting as court of first
instance).
1.
The appeal is upheld with costs, such costs to include the costs of two
counsel.
2.
The order of the court below is set aside and substituted as follows:
‘The plaintiffs’ claims are dismissed with costs, such costs to include the costs consequent upon
the employment of two (2) counsel.’
______________________________________________________________
JUDGMENT
______________________________________________________________
NAVSA JA (BRAND, PONNAN, MLAMBO and MHLANTLA JJA concurring):
[1] At approximately 21h00 on Saturday 19 July 2003, 34 year-old Mr Andre
Vincent Craig, who was heavily under the influence of alcohol, drove in a
southerly direction and into the face of oncoming traffic on the northbound
carriageway of the N3 national freeway. He drove his Toyota motor vehicle into
the path of an oncoming BMW motor vehicle, with disastrous consequences. The
BMW caught alight and two children within that car burnt to death. Other
passengers in the BMW were seriously injured. The collision occurred near
Hammarsdale, in the province of Kwa-Zulu Natal.
[2] Mr Craig survived the collision. He was arrested at the scene by two
members of the South African Police Service. At approximately 21h40, another
policeman, the third appellant, Detective-Inspector Musawakhe Mwandla,1
transported Mr Craig to Camperdown, to the rooms of the district surgeon,
Dr Richard Thompson, to have blood drawn for the purpose of a blood-alcohol
test.
1 Hereafter referred to as Inspector Mwandla.
[3] They arrived at Dr Thompson’s rooms at approximately 23h50. Dr
Thompson conducted an examination and blood was drawn. Tests later revealed
that Mr Craig’s blood-alcohol content was five times over the legal limit. The
official form completed by Dr Thompson at that stage noted small cuts and
bruises on Mr Craig’s body, recorded that he had a painful shoulder blade, but
stated that he was otherwise ‘well’.
[4] After the blood sample had been taken, Inspector Mwandla transported
Mr Craig to the Hammarsdale police station as he had received radio instructions
that members of the latter’s family were waiting there to attempt to secure his
release on bail.
[5] Mrs Craig’s mother, his wife Loraine and her nephew, Mr Russell Everton,
were all waiting at the Hammarsdale police station. After Mr Craig’s arrival the
family requested that he be released on bail, but this was refused. Inspector
Mwandla left the police station shortly thereafter.
[6] Mr Craig’s family then urged the police to allow them to take Mr Craig to
hospital but this too was refused. However, the police, in order to appease them,
summoned paramedics to examine him. The paramedics arrived during the early
hours of Sunday morning.
[7] There is a dispute about whether Mr Craig allowed the paramedics to
examine him. I interpose to state that there are other material disputes about: (a)
the nature and extent of the district surgeon’s examination of Mr Craig; (b)
whether he had given Inspector Mwandla specific instructions concerning further
treatment or hospitalisation; (c) the nature of the complaints made by family
members to the police concerning Mr Craig’s condition and (d) whether Mr Craig
was in obvious physical discomfort at the police station. These disputes will be
addressed in due course.
[8] According to Mrs Loraine Craig, the paramedics conducted a most cursory
examination of her husband and then pronounced that there was nothing wrong
with him. According to a paramedic and the police, Mr Craig was obstructive and
refused to be examined.
[9] A short while after the paramedics had left the police station, Mr Craig’s
family departed. At approximately 03h45 that Sunday morning, because
Hammarsdale police station had no holding facilities, Mr Craig was transported
by the police to the holding cells at Mpumalanga Police Station. At approximately
10h35 Mr Craig complained that he was feeling unwell.
[10] Inspector Mwandla was summoned and instructed to take Mr Craig to
Dr Thompson for treatment. Acting on his own initiative Inspector Mwandla
instead transported Mr Craig to Grey’s hospital. Shortly after his arrival there, and
despite the hospital staff’s best efforts to resuscitate him, Mr Craig died at
approximately 13h45.
[11] The cause of death was diagnosed as a delayed rupture of the
descending aorta. Although not a frequent occurrence, it is a well-known result of
high-impact collisions. It is necessary to describe the relevant physiology and the
nature of this injury.
[12] The aorta is the main artery that transports oxygenated blood from the
heart to the rest of the body. The descending thoracic aorta ─ as the name
suggests ─ is where the aorta turns to supply blood to the thoracic wall and then
the abdomen and the lower limbs. That part of the aorta is partially fixed. The rest
of the aorta and the heart are mobile and that is why there is a predisposition to
rupture, particularly where a person is involved in a high-impact collision. The
victim’s body stops as a result of the collision but the heart, the ascending aorta
and the aortic arch continue to move. At the point where the descending aorta
begins it is relatively immobile and has a propensity to tear. This explains how
the rupture occurred in the present case.
[13] Most of these ruptures are lethal at the scene of the collision because the
rupture is usually such that the injured person bleeds to death almost instantly. In
rare cases where this does not occur, victims experience what is referred to as a
contained rupture, which consists of a blood clot within the outer lining of the
aorta. This has a fair amount of resistance, but with the passage of time and
without surgical intervention, it ultimately gives way and death ensues. Where
there is a contained rupture there are pointers and tell-tale signs to assist in a
diagnosis.
[14] The first indicator is a high-impact collision, which would alert a medical
practitioner to the need for x-rays. A clinical examination would reveal either
unusually high or unusually low blood pressures. There will usually be blood
pressure differentials between arms and legs. Rib fractures, particularly of the
first, second or third ribs, are usually associated with this condition. These
fractures are indicative of direct significant physical trauma best detected by x-
rays. Such fractures are usually associated with a high degree of pain.
[15] In Mr Craig’s case the post-mortem examination revealed such fractures.
During the trial in the court below there was a debate about what could have
caused the fractures, including a suggestion that they might have been caused
by attempts at Grey’s hospital to resuscitate Mr Craig. This aspect will be dealt
with later in the judgment. I shall hereafter refer to Mr Craig as the deceased.
[16] Whilst there was some expert evidence indicating that state hospitals such
as Grey’s were not geared to deal with the kind of injury sustained by the
deceased, it appears however, that one can, on the totality of the expert
evidence, accept that had the police transported the deceased to hospital shortly
after his arrival at the Hammarsdale police station, surgical intervention would in
all probability have saved his life.
[17] Towards the end of June 2006 Mrs Loraine Craig, the first respondent,
instituted action in the Pietermaritzburg High Court against the three appellants,
the Minister of Safety and Security, the Officer commanding the Hammarsdale
police station and Inspector Mwandla. Mrs Craig instituted the action both in her
personal capacity and as legal guardian of her three minor daughters, claiming
delictual damages for loss of support. In her particulars of claim she asserted that
police at the Hammarsdale police station were under a legal duty to ensure the
well-being of an arrested person, such as the deceased, and that they had
negligently breached that duty in relation to him.
[18] According to Mrs Craig the police were negligent in the following respects.
They had detained the deceased without ensuring that he had immediate
medical attention. Furthermore, they had failed to ensure that he was transported
to hospital immediately and only did so some 16 hours later. In addition, they
failed to heed complaints concerning recurring pain made by the deceased to the
officer commanding and they had ignored an instruction by Dr Thompson that the
deceased should be transported to hospital.
[19] At the commencement of the trial and after the parties had reached
agreement in this regard, the court below made an order in terms of Uniform
rule 33(4), that the trial proceed first on the question of liability, the issue of
quantum to stand over for determination at a later stage, if necessary.
[20] After hearing evidence the High Court (Koen J) gave judgment in favour of
Mrs Craig and the three appellants were held liable, jointly and severally, for such
damages as Mrs Craig and her children may prove to have suffered.
[21] It is that order, with the leave of the court below, against which the
appellants presently appeal. Before us the parties were agreed that the appeal
turns on whether the assessment of the evidence by the court below was correct.
It is thus necessary to examine more closely the findings of the court below and
to consider them against the recorded evidence and then to decide whether
intervention by this court is justified.
[22] On a crucial aspect - one in dispute - Dr Thompson testified that he had
issued an instruction that Inspector Mwandla should take the deceased to the
police station to enable his family to transport him to hospital as soon as
possible. The court below did not find Dr Thompson an impressive witness. It
held that, although Dr Thompson was not a party to the litigation, he was guilty of
a dereliction of duty in not arranging for the immediate summonsing of an
ambulance and the hospitalisation of the deceased. Koen J said the following
concerning Dr Thompson:
‘His guarded evidence in this regard made him less than a reliable witness, but it also does not
mean that his evidence must be rejected in toto.’
[23] The court below then proceeded to accept Dr Thompson’s evidence, in
preference to Inspector Mwandla’s denial that no such instruction was given by
the former. For this the court found corroboration in the telephonic report Dr
Thompson had made to Captain van Zandten, the Hammarsdale Station
Commander, on the morning of Monday 21 July 2003, as recorded in the latter’s
diary. During the telephonic discussion Dr Thompson had complained to Captain
van Zandten that Inspector Mwandla had ignored his instruction. The court below
found further corroboration in a letter authored by Dr Thompson dated 24 July
2003, which according to him he had sent to Captain van Zandten, and which
repeated the complaint.
[24] Of course, if Dr Thompson had in fact issued the instruction, as testified to
by him, and if one can conclude that it was ignored by Inspector Mwandla,
liability on the part of the appellants would unarguably ensue.
[25] In order to arrive at a decision in the present appeal, it is necessary to
consider in some detail the material parts of the evidence adduced and its
assessment by the court below, particularly in relation to the disputes referred to
in paragraph 7. I proceed to do so.
[26] First, Dr Thompson. Notwithstanding a paucity of information on the
official form that he had completed during his examination of the deceased, and
even though he recorded the deceased as being ‘well’, Dr Thompson testified
that the deceased had complained of severe pains at the back of his chest. He
had consequently instructed Inspector Mwandla to take the deceased to the
Hammarsdale police station, to enable family members to take him to hospital for
observation and that this should be done as soon as possible. Dr Thompson was
unable to explain why these instructions had not been included in the official
form. Nor, why no written referral for medical observation and, if necessary, for
treatment was directed by him to the medical staff of the hospital concerned.
[27] Dr Thompson testified that, in light of the instruction given by him, it was
likely that he would have written a letter of referral to Grey’s hospital, which
presumably would have been handed to Inspector Mwandla. He did not have a
copy of such a letter nor is it clear from his evidence that he did in fact write such
a letter. It is unclear what such a letter would have instructed or requested the
doctor in charge at Grey’s hospital to do.
[28] In a letter written to the State Attorney, more than three years after the
collision referred to above, Dr Thompson stated that, when he saw the deceased
on the night in question, the latter was in a lot of pain and possibly in ‘early
shock’. He wrote further: ‘My definite impression was that he needed to go for x-
rays and further medical assessment.’ This letter was written after the present
litigation commenced and the material impressions recorded therein do not
appear on the official form completed at the time that Dr Thompson examined the
deceased.
[29] During his testimony, Dr Thompson accepted that Inspector Mwandla is a
well-respected policeman whose word he had no cause to doubt.
[30] Under cross-examination Dr Thompson accepted that it was necessary to
complete the official form with all the accompanying details. He recalled that the
deceased had walked into his rooms unaided. He could not recall whether he
was told that the deceased had been involved in a head-on collision.
Dr Thompson failed to note the deceased’s blood pressure on the official form
and could not recall whether it had been taken by him. He testified that it was his
usual practice to note a patient’s blood pressure on the form. He also did not
record the necessary details in relation to the deceased’s pulse. Surprisingly, he
could nevertheless, more than three years after the event, recall that he had
taken the deceased’s pulse and that it had been a ‘normal strong pulse’.
Alongside the words: ‘Signs of shock’, where they appear in the official form,
Dr Thompson wrote the word ‘well’. When this was pointed out to him he
responded as follows:
‘I am trying to convey that he is a normal person who is generally fit and well.’
[31] With reference to the official form Dr Thompson accepted that he had not
identified any problems with the deceased’s heart, lungs, extremities or his
abdomen. No complaint by the deceased about pain in the chest area was
recorded on the official form. However, Dr Thompson did record that, at the time
of the examination, the deceased was strongly under the influence of alcohol and
that it was probable that, at the time of the incident, he had been under the
influence of alcohol.
[32] When Dr Thompson was asked which of his observations on the official
form would have alerted him to the need for the deceased to be hospitalised, he
replied that the pain in the shoulder area is what would have required
observation. He attempted, during cross-examination, to shift the area of concern
from the shoulder to the right-hand side chest area to tie in with what we now
know is a rupture of the descending aorta.
[33] Later, Dr Thompson was asked if he had suspected that the deceased
had sustained internal injuries. He replied that he suspected nothing other than
fractured ribs. This suspicion does not appear on the official form nor did
Dr Thompson testify that he had in fact performed a clinical examination to
detect, at the very least superficially, whether the deceased had sustained
fractures of his ribs.
[34] The doctor further testified that he had not considered it ‘absolutely
essential’ that the deceased be transported to hospital immediately. According to
him the details he supplied in the letter he wrote to the State Attorney (referred to
in para 28 above), were gleaned from the official form. This, of course, cannot be
so. Asked where he had sourced the information concerning the ‘early shock’ he
described in the letter, Dr Thompson stated that it could be accepted that he had
speculated about this.
[35] Strangely, Dr Thompson’s letter to the State Attorney records that his
instructions to Inspector Mwandla had been relayed by the deceased to
members of his family at the Hammarsdale police station. When it was put to him
that he could not have known this as he had not been present at the police
station, he replied that it could be accepted that this too was speculation on his
part. Dr Thompson was singularly unimpressive in this regard and conceded that
this part of his letter to the State Attorney was misleading.
[36] It will be recalled that the court below found corroboration for
Dr Thompson’s testimony in the telephonic report he had made to the Station
Commander, Captain van Zandten as recorded in the latter’s diary, complaining
that his instruction to Inspector Mwandla had not been followed. According to
Captain van Zandten, he had ascertained that the instruction which Dr Thompson
alleged he had issued had not been in writing. Dr Thompson, however, could not
recall that telephone conversation.
[37] A curious feature of Dr Thompson’s testimony is the letter he produced,
which he said he had sent to Captain van Zandten, complaining that the police
had ignored the instruction given to Inspector Mwandla. It will be recalled that the
court below found corroboration for his testimony in the letter he supposedly
wrote. The copy of the letter produced by Dr Thompson was not under his
letterhead and he could not recall how he had sent it. Captain van Zandten
denied receipt of the letter. However, he testified that during a subsequent visit to
Dr Thompson’s rooms, he had requested that the complaint be put in writing, but
that as far as he was concerned this request had gone unheeded.
[38] Dr Thompson could not recall that Captain van Zandten had paid him a
visit. According to Captain van Zandten, he and Dr Thompson knew each other
very well and the latter was well aware of the fact that he was the Station
Commander. The doctor’s denial that he knew that Captain van Zandten was the
Station Commander at the relevant time, even though the latter was one of his
patients, is therefore very strange.
[39] Next, I turn to consider the relevant parts of Inspector Mwandla’s
testimony and the manner in which the court below dealt with it.
[40] Koen J considered that Inspector Mwandla’s decision to transport the
deceased to Grey’s hospital, rather than to Dr Thompson’s rooms, indicated that
he must have had a prior inkling that the deceased had been unwell and that this
supported Dr Thompson’s testimony that he had expressed ‘some caveat’ to the
policeman. This, of course, ignores Inspector Mwandla’s testimony to the effect
that, in his experience, Dr Thompson was not a doctor who performed thorough
examinations and that he certainly did not dispense medication. Dr Thompson
himself confirmed that, at the relevant time, district surgeons were precluded by
the Department of Health from administering treatment.
[41] According to Inspector Mwandla, Dr Thompson’s examination of the
deceased had lasted approximately ten minutes, rather than half an hour as
testified to by the doctor. The paucity of information in the official form supports
Inspector Mwandla in this regard. Furthermore, Inspector Mwandla’s testimony
that the deceased had walked into the rooms unaided is supported by Dr
Thompson. Inspector Mwandla was adamant that he had not received the
instruction testified to by Dr Thompson. As indicated in the preceding paragraph,
the court below described the instruction as ‘some caveat’ because Dr
Thompson’s evidence mutated in this regard. He was inconsistent in his
description of his concerns about the deceased and the concomitant ‘instruction’,
particularly when he was confronted with the contents of the official form, the
letter he wrote to the State Attorney and the letter allegedly sent to Captain van
Zandten.
[42] The court below held it against Inspector Mwandla that, en route to
Mpumalanga police station to collect the deceased, he had stopped at the
Hammarsdale police station to pick up official forms, which were required to be
completed when an arrested person was to be transported to hospital. The court
below reasoned that this supported Dr Thompson’s assertion that he had issued
the instruction to Inspector Mwandla to see to it that the deceased was
transported to hospital. Koen J stated that Inspector Mwandla’s explanation that
he did this to save time had a hollow ring to it. According to the learned judge, a
further negative feature was that, instead of having the Station Commander sign
the official form, Inspector Mwandla signed it himself, indicating that the
importance of what had been communicated to him by Dr Thompson had
dawned on him and he was now taking urgent remedial steps to redress the
situation.
[43] These conclusions by the court below ignore Inspector Mwandla’s
testimony that, when he had received a radio instruction to collect the deceased
and transport him to the district surgeon, he was informed that the deceased was
experiencing chest pains and that, in the light of his experience of
Dr Thompson’s manner of examining patients and not treating them, he realised
that he would have to transport the deceased to hospital instead. The nature of
the deceased’s complaint, relayed to him, suggested that the deceased would
need to be taken to hospital and he would have had to complete the official forms
to enable him to do so.
[44] In the sequence of events referred to above, there is nothing inherently
sinister in Inspector Mwandla completing the form himself and not obtaining the
Station Commander’s signature, as was officially required. Furthermore, a
detailed examination of the record reveals that Inspector Mwandla was a much
more satisfactory witness than Dr Thompson and his testimony much more
reliable.
[45] It is necessary to record that, in the short time that Inspector Mwandla had
been in the deceased’s presence, during the time that he transported him to and
from the district surgeon and at the police station, the latter had shown no signs
of distress, nor complained. Inspector Mwandla’s testimony that the deceased
walked into the Hammarsdale police station unaided was unchallenged.
[46] After his arrival at the police station, Inspector Mwandla telephoned the
branch commander to ascertain whether the deceased should be released on
bail. He was told by the branch commander that, because people had died as a
result of the collision caused by the deceased’s intoxicated condition, he should
not be released on bail. Inspector Mwandla relayed this to Sergeant Mthembu,
who at the time was on duty at the Hammarsdale police station. Inspector
Mwandla had no communication with the deceased’s family and left the police
station shortly thereafter.
[47] I now turn to deal with the treatment by the court below of the evidence of
Inspector Mkhulise, another policeman who was at the Hammarsdale police
station at the time that the deceased was brought there. The judgment of the
court below states that Inspector Mkhulise testified that the deceased had
complained to him at least once about experiencing chest pain and that his family
had complained at least once about his condition. An examination of the record
shows that, on the contrary, Inspector Mkhulise repeatedly testified that the
deceased had never complained. When it was put to him that, according to the
first respondent, the deceased had complained that he was experiencing pain,
Inspector Mkhulise responded as follows:
‘It is untrue, he never complained of anything.’
Two lines later in the record this denial is repeated.
[48] According to Inspector Mkhulise, he had informed the deceased’s family
that bail would not be granted. They were unhappy about this and immediately
thereafter asked if they could take him to hospital, saying that he was unwell. The
deceased himself made no such complaint. Inspector Mkhulise told them that the
deceased had just come from Dr Thompson and it did not appear that there was
any need for him to go to hospital. The family repeated the request to take the
deceased to hospital. After the second request, Sergeant Mthembu asked
Inspector Mkhulise to summon paramedics to appease the family.
[49] The paramedic, Mr Boy Nkabela, arrived and Inspector Mkhulise showed
him the deceased so that he could examine him. The deceased, however,
refused to be examined by Mr Nkabela, who then left shortly thereafter.
[50] The court below, having mistakenly accepted that the deceased had
complained of chest pains to Inspector Mkhulise, reasoned that this fact, together
with the latter’s own observations, must have been the cause for him contacting
the paramedics. Continuing the reasoning on this mistaken premise, the court
below held that it would then have been highly unlikely that the deceased would
have refused to be transported to hospital.
[51] These conclusions discount the reasonable explanation given for
summoning the paramedics. It is highly likely that, given the deceased’s highly
intoxicated state, he would be unco-operative and refuse to be examined.
[52] Insofar as the paramedic, Mr Nkabela’s evidence is concerned, the court
below noted that he, like Dr Thompson, might potentially be exposed to a claim
for damages. The court found it unlikely that Mr Nkabela could reliably recall
incidents that occurred several years before. Koen J held it against Mr Nkabela
that, whilst he was sketchy on details, he was nevertheless able to recall who his
partner had been on the morning in question. The court below did however, find
corroboration for his evidence that the deceased was unco-operative and
argumentative, in the evidence of Dr Laubscher who had attended to the
deceased upon his arrival at Grey’s hospital, and had found him in an agitated
and aggressive state.
[53] Insofar as the testimony of Mr Everton and Mrs Craig is concerned, the
court below rightly found that they had cause to, and did, exaggerate and over-
dramatise events. Both testified that the deceased was in constant and obvious
excruciating pain. According to Mrs Craig, the deceased had vomited blood in a
toilet at the police station. She testified that the paramedics had conducted the
most cursory examination of the deceased, informed them that there was nothing
wrong with him and then departed. She could not explain why she had not told
the paramedics that her husband had vomited blood, an important indication that
something was amiss.
[54] There is force in the submission on behalf of the appellants that, had the
deceased been in obvious excruciating pain which raised his family’s concerns,
they would all have been intent on ensuring that he was properly examined by
Mr Nkabela, the paramedic, and would have described in as much detail as
possible the symptoms they had witnessed. Furthermore, all the family members
would have ensured they were in attendance to see to it that the deceased
received the necessary attention. Inexplicably, Mr Everton stood outside smoking
whilst Mr Nkabela attempted to tend to the deceased.
[55] Inspector Emmanuel Zungu, who was also at the Hammarsdale police
station on the night in question, corroborated in broad terms the evidence of
Inspector Mkhulise and Mr Nkabela.
[56] There was expert medical evidence that the deceased’s level of
intoxication could very well have masked the pain usually attendant on the kind
of injury he had sustained.
[57] The pre-trial conference minute recorded that the parties were agreed that
all the injuries noted as a result of the post-mortem examination were sustained
as a result of the collision. That notwithstanding, counsel explored whether the
fractures of the ribs could have been caused by efforts to resuscitate the
deceased at Grey’s hospital. The medical evidence was that, as regards the
fractures that would have been an indicator of the injury that caused the
deceased’s death, namely fractures of the second, third and fourth ribs
(posteriorly), the likelihood was that they were caused by the collision
Conclusions
[58] Although courts of appeal are slow to disturb findings of credibility, they
generally have greater liberty to do so where a finding of fact does not essentially
depend on the personal impression made by a witness’ demeanour, but
predominantly upon inferences and other facts and upon probabilities. In such a
case a court of appeal with the benefit of a full record may often be in a better
position to draw inferences.2
[59] In the present case, as demonstrated above, the credibility findings are
not borne out by the record. The reasoning of the court below in relation to the
probabilities, is at times, based on incorrect facts and is flawed in the respects
referred to above.
[60] In Mtati v Minister of Justice 1958 (1) SA 221 (A), this court (at 224)
emphasised the duty of officials who have prisoners in their charge to see to their
well-being. Courts should obviously be vigilant to ensure that officials who have
in their charge those whose freedom of movement has been restricted, comply
with the obligation to ensure their well-being.
[61] In Minister of Police v Skosana 1977 (1) SA 31 (A), the policemen in
question were negligent in not ensuring treatment expeditiously for an arrested
person who had been drunk and had started showing obvious signs of pain after
he had sobered up, and who had complained to the police about his condition.
There was a further delay after an instruction by a medical doctor that he be
taken to hospital immediately. The doctor concerned had written a note to the
doctor in charge of the hospital and had handed it to a policeman. Police
standing orders place an obligation on members of the police to whom it appears
that detainees are in distress and are therefore injured or ill to obtain the
necessary medical assistance for them. The police in Skosana were found to be
negligent and the Minister was consequently held liable.
2 Union Spinning Mills (Pty) Ltd v Paltex Dye House (Pty) Ltd & another 2002 (4) SA 408 (SCA)
para 24 and Louwrens v Oldwage 2006 (2) SA 161 (SCA) para 14.
[62] The well-known test for negligence is set out in Kruger v Coetzee 1966 (2)
SA 428 (A) at 430:
‘For the purposes 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.’
[63] The primary question in the present case is whether the court below was
correct in its conclusion that Dr Thompson had issued the instruction referred to
above and that the police had been negligent in ignoring it.
[64] In my view the court below was manifestly wrong in accepting the
evidence of Dr Thompson. He made the verbal report relied on by the court
below to Captain van Zandten after the deceased’s death was reported in the
media and was common knowledge in Camperdown, and after it must have
become known to him at least that there was a concern about culpability.
[65] The court below was correct to initially approach his evidence with caution
but erred in relaxing that reservation.
[66] Dr Thompson’s apparent subsequent concern about the deceased’s
condition is not borne out by the notes he made on the official form. The form
actually evidences the contrary. It notes that, save for the pain in the shoulder
blade, the deceased was otherwise ‘well’. In my view this supports the conclusion
that there was no referral letter. If there had been one I can think of no reason
why Inspector Mwandla, whom everyone ─ Dr Thompson included ─ regarded as
a dutiful policeman, would ignore it.
[67] Dr Thompson was clearly not candid concerning his knowledge of who the
Hammarsdale Station Commander was. The difficulties he had in explaining the
source of the information contained in his letter to the State attorney directly
affects his credibility. The unsatisfactory aspects in relation to the letter that he
claims he sent to Captain van Zandten, referred to above, strongly suggest that
his testimony in this regard was contrived.
[68] In light of its conclusion that Dr Thompson issued the instruction and that it
was ignored, the court below did not deem it necessary to consider the conduct
of other policemen during relevant times.
[69] As demonstrated above, the court below was right not to place reliance on
the evidence of Mrs Craig and Mr Everton. I can see no reason to disbelieve the
police version of events. If their version is accepted, the following picture
emerges. The deceased had been seen by the district surgeon who had
identified no medical problem that required further medical attention. The
deceased walked unaided and had no ostensible signs of significant injury. At the
Hammarsdale police station the deceased did not complain that he was unwell
and did not show any obvious signs of distress. The deceased’s family members
requested that they be allowed to take him to hospital only after bail had been
refused. When a second request was made Sergeant Mthembu issued an
instruction that paramedics be summoned. Mr Craig refused to be examined.
When the deceased himself complained at the Mpumalanga police station that
he was unwell, that fact was noted and Inspector Mwandla summoned. There is
no indication that the latter delayed unduly and that he did not transport Mr Craig
to Grey’s hospital expeditiously. In light of what is set out above it can hardly be
said of the police that they were negligent.
[70] I am aware of the plight of the deceased’s wife and daughters. They have
lost a breadwinner and appear to be without means. If, of course, the police had
behaved negligently and wrongfully, they should be held to account. On the other
hand, good policemen who behave properly and execute their duties
conscientiously and often under trying circumstances, are entitled to have their
reputations kept intact and should not be saddled with liability unjustifiably.
[71] For all the reasons set out above the following order is made:
1.
The appeal is upheld with costs, such costs to include the costs of two
counsel.
2.
The order of the court below is set aside and substituted as follows:
‘The plaintiffs’ claims are dismissed with costs, such costs to include the costs consequent upon
the employment of two (2) counsel.’
_________________
M S NAVSA
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
R Seegobin SC
T S I Mthembu
Instructed by
State Attorney Durban
State Attorney Bloemfontein
For Respondent:
J Marais SC
V M Naidoo
Instructed by
Chetty Asmall and Maharaj Pietermaritzburg
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:
17 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 17 September 2009 the Supreme Court of Appeal handed down judgment in The
Minister of Safety and Security and others v Loraine Craig, upholding an appeal
against a decision of the Pietermaritzburg High Court. The SCA held that the police
were not liable to pay damages to the widow of a person who had died whilst in
police custody.
At approximately 21h00 on Saturday 19 July 2003 Mr Andre Craig was involved in a
head-on collision which caused the death of two children. At that time he was heavily
under the influence of alcohol ─ more than five times over the legal limit. He was
arrested and taken to the rooms of the district surgeon to have blood drawn for the
purposes of a blood-alcohol test. The district surgeon conducted an examination and
blood was drawn. According to the district surgeon he had issued instructions that
Mr Craig be taken to hospital to be monitored. According to the police such an
instruction was not issued.
After the visit to the district surgeon Mr Craig was transported to the Hammarsdale
police station where members of his family awaited. They sought to obtain bail but
this was refused. According to members of his family Mr Craig was in obvious and
excruciating pain. According to the police Mr Craig had shown no signs of discomfort
and had not complained. It was common cause that paramedics were summoned in
response to the family’s request that they be allowed to transport Mr Craig to
hospital. According to a paramedic and the police Mr Craig was obstructive and
refused to be examined. According to Mr Craig’s wife the paramedic conducted a
cursory examination and then pronounced that there was nothing wrong with him.
During the early hours of Sunday morning, because the Hammarsdale police station
did not have holding facilities, Mr Craig was transported to the Mpumalanga police
station. At 10h35 he complained that he was feeling unwell. He was transported to
Grey’s hospital, where, shortly after his arrival he died despite the hospital staff’s
best efforts to resuscitate him.
The cause of Mr Craig’s death was diagnosed as a delayed rupture of the
descending aorta. Although not a frequent occurrence, it is a well-known result of
high-impact collisions. Most of these ruptures are lethal at the scene of the collision
because the rupture is usually such that the injured person bleeds to death almost
instantly. In rare cases where this does not occur, victims experience what is
referred to as a contained rupture, which consists of a blood clot within the outer
lining of the aorta. This has a fair amount of resistance, but with the passage of time
and without surgical intervention, it ultimately gives way and death ensues. Where
there is a contained rupture there are pointers and tell-tale signs to assist in a clinical
diagnosis.
As a result of Mr Craig’s death the respondent, Mrs Loraine Craig, instituted an
action for damages in her personal capacity and in her representative capacity as
the legal guardian of her three minor daughters, against the Minister of Safety and
Security, the Charge Office Commander of the Hammarsdale police station and
Detective Inspector Musawakhe Mwandla, the policeman who had transported
Mr Craig to the district surgeon and to Grey’s hospital.
The Pietermaritzburg High Court accepted the district surgeon’s version, namely,
that he had issued the instruction to Inspector Mwandla to transport Mr Craig to
Grey’s Hospital and that it had been ignored. Consequently the high court held the
three appellants liable, jointly and severally for such damages as Mrs Craig and her
children may prove to have suffered.
The SCA held that on the record of evidence it was apparent that the district surgeon
had conducted a cursory examination. The SCA had regard to the official form
completed by the district surgeon which noted that although Mr Craig complained of
shoulder pain he was well. The SCA held that the high court had erred in accepting
the district surgeon’s evidence that he had issued the instruction to Inspector
Mwandla. The record of evidence revealed several unsatisfactory aspects of his
testimony and the SCA found that Inspector Mwandla was a much more satisfactory
witness.
The SCA held that the record provided no basis on which to reject the police version
of events, from which the following picture emerged: The deceased had been seen
by the district surgeon who had identified no medical problem that required further
medical attention. The deceased walked unaided and had no ostensible signs of
significant injury. At the Hammarsdale police station the deceased did not complain
that he was unwell and did not show any obvious signs of distress. The deceased’s
family members requested that they be allowed to take him to hospital only after bail
had been refused. When a second request was made Sergeant Mthembu issued an
instruction that paramedics be summoned. Mr Craig refused to be examined. When
the deceased himself complained at the Mpumalanga police station that he was
unwell, that fact was noted and Inspector Mwandla summoned. There is no
indication that the latter delayed unduly and that he did not transport Mr Craig to
Grey’s hospital expeditiously.
This court reiterated that police have a duty to ensure the well-being of arrested
persons. However, in the light of the aforegoing, it could not be said that the police
were negligent. The court appreciated the plight of the deceased’s widow and
children. If the police had acted negligently and wrongfully they should be held to
account. On the other hand, good policemen who behave properly and execute their
duties conscientiously and often under trying circumstances, are entitled to have
their reputations kept intact and should not be saddled with liability unjustifiably.
The appeal was upheld with costs. |
3041 | non-electoral | 2015 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20461/14
In the matter between:
UNICA IRON AND STEEL (PTY) LTD FIRST APPELLANT
MOHAMMED ASIF QASIM
SECOND APPELLANT
and
SURESH MIRCHANDANI
RESPONDENT
Neutral citation: Unica Iron and Steel v Mirchandani (20461/2014) [2015]
ZASCA 150 (1 October 2015)
Coram:
Lewis, Shongwe, Leach and Zondi JJA and Baartman AJA
Heard:
03 September 2015
Delivered: 01 October 2015
Summary: Contract – written document – whether intended by parties to be
binding – conduct of parties post signature showing that they intended to be
bound and that their agreement was not subject to another formal agreement
being concluded.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Gauteng Division, Pretoria (Matojane J sitting as court of
first instance): The appeal is dismissed with costs.
________________________________________________________________
JUDGMENT
________________________________________________________________
Leach JA (Lewis, Shongwe and Zondi JJA and Baartman AJA concurring)
[1] The principal issue in this appeal is whether a document signed by the
parties is an enforceable contract as alleged by the respondent or whether, as the
appellants allege, using the words of Corbett JA in Pitout v North Cape
Livestock Co-operative Ltd 1977 (4) SA 842 (A) at 850C-D, it was merely a
proposal made in the process of negotiation while the parties ‘were feeling their
way towards a more precise and comprehensive agreement’. The high court
upheld the respondent’s contention that it was a binding agreement and granted
relief pursuant to that finding. The appeal to this court is with leave of the court
a quo.
[2] The respondent, who has a business background rooted in the steel
industry, came to South Africa from India in 2005. After his arrival in this
country he met both the second appellant, Mr Mohamed Asif Qasim, a
businessman who owned a plastics factory, and Mr Irshad Ul Haq, an
accountant. In due course the three of them agreed to venture into business
together in a steel manufacturing and smelting operation involving the
production of certain steel products from the recycling of metallic waste.
[3] The first appellant, Unica Iron and Steel (Pty) Ltd (Unica), was the
vehicle they used to conduct this venture. Mr Qasim was appointed its
managing director, Mr Ul Haq its financial director and the respondent its
technical director. Premises for a factory were identified in Babelegi, north of
Pretoria; meetings were held with the Department of Trade and Industry; and
financial backing was procured at a subsidised rate from the Industrial
Development Corporation. The respondent thereafter went back to India to seek
out the requisite machinery and technical staff. This took some time and it was
only some nine months later, on 27 April 2007, that he returned to this country
bringing his family with him.
[4] Before he had left for India, the respondent and Mr Qasim had looked at
various residential properties for Unica to buy to provide a home for the
respondent and his family. Finally they selected the property known as 36
Blesbok Avenue, Centurion (the immovable property). At that stage Unica,
although existing on paper, was not in a position to obtain a home loan, and so
it was decided that Mr Qasim would purchase the property in his name but that
Unica would take over the bond in due course. On that understanding, the
immovable property was purchased in December 2006 and the respondent and
his family took up residence there when he returned from India in April the
following year.
[5] A few weeks after returning to South Africa, the respondent and Unica,
the latter represented by Mr Ul Haq and Mr Qasim, concluded a written
employment agreement. Backdated with effect to 4 December 2006, it
provided:
‘1. That (the respondent) will be working as a technical Director on profit sharing basis. He
will be a key person and under his leadership and guidance, Unica will source, commission
and run the plant successfully.
2. (The respondent) will be entitled for 17% of the profits of Unica defined herein as follows:
3. Profits will be calculated before tax after providing for depreciation and interest on
Shareholders loans.
4. (The respondent) will be drawing a salary of R40000-00 per month which will be deducted
from his profit share at the end of the year. If Unica does not achieve profits it will carry to
the next years until Unica achieves sufficient profits of which 17% is equal or higher than the
total drawings till that date.
5. As (the respondent) is sharing profits in Unica and his association with Unica will be on
long term basis and unrestricted.’
[6] The year following his return to South Africa was a busy time for the
respondent. Not only did he return to India with Mr Ul Haq in order to recruit
technicians but he supervised the erection, construction and commissioning of
Unica’s factory at Babelegi. Production at the factory eventually commenced in
April 2008. As is understandable in a venture of this nature, it took some time
for Unica to show a profit. This it did, according to Mr Ul Haq, towards the
middle of 2009.
[7] Unfortunately, despite the relatively short period of their business
association, the relationship between the respondent on the one hand and his
two co-directors on the other, soured quickly. One of the causes of conflict was
the calculation of the share of the profits the respondent was due to receive
under his contract of employment. For present purposes it is unnecessary to
either detail the respondent’s complaints or to decide whether they were
justified. Suffice it to say that, on 26 November 2009, when the respondent sent
an email to his co-directors commenting on Unica’s management accounts of
October 2009, he stated that the calculation of profit was based on ‘unfounded
assumptions and misinterpretations’ and that the issue remains ‘unresolved and
unaccepted’.
[8] On 15 April 2010, the respondent was summoned to attend a directors’
meeting at which various disputes he had with his co-directors were discussed.
The issues between them were not resolved and, on 12 July 2010, Unica served
the respondent with what purported to be a notice of retrenchment under s 189
of the Labour Relations Act 66 of 1995. This recorded that the reason for his
retrenchment was that ‘the plant has been commissioned and is running
successfully and at present there are a surplus of employees of Unica with the
necessary technical expertise to run the plant successfully’ and that the
respondent therefore could be replaced by another employee ‘at least cost to
Unica’. It went on to propose a severance package of one week’s pay for every
completed year of service plus a payment of R1 million.
[9] In the light of the terms of clause 5 of the respondent’s employment
contract and the background difficulties then existing between him and his co-
directors, the almost irresistible inference is that this notice was a sham and his
co-directors were merely attempting to end his employment due to their
conflict. Be that as it may, the respondent refused to accept the severance
package offered. He also rejected a further offer that he should resign from
Única and, instead, join in a fresh venture with Mr Ul Haq and Mr Cassim,
producing oxygen.
[10] In any event, the relationship between the respondent and his co-directors
did not improve and matters came to a head at a meeting they held on 28
September 2010. At the outset the mood of the meeting was tense. Mr Ul Haq
made it clear to the respondent that he and Mr Qasim could no longer continue
working with him and that he either had to settle amicably with them or would
face retrenchment. As inevitably happens in situations such as this, after some
initial mud-slinging the parties eventually got down to discuss mutually
agreeable terms on which the respondent could leave.
[11] Terms were finally agreed, and Mr Qasim drafted an agreement in
longhand which he, Mr Ul Haq and the respondent all signed (for convenience I
intend to refer to this document as SM1, that being its annexure number to the
particulars of claim). Each term was discussed in turn and only recorded when
all parties were satisfied with its content.
[12] On coming to a lump sum for the respondent to be paid as part of what is
recorded as being his ‘golden handshake’, agreement was reached on a cash
sum of R 1,42 million. In recording this, Mr Qasim initially inserted the words
“tax to be discussed’ immediately thereafter. The respondent was not prepared
to accept this. He stated that he wanted that sum tax free. As this would oblige
Unica to bear the tax burden of such a payment, Mr Ul Haq promptly
telephoned the company’s auditors to inquire how this could be done, and was
told that it would be possible but that a tax directive would have to be obtained
from the South African Revenue Service (SARS). On learning this, Mr Qasim
deleted the words ‘tax to be discussed’ and replaced them with the word ‘nett’.
The suggestion made by the appellants to the court a quo that ‘nett’ merely
meant that the payment was to be in cash can obviously be rejected in the
circumstances.
[13] When completed and signed by all three directors the final document read
thus:
‘Agreement
BETWEEN [THE RESPONDENT]
AND
UNICA IRON & STEEL (PTY) LTD
Following was agreed upon:-
1.
[The respondent] will be leaving Unica from 30th Sept 2010 and he will not be
involved in Unica at all. Subject to signing of Agreement and completion of following
2.
Unica will pay him as follows for golden hand shake:
R1,420000,00 - One million four hundred & 20 Thousand Rand only (Net)
will be paid upon signing of agreement.
Car which he is using will be transferred to his name upon signing of
agreement.
House will be transferred to his name within 3 months of signing the
agreement. Transfer & other costs for 3 months will be paid by Unica.
3.
All other expenses for [the respondent] currently paid by Unica will be transferred for
account or will be cancelled as agreed upon:-
Car insurance.
Telephone. (all cell incl.)
Medical Aid.
Life insurance.
Petrol Card.
DSTV.
Car tracking system.
4.
He will not be engaging himself in any business directly in competition with Unica
Steel or/Unica plastic.
5.
[The respondent] will inform all our associates local/overseas including suppliers
about this development and will introduce Mr Asif.’
[14] According to the respondent, after signing this agreement the mood of the
meeting changed and became light-hearted. Mr Ul Haq handed him a file
containing various documents relating to the house in which he was living as
well as the registration documents for the Dodge motor vehicle, and told him to
arrange transfer of both. The appellants denied this had occurred but it was
common cause that the registration papers for the vehicle were given to the
respondent at some stage soon thereafter and that the vehicle was then
registered in his name, so nothing really turns on precisely when this took place.
[15] Importantly, as agreed in clause 1 of SM1, by the end of the workday on
30 September 2010 the respondent had cleared his desk, collected his
belongings and left the factory, never to return. Before he left, in compliance
with his obligations under clause 5, he had sent an email, approved by Mr Ul
Haq, to Unica’s Indian suppliers (and copied to Mr Qasim and Mr Ul Haq).
After acknowledging the support and contribution the suppliers had made to
Unica, he stated:
‘I have decided to accept the golden handshake package and move on to another project. In
my absence, Mr Asif Qasim, managing director of Unica Iron, will be handling the technical,
imports and purchase. Mr Asif is touring India for seven days from today to shortlist the
vendors, suppliers and exporters of above ref. items. Those who wish to continue their
supplies in future are requested to meet or invite Mr Asif in India for their personal
introduction and future business.’
As envisaged in this letter, Mr Qasim indeed thereafter proceeded to India and
met with the suppliers to whom the respondent had introduced him.
[16] Thus far, all had proceeded to plan as envisaged by SM1. However,
problems arose on 11 October 2010 when Mr Ul Haq requested the respondent
to accompany him to the offices of SARS to obtain the necessary tax directive
relating to his ‘golden handshake’. According to the respondent, Mr Ul Haq met
with several SARS officials and, when they left the meeting, had told him that
the tax liability on the package was close to R1 million and was much bigger
than he had anticipated. Mr Ul Haq then proposed to the respondent that he
should pay half of this, but he refused to do so. Mr Ul Haq then told him that
Unica was anxious for the agreement to be completely in order and asked if he
had any objection to Unica having its attorneys draw up a formal agreement. He
agreed to this proposal on condition that none of the terms of the written
agreement were changed.
[17] A draft agreement was thereafter prepared by attorneys, but the
respondent was told that it was not in order and that a revised copy would
follow. A revised agreement was presented to him early in November 2010 but
the respondent refused to sign it, stating that it deviated from what had been
agreed upon in SM1. At that, Unica again served him with a notice of
retrenchment under s 189 of the Labour Relations Act 66 of 1995. In the light
of the history of the matter this, too, appears to have been a sham.
[18] In November 2010, after the respondent made contact with Mr Ul Haq,
Unica transferred R100 000 into his account. The respondent alleged this was
part payment of what was due to him under SM1. The balance remained unpaid
and when Unica refused to pay it or transfer the immovable property to him, the
respondent instituted action for specific performance in the court a quo.
[19] The appellants’ defence to the respondent’s claim was threefold. It was
argued, first, that SM1 contained a suspensive condition that had never been
fulfilled; second, that SM1 did not constitute a binding agreement; and third
that as the respondent had failed to perform his reciprocal obligations under
SM1, he could not claim specific performance on their part. And as the
appellants contended that SM1 had never had contractual effect, they argued
that the R100 000 the respondent had paid had not been due and the Dodge
motor vehicle ought not to have been transferred to him. In a counter-claim they
sought repayment of that sum plus interest and return of the motor vehicle.
[20] The first two legs of this defence are to a large measure inter-twined. The
argument at the outset was founded on the term in clause 1 of SM1 that the
agreement was ‘subject to signing of agreement’. Relying upon authorities such
as Parsons Transport (Pty) Ltd v Global Insurance Co Ltd [2005] ZASCA 95;
2006 (1) SA 488 (SCA) para 5, the appellants contended that the phrase
‘subject to’ can denote either a suspensive or a resolutive condition, or a
material term in the contract. All three of these possibilities, so the argument
went, have the result that SM1 required the signing of a further agreement in the
form of a formal document drawn up by attorneys and signed by the parties;
and until that was done, the condition in SM1 remained unfulfilled.
Accordingly, as the respondent had refused to sign the formal agreement
prepared by attorneys, the fact that SM1 had been signed was in itself
insufficient for its terms to become binding.
[21] In considering the validity of this argument, it is unnecessary to deal in
any depth with the principles applicable to the interpretation of contracts. They
must now be regarded as well settled, particularly in the light of recent
judgments of this court in cases such as KPMG Chartered Accountants (SA) v
Securefin Ltd & another [2009] ZASCA 7; 2009 (4) SA 399 (SCA), Ekurhuleni
Metropolitan Municipality v Germiston Municipal Retirement Fund [2009]
ZASCA 154; 2010 (2) SA 498 (SCA), Bothma-Batho Transport (Edms) Bpk v S
Bothma & Seun (Edms) Bpk [2013] ZASCA 176; 2014 (2) SA 494 (SCA),
North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd [2013]
ZASCA 76; 2013 (5) SA 1 (SCA) and, most recently, Novartis South Africa v
Maphil Trading [2015] ZASCA 111. As Lewis JA stated in North East
Finance:1
‘The court asked to construe a contract must ascertain what the parties intended their contract
to mean. That requires a consideration of the words used by them and the contract as a
whole, and, whether or not there is any possible ambiguity in their meaning, the court must
consider the factual matrix (or context) in which the contract was concluded.’
All that needs to be added is that it can be accepted that the way in which the
parties to a contract carried out their agreement may be considered as part of the
contextual setting to ascertain the meaning of a disputed term – see eg Rane
1 Para 24.
Investments Trust v Commissioner, South African Revenue Service [2003]
ZASCA 60; 2003 (6) SA 332 (SCA) para 27. As is stated in R H Christie’s The
Law of Contract in South Africa 6 ed (2011) at 117, relying upon Breed v Van
den Berg 1932 AD 283 at 292-293, this is because the parties’ subsequent
conduct ‘may be probative of their common intention at the time they made the
contract’.2
[22] Applying these principles to SM1, there is no reason to conclude that the
phrase ‘subject to’ in clause 1 necessarily connotes that a further agreement –
let alone a formal agreement drafted by attorneys to which no mention
whatsoever is made in the document – needed to be signed before it became
binding. It is necessary to remember that SM1 was written by a businessman,
not a lawyer skilled or trained in the drafting of contracts, and that allowance
must be made for that in construing its terms – see Trever Investments (Pty) Ltd
v Friedhelm Investments (Pty) Ltd 1982 (1) SA 7 (A) at 15C-D. This is all the
more so in the present case where, as appears not only from the terms of SM1
but from the evidence given by the respective parties, the language in which the
document was drafted was not their mother tongue. In these circumstances, the
phrase ‘the agreement’ may readily be understood as meaning no more than
‘this agreement’, particularly in the light of SM1 having been signed by the
parties. Had SM1 been intended to be no more than a memorial of what was
later to be incorporated in a formal agreement, signature by the parties would
have been entirely superfluous. But it was so signed by all three of the relevant
role players, and this is a clear indication that they intended it to be binding.
Indeed Mr Qasim stated in evidence that he had made provision for signature of
the document as he wanted the respondent to be bound so that, in any
subsequent agreement formalised by an attorney, ‘the terms and the amount
2 See further authorities collected in Christie at 226 fn 361 and Telcordia Technologies Inc v Telkom SA Ltd
[2006] ZASCA 112; 2007 (3) SA 266 (SCA) para 91.
should be the same.’ Clearly then SM1 was ‘subject to’ it being signed, and not
some further agreement being signed.
[23] Moreover, and importantly, immediately after SM1 was signed Unica,
through Mr Ul Haq and Mr Qasim, proceeded to implement its terms. I have
already mentioned how the respondent ceased work at the end of September
2010 as agreed; how the Dodge motor vehicle he was using as a company car
was transferred to him; how he sent an email approved by Mr Ul Haq to
suppliers in fulfilment of his obligation under clause 5; and how Unica paid him
R100 000. The appellants’ suggestion that it made this payment in order to
persuade the respondent to sign the agreement their attorney had prepared, rings
hollow and is inconsistent with their counter-claim in which they alleged that it
was paid on the assumption that the suspensive condition they contended for
would be fulfilled.
[24] Not only do those facts in themselves indicate that the appellants
regarded the agreement as binding, but as from 1 November 2010 Unica
commenced paying the bond instalments on the respondent’s residence in order
to comply with its obligation under clause 2 of SM1 to make the property
available to him. Furthermore, pursuant to the provisions of clause 3, the
respondent took over the insurance for the motor vehicle and the monthly
payment of its car-tracking system as well as payment of his monthly telephone
account and satellite television subscription, all of which had been paid by
Unica before SM1 was signed. At his choice, his medical aid and life insurance
that Unica had also been carrying were cancelled.
[25] All of this points to the appellants regarding SM1 not merely as part of
their negotiations towards a final agreement, but as binding upon them. Any
doubt about this is removed by both Mr Ul Haq and Mr Qasim having
confirmed in their testimony that the terms of SM1 were those that they had
agreed upon and could not have been departed from in any formal agreement
subsequently drawn up on their behalf by an attorney. As already mentioned,
Mr Qasim provided for SM1 to be signed in order to bind the respondent to its
terms. He also stated that none of the clauses of SM1 needed to be changed and
that the ‘only thing was to formalise this thing in a proper wording and proper
document’.
[26] All of this is irreconcilable with SM1 having been conditional upon a
subsequent, formalised agreement being concluded and signed. As the
appellants readily conceded, and as the respondent pertinently testified, they all
regarded the agreement as binding and proceeded to implement its terms. The
inference is irresistible that it was only once the appellants realised that they
had underestimated the respondent’s tax liability that they sought to evade their
contractual obligations. The court a quo therefore correctly concluded that SM1
was not subject to the suspensive condition suggested by the appellants and was
binding between the parties.
[27] That is still not the end of the matter, as the appellants also argued that on
the respondent’s own version there was insufficient consensus in regard to the
terms of the restraint of trade clause contained in clause 4 of SM1. This was
advanced on the strength of the respondent having testified that he was only
prepared to accept a restraint as far as the plastic industry is concerned, that he
knew that a restraint should be subject to a specific geographical area and time
limit and that he would not have agreed to a restraint applying to the whole of
South Africa as, effectively, was provided in clause 4 of SM1. Thus, so the
argument went, there had been no consensus in regard to the restraint terms,
that this was a material provision relating to the ‘termination package’ that
indicated that a more comprehensive contract was contemplated being reached
in due course.
[28] The fact remains that the parties signed SM1 with the intention of being
bound by its terms. Whether the respondent, with the benefit of hindsight, acted
rashly to agreeing to the restraint or whether that clause would withstand
judicial scrutiny had the appellants sought to enforce it against him, is neither
here nor there. The restraint, such as it was, was severable from the balance of
the contract. It thus cannot be said that SM1 was inchoate. As I have stressed,
the appellants’ own case is that it encompassed all the terms of the agreement
that had been reached and merely had to be put into ‘a proper document’.
[29] It was also argued by the appellants that the respondent was not entitled
to an order of specific performance as he was in breach of his reciprocal
obligations under clause 4 in that he had been a director and shareholder of one
of Unica’s competitors. The argument is without substance. It is unnecessary to
speculate on the enforceability or otherwise of clause 4 or to consider whether
the respondent had acted in breach thereof. It was never Unica’s case as pleaded
that it had been entitled to withhold performance due to the respondent’s failure
to perform. Its case was, quite simply, that SM1 lacked contractual force. That
was the defence to the respondent’s claim that the court a quo was called on to
decide and in respect of which it reached the correct conclusion.
[30] In all the circumstances the court a quo did not err in finding that SM1
had binding force. It correctly upheld the respondent’s claim and dismissed the
counter claim of the appellants. The appeal must fail.
[31] The appeal is dismissed with costs.
_______________________
L E Leach
Judge of Appeal
Appearances:
For the Appellants:
N Davis SC
Instructed by:
Van der Merwe Du Toit Inc, Pretoria
Symington & De Kok, Bloemfontein
For the Respondent:
B C Stoop SC
Instructed by:
Barnard Inc, c/o Pretorius Le Roux
Attorneys, Pretoria
McIntyre & van der Post, 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: 1 October 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
Neutral citation:
Unica Iron and Steel v Mirchandani (20461/2014) [2015] ZASCA
150 (1October 2015)
The respondent was formerly employed by the first appellant, Unica Iron and
Steel (Pty) Ltd of whom, together with the second appellant and a Mr Ul Haq,
the respondent was a director. When relations between the three directors
became strained, the respondent agreed to leave the employ of Unica. With this
end in view, the three directors signed a document containing the terms under
which he agreed to leave.
Although certain of these terms were implemented, Unica failed to pay the full
cash consideration reflected in the document. When sued by the respondent, it
alleged that the document that had been signed was not a final agreement and
merely a proposal made in the process of negotiation. It contended that the
document had been subject to a final and more precise comprehensive
agreement being signed. This contention was rejected by the Gauteng Division
of the high court which granted an order of specific performance of the signed
document.
On appeal against that judgment, the Supreme Court of Appeal today held that
the conduct of the parties post signature of the document showed that they had
intended to be bound by its terms and that their agreement was not subject to
another formal agreement being concluded. It therefore dismissed the appeal
with costs.
---ends--- |
548 | non-electoral | 2016 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 900/2015
In the matter between:
PEPKOR RETAIL (PROPRIETARY) LIMITED
APPELLANT
and
TRUWORTHS LIMITED
RESPONDENT
Neutral citation: Pepkor Retail (Pty) Ltd v Truworths Ltd (900/2015) [2016]
ZASCA 146 (30 September 2016)
Coram:
Navsa, Cachalia, Zondi, Mathopo and Van der Merwe JJA
Heard:
29 August 2016
Delivered:
30 September 2016
Summary:
Trade mark ─ registered trade mark THE LOOK used in fashion
retail industry ─ mark has no inherent or acquired distinctiveness ─ removal
from the trade mark register ordered.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town
(Mantame J sitting as court of first instance):
1. The appeal is upheld with costs, including the costs of two counsel.
2. The order of the court a quo is set aside and replaced with the following:
„(a)
The main application is dismissed with costs, including the costs of two
counsel.
(b)
The counter-application is granted and an order is made:
(i)
cancelling the first respondent‟s trade mark registration number 1998/05493-5
in classes 16, 25 and 35;
(ii)
directing the registrar of trade marks to cancel the said registrations and to
remove them from the trade marks register;
(iii)
directing the applicant to pay the costs of the counter-application, including
the costs of two counsel.
(c)
The application to strike out is granted with costs.‟
______________________________________________________________
JUDGMENT
______________________________________________________________
Van der Merwe JA (Navsa, Cachalia, Zondi and Mathopo JJA
concurring):
[1] The respondent in this appeal, Truworths Limited (Truworths), is the
proprietor of the registered trade mark THE LOOK (the mark). The appellant,
Pepkor Retail (Proprietary) Limited, inter alia, trades under the name
Ackermans and for convenience I will refer to the appellant by that name.
Ackermans makes use of the phrase THE LOOK FOR LESS (the phrase).
Truworths applied in the Western Cape Division, Cape Town, for an order
interdicting and restraining Ackermans from using the phrase. Ackermans
filed a counter-application for the removal of the mark from the register of
trade marks. The court a quo (Mantame J) granted the interdict and refused
the counter-application. It granted leave to appeal to this court. The appeal is
directed at the whole of the order of the court a quo.
[2] Truworths and Ackermans are competitors in the fashion retail industry.
Both predominantly sell clothing, footwear, headgear and other fashion-
related goods. Ackermans is, however, regarded as a „value‟ retailer aimed at
selling at affordable prices.
[3] The mark was registered in terms of the Trade Marks Act 194 of 1993
(the Act), with effect from 1 April 1998. It was registered in classes 16 (printed
matter), 25 (clothing, footwear, headgear) and 35 (offering for sale and the
sale of goods in the retail and wholesale trade). However, it was only during
2009, that Truworths commenced making any discernible use of the mark. It
used the mark on labels and swing tags attached to its goods. Labels are
permanently attached to the goods, whilst swing tags are intended to be
removed once the item is put to use. Truworths also used the mark in
customer mailers, on posters and on its website.
[4] In the founding affidavit on behalf of Truworths the following appears:
„Truworths has several stores across the country trading under THE LOOK trade
mark. THE LOOK store in Stellenbosch was opened in the Eikestad Mall on 26
November 2009. THE LOOK store in Balfour Park, Johannesburg was opened on 22
July 2010. THE LOOK store in Savannah Mall, Polokwane was opened on 28
October 2010. THE LOOK store in Stanger, KwaZulu-Natal was opened on 21
October 2010 and the store in Brits Mall, Brits was opened on 28 October 2010.
Photographs of the aforementioned five stores are annexed hereto marked “DP2”.‟
One of the photographs is reproduced hereafter. It is quite clear that what is
set out in the affidavit is at best a misdescription and at worst disingenuous.
As can be seen from the photograph it is a TRUWORTHS store with that
name being much more prominent in size and scale with „THE LOOK‟ as an
addendum after a dash, minute in comparison. It is probably more truthful for
it to be described as a TRUWORTHS – THE LOOK store.
A further five TRUWORTHS ─ THE LOOK stores were opened during 2014.
[5] During 2011 Ackermans embarked on an extensive rebranding
exercise. This led to the conceptualisation of the phrase THE LOOK FOR
LESS. During March 2012 Ackermans commenced use of the phrase in its
promotional material and in its stores. In respect of the signage of Ackermans
stores, the phrase was used on the back of the store entrance signs, so that it
was generally only visible to customers leaving the store. On these signs,
Ackermans in turn, gave more prominence to the words THE LOOK, than the
words FOR LESS. Ackermans also has a store situated at the Eikestad Mall
in Stellenbosch.
[6] Towards the end of 2013, Truworths objected to the use of the phrase
by Ackermans. Subsequent negotiations led to an agreement in terms of
which Ackermans essentially gave the following undertakings:
„1.
We will refrain from using the trade mark THE LOOK on its own.
2.
We will never use the phrase THE LOOK FOR LESS or the words THE
LOOK as a name of a retail store or as a label or swing tag in relation to any clothing,
footwear or headgear.‟
The agreement was reached on 5 December 2013.
[7] During the latter part of 2014, Truworths alleged that the signage at the
back of the Ackermans store entrance sign at the Eikestad Mall, constituted
both a breach of the undertaking and an infringement of the mark. Ackermans
disagreed. The parties entered into negotiations but did not reach an
agreement. Truworths consequently launched the application in the court a
quo. In essence, its case was that the aforesaid use by Ackermans of the
phrase on its signage as well as the use thereof in its in-store advertisements,
and in print and television advertisements, constituted a breach of the
undertaking, infringement of the mark in terms of s 34(1)(a) or s 34(1)(c)1 of
the Act and the passing off of its goods as those of Truworths.
[8] Ackermans opposed the main application and filed a counter-
application. The counter-application was for the expungement of the mark
based on the provisions of s 10(1) and 10(2)(a), (b) or (c) of the Act.2 Despite
the fact that it had filed voluminous papers in answer to the main application,
Ackermans dealt with issues related to the main application in its replying
affidavit to the counter-application. Truworths accordingly filed an application
for the striking out of portions of Ackermans‟ replying affidavit in the counter-
application, on the ground that they impermissibly dealt with issues that
related only to the main application. This was followed by an answering
affidavit to the application to strike out.
[9] The court a quo found for Truworths on all the grounds that it had relied
upon. It also granted the striking out application. Before us, however, counsel
for Truworths disavowed reliance on breach of the undertaking and passing
off. Only the infringement of the mark in terms of the Act remained in issue on
appeal in respect of the main application. Counsel were therefore rightly in
agreement that a finding that the counter-application for the removal of the
mark was good, would be dispositive of the appeal. I proceed to consider the
counter-application.
1 Sections 34(1)(a) and (c) provide as follows:
„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;
. . .
(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).‟
2 Sections 10(1) and 2(a), (b) and (c) are set out in full below in para 12 of this judgment.
[10] The purpose of a trade mark is to indicate the origin of goods or
services in connection with which it is used, that is, to serve as a „badge of
origin‟. (See Beecham Group plc & another v Triomed (Pty) Ltd [2002] ZASCA
109; 2003 (3) SA 639 (SCA) para 8; and AM Moolla Group Ltd & others v The
Gap Inc & others [2005] ZASCA 72; 2005 (6) SA 568 (SCA) para 38 at 587B-
D.) The fundamental function of a trade mark is thus to distinguish the goods
or services of one person from the goods or services of another. In order to
fulfil this function, a mark must be „capable of distinguishing‟ goods or
services within the meaning of s 9 of the Act, which provides:
„9
Registrable trade marks
(1)
In order to be registrable, a trade mark shall be capable of distinguishing the
goods or services of a person in respect of which it is registered or proposed to be
registered from the goods or services of another person either generally or, where
the trade mark is registered or proposed to be registered subject to limitations, in
relation to use within those limitations.
(2)
A mark shall be considered to be capable of distinguishing within the meaning
of subsection (1) if, at the date of application for registration, it is inherently capable
of so distinguishing or it is capable of distinguishing by reason of prior use thereof.‟
[11] Thus, for a mark to be registrable in terms of the Act (and for it to
remain on the register), it must have inherent distinctiveness or, if not, it must
have acquired distinctiveness by reason of prior use. Whether a mark
possesses inherent or acquired distinctiveness is a question of fact that must
be determined with regard to all the relevant circumstances of each particular
case. (See G C Webster et al Webster and Page: South African Law of Trade
Marks (Service Issue 19, 2015) at 3-48(7) para 3.40.2; James Mellor et al
Kerly’s Law of Trade Marks and Trade Names 15 ed (2014) at 190 para 8-
017.) The relevant circumstances include the nature of the mark and of the
relevant goods or services, the industry in which the mark is intended to be
used or was used and the perception of the average consumers in that
industry.
[12] It is now necessary to refer to s 10 of the Act. Sections 10(1) and (2)
provide:
„10
Unregistrable trade marks
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:
(1)
A mark which does not constitute a trade mark;
(2)
a mark which ─
(a)
is not capable of distinguishing within the meaning of section 9; or
(b)
consists exclusively of a sign or an indication which may serve, in trade, to
designate a kind, quality, quantity, intended purpose, value, geographical origin or
other characteristics of the goods or services, or the mode or time of production of
the goods or of rendering of the services; or
(c)
consists exclusively of a sign or an indication which has become customary in
the current language or in the bona fide and established practices of the trade.‟
[13] However, s 10(2) is subject to the following proviso:
„Provided that a mark shall not be refused registration by virtue of the provisions of
paragraph (2), or if registered, shall not be liable to be removed from the register by
virtue of the said provisions if at the date of the application for registration or at the
date of an application for removal from the register, as the case may be, it has in fact
become capable of distinguishing within the meaning of section 9 as a result of use
made of the mark.‟
[14] I now turn to s 10(2)(a). There is no evidence that Truworths made use
of the mark before it was registered. Therefore, the question is whether
Ackermans has shown that the mark is liable to be removed from the register
for lack of inherent distinctiveness.
[15] A mark that consists merely of words descriptive of goods or services
in a particular class, is not inherently capable of distinguishing the goods or
services of a particular person in that class. In this case the question is
whether the mark is inherently capable of indicating to the average customer
in the fashion retail industry that the goods in respect of which it is used,
originate from Truworths and not from any other fashion retailer. Put
differently, in the words of the authors of Webster and Page at 3-64(2) para
3.51.3, the question is „whether the perceptions and recollections the signs
would trigger in the mind of the average consumer of the specified goods or
services would be origin specific or origin neutral‟. (Footnote omitted.)
[16] Ackermans demonstrated that a common meaning of the words „the
look‟ in the English language is style or fashion. Dictionary examples of the
use of the words include „the new look for summer‟, „the look this year will be
relaxed and casual‟ and „the preferred look for fall‟. Truworths admitted that
the words „the look‟ are used in ordinary language in the context of fashion
and expressly accepted that they are used by the fashion industry to indicate
that a particular item of apparel or outfit is current or fashionable. Ackermans
produced undisputed evidence of extensive use of the words „the look‟ in the
fashion retail industry. Other competitor fashion retailers such as Woolworths,
Edgars, Mr Price, Queenspark, Foschini and Markhams all make use of the
phrase „get the look‟, as well as numerous other derivatives of the words „the
look‟. Examples abound. I refer only to a few. Woolworths, inter alia, uses „the
lush new look‟, „shop the look‟, „the boho bronze look‟, „a fresh take on the
sporty look‟, „get the lace look‟, „you can shop the look online‟ and „get the
look online‟. Edgars, inter alia, makes use of the phrases „get the white look‟,
„get the look of the moment‟ and „jackets are so required to get the look‟.
[17] The ineluctable conclusion is that in the fashion retail industry, the term
„the look‟ carries the universal ordinary meaning of fashionable or trendy
clothes or outfits. It follows that the mark is not a „covert or skilful allusion‟ to
these goods, as counsel for Truworths argued with reference to Webster and
Page at 3-48(13) para 3.43. He fairly conceded that once this conclusion is
reached, the mark is not inherently distinctive. For these reasons I find that
the mark is not inherently capable of distinguishing the goods of Truworths.
[18] In my judgment, the mark also falls to be removed from the register by
reason of both s 10(2)(b) and (c). The mark has no figurative element. Its
words have a generic descriptive meaning in general use in the industry.
Truworths can have no monopoly over these words. On the evidence, the
mark consists exclusively of words that serve to designate the kind of goods
in the trade or at least a characteristic thereof, namely fashionable clothes or
outfits. The evidence similarly established that the mark consists exclusively
of words which have become customary in the current language of the trade.
[19] The next question is whether at the date of the counter-application, the
mark had as a result of the use thereof nevertheless become capable of
distinguishing the goods of Truworths. Distinctiveness may be acquired within
the meaning of the proviso to s 10(2) of the Act, if, as a result of the use of a
mark, it is recognised by the average consumer in the industry as belonging to
a particular person.
[20] In this regard, Truworths did not produce evidence of a market survey
or any other independent evidence reflecting the public perception of the mark
in the market place. The two affidavits it introduced in reply are of no
assistance in this regard. Both the deponents thereto have, for many years,
been involved in the design and manufacture of clothes. They are members of
separate close corporations that supply clothes to Truworths, and are not
qualified to speak for the average consumer in the industry. That may be the
reason why both of them expressed their views in respect of the public
perception in tentative terms. They respectively said „To my understanding,
THE LOOK is indeed widely associated in the minds of the public with
Truworths as a result of the extensive use Truworths has made of the mark‟
and „I would be very surprised to learn that THE LOOK is not regarded as
associated with Truworths in the market‟.
[21] The evidence indicated no more than that the mark had been put to
use. In this regard counsel for Truworths emphasised the evidence of the
substantial combined turnover of the first five TRUWORTHS ─ THE LOOK
stores for the years 2011 to 2014, and also that the turnover in respect of
clothes bearing THE LOOK swing tags for the period from October 2013 to
September 2014 conservatively amounted to some R117 million. But use
does not equal distinctiveness. (See Beecham para 15 at 648F.) The use of a
mark in itself will not render it capable of distinguishing. The question is
whether the use resulted in distinctiveness. Were such evidence available,
Truworths would no doubt have adduced it. The lack of evidence that the
mark acquired distinctiveness through use is compounded by the common
cause fact that the mark was without exception used in close conjunction with
the well-known marks TRUWORTHS and BASIX. I am satisfied that the mark
did not acquire distinctiveness as a result of its use.
[22] It follows that the counter-application for removal of the mark should
have been granted. In the circumstances the appeal against the order in the
main application must also succeed. The Registrar of Trade Marks was cited
in the counter-application but played no part in the proceedings. The order in
the application to strike out was based on trite principle and must stand. The
costs of two counsel were justified in this court as well as in respect of both
the main application and the counter-application in the court a quo.
[23] In the result the following order is issued:
1. The appeal is upheld with costs, including the costs of two counsel.
2. The order of the court a quo is set aside and replaced with the following:
„(a)
The main application is dismissed with costs, including the costs of two
counsel.
(b)
The counter-application is granted and an order is made:
(i)
cancelling the first respondent‟s trade mark registration number 1998/05493-5
in classes 16, 25 and 35;
(ii)
directing the registrar of trade marks to cancel the said registrations and to
remove them from the trade marks register;
(iii)
directing the applicant to pay the costs of the counter-application, including
the costs of two counsel.
(c)
The application to strike out is granted with costs.‟
__________________
C H G van der Merwe
Judge of Appeal
For Appellant:
J C Butler SC (with him B J Vaughan)
Instructed by:
Werksmans Attorneys, Stellenbosch
Webbers Attorneys, Bloemfontein
For First Respondent:
A R Sholto-Douglas SC (with him M Maddison)
Instructed by:
Spoor and Fisher Attorneys, Claremont
Phatshoane Henney 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 2016
Status: Immediate
PEPKOR RETAIL (PTY) LTD v TRUWORTHS LIMITED
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.
The respondent, Truworths Limited (Truworths), is the proprietor of the registered
trade mark THE LOOK (the mark). The appellant, Pepkor Retail (Pty) Ltd (Ackermans), uses
the phrase THE LOOK FOR LESS (the phrase). Truworths applied in the Western Cape
Division of the High Court for an interdict restraining Ackermans from using the phrase.
Truworths’ case, in essence, was that the use of the phrase constituted an infringement of the
mark. Ackermans filed a counter-application for removal of the mark from the register of
trade marks, principally on the ground that it had no inherent or acquired distinctiveness. The
Western Cape Division granted the interdict and refused the counter-application. Ackermans
appealed to the Supreme Court of Appeal (SCA).
2.
Today the SCA upheld the appeal of Ackermans. The SCA held that the mark
consisted only of words that, in the fashion retail industry, carry the universal ordinary
meaning of fashionable or trendy clothes or outfits. Thus, the SCA held that the mark had no
inherent distinctiveness. The SCA also held that the mark had not acquired distinctiveness
through use. The SCA accordingly ordered the removal of the mark THE LOOK from the
register of trade marks and set aside the interdict that prohibited the use of the phrase THE
LOOK FOR LESS by Ackermans.
--ends-- |
2743 | non-electoral | 2012 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 145/11
Not Reportable
In the matter between:
KEITH LONG First Appellant
THE MEMBER OF THE EXECUTIVE COMMITTEE Second Appellant
FOR EDUCATION, WESTERN CAPE
and
TANIA MEGAN JACOBS Respondent
Neutral citation:
Long & another v Jacobs (145/11) [2012] ZASCA 58 (2
April 2012)
Coram:
Mthiyane DP, Cloete, Van Heerden and Leach JJA and Petse
AJA
Heard:
20 February 2012
Delivered:
2 April 2012
Summary:
Negligence – what constitutes – educator assaulted by learner in
class – whether conduct of the first appellant in failing to prevent
assault on becoming aware of death threats made by learner
against educator negligent.
Damages – apportionment – when appeal court may interfere
with the narrow exercise of judicial discretion by trial court in
assessing apportionment.
Quantum – whether the assessment of the award of damages
was fair and appropriate.
ORDER
On appeal from: Western Cape High Court, Cape Town (Moosa J sitting as
court of first instance):
The appeal is dismissed with costs, including the costs occasioned by the
employment of two counsel.
______________________________________________________________
JUDGMENT
______________________________________________________________
PETSE AJA (Mthiyane DP, Cloete Van Heerden and Leach JJA concurring)
Introduction
[1] On 27 September 2001, at Rhodes High School (RHS), Cape Town the
respondent, Ms Tania Megan Jacobs, then a Grade 8D class teacher at RHS,
was attacked with a hammer by a 13 year old learner in her class, Bheki
Kunene. She suffered serious bodily injuries as a consequence of the assault.
[2] RHS is a public school falling under the control of the Western Cape
Provincial Education Department. The first appellant, Mr Keith Long, was the
headmaster of RHS at the material time. The second appellant, the Member
of the Executive Committee of Education, Western Cape is the nominal
representative of the department which was held to be vicariously liable for
the acts and omissions of the employees of the department at RHS.
[3] Subsequent to the attack the respondent instituted action in the
Western Cape High Court against the appellants and two other defendants
who do not feature in this appeal – the action having been withdrawn against
them before the commencement of the trial – for damages consequent upon
the assault. The trial court found for the respondent and granted judgment
against the appellants jointly and severally for damages in the sum of R1 114
685.53, costs and ancillary relief. Subsequently it granted the appellants leave
to appeal to this court, hence this appeal. The judgment of the trial court has
since been reported sub nomine Jacobs v Chairman, Governing Body,
Rhodes High School & others 2011 (1) SA 160 (WCC).
[4] What occurred on 27 September 2001 was a concatenation of certain
incidents that had been brewing for a while after the respondent joined the
RHS as an educator on 1 January 2001, pursuant to a written employment
contract concluded on 24 November 2000 between the respondent and the
Governing Body of RHS as the employer.
Issues
[5] Four principal issues arise for determination in this appeal, viz:
(a)
whether the trial court erred in finding that the appellants and their
servants owed the respondent a legal duty to act positively to ensure
the safety and security of the respondent;
(b)
whether the trial court erred in finding that the first appellant’s conduct
on 27 September 2001 was negligent and that such conduct, if found
negligent, was causally linked to the harm which the respondent
suffered;
(c)
whether, in the event that this court finds that the appellants were
delictually liable to the respondent, the trial court in finding the
respondent contributorily negligent, erred in determining the parties’
respective degrees of fault;
(d)
whether the trial court erred and misdirected itself in assessing the
quantum of the respondent’s damages to a degree that would warrant
interference by this court.
Pleadings
[6] In her particulars of claim, to the extent relevant for present purposes,
the respondent alleged that the first appellant had been negligent, inter alia, in
the following respects:
(1) the first appellant failed to ensure that Kunene was not left unattended or
unsupervised whilst he called the police for assistance on 27 September
2001;
(2) the first appellant failed to ensure that Kunene was detained within his
office or within other suitable premises, until the police arrived on 27
September 2001 and/or that his school bag was searched for dangerous
weapons and/or that it was safely secured;
(3) the first appellant failed to take effective and reasonable steps to
safeguard the plaintiff from being exposed to the risk of undue physical harm
or danger from Kunene when, by the exercise of reasonable care he could
and should have done so;
(4) the first appellant failed to take any or adequate and/or reasonable steps
to preserve and protect the bodily integrity, psychological well-being, mental
tranquillity and dignity of the plaintiff;
(5) the first appellant failed to prevent the assault by Kunene upon the plaintiff,
when by the exercise of reasonable care, he could and should have done so.
[7] It was common cause both on the pleadings and at the trial that
Kunene assaulted the respondent on 27 September 2001 with a hammer.
However, the appellants denied in their further amended plea that the first
appellant or any of the employees of the second appellant had been negligent
in the respects alleged by the respondent or at all.
[8] In the alternative the appellants alleged, in the event that it was found
that the assault on the respondent was caused by the negligence of the first
appellant or other employees of the second appellant as alleged or at all that
the assault was caused partly by the fault of the employees of the second
appellant and partly by the fault of the respondent in that, so far as is relevant,
she:
(1)
generally did not exercise reasonable care in the management of her
relationship, in her capacity as an educator, with Kunene, in his capacity as a
learner, and that this resulted in the assault;
(2) paid insufficient attention to Kunene, particularly after having read his
journal, a fact which should reasonably have caused her to realise that he
required more attention than she was giving him;
(3) failed to inform the second defendant and/or any other person in authority
at the school and/or the South African Police Service about the contents of
Kunene’s journal upon becoming aware thereof and, in particular, when, by
the exercise of reasonable care, she ought to have done so.
Facts
[9] The respondent, who was thirty-two years old at the commencement of
the trial, testified that on 27 September 2001 she was invigilating her Grade
8D class which was writing a comprehension test. She observed that Kunene,
who was one of the learners in her class, was not writing the test. She
approached him only to discover that Kunene was drawing in his journal.
Despite her request that Kunene stop drawing in his journal, he refused to do
so claiming that the test was difficult for him. At that juncture she observed
that there was a death certificate in the journal, made out in her name.
Alarmed at what she had seen she approached the Head of the General
Education Band at RHS, Ms Leslie Hutchings, to report the incident. She then
called Kunene out of the class to meet with Ms Hutchings in the corridor.
Kunene came out with his journal. The respondent attempted to show
Hutchings the death certificate in the journal but Kunene would have none of
that and wrested the journal from the respondent’s possession. Hutchings
suggested to the respondent that the latter should return to her class whilst
she dealt with Kunene. Hutchings then took Kunene to the first appellant and
reported to him what the respondent had told her. The first appellant advised
Hutchings that he would attend to the matter and that Hutchings could return
to her class, which she did.
[10] The respondent further testified that after some time Kunene returned
to the class to collect his school bag. She did not pay any particular attention
to him as she sat at her desk. But she saw Kunene walking towards the exit
door carrying his school bag. All of a sudden she saw Kunene again turning
back and retrieving something from his school bag. Immediately thereafter he
attacked her with a hammer, striking her twice on her head and once on her
left arm when she tried to deflect his blows. She was also struck on her left
knee. Some learners in her class intervened and took Kunene out of the class.
She sustained head injuries, a fractured wrist and a swollen left knee. She
was conveyed by ambulance to Vincent Palloti Hospital where she received
medical treatment for her injuries.
[11] The first appellant testified that on the day of the incident he was in his
office when Hutchings brought Kunene to him. Hutchings told him that Kunene
had made death threats against the respondent in his journal and had refused
to give her the journal. The first appellant asked Hutchings to leave Kunene
with him and said that he would deal with him. He then asked Kunene to hand
over the journal but he refused. He therefore grabbed the journal and had to
wrestle it from him. He told Kunene to sit on a chair outside his office,
instructing him not to leave. He then studied the journal and saw the death
threats as well as a death certificate. He described what he saw in Kunene’s
journal as ‘absolutely horrifying stuff, stuff of nightmares’. Alarmed by this, he
asked his secretary to call the police and Kunene’s mother. When he returned
to where Kunene was supposed to have been waiting, he found that he had
left. Immediately thereafter some learners came running into his office, yelling
that Kunene had attacked the respondent. He went to investigate and found
Ms Gallie, an educator at RHS, struggling with Kunene – who was still in
possession of the hammer – in the corridor. He joined in the attempts to
subdue Kunene and dispossessed him of the hammer.
Legal duty
[12] It has been repeatedly proclaimed in numerous judgments of this court
that a negligent omission will not attract delictual liability unless it is also
wrongful. In Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty)
Ltd 2006 (3) SA 138 (SCA) the requirements of wrongfulness were discussed
by Brand JA (with whom the other members of the court concurred) in these
terms (para 10):
‘Negligent conduct manifesting itself in the form of a positive act causing physical
damage to the property or person of another is prima facie wrongful. In those cases,
wrongfulness is therefore seldom contentious. Where the element of wrongfulness
becomes less straightforward is with reference to liability for negligent omissions and
for negligently caused pure economic loss (see eg Minister of Safety & Security v
Van Duivenboden 2002 (6) SA 431 (SCA) ([2002] 3 All SA 741) in para [12]; Gouda
Boerdery BK v Transnet 2005 (5) SA 490 (SCA) ([2004] 4 All SA 500) in para [12]. In
these instances, it is said, wrongfulness depends on the existence of a legal duty not
to act negligently. The imposition of such a legal duty is a matter for judicial
determination involving criteria of public or legal policy consistent with constitutional
norms.’
The learned judge of appeal continued (para 12):
‘When we say that a particular omission or conduct causing pure economic loss 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 causing pure economic loss
or 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….’
[13] The trial court stated the following in its judgment:
‘Rhodes High as a public school offering public education to the community, is an
organ of state. The educators of such school, and in particular the Defendants in
charge of such school, as functionaries of the State, were exercising public power
and were accountable for the implementation of the rights enshrined in the
Constitution and, more particularly, “the right to freedom and safety of the person to
be free from all forms of violence from either public or private sources in terms of
section 12(1)(c) of the Constitution”.’
But although the appellants are enjoined in terms of the South African Schools
Act 84 of 1996, the Western Cape Provincial School Education Act 12 of 1997
and the regulations promulgated thereunder to ensure that a safe learning
and teaching environment prevailed at RHS, that did not necessarily give rise
to a legal duty to act for purposes of delictual liability. (Rail Commuters Action
Group & others v Transnet Ltd t/a Metrorail & others 2005 (2) SA 359 (CC)
(2005 (4) BCLR 301) paras 79-81).
[14] In the present matter, I have no doubt that societal norms require the
imposition of liability for negligence. If that were not so then, no matter how
negligent the first appellant might have been, he would be immune from the
consequences. That cannot be the law.
Negligence
[15] In Kruger v Coetzee 1966 (2) SA 428 (A) at 430E-G this court stated
the test for negligence as follows:
‘For the purposes of liability culpa arises if –
(a) a diligens paterfamilias in the position of the defendant –
(i)
would forsee 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 has failed to take such steps.
… Whether a diligens paterfamilias in the position of the person concerned would
take any guarding steps at all and, if so, what steps would be reasonable, must
always depend upon the particular circumstances of each case. No hard and fast
basis can be laid down.’
[16] In determining the question of negligence one must of course pay due
heed to the warning of Nicholas AJA in S v Bochris Investments (Pty) Ltd &
another 1988 (1) SA 861 (A) at 866J-867B that:
‘In considering this question [reasonable forseability], one must guard against what
Williamson JA called “the insidious subconscious influence of ex post facto
knowledge” (in S v Mini 1963 (3) SA 188 (A) at 196 E-F). Negligence is not
established by showing merely that the occurrence happened (unless the case is one
where res ipsa loquitur), or by showing after it happened how it could have been
prevented. The diligens paterfamilias does not have “prophetic foresight”. (S v Burger
[1975 (4) SA 877 (A)] at 879D). In Overseas Tankship (UK) Ltd v Morts Dock &
Engineering Co Ltd (The Wagon Mound) 1961 AC 388 (PC) ([1961] All ER 104)
Viscount Simonds said at 424 (AC) and at 414G-H (in All ER):
‘After the event, even a fool is wise. But it is not the hindsight of a fool; it is the
foresight of the reasonable man which alone can determine liability.’
See also in this regard: Sea Harvest Corporation (Pty) Ltd & another v
Duncan Dock Cold Storage (Pty) Ltd & another 2000 (1) SA 827 (SCA) at
842F-H.
[17] In coming to the conclusion it did, the trial court found that both the
conduct of the employees of the second appellant at RHS prior to 27
September 2001 and also the conduct of the first appellant on that day
constituted
negligence.
In
this
court
counsel
for
the
respondent
acknowledged, albeit tentatively, that to the extent that the judgment of the
trial court relied on conduct prior to 27 September 2001 it was predicated on
tenuous, if not erroneous grounds. Consequently I need say no more about
that aspect in this judgment.
[18] The trial court analysed the evidence and said the following in regard to
what occurred on 27 September 2001:
‘The question to be answered is whether he [Long] acted as a reasonable person
would have done when Hutchings brought Kunene to him with his journal following a
complaint by the plaintiff, or did his conduct fall short of that of a reasonable person
in his shoes? There is some uncertainty firstly, as to what he was told by Hutchings
when she brought Kunene to him and secondly, whether he looked into the journal
before or after he had put Kunene in the chair outside his office. The Second
Defendant was somewhat ambivalent about the first issue. In his evidence in chief he
merely testified that he was informed that “threats” were made, but under cross-
examination conceded that Hutchings had told him that “death threats” were made. I
therefore find that at the time Hutchings handed Kunene over to him, he was aware
of the fact that death threats had been made by Kunene against the Plaintiff.’
[19] On the facts of this case the central issue is whether the first
appellant’s conduct at the critical moment was reasonable or not. The enquiry
as to the reasonableness or otherwise of the first appellant’s conduct must be
related to the relevant circumstances. This aspect was discussed in Cape
Metropolitan Council v Graham 2001 (1) SA 1197 (SCA) para 7 where Scott
JA said:
‘Turning to the question of negligence, it is now well established that whether in any
particular case the precautions taken to guard against foreseeable harm can be
regarded as reasonable or not depends on a consideration of all the relevant
circumstances and involves a value judgment which is to be made by balancing
various competing considerations. These would ordinarily be
“(a) the degree or extent of the risk created by the actor’s conduct; (b) the gravity of
the possible consequences if the risk of harm materialises; (c) the utility of the actor’s
conduct; and (d) the burden of eliminating the risk of harm” … If a reasonable person
in the position of the defendant would have done no more than was actually done,
there is, of course, no negligence.’ (Citations omitted.)
[20] With regard to the question as to whether the first two legs of the
negligence inquiry had been established the trial judge, having analysed the
evidence, came to the following conclusion:
‘In my view, the Second Defendant, by placing Kunene on a chair outside his office
unsupervised and by letting him out of his sight and control, should reasonably have
foreseen the probability that Kunene would slip away to his class and carry out the
imminent death threats. The Second Defendant should have taken reasonable
measures to ensure that it did not happen by asking him to wait in his office in his
presence or get a senior educator or any person, like Mr Cooper, the caretaker, to
supervise him and warn the Plaintiff that her life is in danger and instituted measures
to secure her safety, while he arranged to call the police and Kunene’s mother. The
failure to take these measures in order to avoid the harm, in my view, constitutes
negligence on the part of the Second Defendant.’
What this court must therefore determine in this appeal is whether this
conclusion was correct. In Van Eeden v Minister of Safety & Security
(Women’s Legal Centre Trust, as Amicus Curiae) 2003 (1) SA 389 (SCA) para
11 this court stated that:
‘The approach of our Courts to the question whether a particular omission to act
should be regarded as unlawful has always been an open-ended and flexible one.’
[21] The first appellant admitted that Mrs Hutchings had told him that there
was a death threat in Kunene’s journal. That gave rise to the reasonable
possibility that Kunene might attack the respondent. It was a simple matter for
the seriousness of the threat to be investigated and for Kunene to be
neutralised whilst this was done. The first appellant in fact called the police.
He could and should have taken the elementary precaution of keeping
Kunene in his study where he could keep an eye on him, until the police
arrived. Kunene presented no threat to him personally – he had already
overpowered Kunene in order to wrest the journal from him.
Factual and legal causation
[22] Although there may in certain circumstances be conceptual problems in
regard to issues of legal causation on the one hand and factual causation on
the other – see eg International Shipping Co (Pty) Ltd v Bentley 1990 (1) SA
680 (A) at 700 E-G and Minister of Safety & Security v Van Duivenboden
2002 (6) SA 431 (SCA) paras 24-25 – it is unnecessary to have to wrestle with
these concepts in this case as counsel for the appellants eventually conceded
that the respondent had established the requirements for both factual and
legal causation. Thus no more need be said on this score in this judgment.
Contributory negligence
[23] The gist of the argument advanced by the appellants with regard to
contributory negligence was that the trial court, given the conspectus of the
evidence, erred in finding that the appellants’ degree of fault was substantially
greater than that of the respondent. It ought instead, so the argument
concluded, to have found that the respondent was in fact grossly negligent.
When the question of apportionment arises a trial court, having regard to the
facts of the case, is obliged to asses the respective degrees of negligence of
the parties. In assessing that degree in which the plaintiff was at fault in
relation to the damage, the court must determine to what extent the plaintiff’s
acts or omissions, causally linked with the damage in issue, deviated from the
norm of the bonus paterfamilias (see eg South British Insurance Co Ltd v Smit
1962 (3) SA 826 (A) at 836). Where no error in principle is evident, the
appellate court will not lightly interfere with the apportionment decided upon
by the trial court (see South British Insurance Co Ltd at 837) unless the trial
court’s assessment differs substantially from what the appellate court thinks
the assessment should have been. The rationale for this juridical rule is that
the trial court in ‘assessing the relative degrees of blameworthiness… is not
required to act with precision or exactitude but to asses the matter in
accordance with what it considers to be just and equitable.’1
[24] It must also be remembered that, as Cloete JA said in Transnet Ltd t/a
Metrorail & another v Witter 2008 (6) SA 549 (SCA) at 557 A-C:
‘The section [s 1(i)(a) of the Apportionment of Damages Act 34 of 1956] requires the
court of first instance to exercise a narrow discretion. Accordingly, an appeal court
will not decide the question afresh; it will interfere with the exercise of the discretion
by the trial court only where it is shown that:
“(T)he lower court had not exercised its discretion judicially, or that it had been
influenced by wrong principles or a misdirection on the facts, or that it had reached 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.”
An appeal court is therefore entitled to interfere (as it can in respect of sentences
imposed in criminal matters – another example of the exercise of a narrow discretion)
1 Lloyd-Gray Lithographers (Pty) Ltd v Nedcor Bank Ltd t/a Nedbank 1998 (2) SA 667 (W) at 673E.
where its assessment differs so markedly from that of the court a quo as to warrant
interference.’ (Citations omitted.)
[25] When the principles set out above are applied to the facts of this case, I
incline towards the view that although the learned trial judge may have been
somewhat generous towards the respondent in his apportionment of fault, it
cannot be said that he failed to exercise his discretion judicially or was
‘influenced by wrong principles or a misdirection on the facts or reached a
decision which could not reasonably have been made by a court properly
directing itself to all the relevant facts and principles.’ Thus the appellants’
argument on this score cannot be sustained.
Quantum
[26] What remains to be considered is the quantum of the respondent’s
damages as awarded by the trial court. The trial court awarded a total amount
of R1 114 685.53 made up of (a) R 36 276.69 in respect of past medical
expenses - which is not in issue in this appeal; (b) R46 830 for future medical
expenses; (c) R414 000 for past loss of earnings; (d) R545 750 for future loss
of earnings; and (e) R350 000 in respect of general damages.
[27] With respect to future medical costs the experts called on behalf of the
parties were all agreed as to the respondent’s entitlement to an award for
future medical costs, save for an amount of R27 360 in respect of which Mr
Yodaicken – the clinical psychologist called at the instance of the respondent
– felt that the respondent required additional future medical treatment in the
form of insight therapy for a year. The trial court allowed the amount claimed
in respect of insight therapy. It motivated its award in this regard as follows:
‘From an industrial psychological’s point of view, Swart who is qualified to express a
view on life-coaching, is of the opinion that it is not necessary for the Plaintiff to
undergo life-coaching. In this respect, he agrees with Loebenstein and Zabow. I
agree with them that to provide life-coaching would be tantamount to an “over-kill”. I
am of the view that, should the Plaintiff receive insight therapy, it would be
unnecessary also to get life-coaching therapy. I would therefore allow for insight
therapy but not for life-coaching therapy. In the circumstances the amount of R27
360 in respect of insight therapy is allowed, but the amount of R12 600 in respect of
life-coaching therapy is disallowed.’
[28] In this court, this award was assailed on the ground that it was made
without any logical basis and that the trial court had little or no regard for the
evidence of the appellants’ experts, namely, Mr Loebenstein and Prof Zabow.
The latter, so counsel submitted, considered that cognitive behaviour therapy
combined with pharmacological treatment would be the most appropriate form
of treatment for the respondent’s condition. This submission cannot be
upheld. To my mind the trial judge took a broad view of the situation and
made an award which he considered appropriate in the circumstances.
Moreover, the fact that Mr Loebenstein had initially agreed with Prof Yodaiken
on the need for the respondent to undergo insight therapy must be taken into
account, especially in the light of the trial court’s finding that Mr Loebenstein
could offer no plausible explanation for changing his initial stance on this
aspect.
Past and future loss of income
[29] With respect to the past loss of income, it was submitted that the trial
court committed a material misdirection in regard to the respondent’s age of
retirement in her injured state, in that it disregarded the agreement reached
between the industrial psychologists representing the parties. On the other
hand counsel for the respondent contended that the trial court’s award in
respect of both the past and the future loss of earnings was not predicated
upon the assumption that the respondent’s retirement age in both her
uninjured and the injured state would be 60 years but on the basis that it
would be 65 years.
[30] As to the award for future loss of income, it was argued on behalf of the
appellants that the approach adopted by the trial court was wrong for it
considered whether the future earnings of the respondent, in her uninjured
and injured state, were realistic whereas it ought to have asked itself whether
such incomes were likely. Consequently, so the appellants’ argument went,
regard being had both to the evidence of Prof Zabow and Mr Loebenstein to
the effect that with treatment the respondent would be capable of returning to
a productive level of functioning, the contingency deductions motivated by the
industrial psychologist Mr Swart, ought to have commended themselves to the
trial court.
[31] The gravamen of the appellants’ contentions in relation to past loss of
income amounts to this. That the trial court failed to have regard to the
difference of opinion between the industrial psychologists of the parties
concerning the period within which the respondent would have progressed to
a level nine educator. It was argued on behalf of the appellants that a period
of eighteen years would have been a fair and reasonable approach to adopt,
given the respondent’s good qualities as an educator as against the period of
22 years which the trial court adopted.
[32] As to future loss of income, it was further contended that the trial court
failed to have regard to: (a) the prospect of a significant amelioration of the
respondent’s psychiatric condition; (b) the acquisition of a further tertiary
qualification which would enhance her prospects of reaching level C4; (c) that
with treatment the respondent would return to a productive level of
functioning; and (d) that with treatment the respondent’s post-traumatic stress
disorder should resolve. Consequently, so argued counsel, the trial court
ought to have applied lower contingency deductions to those adopted by it.
[33] In considering this aspect of the case, it should be remembered that:
‘Any enquiry into loss of earning capacity is of its nature speculative, because
it involves a prediction as to the future, without the benefit of crystal balls,
soothsayers, augurs or oracles. All that the Court can do is to make an
estimate, which is often a very rough estimate, of the present value of the
loss,’ – per Nicholas JA in Southern Insurance Association Ltd v Bailey NO
1984 (1) SA 98 (A) at 113G. On all the evidence presented in the trial court –
which I do not propose repeating in this judgment – and the reasons
motivating its ultimate conclusion, it seems to me that the learned trial judge
was justified in reaching the conclusion he did. In light of all the circumstances
I am therefore of the view that the amounts awarded in respect of past and
future loss of earnings fairly represent reasonable compensation for the
respondent’s loss under those heads.
General damages
[34] The trial court, in determining the question of what would be an
appropriate amount in respect of general damages and in the exercise of its
discretion, took into consideration ‘the nature, extent and duration of the
physical injuries, the emotional, psychological and psychiatric sequelae, the
pain, suffering and loss of amenities of life’. It proceeded to award a sum of
R350 000 which it considered ‘eminently fair and equitable’.
[35] In this court the appellants contended that the amount awarded for
general damages by the trial court is excessive and that there should be a
striking disparity between that award and that which in this court’s view ought
to have been awarded. Counsel for the respondent argued that when regard
is had to the nature of the injuries sustained by the respondent the amount
awarded is fair and reasonable in the circumstances. It was emphasised in
argument that the appellants’ contentions to the contrary paid insufficient or
no regard to: (a) the severity of the injuries; (b) that the respondent was laid
off from work for two weeks; (c) was rendered ‘an emotional, physical and
mental wreck’; and (d) suffered from delayed onset post-traumatic stress
disorder and a major depressive disorder. She is also unable to continue with
her teaching career, something that was dear to her heart.
[36] This court has repeatedly stressed that a trial court, in the assessment
of general damages in respect of pain and suffering, disability and loss of
amenities of life, enjoys a wide discretion to award what it considers to be a
fair and adequate compensation to the injured party. Thus this court will only
interfere where there is a striking disparity between what the trial court has
awarded and what this court considers ought to have been awarded. See eg
Protea Assurance Co Ltd v Lamb 1971 (1) SA 530 (A) at 535A-B and the
cases therein cited.
[37] As to what weight should be given to previous awards in earlier
decided cases, Potgieter JA in Protea Assurance v Lamb stated, after a
comprehensive review of several cases, that there was no hard and fast rule
of general application requiring a trial court, or even a court of appeal, to
consider
past
awards.
The
learned
judge
of
appeal
nonetheless
acknowledged that previous awards might serve as a useful guide. In Wright v
Multilateral Vehicle Accident Fund (Corbett and Honey. The Quantum of
Damages in Bodily and Fatal Injury Cases (1992) vol IV E3-31 at E3-36)
Broome DJP said the following:
‘I consider that when having regard to previous awards one must recognise that there
is a tendency for awards now to be higher than they were in the past. I believe this to
be a natural reflection of the changes in society, the recognition of greater individual
freedom and opportunity, rising standards of living and the recognition that our
awards in the past have been significantly lower than those in most other countries.’
Commenting upon this judgment in De Jongh v Du Pisanie NO 2005 (5) SA
457 (SCA) para 60 Brand JA observed that the tendency towards higher
awards is not capable of mathematical precision and may well have come to
an end; that such tendency is only one of the factors to be taken into account
in the exercise of a court’s discretion; that care must be taken to ensure that
the award is fair to both sides; and that conservatism in awards has its origin
in the need to also be fair to a defendant.
[38] In my view the learned trial judge – after a thorough examination of the
expert evidence – gave comprehensive reasons as to what motivated him to
award the amount he did. Accordingly I do not think that it would serve any
useful purpose to undertake the same task in this judgment. Suffice it to say
that having considered all the relevant factors and the authorities referred to
above the assessment of the damages awarded by the trial court cannot be
faulted.
[39] For all the aforegoing reasons therefore this appeal falls to be
dismissed.
[40] Before concluding, it is unfortunately necessary to say something about
the conduct of the trial. The trial went on for many weeks. The record itself
comprises nearly 6000 pages. The cross-examination of the respondent, for
example, lasted nine days. During the course of the trial irrelevant evidence
was allowed resulting in the trial being needlessly dragged out to inordinate
lengths. Another example is that evidence was elicited from the first appellant
which had absolutely no bearing on the issues that were germane at the trial
but had more to do with his personal life which should have been kept private.
In addition, all too often the proceedings degenerated to a slanging contest
between counsel, this without due observance of the decorum of the court.
[41] All of this led to the trial becoming an unnecessarily long and drawn out
affair, no doubt adding substantially to the bills of costs. All of this was allowed
to happen without any restraint, and is to be deprecated. Legal practitioners
should properly apply themselves to the task at hand and do so without
unnecessarily prolonging litigation and they and the trial judge should ensure
that proceedings are limited to that which is relevant. To fail to do so will not
only occasion a wholly unnecessary escalation of costs but will lead to the
human and other resources of the courts in this country, which are under
severe strain, not being optimally used.
Order
[42] The appeal is dismissed with costs, including the costs occasioned by
the employment of two counsel.
_____________
X M Petse
Acting Judge of Appeal
APPEARANCES:
For Appellants:
J C Heunis SC (with him R Jaga)
Instructed by:
State Attorney, Cape Town
State Attorney, Bloemfontein;
For Respondent:
M L Sher (with him U Deetlefs)
Instructed by:
Parker & Khan Inc, Lansdowne
E G Cooper and Majiet Attorneys, 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
2 April 2012
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Long & another v Jacobs
(145/11) [2012] ZASCA 58 ( 2 April 2012)
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 the appellant and
upheld an order of the Western Cape High Court, Cape Town.
The first appellant is the headmaster of the Rhodes High School and the second appellant is
the Member of the Executive Committee of Education in the Western Cape. The
respondent, a Grade 8 educator at Rhodes High School, was attacked with a hammer by a
13 year old learner in her class. The respondent suffered serious bodily injuries as a
consequence of the assault. The respondent instituted action in the high court against the
appellants for damages. The court found for the respondent and granted judgment against
the appellants jointly and severally in the sum of R1 114 685.53 and the second appellant
was, as a result, held to be vicariously liable for the acts and omissions of the employees of
the department at the school.
The central issues before the SCA were whether the high court erred in finding that the
appellants and their servants owed the respondent a legal duty to act positively to ensure
the safety and security of the person of the respondent; secondly whether the high court
erred in finding that the first appellant’s conduct was negligent and if so, whether such
conduct was causally linked to the harm suffered by the respondent; thirdly, whether the
high court in finding the respondent contributorily negligent, erred in determining the parties’
respective degrees of fault and finally whether the trial court erred and misdirected itself in
assessing the quantam of the respondent’s damages to a degree that would warrant
interference by this court.
The SCA held that the first appellant was aware of the death threats made by the learner
against the respondent and therefore should have taken the elementary precaution in
keeping the learner under his supervision, as a reasonable possibility existed that the
learner might attack the respondent.
The SCA held that it will only interfere with an award made by a trial court where there is a
striking disparity between what the high court has awarded and what this court considers
ought to have been awarded.
The SCA on the issue of contributory negligence, held that in assessing the degree of fault
on the part of respondent, the court must determine to what extent the respondent’s acts or
omissions, causally linked with the damage in issue, deviated from the norm of the bonus
paterfamilias and that the appellate court will not lightly interfere with the apportionment
decided upon by the high court and in the event found that the trial judge took a broad view
of the situation and made an apportionment he considered appropriate in the circumstances.
The SCA further held with regard to quantam that the learned trial judge gave
comprehensive reasons as to what motivated him to award the amount he did, and as a
result cannot be faulted. The appeal therefore fell to be dismissed.
--- ends --- |
3485 | non-electoral | 2020 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1035/2019
In the matter between:
BOKONI PLATINUM MINES (PTY) LTD
APPELLANT
and
ABRAM MOROPANE
RESPONDENT
Neutral citation:
Bokoni Platinum Mines v Abram Moropane (/1035/2019) [2020]
ZASCA 168 (11 December 2020)
Coram:
SALDULKER, MOLEMELA and NICHOLLS JJA and SUTHERLAND
and UNTERHALTER AJJA
Heard:
04 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 10h00 on 11 December 2020.
Summary:
Whether the judgment refusing the application for leave to amend plea and
counterclaim was res judicata – whether the recusal of the judicial officer who granted the
order refusing amendment, which recusal was based on bias, invalidates every aspect of
a trial, including judgments and orders made in the course of the trial.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Muller and Kganyago
JJA sitting as court of first instance): judgment reported Bakoni Platinum Limited v
Moropane [2019] ZALMPPHC 30
1 The appeal is upheld.
2 The proceedings before Magistrate Malebane are set aside, including the judgment
refusing leave to amend the plea and counterclaim.
3 The matter is remitted to a full court of the Limpopo Division of the High Court to
adjudicate Acting Magistrate’s Moyane’s judgment on the merits of the application for
leave to amend the plea and counterclaim.
4 Each party is to pay its own costs.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Nicholls JA (Saldulker and Molemela JJA and Sutherland and Unterhalter AJJA
concurring):
[1] To suggest that this matter has a long and tortuous history would be an
understatement. It merely needs to be stated that 6 years after the institution of summons
in the magistrates court, a dispute involving a mielie farm worth R54 000 has now ended
up with an interlocutory application for leave to amend a plea being adjudicated upon in
this Court.
[2] In 2013 Bokoni Platinum Mines (Pty) Ltd (Bokoni), the appellant, decided to
commence mining activities on Klipfontein Farm. Pursuant thereto, Bokoni concluded
separate agreements with various members of the community (the farmers) who were
farming small plots of mielies on the land in question. Bokoni was to pay each subsistence
farmer amounts of R18 000 over three years, totalling R54 000. These agreements
spawned lengthy and costly litigation over a period of years. More than a hundred farmers
issued summons against Bokoni out of the Praktiseer Magistrates Court seeking to
vindicate their rights in term of their agreements. The same attorney represents all the
farmers and the pleadings are substantially identical. There are over a hundred actions
which have been consolidated, but for present purposes it is only necessary to deal with
the claim of one of the farmers, the respondent, Mr Abraham Moropane.
[3] The issue purportedly before this Court is whether the judgment of
Magistrate Malebane, of 13 March 2017, which dismissed Bokoni’s application for leave
to amend its plea and counterclaim, was res judicata. If so, was it permissible for
res judicata to be raised mero motu by the full bench of the Limpopo Polokwane
High Court (the high court)? The high court, having raised the issue, found that the matter
was res judicata and dismissed the application for leave to amend on this basis. It also
refused leave to appeal. The appeal comes before this Court upon Bokoni successfully
petitioning for leave to appeal.
[4] It is necessary to briefly set out the history of the matter. The agreement allegedly
concluded between Bokoni and Mr Moropane provided that an amount of R54 000 was
to be paid in three annual instalments of R18 000 each, on April 2013, April 2014 and
April 2015. The agreement recorded that the R54 000 was–
‘[A] once-off compensation payment, in full and final settlement, for any actual or contingent
losses or damages relating to subsistence farming on [the] Mieliefield located at Klipfontein Farm
(465 KS).’
The first amount of R18 000 was paid in April 2013 but no further amounts were paid.
This prompted Mr Moropane to sue for payments of the two remaining amounts of
R18 000 in terms of the written agreement.
[5] In Bokoni’s plea the written agreement was denied. In the alternative, it was
pleaded that the agreement between the plaintiff and the defendant was partly oral and
partly written, the written portion was attached to the particulars of claim. As a further
alternative, it was pleaded that the agreement contained a tacit term that the plaintiff was
entitled to compensation only if he in fact farmed mielies on the farm. Bokoni’s defence
was that Mr Moropane did not farm mielies at the time of concluding the agreement and
was therefore not entitled to payment. It instituted a counterclaim for unjust enrichment in
respect of the R18 000 already paid in April 2013.
[6] On 1 September 2014, Bokoni sought to amend its counterclaim to the effect that
the agreement between Mr Moropane and Bokoni was partly written, the written portion
being the agreement annexed to Mr Moropane’s particulars of claim. The oral part was
agreed upon during March 2013 by representatives of the Plaintiff, duly authorised, and
by Bokoni, represented by Andrew Letlapa, alternatively by a duly authorised
representative. Despite opposition, the amendment to the counterclaim was granted on
28 November 2014.
[7] Before the trial commenced the separate actions were consolidated, although the
claims of each plaintiff remained separate claims against Bokoni. The trial proceeded
before Magistrate Malebane in 2016 on the pleadings as they stood at that time, including
the amended counterclaim. At the start of the trial, it was submitted on behalf of Bokoni
that the written agreements were denied and there existed tacit agreements, the terms of
which would have to be proven.
[8] Mr Moropane testified, together with two other farmers who had also instituted
actions against Bokoni. At the close of the plaintiffs’ case, Bokoni brought an application
for absolution against the 116 farmers who did not testify. On 2 August 2016,
Magistrate Malebane dismissed thirteen of the actions but did not grant absolution in
respect of the balance of the actions. The defence case then commenced with the
testimony of Mr Pasha who was employed by Bokoni as a community liaison officer.
Contrary to the plea, he admitted that written agreements had been concluded with the
farmers. Once he had completed his testimony, the trial was postponed to
30 November 2016.
[9] Before that date, on 27 October 2016, Bokoni served another notice of intention to
amend its plea and counterclaim in which the written agreement was admitted. Bokoni’s
attorney, Ms Deidre Venter, was the deponent to the founding affidavit in the application
for leave to amend. She explained that after Mr Phasha’s testimony, they consulted with
Mr Letlapa who was employed by Bokoni as the socio-economic development
co-ordinator at the time. It became apparent that it was he, not Mr Phasha, who was
involved in concluding the agreements, and they were indeed written agreements. Bokoni
intended calling him as a witness and in order that the pleadings were aligned with the
evidence, sought to amend its pleas and counterclaims accordingly.
[10] Bokoni’s case as amended was that written agreements were concluded, which
properly interpreted, meant that the farmers would only be entitled to be compensated if
they in fact had a mielie field at the time of the conclusion of the agreement. It was stated
that whether they actually farmed mielies on the mielie field was irrelevant, except insofar
as it may be evidence that they had a mielie field. The counterclaim was similarly framed
that if any farmer did not have a mielie field at the time of the conclusion of the agreement,
he was not entitled to the R18 000 paid to him and was unjustly enriched in this amount
at the expense of Bokoni. In the specific case of Mr Moropane, the written agreement was
still denied but it was pleaded that he did not have a mielie field at the time. This being
so, he was not entitled to compensation.
[11] Mr Moropane’s objections to the leave to amend were, inter alia, that Bokoni was
attempting to introduce a defence not raised in its plea and only after their first witness
had been cross-examined; that Bokoni sought to retract an allegation that the agreement
was partly oral and partly written; and, it would be highly prejudicial to the plaintiffs to
grant the amendment.
[12] After hearing a substantive application for amendment on 13 March 2017
Magistrate Malebane dismissed the application for leave to amend the plea and
counterclaim. Bokoni lodged a notice of appeal against this decision. This was soon
followed by Bokoni’s application for the recusal of Magistrate Malebane on the grounds
of bias, pertaining to the manner in which he had conducted the trial thus far. On
25 April 2017 the recusal application was granted and Magistrate Malebane ordered that
the matter start de novo before another magistrate.
[13] This prompted Bokoni to withdraw its appeal on 30 May 2017 as the effect of the
recusal was that the appeal was now ‘a nullity’. Instead, the next day on 31 May 2017,
the third notice of amendment was served, in terms almost identical to the one that had
been dismissed by Magistrate Malebane.1 A similar objection was filed by Mr Moropane
and Ms Venter again deposed to the founding affidavit.
[14] Another substantive application for leave to amend the plea and counterclaim was
launched, this time before Acting Magistrate Moyane in the Tubatse Magistrate’s Court.
For reasons that are not germane to this appeal, he, like Magistrate Malebane, dismissed
the application. Bokoni appealed Magistrate Moyane’s refusal of the application for leave
to amend in the high court. The appeal was dismissed by the high court.
[15] In the high court the issue of res judicata was raised by the high court for the first
time. Up until that point, both parties had proceeded on the assumption that all
Magistrate Malebane’s judgments, including the judgment on absolution and the
judgment on the application for leave to amend, had been set aside as a consequence of
his recusal. The high court first considered whether Magistrate Malebane was entitled to
order that the matter start de novo. It held that, as a creature of statute,
Magistrate Malebane did not have that power, but because of the successful application
for his recusal the evidence had to be adduced de novo before a different magistrate.
This meant, said the high court, that ‘the slate [was] wiped clean’. Despite this, the
high court held that the judgment of Magistrate Malebane had not been nullified by his
recusal. This judgment was still binding and to find otherwise would be ‘tantamount to a
procedure, other than an appeal or review, in terms whereof a final interlocutory
1 It should be noted that in respect of Mr Moropane, the third amendment continued to deny the existence
of a written agreement.
procedural order, is set aside by the magistrate who is functus officio’. Such a result could
not be countenanced, and the appeal was dismissed on that ground.
[16] To justify its decision the high court concluded that where equity and fairness
demanded, the courts have over the years relaxed the common law requirement that
res judicata had to be pleaded.2 It, therefore, found that the high court was entitled to
raise the issue of res judicata and that the application for amendment before
Magistrate Moyane amounted to an abuse of the process of court. The high court
concluded that ‘the order of Magistrate Malebane ha[d] not been nullified by his recusal,
is final and is res judicata’.
[17] Bokoni, in line with the judgment of the high court, identified three issues that this
Court should deal with on appeal, namely, whether the judgment of Magistrate Malebane
was res judicata; whether res judicata could be raised by the high court mero motu and,
if so, was it appropriate in the circumstances of this case; and finally, the merits of the
application for leave to amend. But was this the correct enquiry in light of the recusal of
Magistrate Malebane?
[18] The starting point should, in my view, have been the legal effect of the recusal. By
embarking upon the issue of res judicata the high court misconstrued the enquiry. The
question to be determined, in the light of Magistrate Malebane’s recusal, was the status
of the interlocutory judgment in which he dismissed the application for leave to amend the
plea and counterclaim. Did his recusal extinguish the entire proceedings, including the
interlocutory judgment or merely the evidence that had been led? If the former, this is
dispositive and the question whether the judgment was res judicata does not arise.
[19] The recusal was sought, and granted, on the grounds of bias, or a reasonable
apprehension thereof. Whether Magistrate Malebane’s decision to recuse himself was
2 For this proposition the high court placed reliance on Boland Konstruksie Maatskappy (Edms) Bpk v Petlen
Properties (Edms) Bpk 1974 (4) 980 (C).
correct, or whether the bias alleged warranted the recusal, is not for this Court to
determine. It suffices that the application for his recusal was granted.
[20] It has long been accepted by our courts that a decision maker should be unbiased
and impartial. This common-law right is now buttressed by the fair trial rights in the
Constitution.3 Impartiality is the cornerstone of any fair and just legal system and an
impartial presiding officer in every judicial proceeding or tribunal is an absolute requisite
of fairness.4 The rule against bias requires the recusal of a presiding officer where there
is bias or a reasonable perception thereof. Once the conduct of a judicial officer is tainted
with bias, this vitiates the proceedings. The law reports are replete with criminal matters
where the entire proceedings were rendered a nullity upon a presiding officer having
recused him or herself.5 The reason for this is straightforward. Unbiased adjudication is
fundamental to a fair hearing: it is an irreducible prerequisite. Once an adjudicator
recognises his or her own bias, recusal must follow. But so too does the consequence
that the proceedings cannot stand. They are set aside because we do not ask whether a
biased adjudicator came to a correct decision. Rather, the law adopts the position that a
biased adjudication will not be countenanced because it is so inimical to what fairness
requires that the decisions rendered by it may not stand.
[21] There is a dearth of authorities in respect of civil matters but there are no coherent
reasons why civil litigants have a lesser claim to an unbiased hearing. Nor why the
principle of nullity should not apply to them.6 In principle there appears to be no distinction.
The reported cases that there are, have, in the main, involved tribunals. If nullity is visited
upon the proceedings of an administrative tribunal where the taint of bias is established,
how much more so in a court of law. In Moch v Nedtravel (Pty) Ltd t/a American Express
3 Section 34 of the Constitution provides that:
‘Everyone has the right to have any dispute which can be resolved by the application of law decided in a
fair public hearing before a court or, where appropriate, another independent and impartial tribunal or
forum’. See also Bernert v Absa Bank Ltd [2010] ZACC 28; 2011 (3) SA 92 (CC) para 28.
4 South African Catering and Allied workers Union v Irvin and Johnson 2000 (3) SA 705 (CC) para13.
5 R v Mhlanga 1959 (2) SA 220 (T); S v De Koker 1978 (1) SA 659 (O); S v Molowa 1998 (2) SACR 422
(O); S v Polelo 2000 (2) SACR 734 (NC).
6 Brooks and Others v S 2019(1) SACR 103 (NCK) para 26 where it is stated that the authorities are clear,
once a presiding officer recuses himself, the trial is a nullity and this applies to both criminal and civil
matters.
Travel Service7 the dispute concerned the appealability of an acting judge’s refusal to
recuse himself in a sequestration application. This Court found that all proceedings
conducted after the recusal were a nullity. This may suggest that any proceedings before
the recusal are unaffected but on a proper reading it appears that this Court accepted
that once there is bias, the proceedings are a nullity from the start. Moch8 invoked the
earlier authority of Council of Review, South African Defence Force v Monnig9 dealing
with a military tribunal where Corbett CJ said:
‘What must be remembered is that in the present case we are concerned with proceedings of
what is in substance a court of law . . . .If, as I have held, the court martial should have recused
itself, it means that the trial which it conducted after the application for recusal had been dismissed
should never have taken place at all. What occurred was a nullity. It was not, as in many of the
cases quoted to us, an irregularity or series of irregularities committed by an otherwise competent
tribunal. It was a tribunal that lacked competence from the start. The irregularity committed by
proceeding with the trial was fundamental and irreparable. Accordingly there was no basis upon
which the council of review could validate what had gone before. The only way the council of
review could have cured the proceedings before the court martial would have been to set them
aside.’
[22] To the extent that there may be some ambiguity in Moch and South African
Defence Force that it is only the proceedings after recusal that are a nullity, this was put
to rest by this Court in Basson v Hugo.10 There the primary issue was whether the
appellant was obliged to exhaust all internal remedies before launching an application to
set aside a decision of the Health Professions Council refusing an application for recusal
of two of its members serving on the relevant disciplinary committee. This Court, relying
on Moch and Monnig, held that if it were found that the members should have recused
themselves, the bias would permeate all the proceedings, including any appellate
proceedings. One cannot cure a nullity observed Shongwe AP before ordering a remittal
back to the high court to determine the review.
7 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (SCA).
8 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (SCA) at 9D-G.
9 Council of Review, South African Defence Force and Others v Mönnig and Others 1992 (3) SA 482 (A) at
495A-D.
10 Basson v Hugo and Others [2018] ZASCA 1; 2018 (3) SA 46 para 21.
[23] Similarly in Ndimeni v Meeg Bank Ltd (Bank of Transkei)11 the failure of an acting
judge in the labour court to recuse himself, resulted in the court proceedings being
declared a nullity.
[24] Therefore, as a general rule, a recusal on the basis of bias will permeate and
invalidate every aspect of a trial, including the judgments and orders made in the course
of the trial. There are those unique circumstances where the rationale for the recusal has
limited impact and to nullify the entire proceedings would not be in the interests of justice.
In Le Car Auto Traders v Degswa12 the appellant, aggrieved by the court’s judgment,
made an application for the recusal of the presiding judge shortly before the application
for the leave to appeal was to be heard. The basis for the application was that the
respondents had behaved unconscionably by making contact with the judge’s registrar
regarding the date of the hearing for leave to appeal. The obviously unmeritorious
application was dismissed. The court’s further observations that the effect of a recusal
could only be in respect of prospective or current proceedings which did not nullify the
judgment were in relation to the very special facts of that case. Apart from being
obiter dictum they have no bearing on the current case as the refusal of the amendment
order formed part of a trial proceeding still underway.
[25] The limitation on the principle of nullity was not argued before us and this is not a
case where it would have application. To find that the recusal nullified the evidence given
before Magistrate Malebane as well as the judgment on absolution from the instance but
not the interlocutory judgment given by him, is an unsustainable proposition. It cannot be
that the bias wiped the slate clean as far as the evidence goes but did not infect any
interlocutory
judgment
given
on
the
basis
of
the
same
evidence.
Once
Magistrate Malebane recused himself, this vitiated the entire proceedings, including his
judgment on the application for leave to amend. The inevitable consequence was that the
11 Ndimeni v Meeg Bank Ltd (Bank of Transkei) [2010] ZASCA 165; 2011 (1) SA 560 (SCA).
12 Le Car Auto Traders v Degswa 10138 CC and Others [2012] ZAGPJHC 286.
trial would have to start de novo. The judgment became a nullity upon his recusal. Having
made this finding, the issue of res judicata becomes irrelevant.
[26] To this extent, the appeal against the decision of the high court to dismiss Bokoni’s
application must succeed, although on entirely different grounds. However, insofar as the
merits of the application for leave to amend are concerned, the high court has not
pronounced on the judgment of Acting Magistrate Moyane. Therefore, the appropriate
course of action is to remit the matter to the high court for a hearing on the merits of the
application for leave to amend the plea and counterclaim.
[27] As regards costs, it was not the fault of either party that the high court misconstrued
its enquiry and did not deal with the merits of the appeal before it. Although Bokoni has
been successful in its appeal it was not on the grounds argued by it. It follows that the
most equitable order would be for each party to pay its own costs.
[26] In the result I make the following order:
1 The appeal is upheld.
2 The proceedings before Magistrate Malebane are set aside, including the judgment
refusing leave to amend the plea and counterclaim.
3 The matter is remitted to a full court of the Limpopo Division of the High Court to
adjudicate Acting Magistrates Moyane’s judgment on the merits of the application for
leave to amend the plea and counterclaim.
4 Each party is to pay its own costs.
_________________
CH NICHOLLS
JUDGE OF APPEAL
APPEARANCES:
For appellant:
L Hollander
Instructed by:
Shepstone & Wylie, Johannesburg
Symington & De Kok, Bloemfontein
For respondent:
DB Tshabalala
Instructed by:
Molefe Attorneys, Polokwane
NW Phalatsi & Partners, Bloemfontein | SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY
MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Bokoni Platinum Mines v Abram Moropane (/1035/2019) [2020] ZASCA 168
From:
The Registrar, Supreme Court of Appeal
Date:
11 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 of the Supreme Court of Appeal.
Today the Supreme Court of Appeal (SCA) upheld the appeal by the appellants with each party to pay
its own costs.
In 2013 Bokoni Platinum Mines (Pty) Ltd (Bokoni), the appellant, commenced mining activities on
Klipfontein Farm. Pursuant thereto, Bokoni concluded separate agreements with various members of
the community (the farmers). Bokoni was to pay each subsistence farmer amounts of R18 000 over
three years, totalling R54 000. More than a hundred farmers issued summons against Bokoni, out of
the Praktiseer Magistrates Court, seeking to vindicate their rights in term of their agreements. The
purported issue before this Court was whether the judgment of Magistrate Malebane, of 13 March
2017, which dismissed Bokoni’s application for leave to amend its plea and counterclaim, was res
judicata. If so, was it permissible for res judicata to be raised mero motu by the full bench of the
Limpopo Polokwane High Court (the high court)? The high court, having raised the issue, found that
the matter was res judicata and dismissed the application for leave to amend on this basis. It also
refused leave to appeal. The appeal comes before this Court upon Bokoni successfully petitioning for
leave to appeal.
Bokoni in its plea denied the written agreement, alternatively, it pleaded that the agreement it entered
into with the individual plaintiff farmers was partly oral and partly written. The various actions were
consolidated and the trial proceeded before Magistrate Malebane in 2016. Pursuant to an application
for absolution at the close of the plaintiffs’ case Magistrate Malebane dismissed thirteen of the actions
but did not grant absolution in respect of the balance of the actions. After the testimony of one of its
witnesses, Bokoni served a notice of intention to amend its plea and counterclaim, in which the written
agreement was admitted. An objection was raised on the basis that Bokoni was attempting to
introduce a defence not raised in its plea; that Bokoni sought to retract an allegation that the
agreement was partly oral and partly written; and, it would be highly prejudicial to the plaintiffs to grant
the amendment.
Magistrate Malebane dismissed the application for leave to amend the plea and counterclaim. Bokoni
lodged a notice of appeal against this decision. This was followed by Bokoni’s application for the
recusal of Magistrate Malebane on the grounds of bias, pertaining to the manner in which he had
conducted the trial thus far. The recusal application was granted and Magistrate Malebane ordered
that the matter start de novo before another magistrate. Bokoni’s notice of appeal was withdrawn on
the basis that the proceedings before Magistrate Malebane were ‘a nullity’. Another substantive
application for leave to amend the plea and counterclaim was launched, this time before Acting
Magistrate Moyane in the Tubatse Magistrates Court. This application was also dismissed. Bokoni
appealed Magistrate Moyane’s refusal of the application for leave to amend in the high court. The
appeal was dismissed by the high court which mero motu raised the issue of res judicata. The high
court first considered whether Magistrate Malebane was entitled to order that the matter start de novo.
It held that, as a creature of statute, Magistrate Malebane did not have that power, but because of the
successful application for his recusal, the evidence had to be adduced de novo before a different
magistrate. However, the high court held that the judgment of Magistrate Malebane was res judicata
and the appeal was dismissed on that ground.
Although the issue identified on appeal was that of res judicata, this Court held that the high court
misconstrued the enquiry. The question to be determined, in the light of Magistrate Malebane’s
recusal, was the status of the interlocutory judgment in which he dismissed the application for leave to
amend the plea and counterclaim. This Court found that the recusal extinguished the entire
proceedings, including the interlocutory judgment. To find that the recusal nullified the evidence given
before Magistrate Malebane, as well as the judgment on absolution from the instance, but not the
interlocutory judgment given by him, was an unsustainable proposition. Once a recusal is granted on
the basis of bias this will generally infect the entire proceedings which are vitiated in their totality. The
SCA held that all proceedings including the judgment of Magistrate Malebane became a nullity upon
his recusal. Having made that finding, the issue of res judicata became irrelevant. With regard to the
merits, it was held that the high court had not pronounced on the merits of the judgment of Acting
Magistrate Moyane on the application for leave to amend the plea and counterclaim. Therefore the
appropriate course of action was to remit the matter to the high court for this purpose. The appeal was
upheld and the proceedings before Magistrate Malebane were set aside, including the judgment
refusing leave to amend the plea and counterclaim. The matter was remitted to the full court of the
Limpopo Division of the High Court to determine the merits. Each party was ordered to pay its own
costs as it was not the fault of either party that the high court misconstrued the enquiry before it.
---oOo--- |
216 | non-electoral | 2018 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 398/2017
In the matter between:
BROMPTON COURT BODY CORPORATE SS119/2006 APPELLANT
and
CHRISTINA FUNDISWA KHUMALO RESPONDENT
Neutral citation: Brompton Court Body Corporate v Khumalo (398/2017) [2018]
ZASCA 27 (23 March 2018)
Coram:
Ponnan, Van der Merwe and Mocumie JJA and Pillay and Makgoka
AJJA
Heard:
1 March 2018
Delivered:
23 March 2018
Summary: Prescription – an arbitration award generally does not create a new
debt for purposes of the Prescription Act 68 of 1969 (the Act) – a claim to make an
arbitration award an order of court in terms of s 31 of the Arbitration Act 42 of 1965 is
not a ‘debt’ in terms of the Act.
___________________________________________________________________
ORDER
On appeal from: Gauteng Division of the High Court, Johannesburg (Mokose AJ
sitting as court of first instance):
1 The appeal is upheld with costs.
2 The order of the court a quo is set aside and replaced with the following:
‘Prayers 1, 2 and 3 of the notice of motion are granted, with costs.’
JUDGMENT
Van der Merwe JA (Ponnan and Mocumie JJA and Pillay and Makgoka AJJA
concurring)
[1] The appellant is the body corporate of the Brompton Court sectional title
scheme. At all relevant times the respondent, Ms Christina Fundiswa Khumalo,
owned a sectional title unit in the scheme. Disputes arose between the parties,
which, by agreement, were referred to arbitration.
[2] The respondent was the claimant in the arbitration. She claimed that her
account with the appellant be credited with various amounts in respect of levies,
other charges and interest that I find unnecessary to particularize. She also claimed:
(a) the costs of repairs to the structure of the unit, for which she asserted the
appellant was responsible; (b) damages on the basis that as a result of the conduct
of the appellant, she was unable to rent out the unit for a period of three months; and
(c) damages for defamation. The appellant counter-claimed for payment of the
outstanding balance owed to it by the respondent in respect of ordinary levies,
special levies, a security levy, consumption of electricity and interest.
[3] The arbitrator published his award on 21 December 2012. He allowed the
claims for the costs of repairs (in the amount of R20 000.00) and for loss of rental
income (in the amount of R27 750.00) but dismissed all of the respondent’s other
claims. The arbitrator found that the respondent owed the amount of R135 099.48 in
respect of the counter-claim. He subtracted the aforesaid amounts of R20 000.00
and R27 750.00 from this amount and made an award in favour of the appellant for
payment of the balance of R87 349.48, interest thereon and costs of the arbitration.
[4] Per notice of motion issued on 26 March 2014, the appellant applied in terms
of s 31 of the Arbitration Act 42 of 1965 to the Gauteng Local Division of the High
Court, Johannesburg that the arbitration award be made an order of court.
The respondent opposed the application in effect only on the basis that the debt in
question had prescribed in terms of the Prescription Act 68 of 1969 (the Act). (In the
absence of an application to review the arbitration award, the allegations in the
answering affidavit that the arbitrator was biased or exceeded his authority, did not
constitute a defence to the application.) The court a quo (Mokose AJ) upheld the
defence of prescription and dismissed the application with costs. She refused leave
to appeal but the appellant was subsequently granted leave to appeal by this court.
The issue in the appeal is whether the defence of prescription was correctly upheld.
[5] Counsel for the appellant submitted that the arbitration award constituted a
new debt and that the three year period of prescription only commenced to run on
the date of publication of the award, that is 21 December 2012. As the application
was launched on 26 March 2014, so it was contended, the respondent’s reliance on
prescription was misplaced. In this regard reference was made to John Saner SC
Prescription in South African Law, (1996) at p 3-160, where it is firstly stated, without
qualification, that when a binding arbitral award is made, a new debt arises and
secondly, that if an arbitral award is not made an order of court within three years of
its granting, the right to do so (being a ‘debt’ in terms of the Act) prescribes. Similar
views were expressed in Primavera Construction SA v Government of Northwest
Province & another 2003 (3) SA 579 (BPD) p 604 paras 13 and 14 and Prime Fund
Managers (Pty) Ltd v Rowan Angel (Pty) Ltd & another [2014] ZAGPPHC 81; [2014]
2 All SA 227 (GNP) paras 44 and 45. The correctness of each of those statements
will be considered in turn.
As to the first:
[6] The first statement cannot be accepted as a principle of general application.
The converse will generally be true. Even a judgment of a court of law generally
does not create a new debt. It serves to affirm and/or liquidate an existing debt which
was disputed. What the judgment does in relation to prescription of a debt, is to give
rise to a new period of prescription of 30 years in terms of s 11(a)(ii) of the Act.
The same must generally apply to an arbitration award, save that it does not attract a
new prescriptive period in terms of s 11 of the Act.
[7] The conclusion that an arbitration award generally does not give rise to a new
debt, is supported by the provisions of s 13(1)(f) of the Act, which provides:
‘(1) If —
(f) the debt is the object of a dispute subjected to arbitration;’
and
‘(i) the relevant period of prescription would, but for the provisions of this subsection, be
completed before or on, or within one year after, the day on which the relevant impediment
referred to in paragraph (a), (b), (c), (d), (e), (f), (g) or (h) has ceased to exist,
the period of prescription shall not be completed before a year has elapsed after the day
referred to in paragraph (i).’
[8] Should the alleged debt that was subject to arbitration be rejected by the
arbitrator, no question of delay of the completion of prescription arises. It follows that
save in exceptional circumstances, such as abandonment of the arbitration
proceedings before completion thereof, the ‘impediment’ of pending arbitration
proceedings will cease to exist on affirmation of an existing debt by an arbitration
award. If the arbitration award constituted a new debt, it would make no sense to
provide for the delay of the completion of prescription of the original underlying debt
after the award and s 13(1)(f) would in most cases be rendered superfluous. In my
judgment the sensible and logical approach is that the delay of completion of
prescription in terms of s 13(1)(f) is intended to enable a creditor to apply to make
the arbitration award an order of court in terms of s 31 of the Arbitration Act, before
the debt on which it is based prescribes.
[9] It should be mentioned that different considerations apply to arbitrations under
the Labour Relations Act 66 of 1995 (the LRA). This is illustrated by the judgments in
Myathaza v Johannesburg Metropolitan Bus Service (SOC) Limited t/a Metrobus &
others [2016] ZACC 49; 2018 (1) SA 38 (CC). There Mr Myathaza obtained an
arbitration award reinstating him to his employment. When he approached the
Labour Court some four years later to have the arbitration award made an order of
court, the employer relied on prescription. Four Justices of the Constitutional Court
held that the Act was inconsistent with the LRA and did not apply to the LRA and that
even if it did, a reinstatement arbitration award under the LRA did not constitute a
‘debt’ in terms of the Act. The other four held that the Act was applicable to
proceedings under the LRA and that a claim for unfair dismissal under the LRA was
a ‘debt’ in terms of the Act, but that referral of the dispute to the CCMA interrupted
prescription in terms of s 15(1) of the Act. See also Mogaila v Coca Cola Fortune
(Pty) Limited [2017] ZACC 6; 2018 (1) SA 82 (CC).
[10] In conclusion on this point, reference should be made to the decision in Blaas
v Athanassiou 1991 (1) SA 723 (W). The arbitration agreement in that matter
provided that the award of the arbitrator ‘. . . shall be deemed to be and shall be
treated as if a judgment delivered by a Judge in the Supreme Court of South Africa’.
The court held, no doubt correctly, that inter partes the award had the status of an
order of court. The judgment has been understood to hold that the prescription
period of 30 years applicable to a judgment debt in terms of the Act, applied to the
arbitration award in that matter. See M M Loubser Extinctive Prescription (1996),
pp 41 and 120, J C Saner above pp 3-160 and Primavera above para 12. But that is
not what Hartzenberg J said in Blaas. What he said (at 725H-I), was that the effect of
the agreement was that for a 30 year period ‘. . . the two parties contracted
themselves out of a right to rely against the other on the defence of prescription.’
Thus the judgment was based on a waiver of rights and not on an application of the
30 year prescription period in terms of the Act to an arbitration award.
As to the second:
[11] I am also unable to agree with the second statement, namely that the claim to
make an arbitration award an order of court is a debt that prescribes after three
years. A claim that an arbitration award be made an order of court is not a ‘debt’ in
terms of the Act. In this regard the Constitutional Court has clearly endorsed the
decision of this court in Electricity Supply Commission v Stewarts & Lloyds of SA
(Pty) Ltd 1981 (3) SA 340 (A) at 344E-G, namely that a debt in terms of the Act is an
obligation to pay money, deliver goods or render services. See both the majority
judgment (paras 85-93) and the minority judgment (paras 187-187 and 195) in
Makate v Vodacom Ltd [2016] ZACC 13; 2016 (4) SA 121 (CC). See also Off-Beat
Holiday Club and another v Sanbonani Holiday Spa Shareblock Limited and others
[2017] ZACC 15; 2017 (5) SA 9 (CC) paras 44 and 48. The appellant’s claim to make
the arbitration award an order of court did not require the respondent to perform any
obligation at all, let alone one to pay money, deliver goods or render services.
The appellant merely employed a statutory remedy available to it. This is not entirely
dissimilar to a claim for rectification of a contract, which this court has held not to
constitute a ‘debt’ in terms of the Act. See Boundary Financing Limited v Protea
Property Holdings (Pty) Limited [2008] ZASCA 139; 2009 (3) SA 447 (SCA)
paras 12-14.
[12] It follows that to the extent that contrary views have been expressed in the
judgments of Primavera and Prime Fund Managers, they should not be followed.
[13] As there is no basis for holding that the arbitration award in this matter
created a new debt and prescription did not commence running on date thereof, the
appellant cannot succeed on this point. There is, however, another reason why the
court a quo erred in upholding the defence of prescription.
[14] The respondent raised prescription in the following terms:
‘1.
The matter between parties has since been prescribed in terms of Section 13(1)(f) of
the prescription Act 68 of 1969, which provides that the completion of prescription will
be delayed until one year after the Arbitration proceedings came to an end, for the
Applicant to make an arbitration award an order of court in terms of Section 31 of the
Arbitration Act, 42 of 1965. The Applicant has failed to do so in time.
2.
The arbitration process took place on the 25th of September 2012 and the award was
published on the 21st of December 2012.
3.
The period of [o]ne year has lapsed since the date of publication, to make the award
an order of court in terms of Section 31 of the Arbitration Act, 42 of 1965.’
[15] It is immediately apparent that prescription was raised as if s 13(1)(f) of the
Act provided for a one year period of prescription in respect of an arbitration award.
This proposition formed the basis of the judgment of the court a quo. The proposition
is of course clearly wrong. Section 13(1)(f) provides nothing of the sort. It deals with
the delay in the completion of the running of prescription. The requisite periods of
extinctive prescription in terms of the Act are to be found in s 11 thereof. Applied to
the facts of this case, s 13(1)(f) provides that if the relevant period of prescription in
respect of a debt would, but for the provisions of the subsection, have been
completed before or on within one year of the date of publication of the award on
21 December 2012, the completion of the period of prescription in respect of such
debt would be delayed for one year after 21 December 2012.
[16] As I have said, the appellant’s counter-claim related to ordinary levies, special
levies, a security levy and consumption of electricity. It can be accepted that the
counter-claim encompassed a variety of separate debts. It follows that for the
respondent to succeed she had to prove that one or more of these separate debts
would have prescribed before or on or within a year of the arbitration award.
This entailed proof of the date on which each debt became due. See Gericke v Sack
1978 (1) SA 821 (A) at 827H-828A.
[17] The respondent made no attempt to satisfy this onus. The various debts
clearly became due on different dates and at least some of them would have
become due from month to month. The respondent presented no evidence as to
when any of these debts became due. The uncertainty is compounded by the fact
that it is not possible on the evidence to make any appropriation of the substantial
payments that the respondent made to the appellant prior to the arbitration.
[18] It follows that the defence of prescription had to fail. Counsel for the
respondent properly conceded that in such event, the order of the court a quo must
be replaced with an order granting the appellant’s application with costs.
[19] The following order is issued:
1 The appeal is upheld with costs.
2 The order of the court a quo is set aside and replaced with the following:
‘Prayers 1, 2 and 3 of the notice of motion are granted, with costs.’
_________________________
C H G van der Merwe
Judge of Appeal
APPEARANCES
For Appellant:
A Granova
Instructed by:
Jordaan & Wolberg Attorneys, Johannesburg
Rossouws Attorneys, Bloemfontein
For Respondent:
M C Ntshangase
Instructed by:
Khumalo Attorneys & Associates, Randburg
Maduba 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
23 March 2018
STATUS
Immediate
Brompton Court Body Corporate v Khumalo (398/2017) [2018] ZASCA 27
(23 March 2018)
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 December 2012 the appellant, the body corporate of the Brompton
Court sectional title scheme, obtained an arbitration award in its favour
against the respondent, Ms C F Khumalo. The respondent owned a unit in the
scheme. The arbitration award represented the outstanding balance owed by
the respondent to the appellant in respect of levies, electricity charges and
interest. During March 2014 the appellant approached the Gauteng Division of
the High Court, Johannesburg (the high court) for an order making the
arbitration award an order of court in terms of s 31 of the Arbitration Act 42 of
1965. The respondent opposed the application on the basis that the debt in
question had prescribed in terms of the Prescription Act 68 of 1969. The high
court upheld the defence of prescription and dismissed the appellant’s
application with costs.
On appeal to the Supreme Court of Appeal (SCA), the appellant sought to
have the decision of the high court overturned on the ground that the
arbitration award created a new debt and that a three year prescriptive period
commenced to run only on the date of the award. As the application was
made within three years thereafter, so it was contended, the respondent’s
reliance on prescription was misplaced. The SCA held, however, that the
arbitration award did not create a new debt. It also held that the claim to have
the arbitration award made an order of court, was not a ‘debt’ for purposes of
the Prescription Act. The SCA therefore held that the appellant could not
succeed on this point.
The SCA concluded that the high court erred in approaching the matter as if s
13(1)(f) of the Prescription Act provided for a one year period of prescription in
respect of an arbitration award. The SCA reasoned as follows: Applied to the
facts of this case, s 13(1)(f) provides that if the relevant period of prescription
in respect of a debt would, but for the provisions of this sub-section, have
been completed before or on or within one year of the date of the award, the
completion of the period of prescription in respect of such debt would be
delayed for one year after 21 December 2011. As the arbitration award was
based on a variety of separate debts, the respondent had to prove that one or
more of these separate debts would have prescribed before or on or within a
year of the arbitration award. The respondent made no attempt to satisfy this
onus and therefore the defence of prescription had to fail.
Therefore the SCA today upheld the appeal with costs and substituted the
order of the high court with an order making the arbitration award an order of
that court, with costs. |
1807 | non-electoral | 2011 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 592/10
In the matter between:
JOHANNES KWANDA Appellant
and
THE STATE Respondent
Neutral citation: Kwanda v State (592/10) [2011] ZASCA 50 (30 March
2011)
Coram:
STREICHER, BOSIELO and THERON JJA
Heard:
15 March 2011
Delivered:
30 March 2011
Summary: Arms and ammunition ─ Unlawful possession of firearms and
ammunition in contravention of s 32 of Arms and Ammunition Act 75 of 1969 ─
Joint possession ─ The state must establish facts from which it can be inferred that the
group had intention (animus) to exercise possession of firearms through actual
detentor and actual detentor had the intention to hold on behalf of the group.
___________________________________________________________
ORDER
On appeal from: North Gauteng High Court (Pretoria) (Els and
Mojapelo JJ sitting as court of first instance):
The conviction of the appellant on the charges of contravening ss 32(1)(a)
and 32(1)(e) of the Arms and Ammunition Act 75 of 1969, and the
sentences imposed in respect thereof, are set aside.
___________________________________________________________
JUDGMENT
THERON JA (STREICHER and BOSIELO JJA concurring)
[1] The appellant was one of several accused who stood trial in the
Regional Court, Springs, on various charges related to conspiracy to
commit armed robbery at the Springs branch of ABSA bank (the bank).
The appellant was convicted of conspiracy to commit armed robbery and
various contraventions of the Arms and Ammunition Act 75 of 1969
(unlawful possession of firearms and ammunition) and sentenced to an
effective term of imprisonment of 35 years. On appeal, the High Court
(the then Transvaal Provincial Division) (Els and Mojapelo JJ),
confirmed the convictions in respect of three of the counts: conspiracy
and contravening ss 32(1)(a) and 32(1)(e) of the Act (unlawful possession
of a firearm and ammunition) and set aside the remaining convictions.
The appeal court also reduced the effective term of imprisonment to 25
years. The appellant appeals against his conviction of unlawful
possession of a firearm and ammunition, with the leave of this court.
[2] It is therefore not necessary to deal with the facts relating to the
conviction on the count of conspiracy save in so far as they are relevant to
a determination of this appeal. The evidence showed that members of the
South African Police Service had received information about a planned
robbery at the bank. On 15 April 2000, before the robbery could be
carried out, the appellant and his co-accused were arrested.
[3] Immediately prior to his arrest, the appellant had been the driver of
a white Nissan Maxima vehicle. Two passengers, Isaac Zikalala (accused
10 in the trial court) and Sipho Mahlenche, were with the appellant in the
vehicle. Mahlenche was seated next to the appellant in the front passenger
seat. It was common cause that Mahlenche was in possession of an
AK47, the subject matter of this appeal. There was some dispute as to
whether the appellant was aware of the firearm in Mahlenche’s
possession. Mahlenche absconded during the course of the trial. It was
further common cause that the appellant at no stage had physical
possession of the firearm and its ammunition.
[4] The only question on appeal is whether the state had established
that the appellant possessed the firearm jointly with Mahlenche. In this
regard the state must prove that the appellant had the necessary mental
intention (animus) to possess the firearm. I accept, for the purpose of this
judgment, that the appellant conspired with his co-accused to rob the
bank.
[5] The fact that the appellant conspired with his co-accused to commit
robbery, and even assuming that he was aware that some of his co-
accused possessed firearms for the purpose of committing the robbery,
does not lead to the inference that he possessed such firearms jointly with
his co-accused. In S v Nkosi,1 Marais J said that such an inference is only
justified where ‘the state has established facts from which it can properly
be inferred by a Court that: (a) the group had the intention (animus) to
exercise possession of the guns through the actual detentor and (b) the
actual detentors had the intention to hold the guns on behalf of the
group’.2 Nugent JA, in S v Mbuli,3 referred to the above quoted passage
from Nkosi and commented that Marais J had ‘set out the correct legal
position’.4 In Mbuli, the appellant and his two co-accused were charged
with and convicted of being in possession of a hand grenade that had
been found in their vehicle shortly after they had robbed a bank (this is
the only charge of relevance to this matter). Nugent JA found that the
evidence did not establish that the appellant and his co-accused had
possessed the hand grenade jointly and that it was possible that the hand
grenade had been possessed by only one of them. Nugent JA concluded
with these words:
‘I do not agree that the only reasonable inference from the evidence is that the
accused possessed the hand grenade jointly. It is equally possible that, like the pistols,
the hand grenade was possessed by only one of the accused. Mere knowledge by the
others that he was in possession of a hand grenade, and even acquiescence by them in
its use for fulfilling their common purpose to commit robbery, is not sufficient to
make them joint possessors for purposes of the Act. The evidence does not establish
which of the accused was in possession of the hand grenade and on that charge, in my
view, they were entitled to be acquitted.’5
[6] Adopting the reasoning in Nkosi and Mbuli, and even if the
appellant was aware that Mahlenche was in possession of the firearm,
such knowledge is not sufficient to establish that he had the intention to
1 1998 (1) SACR 284 (W).
2 At 286g-i.
3 2003 (1) SACR 97 (SCA).
4 Para 71.
5 Para 72.
jointly possess the firearm with Mahlenche. In this matter there are no
facts from which it can be inferred that the appellant had the necessary
intention to exercise possession of the firearm through Mahlenche or that
the latter had the intention to hold the firearm on behalf of the appellant.
[7] The conviction of the appellant on the charges of contravening ss
32(1)(a) and 32(1)(e) of the Act and the sentences imposed in respect
thereof, are set aside.
___________________
L Theron
Judge of Appeal
APPEARANCES
APPELLANT:
F van As
Instructed by Pretoria Justice Centre, Pretoria;
Bloemfontein Justice Centre, Bloemfontein.
RESPONDENT: (Ms) P Vorster
Instructed by the Director of Public Prosecutions,
Pretoria;
The 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
30 March 2011
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Kwanda v State
(592/2010) [2011] ZASCA 50(30 March 2011)
The Supreme Court of Appeal (SCA) upheld an appeal against an order of the
North Gauteng High Court, Pretoria. The appellant, Johannes Kwanda, was
convicted of conspiracy to commit armed robbery and contravening ss
32(1)(a) and 32(1)(e) of the Arms and Ammunition Act 75 of 1969 (the Act)
and was sentenced to 25 years imprisonment. The appellant appealed
against his conviction of unlawful possession of a firearm and ammunition.
The appellant and his co-accused were arrested after the South African Police
Service received information about a planned robbery. At the time of the
arrest one of the appellant’s co-accused, Sipho Mahlenche, was in
possession of an AK 47. The question on appeal was whether the state had
established that the appellant possessed the firearm jointly with the co-
accused. In this regard the state had to prove that the appellant had the
necessary mental intention to possess the firearm.
The court held that even if the appellant was aware that Mahlenche was in
possession of the fire arm, such knowledge is not sufficient to establish that
he had the intention to jointly possess the firearm with Mahlenche, neither can
this inference be drawn from the fact that the appellant conspired with his co-
accused to commit the robbery.
Accordingly, the conviction of the appellant on the charges of contravening ss
32(1)(a) and 32(1)(e) of the Act and the sentences imposed in respect
thereof, were set aside. |
1392 | non-electoral | 2010 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 34/10
In the matter between:
PIETRICH FREDERICH GERHARDT CROTS
Appellant
and
JACQUES PRETORIUS
Respondent
Neutral citation:
Crots v Pretorius (34/10) [2010] ZASCA 107
(17 SEPTEMBER 2010)
Coram:
HARMS DP, NAVSA, SNYDERS, MHLANTLA JJA AND
K PILLAY AJA
Heard:
1 SEPTEMBER 2010
Delivered:
17 SEPTEMBER 2010
Summary:
Condictio furtiva – dolus eventualis sufficient to establish -
Defamation – insufficient proof.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Free State High Court (Bloemfontein) (Van der Merwe J and
Ploos van Amstel AJ sitting as court of appeal):
1. The appeal is upheld with costs.
2. The order of the court below is replaced with the following:
a. ‘The appeal is upheld with costs;
b. The order of the court a quo is replaced with the following:
i. The defendant is ordered to pay the plaintiff the amount
of R45 000;
ii. The defendant is ordered to pay interest on the amount of
R45 000 at the rate of 15,5% per annum from 30 October
2006 until date of final payment;
iii. The defendant is ordered to pay the costs of suit,
including the costs of 7 April 2006 and 8 September
2006;
iv. The defendant’s counterclaim is dismissed with costs.’
______________________________________________________________
JUDGMENT
Snyders JA (Harms DP, Navsa, Mhlantla JJA and Pillay AJA concurring)
[1] On 5 August 2005 the appellant discovered that he had become a victim of
stock theft when he found that nine of his gravid heifers had been stolen. His
subsequent investigations led him to institute action in the Kroonstad
Magistrate’s Court against the respondent for payment of R45 000, the
alleged value of the heifers. He alleged that the respondent had stolen and
slaughtered his heifers. In response the respondent instituted a counterclaim
in the amount of R50 000, alleging that the appellant defamed him by telling
third parties that he had stolen the heifers.
[2] The magistrate dismissed the appellant’s claim and upheld the
counterclaim in the amount of R20 000. An appeal to the Free State High
Court (Bloemfontein), (Ploos van Amstel AJ, Van der Merwe J concurring)
was dismissed. Leave to appeal was refused by the high court, but granted on
petition to this court.
[3] The condictio furtiva is a delictual action for the recovery of patrimonial
loss as a result of theft. It is available to an owner or anyone who has an
interest in the stolen thing, against a thief or his heirs.1
[4] The respondent’s version offers all the facts on which this case is to be
decided. He is a stock speculator of seven years’ standing. He knows about
the provisions of the Stock Theft Act 57 of 1959 (the Act). A man who only
1 C G van der Merwe ‘Things’ Joubert (ed) The Law of South Africa (2 ed) vol 27 para 387;
Minister van Verdediging v Van Wyk en andere 1976 (1) SA 397 (T) at 400C and 402G-403B;
Clifford v Farinha 1988 (4) SA 315 (W) at 322G-323F.
introduced himself as Petrus, telephoned him. Petrus offered to sell nine head
of cattle to him. He agreed on the basis that he would pay Petrus the price the
cattle would fetch upon slaughter at the abattoir, less his commission. Petrus
was satisfied with this arrangement. As Petrus had no transport available for
the cattle, the respondent arranged for the collection of the cattle by a private
transporter. Petrus did not disclose and the respondent did not ascertain the
collection point for the cattle. They arranged that Petrus would send
somebody to meet the truck driver at a rendezvous point and accompany him
to where the cattle had to be loaded. Pursuant to the respondent’s
arrangements nine of the appellant’s gravid heifers were collected from his
farm on 5 August 2005, taken to Country Meat abattoir in Kroonstad and
slaughtered.
[5] Despite the respondent’s usual practise to make payment to his customers
seven days after the sale, Petrus telephonically asked him the very next day
for an advance on the money and he agreed. On 5 August 2005 he paid a
R2000
cash
advance
to
Petrus,
without
obtaining
any
form
of
acknowledgement of the payment. Needless to say, that was the last that was
seen or heard of Petrus.
[6] The respondent did not involve himself in the transaction beyond making
the arrangements for the collection of the cattle and delivery to the abattoir.
He made no attempt to comply with the Act. He did not ask for any of Petrus’
details or credentials, nor of the cattle, their breed, age, whether or how they
were branded or ear marked, or the place for collection of the cattle.2 In fact,
he left the Kroonstad area to attend to business in Johannesburg.
[7] The provisions of ss 6 and 8, and potentially s 7, of the Act applied to the
transaction and obliged the respondent to obtain a removal certificate from the
owner of the cattle and to supply a document of identification, signed by him,
to the abattoir. The removal certificate and document of identification are
designed to contain the details of, at least, the owner, the identifying features
of the cattle and their destination.3 The Act aims at preventing the removal
and transport of livestock by persons with no legal entitlement to do so. By his
own admission the respondent knew his obligations in terms of the Act. No
less is to be expected of a livestock speculator. Mr de Waal, the transporter
who testified for the appellant, said that he specifically mentioned to the
respondent that there were no pre-printed removal certificates with the driver
2 GN R1685 published in GG 15990 on 30 September 1994 in terms of s 16 of the Act,
prescribes the details aimed at identification of individual animals with reference to features
like colour, breed, brandmark, earmark, tattoo and sex, which are to be contained in the
documentation required by ss 6, 7 and 8 of the Act.
3 S 6(1) obliges any person, including any agent, who sells any stock to any other person on
his own behalf or on behalf of any other person, to, at the time of delivery of the stock, furnish
such other person with a document of identification which includes details of his full name and
address or the full name and address of the person on whose behalf he was selling,
particulars of the stock, the full name and address of the person to whom the stock was sold,
the date on which the stock was sold and certifying that such stock is his property or that he is
duly authorized by the owner thereof to deal with or dispose of it.
S 7(1) obliges any person who acquires or receives into his possession for the purpose of
sale, from a person who has no known place of residence, any stock, to receive with it a
certificate of no older than 30 days from a person of authority, like a headman, as listed in the
section, which certificate describes the stock and declares that the relevant person is entitled
to dispose of or deal with such stock.
S 8(1) obliges a person who conveys or transports stock of which he is not the owner along
any public road to carry a removal certificate issued to him by the owner of the stock which
certificate is to include the name and address of the owner of the stock, the particulars of the
stock, the place from and to which the stock is being conveyed, the name of the conveyer and
the date of issue.
of his vehicle as they had run out. The respondent undertook to arrange for
De Waal’s driver to be furnished with the appropriate removal certificate, but
he failed to do so.
[8] The respondent claimed that he had no direct knowledge about the theft or
direct intent to steal the appellant’s heifers. This stance served him well in
both the magistrate’s and the high court. The magistrate’s court and the high
court only investigated whether the respondent’s version established direct
intent to steal and concluded that it did not. Therein lies the misdirection that
entitles this court to interfere. The presence of dolus eventualis satisfies the
requirements of theft. The court below did not assess the probabilities in order
to test whether the requirements of dolus eventualis were satisfied.
[9] The respondent will be liable if, on a balance of probabilities, he
recognised the real possibility that Petrus did not have the right to deliver the
cattle to him or that it was somebody else’s cattle and he deliberately shut his
eyes and entered into the transaction, thereby taking the risk of the
consequences if the cattle were being stolen. Knowledge in the form of dolus
eventualis is present if all the objective, factual circumstances justify the
inference on a balance of probabilities that the respondent actually and
subjectively foresaw that someone else had title to the cattle.4
4 See Frankel Pollak Vinderine Inc v Stanton NO 2000 (1) SA 425 (W) at 438E-439J for a
useful discussion of dolus eventualis in a similar context, the actio ad exhibendum.
[10] The transaction between the respondent and Petrus arouses grave
suspicion. The question why Petrus involved the respondent at all when he
could have earned all of the money paid by the abattoir for the cattle, remains
unanswered. If Petrus was a legitimate seller of the cattle who had no
transport, a mere phone call to a transporter was required to arrange the
necessary transport. The respondent offered no explanation. He also did not
explain why the lack of information about Petrus and the cattle did not arouse
his suspicion, or why he made no attempt to ensure compliance with the Act.
The irrational payment of a R2000 cash advance to Petrus without any
acknowledgement of the payment also remains unexplained.
[11] By ensuring that he knew as little as possible about Petrus and the nine
cattle sold to him and by not complying with the Act, the respondent facilitated
the theft of the appellant’s cattle. His failure to make any of the necessary
enquiries overwhelmingly suggests that he was deliberately avoiding
information that would have revealed that Petrus had no rights to the cattle or
that the cattle were owned by someone else. It is inconceivable that the
respondent, a livestock speculator in the area, would not have been able to
ascertain the ownership of the cattle from the earmarks and tattoos that they
carried or the location from which they were collected. The evidence was that
all the cattle were earmarked and tattooed with the registered marks of the
appellant and were collected from the appellant’s farm.
[12] The respondent proceeded with the transaction recklessly and
deliberately failed to comply with the provisions of the Act. His professed
ignorance of the theft in these circumstances is so unreasonable that it cannot
be accepted. The respondent deliberately shut his eyes to the real and glaring
possibility that he was facilitating the theft of cattle, reconciled himself to the
risk and took it. By so doing he participated in the theft.
[13] The appellant, after due expert notice testified as a farmer and someone
who used to be in the business of marketing and selling livestock. He stated
the value of his nine gravid heifers to have been R5 000 each. He also
testified that at an auction in the area shortly after the theft heifers of a similar
age, but not with calf, fetched prices of over R5000 each. The evidence was
not disputed and no alternative value was suggested. The only dispute raised
was a denial that the heifers were recently with calf. As the respondent did not
attempt to show how this denial would affect the value of R5000, the dispute
is irrelevant.
[14] The respondent’s counterclaim for defamation was granted in the amount
of R20 000. There are three problems with this conclusion. First the
respondent did not plead to whom the defamation was published, second it
was never put to the appellant who the third parties were that publication was
allegedly made to and third the evidence tendered does not establish the
cause of action.
[15] Publication is an essential requirement of defamation that must be
pleaded and proved. The names of the persons to whom the defamatory
remarks were made and who were to be called as witnesses have to be
pleaded and disclosed during cross-examination.5 The reasons are apparent.
Apart from avoiding surprise the identity of the persons involved is also
relevant to enable the defendant to raise appropriate defences. For instance,
depending on who the person is, the defendant may rely on privilege. The
respondent attempted to meet this obligation by pleading that the appellant
made defamatory remarks to third parties to the effect that the respondent
stole his heifers. Who the third parties were, was not alleged. During his
evidence the respondent also did not disclose the identity of the third parties.
During cross-examination the appellant denied that he made defamatory
statements to third parties. The following broad allegation was then put to him:
‘. . . indien nodig gaan daar getuies geroep word wat gaan kom sê u het ook
teenoor hulle hierdie bewering [dat die verweerder u verse gesteel het]
gemaak, ek wil hê u moet mooi dink, Karoo Ochse byvoorbeeld?’ 6
The appellant not only denied the allegation, he challenged the respondent to
call the witnesses. The appellant was never given the opportunity to respond
to the identity of those to whom he allegedly published the alleged defamatory
remarks. If a witness is not given the opportunity to respond to an aspect, it
5 International Tobacco Co (SA) Ltd v United Tobacco Co (South) Ltd (4) 1955 (2) SA 40 (W);
Mograbi v Miller 1956 (4) SA 239 (T).
6 My translation: ‘. . . if necessary, witnesses are going to be called that would say you made
the allegation [that the defendant stole your heifers] to them as well, I want you to think
carefully, for example, persons from Karoo Ochse?’
would be unfair to reject his evidence on that aspect.7 The respondent failed
to adequately plead publication to the persons to whom it was allegedly made,
to testify to that or to confront the appellant with the identity of that person or
persons to allow the appellant a fair opportunity to respond.
[16] Mr Hanekom testified to the alleged publication for the respondent. He
was in the employ of a business previously known as Karoo Ochse. His vague
evidence was that a ‘long time ago’ he had a conversation with the appellant
which he ‘could not really remember’ or could not contextualise, but that it
‘became apparent’ during the conversation that the respondent stole nine of
the appellant’s heifers, that was ‘more or less’ what the appellant ‘alluded to’.8
The evidence of Hanekom is simply too vague to support the defamation
pleaded.
[17] For these reasons the respondent’s counterclaim should not have been
upheld.
[18] In the result I make the following order:
18.1
The appeal is upheld with costs;
18.2
The order of the court below is replaced with the following:
a. ‘The appeal is upheld with costs;
7 President of the Republic of South Africa and others v South African Rugby Football Union
and others 2000 (1) SA 1 (CC) paras 61 to 63.
8 The phrases quoted are my translations for the following: ‘lank terug’, ‘kan nie rêrig onthou’ ,
‘aan die lig gekom’, ‘min of meer’ and ‘gesinspeel’.
b. The order of the court a quo is replaced with the following:
i. The defendant is ordered to pay the plaintiff the amount
of R45 000;
ii. The defendant is ordered to pay interest on the amount of
R45 000 at the rate of 15,5% per annum from 30 October
2006 until date of final payment;
iii. The defendant is ordered to pay the costs of suit,
including the costs of 7 April 2006 and 8 September
2006;
iv. The defendant’s counterclaim is dismissed with costs.’
_________________
S SNYDERS
JUDGE OF APPEAL
APPEARANCES:
For appellant:
N Snellenburg
Instructed by Du Randt & Louw, Kroonstad,
Rosendorff Reitz Barry, Bloemfontein.
For respondent:
J G Gilliland
Instructed by Grimbeek van Rooyen & vennotte,
Kroonstad,
Quinton Grimbeek Prokureurs, 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 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.
* * *
Crots v Pretorius (34/10) [2010] ZASCA 107
When a livestock speculator buys cattle that he has no details of from a
person he knows nothing about and deliberately fails to comply with the
provisions of the Stock Theft Act 57 of 1959, his actions amount to theft of the
livestock. The instincts of Mr Crots, the victim of the theft, about right and
wrong caused him to pursue this matter since 2004 despite successive losses
in the magistrate’s court and the high court. He has now been shown by the
Supreme Court of Appeal to have been right all along.
During August 2004 nine of Crots’ gravid heifers disappeared from his farm.
He noticed tyre tracks at the likely place where the heifers were loaded and
recognised it as belonging to a vehicle of a local transporter. The local
transporter confirmed that nine heifers were collected by his truck on the
instruction of a livestock speculator from the area, Mr Pretorius. Pretorius
admitted that he instructed a vehicle to collect nine heifers and deliver them to
the abattoir where they were promptly slaughtered. Crots sued Pretorius for
the value of the heifers. He denied any knowledge of the theft, saying that he
bought the heifers from a man that was unknown to him, called Petrus,
suggesting that if the cattle were stolen, Petrus stole them and not him. He
counterclaimed against Crots for saying that he stole the heifers.
The Supreme Court of Appeal found that Pretorius, who knows the livestock
trade and the provisions of the Stock Theft Act, was part of the theft of the
Crots’ heifers. It found that Pretorius, by making sure that he knew nothing
about Petrus and the nine heifers and by deliberately not complying with the
Stock Theft Act, facilitated and was part of the theft of the heifers. Pretorius
was ordered to pay R45 000 with interest to Crots.
The decision of the magistrate’s court that Crots was to pay R20 000 in
damages for defamation to Pretorius was also set aside. The Supreme Court
of Appeal found that there was not sufficient evidence that Crots told anybody
that Pretorius stole his heifers. |
2910 | non-electoral | 2015 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 685/2013
Reportable
In the matter between:
GREATER TZANEEN MUNICIPALITY Appellant
and
ANDRE JEAN JACQUES LE GRANGE Respondent
Neutral citation: Greater Tzaneen Municipality v Le Grange (685/2013) [2015]
ZASCA 17 (18 March 2015)
Coram: Brand, Leach, Willis, Zondi JJA and Dambuza AJA
Heard: 23 February 2015
Delivered: 18 March 2015
Summary: Jurisdiction – an undertaking to employ in a contract is not a matter
falling within the purview of s 157 of the Labour Relations Act. – the high court has
jurisdiction – rectification – on the evidence the contract was not truly reflective of the
intention of the parties and agreement properly rectified.
____________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: North Gauteng High Court, Pretoria (Hiemstra AJ sitting as court
of first instance):
‘The appeal is dismissed with costs, such costs to include the costs of the application
for an interdict’.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Dambuza AJ (Brand, Leach, Willis and Zondi JJA concurring):
[1] This appeal is with the leave of this court, against the judgment of the North
Gauteng High Court, Pretoria (Hiemstra AJ), dismissing an application by the
appellant (municipality) to have the respondent (Mr Le Grange) interdicted from
accessing the municipal premises as an employee of the municipality. The court a
quo also rectified an agreement concluded between the municipality and Mr Le
Grange. Before us counsel for the municipality informed us that the interdict
originally sought by the municipality had become academic and that the
municipality was abandoning its appeal and tendering costs in so far as it related
to that issue. What remained for determination was the appeal against rectification
of the agreement.
[2] The agreement at the centre of the dispute between the parties, was
concluded on 9 April 2010. Prior to the conclusion of the agreement Mr Le Grange
had been employed by the municipality as the ‘Head: Section Finance
Expenditure’. He had been employed by the municipality for the 17 years
preceding the conclusion of the agreement. In terms of the agreement Mr Le
Grange took up employment with the municipality as the chief financial officer
(CFO) for a period of three years, starting from 1 December 2009 until 30 June
2012. Upon the expiry of the three year period, Mr Le Grange continued to present
himself at the premises of the municipality, insisting that the municipality had an
obligation to keep him in his employ.
[3] The municipality denied that it was obliged to employ Mr Le Grange.
Instead, on 7 July 2012, the municipality approached the high court, on an urgent
basis, seeking an order that Mr Le Grange be interdicted from accessing the
municipal premises as an employee of the municipality and that he be ordered to
return the access cards with which he had been provided as an employee. The
municipality contended that Mr Le Grange’s right to access the municipality
premises as an employee of the municipality ceased when the term of his
employment as CFO of the municipality expired.
[4] Mr Le Grange opposed the application brought by the municipality and
asserted his right of continued presence at the municipal premises. He relied on a
portion of clause 2.3 of the agreement which, he contended, entitled him to a
further contract of employment with the municipality. He brought a counter-
application in which he sought to enforce his right to a contract of that kind. He
also sought rectification of the agreement in terms more fully set out in the
paragraphs that follow.
[5] The high court dismissed the application for an interdict, holding that no
authorisation for institution of the court proceedings by the municipality had been
shown. It then granted an order for rectification of the agreement and found that on
expiry of Mr Le Grange’s term of employment as CFO, the municipality was
obliged to employ him as provided in the rectified agreement.
[6] It was not in dispute, both before the high court and in this court, that in its
original form, and as signed by Mr Le Grange, clause 2.3 of the agreement
provided that:
‘2.3
It is specifically recorded that there is no expectation that this Contract will be
renewed or extended beyond the term referred to in clause 2.2 [the three year term]. The
Employer’s decision not to renew or extend the contract shall not constitute an unfair
dismissal and the Employee shall not be entitled to any form of compensation.
2.3.1 However, during the discussions with the Mayor regarding the short period of the
Contract, it was agreed that the Employer, in the case of non-renewal or extension of this
contract will endeavour to suitably accommodate the Employee in a permanent position
on the service register that fits his status, qualifications and experience.’ (My emphasis.)
[7] The order for rectification of the agreement provided for replacement of the
word ‘endeavour’ in clause 2.3.1 with the words ‘be obliged’. It was common cause
that, about a month into Mr Le Grange’s term of employment as CFO, Mr
Mangena, the municipal manager at the time, deleted clause 2.3.1 from a copy of
the agreement and signed that copy on behalf of the municipality (on 19 April
2010).
[8] Subsequent to the deletion of clause 2.3.1 there was an exchange of
correspondence between Mr Le Grange (through his attorneys) and the
municipality on the propriety of the deletion of the clause. Essentially, Mr Le
Grange maintained that he had concluded an agreement with the municipality in
the terms set out in the original agreement. He also lodged a grievance with the
Mayor protesting the purported amendment to the agreement. The dispute
remained unresolved until the expiry of Mr Le Grange’s term of employment as the
chief financial officer (CFO).
[9] The appeal against rectification is premised, mainly, upon two grounds. The
municipality contends, first, that Mr Le Grange had failed to establish that when
the agreement was concluded both parties were labouring under a common
mistake. Its second contention was that because the remedy sought by Mr Le
Grange is founded in the provisions of the Labour Relations Act 66 of 1995 (LRA),
the high court (and this court) had no jurisdiction to entertain the counter-
application. This submission extended to an argument that employment to the
position(s) contemplated by Mr Le Grange required approval of the municipal
council which had not been obtained prior to the conclusion of the agreement and
therefore the agreement was illegal and unenforceable. For that reason it could
not be rectified. Although the high court did not pertinently consider the issue of
jurisdiction, it is expedient that I deal with it before considering the other grounds
on which the appeal is founded.
[10] Jurisdiction
The contention that the high court had no jurisdiction to hear Mr Le Grange’s
complaint was foreshadowed, rather obliquely, in the municipality’s founding
affidavit. The allegation was that, rather than repeatedly presenting himself at the
municipal offices and disturbing the peace, Mr Le Grange should have approached
the labour court to assert his claim for ‘reinstatement’. In the answering affidavit,
Mr Le Grange denied that he sought re-instatement and explained that his claim
was for specific performance of a term of an agreement. Counsel for the
municipality persisted before us that in terms of s 77(3) of the Basic Conditions of
Employment Act1 (the BCEA), only the labour court had jurisdiction to hear the
claim brought by Mr Le Grange as the claim was founded on s 186(2)(c) of the
LRA.2 The argument was that Mr Le Grange’s case was essentially one of unfair
labour practice by the municipality in refusing to reinstate him to employment. This
is incorrect.
[11] First, the provisions of the LRA did not arise in this case. The remedy
sought by Mr Le Grange was not ‘re-instatement’ to a position previously held with
the municipality; nor did he seek renewal of the expired agreement. What he
sought was specific performance of clause 2.3.1 of the agreement as reflected in
the declaratory order. In Gcaba v Minister for Safety and Security 2010 (1) SA 238
(CC) the Constitutional Court explained the basis on which the nature of issues
raised in proceedings must be determined. That court held that jurisdiction is
determined on the basis of the pleadings and not on the substantive merits of the
case. Mr Le Grange had pleaded, as the relief he sought, the common law remedy
of specific performance, based on the fact that the municipality was obliged, in
terms of the agreement, to employ him after 30 June 2012. The fact that the relief
sought related to employment did not necessarily mean that it was rooted in the
provisions of the LRA. And the fact that Mr Le Grange had been employed by the
municipality prior to 30 June 2012 did not mean that he was seeking re-
instatement. In Makhanya v University of Zululand 2010 (1) SA 62 (SCA) this court
held that:
‘When a claimant says that the claim arises from the infringement of the common-law right
to enforce a contract, then that is the claim, as a fact, and the court must deal with it
accordingly. 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
1 Basic Conditions of Employment Act 75 of 1997.
2 Section 186 of the LRA deals with the meaning of dismissal and unfair labour practice. Section
191 provides that if there is a dispute about the fairness of a dismissal or a dispute about an unfair
labour practice the dismissed employee or the employee alleging an unfair labour practice may
refer the dispute in writing for conciliation or arbitration.
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.’3
[12] Further, even if Mr Le Grange was seeking reinstatement, s 77(3) of the
BCEA on which the municipality relied (perhaps unwittingly), provides that:
‘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.’
In Gcaba4 the Constitutional Court clarified the issue concerning the overlap in
jurisdiction of the labour court and the high court in respect of employment matters
by explaining that the labour court has exclusive jurisdiction over those matters
which the LRA prescribes should be determined by it.5 That court, however,
endorsed the concurrency of jurisdiction between the two courts6 but warned that s
157(2) should not be understood to extend the jurisdiction of the high court to
determine issues which, in terms of s 157(1) of the LRA, fall exclusively under the
jurisdiction of the Labour Court.7
[13] In this case the municipality brought its application for an interdict in the
high court. In its founding affidavit it set out what it considered to be the relevant
portion(s) of the agreement as the ‘background facts to the application’. It pleaded
that because the agreement had expired, Mr Le Grange’s right to access the
municipal premises as an employee had ceased. The defence tendered by Mr Le
Grange was, in essence, that the agreement went beyond the terms set out in the
founding affidavit; it also regulated certain rights and obligations of the parties after
30 June 2012. Therefore, even if Mr Le Grange’s claim had been founded in the
LRA it would not have been acceptable for the municipality to plead that Mr Le
Grange be directed to approach the labour court. Such a course would result in an
3 At 82G-I at 71G-I.
4 Supra, paras 70 – 72.
5 S157(1) of LRA. Such matters include review of arbitration awards in terms of s 145 of the LRA and
those regulated by s 186 of the LRA.
6 S157(2) of the LRA provides that: ‘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 Republic of South Africa, 1996, and arising from –
(a) Employment and from labour relations;
(b) any dispute over constitutionality of any 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’.
7 At 261D-E
undesirable duplication of proceedings in which essentially the same disputes
would arise. The contention that Mr Le Grange should have approached the labour
court was therefore misplaced.
[14] Rectification
In granting the order for rectification, the high court found that Mr Le Grange had
proved that both him and the municipality had intended that the municipality be
obliged to offer employment to Mr Le Grange on expiry of his term of employment
as chief financial officer. The challenge against the finding of the high court was
based on two grounds: that Mr Le Grange had failed to prove a mistake common
to both parties at the time of the conclusion of the agreement and that the
agreement fell foul of certain statutory requirements and was therefore illegal and
could not be rectified. I start with the last.
[15] The contention by the municipality was that the agreement could not be
rectified as it was tainted by an underlying illegality in that it was concluded with
the mayor who lacked the necessary power to do so. This argument on behalf of
the municipality was based on an assumption that Mr Le Grange sought to be
employed to a position regulated by s 57 of the Local Government: Municipal
Systems Act 32 of 2000. This section regulates the terms of employment contracts
for municipal managers and managers directly accountable to municipal
managers. In terms of s 56 of the same Act, municipal managers and managers
directly accountable to the municipal manager must be appointed by the municipal
council in consultation with the municipal manager.
[16] This description of Mr Le Grange’s case was wrong on three fronts. It was
not Mr Le Grange’s case that the agreement was that he would be employed to a
s 57 position; he also did not seek employment to such a position. His case was
that the municipality had undertaken to employ him in a ‘permanent position on the
service register that fits his status, qualification and experience’. All that he sought
was to be employed as agreed. In fact, the evidence was that on expiry of his term
as the CFO he had demanded to be employed in a position similar or the one he
had occupied prior to the conclusion of the agreement. By all accounts such
position was not a s 57 position.
[17] It was also not Mr Le Grange’s case that he had concluded the agreement
with the mayor. His case had always been that the agreement was concluded with
the council. The agreement reflects that to have been the case. The fact that he
had held discussions with the mayor relating to the agreement is irrelevant.
Therefore the argument that the agreement was unenforceable did not assist the
municipality.
[18] In the end, whether the agreement was eligible for rectification fell to be
determined on whether the evidence tendered proved that the agreement, in
particular, clause 2.3.1, was not a correct recordal of the true agreement between
Mr Le Grange and the municipality. In essence the enquiry was whether use of the
word ‘endeavour’ in clause 2.3.1 was due to a mistaken understanding of the
meaning thereof by both parties, as Mr Le Grange contended.
[19] The municipality insisted that the determination of the intention of the
parties had to be limited to the word ‘endeavour’ as used in the agreement without
recourse to the background against which the agreement was concluded. On the
wording of the agreement, the municipality was only obliged to endeavour to
employ Mr Le Grange, so it was argued. This interpretation of the agreement
impermissibly isolates the word ‘endeavour’ from the rest of clause 2.3.1. The
clause sets out the background and motivation for the agreement to employ Mr Le
Grange in a permanent position after 30 June 2012. In addition Mr Le Grange
tendered further evidence in respect of the background to the conclusion of the
agreement. The evidence was to the effect that it was Mr Le Grange and Mr
Visser, the municipality’s human resource manager at the time, who prepared the
agreement. In his affidavit, filed in support of Mr Le Grange, Mr Visser explained
that when Mr Le Grange was recommended for the position of CFO, he (Mr Le
Grange) advised the municipal council that he would accept the position on
condition he was ‘provided with security that he would not be without an
appointment/work after 30 June 2012’. It was on this basis that Mr Visser was
instructed to draft the agreement. He explained that the word ‘endeavour’ was
used as a translation for the Afrikaans word ‘onderneem’, which both he and Mr Le
Grange, being Afrikaans speaking, had intended to use in the agreement.
[20] Both Mr Le Grange and Mr Visser highlighted in their evidence that, at the
discussions relating to the three year CFO position, Mr Le Grange had insisted on
protecting the security of his long term employment with the municipality. This
evidence is consistent with the inclusion of clause 2.3.1 in the agreement.8 As
against this evidence, the municipality tendered the evidence of Mr Thulani Twala,
the municipal manager who took office at some stage subsequent to Mr Mangena.
Mr Twala denied that the use of the word ‘endeavour’ was a mistake. However, Mr
Twala did not set out the basis on which he could attest to the facts relating to the
conclusion of the agreement. There was no evidence indicating that he was
present at any stage during the negotiations relating to the conclusion of the
agreement.
[21] On the evidence before the high court, Mr Twala could only have hearsay
knowledge about the terms on which the agreement was concluded. There was no
evidence tendered on behalf of the municipality, by a person who was privy to the
negotiations. The high court could only determine the true intention of the parties
on credible evidence before it. Only the evidence of Mr Le Grange and Mr Visser
was properly before the high court and the finding of that court, that the use of the
word ‘endeavour’ was attributable to an erroneous translation of the Afrikaans
word ‘onderneem’ by Mr Le Grange and Mr Visser, was properly made. A proper
case for rectification had been made and the declarator was correctly granted.
Consequently the appeal must fail.
[23] In the result, the following order is made:
‘The appeal is dismissed with costs’.
______________
N Dambuza
Acting Judge of Appeal
8 The evidence was that it was only after an (unspecified) inquiry was made by ‘National Treasury
regarding the clause that Mr Mangena deleted it. Although in the correspondence following from
the deletion of clause 2.3.1, the municipal (through Mr Mangena) disputed that the clause had been
properly included in the agreement, in its replying papers to the counter-application it disavowed Mr
Mangena’s attempts at altering the agreement, by deletion of the clause. It only contended that Mr
Le Grange’s interpretation of the clause as entitling him to ‘remain’ in the employment of the
municipality was incorrect as the clause only compelled the municipality to ‘endeavour’ to employ
Mr Le Grange. The argument was that Mr Le Grange had not proved that the municipality had
failed to meet its obligation to ‘endeavour’ to employ him.’
APPEARANCES
For Appellant:
GN Moshoana
Instructed by:
Mushoana Inc, Pretoria
Lovius Block Attorneys, Bloemfontein
For Respondent:
JS Stone
Instructed by:
Kruger Nagel & De Jager Attorneys,
Tzaneen
Bezuidenhouts 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
18 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.
Greater Tzaneen Municipality v Andre Jean Jacques Le Grange (685/2013) [2015]
ZASCA 17
MEDIA STATEMENT
Today the Supreme Court of Appeal (SCA) dismissed the appeal by the Greater Tzaneen
Municipality (the appellant) and upheld an order of the North Gauteng High Court, Pretoria, that the
municipality is obliged to employ the respondent, Mr Le Grange
The two issues before the SCA were (i) whether the high court had jurisdiction to hear a matter
concerning a contractual agreement to employ a person, or whether such jurisdiction was excluded
by s 157 of the Labour Relations Act 66 of 1995 (LRA) and (ii) whether the high court was correct in
ordering the rectification of the contract in question and declaring that the municipality was obliged to
employ Mr Le Grange..
Mr Le Grange, entered into an employment contract with the Greater Tzaneen Municipality (the
municipality), in terms of which he would be employed as the municipality‟s chief financial officer for
three years, and upon expiration of this period the municipality would „endeavour to suitably
accommodate [Mr Le Grange] in a permanent position on [its] service register....‟ Upon the expiry of
the three year period, the municipality refused to re-employ Mr Le Grange, and applied to the high
court for an order interdicting him from accessing the municipal premises as an employee. Mr Le
Grange opposed this interdict on the basis that the municipality was obligated to re-employ him, and
brought a counter-application in which he sought to assert his right to be re-employed and to rectify
the contract in question by replacing, in the contract, the word “endeavour” with “be obliged”. The
basis for the rectification was that during the negotiation of the contract it was understood by all
involved that in view of the 17 years he had already spent working for the municipality, Mr Le Grange
required secure employment following the three year period. Both Mr Le Grange and the drafter of the
contract (the municipality‟s human resource manager) had been under the mistaken belief that the
word „endeavour‟ in fact entailed an obligation; as they both believed that it was the correct translation
for the Afrikaans word „onderneem‟ (which is closer to „undertake‟).
The high court dismissed the municipality‟s application for the interdict, granted Mr Le Grange‟s order
for rectification of the agreement, and declared that the municipality was obliged to employ him.
Before the SCA, the municipality argued that the high court had lacked jurisdiction to hear Mr Le
Grange‟s complaint because he was essentially requesting a re-instatement, which was a labour
matter that could only be brought before the labour court. The SCA rejected this submission on the
basis that the remedy sought by Mr Le Grange was specific performance of a contractual term and
was not based on any provisions of the LRA. In addition, the provision of the Basic Conditions of
Employment Act 75 of 1997 (BCEA) relied upon by the municipality specifically allowed for concurrent
jurisdiction of the labour and civil courts in matters of employment contracts.
The municipality further argued that the order for rectification should not have been granted on the
basis that (i) the rectification would result in the contract being in conflict with the Local Government:
Municipal Systems Act 32 of 2000 (MSA) and (ii) that Mr Le Grange had failed to prove that the word
„endeavour‟ inaccurately reflected the intentions of the parties. The SCA rejected both arguments. It
held that the MSA only applied in respect of certain municipal posts, which were not relevant in this
matter. And the municipality had failed to tender any valid first-hand evidence to contradict the
background circumstances and context of the contractual negotiations presented by Mr Le Grange.
Accordingly, the SCA held that the high court had properly granted the order for rectification.
-- ends --- |
3757 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 60/2021
In the matter between:
SEKOKO MAMETJA INCORPORATED ATTORNEYS
APPELLANT
and
FETAKGOMO TUBATSE LOCAL MUNICIPALITY
RESPONDENT
Neutral citation:
Sekoko Mametja Incorporated Attorneys v Fetakgomo Tubatse Local
Municipality (Case No. 60/2021) [2022] ZASCA 28 (18 March 2022)
Coram:
PETSE DP, VAN DER MERWE, DLODLO, MBATHA and GORVEN
JJA
Heard:
23 February 2022
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 18 March
2022.
Summary:
Local Government – administrative law – tender – review – legality – tender
set aside as unlawful – discretionary remedy under s 172(1)(b) of the Constitution –
services rendered to the respondent prior to successful legality review – money award to
the appellant appropriate.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Semenya J sitting as
court of first instance):
The appeal is upheld with no order as to costs.
Paragraph (iv) of the order of the court a quo is set aside and replaced with the
following:
‘(iv)
The applicant (the municipality) is ordered to pay the respondent an amount of
R436 250.30 plus interest of 10.25% per annum calculated as from 26 November 2019
to date of payment. No order is made in respect of the costs of the counter-application.’
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Dlodlo JA: (Petse DP, Van der Merwe, Mbatha and Gorven JJA concurring):
[1] Fetakgomo Tubatse Local Municipality (the municipality) brought a review based
on legality in which it sought to review and set aside its own decision to award a tender
to Sekoko Mametja Incorporated Attorneys (Sekoko Attorneys) on the grounds set out
hereunder. Sekoko Attorneys opposed the review application and also counter applied
for payment of the outstanding amount in respect of the invoices already delivered to the
municipality covering the period January 2018 to May 2018 for services rendered.
[2] The municipality published an invitation to tender for ‘the provision of debt
collection services for a period of three years as and when required’ (the tender). Sekoko
Attorneys submitted a tender in response. The Municipality’s Bid Evaluation Committee
and Adjudication Committee awarded the tender to Sekoko Attorneys and four other
applicants. The municipality required the collection of debts owed to it. Accordingly, it
gave Sekoko Attorneys a list of debtors from which it was to recover money. Sekoko
Attorneys collected sums of money owed to the municipality and issued invoices for
payment in accordance with the tender.
[3] In April 2018, the municipality realised that Sekoko attorneys had submitted a non-
responsive bid in contravention of clause 43 of the Municipality’s Supply Chain
Management Policy which inter alia reads:
‘No award above R15 000 may be made in terms of this policy to a person whose tax matters
have not been declared by South African Revenue Services to be in order.’
According to the municipality, Sekoko Attorneys had failed to provide any such proof. This
was the basis of the legality revue.
[4] On 15 May 2018, the municipality addressed a letter to Sekoko Attorneys and
sought to cancel the appointment with immediate effect citing the two reasons, namely,
(a) failure to provide an original valid Tax Certificate; (b) failure to provide proof of a valid
CSD report. The letter referred to above categorically stated that the above constituted
‘non-compliance with material terms of the bid’. Sekoko Attorneys, however, did not
accept the termination of its appointment. It delivered an answering affidavit which also
covered a counter application in which it sought payment of the outstanding amount in
respect of the invoices delivered to the municipality during the period January 2018 to
May 2018. These invoices totalled R438 260.30.
[5] The municipality did not oppose the counter application. It did not file any
answering affidavit to the counter application. The municipality accepted that the invoiced
work had been performed by Sekoko Attorneys. However, there was no attempt made by
it to motivate why Sekoko Attorneys was not entitled to payment for services already
rendered other than to say that the award of the tender was void ab initio.
[6] The application was brought in the Limpopo Division of the High Court, Polokwane
(the high court) before Semenya J. The high court considered whether or not the
municipality was entitled to an order in terms of s 172(1)(a) of the Constitution. 1 Section
172(1)(a) of the Constitution provides:
‘When deciding a constitutional matter within its powers, a court –
(a)
must declare that any law or conduct that is inconsistent with the Constitution is invalid to
the extent of its inconsistency’.
[7] Having found that the tender award was inconsistent with the Constitution and was
therefore unlawful and invalid, the high court also proceeded to dismiss Sekoko Attorneys’
counterclaim with costs. The high court made a finding that Sekoko Attorneys had
performed the tasks in accordance with the terms of the agreement to the satisfaction of
the municipality. It reasoned that even though the municipality failed to dispute the
counter application, Sekoko Attorneys ‘cannot be allowed to derive a benefit out of an
unlawful contract’.
[8] In this Court, Sekoko Attorneys is not appealing the correctness of the declaration
of invalidity of the tender awarded to it by the municipality. The appeal, which is before
us with the leave of the high court, deals exclusively with the dismissal of its counter
application for payment for the services rendered by it to the municipality prior to the
review and cancellation of the tender. It is correct that Sekoko Attorneys initially disputed
that the municipality was entitled to a declarator based on s 172 (1)(a) of the Constitution.
That much is clear from the answering affidavit. Its argument before this Court is simply
that an order declaring the decision to award the tender to it having been sought and
obtained, it was still entitled to payment based on the provisions of s 172(1)(b) of the
Constitution. This provides that a court, having declared conduct such as the award of a
tender invalid:
‘. . . may make any order that is just and equitable, including –
(i) an order limiting the retrospective effect of the declaration of invalidity; and
(ii) an order suspending the declaration of invalidity for any period and on any condition, to
allow the competent authority to correct the defect.’
1 Section 172 of the Constitution of the Republic of South Africa, 1996.
[9] The criticism of the dismissal by the high court of the counterclaim is that it failed
to consider whether, despite correctly holding that the tender was void ab initio, an order
should have been made under these provisions. This is not novel. It is incumbent on a
court making an order of invalidity under s 172(1)(a) to then invoke the provisions of
s 172(1)(b) in considering whether or not to make an order which is just and equitable.
This the high court did not do. It clearly could not enforce payment under a void tender
but it could consider whether an amount should be paid on the basis that it was just and
equitable for the municipality to do so.
[10] Moseneke DCJ had given guidance in this regard. In Steenkamp NO v Provincial
Tender Board of the Eastern Cape,2 he said the following regarding the appropriate
remedy:
‘It goes without saying that every improper performance of an administrative function would
implicate the Constitution and entitle the aggrieved party to appropriate relief. In each case the
remedy must fit the injury. The remedy must be fair to those affected by it and yet vindicate
effectively the right violated. It must be just and equitable in the light of the facts, the implicated
constitutional principles, if any, and the controlling law. It is nonetheless appropriate to note that
ordinarily a breach of administrative justice attracts public law remedies and not private law
remedies. The purpose of a public law remedy is to pre-empt or correct or reverse an improper
administrative function. In some instances the remedy takes the form of an order to make or not
to make a particular decision or an order declaring rights or an injunction to furnish reasons for
an adverse decision. Ultimately the purpose of a public remedy is to afford the prejudiced party
administrative justice, to advance efficient and effective public administration compelled by
constitutional precepts and at a broader level, to entrench the rule of law.’ (Footnote omitted.)
If properly examined and considered, the facts of each matter will often reveal whether
an appropriate remedy is necessary. Once that has been established, the remedy must
be crafted to ameliorate the injustice of suffering a loss that can be avoided.
2 Steenkamp NO v Provincial Tender Board of the Eastern Cape (CCT71/05) [2006] ZACC 16; 2007 (3) SA
121 (CC); 2007 (3) BCLR CC para 29.
[11] In Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd
and Others,3 Froneman J stated:
‘The apparent anomaly that an unlawful act can produce legally effective consequences is not
one that admits easy and consistently logical solutions. But then the law often is a pragmatic blend
of logic and experience. The apparent rigour of declaring conduct in conflict with the Constitution
and PAJA unlawful is ameliorated in both the Constitution and PAJA by providing for a just and
equitable remedy in its wake. I do not think that it is wise to attempt to lay down inflexible rules in
determining a just and equitable remedy following upon a declaration of unlawful administrative
action. The rule of law must never be relinquished, but the circumstances of each case must be
examined in order to determine whether factual certainty requires some amelioration of legality
and, if so, to what extent. The approach taken will depend on the kind of challenge presented –
direct or collateral; the interests involved and the extent or materiality of the breach of the
constitutional right to just administrative action in each particular case.’ (Footnotes omitted.)
[12] The situation in State Information Technology Agency SOC Ltd v Gijima Holdings
(Pty) Ltd4 was worse compared to what transpired in the present appeal. At least in the
matter at hand, an agreement was concluded between the parties following a competitive
bidding process. In Gijima, SITA concluded an agreement without any competitive
process being followed. Despite this, the Constitutional Court dealt with the appropriate
remedy as follows:
‘[53] However, under section 172(1)(b) of the Constitution, a court deciding a constitutional matter
has a wide remedial power. It is empowered to make “any order that is just and equitable”. So
wide is that power that it is bounded only by considerations of justice and equity. Here it must
count for quite a lot that SITA has delayed for just under 22 months before seeking to have the
decision reviewed. Also, from the outset, Gijima was concerned whether the award of the contract
complied with legal prescripts. As a result, it raised the issue with SITA repeatedly. SITA assured
it that a proper procurement process had been followed.
[54] Overall, it seems to us that justice and equity dictate that, despite the invalidity of the award
of the DoD agreement, SITA must not benefit from having given Gijima false assurances and from
its own undue delay in instituting proceedings. Gijima may well have performed in terms of the
3 Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others [2010] ZACC
26; 2011 (4) SA 113 (CC); 2011 (3) BCLR 229 (CC) para 85.
4 State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd [2017] ZACC 40; 2018 (2)
BCLR 240 (CC); 2018 (2) SA 23 (CC) paras 53 and 54 (Footnote omitted).
contract, while SITA sat idly by and only raised the question of the invalidity of the contract when
Gijima instituted arbitration proceedings. In the circumstances, a just and equitable remedy is that
the award of the contract and the subsequent decisions to extend it be declared invalid, with a
rider that the declaration of invalidity must not have the effect of divesting Gijima of rights to which
– but for the declaration of invalidity – it might have been entitled. Whether any such rights did
accrue remains a contested issue in the arbitration, the merits of which were never determined
because of the arbitrator’s holding on jurisdiction.’ (Emphasis added.)
[13] Lastly, in Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd,5 the
Constitutional Court (CC) had to consider an appropriate remedy again in the context of
a legality review. In this regard, the CC said the following:
‘[104] When the Municipality took the view that the Reeston contract was invalid, the
implementation of the contract had commenced and was continuing. The Municipality was content
for the respondent to complete the contract (building low-cost houses) to the benefit of the
municipality and residents of Reeston. It was common cause that the work has been practically
completed.
[105] In these circumstances, justice and equity dictate that the Municipality should not benefit
from its own undue delay and in allowing the respondent to proceed to perform in terms of the
contract. I therefore make an order declaring the Reeston contract invalid, but not setting it aside
so as to preserve the rights to that the respondent might have been entitled. It should be noted
that such an award preserves rights which have already accrued but does not permit a party to
obtain further rights under the invalid agreement.’
[14] It is common cause that the municipality ‘has never complained about the
effectiveness of the respondent’s services’. Undoubtedly, the municipality received the
full benefit of such services. Most certainly, Sekoko Attorneys incurred expenses to
enable it to render the services to the municipality. The municipality did not dispute
Sekoko Attorneys’ entitlement to be paid for services rendered. It did not even participate
in this appeal. On the contrary, it served a notice that it will abide by the appeal outcome.
5 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd [2019] ZACC 15; 2019 (6) BCLR 661
(CC); 2019 (4) SA 331 (CC) paras 104 and 105.
[15] Unlike some of the matters referred to above, no further services have been
rendered by Sekoko Attorneys since delivering their last invoice in May 2018. There is
thus no need for any order that the rights of Sekoko Attorneys under the void tender be
preserved. It is appropriate, however, that where no fault lies at the door of Sekoko
Attorneys and it rendered services which redounded to the benefit of the municipality, an
order is granted for payment. In those circumstances, it is just and equitable to order that
the municipality pay to Sekoko Attorneys an amount equivalent to that to which it would
have been entitled under the void tender. The municipality advanced no considerations
against such an order. In the result, the counter application for payment should have been
upheld by the high court on this basis.
[16] It is necessary to say something about the issue of costs. As already indicated, the
appeal was not opposed. And, what is more, the issue for decision was fairly
straightforward. There was therefore no need for the appellant to brief senior counsel for
purposes of arguing the appeal. This is a matter that could easily and should have been
disposed of without the hearing of oral argument in terms of s 19(a)6 of the Superior
Courts Act.7 Accordingly, the interests of justice dictate that there should be no order as
to costs both in the court a quo and this Court.
[17] The following order is made:
The appeal is upheld with no order as to costs.
Paragraph (iv) of the order of the court a quo is set aside and replaced with the
following:
‘(iv) The applicant (the municipality) is ordered to pay the respondent an amount of R436
250.30 plus interest of 10.25% per annum calculated as from 26 November 2019 to date
of payment. No order is made in respect of the costs of the counter-application.’
6 Section 19(a) in relevant part reads:
‘The Supreme Court of Appeal . . . may, in addition to any power as may specifically be provide for in any
other law–
(a) dispose of an appeal without the hearing of oral argument.’
7 Superior Courts Act 10 of 2013.
_________________
DV DLODLO
JUDGE OF APPEAL
APPEARANCES:
For the appellant:
R J A Moultrie SC
Instructed by:
Albert Hibbert Attorneys, Pretoria
Webber Attorneys, Bloemfontein
For the 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:
18 March 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
Sekoko Mametja Incorporated Attorneys v Fetakgomo Tubatse Local Municipality
(Case No. 60/2021) [2022] ZASCA 28 (18 March 2022)
Today the Supreme Court of Appeal (SCA) handed down a judgment upholding, with no costs, an
appeal against the Limpopo Division of the High Court, Polokwane (the high court).
The issue before the SCA dealt exclusively with the dismissal of Sekoko Mametja Incorporated
Attorneys (Sekoko Attorneys) counter application for payment for the services rendered by it to the
Fetakgomo Tubatse Local Municipality (the municipality) prior to the review and cancellation of the
tender. The municipality brought a review based on legality in which it sought to review and set aside
its own decision to award a tender to Sekoko Attorneys. Sekoko Attorneys opposed the review
application and counter applied for payment of the outstanding amount in respect of the invoices already
delivered to the municipality covering the period January 2018 to May 2018 for services rendered.
The Municipality’s Bid Evaluation Committee and Adjudication Committee awarded the tender to
Sekoko Attorneys and four other applicants in which the municipality required the collection of debts
owed to it. However, in April 2018, the municipality realised that Sekoko attorneys had submitted a non-
responsive bid in contravention of clause 43 of the Municipality’s Supply Chain Management Policy.
Consequently, on 15 May 2018, the municipality addressed a letter to Sekoko Attorneys and sought to
cancel the appointment with immediate effect.
The high court considered whether or not the municipality was entitled to an order in terms of s 172(1)(a)
of the Constitution. Having found that the tender award was inconsistent with the Constitution and was
therefore unlawful and invalid, the high court dismissed Sekoko Attorneys’ counterclaim with costs. It
reasoned that even though the municipality failed to dispute the counter application, Sekoko Attorneys
‘cannot be allowed to derive a benefit out of an unlawful contract’.
The SCA held that it was incumbent on a court making an order of invalidity under s 172(1)(a) to then
invoke the provisions of s 172(1)(b) in considering whether or not to make an order which was just and
equitable. Accordingly, this the high court did not do. It clearly could not enforce payment under a void
tender, but it could consider whether an amount should be paid on the basis that it was just and
equitable for the municipality to do so.
Furthermore, the SCA held that it was common cause that the municipality had ‘never complained about
the effectiveness of the respondent’s services’ and it received the full benefit of such services. In
addition, the SCA held that Sekoko Attorneys incurred expenses to enable it to render the services to
the municipality. Moreover, the SCA held that where no fault lies at the door of Sekoko Attorneys, and
it rendered services which redounded to the benefit of the municipality, an order was granted for
payment.
The SCA found that in those circumstances, it was just and equitable to order that the municipality pay
to Sekoko Attorneys an amount equivalent to that to which it would have been entitled under the void
tender. In the result, the counter application for payment should have been upheld by the high court on
this basis.
~~~~ends~~~~ |
4158 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 801/2022
In the matter between:
BP SOUTHERN AFRICA (PTY) LTD
APPLICANT
and
COMMISSIONER FOR THE SOUTH
AFRICAN REVENUE SERVICE
RESPONDENT
Neutral citation: BP Southern Africa (Pty) Ltd v Commissioner for the South
African Revenue Service (Case no 801/2022) [2024]
ZASCA 2 (12 January 2024)
Coram:
MOLEMELA P, NICHOLLS, MATOJANE and GOOSEN JJA
and MUSI AJA
Heard: 07 November 2023
Delivered: This judgment was handed down electronically by circulation to
the parties’ representatives by email, published on the Supreme Court of
Appeal website, and released to SAFLII. The date and time for hand-down is
deemed to be 11h00 on 12 January 2024.
Summary: Tax law – Customs and Excise – interim interdict – requirements
restated – demand by Commissioner for the South African Revenue Service –
amount due not suspended by a request for reasons or an appeal.
Interlocutory ruling – appealability – ruling not to admit a supplementary
founding affidavit before the filing of a record in rule 53 proceedings not
appealable.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Baqwa,
Tolmay and Sardiwalla JJ sitting as court of appeal):
The application for special leave to appeal is dismissed with costs.
JUDGMENT
Musi AJA (Molemela P, Nicholls, Goosen and Matojane JJA
concurring):
Introduction
[1] This is an application for leave to appeal, in terms of s 17(2)(d) of the
Superior Courts Act 10 of 2013 against an order of the full court of the
Gauteng Division of the High Court, Pretoria (the full court). The applicant,
BP Southern Africa (Pty) Ltd (BP), launched two separate urgent applications
for interim interdicts (Part A in both applications), seeking substantially
similar relief, in the high court (per Mothle J), against the respondent, the
Commissioner for the South African Revenue Service (SARS), pending
review applications (Part B in both applications). Mothle J dismissed both
applications. Leave to appeal to the full court was granted by this Court. In
separate proceedings, BP unsuccessfully applied to file a supplementary
founding affidavit in the high court (per Munzhelele AJ). Munzhelele AJ
granted BP leave to appeal to the full court against her ruling. The full court
dismissed all three appeals.
Background
[2] In Part A, BP sought the following orders:
(a) an order truncating the time period in s 96 of the Customs and Excise Act
91 of 1964 (the Act); and
(b) an order interdicting and restraining SARS from attaching and disposing
of its property, and from proceeding with any execution proceedings against
it, pursuant to the issuing of a certified statement filed in terms of s
114(1)(a)(ii) of the Act by SARS on 16 March 2020, pending the outcome of
review applications brought under Part B.
[3] In Part B, it sought to review and set aside SARS’ decisions to:
(a) issue final demands and notices of the institution of legal proceedings;
(b) to issue the debt management certificate on 16 March 2020;
(c) proceed with the execution in respect of BP’s property; and
(d) SARS’s failure to allow BP to submit an appeal in accordance with the
Act.
In Part B of the second application, it sought an order reviewing and setting
aside SARS’ decision to dismiss its application for suspension of payment.
[4] After Mothle J dismissed Part A of BP’s applications and its application
for leave to appeal, it filed a supplementary founding affidavit in support of
its review applications. SARS brought an application in terms of Uniform
Rule 30(1) to declare the filing of the supplementary founding affidavit as an
irregular step and to set it aside. BP opposed the application and brought a
counter application to be allowed to file the supplementary founding affidavit.
Munzhelele AJ granted SARS’ application and dismissed BP’s application.
She further ordered BP to pay the costs, including the costs of two counsel,
on the attorney and client scale.
[5] The appeals against Mothle J’s and Munzhelele AJ’s orders were
consolidated. The full court dismissed the appeals with costs, including costs
of two counsel on an attorney and own client scale. BP applied to this Court
for special leave to appeal against the order of the full court. The application
for special leave to appeal was referred to this Court for oral argument with
leave to argue the merits, if necessary.
Architecture of the Act
[6] The Act contains a myriad of regulatory provisions and rules made in
terms thereof. The architecture of the Act is extensively discussed in Gaertner
v Minister of Finance.1 The sections of particular relevance to this matter are
set out below. The Commissioner is charged with the administration of the
Act.2 The Commissioner may make rules relating to the storage and
manufacture of goods in a customs and excise warehouse, including the
removal of such goods from the warehouse.3 In terms of s 19A(a)(iii), the
Commissioner may, by rule, in respect of any specified excisable goods or
fuel levy goods or any class or kind of such goods manufactured in the
Republic, prescribe any procedures or requirements or documents relating to
1 Geartner v Minister of Finance [2013] ZACC 38; 2014 (1) SA 442 (CC); 2014 (1) BCLR 38 (CC) paras
17-49.
2 Section 2(1) of the Customs and Excise Act 91 of 1964 (the Act).
3 Section 120 of the Act.
the entry and removal of goods from and to any such warehouse or for export
or for the use under rebate of duty.4
[7] Only a licensee of a fuel warehouse, commonly known as a refinery, or
licensed distributor,5 may export distillate fuel (fuel).6 Fuel may be stored at a
warehouse for home consumption, re-warehousing, or for export purposes.
When fuel is removed from a warehouse for any of the three purposes stated
above, duty is payable. The licensee’s obligation to pay duty is triggered by
the removal of the fuel from the warehouse. This is called duty at source
(DAS).7 No duty is levied for fuel levy goods exported from South Africa.8
When fuel levy goods are exported, and the exporter has complied with all the
s 19A and rule 19A requirements, the DAS paid is refunded by way of set-off
against any duty the exporter is permitted to pay monthly or quarterly.9
[8] When any fuel is transported by road for export purposes, the removal
must be done by a licensed remover of goods in bond,10 unless the licensee or
a licensed distributor carries the goods.11 After the exportation of the fuel, the
exporter claims a refund based on all the documents relating to the movement
of the fuel from South Africa to the foreign country. The final documents, the
customs notification documents (CN1 and CN2), are referred to as acquittals.
In terms of rule 19A.05, a licensee must keep books, accounts documents and
4 Section 19A(1)(a)(iii)(dd) of the Act.
5 A licensed distributor is licensed in accordance with s 60 and s 64F.
6 Rule 19A4.04(a)(iii).
7 Section 20(4) of the Act.
8 Section 18A (1) and (2) of the Act
9 Section 77(a) of the Act.
10 Goods in bond or bonded goods are goods for which customs and excise duties are not yet paid. See
Cambridge Business English Dictionary © Cambridge University Press.
11 Rule 19A4.04(a)(iv). The licensing of a remover of goods in bond is regulated by s 64D.
data relating to goods received, stored, used or removed as well as the contract
of carriage entered into between the licensee and the licensed remover of
goods in bond and the delivery instructions issued to such remover in respect
of each consignment. When goods are declared for exportation to a particular
destination, they may not be diverted to any other destination without the
permission of the Commissioner.12
[9] If the Commissioner, purporting to act under the provisions of the Act,
pays to any person by way of refund any amount which was not duly payable
to that person, such amount shall be repaid by that person to the Commissioner
upon demand, failing which it shall be recoverable as if it were the duty or
charge concerned.13 This applies to any amount set off in terms of s 77 of the
Act.
The investigation
[10] BP is a licensee of a warehouse and an exporter of fuel. BP represented
to SARS that it had exported fuel to Zimbabwe. It claimed refunds of the DAS
it had paid when the fuel left a Transnet storage facility at Tarlton, which is
not a licensed warehouse. SARS investigated various consignments of fuel
that BP alleged it had exported. SARS was of the view that the fuel had never
been exported but consumed locally. SARS made the determination, inter alia,
based on the following: none of the goods were exported from a licensed
warehouse; the Zimbabwean consignees did not exist or were not importers
of fuel; the vehicles purportedly used to transport the diesel never crossed the
border since SARS’ electronic records indicated that the vehicles did not reach
12 Sections 18A(9) and 18A(13)(a)(i) of the Act.
13 Section 76A of the Act.
the port of exit; BP could not provide the necessary documents to prove
exportation; most of the documentation purportedly proving exportation to
Zimbabwe were falsified; the transporters were not licensed removers of
goods in bond.
[11] BP’s version is that it sold diesel to different intermediaries who, in
turn, sold it to importers in Zimbabwe. It acted as an ‘exporter of record’ of
the diesel because the intermediaries are not licensees of warehouses or
licensed distributors of fuel, and would therefore not be entitled to refunds of
excise duty, fuel levy and road accident fund levy paid by BP in terms of the
DAS policy. BP sold the fuel to the intermediaries, excluding DAS, and
claimed refunds of the DAS that it had paid, after the fuel was exported by the
intermediaries. It denied that it committed fraud, or that it was a party to any
fraudulent scheme.
[12] On 13 February 2020, SARS issued BP with four letters of demand. BP
did not pay the amounts demanded by SARS. The payments became due and
payable upon demand.14
[13] On 24 February 2020, SARS issued a final demand and notice of the
institution of legal proceedings against BP. It informed BP that the amounts
in the letters of demand were due and payable and that those amounts
constituted a debt which was due and payable to the State. It further advised
14 Section 44(10) of the Act reads:
‘Any duty for which any person is liable in terms of this section shall be payable on demand by the
Commissioner.’
BP that any objection to the demand lodged by it in terms of the Act would
not suspend payment.
[14] On 16 March 2020, SARS filed a certified statement with the registrar
of the Gauteng Division of the High Court, Pretoria, in terms of s 114(1)(a)(ii)
of the Act for an amount of R49 978 544.06. This section reads as follows:
‘If any person fails to pay any amount of any duty, interest, fine, penalty or forfeiture
incurred under this Act, when it becomes due or is payable by such person, the
Commissioner may file with the clerk or registrar of any competent court a statement
certified by him as correct and setting forth the amount thereof so due or payable by that
person, and such statement shall thereupon have all the effects of, and any proceedings may
be taken thereon as if it were a civil judgment lawfully given in that court in favour of the
Commissioner for a liquid debt of the amount specified in the statement.’
[15] On the same day, SARS attempted to execute the judgment. On 17
March 2020, BP requested SARS to give it an undertaking that it would stay
execution of the judgment pending the outcome of a review application to be
launched by BP. On 18 March 2020, BP served a notice in terms of s 96(1) on
SARS. Section 96(1)(a)(i) provides:
‘No process by which any legal proceedings are instituted against the State, the Minister,
the Commissioner or an officer for anything done in pursuance of this Act may be served
before the expiry of a period of one month after delivery of a notice in writing setting forth
clearly and explicitly the cause of action, the name and place of abode of the person who
is to institute such proceedings … and the name and address of his or her attorney or agent,
if any.’
SARS may, on good cause shown, reduce or extend the period in s 96(1)(a)(i)
by agreement with a litigant.15 A high court may, upon application made to it,
reduce or extend the aforementioned period.16
[16] On 19 March 2020, SARS gave an undertaking that it would not
continue with any collection steps until BP’s application for suspension of
payment had been considered. On 23 March 2020, BP launched the first
urgent application, which it subsequently removed from the roll. On 26 March
2020, BP applied for suspension of payment, which was rejected on 19 May
2020. On 24 May 2020, BP launched the second urgent application.
Litigation history
[17] Mothle J found that neither application was urgent, but he nevertheless
considered it expedient to deal with the merits of the applications. He further
found that BP failed to prove that it would suffer any prejudice because it
could afford to pay the amount claimed and that it would be able to recover
the money after submitting the necessary documents to SARS.
[18] The full court found that the high court exercised its discretion against
BP in terms of s 96. It further found that BP failed to prove any of the
requirements for an interim interdict. Regarding the supplementary founding
affidavit, the full court found that there is no procedural basis, in rule 53
proceedings, for the filing of such affidavit before the record had been filed.
15 Section 96(1)(c)(i) of the Act.
16 Section 96(1)(c)(ii) of the Act.
Mootness
[19] SARS argued that the appeal would have no practical effect since the
debt had already been collected in terms of s 114AA, which entitles SARS to
declare any person to be the agent of a debtor and require such person to make
payment on behalf of such debtor. SARS further argued that because the
interim interdict sought to interdict and restrain the recovery of the money in
terms of s 114(1)(a)(ii), a recovery in terms of s 114AA was therefore beyond
the ambit of the relief sought.
[20] It is now well established that an appeal may be entertained even when
there are no live issues to settle, if it is in the interests of justice to do so.17 In
my view, the issues between the parties have not yet been finally settled. In
the review, BP seeks to declare SARS’ decisions, from the issuance of the
final demands to the rejection of its suspension application invalid and to have
it set aside. If it succeeds, the recovery in terms of s 114AA would also be
affected. This Court held in Seale v Van Rooyen NO and Others; Provincial
Government, North-West Province v Van Rooyen NO and Others that:
‘. . . acts performed subsequent to a decision which is set aside and which can no longer
depend upon the mere existence of that decision for their own validity, are invalid once the
decision is set aside, irrespective of whether those acts were performed before or after the
court order invalidating the decision.’18
[21] There are still ongoing disputes between the parties based on similar
issues. A determination of the issues in this matter will have a practical effect
17 Normandien Farms (Pty) Limited v South African Agency for Promotion of Petroleum Exploration SOC
Limited and Others [2020] ZACC 5; 2020 (6) BCLR 748 (CC); 2020 (4) SA 409 (CC) paras 46-50.
18 Seale v Van Rooyen NO and Others [2008] ZASCA 28; [2008] 3 All SA 245 (SCA); 2008 (4) SA 43 (SCA)
para 14.
in limiting the disputes in the subsequent matters between these parties. The
appeal is therefore not moot, and, even if it were, it is in the interests of justice
to entertain it.
Issues
[22] The first issue to be determined is whether the high court refused the s
96 application. Secondly, whether the applicant made out a proper case for an
interim interdict. Lastly, whether the refusal to admit the supplementary
founding affidavit is appealable and, if it is, whether the refusal to admit it
was proper. Before discussing these issues, I propose to deal with a
preliminary issue.
Adducing evidence
[23] Before us, BP moved an application to adduce evidence, in the form of
two affidavits, on appeal. It sought to find justification for the request in a
decision of this Court in Community of Grootkraal v Kobot Business Trust
(Grootkraal).19 SARS objected and pointed out that it disputed the contents of
the affidavits in question as they are the subject of a dispute in another matter
between the same parties. Reliance on Grootkraal is misconceived. In
Grootkraal, this Court took judicial notice of historical material that is readily
available and reliable. BP did not seek to present documents that contained
material of the kind admitted in Grootkraal.
[24] Further evidence on appeal should only be admitted in exceptional
circumstances: it must be weighty material; there must be a reasonable
19 Community of Grootkraal v Botha NO and Others [2018] ZASCA 158; 2019 (2) SA 128 (SCA) para 21.
explanation for its lateness; and there should not be substantial disputes of fact
militating against its admission.20 BP did not satisfy any of the three
requirements. Consequently, we decided not to admit the evidence.
Section 96
[26] As mentioned before, Mothle J found that the applications were not
urgent but decided to deal with the merits. SARS contended that he refused
the s 96 application by implication. BP contended that Mothle J did not deal
with its s 96 application, at all, and therefore failed to properly exercise his
discretion. The fact that Mothle J neither referred to, nor discussed s 96 is of
no moment. This is because he dealt with the merits of the matter. If he had
refused the s 96 application, that would have spelt the end of the matter. The
ineluctable inference is that he granted the truncated times in terms of s 96 as
a pathway to considering the merits.
Interim interdicts
[27] The requirements for interim relief have been succinctly restated in SA
Informal Traders Forum v City of Johannesburg as follows:
‘Foremost is whether the applicant has shown a prima facie right that is likely to lead to
the relief sought in the main dispute. This requirement is weighed up along with the
irreparable and imminent harm to the right if an interdict is not granted and whether the
balance of convenience favours the granting of the interdict. Lastly, the applicant must
have no other effective remedy.’ 21
20 P A F v S C F [2022] ZASCA 101; 2022 (6) SA 162 (SCA) para 9; see also Rail Commuters Action Group
v Transnet Ltd t/a Metrorail [2004] ZACC 20; 2005 (2) SA 359 (CC); 2005 (4) BCLR 301 (CC) para 41-43.
21 South African Informal Traders Forum and Others v City of Johannesburg and Others; South African
National Traders Retail Association v City of Johannesburg and Others [2014] ZACC 8; 2014 (6) BCLR
726 (CC); 2014 (4) SA 371 (CC) 2014 (4) SA 371 (CC) para 24.
[28] A prima facie right may be established by showing prospects of success
in the review.22 BP must therefore show that there is a probability that the
court hearing its review application would find that it is entitled to the relief
sought. BP contended that the prima facie right that it asserts in its claim for
an interim interdict is sourced from the Constitution, which is its right to fair
administrative action that is lawful, reasonable, and procedurally fair as
guaranteed by s 33(1) of the Constitution and embodied in ss 3 and 6 of the
Promotion of Administrative Justice Act (PAJA).23 It is therefore, superfluous
to enquire whether the right exists.24
[29] It is common cause that the Commissioner’s decisions to file a certified
statement and the refusal of the application to suspend payment constitute
administrative action. The applicant’s two main contentions with regard to
SARS’ action were, first, that it unlawfully filed the certified statement and,
second, that the decision to reject the suspension application was influenced
by an error of law and that relevant considerations were ignored.
The certified statement
[30] It is common ground that BP became aware of the letters of demand on
13 February 2020. The certified statement was filed on 16 March 2020. BP’s
contention is that it had 30 days after it became aware of the letters of demand
to request reasons, and a right to be notified of the reasons within 45 days from
the date on which SARS acknowledged receipt of the request.25 BP filed
22 Ibid para 25.
23 Promotion of Administrative Justice Act 3 of 2000. Regrettably the applicant did not delineate which
subsection of the two sections it relied on, however, it crystallised during argument.
24 National Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18; 2012
(6) SA 223 (CC); 2012 (11) BCLR 1148 (CC) (6) SA 223 para 46.
25 Subrules 77H.02(4) and (5) read as follows:
a request which it styled as a request for information on 26 March 2020, which
was exactly 30 days after it became aware of the demand. According to BP,
SARS had no right to file the certified statement before the 30 days had lapsed.
I will accept for present purposes that it was a proper request for reasons.
[31] The separate letters of demand each constitute a determination in terms
of s 47(9)(a)(i)(bb).26 Section 47(9)(b)(i) provides that:
‘Whenever any determination is made under paragraph (a). . . any amount due in terms
thereof shall, notwithstanding that such determination is being dealt with in terms of any
procedure contemplated in Chapter XA of the Act, remain payable as long as the
determination remains in force: provided that the Commissioner may suspend the payment,
on good cause shown, until the date of any final judgment by the High Court or a judgment
by the Supreme Court of Appeal.’
Chapter XA regulates internal administrative appeals, alternative dispute
resolution and dispute settlement procedures.
[32] Section 77G provides that notwithstanding anything to the contrary in
the Act, the obligation to pay to Commissioner and the right of the
Commissioner to receive and recover any amount demanded in terms of any
provision of the Act shall not, unless the Commissioner so directs, be
suspended pending finalisation of any procedure contemplated in Chapter XA
or pending a decision by a court.
‘(4) A person that requested reasons must be notified of such reasons in writing within 45 days from the date
of acknowledgement of receipt referred to in subrule (3)(a).
(5) If an aggrieved person intends to submit an appeal against a decision in terms of rule 77H.04 and wishes
to request reasons for such decision, a request referred to in subrule (1) must be submitted within 30 days
from the date the aggrieved person became aware of the decision.’
26 Section 47(9)(a)(i)(bb) reads:
‘The Commissioner may in writing determine whether goods so classified under such tariff headings, tariff
sub-headings, tariff items or other items of Schedule No. 2, 4, 5 or 6 may be used, manufactured, exported
or otherwise disposed of as provided in such tariff items or other items specified in any such Schedule’
[33] Section 77G engages two powers of the Commissioner. First, the right
to receive and recover any amount due and payable and, second, the power to
suspend payment of an amount. The amount is not automatically suspended
by a request for reasons, an internal administrative appeal, or a court
application. It remains due and payable until the Commissioner decides to
suspend it. Absent a suspension by the Commissioner and regardless of a
Chapter XA procedure or court proceedings, SARS may file a certified
statement. SARS is not obliged to wait until the lapsing of the 30 days within
which reasons may be requested, or the filing of an internal administrative
appeal. SARS’ filing of the certified statement before 26 March 2020 was
lawful. It had the right to do so from 13 February 2020 – when BP became
aware of the demand.
[34] BP argued that the certified statement is unlawful because the amount
set forth as due and payable is wrong. It contends that SARS acted unlawfully
by claiming an amount of R14 866 726.00, which was not due to it. Section
114(1)(a)(iii)(cc) of the Act provides that:
‘Pending the conclusion of any proceedings, whether internally or in any court, regarding
a dispute as to the amount of any duty, interest, fine, penalty or forfeiture payable, the
statement filed in terms of subparagraph (ii) shall, for purposes of recovery proceedings
contemplated in subparagraph (ii), be deemed to be correct.’
This provision creates a prima facie right in SARS’ favour.
Rejection of the suspension application
[35] BP argued that SARS’ reasons for rejecting its suspension application
were influenced by errors of law and that the relevant considerations were not
considered. SARS gave three reasons for rejecting the application: first, that
there were no pending internal procedures as required by s 77G as the 30 days,
within which reasons may be requested or an appeal filed, had lapsed; second,
that fraudulent acquittal documents for the entries in question were supplied
to SARS; and thirdly, that BP would not suffer financial hardship if it paid the
amount.
[36] BP’s submissions are without merit. It did not file a request for reasons,
but a request for information stating that its representatives wished to visit
Beit Bridge and familiarise themselves with the processes followed there. It
also requested all the documents and information that SARS had relied on, in
order to issue the letters of demand. It stated that it required the information
in order to prepare its appeal. SARS cannot be faulted for not accepting the
request for information as a request for reasons. It is therefore not surprising
that SARS did not respond to the request for information.
[37] SARS did not suggest that BP committed fraud. It stated that fraudulent
documents relating to the consignments were presented to it. BP could not
dispute that, because it did not possess all the documents required in terms of
the Act and the rules. For that reason, it sent countless requests to its
intermediaries for the necessary information. So desperate was BP for the
information that it litigated against at least one such intermediary.
[38] The difficulty for BP is that in terms of s 101 of the Act, any person
carrying on business in the Republic shall keep such books, accounts and
documents relating to the relevant transactions. Furthermore, s 102(4)
provides that in any dispute in which the Commissioner is a party and the
question arises whether any books, accounts, documents, forms, or invoices
required to be completed and kept, exist or have been duly completed and kept
or have been furnished to an officer, it shall be presumed that such books,
accounts documents, forms or invoices do not exist or have not been duly
completed and kept, until the contrary is proved. BP has failed to show, in
these proceedings, that it has completed and kept all the required books,
accounts, documents, forms or invoices. BP will have to surmount this hurdle
in the review application.
[39] SARS had regard to BP’s relevant financial statements, which BP
submitted as part of its application for suspension. SARS relied on such
statements when it concluded that BP would not suffer financial hardship if it
paid the due amount.
[40] It is not our task to usurp SARS’ functions. We must determine whether
SARS’ decision falls within the bounds of reasonableness. I am of the view
that SARS did not commit an error of law and that it considered all the relevant
information before it. Having considered that information, it reached a
reasonable and fair conclusion not to grant the application for suspension.27
The determination
[41] BP submitted that SARS’ determination that the fuel was not exported
was wrong and asserted that the fuel was exported. In terms of s 102(5) of the
27 Bato Star Fishing (Pty) Ltd v Minister of Environmental affairs and Tourism and Others [2004] ZACC 15;
2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) paras 42 - 49.
Act, if in any dispute in which the Commissioner is a party, it is alleged that
goods have not been exported, it shall be presumed that such goods have not
been exported unless the contrary is proved. SARS, in any event, put up two
reasons for its determination that the goods were not exported. The first reason
was that, on SARS’ electronic system, the consignments were reflected as
‘ready to mark for arrival’ because they had not yet arrived at the border post.
The second reason was that there was no indication on the Department of
Home Affairs’ electronic system that the vehicles mentioned in the demand
crossed the border. BP could not dispute SARS’ assertions. The presumption
creates a prima facie case in SARS’ favour.
Irreparable harm and balance of convenience
[42] BP contended that because it would not be entitled to any pre-judgment
interest and that it suffered an immediate loss of R69 836 907.04 in liquid
funds, the balance of convenience favoured it and not SARS. It must be
remembered that SARS claimed back money unduly paid to BP. That being
the case, the amount became due on demand, in terms of s 76A.28 The Act is
part of fiscal legislation that assists the State in collecting money in order to
fulfil its socio-economic mandate towards the citizenry. The balance of
convenience therefore favours SARS. Furthermore, I agree with the full court
that BP’s audited financial statement belies its assertion that it would suffer
irreparable harm. Its annual turnover was R47 billion and it had access to
credit facilities in excess of R4 776 billion. BP argued that it will suffer
irreparable harm because it now has a civil judgment against it and that SARS
misused the wide powers that the Act gives it. It is true that SARS has wide
28 Op cit fn 12.
powers, however, the constitutionality of those powers were neither
challenged before the high court nor in this Court.
Alternative remedy
[43] SARS contended that BP will be repaid if it proves that SARS’
determination that it did not export the diesel is incorrect. BP would be able
to do this, if it submits all the documents to SARS or if it can satisfy the review
court that it has an acceptable explanation for why it could not produce the
required documents in a timely manner. It is correct that BP would not be paid
interest if the review application succeeds. That is unfortunately part of the
unchallenged legislative scheme.
[44] I agree with Mothle J and the full court that BP failed to prove any of
the requirements for an interim interdict. An interim interdict pending an
action or a review is an extraordinary remedy within the discretion of the
Court.29 Courts grant interim interdicts against the exercise of statutory power
only in the clearest of cases.30 Mothle J exercised his discretion properly when
he dismissed both applications.
The supplementary founding affidavit
[45] BP brought Part B in terms of rule 53. Rule 53(1)(b) triggered a duty
on SARS to despatch the record and its reasons to the registrar of the high
court. It is only after the record is made available to BP in terms of rule 53(4)
that it may file, as of right, a supplementary founding affidavit. BP contended
29 Eriksen Motors Ltd. v Protea Motors and another 1973 (3) SA 685 (AD) at 691B-C.
30 National Treasury and Others v Opposition to Urban Tolling Alliance [2012] ZACC 18; 2012 (11) BCLR
1148 (CC); 2012 (6) SA 223 (CC) para 47.
that it filed the supplementary founding affidavit because SARS failed to file
the record timeously.
[46] The antecedent question to consider is whether Munzhelele’s AJ’s
ruling is appealable. In Zweni v Minister of Law and Order,31it was pointed
out that there was a difference between a judgment or order and a ruling.
Harms AJA, as he then was, held:
‘In the light of these tests and in view of the fact that a ruling is the antithesis of a judgment
or order, it appears to me that, generally speaking, a non-appealable decision (ruling) is a
decision which is not final (because the Court of first instance is entitled to alter it), nor
definitive of the rights of the parties nor has the effect of disposing of at least a substantial
portion of the relief claimed in the main proceedings.’32
[47] In United Democratic Movement and Another v Lebashe,33it was held
that in deciding whether an order is appealable, not only the form of the order
must be considered but also, and predominantly, its effect and that the
appealability test is the interests of justice. Munzhelele AJ’s decision is a
ruling that has no final effect, it is not definitive of the rights of the parties and
it does not dispose of any part of the main proceedings. In fact, BP will in due
course, in terms of rule 53(4), after the record has been filed, as of right, have
an opportunity to file a supplementary founding affidavit. SARS’ dilatoriness
in filing the record can hardly be justification for BP’s irregular step. It could
have approached the high court with an application to compel SARS to file
31 Zweni v Minister of Law and Order of the Republic of South Africa [1992] ZASCA 197; [1993] 1 All SA
365 (A); 1993 (1) SA 523 (A).
32 Ibid at 536A-B.
33 United Democratic Movement v Lebashe Investment Group (Pty) Ltd and Others [2022] ZACC 34; 2022
(12) BCLR 1521 (CC); 2023 (1) SA 353 (CC) paras 41 and 43.
the record and its reasons. In my view, it is not in the interest of justice that
an interlocutory ruling of the kind made by Munzhelele AJ be appealable.
[48] This matter presents no special circumstances why special leave to
appeal should be granted. The application ought to be dismissed.
Costs
[49] SARS requested us to make a punitive costs order. BP has neither
abused the court process nor committed misconduct. Costs should however
follow the result.
Order
[50] In the result the following order is made:
The application for special leave to appeal is dismissed with costs.
C J MUSI
ACTING JUDGE OF APPEAL
Appearances
For the appellant:
AP Joubert SC with LJ du Bruyn
Instructed by:
Edward Nathan Sonnenbergs, Sandton
Webbers Inc., Bloemfontein
For the respondent:
J Peter SC
Instructed by:
MacRobert Inc, Pretoria
Lovius Block 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 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
BP Southern Africa (Pty) Ltd v Commissioner for the South African Revenue Service (Case no
801/2022) [2024] ZASCA 2 (12 January 2024)
Today the Supreme Court of Appeal (SCA) dismissed an application for special leave with costs.
The applicant, BP Southern Africa (Pty) Ltd (BP), launched two separate urgent applications for interim
interdicts (Part A in both applications), seeking substantially similar relief, in the high court (per Mothle
J), against the respondent, the Commissioner for the South African Revenue Service (SARS), pending
review applications (Part B in both applications). Mothle J dismissed both applications. In separate
proceedings, BP unsuccessfully applied to file a supplementary founding affidavit in the high court (per
Munzhelele AJ). Munzhelele AJ granted BP leave to appeal to the full court against her ruling. The full
court dismissed all three appeals.
In Part A, BP sought the following orders: (a) an order truncating the time period in s 96 of the Customs
and Excise Act 91 of 1964 (the Act); and (b) an order interdicting and restraining SARS from attaching
and disposing of its property, and from proceeding with any execution proceedings against it, pursuant
to the issuing of a certified statement filed in terms of s 114(1)(a)(ii) of the Act by SARS on 16 March
2020, pending the outcome of review applications brought under Part B. In Part B, it sought to review
and set aside SARS’ decisions: (a) to issue final demands and notices of the institution of legal
proceedings; (b) to issue the debt management certificate on 16 March 2020; (c) proceed with the
execution in respect of BP’s property; and (d) SARS’s failure to allow BP to submit an appeal in
accordance with the Act. In Part B of the second application, it sought an order reviewing and setting
aside SARS’ decision to dismiss its application for suspension of payment.
After Mothle J dismissed Part A of BP’s applications and its application for leave to appeal, it filed a
supplementary founding affidavit in support of its review applications. SARS brought an application in
terms of Uniform Rule 30(1) to declare the filing of the supplementary founding affidavit as an irregular
step and to set it aside. BP opposed the application and brought a counter application to be allowed to
file the supplementary founding affidavit. Munzhelele AJ granted SARS’ application and dismissed BP’s
application. The appeals against Mothle J’s and Munzhelele AJ’s orders were consolidated. The full
court dismissed the appeals with costs, including costs of two counsel on an attorney and own client
scale.
BP is a licensee of a warehouse and an exporter of fuel. BP represented to SARS that it had exported
fuel to Zimbabwe. It claimed refunds of the DAS (Duty at Source) it had paid when the fuel left a
Transnet storage facility at Tarlton, which is not a licensed warehouse. SARS investigated various
consignments of fuel that BP alleged it had exported. SARS was of the view that the fuel had never
been exported but consumed locally. BP’s version was that it sold diesel to different intermediaries who,
in turn, sold it to importers in Zimbabwe. It acted as an ‘exporter of record’ of the diesel because the
intermediaries were not licensees of warehouses or licensed distributors of fuel, and would therefore
not be entitled to refunds of excise duty, fuel levy and road accident fund levy paid by BP in terms of
the DAS policy. BP sold the fuel to the intermediaries, excluding DAS, and claimed refunds of the DAS
that it had paid, after the fuel was exported by the intermediaries. It denied that it committed fraud, or
that it was a party to any fraudulent scheme.
On 13 February 2020, SARS issued BP with four letters of demand. BP did not pay the amounts
demanded by SARS. On 24 February 2020, SARS issued a final demand and notice of the institution
of legal proceedings against BP. On 16 March 2020, SARS filed a certified statement with the registrar
of the Gauteng Division of the High Court, Pretoria, in terms of s 114(1)(a)(ii) of the Act for an amount
of R49 978 544.06. On 17 March 2020, BP requested SARS to give it an undertaking that it would stay
execution of the judgment pending the outcome of a review application to be launched by BP. On 18
March 2020, BP served a notice in terms of s 96(1) on SARS.
On 19 March 2020, SARS gave an undertaking that it would not continue with any collection steps until
BP’s application for suspension of payment had been considered. On 23 March 2020, BP launched the
first urgent application, which it subsequently removed from the roll. On 26 March 2020, BP applied for
suspension of payment, which was rejected on 19 May 2020. On 24 March 2020, BP launched the
second urgent application.
Mothle J found that neither application was urgent, but he nevertheless considered it expedient to deal
with the merits of the applications. He further found that BP failed to prove that it would suffer any
prejudice because it could afford to pay the amount claimed and that it would be able to recover the
money after submitting the necessary documents to SARS. The full court found that BP failed to prove
any of the requirements for an interim interdict and that Mothle exercised his discretion properly.
Regarding the supplementary founding affidavit, the full court found that there is no procedural basis,
in rule 53 proceedings, for the filing of such affidavit before the record had been filed.
The issues for determination before the SCA were as follows: in the first instance, whether the high
court refused the s 96 application. Secondly, whether the applicant made out a proper case for an
interim interdict. Lastly, whether the refusal to admit the supplementary founding affidavit was
appealable and, if it was, whether the refusal to admit it was proper.
In addressing the issue of the s 96 application, the SCA held that the fact that Mothle J neither referred
to, nor discussed s 96 is of no moment because he dealt with the merits of the matter. It reasoned that
if he had refused the s 96 application, that would have spelt the end of the matter. In conclusion on this
point, the SCA held that the ineluctable inference was that Mothle J granted the truncated times in terms
of s 96 as a pathway to considering the merits.
The SCA found that Mothle J and the full court were correct in holding that BP failed to prove any of the
requirements for an interim interdict as an interim interdict pending an action or a review is an
extraordinary remedy within the discretion of the court and only granted against the exercise of statutory
power only in the clearest of cases.
Lastly, in relation to whether the refusal to admit the supplementary founding affidavit was appealable,
the SCA held that Munzhelele AJ’s decision was a ruling that had no final effect, was not definitive of
the rights of the parties and did not dispose of any part of the main proceedings. It concluded that it was
not in the interest of justice that an interlocutory ruling of the kind made by Munzhelele AJ be appealable.
In the result, the SCA issued an order dismissing the application for special leave to appeal with costs.
--------oOo-------- |
1407 | non-electoral | 2010 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 161/2010
No Precedential Significance
In the matter between:
NOMVULA GAMEDE First Appellant
TANJANE JUSTICE MAKUNGA Second Appellant
and
THE STATE Respondent
Neutral citation: Gamede v The State (161/10) [2010] ZASCA 122 (30
September 2010)
Coram:
NUGENT, MHLANTLA JJA and EBRAHIM AJA
Heard:
10 September 2010
Delivered:
30 September 2010
Summary:
Criminal Law – Drugs and Drug Trafficking Act 140 of
1992 ─ whether conviction justified by evidence ─
appropriate sentence.
_____________________________________________________________________
ORDER
On appeal from: KwaZulu-Natal High Court (Pietermaritzburg)(Swain
and Hollis JJ sitting as court of appeal.):
In each case the appeal against the conviction is dismissed.
In each case the appeal against the sentence is upheld.
2.1
The sentence of the first appellant is set aside and substituted
with a sentence of 5 years imprisonment.
2.2
The sentence of the second appellant is set aside and
substituted with a sentence of 15 years imprisonment.
___________________________________________________________
JUDGMENT
EBRAHIM AJA (Nugent and Mhlantla JJA concurring)
[1] The appellants were convicted in the regional court at Durban of
contravening the provisions of s 5(b) of the Drugs and Drug Trafficking
Act 1992 (Act 140 of 1992) in that during June 2004, they dealt in 556
kilograms of methaquolone (commonly known as mandrax), an
undesirable dependence producing substance, listed in part 3 of schedule
2 of the Act, the value thereof being approximately R50 million. They
were each sentenced to a term of 20 years imprisonment.
[2] An appeal to the KwaZulu-Natal High Court, was dismissed but
leave granted to appeal to this court against the convictions and sentences
in each case.
[3] The issue in the appeals is whether the respondent proved beyond
reasonable doubt, that mandrax was being manufactured at the premises
concerned and, if so, was it proved that the appellants were dealing in the
substance as envisaged by the Act.
[4] The factual background for the conviction is the following. On
Thursday 22 June 2004, members of the South African Police Service
from the Organized Crime Unit as well as the Crime Intelligence Unit
found a powdered substance of the colour of sea sand in large quantities
in various rooms in a house on Spitskop Farm near Newcastle in the
province of KwaZulu-Natal. Some of the powder was already dry and
some wet. Fans and heaters were also discovered in these rooms. In
various outbuildings on the farm, buckets, pots, mixing bowls, measuring
equipment such as a scale, bags of Anthranilic Acid and other chemicals,
gas burners, gas masks, gloves and gum boots were found. In a nearby
pigsty markings found on the ground were consistent with markings on
the pots found and contamination on the soil indicated a cooking process
had been conducted there.
[5] On Saturday 24 June 2004, the police arrived at Mange Farm a few
kilometres away from Spitskop Farm, in the same district, where they
found a Red Venture vehicle parked in the grounds. Inside the vehicle
various equipment such as copper pipes sealing machine and boxes of
pinchers as well as mandrax tablets were found. In a shed nearby,
chemicals in 2 ½ litre drums were found, as also an industrial mixer, an
industrial dryer, a gas bottle and a 3 phase power box. The following day
at Osizweni, a place 22 kms away from the two farms, at the house of
Alfred Mazibuko, the owner of Mange Farm, a mandrax press machine
was found. Mazibuko told the police that he had been called out to the
farm on Friday and persons who owned the Red Venture vehicle had
asked him to fix wheels to the mandrax press in the shed, so that it would
be easier to move the machine. This was the reason he took the machine
to his home at Osizweni.
[6] From this evidence the police concluded that a mandrax
manufacturing operation was in progress on both farms. Samples of the
powdered substance were removed for analysis by the police.
[7] The second appellant was arrested on Thursday 22 June 2004 at
approximately 23.00 when he arrived at Spitskop Farm driving a Silver
Colt bakkie. At the back of the bakkie, police found a load of groceries
and a black plastic bag in which was placed a white bag containing a
white powder substance. The identity of the white powder inside the bag
was clear from an indication in writing on the bag that the contents were
Anthranilic Acid. It is not disputed that Anthranilic Acid is used in the
manufacture of mandrax. The second appellant explained his presence on
the farm as a conveyer of food for the workers. He denied any knowledge
of the acid. The first appellant was arrested two days later on 24 June. I
shall deal with the circumstances leading to her arrest in due course.
[8] During the trial the respondent, in addition to the forensic evidence
led the evidence of two former employees. One of them, Ivan Thusi, was
a shepherd on Spitskop Farm. He identified the second appellant as one
of a number of persons who stayed on the farm from time to time.
Although he did not know why the second appellant was there, he said he
was in the company of the others who were engaged in activities on the
farm involving the spilling of water and the spreading of a brownish
coloured substance, of the consistency of mud, on the floor. Duduzile
Petros Mchunu the other employee, regarded himself as the Induna of
Spitskop Farm. He also identified the second appellant as one of the
people who had come to work and stay on the farm. He said that these
persons wore gum boots, gloves and a covering over their mouths whilst
working. Although he had never seen the second appellant wearing such
apparel, he had seen him on the farm grounds with the people wearing the
boots, gloves and masks.
[9] The first appellant was arrested during the evening of Saturday 24
June 2004. The police were keeping Mange Farm under surveillance
when they saw lights of a motor vehicle leaving the farm. They followed
the vehicle, a maroon Isuzu bakkie, and attempted to get it to stop but the
driver, the first appellant, increased speed. The police vehicle gave chase
putting on its siren and blue light. Despite that the first appellant
continued driving at high speed. Eventually approximately 2 ½
kilometres from the farm, the police managed to stop the vehicle. The
vehicle was searched and at the back of the bakkie, buckets and plastic
bags were found containing a powdered substance. The first appellant
explained that she was asked to discard the buckets and plastic bags, with
contents, by people on the farm. She told the police that the powder was
cattle feed and that people from the farm were going to follow her to
indicate a place at Arbor Park where the goods were to be discarded.
[10] On the evidence set out, both appellants were convicted of dealing
in mandrax, despite the denial by the second appellant that the bag of
anthranilic acid was on his vehicle and despite the exculpatory statement
made by the first appellant to the arresting police officers.
[11] The veracity of the forensic analysis of the substance found on the
farms was challenged on behalf of the appellant but it is not necessary to
deal with that. According to the undisputed evidence the equipment and
materials that I have referred to are of the kind that is used in the
manufacture of mandrax. It is clear from the nature of the material and
equipment alone that both farms were being used for the manufacture of
mandrax on a substantial scale.
[12] The question arising from this, is whether the conviction of the
appellants is sound in law. The definition of the statutory offence of
dealing in drugs is very wide and encompasses almost any activity
performed in connection with the drug. In s 1 of the Drugs and Drug
Trafficking Act 1992, dealing is defined, in relation to a drug, to include
‘performing any act in connection with the transhipment, importation,
cultivation, collection, manufacture, supply, prescription, administration,
sale, transmission or exportation of the drug.’
[13] There can be no doubt at all, against the background of the factual
finding of the court a quo, that a mandrax manufacturing operation was
taking place at the farms. It is also clear from the evidence that the first
appellant was in the process of assisting to remove incriminating
evidence of the operation at the time that she was arrested. It was
submitted on her behalf that it had not been established that she had
knowledge that the material and equipment that she was removing was
connected to the manufacture of mandrax but that submission must be
rejected. The manufacturing operation was of such a scale that she could
not but have known that mandrax was being manufactured. She was
clearly participating with the persons connected with the Red Venture in
removing incriminating evidence and must at least have been told why
that was required. Moreover, her explanation for not stopping when she
encountered the police is far-fetched, and is consistent with knowledge on
her part that she was involved in an illegal operation. Taken together the
inference is inescapable that she was aware of the nature of the materials
that she was conveying. Her conduct falls within the wide definition of
the statutory offence of dealing and she was properly convicted.
[14] The second appellant was caught ‘red-handed’ with material that
announced itself to be Anthranilic acid. There was no suggestion in the
evidence that the contents of the bag might have been some thing other
than Anthranilic acid, nor was it suggested that the second appellant
might not have known what it was. The evidenced also establishes that
Anthranilic acid is a substance used in the manufature of mandrax. That
he led the police on a ‘wild goose’ chase thereafter to seek the main
perpetrator does not detract from his culpability. He was also seen on the
farm on at least four occasions in the company of persons working there,
some of whom wore masks, boots and gloves. He, despite the
overwhelming evidence against him, elected not to testify. The inference
is inescapable that the second appellant was knowingly bringing the acid
to the farm so that the drugs could be manufactured. His actions too fall
squarely within the definition of statutory dealing, having performed an
act in connection with the manufacture of mandrax. I would accordingly
confirm his conviction.
[15] In so far as the sentence is concerned, I would uphold the appeal on
the basis that the sentence in the case of the first appellant is unjustifiably
excessive, given the fact that the evidence establishes no greater role in
the operation than to have assisted in attempting to dispose of the
evidence. Accordingly in line with this court’s approach in S v Scott-
Crossley 2008 (1) SACR 223 SCA at 239 para 29, I am of the view that
an appropriate sentence in respect of the first appellant would be one of
five years imprisonment. The second appellant was directly involved with
the manufacturing process and as a first offender, the Criminal Law
Amendment Act 105 of 1997, as amended, makes provision for a
minimum sentence of 15 years imprisonment to be imposed on him.
Whilst the sentencing court had regard to the mitigating character of the
second appellant’s clean record, having reached the age of 40 years
without blemish, it nonetheless considered that there were aggravating
circumstances that justified a sentence in excess of the minimum. The
evidence did not establish that the second appellant played more than a
subsidiary role in the operation. I do not think there was any justification
for imposing more than the minimum sentence. Accordingly, I would
uphold second appellant’s appeal against sentence, by setting aside the
sentence of 20 years imprisonment and in its place substituting a sentence
of 15 years imprisonment.
[16] 1
In each case the appeal against the conviction is dismissed.
In each case the appeal against the sentence is upheld.
2.1
The sentence of the first appellant is set aside and
substituted with a sentence of 5 years imprisonment.
2.2
The sentence of the second appellant is set aside and
substituted with a sentence of 15 years imprisonment.
___________________
S Ebrahim
Acting Judge of Appeal
APPEARANCES
FIRST APPELLANT:
B Bam SC
Instructed by Ehlers Attorneys, Irene
c/o
Adrie
Hechter
Attorneys,
Bloemfontein
SECOND APPELLANT:
J Engelbrecht SC
Instructed by Ehlers Attorneys, Irene
c/o
Adrie
Hechter
Attorneys,
Bloemfontein
RESPONDENT:
(Ms) TS Jacobs
Instructed by The Director of Public
Prosecutions, Pietermaritzburg
The Director of Public Prosecutions,
Bloemfontein | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
30 September 2010
STATUS:
Immediate
Gamede v The State (161/10) [2010] ZASCA 122 (30 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 SCA today dismissed an appeal against a conviction of dealing in 556 kgs of
mandrax in the case of each of the appellants the value of the mandrax was
approximately R50 million.
The appeal against their respective sentences of 20 years’ imprisonment was upheld
on the basis that the role played by each of them was not substantial and neither of
them had been proved to have been the mastermind behind the operation of a mandrax
manufacturing plant conducted on Spitskop and Mange Farms in KwaZulu-Natal.
The first appellant was apprehended by police as she was in the process of removing
incrimination evidence.
The SCA found that the large scale of the manufacturing operation complied with her
conduct in attempting to evade arrest, was consistent with knowledge on her part that
she was involved in an illegal operation and that she was aware of the nature of the
material she was conveying. The court however found that such knowledge and
conduct did not warrant a sentence of 20 years’ imprisonment but one more in line
with sentences imposed on persons convicted after the fact. Her sentence was
accordingly altered to one of five years’ imprisonment.
The first appellant was apprehended on Spitskop Farm in possession of a bag of
Anthranilic Acid, established on the evidence as being a substance used in the
manufacture of mandrax. He was seen prior to his arrest on at least four different
occasions on the farm, in the company of workers wearing gas masks, gum boots and
gloves. From this evidence the court concluded that he was knowingly bringing the
acid to the farm so that the drugs could be manufactured. Because he was directly
involved in the manufacturing process the SCA considered, despite his clean record,
that his role justified the imposition of no more than a sentence of 15 years’
imprisonment for a conviction of drug dealing, as provided for in the Criminal Law
Amendment Act 105 of 1997, as amended. The first appellant’s sentence was
accordingly altered to one of 15 years’ imprisonment. |
4077 | non-electoral | 2023 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 648/2022
In the matter between:
DIS-CHEM PHARMACIES LIMITED APPELLANT
and
DAINFERN SQUARE (PTY) LTD FIRST RESPONDENT
MPILO WINSTON DLAMINI N O SECOND RESPONDENT
NOBLE SPECTATUS FUNDS (PTY) LTD THIRD RESPONDENT
Neutral Citation:
Dis-Chem Pharmacies Limited v Dainfern Square (Pty) Ltd &
Others (648/2022) [2023] ZASCA 115 (27 July 2023)
Coram:
NICHOLLS, MOTHLE and MOLEFE JJA and KATHREE-SETILOANE
and MALI AJJA
Heard:
15 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
27 July 2023 at 11h00.
Summary: Alternative Dispute Resolution – jurisdiction of arbitrator – unjustified
enrichment – whether an arbitrator has jurisdiction over the appellant’s unjustified
enrichment claim – whether the application for an order declaring that the arbitrator
did not have jurisdiction to determine a claim of unjustified enrichment was premature
– whether the arbitrator erred in dismissing a special defence of jurisdiction as raised
by the first respondent.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Janse van
Nieuwenhuizen J sitting as court of first instance):
The appeal is upheld with costs, including costs of two counsel where so
employed.
The order of the high court is set aside and is substituted by:
‘1 The application is dismissed with costs; and
2 It is declared that the arbitrator has jurisdiction over the respondent’s claim.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Mothle JA (Nicholls and Molefe JJA and Kathree-Setiloane and Mali AJJA
concurring)
[1] This appeal concerns a dispute between a tenant and a landlord over the
interpretation of an arbitration clause in a written lease agreement. The crisp issue is
whether, on a correct interpretation of the arbitration clause, the second respondent
the arbitrator – Mr Mpilo Winston Dlamini SC – had the requisite jurisdiction to
adjudicate an enrichment claim, essentially for a refund of excess payment of turnover
rental, lodged by the appellant, Dis-Chem Pharmacies Limited (Dis-Chem) as the
tenant, against the first respondent, Dainfern Square (Pty) Ltd (Dainfern), its erstwhile
landlord.
[2] The background facts which are largely common cause are that during
October 2016 and at Johannesburg, Dis-Chem entered into a written lease agreement
with Dainfern, the owner of Dainfern Square Shopping Centre. In terms of the lease
agreement, Dis-Chem took occupation of shop 27 in the business premises and was
liable for payment of monthly rental and turnover rental to Dainfern. A formula for
calculation of Dis-Chem’s financial year-end turnover rental was expressed in
annexure ‘F’ to the lease agreement.
[3] The full text of annexure ‘F’ to the written lease agreement is attached to Dis-
Chem’s claim. Since the merits of the claim are yet to be considered and decided on,
it is unnecessary at this stage to refer to the full text of annexure ‘F’. In this judgment,
reference is made only to the material terms of the annexure as pleaded in the claim.
These are:
‘In terms of the agreement of lease [Dis-Chem] would let from [Dainfern] shop no 27 in the
Dainfern Square shopping centre.
. . .
The agreement of lease had the following express alternatively implied further alternatively
tacit terms (and the agreement of lease, properly construed, provided inter alia as follows):
…
The agreement of lease would commence on 1 June 2015 and [Dis-Chem’s] rental obligations,
from 23 July 2015;
Basic rental would be R115 p/m2 (subject to escalation at a rate of 7%, on 1 May of every
succeeding year);
In addition to basic rental [Dis-Chem] would be liable for payment of turnover rental calculated
in accordance with annexure “F” to the agreement of lease;
Turnover rental (with annexure “F” to the agreement of lease properly construed);
would be payable within two months from the end of each turnover period;
would be payable in addition to the basic rental; and
would be calculated as the amount equal to the difference between the basic rental (referred
to as “Gross Rental” in annexure “F”) and 1.75% of nett turnover (if any) and accordingly,
would be payable if and to the extent that 1.75% of nett turnover exceeds the basic rental;
. . .
A “turnover period” would be the period that commenced at the date of commencement of the
agreement of lease and ended at [Dis-Chem’s] financial year-end (and thereafter, on every
anniversary of [Dis-Chem’s] financial year-end).’
[4] In May 2020, Dis-Chem lodged a claim with the arbitrator in which it alleged that
on 20 May 2016, 19 May 2017 and 22 May 2018, Dainfern claimed payment of
turnover rental by issuing invoices in the amounts of R646 258.26, R1 543 300.34 and
R2 010 065.97 on those dates. Dis-Chem further alleged in the claim that it paid those
amounts as they were requested on 1 June of three consecutive years - 2016, 2017
and 2018 respectively. The payments made:
‘13.1 [W]ere made in the bona fide and mistaken belief that the amounts invoiced were due
and payable when, in truth, they were not, in that turnover rental:
13.1.1 Ought to have been calculated as the difference (if any) between basic rental and
1.75% of [Dis-Chem’s] nett turnover; and
13.1.2 Ought to have been payable only in the event and to the extent by which 1.75% of Dis-
Chem’s nett turnover, over a turnover period, exceeded the basic rental for the same period’.
[5] Dis-Chem alleged that when it paid the invoices, it made a bona fide (but
reasonable and mistaken) acceptance of the correctness of Dainfern’s invoices. No
turnover rental was payable in circumstances where 1.75% of Dis-Chem’s turnover in
any one of the relevant periods did not exceed the basic rental. Consequently, the total
amount invoiced in the three years, being R4 199 624.57 was an overpayment.
Therefore, Dainfern has been enriched and Dis-Chem impoverished to the extent of
the total amount, and despite demand, Dainfern has refused to repay the excess
amount. Dis-Chem specifically made an allegation in its claim that Dainfern was
unjustifiably enriched.
[6] It is apposite to mention that at the time Dis-Chem lodged the claim, Dainfern
had sold the property to the third respondent, Noble Spectatus Funds (Pty) Ltd (Noble
Spectatus Fund). Dis-Chem included an alternative claim against Noble Spectatus
Fund as successors in title. Consequently, Noble Spectatus Fund, as well as the
arbitrator, cited as the third and the second respondents respectively, did not
participate in this appeal. The dispute in this appeal is thus primarily between Dis-
Chem and Dainfern.
[7] Dainfern entered two special pleas to the claim: one on jurisdiction and the other
on prescription. It, however, did not plead over. In relation to the special plea of
jurisdiction, Dainfern contended that since Dis-Chem had sought an award for
payment on the basis of a condictio: (a) the claim is one in unjustified enrichment, and
not grounded in contract; and (b) the dispute does not pertain to the interpretation of
any provision of the agreement of lease or the implementation thereof. Dainfern
accordingly pleaded that the dispute fell beyond the ambit of the parties’ terms of the
arbitration agreement and consequently the arbitrator had no requisite jurisdiction to
determine the dispute in relation to the plea of prescription.
[8] Dainfern pleaded in the alternative (and only in the event that the first special
plea is not upheld), that in paragraph 12.1 of the statement of claim, Dis-Chem claimed
that on or about 1 June 2016, it paid to Dainfern an amount of R646 258.26 from the
invoice received in May 2016. Dainfern also pleaded that Dis-Chem ‘had knowledge
of the identity of the debtor, [Dainfern], and the facts from which the debt in the amount
of R646 258.26 allegedly arose, [which] is more than three years prior to the referral
of the dispute to arbitration, alternatively Dis-Chem could have acquired such
knowledge by exercising reasonable care. Dis-Chem’s claim has accordingly
prescribed to the extent of R646 258.26’. Significantly, Dainfern did not plead-over in
respect of the allegation that it applied an incorrect interpretation in generating the
invoices in the course of implementing the formula in annexure ‘F’, for collection of
turnover rental.
[9] Dis-Chem submitted the matter to the arbitrator who ruled that the central dispute
was one of interpretation of annexure ‘F’ to the lease agreement and consequently he
had jurisdiction to determine the claim. The arbitrator dismissed Dainfern’s special
plea. Dainfern applied to the Gauteng Division of the High Court, Pretoria (the
high court), which declared (per Janse van Nieuwenhuizen J) that the dispute did not
fall within the provisions of clause 33.1 of the lease agreement and was accordingly
incorrectly referred to arbitration by Dis-Chem. Dis-Chem sought and successfully
obtained leave to appeal the judgment and order of the high court, to this Court.
[10] Central to the crisp issue of the arbitrator’s jurisdiction, is the interpretation of
the arbitration clause 33.1 of the lease agreement, which provides:
‘In the event of any dispute or difference or doubt or question arising between the parties as
to the interpretation of any provision of this Agreement of Lease or the implementation thereof,
and the parties being unable to resolve the issue, then in the discretion of either party, the
issue shall be submitted to arbitration in accordance with the provisions of this clause and the
decision of the arbitrator/s or the umpire as the case may be, shall be final and binding upon
the parties.’
[11] In addition, and read with the arbitration clause, is clause 24 of the lease
agreement, which deals with the issue of jurisdiction and costs. It provides thus:
‘Should there be a breach of this agreement by the defaulting party then the aggrieved party
shall choose whether the dispute is to be brought in the Magistrate’s Court or by way of
arbitration as set out in clause 33 below.’
[12] In making his ruling, the arbitrator concluded that:
‘Dis-Chem’s claim for the turnover rental allegedly paid over to Dainfern, although not
specifically envisaged in the arbitration clause since the clause is silent about overpayment or
enrichment, it is in actual fact a claim relating to the lease agreement because it involves the
interpretation of annexure “F”.’ and … therefore [it is] referable to arbitration.’
[13] The high court in accepting Dainfern’s argument, similarly confined its remarks
and findings to the question of interpretation of clause 33.1. The learned Judge at the
outset, correctly held, with reference to the matter of Hos + Medical Aid Scheme v
Thebe Ya Bophelo Healthcare Marketing & Consulting (Pty) Ltd and Others1 that the
source of the arbitrator’s power is the agreement between the parties. She, however,
summarily concluded that since the arbitration clause ‘does not make provision for a
claim based on unjustified enrichment [it] does not find application.’
[14] On a proper construction of the text of the arbitration clause 33.1 of the lease
agreement, ‘any disputes or differences, doubts or question arising between the
parties’, may be categorised as either an interpretation of any provision of the
agreement of lease; or the implementation of the lease agreement. The phrase may
also be construed as including both interpretation and implementation as referenced
above.
1 Hos+Med Medical Aid Scheme v Thebe ya Bophelo Healthcare Marketing & Consulting (Pty) Ltd and
Others [2007] ZASCA 163; 2008 (2) SA 608 SCA; [2008] 2 All SA 132 (SCA).
[15] The high court adopted Dainfern’s approach, which essentially implies that the
claim by Dis-Chem should be viewed as consisting of two parts. The one component
is where Dainfern’s application of the formula to calculate turnover rental and issuing
the inflated invoices, is raised. Dainfern concedes that this part of the claim relates to
the interpretation of annexure ‘F’. It falls within the arbitrator’s jurisdiction. There is
thus no dispute in this regard.
[16] The disputed part of the claim relates to the relief sought by Dis-Chem, should
it succeed, on its interpretation, to prove that the invoices were incorrect. Dainfern
contends that the relief or award sought by Dis-Chem is in the form of unjustified
enrichment; which is a separate course of action that may raise ‘other requirements’.
It is this part of the claim, so continues Dainfern’s argument, which falls outside of the
agreement and beyond the terms of the arbitration clause 33.1 of the lease agreement.
The contention is that the arbitrator has no jurisdiction to make an award based on
unjustified enrichment. This is the nub of the objection to jurisdiction, on which the
high court also based its conclusion.
[17] The high court held that since the claim was one of enrichment, it contemplated
‘other requirements’ of enrichment, beyond the interpretation which would have to be
considered. It held that:
“These other requirements are not expressly mentioned in clause 33.1. This would entail that
the arbitrator may only adjudicate on the interpretation of annexure “F” to the agreement and
the remainder of the issues in dispute will need to be determined by another forum. This an
arbitrator may not do. In the words of Ponnan JA: “[t]he award or determination may therefore
not reserve a decision on an issue before the arbitrator or expert for another to resolve.”’
The quoted text attributed to Ponnan JA was extrapolated from Termico (Pty) Ltd v
SPX Technologies (Pty) Ltd & Others (Termico)2. I will return to this aspect later in the
judgment.
[18] In the present case, by concluding as it did, the high court erred in overlooking
the nature of the dispute. Central to Dis-Chem’s claim, as described by the arbitrator
in his award, is the determination of the dispute as to the correct interpretation in the
2 Termico (Pty) Ltd v SPX Technologies (Pty) Ltd and Others; SPX Technologies (Pty) Ltd v Termico
(Pty) Ltd [2019] ZASCA 109; 2020 (2) SA 295 (SCA).
course of the implementation of annexure ‘F’ of the lease agreement, relating to
turnover rental. Until that determination is made, the issue as to whether any party
was unjustifiably enriched or impoverished, does not arise. Less so ‘other
requirements’ that would go with enrichment which, as it turns out, do not appear
anywhere in the pleadings. Dainfern, in its response to Dis-Chem’s claim, had not
pleaded any ‘other requirements’ of unjustified enrichment and how ‘the other
requirements’ find application to exclude the jurisdiction of the arbitrator. Equally so,
the high court has not attempted to identify or define the ‘other requirements’ alluded
to.
[19] The conclusion of the high court based on these unnamed ‘other requirements’
amounts to speculation as to what may or may not arise in the course of the arbitration
of the dispute. Therefore, the high court’s reasoning is grounded on conjecture. Over
the years, the courts in South Africa, including this Court, relying on cases decided in
England, have developed the approach and principles applicable to the determination
of the scope of jurisdiction of an arbitrator. The following are some of the authorities
relevant to the issue in this appeal.
[20] In North East Finance v Standard Bank (North East Finance),3 this Court held:
‘In addition, a contract must be interpreted so as to give it a commercially sensible meaning:
Ekurhuleni Metropolitan Municipality v Germiston Municipal Retirement Fund.4 This is the
approach taken to considering the ambit of an arbitration clause adopted in Fiona Trust. We
must thus examine what the parties intended by having regard to the purpose of their contract.’
In adopting the approach of the courts in England, the court in North East Finance
referred to an address by Lord Hoffman in Fiona Trust, and held:5
‘It was necessary, therefore, Lord Hoffman said, to have regard to the purpose of the
agreement as a whole and of the arbitration clause in particular. In doing so, the court would
assume that generally parties intended to have all their disputes under an agreement
3 North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd [2013] ZASCA 76; 2013 (5) SA 1
(SCA); [2013] 3 All SA 291 (SCA) para 25.
4 Ekurhuleni Metropolitan Municipality v Germiston Municipal Retirement Fund [2009] ZASCA 154; 2010
(2) SA 498 (SCA); [2010] 2 All SA 195 (SCA) para 13. See also Natal Joint Municipal Pension Fund v
Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA); [2012] 2 All SA 262 (SCA) para 18.
5 Fn 5 above para 21.
determined by the same tribunal – not some disputes by an arbitrator and others by a court. If
the parties intended otherwise, it was easy enough for them to say so.’
[21] In Fili Shipping Co Ltd v Premium Nafta Products and Others,6 Lord Hoffmann,
delivering the speech with which all their lordships concurred, said:
‘In my opinion the construction of an arbitration clause should start from the assumption that
the parties, as rational businessmen, are inclined to have intended any dispute arising out of
the relationship into which they have entered or purported to enter to be decided by the same
tribunal. The clause should be construed in accordance with this presumption unless the
language makes it clear that certain questions were intended to be excluded from the
arbitrator’s jurisdiction.’
[22] The essence of Dis-Chem’s objection is that when Dainfern generated the
invoices it interpreted the calculation clauses incorrectly. There is no doubt that even
on a narrow construction, the objection to the invoices arises first, during the course
of the implementation of the calculation clause in annexure ‘F’ of the lease agreement;
and second, Dainfern applied a wrong interpretation of the calculations in annexure ‘F’
to the lease agreement. Therefore, the objection falls squarely within the ambit of
clause 33.1 and it is within the arbitrator’s jurisdiction.
[23] Dis-Chem submits, and correctly so, that the arbitration clause does not refer
to any course of action or any claim. It refers to ‘any dispute or difference or doubt or
question’. The entitlement it may have to recover from Dainfern depends entirely on
the determination of a dispute as to the correct interpretation and the implementation
of certain provisions of the lease agreement, in this case annexure ‘F’.
[24] In Zhongji Development Construction Engineering Company Limited v Kamoto
Copper Company Sarl (Zhongji),7 this Court, with reference to the seminal case in
England, stated as follows:
‘In Fiona Trust (which the House of Lords upheld in Fili Shipping), decided in the English Court
of Appeal, Longmore LJ, delivering the court’s unanimous judgment, said:
6 Fili Shipping Co Ltd v Premium Nafta Products and Others [2007] UKHL 40; [2007] Bus LR.
7 Zhongji Development Construction Engineering Company Limited v Kamoto Cooper Company Sarl
[2014] ZASCA 160; 2015 (1) SA 345 (SCA); [2014] 4 All SA 617 (SCA) para 32.
“As it seems to us any jurisdiction or arbitration clause in an international commercial contract
should be liberally construed. The words ‘arising out of’ should cover ‘every dispute except a
dispute as to whether there was ever a contract at all’.”
And
“One of the reasons given in the cases for a liberal construction of an arbitration clause is the
presumption in favour of one-stop arbitration. It is not to be expected that any commercial man
would knowingly create a system which required that the court should first decide whether the
contract should be rectified or avoided or rescinded (as the case might be) and then, if the
contract is held to be valid, required the arbitrator to resolve the issues that have arisen.”
[25] Also in Termico, this Court determined two principles relevant and applicable
to the present appeal. There, this Court dealt with an arbitration award that did not
include relief in the form of money. The arbitrators had refrained from including a
monetary value in the award, for the reason that it was not part of the claim. In
acquiring the shares, the claimant had received a loan from the respondent, whose
value, at the time of the arbitration, was not as yet determined. The high court
concluded that by failing to make an award for the value of the shares, the arbitrators
committed an irregularity. On appeal, this Court first held that the decision of the
arbitrators did not constitute any irregularity, as that case was not one where an
‘arbitrator neglected to determine all the disputes that had been referred to arbitration,
he/she in doing so, [would] commit a reviewable irregularity’. Here Dainfern went to
court to seek a review and declaratory relief in circumstances where there was no
misconduct or gross irregularity. In Termico, the second principle was that, a party can
only apply to review an arbitration award if all the disputes submitted to the arbitrator
have been disposed of in a manner that achieves finality and certainty.8
[26] Therefore Dis-Chem submits, correctly so, that Dainfern prematurely
approached the high court to seek a review against what it perceived to be a ‘wrong’
decision of the arbitrator. It couched the review in the form of declaratory relief, despite
being aware that the arbitration had not reached finality and certainty on the merits of
the claim. In Zhongji,9 this Court stated as follows:
8 Fn 2 above para 13.
9 Zhongji fn 9 above para 38.
‘Zhongji Construction’s application to the high court was accordingly premature and perhaps
unnecessary. In Geldenhuys and Neethling v Beuthin, Innes CJ said:
“Courts of Law exist for the settlement of concrete controversies and actual infringements of
rights, not to pronounce upon abstract questions, or to advise upon differing contentions,
however important. And I think we shall do well to adhere to the principle laid down by a long
line of South African decisions, namely that a declaratory order cannot be claimed merely
because the rights of the claimant have been disputed, but that such a claim must be founded
upon an actual infringement.”’
Thus, the reliance on the decision in Tzaneng Treated Timbers (Pty) Ltd v Komatiland
Forest SOC Limited and another10 that it was permissible for a court to grant declaratory
relief against a ruling of an arbitrator, before the arbitration had reached finality and
certainty on the merits, was clearly misplaced. The high court therefore, erred in
granting a declaratory order in circumstances where the merits of the claim had not
reached finality and certainty. The high court’s order must thus be set aside and the
appeal in this Court must succeed. I see no reason why the costs should not follow
the result.
[27] In the result, the following order is made
The appeal is upheld with costs, including those of two counsel where so
employed.
The order of the high court is set aside and is substituted by:
‘1 The application is dismissed with costs; and
2 It is declared that the arbitrator has jurisdiction over the respondent’s claim.’
____________________
SP MOTHLE
JUDGE OF APPEAL
10 Tzaneng Treated Timbers (Pty) Ltd v Komatiland Forest Limited and Another (A3966/2020) [2021]
ZAGPPHCSOC 376 (22 June 2021).
Appearances
For the appellant:
A J Daniels SC
Instructed by:
Saltzman Attorneys, Johannesburg.
EG Cooper Madjiedt Inc, Bloemfontein.
For first respondent: E Fagan SC and S Mathiba
Instructed by:
GVS Law, Durbanville.
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:
27 July 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
Dis-Chem Pharmacies Limited v Dainfern Square (Pty) Ltd & Others (648/2022) [2023] ZASCA 115
(27 July 2023)
Today the Supreme Court of Appeal (SCA) upheld Dis-Chem Pharmacies Limited’s (Dis-chem) appeal
with costs including costs of two counsel. It further set aside and substituted the order of the Gauteng
Division of the High Court, Pretoria (the high court).
During October 2016 at Johannesburg, Dis-Chem entered into a written lease agreement with Dainfern,
the owner of Dainfern Square Shopping Centre. In terms of the lease agreement, Dis-Chem took
occupation of shop 27 in the business premises and was liable for payment of monthly rental and
turnover rental to Dainfern. A formula for calculation of Dis-Chem’s financial year-end turnover rental
was expressed in annexure F to the lease agreement.
In May 2020, Dis-Chem lodged a claim with the arbitrator in which it alleged that on 20 May 2016,
19 May 2017 and 22 May 2018, Dainfern claimed payment of turnover rental by issuing invoices in the
amounts of R646 258.26, R1 543 300.34 and R2 010 065.97 respectively. Dis-Chem further alleged in
the claim that it paid those amounts as they were requested on 1 June of each year, further alleging
that when it paid the invoices, it made a bona fide (but reasonable and mistaken) acceptance of the
correctness of Dainfern’s invoices. Consequently, the total amount invoiced in the three years, being
R4 199 624.57 was an overpayment, in circumstances where 1.75% of Dis-Chem’s turnover in any one
of the relevant periods did not exceed the basic rental as no turnover rental was payable. Therefore,
Dainfern had been enriched and Dis-Chem impoverished to the extent of the total amount, and despite
demand, Dainfern refused to repay the excess amount. Dis-Chem specifically made an allegation in its
claim that Dainfern was unjustifiably enriched.
Dainfern entered a plea, consisting of two special pleas, to the claim. One special plea on jurisdiction,
and the other on prescription. First, Dainfern contended that since Dis-Chem had sought an award for
payment on the basis of a condictio: (a) the claim is one in unjustified enrichment, and not grounded in
contract; and (b) the dispute does not pertain to the interpretation of any provision of the agreement of
lease or the implementation thereof. Dainfern’s plea that the dispute fell beyond the ambit of the parties’
terms of the arbitration agreement and consequently the arbitrator had no requisite jurisdiction to
determine the dispute. Secondly, Dainfern specially pleaded that the debt in the amount of R646 258.26
allegedly arose more than three years prior to the referral of the dispute to arbitration and has
accordingly prescribed. Dis-Chem submitted the matter to the arbitrator who ruled that the central
dispute was one of interpretation of the annexure ‘F’ to the lease agreement and consequently he had
jurisdiction to determine the claim. The arbitrator dismissed Dainfern’s plea. Dainfern then applied to
the Gauteng Division of the High Court, Pretoria (the high court), which declared that the dispute does
not fall within the arbitration clause of the lease agreement and was accordingly incorrectly referred to
arbitration by Dis-Chem.
The issue before the SCA was whether, on a correct interpretation of the arbitration clause, the arbitrator
had the requisite jurisdiction to adjudicate the claim, essentially for a refund of excess payment of
turnover rental, lodged by Dis-Chem, as the tenant, against its erstwhile landlord, Dainfern Square (Pty)
Ltd (Dainfern).
The SCA, in dealing with the appeal, reasoned that central to the issue of the arbitrator’s jurisdiction, is
the interpretation of the arbitration clause 33.1 of the lease agreement. It further reasoned that on a
proper construction of the text of clause 33.1 of the lease agreement, the phrase ‘any disputes or
differences, doubts or question arising between the parties’, may be categorised in one or both two
instances. First, as it may concern an interpretation of any provision of the agreement of lease; and/or
second, as it may concern the implementation of the lease agreement. That being so, the initial step
was to consider whether the dispute, difference, doubt or question concerns any, or both the two
categories.
The SCA then held that the high court erred in overlooking the nature of the dispute as central to Dis-
Chem’s claim. The nature of the dispute as described by the arbitrator in his award, was the
determination of the correct interpretation of the agreement, in the course of the implementation of the
formula relating to the calculation of turnover rental. Until that determination was made, the issue as to
whether any party was unjustifiably enriched or impoverished, did not arise. The SCA further held that
the conclusion by the high court based on unnamed ‘other requirements’ amounts to speculation as to
what may or may not arise in the course of the arbitration of the dispute. Therefore, the high court’s
reasoning was grounded on conjecture.
Lastly, the SCA held that the high court erred in granting a declaratory order under circumstances where
the merits of the claim had not reached finality and certainty.
In the result, the SCA upheld the appeal with costs, including costs of two counsel where so employed,
set aside and substituted the high court’s order.
--------oOo-------- |
2249 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
No precedential significance
Case No: 686/08
NEDBANK LIMITED
Appellant
and
P U INJECTION MANUFACTURING (PTY) LTD First Respondent
SOUTH AFRICAN RESERVE BANK Second Respondent
Neutral citation:
Nedbank
Ltd
v
P
U
Injection
Manufacturing
(686/2008) [2009] ZASCA 61 (29 May 2009)
Coram:
STREICHER ADP, CLOETE and LEWIS JJA and LEACH
and TSHIQI AJJA
Heard:
22 May 2009
Delivered:
29 May 2009
Summary:
Claim for payment of money from a bank account in which
financial rand had been held refused where applicant unable to
prove any right to the money.
ORDER
On appeal from: Pretoria High Court (Pretorius and Preller JJ and Makhafola
AJ, sitting as a full court on appeal).
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the court of first instance is altered to read:
‘The application is dismissed with costs.’
JUDGMENT
LEWIS JA (STREICHER ADP, CLOETE JA AND LEACH AND TSHIQI AJJA
concurring)
[1] The question in this appeal is simple: did the first respondent, PU
Injection Manufacturing (Pty) Ltd (PUI) have a claim against the appellant,
Nedbank Ltd, for payment of the sum of R4 3242 817.16 plus interest? Its
application for an order for payment was granted by the court of first instance,
and that order was confirmed on appeal to a full court. Nedbank appeals with
the special leave of this court.
[2] The undisputed facts relevant to the determination of the question are
these. PUI required funding for a manufacturing business. The funding was to
be provided by a company, Olympus Investments Ltd (Olympus), registered in
Guernsey, the sole purpose of which, allegedly, was to make financial rand
available for the benefit of PUI and another company.
[3] On 22 November 1988 Nedbank, an authorized dealer in terms of the
Exchange Control Regulations (RG 45, GG 123, 1 December 1961) as
amended, submitted an application on behalf of Olympus to the South African
Reserve Bank for the release of financial rand to the value of some R12.5m.
(Curiously, Olympus was incorporated only on 30 November, after its
application was made, but nothing in this appeal turns on this.) On 12 January
1989, pursuant to the application, the Reserve Bank approved the release of
financial rand in the sum of R12.5m. The beneficiary of the application was
said to be PUI. The approval was, however, subject to various conditions, in
particular that the financial rand could be released only against the issuing of
ordinary shares at a premium in PUI.
[4] Funds introduced from overseas were converted into financial rand and
deposited in a financial rand suspense account in the name of P U Injection
Manufacturing Pty Ltd / Olympus Ltd at Standard Corporate Bank, Bramley.
Some of the financial rand were paid out, amongst others to PUI’s account
with Standard Merchant Bank, Bramley, leaving a balance of R2 497 793,80
in the financial rand suspense account and R415 027,54 in PUI’s account.
The papers do not disclose whether shares in the required form were ever
issued. On 5 May 1989 the Reserve Bank issued an order to the Standard
Bank of South Africa Ltd attaching all funds held in the name of P U Injection
Manufacturing / Olympus Ltd in terms of reg 22A(1)(a)(i), pending an
investigation by the Reserve Bank. We are not told why the attachment was
ordered nor whether there was an investigation, let alone its outcome.
Pursuant to the attachment the funds were transferred to the Reserve Bank’s
account at Standard Bank.
[5] Attachments in terms of reg 22A are, however, subject to the
provisions of reg 22A(3) which in effect provides that the Treasury must
release funds from attachment, unless they are forfeited in terms of reg 22B,
within a period of three years of the attachment. Regulation 22A(3) requires
that the Treasury must return the money to the person ‘in whose possession it
has been found or the person entitled thereto’.
[6] The financial rand attached were in fact released on 22 October 1992,
three years and five months after attachment. The funds, plus interest, were
transferred by Standard Bank to Nedbank (on the instruction of the Reserve
Bank) by means of a SWIFT (Society for World Wide Interbank Financial
Telecommunication) message. The beneficiary customer was stated to be
Olympus. It is not disputed that SWIFT messages inter banks are binding.
Since the money was regarded as foreign currency, being financial rand, it
could be paid out only with the permission of the Reserve Bank.
[7] Some ten years later PUI finally settled its dispute with the Reserve
Bank and the Reserve Bank wrote to Nedbank on 25 September 2002
advising that the funds could be released. I shall revert to this letter. When
PUI subsequently requested payment of the funds in the Nedbank Olympus
account it was advised that all moneys in the account had been paid out to
two other entities. PUI maintains that Nedbank is nonetheless obliged to pay
to it the sum transferred by Standard Bank in 1992 since it, and not Olympus,
should have been the beneficiary of the payment.
[8] PUI’s claim is founded on the assertion, made in the founding affidavit,
that the SWIFT message ought to have referred not to Olympus, but to PUI
Manufacturing (Pty) Ltd/ Olympus. PUI contends that this is so since the sole
purpose of Olympus was to pay funds into an account for the benefit of PUI.
The assertion is not substantiated by anything else. There is no such entity as
PUI Manufacturing (Pty) Ltd/Olympus. And of course the entitlement of PUI to
the funds paid by Olympus was dependent on the issue of shares in the
company to Olympus. There is no evidence – and not even an allegation –
that those shares were issued. There is thus nothing to suggest that PUI was
entitled to the funds at any stage.
[9] PUI nonetheless contends that the Reserve Bank letter of 25
September 2002 to Nedbank’s legal adviser amounted to an instruction to
Nedbank to pay the moneys in the Olympus account to PUI. The letter stated
that the matter between the Exchange Control Department of the Reserve
Bank and PUI/Olympus had been ‘settled’, and that the funds paid in to
Nedbank in October 1992, plus interest, should be transferred to the trust
account of PUI’s attorney.
[10] The letter does not, contrary to PUI’s contention, confer any right on
PUI. It does no more than indicate that the funds may be released in view of
the settlement. The Reserve Bank, in the letter, does not purport to give any
right to PUI to claim payment, nor could it do so. After all, it had some ten
years previously, released the funds from attachment, hence the SWIFT
transfer from Standard Bank to Nedbank.
[11] In view of the fact that PUI has shown no right to the funds that were
transferred into the Nedbank Olympus account, its claim should have failed
and the appeal must succeed.
[12] It is thus ordered that:
1 The appeal is upheld with costs, including the costs of two counsel where so
employed.
2 The order of the court of first instance is altered to read:
‘The application is dismissed with costs.’
______________
C H Lewis
Judge of Appeal
APPEARANCES:
FOR APPELLANT:
J G Wasserman SC
P T Rood
Cliffe Dekker Hofmeyer Inc
Pretoria
Instructed by
Webbers Attorneys
Bloemfontein
FOR RESPONDENT:
D A Gordon SC
H C Janse van Rensburg
Julian Pokroy Attorneys
Pretoria
Instructed by
Horn & van Rensburg Attorneys
Bloemfontein | SUPREME COURT OF APPEAL OF SOUTH AFRICA
PRESS RELEASE
STATUS: Immediate
Nedbank Ltd v P U Injection Manufacturing (686/2008) [2009] ZASCA x (x
May 2009)
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 the decision of
a full court of the High Court, Pretoria, which had confirmed an order of the
court of first instance, ordering Nedbank to pay a substantial sum of money to
P U Injection Manufacturing (PUI).
PUI had claimed payment of financial rand that had been attached by the
Reserve Bank in 1989, and subsequently transferred into an account, in the
name of another entity, Olympus, at Nedbank in 1992. PUI and the Reserve
Bank had settled their dispute over the funds in 2002, hence the claim for
payment of the funds in 2005.
The SCA found that PUI had not established any right to the money
transferred into the account of Olympus. It thus upheld the appeal by
Nedbank against the order that it pay the funds plus interest to PUI.
--------- |
1266 | non-electoral | 2008 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
CASE NO 519/2007
In the matter between
OVATION PRESERVATION PENSION FUND
First Appellant
OVATION PRESERVATON PROVIDENT FUND
Second Appellant
OVATION PRESERVATION ANNUITY FUND
Third Appellant
and
EXECUTIVE OFFICER OF THE FINANCIAL
SERVICES BOARD
Respondent
Coram:
Scott, Mlambo JJA and Hurt, Leach, Kgomo AJJA
Heard:
21 MAY 2008
Delivered:
02 JUNE 2008
Summary:
Appointment of a curator to take control and management of an institution under
s 5 of the Financial Institutions (Protection of Funds) Act 28 of 2001 – court having a wide
discretion and entitled to order that the costs of curatorship be defrayed from the assets of
investors held by the institution – court further entitled to restrict payments to investment
beneficiaries and disinvestment from the institution under curatorship.
Neutral citation:
Ovation v Executive Officer Financial Services Board
(519/2007) [2008] ZASCA 82 (02 JUNE 2008)
___________________________________________________________
LEACH AJA
[1] On 2 March 2007 the Cape High Court granted a provisional order in
terms of s 5(2) of the Financial Institutions (Protection of Funds) Act 28 of 2001
(the “FI Act”) placing the whole of the businesses of two companies known as
Ovation Global Investment Services (Pty) Limited (“Ovation Services”) and
Ovation Global Investment Nominees (Pty) Limited (“Ovation Nominees”) under
curatorship. Despite a number of intervening parties, including the three
appellants, having opposed certain aspects of the relief sought, the provisional
order was confirmed on 14 June 2007, albeit with certain amendments
suggested by counsel. That judgment is now reported as Executive Officer
Financial Services Board v Ovation Global Investment Services (Pty) Limited &
Another (Ovation Preservation Pension Fund and Others Intervening) 2008 (3)
SA 69 (C). The appeal is with the leave of the court a quo.
[2] While not seeking to contest the decision to issue an order of curatorship,
the three appellants contend that certain terms of the order had been beyond the
authority of the court a quo and amount to a restriction on their rights not
authorised by the FI Act.
[3] Ovation Services is what is known in the financial world as a “LISP”,1
which conducts business by investing moneys on behalf of its clients in various
investment schemes and financial products. To the benefit of its clients, it “bulks”
or aggregates the funds invested with it when buying or selling financial products.
However, the investment of each client is administered separately with a detailed
record of investments being maintained and regular investment statements being
issued to the client.
[4] Investments made by a LISP are typically channeled through a nominee
company. In the case of Ovation Services, its nominee was its fully owned
1 An acronym for ”Linked Investment Services Provider”.
subsidiary, Ovation Nominees. Both Ovation companies were closely associated
with two asset management companies, Common Cents Investment Portfolio
Strategists (Pty) Limited (“Common Cents”) and Fidentia Asset Management
(Pty) Limited (“Fidentia”). In particular, substantial cash investments made by
clients of Ovation Services were placed through Ovation Nominees in a cash
portfolio administered by Common Cents.
[5] It is unnecessary for present purposes to analyse precisely what went
wrong. Suffice it to say the businesses of Common Cents and Fidentia were
plagued by alleged administrative chaos, misappropriations and other
irregularities which eventually led to them both being placed under curatorship in
terms of section 5 of the FI Act. This had a negative effect on the Ovation
companies, whose liquidity and accounting difficulties were further exacerbated
by the resignation of key directors and personnel. This unhappy picture caused
retirement funds which had invested in Ovation Services to threaten to place their
business elsewhere and the underwriters of a post-retirement annuity product
marketed by Ovation Services to instruct that no new living annuity business be
concluded. This precipitated a cash crisis and a major shareholder in Ovation
Services threatened to bring liquidation proceedings. Fortunately, a large
insurance company was prepared to consider extending financial assistance to
the Ovation companies and the respondent, the executive officer of the Financial
Services Board, decided to apply for curators to be appointed to them under
section 5 of the FI Act, which application was successful as already detailed
above.
[6] Each appellant is a registered pension fund as defined in the Pension
Funds Act, 24 of 1956. They had each concluded an agreement with Ovation
Services to administer its business and had invested substantial funds with it.
Each had also entered into an agreement with Ovation Nominees which had
undertaken to hold assets on its behalf. The appellants viewed the terms of the
provisional order to be an unjustified interference with their rights of ownership in
their investments, and opposed the curators’ entitlement to restrict both their right
to disinvest and the payment of pension benefits to their members. They also
opposed the curators’ authority to defray the costs of the curatorship from their
investments. Despite their opposition, the order granted on 14 June 2007
provided as follows (I quote only those portions of the order relevant to the
present debate):
‘4.2
Investments in or administered by the business or companies shall not without the prior
approval of the Registrar be withdrawn, transferred or otherwise disinvested from the
business or companies.
5.
The curators are hereby:
5.1
authorised to maintain control of, and to manage and investigate the business and
operations of and concerning the companies, together with all assets and interests
relating to such business, such authority to be exercised subject to the control of the
Registrar in accordance with the provisions of section 5(6) of the Act, and with all such
rights and obligations as may pertain thereto;
5.2
vested with all executive powers which would ordinarily be vested in, and exercised by,
the board of directors or members of the companies, whether by law or in terms of their
articles of association, and the present directors, members or managers of the
companies continue to be divested of all such powers in relation to the business;
5.3
…
5.4
…
5.5
authorised, in their discretion and depending on available resources, to maintain
payments to annuitants, pensioners and other beneficiaries who receive regular
payments;
5.6
directed to take custody of the cash, cash investments, stocks, shares and other
securities held or administered by the companies, and of other property or effects
belonging to or held by or on the instructions of the companies or any entity directly or
indirectly controlled by, affiliated to or associated with the companies;
5.7
…
5.8
subject to paragraph 7 below authorised to incur such reasonable expenses and costs as
may be necessary or expedient for the curatorship and control of the business and
operations of the companies, and to pay same from the assets held, administered or
under the control of the companies;
5.9
subject to paragraph 7 below permitted to engage such assistance of a legal, accounting,
administrative, or other professional or technical nature, as they may reasonably deem
necessary for the performance of their duties in terms of this order and to defray
reasonable charges and expenses thus incurred from the assets held by or under control
of the companies;
…
6.
… (T)he costs of these proceedings, as between attorney and own client, and the costs
and remuneration of the curators shall be payable by the companies, jointly and
severally, and to the extent that the assets of the companies are insufficient for that
purpose, and only to the extent of any such insufficiency, out of the assets or investments
of investors administered by or under the control of the companies pro rata the value of
such assets or investments of each investor in relation to the total value of investors’
assets or investments administered by or under the control of the companies on 2 March
2007; ...
7.
In funding the expenses and costs of curatorship referred to in paragraphs 5.8 and 5.9
above and the applicant’s costs of this application … the curators shall first utilise the
resources of the companies, jointly and severally, and only if those resources are
insufficient for that purpose, and only to the extent of any such insufficiency, out of the
assets or investments of investors administered by or under control of the companies pro
rata the value of such assets or investments of each investor in relation to the total value
of investors’ assets or investments administered by or under the control of the companies
on 2 March 2007...’.
[7] In this court, the appellants essentially seek to impugn the competency of
the court a quo to grant the relief set out in paragraphs 4.2, 5.5 and 5.6 of the
order (and certain of the ancillary terms related thereto) as well as those
provisions (eg in paragraphs 5.8 ,6 and 7) entitling the curators to seek to
recover costs from the assets and investments of investors. I interpose to
mention that it is common cause that the appellants’ investments in the Ovation
companies constituted “trust property” as defined in s 1 of the F1 Act, and were
protected by s 4(5) which provides that “trust property” as so defined “invested,
held, kept in safe custody, controlled or administered by a financial institution or
nominee company under no circumstances forms part of the assets or funds of
the financial institution or such nominee company”. It was accepted by all parties
that the appellants’ investments therefore remained their property and were not
assets in the Ovation companies. In the light of this, the appellants’ first
contention was that as their investments were not assets of the Ovation
companies, the curators were not entitled to recover any costs from them.
Secondly, the appellants argued that the curators’ function was no more than to
take control of and to manage the business of the companies. They therefore
argued that the terms and conditions of the administration and nominee
agreements remained of full force and effect, and that not only were the curators
obliged to pay whatever benefits were due to them and their clients as and when
they fell due under these agreements, but that they could withdraw their
investments if they were contractually entitled to do so and that the court a quo
had not been entitled to restrict any such payment or withdrawals.
[8] The origin of the form of curatorship arising in cases of this nature appears
to have been s 6 of the Financial Institution (Investment of Funds) Act 56 of 1964
which provided in certain circumstances for the appointment of a curator, acting
under the control of the court, to take control of and to manage the whole or part
of the business of a financial institution. That Act was replaced by the Financial
Institution (Investment of Funds) Act 35 of 1984, s 6 of which was in similar terms
to s 6 of the 1964 Act. In turn, the 1984 Act was in due course repealed and
replaced by the current FI Act, s 5(5) of which reads as follows:
‘The court may make an order with regard to –
(a) the suspension of legal proceedings against the institution
for the duration of the curatorship;
(b) the powers and duties of the curator;
(c) the remuneration of a curator appointed provisionally
under subsection (2) (a) or finally under subsection (4);
(d) the costs relating to any application made by the registrar
under subsection (1);
(e) the costs incurred by the registrar in respect of an
inspection of the affairs of the institution concerned in
terms of the Inspection of Financial Institutions Act, 1998
(Act 80 of 1998); or
(f) any other matter which the court deems necessary.’
[9] Sections (5)(b) and (f) are open ended and extend a wide discretion to the
court. The reason for this is clear. A wide range of persons fall within the
definition of an “institution” which may be placed under curatorship in terms of s
5. The definition in s 1 of the FI Act refers, inter alia, to a “financial institution”
which is, in turn, defined as including not only a medical scheme but also any
other person or institution referred to in the definition of a “financial institution” in
s 1 of the Financial Services Board Act 97 of 1990. The latter definition includes
pension funds, friendly societies, unit trust schemes, participation bond schemes,
stock exchanges, registered insurers, insurance brokers and mutual banks (this
list is not exhaustive).
[10] In the light of the array of “institutions” as defined which could be placed
under curatorship, even the wisdom of Solomon would have been taxed in both
anticipating what would arise and need to be addressed in every case and
drafting an exhaustive list of powers that curators would require. In enacting s
5(5)(b) and (f) the legislature therefore granted the court a wide discretion to craft
out an appropriate order to meet the exigencies of each individual case.
[11] The essential feature of an order in terms of s 5 is that it vests in the
curator the management and control of the business of the institution. The order
neither changes the nature of the trust assets held by the institution nor
extinguishes the institution’s contractual rights and obligations, and certainly
does not vest ownership of the trust assets in the institution. But that does not
mean that the enjoyment of the full rights of ownership in the trust assets will not
be affected. By its very nature, the order impacts upon the institution and, for
the institution to be steered through a crisis, drastic steps might have to be taken,
even if they impinge upon the rights of third parties. Cf. Conze v Masterbond
Participation Trust Managers (Pty) Ltd 1996 (3) SA 786 (C) at 798A-C.
[12] Bearing that in mind, I turn now to consider the submission that the court
was not authorised to order that any portion of the costs of the curatorship be
defrayed from trust assets, this being the aspect of the appeal which attracted
the most attention during argument. As I have said, simply put, it is the
appellants’ argument that as the trust assets vest in them and not in the Ovation
companies, the curators should not be entitled to look to such assets for that
purpose.
[13] While not necessarily axiomatic, it stands to reason that in many cases in
which an order of curatorship is required, the institution concerned will be in poor
financial shape. This the legislature must have appreciated, and it is significant
that while s 6(8) of both the 1964 and the 1984 FI Acts provided for the curator to
be remunerated out of the funds of the institution under curatorship, this provision
was not carried over to the current FI Act and s 5(5) leaves it up to the court to
make an order with regard to the curator’s remuneration. As the funds of the
institution under curatorship will often be insufficient to defray the costs and
expenditure incurred in the curatorship, including the curator’s renumeration, the
question may be asked from what source did the legislature envisage the
additional funds would be forthcoming?
[14] In seeking to answer this question, it was argued by the appellants that
the respondent is to be held responsible for whatever expenditure the institution
under curatorship could not meet, particularly as the curator acts under the
control of the respondent and may have to apply to him for instructions in regard
to any matter arising out of or in connection with the control and management of
the institution’s business.2 This argument was founded on s 3 of the Financial
Services Board Act 97 of 1990 (“the FSB Act”) which provides that one of the
respondent’s functions is to supervise compliance with laws regulating financial
institutions and the provision of financial services. It was argued that the costs of
the curatorship were incidental to this function and that, as s 16(1)(b) of the FSB
Act entitles the board to raise money, inter alia, by way of levies imposed on
financial institutions, and as s 16(3) of the FSB Act obliged the board to utilize its
funds for the “defrayal of expenses incurred by the board in the performance of
its functions”, the respondent could use those funds to pay the costs of
curatorship.
[15] In my view, this argument cannot be upheld. It is clear that the funds
obtained by the Financial Services Board by way of levies are to be used by the
board in the performance of its functions, and while those functions involve the
supervision of compliance with laws regulating financial institutions and the
provision of financial services, they do not include the running of an institution
under curatorship. While the respondent, as executive officer of the board, is
entitled to apply for an order appointing a curator, the curator and not the
respondent, thereafter administers the institution. The costs and expenses
incurred in running an institution under curatorship are a product of that
curatorship. They cannot be construed as being expenses incurred by the board
in the performance of its functions, and a court cannot order the board to bear
them.
[16] The answer to the question who should bear the costs of the curatorship
should the institution’s own funds be insufficient for that purpose, is, I think, clear.
The curatorship is there to protect the assets of investors, and I can see no
2 S 5(6) of the FI Act.
reason why, when necessary, those investors should not bear any costs in
respect of the curatorship intended to benefit them. Indeed, I can see no reason
why any person other than the persons in whose favour the curatorship was
granted should bear any costs related thereto in the event of the institution’s
funds being insufficient. I therefore have no difficulty in concluding that the court
a quo was entitled to grant the order it did in respect of the costs of the
curatorship.
[17] I turn to deal with paragraph 4.2 of the court’s order. As I have said, the
court was endowed with a wide discretion under s 5(5)(f) to make an order
regarding “any other matter which (it) deems necessary”. Drastic times require
drastic measures, as was recognized by the legislature in s 5(5)(a) which
specifically authorises the issue of an order suspending legal proceedings
against an institution for the duration of its curatorship, a moratorium which
would render it impossible for a third party to seek to enforce a right to disinvest. I
can therefore see no reason why an order authorizing a restriction on
disinvestment could not have been countenanced.
[18] There are also sound policy reasons justifying a restriction on
disinvestment. Common experience teaches us that even a vague suggestion of
financial instability on the part of an institution will inevitably result in it being
flooded with investors seeking to withdraw their investments, thereby threatening
its very existence. Of this the legislature must have been aware, and must have
envisaged a court, granting an order of curatorship, taking steps to guard against
such an outcome. Bearing that in mind, I have no difficulty in concluding that the
court a quo was entitled to impose restrictions upon disinvestment during the
period of curatorship.
[19] By a process of similar reasoning, I conclude that s 5 also entitled the
court a quo to place restrictions upon the payment of pension benefits to
members of the appellants’ pension funds. Even if the members are paid less
than what they are entitled to receive, their contractual rights remain extant and
are not extinghuished by the order of curatorship which will allow them to claim
any unpaid balance after it has been lifted. But in preserving the trust assets of
an institution in financial distress, it might at times be necessary to place
restrictions on an outflow of funds to avoid the institution’s demise. This
conclusion is reinforced by the specifically authorised moratorium in respect of
legal proceedings. If the legislature contemplated that a person entitled to a
benefit could not sue to recover benefits, it must also have envisaged a court
placing a temporary restriction on payment of those benefits.
[20] Accordingly, I am unpersuaded that any of the provisions of the order of
the court a quo were either beyond the court’s powers or inappropriate. The
appeal must fail, with costs.
[21] I make the following order:
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
____________________
L E LEACH
ACTING JUDGE OF APPEAL
CONCUR:
)
SCOTT JA
)
MLAMBO JA
)
HURT AJA
)
KGOMO 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:
02 June 2008
Status:
Immediate
OVATION PRESERVATION v EXECUTIVE OFFICER OF THE FINANCIAL
SERVICES BOARD
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 June 2007, the Cape High Court granted an order under s 5(2) of the
Financial Institutions (Protection of Funds) Act 28 of 2001 placing Ovation
Global Investment Services and its subsidiary, Ovation Global Investment
Nominees, under curatorship. The appellants, three pension funds, contended
that certain conditions of that order interfered with their rights in their
investments in those companies. To that extent they appealed against these
conditions which restricted both disinvestment from the companies and the
payment of pension benefits to their members. They also appealed against an
order that the costs of the curatorship could, if necessary, be defrayed from
their investments.
The Supreme Court Of Appeal dismissed the appellants’ contentions. It held
that the High Court had wide powers under s 5 and that the conditions
appealed against had been within its powers to impose.The appeal was
therefore dismissed. |
2258 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number: 214/2008
In the matter between:
SPEARHEAD PROPERTY HOLDINGS LTD Appellant
and
E & D MOTORS (PTY) LTD Respondent
Neutral citation: Spearhead Property Holdings Ltd v E & D Motors (Pty)Ltd
(214/2008) [2009] ZASCA 70 (1 June 2009)
Coram:
MPATI P, MTHIYANE, LEWIS, MAYA JJA and HURT AJA
Heard:
17 MARCH 2009
Delivered: 1 JUNE 2009
Summary: Lease – whether an option to purchase leased property is
binding on a lessor’s successor-in-title by virtue of the rule
‘huur gaat voor koop’ – whether lease agreement ought to be
rectified.
_____________________________________________________________
ORDER
On appeal from: Cape of Good Hope Provincial Division (Zondi J sitting
as court of first instance).
The appeal is allowed with costs, such costs to include the costs of
two counsel.
The order of the court below is set aside and the following order
substituted therefor:
‘The plaintiff’s claim is dismissed with costs, such costs to include the costs
of two counsel.’
JUDGMENT
MAYA JA (Dissenting)
[1] This appeal turns on the enforceability of an option to purchase
business premises situate at Shop 1, Ottery Hypermarket Shopping Centre,
Ottery, Cape Town (the premises) which was granted to the respondent as
lessee by its erstwhile lessor, Quantum Leap Investments 230 (Pty) Ltd
(Quantum) in terms of a lease agreement concluded on 19 February 2003.
[2] During October 2002, Mr M S Adams and his wife, Mrs N Adams,
negotiated to hire premises from Quantum on behalf of a company named
Expectra 534 (Pty) Ltd (Expectra). Mr Adams was Expectra’s managing
director. Pursuant to the negotiations, Quantum and Expectra concluded an
‘offer to lease’ which was to remain binding until substituted by a standard
lease agreement. To that end, Clause 10(b) of the Offer to Lease provided:
‘On acceptance of this Offer the Lessor’s standard Agreement of Lease will be prepared
and signed by both parties in substitution of this Agreement within 30 days of date
hereof. In the event that both or either of the parties refuse or fail to sign such standard
Lease Agreement, then this Agreement shall continue to bind both parties.’
[3] By agreement initiated by Mrs Adams between Quantum and
Expectra, the respondent, a Toyota car franchise with, incidentally, the same
three directors as Expectra, substituted the latter as the tenant in the final
lease agreement (the lease agreement). The respondent signed it on 19
November 2002 and commenced building alterations to the premises to suit
its trading specifications. It took occupation of the premises in February
2003.
[4] Both the offer to lease and the lease agreement granted the respondent
an option to purchase the premises. Clause 16.1 of the offer to lease
provided:
‘The landlord will provide the tenant with an option to purchase the property for R2 000
000.00 excluding VAT for a 24-month period from date of occupation, subject to
approval from Pick `n Pay [the landlord’s anchor tenant], approval from the City Council
for sub-division and approval from Quantum Leap Investments 230 (Pty) Ltd for
reciprocal access and parking agreement (See plan attached).’
These provisions were replicated in Clause 7 of the lease agreement, albeit
without the conditions relating to VAT and the various forms of approval
from Pick `n Pay, the City Council and Quantum (I shall deal with the
omission of the conditions later) and read:
‘Area of Leased Premises:
7.1
This lease automatically entitles the tenant with the first option to purchase the
said property as per annexure “E” [the site plan] within 2 years of date of
signature hereof, the property totalling 3445sqm i.e. 1779sqm in addition to the
leased premises.
7.2
The said property referred to in 7.1 above, shall constitute the entire area leased in
terms hereof i.e. 847sqm plus an additional 529sqm for the extension and 290sqm
for the undercover vehicle display, totalling 1666sqm.
7.3
It is further hereby expressly agreed that the tenant will be entitled to upon
signature hereof also utilize the additional space referred to above (819sqm)
which is situated at the front of the leased premises.’
[5] A few days after Quantum signed the lease agreement, on 25
February 2003, it sold the entire shopping centre to the appellant which took
transfer on 15 June 2003. It is clear from the relevant deed of sale concluded
by Quantum and the appellant that the latter had notice of the respondent’s
option at the time of purchase as clause 6.4.2, one of its warranty provisions,
provides:
‘The Seller [Quantum] warrants and undertakes to the Purchaser [the appellant] … no
agreements have been entered into by the Seller whereby any restrictive conditions or
servitudes or other real rights attach to the property or in terms of which any person,
natural or corporate, is entitled to obtain any real rights to the property, save for existing
tenant, Ottery Toyota, [the respondent] who have limited rights to purchase their section
subject to a subdivision of the land.’ (My emphasis.)
[6] Shortly after transfer, during June or July 2003 according to the
pleadings, the respondent sought to exercise the option against the appellant
by way of an undated letter. In correspondence that followed, the appellant
pointed out that the respondent’s option was subject to the conditions
reflected in the offer to lease. This was denied by the respondent. The final
letter from the appellant’s attorneys, dated 28 October 2004, reads:
‘Our client considers that it is bound by the option agreement but that due to an error
common to the parties, the three conditions contained in the offer to rent were not carried
forward into the ultimate lease agreement and that the lease agreement accordingly falls
to be rectified.’
[7] The respondent had, in the meantime, obtained a written undertaking
from Pick `n Pay that the latter did not object to the respondent’s
contemplated purchase of the premises. More correspondence flowed
between the parties but the impasse remained. Consequently, the respondent
instituted action proceedings against the appellant in the Cape High Court.
The basis of its claim, which was pursued in this court, was that the
appellant substituted Quantum and was bound by the option, which was an
integral part of the lease agreement, as Quantum’s rights and obligations
concerning that agreement were assigned to it through the purchase and that
the appellant had accepted and implemented such assignment. It was
alternatively contended that the appellant had acknowledged the option’s
existence and exercise albeit in different terms. The assignment therefore
arose from the rule ‘huur gaat voor koop’ – hire takes precedence over sale
– alternatively clause 6.4.2 of the deed of sale and the appellant’s letters
acknowledging the option.
[8] The appellant raised various defences, including that it had not
become party to the option the purported exercise of which it contended was,
in any event, invalid for failure to comply with the provisions of s 2(1) of the
Alienation of Land Act 68 of 1981 (the Act).1 It also counterclaimed for
1 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.’
rectification of the lease agreement to incorporate the disputed conditions in
the event that a finding was made in the respondent’s favour.
[9] The matter was heard by Zondi J, who, on the strength of the
respondent’s submissions, ordered the appellant to procure the approval of
the Cape Town City Council for the subdivision of the premises and effect
transfer to the respondent, but dismissed its counterclaim for rectification.
The learned judge then granted the respondent leave to appeal to this court
only in respect of the validity of the option. Upon further application to this
court, the appellant was granted leave to appeal against the dismissal of its
counterclaim and a directive was issued for all the issues to be determined
simultaneously.
[10] The issues on appeal2 are (a) whether the option became binding
upon the appellant as a result of its purchase of the premises by virtue of
either the operation of the rule ‘huur gaat voor koop’ or on any other legal
basis; (b) whether the respondent’s exercise of the option against the
appellant gave rise to a valid agreement of sale which met the requirements
of the Act notwithstanding the absence of a new written deed of sale; and, if
the answer to (a) and (b) is ‘Yes’, (c) whether the terms of the option ought
to be rectified as claimed by the appellant in its counterclaim.
[11] In sum, the appellant’s contentions before us were (a) that the
operation of the rule ‘huur gaat voor koop’ does not, as a matter of law,
result in the transfer from the original lessor to the new owner of the rights
2 Some of the issues argued in the court below and raised in the appellant’s heads of argument in this court
as grounds of appeal were correctly abandoned at the commencement of argument before us.
and obligations contained in an option to purchase immoveable property
reflected in a lease agreement upon the sale of the property; (b) that the said
rights and obligations are not incidents of the lease which can be transferred
to the new owner, and thus remain effective only between the lessee and the
original grantor of the option; and (c) that the option must be signed by both
the grantor and the grantee to amount to a written deed of alienation as
envisaged by s 2(1) of the Act – one signed by both parties or their agents
acting on their written authority – to be enforceable.
[12] In considering whether the ‘huur gaat voor koop’ rule is relevant to
the resolution of the issues it is necessary to examine briefly its source and
the development of the principles which relate to it. In that regard, the
following may be gleaned from various texts on our law and decisions of our
courts.3 In Roman law a lessee did not have a real right in the leased
property, but merely enjoyed a personal right against the lessor on the lease
contract. If the lessor sold the property the buyer could generally evict the
lessee as he had no duty to recognise the lessee’s rights of occupation under
the lease, unless he had undertaken to do so.
[13] As a result of the lessee’s untenable situation and a need to cure the
inequity, the rule evolved from local customs and legislation relating to the
lease of land and housing in parts of the Netherlands and Holland as an
equitable measure to give the lessee security of tenure where the leased
3 Scrooby v Gordon & Co 1904 TS 937; Boshoff v Theron 1940 TPD 299; Archibald v Strachan 1944 NPD
40; J C De Wet ‘“Huur gaat voor koop” and the Proviso to Section 2 of the General Law Amendment Act,
No 50 of 1956’ (1970) 87 SALJ 137; J C De Wet (1944) 8 THRHR 74; W E Cooper ‘Landlord And Tenant’
2 ed p 274; A J Kerr ‘The Law of Sale and Lease’ (1984) p 277; De Jager v Sisana 1930 AD 71; De Wet v
Union Government 1934 AD 59; Thipa v Subramany 1954 (4) SA 126 (N); Kessoopersadh en `n ander v
Essop en ‘n ander 1970 (1) SA 265 (A); Mignoel Properties (Pty) Ltd v Kneebone 1989 (4) SA 1042 (A);
Gennae-Wae Properties (Pty) Ltd v Medio-Tronics (Natal) (Pty) Ltd 1995 (2) SA 926 (A).
property was alienated. It became part of Roman-Dutch law and, ultimately,
South African law in that form.4 The rule therefore has its origins in
equitable principles and, apart from the fact that it applies to agreements of
the letting and hiring of land and buildings, has never been clearly defined
regarding its precise scope and consequence.
[14] This much is, however, settled in our law: successors in title to
owners of leased property are bound to recognise the existence of the lease
and an ex lege substitution of the purchaser for the lessor-seller takes place
in the lease upon sale of such property. Thus, the rule relieves the seller of
all rights and obligations flowing from the lease which are transferred to the
buyer on transfer.5 This view found expression in the Mignoel Properties6
decision on which the respondent heavily relied. There, this court said:
‘[O]nce the lessee elects to remain in the leased premises after a sale, the seller ex lege
falls out of the picture and his place as lessor is taken by the purchaser. No new contract
comes into existence; all that happens is that the purchaser is substituted for the seller as
lessor without the necessity for a cession of rights or an assignment of obligations. On
being so substituted for the seller, the purchaser acquires all the rights which the seller
had in terms of the lease, except, of course, collateral rights unconnected with the lease.’
This position has been endorsed in later decisions of this court: Gennae-Wae
Properties7 and SA Breweries Ltd v Van Zyl.8
[15] A question arises whether it can be accepted on the basis of these
principles that in stepping into Quantum’s shoes in terms of the lease
agreement, the appellant also acquired the obligation relating to the
4 Graham v Local & Overseas Investments (Pty) Ltd 1942 AD 95.
5 See also 14 LAWSA 2 ed para 45.
6 At 1050J-1051A.
7 1995 (2) SA 926 (A) at 937B.
8 2006 (1) SA 197 (SCA) para 7.
respondent’s option as its counsel urged upon us. An apparent difficulty
which presents is that the case raises a novel issue as none of our courts, and
certainly none of the authorities referred to above, have ever pertinently
determined the extent of the effect of the ‘huur gaat voor koop’ rule on a
lease agreement containing an option to purchase leased immovable
property. By and large, our courts have considered the relevance of the rule
in the context of options to renew, rights of pre-emption and cession.
[16] There is, nevertheless, persuasive authority to the effect that an
option to purchase may, in appropriate circumstances, be binding on a new
owner. Authors W E Cooper9 and A J Kerr10 are of the view that the proper
approach in determining the applicability of the ‘huur gaat voor koop’ rule
is to ask whether or not the option is an integral part of the agreement, such
as where it was an inducement to contract or its presence had a bearing on
the rent agreed upon, unless it is supplementary to the main agreement – the
question whether the option is separate from the lease agreement largely
depending on the interpretation of the contract as a whole.11 The authors’
reasoning is that if the option impacts on the determination of the rental to
which the new owner is entitled, it must then follow that such new owner is
bound by it as he becomes the lessee’s debtor in toto,12 unless the option
forms a separate contract.
9 Landlord and Tenant 2ed (1994) at 300-302.
10 The Law of Sale and Lease 3ed (2004) at 42.
11 Banket Holdings (Pty) Ltd v Levy 1955 (4) SA 74 (SR) at 76; Uys and another v Sam Friedman Ltd 1935
AD 165 at 166.
12 Scrooby v Gordon & Co (supra) at 945; De Jager v Sisana (supra) at 82; De Wet v Union Government
(supra) at 63; Kessoopersadh v Essop (supra) at 282-3; Creeser v Smit 1948 (4) SA 302 (T); Boshoff v
Theron (supra) at 305.
[17] In counter – and I shall deal incrementally with each leg of the
argument outlined in para 11 as it developed – counsel for the appellant
started with the submission that only the incidents of the direct relation of
the lessee and lessor ie those arising in relation to occupation, and not those
that may relate to dominium of the property, such as an option to purchase,
are transferred in terms of the ‘huur gaat voor koop’ rule. He relied for this
contention on Shalala & another v Gelb13 and Hirschowitz v Moolman &
others.14 The gist of the remarks of the provincial courts in these decisions,
made in passing as the appellant properly acknowledges, is that an option to
purchase is a collateral obligation undertaken by the original lessor and that
the rule has no application as between competitors for dominium.
[18] With respect, I do not agree with this approach. It is similar to Prof
De Wet’s view,15 which, as is pointed by Cooper,16 is based on the premise
that a new owner does not become the lessee’s debtor and is obliged only to
suffer the lessee’s rights of use, contrary to the decisions of our courts that a
new owner is bound by all the material terms of the lease and upon transfer
of ownership the lessor is divested of his obligations to the lessee. This view
was roundly rejected by this court in Mignoel Properties.17 There, Friedman
AJA reiterated the view expressed in Kessoopersahd18 that the rule, being a
creature of practical considerations of fairness, is sui generis in nature and is
not subject to a strict application of the law of contract, a factor which he
said De Wet overlooked.
13 1950 (1) SA 851 (C) at 865.
14 1983 (4) SA 1 (T).
15 (8) 1944 THRHR 74; De Wet & Van Wyk Die Suid-Afrikaanse Kontraktereg en Handelsreg 4ed (1978).
16 Landlord and Tenant 2ed (1994) at 302.
17 At 1049B-F.
18 1970 (1) SA 265 (A) at 283B-C.
[19] But, despite my disagreement with Ogilvie Thompson J’s view in the
Shalala v Gelb decision19 that options to purchase are not protected by the
‘huur gaat voor koop’ rule, I nonetheless find his comments on the scope of
the tenant’s right to renew the lease instructive. The learned judge found that
considerations of principle and convenience and our courts’ interpretation of
the rule dictated that the renewal period provided for in a lease, even one of
which the purchaser was ignorant, falls to be included in the protection that
the rule accorded to the tenant.
[20] The basis of this finding – which was limited to the right to renew a
lease because it ‘is an extension of the duration of a tenant’s right of
occupation… which the rule … is designed to protect’ and ‘forms a very
material part of his interest in the land’ – is expressed in the following
remarks:20
‘As regards the conditions of the existing lease, the purchaser is … admittedly bound –
virtually in the position of the landlord vis-à-vis the tenant … Since the tenant must pay
his rent to the purchaser, the original landlord’s right to claim rent in consideration of the
tenant’s occupation is gone; and there is thus much to be said, both on grounds of
convenience and of equity, for the view that the obligation to recognize a renewal of the
lease should likewise pass from the original landlord to the purchaser. The alternative is
to leave the tenant with an action for damages for breach of contract against his original
landlord: but it was to avoid that very result that the Roman-Dutch Law departed from
the Roman Law whereunder the tenant had only a personal right … and applied the
doctrine of huur gaat voor koop to the tenant’s right of occupation.’
19 1950 (1) SA 851 (C).
20 At 862.
[21] The learned judge further took the view that ‘[i]f the innocent
purchaser is to be held bound by the existing lease because, had he enquired,
he would have ascertained that there was a tenant in occupation of the
premises under a lease, the same reason exists for holding him bound by a
right of renewal of that lease which right, had he made a proper enquiry,
would have been revealed to him.21
[22] I see no reason why these considerations should not apply to an option
to purchase, which is a material component of and was a key motivating
factor in the conclusion of the lease agreement. Our courts have made it
clear that if an option to purchase is incorporated in a lease, principles
similar to those on options to renew apply.22 This view was expressed by
this court in Mittermeier v Skema Engineering (Pty) Ltd,23 where Smuts
AJA had to decide the longevity of an option to buy leased premises
contained in an agreement of lease which did not state when it was to be
exercised. He said:
‘It appears to me that where one finds an option to buy leased premises conferred on a
lessee in an agreement of lease, with no mention of the period within which it is to be
exercised, the agreement prima facie, and in the absence of contrary indications, means
that the option is to be exercised before the expiration of the lease. That is the way in
which leases containing a right of renewal without a clear statement of the period within
which the option to renew is to be exercised, have been interpreted in the past … There
appears to be no reason why an option to buy the leased premises should be placed on a
different footing.’
21 At 864.
22 14 LAWSA 2ed para 55.
23 1984 (1) SA 121 (A) at 126D-G.
[23] Another example is Banket Holdings v Levy24 in which Murray CJ
relied on the judgment of Wessels CJ in Uys & another v Sam Friedman
Ltd25 for his dictum that a determination whether or not an option to
purchase is collateral to the lease depends on the interpretation of all the
terms of the agreement. In Uys, the court considered whether the lease
conferred upon the lessee an option of renewal which had influenced the
rental and said:
‘If the option to renew a lease is a term or condition of the lease, as indeed in law it is,
then it is difficult to see how it can be regarded as severable from the lease more than any
other term of the contract. Indeed the right to renew on the part of the lessee may be a
most important consideration and may very materially affect the rent payable, as we see
at once when we consider the case of a shop where the right to carry on trade in a
particular locality is an important part of the goodwill. The right to renew a lease which
may form so important a part of the contract is no different from any other term or
condition of the lease.’26
[24] My view is further, fortified by Broome J’s skepticism of the notion
that options to purchase are collateral to a lease, expressed in Archibald &
Co v Strachan & Co27 as follows:
‘The proposition that an option to purchase is not incident to the relation of lessor and
lessee may, for what it is worth, be accepted as in accordance with our law. But the
contracting parties may insert in their contract what terms they please, and those terms,
whether or not they are incident to the relation of lessor and lessee, are manifestly
incident to the contract itself, for the parties have so made them.’
24 1955 (4) SA 74 (SR).
25 1935 AD 165 at 166.
26 At 166. See also Transvaal Mortgage Loan and Finance Co Ltd v Aronson 1904 TS 864 at 866-867.
27 1944 NPD 40 at 43.
[25] I can articulate my conviction that no inequity arises from extending
the protection afforded by the rule no better than was done by Greenberg JP
in Boshoff v Theron.28 In that case the issue was whether a seller of leased
premises was divested of his obligation to provide his tenant with a power of
attorney to enable him to draw water for watering his crops after the sale of
the property. The court held:
‘It does not seem a harsh provision that, in return for protection afforded him by the
maxim, he should be required to look to the purchaser, in place of the seller, for
performance of the lessor’s obligations. In the ordinary obligations owed by a lessor … it
can make little difference to the lessee who his lessor is, in so far as his legal rights are
concerned … [because] as regards the lessor, there is ordinarily no delectus personae; the
property itself generally affords the lessee sufficient security for the performance of the
lessor’s obligations. The position may be different where the lease provides for an
obligation on the lessor which calls for some special quality on his part … It is clear …
that the purchaser is bound by all the “material” terms of a contract of lease entered into
by his predecessor in title.’
[26] To further bolster the appellant’s contention, an attempt was made to
conflate the option to purchase with the right of pre-emption. It was argued
that transfer of rights and obligations ex lege cannot take place in the case of
an option to purchase for the same reason that the new owner would not
automatically be substituted for the original lessor in relation to obligations
arising from the right of pre-emption.
[27] I find no merit in this submission because it ignores the fundamental
difference between the two rights. As was pointed out by the respondent the
right of pre-emption must be offered to the lessee and exercised before a sale
28 1940 TPD 299 at 303-304.
of the leased property to a third party. Where the lessee declines to purchase
the property, the owner may then sell to a third party. This means that by the
time the third party comes on to the scene the pre-emptor has already
disappeared. The right has been extinguished. There is therefore no room for
a substitution and there is no one to replace.
[28] Neither am I persuaded by the contention that the approach advocated
by Cooper and Kerr, whether or not an option falls within the ambit of the
‘huur gaat voor koop’ rule, must depend upon the facts of each case and on
the severability or otherwise of the right from the main agreement, was
wrong because (a) it improperly sought to import principles applicable to
options to renew a lease contract to options to purchase and (b) would result
in uncertainty contrary to the objectives of s 2(1) of the Act. Examples given
in support of the latter submission were that a determination of questions
whether the grant of the option influenced the fixing of the rent and the
identity of the party against whom the option could be exercised had the
potential of creating disputes of fact and conflicting interpretations.
[29] As I have said, I have no difficulty with the impugned approach.
Reference must again be made to the sui generis nature of the rule and the
fact that our courts accepted, early on, that the rule was not invariable in its
operation and did not produce the same result wherever it was applied.29
[30] I have attempted to show in paragraph [22] that the first concern has
no basis as principles relating to options to renew are equally applicable to
options to purchase. The perceived risk of uncertainty is, in my view,
29 See Graham v Local and Overseas Investments (Pty) Ltd 1942 AD 95 at 111.
similarly baseless. The exclusion in Mignoel Properties30 of ‘collateral
rights unconnected with the lease’ from the rule’s protection, without
specifying what those rights are, indicates a determination of those rights on
a case by case basis. And the relevance of s 2(1) of the Act needs first to be
established before its requirements are imposed on the case. In any event,
our courts have the means and are capable of resolving disputes of fact
wherever they arise.
[31] Mindful of the dangers of arguing by way of analogy, I nevertheless
find resonance in the remarks of Corbett CJ in Administrator, Transvaal v
Traub.31 The remarks related to the doctrine of legitimate expectation which,
albeit a different concept from the ‘huur gaat voor koop’ rule existing in a
different legal sphere, similarly evolved as a concept based on equitable
principles, to promote procedural fairness in administrative decision-making,
from ‘judicial attempts to mediate between individual interests and
collective demands in the modern administrative state’.32 Notably, the
learned chief justice expressed no qualms with the fact that the concept,
which is not well defined, is applied on a case by case basis and merely
sounded this caution:33
‘[W]hereas the concepts of liberty, property and existing rights are reasonably well
defined, that of legitimate expectation is not. Like public policy, unless carefully handled
it could become an unruly horse. And, in working out, incrementally, on the facts of each
case, where the doctrine of legitimate expectation applies and where it does not, the
Courts will, no doubt, bear in mind the need from time to time to apply the curb.’
30 At 1051A.
31 1989 (4) SA 731 (A).
32 Prof Robert E Riggs (1988) 36 American Journal of Comparative Law at 395.
33 At 761E-G.
[32] In sum, I consider that the answer lies in whether the respondent’s
option was a material part of the lease agreement. There is evidence
available, which was adduced at the trial, from which the parties’ intention
in this regard may be ascertained. I may just point out that the court below
had made adverse credibility findings against the appellant’s witness, Mr
Codron, who had represented Quantum both in the lease negotiations and the
subsequent sale transaction.
[33] There was, happily, no controversy regarding the evidence relevant
for this part of the enquiry. It seems to me that this issue may be disposed of
shortly by reference to a portion of Codron’s testimony-in-chief. He was
examined as follows:
‘Do you recall when the reference to an option to purchase was first raised?
Prior to signing the offer to lease the issue was raised because of the substantial amount
of money being put in by [the respondent].
…
And it was raised in what context?
If we would consider selling [the respondent] the property in future.
…
And what was your response to the proposal with regard to an option?
I discussed it with my partner who viewed it favourably as long as certain conditions
were adhered to.
Firstly, how did you arrive at the [option] price?
We projected the rental going forward for twenty-four months. That was the R18 000,00
a month [rental] escalating – I can’t recall what the escalations were – but escalating over
twenty-four months. And then applying a rate of capitalization on the asset at that point.
That came to – we were satisfied with R2m plus VAT at that point … amenable to
granting an option, but subject to conditions.’
[34] It is clear from this evidence that the substantial improvements that
were going to be effected by the respondent on the premises directly
influenced the amount of rental that was to be paid therefor and vice versa. It
further provides ample support for the respondent’s version testified to by
one of its directors, Mr Karriem, that without the grant of the option it would
not have expended R2m towards improving premises that did not belong to
it which it could not recoup at the expiry of the lease, and that without the
option there would have been no lease. Without a shadow of doubt, the
option was intended to be an integral, material part of the lease agreement.34
In my view, it is binding on the appellant.
[35] It is binding for another reason too. The appellant agreed to clause
6.4.2 in the deed of sale and, upon transfer, engaged in correspondence with
the respondent acknowledging the option. It was, however, argued on its
behalf that the clause was merely intended to put it on guard that Quantum
owed an obligation to the respondent in order to protect it from a claim for
damages in the event that the respondent sought to enforce the option against
it; that it was, in any event, vague and did not indicate which agreement it
referred to, alternatively that it referred to the offer to lease to which the
respondent was not party, because of its mention of ‘subject to subdivision’.
34 There is another debate relating to the view that a new owner is bound by ‘all the material terms’ of the
lease or ‘terms integral’ to the lease. Authors such as W E Cooper Landlord and Tenant 2ed (1994) pp 297
– 300; A S Mathews 1966 Annual Survey 116, De Wet (whose views relating to the scope of the maxim,
have nevertheless, since been dismissed by this court as indicated) (1944) 8 THRHR 241 have, for a variety
of reasons, criticized the view. The reasons include that it may be difficult to determine which terms are
material or non-material and that as the lessor’s substitute, the new owner should be bound by all the terms
of the contract. I do not propose to engage in the debate as none of these concerns arise in the present case.
[36] I find no ambiguity in the clause. It is so that it does not expressly
refer to any specific agreement. It must, however, be considered that in
terms of clause 10(b) of the offer to lease, Quantum’s ‘standard Agreement
of Lease would be prepared and signed by both parties in substitution’
thereof on acceptance of the offer. The lease agreement therefore superceded
the offer to lease as it had been signed when the deed of sale was concluded
and was the only agreement in existence at the material time. It is only
reasonable to assume that that fact would have been brought to the
appellant’s attention or that it would have itself discovered it in its due
diligence exercise specified in the deed of sale.
[37] In any event, the clause refers to ‘the existing tenant, Ottery Toyota’.
That is the respondent’s trading name. The reference to it excludes any
possibility that the clause could refer to Expectra, the lessee in the offer to
lease which exited the scene when the lease agreement was concluded. I also
think that nothing turns on the reference to the subdivision of the premises
which was reflected only in the offer to lease. Such condition is, in any case,
implied by law, and it should be noted that the other disputed conditions
(included in the offer to lease but not in the lease itself) are not mentioned in
clause 6.4.2, which points to a reference to the lease itself.
[38] I am satisfied in the circumstances that the appellant accepted the
validity of the option and its binding effect upon itself albeit, perhaps,35
subject to the disputed conditions. On the assumption that the finding of an
ex lege substitution of the appellant as lessor in Quantum’s place is not
sufficient to meet the requirement of a written option to purchase signed by
35 I deal more fully with the fate of the disputed conditions hereinbelow.
its grantor in terms of the provisions of s 2(1) of the Act, my view is that
Clause 6.4.2 fulfils such requirement.
[39] In the premises, I find that a valid option agreement exists which was
capable of being exercised and was in fact validly exercised by the
respondent. These findings dispense with the need to consider a further
string to the appellant’s bow, that there is an array of remedies available to a
lessee that it can invoke against the original lessor to protect its interests,
such as a claim for specific performance or damages or an interdict which
divests from the respondent any need for the protection offered by the ‘huur
gaat voor koop’ rule.
[40] It now remains to consider the appellant’s counterclaim for
rectification. The appellant seeks rectification of the option agreement by the
insertion of the words ‘excluding VAT’ after the option price and, at the end
thereof, the phrase ‘subject to approval from Pick `n Pay, approval from the
City Council for sub-division of the property and approval from Quantum to
a reciprocal access and parking agreement’.
[41] There was conflicting oral evidence regarding the omission of the
disputed conditions in the lease agreement. According to Karriem, the
respondent successfully negotiated the exclusion of the conditions through
the Adamses and the lease agreement was accordingly prepared by the
appellant to reflect the changes. Codron, on the other hand, denied any
agreement to omit the conditions. He testified that the lease agreement was a
different document from that drawn by the appellant’s agent and furnished to
the respondent for signature, presumably amended unilaterally by the
respondent’s attorneys. He noticed the omission before signing the lease
agreement and contacted Mrs Adams to enquire about the unauthorized
changes. Mrs Adams acknowledged the mistake and they agreed to an
addendum to be drawn by the appellant rectifying the situation. In the
meantime, he signed the lease agreement in its unchanged form to
accommodate the respondent which needed it urgently to secure finance.
Inexplicably, the addendum was never signed and he did not know what
finally happened to it. The court below dismissed Codron’s testimony in this
regard as improbable.
[42] It was argued before us that the basis for the appellant’s claim for
rectification set out in its pleadings, a bona fide common error, was not
established by the evidence and that the addendum referred to by Codron
was similarly not pleaded by the appellant. Parties should, of course, define
the issues in their pleadings so that they each know what case they have to
meet36 and should, therefore, be limited to such pleadings.37 However, it is
equally trite that since pleadings are made for the court and not the court for
the pleadings, it is the duty of the court to determine the real issues between
the parties, and provided no possible prejudice can be caused to either, to
decide the case on those real issues.38
[43] Thus, whilst there may be merit in the respondent’s contentions in
this regard, I do not consider myself bound to decide the issue on the basis
of the inconsistent evidence. The reason is that the parties’ intention
36 See, for example, Robinson v Randfontein Estates GM Co Ltd 1925 AD 173 at 178.
37 Imprefed (Pty) Ltd v National Transport Commission 1993 (3) SA 94 (A) at 107G-H.
38 Collen v Rietfontein Engineering Works 1948 (1) SA 413 (A); Middleton v Carr 1949 (2) SA 374 (A);
Shill v Milner 1937 AD 101.
regarding the terms of the lease is readily ascertainable from the option
granted by Quantum to the respondent. I believe that it would be remiss of
this court to ignore such clear, objective evidentiary material which was
fully canvassed at the trial where none of the parties can claim to have been
misled by the state of the pleadings.
[44] The validity of the offer to lease in which the disputed conditions
were contained was not brought into question. As stated above, in terms of its
clause 10, the signed offer had the status of a binding lease until substituted by
a standard lease agreement. Significantly, in the event that a standard lease
agreement did not come into being, the offer to lease would continue to bind
the parties. It could be no clearer from the plain language of this clause that
the intention of the contracting parties was that the provisions of the offer
would be transposed to the lease agreement in their entirety, failing which
they would remain bound by its terms. That being so, it must be accepted that
the disputed conditions were intended to be part of the lease agreement and
that their omission from this document was an error. The appellant is,
therefore, entitled to rectification in the terms it proposes.
[45] In the result, I would dismiss the appeal but order rectification of the
lease agreement as prayed in the counterclaim; each party to pay its own costs
at both tiers of the proceedings in view of the substantial success which they
have both enjoyed.
___________________
MML MAYA
JUDGE OF APPEAL
________________________________________________________________________
JUDGMENT
HURT AJA (MPATI P, MTHIYANE, LEWIS JJA concurring):
[46] I have had the benefit of reading the judgment prepared by my
colleague, Maya JA. Unfortunately, I find myself in respectful disagreement
with her conclusion that a valid agreement of sale resulted from the exercise
of the option.
[47] The background facts have been set out in detail by Maya JA, but it is
convenient to recount those which I regard as particularly pertinent to the
view which I take. For ease of identification I shall refer to the parties as
follows: the original owner of the leased property with which this appeal is
concerned will be referred to as 'Quantum', the appellant as 'Spearhead' and
the respondent as 'E and D Motors'. In October 2002 Quantum let premises
in a shopping centre to a company called Expectra 534 (Pty) Ltd. The
written lease agreement contained a provision to the effect that the tenant
was granted an option to purchase the leased premises plus an additional
area in the shopping centre, within two years, at a price of R2 million,
subject to certain conditions. It was agreed that this lease agreement was in
provisional form and was to remain in force pending the conclusion of a
'final agreement'. [49]
In February 2003 the 'final agreement' was signed,
but, in the interim, it had been agreed that E and D Motors would be
substituted as lessee (E and D Motors having the same directors and
shareholders as Expectra 534 (Pty) Ltd). The existence of the option was
confirmed in this lease agreement (this time the grant being in favour of E
and D Motors) and a plan of the shopping centre was annexed to the lease
showing the area which was to be subject to the option (and which was
approximately twice the size of the premises actually leased by E and D
Motors). No reference was made in this version of the option to the
conditions previously stipulated in the lease signed by Expectra. Shortly
after this 'final lease' was concluded, Quantum sold the shopping centre to
Spearhead. The contract of sale contained a reference to the existence of the
option in terms which will be set out later. At some time shortly after
transfer of the property to Spearhead, E and D Motors exercised the option
in a signed letter addressed to Spearhead, tendering to pay the purchase price
of R2 million. After certain correspondence was exchanged, Spearhead
adopted the stance that it was not obliged to honour the option. E and D
Motors then instituted the action for specific performance, ie transfer of the
property to them against their tender of payment.
[48] In the court below, Zondi J held that Spearhead had purchased the
shopping centre with knowledge of the existence of the option in favour of E
and D Motors. He placed emphasis on correspondence by Spearhead's
attorney after E and D Motors' purported exercise of the option, in which it
was stated that Spearhead was 'bound' by the exercise.39 As to the contention
that there was no compliance with the formalities required for a valid
alienation of immovable property, the learned judge held, as I understand his
judgment, that the principle of huur gaat voor koop had the effect, ex lege,
of substituting Spearhead for Quantum for all purposes of the lease
agreement. These 'purposes' included the grant of the option and, I presume,
the legal consequence of the substitution was that Spearhead was to be
39 It should be noted that the attorney was not authorized in writing to write this letter to E and D Motors.
regarded as the grantor of the option and Quantum's signature of the lease
was to be regarded as that of Spearhead once the property had been
transferred to Spearhead.40 If my interpretation of the findings of the court
below is correct, then I consider that the learned judge overstated the law as
it currently stands with regard to the consequences of the huur gaat voor
koop principle.
[49] In argument before us, the primary contention by Mr Mullins, for
Spearhead, was that his client was not bound by the option to purchase. He
submitted that the obligations in respect of the option were not transferred to
Spearhead when it took transfer of the property pursuant to the sale. He
further contended that no valid 'deed of alienation', complying with the
formalities prescribed by the Alienation of Land Act 68 of 1981 ('the Act'),
had come into being as a result of the cumulative transactions between the
parties and that the claim for specific performance of a contract of sale by
Spearhead to E and D Motors must accordingly fail. Mr van Riet, for E and
D Motors, based his claims to validity of the exercise of the option on two
contentions. The first was that the transfer of rights and obligations pursuant
to the huur gaat voor koop rule occurred ex lege and, as such, the
substitution of Spearhead for Quantum was automatic. Accordingly, so the
contention ran, the option which had been granted and signed by Quantum
must be treated as an option signed by Spearhead, so that the exercise by E
40 This is my interpretation of the learned judge's approach from the following passage in para 39 of his
judgment, in which he dealt with the contention that there was no compliance with the statutory formalities:
'The option agreement in the present matter was transferred by virtue of the principle huur gaat voor koop
from Quantum Leap to the defendant [Spearhead] which entitled the plaintiff [E and D Motors] to exercise
its rights as against the defendant directly. The option which the plaintiff seeks to exercise is contained in
the lease agreement which it concluded with Quantum Leap. In other words the defendant was substituted
ex lege for Quantum Leap (the original lessor) and the latter fell out of the picture. On being substituted the
defendant acquired by operation of law all the rights and obligations of Quantum Leap under the lease.'
and D Motors must, in law, bring into being a valid contract of sale by
Spearhead to E and D Motors. Mr van Riet's second contention was that the
written lease by Quantum to E and D Motors, which had been signed by
both of them, and the contract of sale signed by Spearhead, obliged
Spearhead to honour the option if exercised by E and D Motors. The
exercise of this option by the signature and transmission of the letter from E
and D Motors to Spearhead, he contended, would in any event bring into
existence a contract complying with the formalities prescribed by the Act.
[50] Two comparatively recent decisions by this court have restated the
basic principles upon which the huur gaat voor koop rule is to operate. The
first is Mignoel Properties (Pty) Ltd v Kneebone 1989 (4) SA 1042 (A), in
which Friedman AJA held that:41
'. . . once the lessee elects to remain in the leased premises after a sale, the
seller ex lege falls out of the picture and his place as lessor is taken by the
purchaser. No new contract comes into existence; all that happens is that the
purchaser is substituted for the seller as lessor without the necessity for a
cession of rights or an assignment of obligations. On being so substituted for
the seller, the purchaser acquires all the rights which the seller had in terms
of the lease, except, of course, collateral rights unconnected with the lease.'
The second decision is Genna-Wae Properties (Pty) Ltd v Medio-Tronics
(Natal) (Pty) Ltd 1995 (2) SA 926 (A) at 939, where Corbett CJ extended the
principle stated in Mignoel by confirming that the lessee does not have an
election whether to proceed with the lease – he is bound, just as the
purchaser is, to the terms of the lease as they stood between him and the
41 At 1050I ─ 1051A.
original lessor. Apart from this gloss, the decision in Genna-Wae endorsed
the principle quoted above from Mignoel.
'Collateral rights unconnected with the lease.'
[51] The authors Cooper42 and Kerr43 suggest that the question of what are
'collateral rights unconnected with the lease' must be decided on a casuistic
basis, dependent upon the intention of the parties as gleaned from a
consideration of the contract as a whole (or possibly the contractual matrix,
where more than one contract is involved). Options to renew present no
difficulty. It has long been the position that such options, constituting, as
they do, obligations due by the landlord in his capacity as such, are a
fundamental part of the lease arrangement and should not be regarded as
'collateral' or 'unconnected with the lease'.44 It is the authors' approach to
options to purchase with which I have difficulty. Stating that options to
purchase 'present a more difficult problem', Kerr45 refers to the decisions in
Ginsberg v Nefdt (1908) (25) SC 680 and Archibald & Co Ltd v Strachan &
Co Ltd 1944 NPD 40 as examples (as I understand the learned author) of
cases in which huur gaat voor koop operated in favour of a lessee who had
an option to purchase and, accordingly, against the prospective purchaser.
After then referring to the apparently contrary decision by Ogilvie
Thompson J in Shalala v Gelb the learned author states:
'With The Hon Mr Justice Cooper it is thought that the correct approach is to
enquire whether the option to purchase was an integral part of the original
lease or not; if it was, as for example where it was an inducement to
42 Landlord and Tenant (2 ed) p 303.
43 The Law of Sale and Lease (3 ed) p 442 and also writing in 14 (2) Lawsa (2nd reissue) para 46.
44 Shalala & another v Gelb 1950 (1) SA 851 (C) at 856 to 864.
45 Op cit pp 441 ─ 442.
contract, or its presence had a bearing on the rent agreed upon, then it is
protected by the rule huur gaat voor koop; if it was not, as for example when
it is clearly supplementary to the main agreement, then it is not protected.'
I very much doubt that the test thus proposed will assist in dealing with the
difficulty.
[52] It must be borne in mind that the principle of huur gaat voor koop
operates in regard to the purchaser of leased property regardless of whether
he has notice of the existence or the terms of the prior lease.46 The object of
the rule is an equitable one, namely to protect the right of the lessee to
continued occupation of the property. It is perhaps not surprising that such a
rule, which does not have its origins in one or other of the recognized
principles of contract, should give rise to vigorous debate about its effects
and its limits.47 But it can hardly be equitable to bind an innocent purchaser
to an option to purchase which may well be for a price less than that which
he has just paid to acquire the property, simply because the option forms an
'integral part' of the lease to which he has succeeded. In my view, the
problem must be approached from an objective point of view which keeps in
focus the basic object of huur gaat voor koop. On this approach, the question
is simply whether the 'collateral right' (or the collateral obligation) relates to
the lessee's real right of occupation as lessee. It seems to me that this
question can hardly ever be answered in the affirmative when it relates to the
rights and obligations flowing from an option to purchase. The guarded
statement by Ogilvie Thompson J in Shalala, to the effect that the maxim
huur gaat voor koop has no application as between competitors for
46 Shalala at 862.
47 See Kessoopersadh v Essop 1970 (1) SA 265 (A) at 282 ─ 283.
dominium48 has been criticized by the writers to whom I have made
reference earlier, but in my view it encapsulates a legal conclusion which fits
very comfortably into the scheme of application of the huur gaat voor koop
rule.
[53] An option to purchase incorporates a pactum de contrahendo in which
the grantor undertakes irrevocably to keep an offer to sell open, usually for a
specified or determinable period. The grant may be subject to certain
contingencies and/or conditions.49 The rights conferred by it are purely
personal to the grantee. Assuming that the option is granted in respect of the
leased property (for, if it is not, then it can hardly be regarded as part of the
landlord's obligations to his tenant 'as lessor'), then the anomalous situation
arises that, by selling to the purchaser, the landlord jeopardizes the pactum.
The common law in this situation (quite apart from the huur gaat voor koop
rule) is clear. If the purchaser had notice of the existence of the option prior
to purchasing, he must be taken to have bought the property subject to the
lessee's personal right against the landlord to exercise it. If the purchaser did
not have notice of the option, there is no rule in the common law (again
apart from the possible application of huur gaat voor koop) which would
render the purchaser bound to an obligation of which he was unaware. The
question is whether the development of the huur gaat voor koop principle in
our law has included, or should include, the ex lege transfer of obligations
arising out of an option to purchase, granted by the original landlord, to the
purchaser of leased property. Certainly, an examination of the reported
48 At 865.
49 Hirschowitz v Moolman 1985 (3) 739 (A) at 765 ─ 766.
decisions concerning options to purchase in this context does not reveal any
such development.
The Case Law on the Exercise of Options to Purchase.
[54] There are three reported cases in which the exercise of an option to
purchase, granted to a lessee, occurred after the original landlord had sold
the leased property.50 The first such decision is Ginsberg v Nefdt (1908) 25
SC 680. The lease in this matter included the grant to the lessee of an option
to purchase the leased property. The landlord sold the property to a third
party during the currency of the lease. The lessee applied to interdict the
transfer of the property to the purchaser. The purchaser agreed to be bound
by the lessee's option but, for some reason which is not clear, the court
granted the interdict to protect the lessee's option. It appears that the option
had not been exercised at the time when the matter came to court, nor is
there any indication as to whether the option was to be exercised against the
original landlord or the purchaser. Given that an interdict against the
purchaser was granted, though, it seems that the parties contemplated that
the option was to be exercised against the former.
[55] The second case is Archibald & Co Ltd v Strachan & Co Ltd 1944
NPD 40. Insofar as they relate to the issues in this matter, the facts are
briefly that the landlord had granted the lessee an option to purchase the
leased property, such option being incorporated in the agreement of lease.
The landlord subsequently sold the property but, for reasons which are not
recorded, transfer of the property was not passed to the purchaser. Nearly 18
50 These are, as far as I have been able to ascertain, the only three cases in which this aspect has been dealt
with.
months after the conclusion of the contract of sale, the lessee exercised his
option by directing a written acceptance of it to the original landlord. The
landlord thereupon notified the purchaser that the sale to him had 'fallen
away' by virtue of the lessee's decision to exercise the option. The purchaser
sought an order of specific performance against the landlord but his
application was dismissed. The court held that the purchaser had concluded
the contract of sale in the full knowledge of the existence of the option and
was accordingly bound to recognize the lessee's entitlement to exercise it.
Here again, the lessee had exercised the option against the original landlord
and not against the purchaser.
[56] In Van der Pol v Symington 1971 (4) 472 (T), the original lessor (who
had granted the lessee an option to purchase) had died during the currency of
the lease and the property was transferred to her son by her executor. The
lessee exercised the option against the son. The court held that the son was
bound by the option, regardless of whether he had knowledge of the lease
before he took transfer, on the basis that he was a gratuitous successor to the
original lessor. The question whether, by exercising the option, the lessee
had brought into being a written contract between himself and the son was
not considered. Nor was this an application of the principle of huur gaat
voor koop because the son had not purchased the property but had acquired
his title as an heir.51
51 There is one other decision in which an option to purchase leased property was considered in this
particular context, namely Shalala v Gelb 1950 (1) SA 851 (C) at p 862. However, it was considered only
for the purpose of differentiating it from an option to renew the lease and although Ogilvie Thompson J
made a statement to the effect that the principle huur gaat voor koop does not apply to options to purchase,
the dictum was plainly obiter and has been treated as such in subsequent cases.
[57] A significant feature of both Ginsberg and Archibald is that the option
was exercised against the grantor and not the purchaser and the court, in
each case, applied the doctrine of notice as the basis for finding that the prior
right of the lessee under his option prevailed over the subsequent right of the
purchaser to transfer of the property.52 Nor, in either of the two cases, had
there been transfer to the purchaser, and although there was a passing
reference in Ginsberg to the 'well known proposition . . . that lease goes
before sale', the court appeared to be applying the principles of a 'double
sale', and not huur gaat voor koop.The result is that there is no reported
decision in our case law to the effect that the obligations arising out of an
option to purchase are transferred ex lege and without express or tacit
assignment, to the purchaser of leased property. Nor, on the basis of what I
have set out above, is there any reason to extend the effects of the huur gaat
voor koop rule to include such a transfer.
[58] I have already indicated that such an extension would operate unfairly
against an 'innocent purchaser' (ie one who purchases the leased property in
ignorance of the terms of the agreement between the landlord and the
tenant). As to the 'purchaser with notice', the doctrine of notice, in my view,
provides adequate protection to the tenant in respect of his rights in terms of
the option, as is apparent from the decisions referred to in para 57, above.
The situation of the tenant who invokes the doctrine of notice against a
purchaser of the leased property in these circumstances has recently been
clarified by this court in Bowring NO v Vrededorp Properties CC 2007 (5)
SA 391 (SCA), particularly in paras 17 and 18. In that case the respondent
52 The remaining cases cited by Kerr in this context, viz Levy v Banket Holdings (Pvt) Ltd 1956 (3) SA 558
(FC) and Sandmann v Schaefer 1969 (4) SA 524 (SWA), deal with the question of 'collateral terms' in a
lease and not with the application of huur gaat voor koop.
had purchased a portion of a property on the basis that the portion was to be
subdivided and transferred to the respondent together with the registration of
a servitude which was to give the respondent access to the subdivision.
Before transfer or registration of the servitude, the owner of the property had
been liquidated. The liquidator sold the whole property to Investec Bank, the
contract of sale making express reference to the uncompleted sale to the
respondent and specifically recording that the property being sold did not
include the portion sold to the respondent. Investec Bank later sold the
whole property to the appellant. The contract between Investec Bank and the
appellant made no mention of the prior sale of portion of the property to the
respondent, but it was common cause that the appellant was aware of the
respondent's right to claim transfer of, and have the servitude registered in
favour of, the portion of the property.
[59] The respondent had sued the appellant for transfer of the portion of
the property to it and for an order that the appellant do whatever was
necessary to register the servitude over the remainder of the property in
favour of the respondent. The appellant had contended that the respondent
had no right to claim transfer from it, but that the doctrine of notice required
the respondent first to set aside the sale to the appellant and then to claim
transfer from Investec Bank. This defence had failed in the court of first
instance, nor did it succeed before this court. After a careful examination of
the consequences of 'double sales' to purchasers with notice, Brand JA
said:53
'(I)n the case of a servitude, application of the doctrine of notice does not
require that the transfer of the property to the purchaser be set aside so as to
53 Paras 17 and 18.
enable the beneficiary under the servitude agreement first to claim
registration of the servitude against the seller before the property is
retransferred to the purchaser subject to the registered servitude. The
beneficiary's claim is allowed directly against the purchaser (see eg Grant
and Another v Stonestreet and Others54 (supra) 7). That there is no privity of
contract between the beneficiary and the purchaser is not seen as an
insurmountable hurdle. Why then, it may in my view rightfully be asked,
should the position be any different when the same doctrine is applied in the
instance of double sales?
My suggestion is not that in the successive-purchaser situation B (the first
buyer) should always be allowed to claim transfer directly from C (the
second). The doctrine of notice is an equitable remedy and its manner of
application should be determined largely by what is considered to be
equitable to all concerned in the circumstances of the particular case. Where
the whole property is first sold to B and then to C, the most equitable
solution will probably be to restore A and C to their former position – by
ordering cancellation of the transfer and repayment of the purchase price –
before A is ordered to transfer the property to B. But in this case the position
is substantially different. (The respondent) claims transfer of . . . portion of
the railway siding only. Cancellation of the successive transfers of the whole
property to Investec and the (appellant) will therefore require that the
remainder of the property be retransferred first to Investec and then to the
(appellant). . . . No reason has been suggested, and I can think of none, why
this cumbersome and wasteful process would be in anybody's interest.'
54 1968 (4) SA 1 (A).
[60] It seems to me that, in general, the equitable process of rearrangement
contemplated in this judgment will be applicable to a situation where a
lessee seeks to enforce his right to delivery pursuant to the exercise of his
option against the original lessor, regardless of whether the option related to
the whole of the property sold or to only a portion of it. The fact is that there
is no 'equitable need' to postulate an ex lege transfer of the obligations
arising out of the option to the purchaser in order to protect the lessee's
option against a purchaser with notice.
[61] I conclude, therefore, that the obligations arising from an option to
purchase the leased property, granted by the lessor, are not, by the operation
of the rule huur gaat voor koop, transferred ex lege to the purchaser of the
property. It follows that a lessee, seeking to exercise such an option (always
assuming, of course, that the relevant contracts do not constitute an
assignment of the lessor's obligations to the purchaser) must do so as against
the grantor and not against the purchaser. Where, however, there has been a
transfer of the property to a purchaser with notice of the option, the lessee,
having thus exercised his option, will generally be able to claim transfer of
the property from the purchaser. The submissions on behalf of E and D
Motors to the effect that it was entitled to exercise the option against
Spearhead merely by operation of the huur gaat voor koop rule must, in my
view, fail.
[62] That leaves the contention by the respondent that the lease, the
contract of sale to Spearhead and the letter from E and D Motors to
Spearhead purporting to exercise the option, read together, constitute a
written deed of alienation complying with the provisions of the Alienation of
Land Act 68 of 1981. There is no doubt that the grant of the option in the
written lease by Quantum to E and D Motors constituted an offer to sell
complying with the requisite formalities.55 The fact that the written offer and
the written acceptance may be embodied in different documents is not a bar
to compliance with the Act.56 The question is whether the agreement of sale
from Quantum to Spearhead can be construed as an assignment of
Quantum's obligations in terms of the option to Spearhead, complying with
the statutory formalities. The only mention, in the contract of sale, of the
option granted to E and D Motors is to be found in clause 6.4, which reads:
'6.4
The Seller warrants and undertakes to the Purchaser –
6.4.1 the Seller is the owner of and has the absolute right to dispose
of the property to the Purchaser in accordance with the provisions of
this agreement;
6.4.2 no agreements have been entered into by the Seller whereby
any restrictive conditions or servitudes or other real rights attach to
the property or in terms of which any person, natural or corporate, is
entitled to obtain any real rights to the property, save for the existing
tenant, Ottery Toyota,57 who have limited rights to purchase their
section subject to a subdivision of the land;
6.4.3 no notice has been received by the Seller of the intention of any
authority to expropriate the property or any portion thereof nor is the
Seller aware of any intention to expropriate the property or any
portion thereof by any such authority;
55 Venter v Birchholtz 1972 (1) SA 276 (A) at 283 ─ 284.
56 Johnston v Leal 1980 (3) SA 927 (A) at p 937H; Hirschowitz p 758B to C.
57 The trade name of E and D Motors.
6.4.4 as far as the Seller is aware the current use of the property and
buildings by the existing tenants is lawful and is not in contravention
of any applicable zoning scheme and/or conditions of title;
6.4.5 as far as the seller is aware no building encroaches over any
boundary or building line or similar restriction;
6.4.6 as far as the Seller is aware no building or improvement on any
adjoining property encroaches onto the property.'
[63] I have purposely quoted the clause in full to set clause 6.4.2 in its
context. I do not think that the clause can, by the furthest stretch of
imaginative interpretation, be construed as an assignment by Quantum to
Spearhead of any obligations, let alone the obligations arising out of the
option. Nor is it couched as an offer by Spearhead to endorse the option in
favour of E and D Motors. What the seller is saying in this clause is plainly
along the following lines: 'Take notice that there is an option which entitles
Ottery Toyota to purchase a portion of the property if the land is
appropriately subdivided'. The sale of the subdivision to E and D Motors
would not be frustrated by the fact that Quantum was no longer the owner
and, indeed, the tenor of the stipulation is simply that, if the option is
exercised (against Quantum), Spearhead may later be required to transfer
the subdivision to E and D Motors. It is a classic situation where the doctrine
of notice would apply. But that, to my mind, is as far as the clause can be
taken.
[64] It follows that, in my view, the appeal should succeed. The following
order is made:
The appeal is allowed with costs, such costs to include the costs of
two counsel.
The order of the court below is set aside and the following order
substituted therefor:
'The plaintiff's claim is dismissed with costs, such costs to include the costs
of two counsel.'
________________________
NV HURT
ACTING JUDGE OF APPEAL
Appearances:
For Appellant:
S Mullins SC
A D Brown
Instructed by
Bernadt Vukic Potash & Getz; Cape Town
Lovius Block, Bloemfontein
For Respondent:
R S Van Riet SC
Instructed by
Harmse Kriel Inc; Cape Town
Rossouws Attorneys, Bloemfontein | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
1 June 2009
STATUS:
Immediate
Spearhead v E & D Motors (214/2008)[2009] ZASCA 70 (1 June 2009)
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 SCA today upheld an appeal by Spearhead Property Holdings (Pty) Ltd against a
judgment in the Cape Provincial Division of the High Court in terms of which
Spearhead had been ordered to transfer a portion of the property on which the Ottery
Shopping Centre in Cape Town is situated. The property in question has been leased
by the Toyota franchise, E & D Motors (Pty) Ltd since 2003 and the lease contained
an option, in favour of E & D Motors, to purchase the leased property together with
an additional area for parking. Spearhead bought the property from the original
landlord at a time when the lease to E & D Motors was already in force. The majority
of the judges held that E & D Motors was not entitled to exercise the option against
Spearhead, but that it should have been exercised against the original landlord. |
2601 | non-electoral | 2014 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
NOT REPORTABLE
Case no: 700/2013
In the matter between:
D E B APPELLANT
and
M G B RESPONDENT
Neutral citation: B v B (700/2013) [2014] ZASCA 137 (25 September 2014)
Coram:
Lewis, Tshiqi and Theron JJA and Mocumie and
Gorven AJJA
Heard:
3 September 2014
Delivered:
25 September 2014
Summary: In an accrual claim under s 3(1) of the Matrimonial Property Act 88 of 1984,
the defendant contended that no accrual had been proved and the trial court had erred in
granting an order based on such an accrual. The appeal against that order was dismissed on
the basis that an accrual had been shown to the estate of the defendant and none to that of the
plaintiff save that the accrual calculation was calculated differently. Admissibility of
documents discussed.
___________________________________________________________________________
ORDER
On appeal from: KwaZulu-Natal High Court, Durban (Lopes J sitting as court
of first instance):
1 The appeal is dismissed with costs, save to the extent that the order of the
court a quo is amended as set out below.
2 Paragraphs (a), (b) and (d) of the order of the trial court are amended to read
as follows:
„(a) The defendant is to pay to the plaintiff the sum of R 6 478 717.75 by no
later than 30 November 2014.
(b) The defendant is directed to transfer to the plaintiff an amount equal to one-
half of the defendant‟s loan account in Full House Taverns (Pty) Ltd as at the
date of divorce.
(d) (i) The defendant is to pay the plaintiff‟s costs of the action.
(ii) The plaintiff is to pay the costs of the applications to compel her to
attend on the defendant‟s psychologist.
(iii) The defendant is to pay all reserved orders for costs not dealt with in
paragraph (d)(ii), save that, where those costs relate to applications concerning
the custody of the minor children, each party is to pay his or her own costs.‟
JUDGMENT
Gorven AJA (Lewis, Tshiqi and Theron JJA and Mocumie AJA
concurring)
[1] This appeal concerns a claim by the respondent (the plaintiff in the court
a quo) for one half of what had accrued to the estate of the appellant (the
defendant in the court a quo) during just over 14 years of the marriage between
the parties. I shall refer to the parties as the plaintiff and the defendant
respectively. In the divorce action all the other issues between the parties were
resolved, including those relating to the minor children of the parties which had
given rise to a number of pre-trial applications and conferences. A consent order
for a decree of divorce and the other settled issues was granted on 7 June 2013
at the end of the trial. The only contentious issue in the end was whether or not
an accrual had occurred to the estate of the defendant and, if so, the extent of
that accrual. There had been no accrual to the estate of the plaintiff.
[2] After reserving judgment on the accrual claim, the trial judge granted the
following order:
„(a) The defendant is to pay the plaintiff the sum of R7 324 984.63 by no later than the 31st
August 2013;
(b) The plaintiff is declared to be the owner of one half of the defendant‟s loan account in
Full House Taverns (Pty) Ltd;
(c) In the interim, and pending the payment of the amount in (a) above by the defendant to
the plaintiff, the defendant is to continue paying maintenance to the plaintiff pursuant to the
agreement reached between the parties in the Rule 43 proceedings;
(d) The defendant is to pay the plaintiff‟s costs of the action, including all reserved orders for
costs, save those with regard to the applications to compel her to attend on the defendant‟s
psychologist and the plaintiff is to pay the defendant‟s costs of those applications;
(e) All costs are to include the costs of senior counsel, and two counsel, where applicable.
(f) In any report of this judgement, no person other than the advocates, the attorneys
instructing them, or persons (other than the parties, members of the extended families and
their children) identified by name in the judgement itself, may be identified by name or
location. In particular the anonymity of the children and the adult members of their family
must be strictly preserved. If reported, it shall be the duty of the Law Reporters to carry out
this part of the order.‟
[3] With the leave of the trial court, the defendant appeals against paragraphs
(a) to (d) of the order, asking that they be substituted with an order that:
„(a) The Plaintiff‟s claim for payment of any amount in terms of the accrual system, referred
to in Chapter 3 of the Matrimonial Property Act, No. 88 of 1984, be dismissed, alternatively
that there be absolution from the instance.
(b) The Plaintiff is to pay the Defendant‟s costs of the action, including all reserved orders
for costs, and including those with regard to the applications to compel her to attend on the
Defendant‟s psychologist.‟
It can therefore be seen that the amount awarded is attacked as is the order
declaring the plaintiff the owner of one half of an asset of the defendant, namely
his loan account in Full House Taverns (Pty) Ltd (Full House Taverns).
[4] The parties were married to each other out of community of property with
the application of the accrual system. The Matrimonial Property Act1 introduced
into South African Law the system of accrual which could be made applicable
to marriages contracted out of community of property and of profit and loss by
way of an antenuptial contract (ANC). In addition to excluding community of
property and of profit and loss, under this regime a claim (an accrual claim)
arises at the dissolution of the marriage „for an amount equal to half of the
difference between the accrual of the respective estates of the spouses‟.2
[5] Since community of property is excluded, each spouse maintains a
separate estate. If a spouse so desires, the assets which make up the separate
estate are under his or her sole control. In an accrual claim, therefore, the spouse
making the claim often has little or no knowledge of the assets which make up
the estate of the other party. It is presumably for this reason that the legislature
enacted s 7 of the Act, the relevant parts of which are as follows:
1 Act 88 of 1984.
2 Section 3(1). The dissolution may be by way of death or divorce.
„When it is necessary to determine the accrual of the estate of a spouse … that spouse …
shall within a reasonable time at the request of the other spouse … furnish full particulars of
the value of that estate.‟
It is therefore clear that the legislature requires that a spouse furnish full
particulars if requested. The relevance of the requirement to this action will
become clear in due course.
[6] The ANC of the parties deals in paras 7 and 8 with the commencement
values and the approach to calculating the accrual claim. Paragraph 7 declares
the nett value of the estate of the defendant at the inception of the marriage to be
R2 543 939. This is said to be made up of two parts, reflected as follows:
„(i) R1 438 000,00 . . . consisting of interest in immovable property, cash on hand, claims
receivable, shares and interest in companies and corporations, investments and movable
assets.
(ii) R1 105 939,00 . . . being the value of [the] option to purchase shares at agreed price in
Aristocrat Leisure Limited.‟
[7] Paragraph 8 provides that certain assets (the excluded assets) „shall not be
taken into account as part of each party‟s estate at either the commencement or
the dissolution of the marriage‟.3 These were said to comprise the following:
„1. The value of all amounts standing to the credit of the following bank accounts:
Standard Bank, Sandton City Branch, Account Number 220427097; and
Investec Bank, Durban, Account Number 1100169436500
as at 1st March 1999.
2. Any balance of any proceeds of the sale of shares and any other interest or claim in respect
of A L I Gaming Solutions (Pty) Limited.
3. The value of the interest in the immovable property situated at 47 Riebeeck, 208 Cowey
Road, Durban and the proceeds of any alienation thereof.
3 This echoes the provisions of s 4(1)(b)(ii) of the Act which reads:
„[I]n the determination of the accrual of the estate of a spouse ─
(ii) an asset which has been excluded from the accrual system in terms of the antenuptial contract of spouses, as
well as any other asset which he acquired by virtue of his possession or former possession of the first mentioned
asset, is not taken into account as part of that estate at the commencement or the dissolution of the marriage‟.
4. Any interest in Propwell CC and the proceeds of any alienation thereof.
5. The value of shares held in respect of SISA and the proceeds of any alienation thereof.
6. The value of all shares held in the Hamilton Airship Company and the proceeds of any
alienation thereof.
7. The value of any claim against Propwell CC, or the value of any asset acquired with the
proceeds of such claim.
8. The value of the rights arising in respect of the option to purchase shares in Aristocrat
Leisure Limited, the value of any shares purchased in terms thereof, and the value of any
proceeds of the alienation of such shares.‟
Admissibility of documents discovered by the defendant; assertions in
cross-examination
[8] The only evidence led by either party regarding the accrual was that of
Mr Peter Duncan, a chartered accountant who was called by the plaintiff. The
defendant neither testified nor called any witnesses to do so on his behalf.
[9] On appeal it was contended on behalf of the defendant that Mr Duncan‟s
evidence was inadmissible as it was based on hearsay. When Mr Duncan was
called, and before he had given any evidence, counsel for the defendant
indicated that she objected to his being called on two bases. She summarised the
objection as follows, „We have difficulty in understanding how he can testify to
factual matters and we believe it would, of necessity, venture into opinion
evidence‟. The court a quo ruled, „We will deal with that as it arises‟. This quite
clearly meant that, if Mr Duncan ventured into either of those forbidden
territories, the defendant would need to object at that point. The objection would
then be dealt with. The only objection made by the defendant during the leading
of his evidence was early on when Mr Duncan produced a schedule to which he
wished to refer. The objection at that stage was that the schedule had not been
seen until then and that no rights were being waived „that arise from late
documentation‟. When it emerged that the schedule simply contained a
compilation of amounts reflected in the documents discovered under oath by the
defendant and used by his own accountant to compile a similar schedule, no
further issue was made of this. Accordingly, after the defendant had been given
the opportunity to consider the schedule, it was used without any renewal of the
objection. No objections were made to the use by Mr Duncan of the defendant‟s
discovered documents or to their authenticity.
[10] At the outset, Mr Duncan was asked „[W]ere you given seven lever arch
files containing all of the defendant‟s discovered documents?‟ His reply was in
the affirmative. This evidence was never challenged. He indicated that, from the
discovered documents, he had drawn up a schedule which set out the
defendant‟s assets and liabilities at the end of each tax year of the marriage.
Apart from the 1999 tax year and that ending in February 2013, he had taken the
figures for his schedule from the defendant‟s tax returns for the years in
question. The 1999 information was based on the defendant‟s declaration of
assets and liabilities as at 28 February 1999 to the Gambling Board which was
signed by him on each page. The 2013 figures included in Mr Duncan‟s
schedule were taken from a statement of assets and liabilities as at
28 February 2013 drawn up and discovered by the defendant.
[11] During the cross-examination of Mr Duncan, counsel for the defendant
handed in a schedule and posed questions based on it. In response to a question
by the trial judge, counsel said that this had been drawn up by an accountant
employed by the defendant, Ms Wright. It had been compiled from the same
discovered documents as those provided to the plaintiff. In other words, Ms
Wright used the same documents as did Mr Duncan. These documents resulted
in the schedule prepared by her which, it was asserted during cross-
examination, reflected the assets and liabilities of the defendant as at 30 April
2013.
[12] On appeal, the defendant‟s counsel submitted that, apart from the ANC,
there „was no agreement as to the status of any other documents and thus the
authenticity of any such documents needed to be proved‟ as regards „the value
of the estate of the [defendant] as at date of divorce‟. I have outlined how the
evidence based on the documents emerged. In the first place, there was no
objection to the statement that Mr Duncan had based his schedules on all of the
discovered documents of the defendant. Secondly, there was no objection „as it
arises‟ to Mr Duncan referring to the discovered documents. Thirdly, the
defendant‟s counsel introduced Ms Wright‟s schedule into evidence, saying that
it was based on the very same documents used by Mr Duncan on the basis that
this schedule accurately reflected the assets and liabilities of the defendant as at
30 April 2013. There was, finally, no challenge to the authenticity of the
documents relied on by both accountants.
[13] In S v W4 this court held that assertions made during cross-examination
could be regarded as admissions. This was dealt with by Ogilvie Thompson JA
as follows:
„From all the foregoing it thus becomes abundantly plain that, while disputing the major issue
of intercourse as deposed to by F, appellant, through his attorney, at the same time asserted:
(i) that money had been paid by him to F in a total sum exceeding that which she herself
maintained; and (ii) that he had been in F's company only on “one night in January, 1961”,
when intercourse might possibly have occurred while he was drunk. Although advanced only
in cross-examination, these assertions were specifically and deliberately made: the facts of
the case do not admit of the possibility of any error on the part of the cross-examining
attorney. In the context of F's evidence, these assertions must, in my view, be regarded as
unequivocal admissions by appellant of the matters so asserted. Having been made during the
actual hearing in the trial court, the admissions in question require, in my judgment, no
additional formal proof before they may be used against appellant‟.5
4 S v W 1963 (3) SA 516 (A).
5 At 523B-F.
In the context of civil litigation, Nkuta v Santam Assuransie Maatskappy Bpk6
followed this approach, saying:
„Hoewel, soos reeds gemeld, die verweerder sy saak gesluit het sonder om enige getuie te
roep, is hy gebonde aan die saak wat formeel as 'n feitlike bewering deur sy raadsman in die
ope Hof aangekondig en aan 'n getuie van die teenparty gestel is.‟7
[14] The thrust of these cases cannot be avoided by the defendant in these
circumstances. The assertions of the defendant, as put by his counsel during
cross-examination, amounted to „unequivocal‟ admissions. These were at least
twofold; an admission that the documents used by Mr Duncan and Ms Wright
were authentic in that they were relied on by the defendant to place his financial
position before the court for the purpose of the accrual claim and an admission
as to the actual amount owed to him by Full House Taverns.8
[15] The submission meets a further difficulty when it is made on appeal. As
was mentioned earlier, no objection was raised to any of the evidence given by
Mr Duncan at the trial. This after the trial court ruled that objections should be
made at the time that objectionable evidence was introduced. If no objection is
made during a trial, an appeal court cannot consider an objection of this nature.
In Transnet Limited v Newlyn Investments (Pty) Limited9 Cloete JA held:
„. . . So far as this court is concerned, it is a salutary principle that an appeal court will not
entertain technical objections to documentary evidence which were not taken in the court
below and which might have been met by the calling of further evidence . . . It would be
unfortunate in cases such as the present if a party could claim a forfeit on appeal.‟10
6 Nkuta v Santam Assuransie Maatskappy Bpk 1975 (4) SA 848 (A).
7 At 853G-H. „However, as already mentioned, since the defendant closed his case without calling any witness,
he is bound by the case which was formally advanced by his representative in open court by way of factual
assertions put to a witness of the opposite party.‟ (My translation.)
8 See also Zungu NO v Minister of Safety and Security 2003 (4) SA 87 (D) at 91E-93B.
9 Transnet Limited v Newlyn Investments (Pty) Limited 2011 (5) SA 543 (SCA).
10 Paragraph 18.
[16] Counsel for the defendant sought to distinguish this matter submitting
that, because the issue had been raised in heads of argument before the trial
court, the dictum in Transnet did not apply and the objection could be dealt with
on appeal. At that stage, the parties had already closed their cases. Without a
formal application to reopen the case, the objection could not have been met by
calling evidence. We know, too, that all of the documents in question were
those of the defendant. The plaintiff was hardly obliged to call him as a witness.
Counsel for the defendant submitted that use could have been made of Rule
35(10) of the Uniform Rules of Court.11 It seems to me that to require the
plaintiff to have done so in the circumstances of this matter would be to adopt
an unduly formalistic approach.
[17] The approach of counsel for the defendant in this matter differs markedly
from the salutary approach adopted by counsel in Zungu. Counsel for the
defendant quite properly alerted counsel for the plaintiff to the fact that he
would take the point in argument that there had not been sufficient proof by way
of admissions made under cross-examination. As a result, counsel for the
plaintiff sought a ruling from the court on this issue before closing his case. In
the present matter, the defendant‟s counsel did not in a similar way alert that of
the plaintiff but raised the issue for the first time in argument. This despite a
specific ruling by the trial judge that objections should be raised as the basis for
them arose. In the light of what was said above on the issue of assertions put on
behalf of the defendant and the dictum in Transnet Ltd, I am of the view that no
forfeit can be claimed on appeal and the objection ought not to be dealt with.
11 Rule 35(10) reads:
„Any party may give to any other party who has made discovery of a document or tape recording notice to
produce at the hearing the original of such document or tape recording, not being a privileged document or tape
recording, in such party's possession. Such notice shall be given not less than five days before the hearing but
may, if the court so allows, be given during the course of the hearing. If any such notice is so given, the party
giving the same may require the party to whom notice is given to produce the said document or tape recording
in court and shall be entitled, without calling any witness, to hand in the said document, which shall be
receivable in evidence to the same extent as if it had been produced in evidence by the party to whom notice is
given.‟
[18] Counsel for the defendant submitted on appeal that the evidence of Mr
Duncan amounted to expert opinion evidence and should therefore be excluded.
It is my view that his evidence did not amount to that of an expert giving an
opinion. As Mr Duncan himself said, „This is purely a compilation engagement.
I purely compiled this straight off the documentation that was there and put it in
a format that would be more easily understood by everybody, as opposed to
having to go through hundreds of files looking at different documents.‟
[19] Undeterred, counsel for the defendant submitted that, if this was the case,
the evidence of Mr Duncan was „supererogatory evidence‟. It has been held by
this court that, unless an expert witness can give the court „appreciable help‟,
evidence which is not of an expert nature is „supererogatory and superfluous‟.12
It was clear that the documents discovered were voluminous. Even the
defendant, who is himself a chartered accountant, contracted Ms Wright to
perform a similar exercise. The work done by Mr Duncan and his evidence
certainly had the effect of saving the time of the court and the expense of the
parties, and was accordingly of appreciable help. It was therefore in no way
superfluous or inadmissible. In any event, similar considerations arise to the
other objection since it was not raised during evidence.
The estate of the defendant
[20] What, then, did the evidence disclose? There was agreement on the
following. There were two immovable properties owned by the defendant.
These were reflected in Mr Duncan‟s schedule at cost price plus cost of
improvements but were reflected in that of Ms Wright as being the market
values from figures supplied to her. These were agreed by the plaintiff. A
Landrover vehicle owned by the defendant was also reflected in Ms Wright‟s
schedule at a value obtained by her and this was also agreed to by the plaintiff.
12 Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A) at 616H.
All of the balances shown in Ms Wright‟s schedule for the defendant‟s overseas
investments and bank accounts were accepted. It was agreed that a cash
payment of R700 000 had been made to the plaintiff and two vehicles, one
valued at R260 000 and one at R100 000, had been transferred to her during an
attempt to reconcile and that these amounts should be deducted from any
accrual claim if the reconciliation failed.
[21] This left the following differences between the parties. First, the
commencement value which must be used in the accrual calculation. Secondly,
the value of the defendant‟s loan account in Full House Taverns. Thirdly, the
amount which the defendant owed a Family Trust (the Trust) of which he was a
trustee and which shall not be named in this judgment so as to preserve the
anonymity of the parties and their children. Fourthly, which of the assets of the
defendant at dissolution, if any, should be excluded from the accrual
calculation. Finally, the schedule prepared by Ms Wright included liabilities of
approximately R1.37 million for estimated legal and related fees which found
no expression in any prior schedule discovered by the defendant. I shall deal
with each in turn.
[22] The commencement value of the defendant‟s estate requires the
construction of paras 7 and 8 of the ANC. It will be recalled that a
commencement value was declared (the declared value). This was said to
comprise certain assets. Paragraph 7 declares that the commencement value
totalled R2 534 939. The paragraph did not leave it at that. The assets which
made up this amount were listed. Paragraph 8 then provided that the excluded
assets and assets which derive from them should not be taken into account
either at the commencement or the dissolution of the marriage.
[23] This means that, where an excluded asset forms part of the value declared
in para 7, the declared value must be reduced by the value of that asset. What
remains after the deduction is the commencement value (the accrual
commencement value) to be used for the purpose of the accrual claim.
The shares option
[24] Applying this approach to the facts, therefore, the value of the option to
purchase shares in Aristocrat Leisure Limited (the shares option) must be
subtracted from the declared value. This is because that asset is an excluded asset
as specified in para 8. This obtains equally for any other assets which are referred
to in both paras 7 and 8. This is where the evidence of Mr Duncan was material.
He gave unchallenged evidence linking the other excluded assets specified in
para 8 to those referred to in the first part of para 7. He did this by reference to
the declaration of the defendant to the Gambling Board of his assets and
liabilities as at the end of February 1999. The ANC was executed on 11 March
1999, a few days later. After Mr Duncan had completed this exercise, the only
assets not identified as excluded assets had a value of R108 000. The position
regarding unchallenged evidence was set out in President of the Republic of
South Africa & others v South African Rugby Football Union & others to the
following effect:13
„The institution of cross-examination not only constitutes a right, it also imposes certain
obligations. As a general rule it is essential, when it is intended to suggest that a witness is
not speaking the truth on a particular point, to direct the witness‟s attention to the fact by
questions put in cross-examination showing that the imputation is intended to be made and to
afford the witness an opportunity, while still in the witness-box, of giving any explanation
open to the witness and of defending his or her character. If a point in dispute is left
unchallenged in cross-examination, the party calling the witness is entitled to assume that the
unchallenged witness‟s testimony is accepted as correct.‟
13President of the Republic of South Africa & others v South African Rugby Football Union & others 2000 (1)
SA 1 (CC) para 61.
This means that the plaintiff proved that the accrual commencement value of the
defendant‟s estate, after deducting the excluded assets from the declared value,
was R108 000.
[25] The Act requires the application of the Consumer Price Index (the CPI) to
the accrual commencement value so as to achieve a present day value (the
inflated commencement value). In the circumstances, it is the figure of
R108 000 to which the CPI must be applied. The relevant rates of the CPI are
contained in another schedule prepared by Ms Wright and handed in by the
defendant. In that schedule, the CPI rates were applied to the declared value of
R2 543 939. Because the calculation had not been done using R1 438 000, being
the declared value less the stated value of the shares option, or for R108 000,
counsel for the plaintiff was requested at the hearing to have the calculation
performed on these two amounts.
[26] Such calculations were presented under cover of a letter indicating that
they had been sent to the defendant but that the defendant‟s legal representatives
were not in agreement. A subsequent letter was received from the defendant‟s
legal representatives confirming their disagreement and disputing that the CPI
rates referred to in court had been agreed. In addition, they provided various
accrual calculations, using the declared value, a value excluding the declared
value of the share option and R108 000 and applying each of these to Mr
Duncan‟s schedule as a whole and that of Ms Wright as a whole. This had not
been requested. As to the denial of agreement that the CPI rates were accurate,
Ms Wright used those rates to arrive at her inflated value in her schedule. This
schedule and in particular the inflated value of the declared value arrived at by
the application of those CPI rates, was asserted by the defendant‟s counsel to
accurately represent the accrual calculation. This contains at least an implicit
admission that the CPI rates used were correct. As a result, I accept their
accuracy. The plaintiff‟s representatives indicated that, after applying the CPI
rates to R108 000, the figure arrived at is R234 075.00. I had performed the
calculation myself which resulted in a figure of R234 077.76. I shall use the
higher one as the inflated commencement value.
The Full House Taverns loan
[27] The second asset in dispute was the value of a loan account held by the
defendant in Full House Taverns, of which he was the sole shareholder and
director. Ms Wright placed a value on this of R74 000. She did so, it was said
by counsel for the defendant, because it was her opinion that only that much of
the loan was recoverable due to financial difficulties experienced by Full House
Taverns. This evidence was, of course, not led. There is thus no admissible
evidence for the value used by her. Mr Duncan said, again without challenge,
that no documents were discovered concerning the financial position of Full
House Taverns. As a result of this failure, he was unable to comment on the
recoverability or otherwise of that loan. Once again, the defendant inexplicably
failed to provide the relevant documentation or to testify in support of his
contention on recoverability.
[28] In the schedule of his assets and liabilities as at 28 February 2013, the loan
was reflected by the defendant as being R7 502 636. During evidence, Mr
Duncan indicated that the defendant‟s legal team had provided a document
during the trial showing the loan balance as more than R11 million. The
defendant‟s counsel then put to him that the correct figure for the loan was in fact
R11 101 528. Once again, this assertion amounts to an admission by the
defendant and must therefore be accepted as being the value of the loan account.
[29] This asset was not brought into account by the trial court in arriving at the
value of the defendant‟s estate at dissolution. A separate order was made
concerning it. This was possibly done out of caution in the light of the
unsupported assertion that it would not be recoverable. At the hearing of the
appeal, counsel for the defendant indicated that, if this court found that the loan
account should be included in the defendant‟s assets at the value asserted by her
during cross-examination, the defendant would abandon his appeal against para
(b) of the order granted by the court a quo. Counsel for the plaintiff indicated
that the plaintiff was amenable to this approach. The parties further agreed that,
if this was the outcome, para (b) of the order should be amended from a
declaratory order to one requiring the defendant to transfer to the plaintiff one
half of the value of his loan account in Full House Taverns calculated as at the
date of the divorce order.
The loan from the Trust
[30] The third material discrepancy between the schedules of Mr Duncan and
Ms Wright relates to a loan reflected as being due by the defendant to the Trust.
In Mr Duncan‟s schedule, based on the schedule prepared and discovered by the
defendant, the amount owing to the Trust as at 28 February 2013 was R418 343.
In Ms Wright‟s schedule the amount owing as at 30 April 2013 was said to be
R1 418 335.31. When Mr Duncan was asked about this figure, his response was
twofold. First, he said that there were no discovered documents for the Trust
beyond 28 February 2013. Secondly, he expressed surprise that the Trust could
have lent the defendant an additional million or so Rand because the only asset
in the Trust was its loan to the defendant and he could not see how it could have
obtained monies to advance to him. The figure reflected in the schedule of Mr
Duncan must accordingly apply, being consistent with the other documents.
This is an aspect which appears to have been overlooked by the trial court and
was excluded from the accrual calculation. It must thus be brought into account
as a liability.
The proceeds of the shares option
[31] The next issue is whether the excluded assets, or those which derived
from them, could be identified with any assets in the estate of the defendant. Mr
Duncan gave evidence that, after various splits, the shares option had been
finally exercised in June 2001. When he was asked whether he had been able to
identify which assets, if any, derived from this, he said that he had not been able
to do this as a result of the failure of the defendant to provide a full schedule of
the requisite bank accounts. The defendant‟s counsel challenged this evidence,
saying that complete sets of „the Standard Bank statements and also Investec
Bank statements, those that our client had were furnished on 30 May 2013‟. The
trial commenced on 3 June 2013. It emerged that the statements referred to by
counsel did not comprise a complete set of bank statements and, in any event,
had not been discovered. Although it was put to Mr Duncan during cross-
examination that Ms Wright had traced the assets derived from the exercise of
the option, no evidence to that effect was led. This kind of assertion stands on a
completely different footing to those dealt with earlier where the assertion put in
cross-examination amounts to an admission by the defendant. Here, if the
assertion is to be taken into account, either the plaintiff must agree to it or
evidence must be led in support of it. Neither of these alternatives materialised.
[32] The net effect of this is that there was no evidence as to which assets of
the defendant, if any, derived from the excluded assets. In response to this,
counsel for the defendant submitted that the onus was on the plaintiff to prove
that the exemption clause was not enforceable. This is not a correct formulation
of the issue. At no stage did either party claim that the clause was not
enforceable. The evidence of Mr Duncan that the discovered documents did not
show which of the defendant‟s assets, if any, were derived from the excluded
assets, was contested. Counsel for the defendant then submitted that, as part of
the onus on the plaintiff to prove the accrual to the estate of the defendant, she
must prove which assets derive from the excluded assets.
[33] It is not necessary or desirable to decide the issue of the onus in the
present circumstances and I expressly refrain from doing so. Here there is
uncontested evidence that no excluded assets can be traced from the discovered
documents. On the evidence, therefore, the plaintiff proved that no assets can be
identified as deriving from those excluded by the ANC. If this evidence was
incorrect, no documentation was shown to Mr Duncan tracing any such assets
such as to cause the trial court to reject this evidence. Likewise, no
countervailing evidence was led.
The estimates of the legal fees of the defendant
[34] The final issue relates to the amounts included in Ms Wright‟s schedule
which are said to be estimates of the defendant‟s indebtedness for legal fees and
associated costs. There is no such liability disclosed in any of the documents
prepared by the defendant on which Mr Duncan based his evidence. This
includes the schedule prepared and put up by the defendant as at 28 February
2013. Since, once again, neither the defendant nor Ms Wright led evidence as to
this liability, it must be ignored for present purposes.
The value of the defendant’s estate
[35] The value of the defendant‟s estate emerges as follows. The amounts
under
Lentus
Asset Management
after
deducting
liabilities
totalled
R13 707 426.13. The three cheque accounts totalled R115 676.67 and the
Investec Money Market account totalled R126.58. To this must be added the
agreed net value of the immovable properties in the sum of R1 686 433.23 and
the Landrover with a value of R244 000. From this must be deducted the
amount by which the Standard Bank account was overdrawn and amounts
owing for the credit card. These total R23 806.35. All of the above figures are
taken from Ms Wright‟s schedule and were accepted by the plaintiff. The
liability of the defendant to the Trust in the sum of R418 343 must be deducted.
The inflated commencement value of R234 077.76 must be deducted. Since
there are no excluded assets identified, no further deduction takes place in that
regard.
[36] If, after this exercise, there is a positive balance, there has been an
accrual. The plaintiff is entitled to one half of any such accrual less what she
received in advance. As mentioned, this was agreed to be cash of R700 000 and
two vehicles with agreed values of R260 000 and R100 000 respectively. From
the accrual, therefore, a sum of R1 060 000 must be deducted in order to arrive
at an award, if any.
The calculation of the accrual award
[37] Excluding the loan account in Full House Taverns, the accrual to the
defendant‟s estate and the award to be made to the plaintiff is therefore
calculated as follows:
Lentus Asset Management
R 10 802 415.41
Lentus Asset Management
R 1 199 884.60
Lentus Asset Management
R 774 208.60
Lentus Asset Management
R 444 474.44
Lentus Asset Management
R 223 316.89
Lentus Asset Management
R 263 126.19
R 13 707 426.13
Landrover
R 244 000.00
R 244 000.00
Citi Cheque Account
R 55 363.05
Macquarrie Bank Account
R 54 320.96
Investec Private Bank
R 5 992.66
R 115 676.67
Investec Money Market Account
R 126.58
R 126.58
South Ridge Road
R 36 433.23
Rietvlei
R 1 650 000.00
R 1 686 433.23
less
Standard Bank o/d
-R 7 287.77
Standard Bank credit card
-R 16 518.58
-R 23 806.35
The Trust loan
-R 418 343.00
-R 418 343.00
Inflated commencement value
-R 234 077.76
-R 234 077.76
Accrual
R 15 077 435.50
Plaintiff's share
R 7 538 717.75
less
Advance payment
-R 700 000.00
Vehicle 1
-R 260 000.00
Vehicle 2
-R 100 000.00
-R 1 060 000.00
AWARD
R 6 478 717.75
[38] Before arriving at the order to be made, it is appropriate to comment on
the manner in which the defendant approached the litigation on the accrual
claim. As I mentioned, the defendant‟s counsel put to Mr Duncan that Ms
Wright had been able to trace assets which derived from the exercise of the
share option which was an excluded asset. If this is so, it must mean that Ms
Wright was privy to documentation that was not shown to Mr Duncan. This
must mean, in turn, that relevant documents exist which the defendant failed to
discover or furnish. This was also true of the financial statements of Full House
Taverns, a company of which the defendant was the guiding mind. In addition,
the plaintiff attempted to subpoena duces tecum through the defendant, as
trustee, documents showing the financial position of the Trust. This provoked a
response by the defendant that he could not provide these documents without
the consent of his co-trustees. When the loan was shown to have increased by
approximately R1 million between the end of February 2013 and 30 April
2013, Mr Duncan stated that he had not seen any financial documents relating to
the trust for the period after the end of February 2013. It was then put to him
that documents had been provided to the plaintiff‟s attorneys pursuant to a
subpoena duces tecum on the Thursday or Friday before the trial commenced.
The accuracy of this assertion was not proved.
[39] The attitude of many divorce parties, particularly in relation to money
claims where they control the money, can be characterised as „catch me if you
can‟. These parties set themselves up as immovable objects in the hopes that
they will wear down the other party. They use every means to do so. They fail
to discover properly, fail to provide any particulars of assets within their
peculiar knowledge and generally delay and obfuscate in the hope that they will
not be „caught‟ and have to disgorge what is in law due to the other party.
[40] The conduct of the trial on the accrual claim appears to have been run by
the defendant on a „catch me if you can‟ basis. He clearly failed to comply with
the provisions of s 7 of the Act. He delayed providing what were obviously
relevant documents until the last minute and then did not discover them. He
declined to provide any documents concerning the financial position of Full
House Taverns. He did not provide documents which could be used to trace
assets derived from the excluded assets. He did not prove that documents
relating to the Trust were furnished timeously or at all pursuant to a subpoena
duces tecum after initially claiming that he could not furnish these without the
consent of his co-trustees. He inexplicably did not testify and then took a
technical point concerning documentary proof.
[41] This approach of the defendant deserves censure. In my view, it may have
warranted a punitive costs order at the trial. There is no cross appeal before us
on costs so such an order is not competent. Even though the award has been
reduced on appeal and it may be argued that the defendant achieved a measure
of success, because this attitude persisted on appeal, the defendant will be liable
for the costs of the appeal.
[42] The following order issues:
1 The appeal is dismissed with costs, save to the extent that the order of the
court a quo is amended as set out below.
2 Paragraphs (a), (b) and (d) of the order of the trial court are amended to read
as follows:
„(a) The defendant is to pay to the plaintiff the sum of R 6 478 717.75 by no
later than 30 November 2014.
(b) The defendant is directed to transfer to the plaintiff an amount equal to one-
half of the defendant‟s loan account in Full House Taverns (Pty) Ltd as at the
date of divorce.
(d) (i) The defendant is to pay the plaintiff‟s costs of the action.
(ii) The plaintiff is to pay the costs of the applications to compel her to
attend on the defendant‟s psychologist.
(iii) The defendant is to pay all reserved orders for costs not dealt with in
paragraph (d)(ii), save that, where those costs relate to applications concerning
the custody of the minor children, each party is to pay his or her own costs.‟
T R Gorven
Acting Judge of Appeal
Appearances
For Appellant:
J A Julyan SC, with her S I Humphery
Instructed by:
Belinda Ardenbaum Attorneys, Durban
Phatshoane Henney Attorneys, Bloemfontein
For Respondent:
A Stokes SC
Instructed by:
Roger Knowles Attorneys, Durban
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
25 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.
B v B (700/2013) [2014] ZASCA 137 (25 September 2014)
The SCA today dismissed an appeal by a husband arising from a divorce
action in the KwaZulu-Natal High Court, Durban, where it was held that
an accrual had taken place to his estate during the marriage. The husband
contended that the evidence led on behalf of the wife on the accrual claim
had been inadmissible, in that the documents on which it was based had
not been properly proved. It was held on appeal that assertions made in
cross-examination on behalf of the husband stood as admissions. These
assertions were to the effect that the documents used by accountants
employed by both parties were authentic. The order of the high court was
amended due to certain amounts not having been taken into account. The
obstructive approach of the defendant to the litigation was deplored. |
3696 | non-electoral | 2021 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 507/2020
In the matter between:
BAYPORT SECURITISATION LIMITED
FIRST APPELLANT
LAW SOCIETY OF SOUTH AFRICA
SECOND APPELLANT
and
UNIVERSITY OF STELLENBOSCH LAW CLINIC
FIRST RESPONDENT
SUMMIT FINANCIAL PARTNERS (PTY) LIMITED
SECOND RESPONDENT
JENINA MARY MATTHYS
THIRD RESPONDENT
SKHUMBUZO RICHARD KHUMALO
FOURTH RESPONDENT
FRANS SAULUS
FIFTH RESPONDENT
ALBERT ROBERT KLEINSMITH
SIXTH RESPONDENT
GLADYS SEIKGOTLA JANTJIES
SEVENTH RESPONDENT
ESTER KORDOM
EIGHTH RESPONDENT
SARAH FELICITY VISSER
NINTH RESPONDENT
EDGAR ARNOLDS
TENTH RESPONDENT
PATRICK MOEMEDI TLADI
ELEVENTH RESPONDENT
LEBOGANG VICTOR MOKATE
TWELFTH RESPONDENT
Neutral citation:
Bayport Securitisation Limited and Another v University of
Stellenbosch Law Clinic and Others (Case no 507/2020) [2021]
ZASCA 156 (4 November 2021)
Coram:
PONNAN, MAKGOKA and GORVEN JJA and PHATSHOANE and
MOLEFE AJJA
Heard:
07 September 2021
Delivered:
This judgment was handed down electronically by circulation to the parties’
legal representatives via 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 9h45
on 4 November 2021.
Summary:
National Credit Act 34 of 2005 – s 103(5) read with s 101(1)(g) – whether
collection costs as defined includes all legal costs incurred in enforcing credit agreement
– whether s 103(5) applies for as long as the consumer remains in default irrespective of
whether judgment has been granted – collection costs, as defined and referred to in s
101(1)(g) – to be given its common law meaning by drawing a distinction between the
collection fees charged by an attorney prior to litigation and the costs awarded in an action
to recover the debt – legal costs commence with a summons and do not as a general rule
allow for pre-litigation costs to be recovered from the losing litigant – the judgment entered
is for the capital sum fixed at a particular date together with interest – thus s 103(5) does
not apply post-judgment – appeal upheld.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Hack AJ, sitting
as the court of first instance):
1 The appeal of the first and second appellants is upheld.
2 The order of the high court is set aside and in its place is substituted the following:
‘The application is dismissed.’
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Phatshoane AJA (Ponnan, Makgoka and Gorven JJA and Molefe AJA concurring):
[1] This appeal concerns the construction to be placed on ‘collection costs’ as defined
in s 1 and whether collection costs in s 101(1)(g), as read with s 103(5), of the National
Credit Act 34 of 2005 (the NCA) includes all legal costs pre- and post- judgment.
[2] The NCA introduced profound changes to the South African credit landscape. It
ushered in a host of new forms of protection for consumers. These include the regulation
of the consumer credit industry, prohibiting credit providers from extending ‘reckless
credit’ and mechanisms to assist over-indebted consumers to manage their debt burden.1
While the introduced reforms are mostly laudable, the inept and inelegant drafting has,
on occasion, been a cause for concern.2
1 Sebola v Standard Bank of South Africa Ltd [2012] ZACC 11; 2012 (5) SA 142 (CC) para 41.
2 Du Bruyn No and Others v Karsten [2018] ZASCA 143; 2019 (1) SA 403 (SCA) para 1; Nedbank Ltd and
Others v National Credit Regulator and Another [2011] ZASCA 35; 2011 (3) SA 581 (SCA) para 2.
[3] In Nkata v FirstRand Bank Ltd,3 Moseneke DCJ remarked that the NCA infuses
constitutional considerations into the culture of borrowing and lending between
consumers and credit providers. He observed:
‘Credit givers serve a beneficial and indispensable role in advancing the economy and sometimes
social good. They too have not only rights but also responsibilities. They must act within the
constraints of the statutory arrangements. That is particularly so when a credit consumer honestly
runs into financial distress that precipitates repayment defaults. The resolution of the resultant
dispute must bear the hallmarks of equity, good faith, reasonableness and equality. No doubt,
credit givers ought to be astute to recognise the imbalance in negotiating power between
themselves and consumers. They ought to realise that at play in the dispute is not only the profit
motive, but also the civilised values of our Constitution.’4
While the object of the NCA is largely to protect consumers, the interests of creditors must
also be safeguarded and should not be overlooked.5
[4] The appeal by Bayport Securitization RF Limited (Bayport), a company providing
credit (small and intermediate) to consumers, and the Law Society of South Africa (LSSA),
the first and second appellants respectively, against a judgment of the Western Cape
Division of the High Court (per Hack AJ), is with the leave of that court. The University of
Stellenbosch Law Clinic (the Law Clinic) and Summit Financial Partners (Pty) Ltd
(Summit), the first and the second respondents, represented the third to twelfth
respondents in application proceedings before Hack AJ. The application cited 47
respondents, which included Bayport and LSSA.
[5] The respondents sought and were granted the following three declaratory orders
and certain consequential relief:
‘(a)
That collection costs as referred to in section 101(1)(g), as defined in section 1 and
contemplated in section 103(5) of the National Credit Act 34 of 2005, includes all legal fees
incurred by the credit provider in order to enforce the monetary obligation of the consumer under
a credit agreement charged before, during and after litigation.
3 Nkata v FirstRand Bank Ltd [2016] ZACC 12; 2016 (4) SA 257 (CC).
4 Ibid para 94.
5 Sebola and Another v Standard Bank of South Africa Ltd and Another [2012] ZACC 11; 2012 (5) SA 142
(CC) para 40.
(b)
That section 103(5) of the National Credit Act 34 of 2005 applies for as long as the
consumer remains in default of his/her credit obligations, from the date of default to the date of
collection of the final payment owing, in order to purge his default, irrespective of whether
judgment in respect of the default has been granted or not during this period.
(c)
That legal fees, including fees of attorneys and advocates, in as much as they comprise
part of collection costs as contemplated in section 101(1)(g) of the National Credit Act 34 of 2005
may not be claimed from a consumer or recovered by a credit provider pursuant to a judgment to
enforce the consumer’s monetary obligations under a credit agreement, unless they are agreed
to by the consumer or they have been taxed.’
Paragraphs (d) to (f) of Hack AJ’s order deal with the consequential relief for the
appointment of an expert to recalculate the outstanding amounts of certain emoluments
attachment orders (EAO) obtained against the third to twelfth respondents and for the
repayment of any amount found to have been due and owing pursuant to the
recalculation.
[6] The appeal by the LSSA is against the whole of the judgment and order of the high
court, whereas Bayport’s appeal is directed solely against the declaratory relief granted
in para (b) on the basis, in essence, that if that paragraph of the order does not withstand
scrutiny, then the rest of the relief granted likewise cannot stand.
[7] Central to the declaratory orders granted by the high court is the definition of
collection costs. According to s 1 of the NCA, ‘collection costs’ means:
‘[A]n amount that may be charged by a credit provider in respect of enforcement of a consumer’s
monetary obligations under a credit agreement, but does not include a default administration
charge’.
The NCA limits the extent to which a consumer may be held liable to a credit provider
under a credit agreement. In terms of s 101(1) of the NCA, a credit agreement may not
require payment by the consumer of any money or other consideration, except: the
principal debt (subsec (a));6 an initiation fee (subsec (b));7 a service fee (subsec (c));8
interest (subsec (d));9 cost of any credit insurance (subsec (e));10 default administration
charges (subsec (f));11 and collection costs (subsec (g)).12
[8] The NCA prescribes in s 103(5) that the aggregate interest, fees and charges,
including collection costs referred to in s 101(1)(a) to (g), which accrue during the time
that the consumer is in default, may not exceed the unpaid balance of the principal debt
at the time of the default. It provides:
‘Despite any provision of the common law or a credit agreement to the contrary, the amounts
contemplated in section 101(b) to (g) that accrue during the time that a consumer is in default
under the credit agreement may not, in aggregate, exceed the unpaid balance of the principal
debt under that credit agreement as at the time that the default occurs.’
[9] The high court favoured an interpretation that in terms of s 101(1)(g) collection
costs included all legal fees incurred by the credit provider to enforce the monetary
obligations of the consumer. Those included the costs incurred: (a) prior to the
commencement of litigation; (b) post the commencement of litigation, but pre-judgment
6 Section 101(1)(a) reads: ‘the principal debt, being the amount deferred in terms of the agreement, plus
the value of any item contemplated in section 102’.
7 Section 101(1)(b) reads: ‘an initiation fee, which –
(i) may not exceed the prescribed amount relative to the principal debt; and
(ii) must not be applied unless the application results in the establishment of a credit agreement
with that consumer’.
8 Section 101(1)(c) reads: ‘a service fee, which-
(i) in the case of a credit facility, may be payable monthly, annually, on a per transaction basis or
on a combination of periodic and transaction basis; or
(ii) in any other case, may be payable monthly or annually; and
(iii) must not exceed the prescribed amount relative to the principal debt’.
9 Section 101(1)(d) reads: ’interest, which –
(i) must be expressed in percentage terms as an annual rate calculated in the prescribed manner;
and (ii) must not exceed the applicable maximum prescribed rate determined in terms of section
105.’
10 Section 101(1)(e) reads: ‘cost of any credit insurance provided in accordance with section 106’.
11 Section 101(1)(f) reads: ‘default administration charges, which-
(i) may not exceed the prescribed maximum for the category of credit agreement concerned; and
(ii) may be imposed only if the consumer has defaulted on a payment obligation under the credit
agreement, and only to the extent permitted by Part C of Chapter 6; …’.
12 Section 101(1)(g) reads: ‘collection costs, which may not exceed the prescribed maximum for the
category of credit agreement concerned and may be imposed only to the extent permitted by Part C of
Chapter 6’.
and (c) post-judgment. It was thus construed to include all legal fees incurred through the
employment of attorneys and advocates, as well as the execution of the judgment.
[10] Counsel for the respondent contended that particularly in the context of microloans
s 103(5) was important, as it serves to protect the consumer from collection costs far
exceeding the amount that was initially borrowed. He argued that by necessary
implication legal fees had to be included in the definition of collection costs. The credit
agreements, he argued, invariably make provision for costs on an attorney and client
scale. In each instance, where these costs are to be recovered from consumers, the credit
providers are seeking an enforcement of the credit agreement. In this regard, counsel
placed reliance on Nkata, where reference was made to ‘reasonable legal costs of
enforcing the agreement’. Accordingly, so it was contended, Nkata is dispositive of the
appellants’ contentions.
[11] For a proper understanding of the context in which reference was made to
‘reasonable legal costs of enforcing the agreement’ in Nkata, an analysis of that case is
necessary. In the main, Nkata concerned the correct interpretation of subsecs
129(3)(a) and 129(4)(b) of the NCA. At any time before a credit provider has cancelled
the credit agreement, s 129(3) of the NCA permits consumers who have fallen into
arrears, and face impending debt-enforcement procedures, to remedy their default or
'reinstate' the credit agreement by paying the full arrear amounts, along with the credit
provider's permitted default charges and reasonable costs of enforcing the agreement.
Section 129(4)(b) precludes reinstatement 'after . . . the execution of any other court order
enforcing that agreement'.
[12] Ms Nkata, a consumer, who was in default of a mortgage loan agreement, paid all
overdue instalments but did not make separate payment of the 'costs of enforcing the
agreement' which the credit provider, FirstRand Bank Ltd (the bank), had debited to her
account. She made this payment when the bank had already taken judgment against her
and had obtained a writ of execution against the mortgaged property, but before (as a
result of further arrears) the bank attached and had the mortgaged property sold in
execution.
[13] The minority decision took the view that the credit agreement between Ms Nkata
and the bank was not reinstated in terms of s 129(3) because, whilst it was so that
she paid all amounts that were overdue, she did not pay the reasonable costs of enforcing
the agreement. By adding the costs to the capital debt, the bank had lent Ms Nkata
money, thereby prescribing the manner in which it expected to receive payment. But the
bank's action in postponing its claim for payment did not mean that she had paid those
costs. The majority held that properly construed s 129(3) did not preclude the
reinstatement of a credit agreement where the consumer had paid all the amounts that
were overdue, but had not been given due notice of reasonable legal costs — whether
agreed or taxed. This was so because the legal costs would become due and payable
only when they are reasonable, agreed or taxed and on due notice to the consumer. The
majority found that the credit agreement was reinstated when Ms Nkata discharged in full
her bond arrears. The bank's legal costs were then not due and payable because the
bank had not given her notice of the legal costs, neither had it demanded its payment
properly or at all. Also, the nature and extent of the legal costs had not been agreed to by
Ms Nkata and had not been assessed for reasonableness by taxation or other acceptable
means. Instead, the bank chose to be the sole arbiter of the extent of the legal costs and
unilaterally debited the costs to the bond account of Ms Nkata.
[14] Nkata is thus not authority for the proposition that collection costs referred to in s
101(1)(g), read with s 103(5), include legal costs. The Constitutional Court was not
required to consider the distinction between collection costs and litigation costs or to
consider whether the litigation costs form part of collection costs referred to in s 103(5).
The costs at issue in Nkatha were costs incurred to enforce the credit agreement through
the institution of legal proceedings (these were costs of the cancelled sale in execution,
as well as the costs of the rescission application 'as taxed or agreed’, which Ms Nkata
had agreed to service).13 The Constitutional Court had no difficulty in concluding that such
13 In para 10 of Nkata the Court noted that ‘. . . The bank describes these as being for the attorney's fees
costs could be claimed from the consumer provided they were taxed or agreed between
the parties in the normal course.
[15] Our courts have over many years drawn a distinction between collection costs and
litigation costs. The high court reasoned that those authorities predate the Constitution
and are thus not relevant. It is trite that a statutory provision should not be interpreted so
as to alter the common law more than is necessary, unless the intention to do so is clearly
reflected in the enactment, whether expressly or by necessary implication. It is a sound
rule to construe a statute in conformity with the common law, save where and insofar as
the statute itself evidences a plain intention on the part of the Legislature to alter the
common-law.14 As long ago as 1916 in D & D H Fraser Ltd v Waller,15 Innes CJ had
occasion to state:
‘But the point is that the costs recoverable must be costs of collection. Collection in the sense in
which the word is used…. is a different process from recovery by action. The assistance of the
Court is invoked after the collector has failed. The attorney who conducts the case recovers the
money at law, and is remunerated by the costs awarded him. He cannot claim against his principal
a commission upon the amount of the judgment; nor can the agent; for neither of them has
collected the debt. And it would make no difference should the capacities of collecting agent and
attorney happen to be united in the same individual. If it were otherwise, there would be a double
charge - costs plus commission - upon the debtor in every case in which an instrument of debt
containing a collection clause was sued upon.’16
[16] Nothing in the NCA suggests an intention on the part of the Legislature to depart
from that construction. It follows that collection costs, as defined and referred to in s
101(1)(g), should be given the same meaning as in D & D H Fraser. That a distinction is
to be drawn between collection costs and legal fees is fortified by the fact that in terms of
and counsel's day fee in Ms Nkata's unsuccessful rescission application, which costs were covered by the
parties' settlement agreement. This was in addition to a globular amount of R9050, debited to the mortgage
bond account in October 2010, for fees that the bank had incurred in pursuing the cancelled execution and
sale’. The R9 050 was for summons, judgment, writ, attachment and first sale in execution, including VAT,
disbursements and sheriff's fees.
14 Footnote 2 para 38.
15 D & D H Fraser Ltd v Waller 1916 AD 494.
16 Ibid at 501.
the Superior Courts Act 10 of 2013, the Magistrates’ Courts Act 32 of 1944 (MCA), or the
Debt Collectors Act 114 of 1998 (whichever is applicable to the enforcement of the credit
agreement) maximum tariffs are prescribed.17
[17] Costs are awarded to successful litigants in order to indemnify them for the
expense to which they have been put through, having been compelled either to initiate or
defend litigation. The ensuing legal costs, which courts have a discretion to both award
and determine the applicable scale thereof, flow directly from, and are limited to, the
litigation. Owing to the necessary operation of taxation, such an award is seldom a
complete indemnity. However, that does not affect the principle on which it is based.18
The high court failed to take into account that in terms of the tariff applied by taxing
masters, legal costs are regarded as commencing with a summons and do not as a
general rule allow for pre-litigation costs to be recovered from the losing litigant.19
[18] The respondents’ submission that the NCA puts a maximum limit on the amount
of legal costs that can be recovered from a consumer would lead to some glaring
absurdities. What militates against such a construction is that the award of costs generally
involves the exercise of a judicial discretion. To hold that collection costs include legal
costs would be to oust or severely fetter the discretion of a court to make appropriate
costs orders, including where necessary punitive costs orders. The following example,
which was put to counsel and to which he had no answer, may well illustrate the point:
Assuming that credit provider A, is forced to institute proceedings in a magistrates’ court
against consumer B. Judgment is entered for A. B then prosecutes an appeal to the high
17 In terms of s 51 of the Superior Courts Act 10 of 2013 the rules applicable to the various high courts
immediately before the commencement of that section remain in force to the extent that they are not
inconsistent with the Act. Rule 22 of the Rules of the Constitutional Court as published in Government
Notice R1675 in Government Gazette 25643 of 31 October 2003 provides for taxation of costs and
attorneys’ fees; Rules 17 and 18 of Rules Regulating the Conduct of the Proceedings of the SCA as
promulgated in Government Notice R1523 of 27 November 1998 provides for taxation of costs and
attorneys’ fees. Rule 69 of the Uniform Rules of the high court provides tariff of maximum fees for advocates
on party and party basis in certain civil matters and rule 70 applies to taxation and tariff of fees of attorneys.
See also s 80 of the MCA read with rule 33 of the Rules Regulating the Conduct of the Proceedings of the
Magistrates' Courts published under GN R740 in GG 33487 of 23 August 2010 and regulations made in
terms of the National Credit Act, 2005 as published under GNR. 489 of 31 May 2006.
18 Texas Co (SA) Ltd v Cape Town Municipality 1926 AD 467 at 488.
19 Footnote 15 at 501 and 505.
court, which fails. Are the costs of the appeal also to be limited by the application of s
103(5)? What if a further appeal is prosecuted by B to this Court? Imagine if any of the
courts form the view that B’s conduct in the litigation is deserving of censure, would it be
precluded by virtue of s 103(5) from ordering costs on a punitive scale? Where, for
example, the principal debt is comparatively small (as most micro loans are), it is not hard
to imagine that the litigation costs will quickly exceed that amount.
[19] Had the Legislature intended collection costs to include legal costs, it could easily
have said as much. The language used by the legislature demonstrates that collection
costs were not intended to include litigation costs. ‘If the language used by the lawgiver
is ignored in favour of a general resort to “values” the result is not interpretation but
divination’.20
[20] It was argued for the respondents that the debt collection procedures for small
loans have no transparent billing system in that credit providers or their collecting agents
are at large to simply add untaxed costs to the outstanding capital sum with no
consideration as to whether the services were provided and the fees reasonable. In
Nkata, in the context of s 129(3), it was said that ‘if a credit provider is not obliged properly
to quantify and give due notice of the legal costs to the consumer, the relief s 129(3)
affords to a consumer will be frustrated and become illusory’.21 At para 148, Nugent AJ,
in the minority decision, remarked that perhaps greater transparency in the bank billing
system was desirable ‘but that is then a matter for the Legislature to correct.’
[21] The stamps, fees, costs and charges in connection with any civil proceedings in
the magistrates' courts shall, as between party and party, be payable in accordance with
the scales prescribed by the rules.22 In terms of s 80(3) of the MCA, payment of costs
awarded by the court (otherwise than by a judgment in default of the defendant's
appearance to defend or on the defendant's consent to judgment before the time for such
20 S v Zuma [1995] ZACC 1; 1995 (2) SA 642 (CC) para 18.
21 Footnote 3 para 125.
22 Section 80(1) of the Magistrates’ Courts Act 32 of 1944 (MCA).
appearance has expired) may not be enforced until the costs have been taxed by the
clerk of the court.23 Except as specifically set out in or necessarily implied by the NCA, its
provisions are not to be construed as limiting, amending, repealing or otherwise altering
any provision of any other Act.24 Section 80(3) of the MCA has not been amended by the
NCA. As I see it, the allegation that excessive costs are being charged in the context of
EAOs, may be a matter for the Legislature. Assuming it to be true, it cannot be addressed
by a strained interpretation of s 103(5).
[22] The conclusion that collection costs do not include legal costs may well be
dispositive of the appeal in its entirety. However, in view of the fact that the appeal of
Bayport was confined to para (b) of the high court’s order, it may be necessary to turn to
the contentions advanced in that regard. That order is to the effect that s 103(5) of the
NCA applies for as long as the consumer remains in default of his or her credit obligations,
from the date of default to the date of collection of the final payment, irrespective of
whether judgment has been granted.
[23] The appellants argued that a judgment alters the character of the debt. By the
grant of judgment, the litigation steps taken to obtain satisfaction of a judgment, cannot
be equated with the collection of the debt in its original form. It must follow, they contend,
that s 103(5) ceases to be of any force or effect post-judgment because it can only apply
while the creditor is in default under the credit agreement. The respondents, on the other
hand, contend that the judgment does not novate the credit agreement but strengthens
and reinforces the original debt. Thus, the statutory limit in s 103(5) remains in force even
after judgment.
[24] That a judgment provides judgment creditors with a new cause of action on which
they may sue in another court has been settled by this Court in MV Ivory Tirupati.25 The
23 Ibid section 80(1)(3).
24 Section 2(7) of the NCA.
25 MV Ivory Tirupati: MV Ivory Tirupati v Badan Urusan Logistik (aka Bulog) [2002] ZASCA 155; 2003 (3)
SA 104 (SCA) para 31.
views expressed in Eke v Parsons,26 which concerned a settlement agreement that had
been made an order of court, are instructive. It was there stated:
‘The effect of a settlement order is to change the status of the rights and obligations between the
parties. Save for litigation that may be consequent upon the nature of the particular order, the
order brings finality to the lis between the parties; the lis becomes res judicata (literally, 'a matter
judged'). It changes the terms of a settlement agreement to an enforceable court order. The type
of enforcement may be execution or contempt proceedings. Or it may take any other form
permitted by the nature of the order. . . .’27
[25] The high court concluded that the judgment of this Court in Nedbank28 supported
its conclusion that s 103(5) of the NCA endures post judgment. Nedbank held:
‘[38] . . . Section 103(5) is not a code and embodies no more than a specific rule applicable to
specific circumstances, that is, to credit agreements subject to the NCA. It is thus a statutory
provision with limited operation. It seeks not only to amend the common-law in duplum rule but
also to extend it. It deals with the same subject matter as the common law rule but this does not
mean that it incorporates all or any of the aspects of the common law rule. It is a self-standing
provision and must be construed as such.’29
…
‘[49]
…Once the amounts referred to in s 101(1)(b)-(g) that accrue during the period of default,
whether or not they are paid, equal in aggregate the unpaid balance of the principal debt at the
time the default occurs, no further charges may be levied. It is not that a moratorium
against payment is introduced by s 103(5): no amount in respect of the fees, costs and charges
may 'accrue' any further. Put differently, no enforceable right to the charges outlined in s
101(1)(b)-(g) thereafter arises. This, it seems, is the meaning of the word used in cases on the
common-law rule. The words of s 103(5) simply do not allow for a different construction. . . .’30
(My emphasis.)
[26] However, in Nedbank, the court was not called upon to consider whether the
statutory limit in s 103(5) continued to apply to the costs of credit referred to in s 101(1)(b)-
26 Eke v Parsons [2015] ZACC 30; 2016 (3) SA 37 (CC).
27 Ibid para 31.
28 Footnote 2.
29 Ibid para 38. Cited footnotes excluded.
30 Ibid para 49.
(g) after judgment had been granted. A fundamental difference between the facts in that
case and in this is that after a judgment has been granted against a consumer usually,
save for necessary disbursements and charges allowed in terms of the relevant tariff, only
interest accrues on the judgment debt. The remaining charges contemplated in s
101(1)(b) to (g) are thus not post-judgment charges. The judgment entered is thus for the
capital sum fixed at a particular date together with interest. It follows that even had it been
correctly found that s 103(5) found application, it did not apply post-judgment.
[27] In conclusion, the high court’s interpretation of collection costs in s 1, and its
application to ss 101(1)(g) and 103(5) of the NCA, which culminated in the declaratory
orders granted, cannot be supported. As the consequential relief is contingent upon the
declaratory granted, it too must suffer the same fate. Accordingly, the appeal must be
upheld.
[28] On the question of costs, the opposition to this appeal was made to advance the
interests of vulnerable South Africans on issues of considerable moment and for the
public good. The Law Clinic and the Summit took up the responsibility to represent the
interests of impecunious members of society. They ought not to be mulcted in costs. The
qualified immunity under Biowatch31 accordingly applies. There will thus be no costs
order in this Court and in the proceedings before the high court.
[29] In the result the following order is made:
The appeal of the first and second appellants is upheld.
The order of the high court is set aside and in its place is substituted the following:
‘The application is dismissed.’
_________________
M V PHATSHOANE
ACTING JUDGE OF APPEAL
31 Biowatch Trust v Registrar Genetic Resources [2009] ZACC 14; 2009 (6) SA 232 (CC) paras 23-24.
Appearances:
For first appellant:
ARG Mundell SC (with CL Robertson)
Instructed by:
Marie-Lou Bester Inc, Johannesburg
Bokwa Attorneys, Bloemfontein.
For the second appellant:
MA Badenhorst SC
Instructed by:
Rooth & Wessels Inc, Pretoria
Pieter Skein Attorneys, Bloemfontein.
For the first to the twelfth respondents: I Jamie SC (with HN De Wet and DM Lubbe)
Instructed by:
Suné van der Merwe Attorneys, Paarl
Webbers 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:
04 November 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
Bayport Securitisation Limited and Another v University of Stellenbosch Law Clinic and Others
(Case no 507/2020) [2021] ZASCA 156 (4 November 2021)
Today the Supreme Court of Appeal (SCA) upheld the appeal by Bayport Securitization RF Limited and
the Law Society of South Africa, the first and second appellants, against a judgment of the Western
Cape Division of the High Court, Cape Town (high court).
The appeal concerned the construction to be placed on ‘collection costs’ as defined in s 1 and whether
collection costs in s 101(1)(g), as read with s 103(5), of the National Credit Act 34 of 2005 (the NCA)
included all legal costs pre-and post-judgment.
The high court favoured an interpretation that in terms of s 101(1)(g), collection costs included all legal
fees incurred by the credit provider to enforce the monetary obligations of the consumer. Those included
the costs incurred: (a) prior to the commencement of litigation; (b) post the commencement of litigation,
but pre-judgment and (c) post-judgment. It was thus construed to include all legal fees incurred through
the employment of attorneys and counsel, as well as the execution of the judgment.
On appeal, the appellants contended that collection costs as defined and referred to in s 101 (1)(g) did
not include legal fees incurred by the credit provider through the initiation of legal proceedings. The
respondents, on the other hand, argued that s 103(5) placed a maximum limit on the amount of legal
costs that the credit provider could recover from a consumer. That in the context of microloans s 103(5)
served to protect the consumer from collection costs far exceeding the amount that was initially
borrowed. That by necessary implication meant that legal fees had to be included in the definition of
collection costs.
The SCA held that it was trite that a statutory provision should not be interpreted so as to alter the
common law more than was necessary unless the intention to do so was clearly reflected in the
enactment, whether expressly or by necessary implication. That collection costs, as defined and
referred to in s 101(1)(g), should be given the same meaning as in D & D H Fraser Ltd v Waller 1916
AD 494 where a distinction was drawn between the collection fees charged by an attorney prior to
litigation and the costs awarded in an action to recover the debt.
Held further that, that a distinction was to be drawn between collection costs and legal fees was fortified
by the fact that in terms of the Superior Courts Act 10 of 2013, the Magistrates’ Courts Act 32 of 1944
(MCA), or the Debt Collectors Act 114 of 1998 (whichever was applicable to the enforcement of the
credit agreement) maximum tariffs were prescribed. That in terms of the tariff applied by taxing masters,
legal costs were regarded as commencing with a summons and did not as a general rule allow for pre-
litigation costs to be recovered from the losing litigant.
Held further that the respondents’ submission, that the NCA placed a maximum limit on the amount of
legal costs that could be recovered from a consumer, would lead to some glaring absurdities. To hold
that collection costs included legal costs would be to oust or severely fetter the discretion of a court to
make appropriate costs orders, including where necessary punitive costs orders. Had the legislature
intended collection costs to include legal costs, it could easily have said as much.
As to paragraph (b) of the high court’s order – which is to the effect that - s 103(5) of the NCA applied
for as long as the consumer remained in default of his or her credit obligations, from the date of default
to the date of collection of the final payment, irrespective of whether judgment had been granted – the
SCA held that after a judgment has been granted against a consumer usually, save for necessary
disbursements and charges allowed in terms of the relevant tariff, only interest accrues on the judgment
debt. The remaining charges contemplated in s 101(1)(b) to (g) were not post-judgment charges. The
judgment entered was for the capital sum fixed at a particular date together with interest. Consequently,
s 103(5) did not apply post-judgment.
Accordingly, the appeal succeeded with no order as to costs.
~~~~ends~~~~ |
3910 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 487/2021
In the matter between:
SIYANGENA TECHNOLOGIES (PTY) LTD
APPELLANT
and
PASSENGER RAIL AGENCY
OF SOUTH AFRICA
FIRST RESPONDENT
RETIRED JUSTICE EZRA GOLDSTEIN
SECOND RESPONDENT
RETIRED JUSTICE MEYER JOFFE
THIRD RESPONDENT
#UNITEBEHIND
AMICUS CURIAE
Neutral citation:
Siyangena Technologies (Pty) Ltd v PRASA and Others
(487/2021) [2022] ZASCA 149 (1 November 2022)
Coram:
PONNAN, VAN DER MERWE and PLASKET JJA and CHETTY
and SALIE-HLOPE AJJA
Heard:
26 August 2022
Delivered:
1 November 2022
Summary:
Constitutional and administrative law
– irregularities in
procurement process by organ of state – legality review – self-review – delay – whether
unreasonable and should be condoned – just and equitable remedy following
declaration of unconstitutionality of contracts – factors relevant to assessment –
misconduct by state officials – contracting parties not innocent – remedial discretion –
independent engineer appointed to assess value of work – order may be interfered
with on appeal only if discretion not exercised judicially – defective record – absence
of core bundle – costs.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Lamont, Raulinga and
Hughes JJ, sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel.
The appellant’s attorneys shall not be entitled to recover any of the costs
associated with the preparation, perusal or copying of the record.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Chetty AJA (Ponnan, Van der Merwe and Plasket JJA and Salie-Hlope AJA
concurring):
Introduction
[1] This appeal is against the judgment of the Gauteng Division of the High Court,
Pretoria (the high court), which set aside certain procurement contracts entered into
between the appellant, Siyangena Technologies (Pty) Ltd (Siyangena) and the first
respondent, the Passenger Rail Agency of South Africa (PRASA). Siyangena was
appointed by PRASA to supply and maintain an integrated security access
management system (ISAMS) at various train stations. The equipment – which
included public address facilities, speed gates and electronic display boards – was
intended to enhance the safety, access and efficiency of the public rail commuter
system, which PRASA is under a statutory duty to provide and maintain.1
1 PRASA was established in terms of s 22 of the Legal Succession to the South African Transport
Services Act 9 of 1989. Its statutory mandate is to provide, inter alia, commuter rail services in the public
interest throughout the Republic and is funded by the National Treasury through allocations made to
the Department of Transport.
[2] The high court found that in contracting for these goods and services with
Siyangena, PRASA, as an organ of state, failed to act in a manner that is ‘fair,
equitable, transparent, competitive and cost effective’ in accordance with the
provisions of s 217 of the Constitution. The high court declared the award of the
contracts to the value of approximately R5.5 billion invalid, and set them aside in terms
of s 172(1)(a) of the Constitution. The high court further directed, as part of its remedial
powers in terms of s 172(1)(b) of the Constitution, that an independent engineer be
appointed in order to determine whether any of the payments made to Siyangena by
PRASA should be set off against the value of the works done. It is principally this latter
conclusion that occupies our attention in this appeal, which is with the leave of the
court below.
Grounds of appeal
[3] On appeal Siyangena appeared to accept that on the strength of State
Information Technology Agency SOC Ltd v Gijima2 (Gijima) and Buffalo City
Metropolitan Municipality v Asla Construction (Pty) Ltd3 (Buffalo City) the contracts fall
to be declared constitutionally invalid. However, it takes issue with the remedial order.
It contends that it is inconsistent with the Constitutional Court’s approach to a just and
equitable remedy because, so it claims, it was in the position of an innocent party. As
a result, it ought not to be stripped of any rights it would have been entitled to under
the contract, but for the declaration of invalidity.
[4] Importantly, in its written argument before this Court, Siyangena conceded that
it could not contest the high court’s ‘numerous findings that PRASA had failed to
comply with the requirements of the procurement processes in respect of the three
contracts at issue in these proceedings’. Rather, the position adopted by Siyangena
is that at all times it had no knowledge of the internal workings of PRASA and was an
‘innocent’ contracting party; there was thus no basis to infer that it was complicit in the
malfeasance.
2 State Information Technology Agency SOC Ltd v Gijima [2017] ZACC 40; 2018 (2) BCLR 240 (CC).
3 Buffalo City Metropolitan Municipality v Asla Construction (Pty) Ltd [2019] ZACC 15; 2019 (6) BCLR
661 (CC).
Background facts
[5] PRASA approached the high court in March 2018 to have its own decisions to
conclude the procurement contracts with Siyangena reviewed and set aside.4 The
election by PRASA to set aside its own decisions was taken by the reconstituted Board
of Control of PRASA (the Board), which was appointed in August 2014. Prior to this,
the executive management committee fell under the control of the erstwhile Group
Chief Executive Officer (GCEO), Mr Montana, who resigned under a cloud in July 2015
amidst mounting concern of mismanagement, as well as an ongoing investigation by
the Public Protector into maladministration at PRASA.
[6] The facts surrounding the irregularities, to the extent that they implicate
PRASA’s own officials, are extensively canvassed in the founding affidavit of Ms
Ngoye, the Group Executive: Legal, Risk and Compliance at PRASA and corroborated
by supporting documentation and affidavits. The high court made extensive reference
to these facts in its judgment,5 and no purpose would be served in restating those
here. The stance adopted by the appellant is that it does not challenge those findings,
as it was not privy to the internal workings of PRASA.
Irregular contracts
[7] In preparation for the 2010 FIFA World Cup, a decision was taken by PRASA
to initiate a pilot project to upgrade certain stations. However, due to budgetary
constraints, not every station was to be upgraded.
[8] Mr van der Walt was the Head of Strategic Asset Development (SAD) at
PRASA. Mr Gantsho was the general manager in the unit which was responsible for
infrastructure development. Mr Gantsho, without the knowledge of Mr van der Walt,
but after liaising with Mr Montana, authorised the extension of the pilot project to other
‘2010’ stations, with Siyangena as the contracting party.
4 The legal challenge to the procurement contracts has a lengthy history more fully canvassed in the
high court judgment. PRASA launched an earlier review application on 2 February 2016 to set aside
the contracts. On 3 May 2017, Sutherland J dismissed the application on the basis that PRASA had not
sought condonation for the delay in bringing the application in terms of s 9(1) of the Promotion of
Administrative Justice Act 3 of 2000 (PAJA). An application for leave to appeal and subsequent
application to the SCA were dismissed. Thereafter, the Constitutional Court handed down judgment in
Gijima, paving the way for the present application as a legality review.
5 See paras 43-104.
[9] The haste with which this contract was concluded is evident from a proposal
submitted by Mr Ferreira, the Chief Executive Officer (CEO) of Siyangena, on 17
March 2010 for the installation of Speedstile gates and closed circuit television (CCTV)
surveillance cameras (forming part of an integrated security system) at seven sites for
the amount of R90.9 million. Siyangena requested an appointment letter within two
days from the date of its proposal. The proposal was met with some concern by Mr
Sebola, the Senior Manager: Projects, on the issue of the funding and ownership of
the installations. His concerns were overlooked. Similar concerns were echoed by the
Supply Chain Management department that the proposal be placed before the Board
and that the issue of funding be resolved. These concerns were also brushed aside.
On 30 April 2010, Siyangena was appointed as the contractor for an amount of R61.8
million, exclusive of VAT, in terms of a letter of appointment, although no formal
contract could be located. It bears noting that the motivation submitted to the Chairman
of the Board for approval of the contract deleted any reference to Mr Montana as being
one of the persons who was instrumental in driving this project. Instead, the motivation
referred to Mr Gantsho alone.
[10] The high court recorded that this contract was concluded following private
meetings held between Siyangena and officials of PRASA. A meeting took place
between Mr Ferreira and Mr Kgaudi in November 2009 where they discussed the work
to be carried out in respect of the 2010 FIFA World Cup stations. Mr Kgaudi was a
consultant engineer acting on behalf of PRASA with regard to the supply and
installation of the ISAMS. The identification of Siyangena as a suitable entity to take
over the role as the service provider on the ISAMS project appears, even on the
version of Siyangena, to have been more than fortuitous. Both Mr Gantsho and Mr
Montana were present at the meeting in January 2010 when Siyangena was
mentioned to assist with the ISAMS roll-out. Mr Gantsho was then instructed to contact
Siyangena, after which, as the high court found, at least two meetings were held
between Mr Ferreira and Mr Montana, in private. There is no record of what was
discussed at these meetings. Ultimately, Mr Gantsho, in liaison with Mr Montana, and
to the exclusion of Mr van der Walt and those in supply chain management, motivated
for the appointment of Siyangena.
[11] The high court further noted that in Siyangena’s answering affidavit it is
recorded that Mr Montana met with Mr Ferreira on 17 March 2010 at the former’s
office, where discussions were held as to Siyangena’s ability to meet the proposed
deadline for delivery. There is no record of this meeting either. What is not disputed is
that, on the same day, Mr Gantsho received the abovementioned proposal from
Siyangena for an extension of the pilot project at a contract price of R90.9 million.
[12] The high court found that, despite the absence of a budget to fund the roll-out
of the ISAMS programme, and without having carried out any procurement process or
prior needs assessment as to whether the installation would be fit for purpose, PRASA
proceeded to contract with Siyangena on the pretext that it would not be able to secure
an alternative contractor to take over in time from Siemens (the previous contractor)
before the commencement of the 2010 FIFA World Cup. It was found that internal
documents were manipulated in an attempt to justify and conceal a prior commitment,
which had been made to Siyangena, to the exclusion of other contractors.
[13] The high court proceeded to analyse the circumstances leading to the
conclusion of ‘Phase 1’ of the impugned contracts, which entailed the roll-out of the
ISAMS programme to sixty-two stations throughout the country. Siyangena was
allowed to piggyback on its original contract with PRASA, and in this way, allowed to
by-pass any vetting under the procurement system. The 2010 FIFA World Cup
provided the impetus for stations designated as ‘World Cup Stations’ to be
modernised, the intention being to reduce fare evasion and to cater for the anticipated
volumes of commuters during the tournament. However, no needs analysis or end-
user assessment, planning or budgetary exercise was carried out before embarking
on the next phase of the installations. This must be seen against the backdrop of a
contract price of R1.9 billion, where the costs under the pilot project of R2.5 million per
station ballooned under the extended roll-out to approximately R12.4 million per
station, and then to R31.5 million. Correspondence between Mr Gantsho and
Siyangena suggests that the latter were left to design the specifications and the bill of
quantities, so much so that the contract in Phase 1 resembles that of an unsolicited
bid.
[14] Moreover, PRASA as an entity falling under the control of the Department of
Transport and the responsible Minister, was bound by further regulatory policy.
Provision for such a large expenditure (defined in the National Treasury Guidelines as
a ‘mega project’6) would have had to feature in the Medium Term Expenditure
Framework (MTEF) for 2010/2011. No allocation was made for such expenditure. As
the high court found, there was no authorisation from the Minister for a contract of
such magnitude.
[15] The high court found that the key protagonists in paying little or scant regard
for PRASA’s internal systems of checks and balances, and of the numerous
committees created for the very purpose of ensuring efficiency and transparency in
procurement, were Mr Montana, Mr Gantsho and Mr Mbatha, the Chief Procurement
Officer (CPO). As the GCEO, Mr Montana simply ignored procedures, by-passed
committees and manipulated documents to favour an outcome to the advantage of
Siyangena. When the tender documents did find their way to the Board for approval,
the minutes which served before the Board concealed irregularities and contained
misrepresentations.
[16] It is inconceivable that the Board could have approved a contract for
approximately R1.3 billion in circumstances where its national budget for the
installation of speed gates was R317 million. The Board members, who considered
the approval of the contract, did not have the necessary expertise to evaluate the bid,
but nonetheless awarded the contract to Siyangena on the basis that it ‘met all our
technical requirements’.
[17] Even more startling is that Siyangena tendered for the contract at a price of
R1.1 billion with the Board inexplicably approving the award of the contract at a price
of R1.9 billion including VAT. This situation is exacerbated by an up-front payment by
PRASA of R250 million as a ‘deposit’ to enable Siyangena to ‘purchase equipment’,
without even knowing what equipment it intended to purchase.
6 National Treasury, Capital Planning Guidelines, June 2018 defines a ‘mega project’ as those
estimated to cost more than R400 million per year for a minimum of three years, or a total project cost
of at least R1 billion. Most mega projects will customarily require a pre-feasibility study and a
comprehensive feasibility study for scrutiny by National Treasury.
[18] The Joint Buildings Contract Committee (JBCC) agreement followed upon a
process riddled with irregularities. The high court found that the works and quantities
in the agreement had not been identified; the principal agent appointed had no skills
to satisfy the requirements of the position. In short, the high court described the
conclusion of the JBCC agreement as irrational and unreasonable. None of these
shortcomings and irregularities are gainsaid by Siyangena.
[19] A further example of Siyangena being the beneficiary of ‘extensions’ to existing
contracts, without having to compete in an open and fair procurement process, is
evident from a motivation addressed by Mr Mbatha to Mr Montana for approval of
CCTV cameras at the cost of R97.7 million. The proposal was motivated on the basis
of an urgent need to address spiralling theft and vandalism at the Wolmerton and
Braamfontein staging yards. No formal needs analysis or budgetary considerations
were evident in the request. A recurring theme used to justify the award of various
contracts to Siyangena was on the basis of emergency situations or that an existing
service provider was unable to meet the proposed deadline.
[20] The implementation of ‘Phase 2’ of the roll-out of the ISAMS project was carried
out in much the same manner as Phase 1. This phase encompassed 160 stations
throughout the country and commenced with a proposal from Siyangena of R2.5
billion. Again, a competitive bidding process was jettisoned. The contract was
considered in circumstances where the MTEF for 2013/14 only made provision for
R235 million for work of this nature, nor was there approval from the Department of
Transport or National Treasury in respect of a ‘mega project’.
[21] PRASA attempted to give the process a veneer of compliance with the
procurement guidelines. However, in June 2013, when a Request for Proposal was
issued to various service providers, contrary to its SCM guidelines, PRASA specified
the use of a specific brand of equipment in respect of access control, CCTV and speed
gate installation. This was directed at favouring Siyangena over the other bids, as the
brand of equipment specified was supplied almost exclusively by Siyangena.
[22] Despite various concerns having been raised, Mr Montana ultimately
recommended the approval of Siyangena as the successful bidder in circumstances
where there was no approval by the Board. A letter of appointment was issued by Mr
Mbatha on 17 June 2014 at a contract value of R2.5 billion. As in Phase 1, a JBCC
agreement was concluded on 30 June 2014, which was plagued by the same
shortcomings as its predecessor.
[23] A further contract between PRASA and Siyangena was concluded in
September 2014 for work to upgrade the equipment installed under Phase 1 and for
the maintenance and warranty of equipment installed in Phase 2. The proposal for the
work was initiated by Siyangena and it was the only entity considered, and thereafter
engaged. As with other contracts between the parties, there was no adherence to any
procurement protocols, no budget analysis, no Board approval and no consideration
of the proposal by any of PRASA’s committees, including the Corporate Tender
Procurement Committee (CTPC). In this instance, the contract was steam-rolled by
the Group Chief Procurement Officer, Mr Phungla, together with Mr Montana, at a
price of R794 million.
Hearsay evidence and the exclusion of affidavits of ‘intervening witnesses’
[24] Siyangena contended that it was seriously hamstrung in demonstrating that it
was innocent of the alleged malfeasance because the high court had wrongly decided
to disregard affidavits made by certain witnesses. Those witnesses came to depose
to affidavits in the following manner: The review application was set down by special
allocation on 5-8 March 2019, the Judge President of the Division having decided to
constitute a court of three judges to hear the matter (the first court) (which, save for
one judge, was differently constituted to the one that eventually heard the matter).7
Prior to the hearing, counsel were informed in chambers that the court had decided
that the matter would not proceed, as the court was concerned that current and former
employees of PRASA, who were implicated in alleged wrongdoing, had not been
granted any opportunity to respond to the allegations made against them or to
participate in the review proceedings as ‘witnesses’ or as parties. The first court
consequently ordered that those specifically named employees or members of
7 Per Mothle, Hughes and Van der Westhuizen JJ.
PRASA’s board were entitled to intervene as witnesses and deliver affidavits in their
defence of their alleged wrongdoing.
[25] This was done mero motu absent an application by any of the ‘intervening
witnesses’ or the parties themselves. It is unclear where the court derived the power
that it purported to exercise. There is certainly no provision in the Uniform Rules for
Court for the intervention of a witness in an application. In any event, PRASA was not
seeking relief against any of those identified as witnesses. The relief sought by PRASA
was confined to the setting aside of the JBCC agreements, the contracts concluded
with Siyangena and orders setting aside the arbitration agreements. None of those
‘intervening witnesses’ had any direct and substantial interest in the relief sought by
PRASA.
[26] In my view, the order permitting witness affidavits to be filed ought not to have
been granted in the first place. Support for this conclusion is to be found in National
Director of Public Prosecutions v Zuma,8 where this Court considered an application
by the former President, Mr Mbeki, and the Government of South Africa to intervene
in appeal proceedings concerning a decision by the high court which found the
existence of a political conspiracy to prosecute the former Deputy President, Mr Zuma.
To that end, the high court made several conclusions implicating Mr Mbeki, which
reflected negatively on him and the Government. Mr Mbeki sought to intervene in this
Court to ‘set the record straight’. The application was dismissed with Harms JA saying
the following:9
‘Nevertheless, to be able to intervene in proceedings a party must have a direct and
substantial interest in the outcome of the litigation, whether in the court of first instance or on
appeal. The basic problem with the application is that the applicants have no interest in the
order but only in the reasoning. They are in the position of a witness whose evidence has been
rejected or on whose demeanour an unfavourable finding has been expressed. Such a person
8 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA) para 84.
See Energy Fund SOC Ltd and Another v Venus Rays Trade (Pty) Ltd and Others [2020] ZAWCHC
164, where Rogers J dismissed an application by an individual implicated in certain impugned
transactions who sought to intervene in the proceedings to file an affidavit, presumably to exculpate
himself. The Court reasoned:
‘To the extent that my findings reflect adversely on Gamede, they have been reached without regard to
the evidence he wanted to adduce. If Gamede feels that a public statement setting out his side of the
story is necessary to protect his reputation, my judgment will be no bar to his doing so.”
9 Paragraph 85.
has no ready remedy, especially not by means of intervention. To be able to intervene in an
appeal, which is by its nature directed at a wrong order and not at incorrect reasoning, an
applicant must have an interest in the order under appeal. The applicants do not have such
an interest.’ (My emphasis.)
[27] The high court ruled ‘the affidavits inadmissible as evidence in these
proceedings’. Although the reasoning of the court in arriving at that conclusion can
rightly be said to be open to criticism, the conclusion itself cannot be faulted. The order
of the first court was open to reconsideration by the court seized with the review
application. The order by the first court granting leave to witnesses to intervene is
unprecedented. Unsurprisingly, there is no support for it in the rules of court or our
substantive law. The first court lacked the power to issue such an order, which was to
all intents and purposes a nullity.10 The court below was thus entitled to disregard the
affidavits produced in terms of that order on the basis that they were inadmissible.
Delay
[28] The high court had careful regard to PRASA’s explanation for the delay, viewed
in the context of the widespread corruption that appeared to permeate those sections
of PRASA concerned with the procurement of services related to the integrated access
management control system. The high court found that the previous management of
PRASA, under the ‘tyrannical’ control of its erstwhile GCEO, Mr Montana, placed
obstacles in the path of the newly constituted Board to unearth the true state of affairs,
by frustrating the flow of information. The new Board was constituted in August 2014.
Mr Montana remained in his position until his resignation in July 2015, in which time
steps were taken to conceal the irregular and unlawful conduct. These features too
were echoed in Swifambo Rail Leasing (Pty) Ltd v Passenger Rail Agency of South
Africa (Swifambo).11
[29] In order to unearth the true extent of the mismanagement, the new Board
appointed a team of forensic investigators. The investigators were required to trawl
10 Master of the High Court Northern Gauteng High Court, Pretoria v Motala N O and Others [2011]
ZASCA 238; 2012 (3) SA 325 (SCA).
11 Swifambo Rail Leasing (Pty) Ltd v Passenger Rail Agency of South Africa [2018] ZASCA 167; 2020
(1) SA 76 (SCA) para 34.
through countless emails and computer databases, amidst deliberate efforts to
conceal the malfeasance within PRASA.
[30] It is in this context that PRASA contends that once the true reasons for the
impugned decisions were known to the reconstituted Board, it acted without delay and
within a reasonable time in bringing this application. To the extent that there was any
delay (which the high court determined to be approximately 10 months), PRASA
provided an explanation. In essence, as the high court held:
‘The reconstituted board required time to . . . ascertain the nature and extent of the irregular
activities and expenditure. What made the board's work even more difficult, is that, as a result
of the victimization they suffered, certain members of the applicant's board resigned.’
[31] The high court, relying on Buffalo City, exercised its judicial discretion and
granted condonation for the delay of 10 months, taking into account the nature of the
impugned decision; the conduct of PRASA; and prejudice to the public purse. It said
that Siyangena’s complaint of prejudice could be ameliorated in the form of an
appropriate remedy.12 It was not contended in this Court that the high court exercised
its discretion on wrong principles or misdirected itself in any way.
[32] This Court in Swifambo condoned a delay of three years in circumstances
similar to those in this matter, where the Board was kept ignorant of the full extent of
the wrongdoing at PRASA.13 Swifambo and the present matter relate to procurement
during the tenure of Mr Montana, in the face of corrupt dealings with service providers.
Swifambo confirmed that the overriding consideration in condoning delay is the
interests of justice, as well as the public interest. In this regard, the high court held that
almost R5.5 billion of taxpayer’s money had been spent on equipment which was not
fit for purpose. As the Constitutional Court pointed out in City of Cape Town v Aurecon
South Africa (Pty) Ltd:14
12 Khumalo and Another v Member of the Executive Council for Education: KwaZulu-Natal [2013] ZACC
49; 2014 (5) SA 579 (CC); 2014 (3) BCLR 333 (CC) paras 53 and 56. See also Buffalo City para 54.
13 Swifambo para 36.
14 City of Cape Town v Aurecon South Africa (Pty) Ltd [2017] ZACC 5; 2017 (6) BCLR 730 (CC).
‘. . . If the irregularities raised in the report had unearthed manifestations of corruption,
collusion or fraud in the tender process, this Court might look less askance in condoning the
delay. The interests of clean governance would require judicial intervention.’15
[33] I can find no ground to interfere with the high court’s decision to condone the
delay of 10 months. This period of delay was not unreasonable in the circumstances.
PRASA acted expeditiously once the true reasons for the impugned decisions came
to light. In the context of a litany of breaches of the procurement system, condonation
had to be granted in the interests of justice.
Corruption
[34] As this Court held in Millennium Waste Management (Pty) Ltd v Chairperson,
Tender Board: Limpopo Province and Others,16 where there is evidence of corruption,
an order declaring the contracts unconstitutional ought to follow. The factual findings
by the high court, summarised above, display a concerted effort on behalf of officials
within PRASA to debase almost all aspects of the procurement process, to the benefit
of Siyangena. Their conduct spanned breaching the supply chain guidelines by not
having the scope of work designed and evaluated by the Cross Functional Sourcing
Committee (CFSC) and the introduction of brand specification into the Request for
Proposals, in circumstances where Siyangena would have had ‘priority’ access or
availability to such items by virtue of their proximity to the suppliers.
[35] It was also apparent that Siyangena was on occasion, without resort to a
bidding process, introduced as the contractor that would be able to deliver on a
particular project, based primarily on it being an existing contractor. The appointments
were made without the necessary vetting process. In other instances, specifications
were proposed by Siyangena rather than PRASA. When officials within the
procurement structure raised concerns about source and price, their concerns were
dismissed. The high court inferred an ‘existence of corruption . . . from the fact that a
15 Aurecon para 50.
16 Millennium Waste Management (Pty) Ltd v Chairperson, Tender Board: Limpopo Province and Others
[2007] ZASCA 165; [2008] 2 All SA 145; 2008 (2) SA 481 (SCA) para 26: ‘There is no suggestion that
the consortium was complicit in some way in bringing about the conclusion of the tender - had that been
shown it would have been appropriate to set the decision aside for that reason alone - and it must be
accepted that it is an innocent party’.
multitude of irregularities exist’ and the ‘absence of a candid explanation from the
tenderer’.
[36] That remains the only plausible inference on a conspectus of all of
uncontroverted evidence. I am satisfied that the high court was ineluctably driven to
conclude that Siyangena was complicit, alternatively involved in the corruption in
relation to the impugned contracts.17 Nothing which has been placed before us
warrants disturbing that finding. I therefore concur with the high court’s inference of
complicity in the corruption on the part of Siyangena.
Remedy
[37] In the high court and in this Court, PRASA accepted that some of the work of
Siyangena was of value to it. Thus, despite the view that Siyangena was not the
innocent contractor it proclaimed to be, the high court devised a remedy it deemed to
be fair to both parties, and directed that an independent engineer be appointed to
value the works purportedly carried out by Siyangena at the various train stations and
other facilities belonging to PRASA.
[38] The high court further considered that the independent engineer would take into
account amounts already paid under the contracts to Siyangena and in the event that
it is determined that Siyangena has been underpaid, PRASA would be obliged to make
good on the shortfall. Conversely, if it is determined that Siyangena has been overpaid
in relation to the value of the work done, then it would be liable to recompense PRASA.
[39] Gijima informs us that the powers of a court granting relief in terms of s
172(1)(b) of the Constitution are so wide that ‘it is bounded only by considerations of
justice and equity’.18 In this Court, counsel for Siyangena placed much emphasis on
17 In AllPay Consolidated Investment Holding (Pty) Ltd v Chief Executive Officer South African Social
Security Agency (Corruption Watch and Centre for Child Law as Amici Curiae) [2013] ZACC 42; 2014
(1) SA 604 (CC) (AllPay), it was held at para 27: ‘. . . deviations from fair process may themselves all
too often be symptoms of corruption or malfeasance in the process. In other words, an unfair process
may betoken a deliberately skewed process. Hence insistence on compliance with process formalities
has a three-fold purpose: (a) it ensures fairness to participants in the bid process; (b) it enhances the
likelihood of efficiency and optimality in the outcome; and (c) it serves as a guardian against a process
skewed by corrupt influences’.
18 Gijima para 53.
evidence that PRASA insisted that Siyangena continue to perform work in terms of the
contracts, even at the time when the former was taking steps to review and set aside
the contracts. Counsel for Siyangena contended that the company continued to
provide its services as PRASA continued to demand performance. There is a dispute
in this regard, as Siyangena itself obtained an interdict preventing PRASA from taking
steps to bar it from various sites. That notwithstanding, it is not in dispute that PRASA
ceased payment to Siyangena in May 2016 on the contracts in question.
[40] It is in this context that the appellant submits that even if the high court was
correct in declaring the impugned contracts to be invalid, it ought to have been treated
in the same manner as that in Gijima, that is, be afforded just and equitable relief in
the form of an order that the declaration of invalidity shall not have the effect of
divesting it of its rights, which but for the declaration of invalidity it would have been
entitled to.19 This would have included its right to pursue the pending arbitration before
the second and third respondents and to contend for payment of services rendered at
‘market related rates’.
[41] #UniteBehind was admitted as an amicus curiae. It joined issue with PRASA in
opposing any alteration to the relief granted by the high court. It submitted that
Siyangena’s attempt to alter the relief falters at the first hurdle, in that it has not been
able to demonstrate any basis on which this Court should interfere with a true
discretion exercised by the court below in respect of the relief granted under s
172(1)(b).
[42] As observed in Trencon Construction (Pty) Ltd v Industrial Development
Corporation of South Africa Limited and Another:20
‘[88]
When a lower court exercises a discretion in the true sense, it would ordinarily be
inappropriate for an appellate court to interfere unless it is satisfied that this discretion was not
exercised—
19 Gijima para 54.
20 Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and
Another [2015] ZACC 22; 2015 (5) SA 245 (CC) paras 88-89.
“judicially, or that it had been influenced by wrong principles or a misdirection on the facts, or
that it had reached 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.” (Footnote omitted.)
An appellate court ought to be slow to substitute its own decision solely because it does not
agree with the permissible option chosen by the lower court.”
[89] In Florence, Moseneke DCJ stated:
“Where a court is granted wide decision-making powers with a number of options or variables,
an appellate court may not interfere unless it is clear that the choice the court has preferred is
at odds with the law. If the impugned decision lies within a range of permissible decisions, an
appeal court may not interfere only because it favours a different option within the range. This
principle of appellate restraint preserves judicial comity. It fosters certainty in the application
of the law and favours finality in judicial decision-making.”.’
[43] In my view, Siyangena did not show that the high court had failed to exercise
its discretion judicially or, as this Court in Central Energy Fund SOC Ltd and Another
v Venus Rays Trade (Pty) Ltd and Others (Central Energy Fund) stated:21
‘. . . It may be interfered with on appeal only if this Court is satisfied that it was not exercised
judicially, or had been influenced by wrong principles or a misdirection of the facts, or if the
court reached a decision which “could not reasonably have been made by a court properly
directing itself to all the relevant facts and principles”. Put simply, the appellants must show
that the high court’s remedial order is clearly at odds with the law.’
[44] In the present case, Siyangena was rightly found by the high court to have been
‘complicit to the corruption, impropriety and maladministration’. It is inconsistent with
notions of justice and equity that it should be allowed to profit from the unlawful
procurement contracts. Furthermore, even innocent counterparties are not generally
entitled to benefit or profit from an unlawful contract.22
[45] Siyangena further contends that the order of the high court was imprecise and
incapable of implementation, in that it failed to define how the independent engineer
would attach a ‘value’ to the work which it has carried out. This argument has no merit.
The order of the high court specifically provides that if the parties are unable to agree
21 Central Energy Fund SOC Ltd and Another v Venus Rays Trade (Pty) Ltd and Others [2022] ZASCA
54; [2022] 2 All SA 626 (SCA) para 43.
22 AllPay 2 para 67.
on the identity of the engineer or if there is disagreement in the valuation of the works,
they are entitled to re-enrol the matter for the court to make a determination.
[46] There is precedent for an order, for instance, where an independent third party
is appointed to assess the financials of the contracts to determine the appropriate
accounting reconciliation.23 Thus, the appointment of the independent engineer,
particularly where parties are unable to agree on the value of the works, is not unusual.
In this case, PRASA contends that the equipment was not fit for purpose, because it
did not meet the need or provide the latest technology and, in various respects, was
implemented in a manner that was inadequate and incomplete. All of this points to the
need for an independent, qualified third party to assess and determine the financial
value of the works. This approach will ensure that Siyangena would not be benefitted
unduly and that PRASA would not be paying for services not rendered. Fairness is
achieved and justice is ensured for both parties.
[47] For all the reasons set out above, Siyangena’s appeal must fail.
Record
[48] It remains to comment on the size of the court record and the failure of the
appellant to produce a core bundle. SCA rule 8(7)(a) makes it plain that a core bundle
is to be prepared as an adjunct to the appeal record if appropriate. This is particularly
necessary where the record is voluminous. PRASA’s counsel alerted Siyangena to
this at the time when it filed its heads of argument in November 2021, almost nine
months before the hearing of the appeal. Correspondence was placed before us,
which indicates that in August 2021 Siyangena’s attorneys wrote to those acting for
PRASA stating that since the appeal is directed at ‘the whole of the judgment and
order (including costs)’, it would not serve any purpose or contribute to the
convenience of the SCA to omit any portion of the record from the bundles.
23 See Black Sash Trust v Minister of Social Development and Others (Freedom under Law Intervening)
[2018] ZACC 36; 2018 (12) BCLR 1472 (CC) (Black Sash I) paras 40 and 50; South African Social
Security Agency and Another v Minister of Social Development and Others [2018] ZACC 26; 2018 (10)
BCLR 1291 (CC) and Freedom Under Law NPC v Minister of Social Development (Corruption Watch
(NPC) RF and South African Post Office SOC Ltd Amiens Curiae) [2021] ZACC 5; 2021 (6) BCLR 575
(CC).
[49] PRASA’s attorneys responded expressing concern at the size of the record and
invited their opponents to ‘narrow the issues before the appeal court in a way that
would facilitate only parts of the record being included’. This recommendation was
unheeded, with the result that the record which was placed before us was made up of
41 volumes, comprising almost 8000 pages. According to Siyangena’s practice note,
approximately 1000 pages were relevant and necessary to read, excluding a further
2000 pages relevant to the ‘intervening witnesses’. It beggars belief as to why the
record comprised a further 7000 pages and why there was not at least a core bundle.
[50] Where appeal records contain unnecessary documentation or have not been
properly prepared in other respects, this Court has on several occasions limited the
costs
of
preparation,
perusal
and
copying
that
those
responsible
for preparing the record are entitled to claim.24 In Altech Radio Holdings (Pty) Limited
and Others v City of Tshwane Metropolitan Municipality,25 in light of the practitioners
not heeding previous warnings to prepare a core bundle, this Court sanctioned non-
compliance with the rules by ordering that the errant attorneys would not be permitted
to saddle their client with the costs of preparation of the record.
[51] It appears to me that in light of the blatant disregard by Siyangena’s attorneys,
who bear the primary obligation for the preparation of the record in accordance with
the rules, and their misguided view that it would be necessary for this Court to trawl
through approximately 8000 pages, a disallowance of costs for non-compliance with
the rules should follow.26
24 See Bothma-Batho Transport (Pty) Limited and Another v Nedbank Limited [2015] ZASCA 31 (SCA)
paras 20−21 (75 per cent of record superfluous); W T and Others v K T [2015] ZASCA 9; 2015 (3) SA
574 (SCA) paras 39−40 (record not cross-referenced); Bengwenyama-ya-Maswati Community and
Others v Minister for Mineral Resources and Others [2014] ZASCA 139; [2014] 4 All SA 539 (SCA) para
65; and Bengwenyama-ya-Maswati Community and Others v Genorah Resources (Pty) Ltd and Others
[2014] ZASCA 140; [2014] 4 All SA 673 (SCA) para 67 (appeal record more extensive than it ought to
have been; 10 per cent reduction in costs of appeal ordered).
25 Altech Radio Holdings (Pty) Limited and Others v City of Tshwane Metropolitan Municipality [2020]
ZASCA 122; 2021 (3) SA 25 (SCA) para 76.
26 City of Ekurhuleni Metropolitan Municipality v Takubiza Trading & Projects CC and Others [2022]
ZASCA 82 (SCA) paras 18-19.
Order
[52] In the result, the following order is made:
The appeal is dismissed with costs, including the costs of two counsel.
The appellant’s attorneys shall not be entitled to recover any of the costs
associated with the preparation, perusal or copying of the record.
________________________
M R CHETTY
ACTING JUDGE OF APPEAL
APPEARANCES
For the appellant:
N G D Maritz SC
[Heads of argument having been drafted by N G D
Maritz SC and S Pudifin-Jones]
Instructed by:
Van der Merwe & Associates, Pretoria
Honey Attorneys, Bloemfontein
For the first respondent:
Q G Leech SC (with H Shozi SC, M Kufa and J Chanza)
[Heads of argument having been drafted by A Subel SC,
Q G Leech SC, l Kutumela and O Makgotha]
Instructed by:
Ngeno and Mteto Incorporated, Pretoria
Mavuya Incorporated, Bloemfontein
For the amicus curiae:
N Ferreira (with him M Mbikiwa)
Instructed by:
Webber Wentzel, Johannesburg
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:
1 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
Siyangena Technologies (Pty) Ltd v PRASA and Others (487/2021) [2022] ZASCA 149
(1 November 2022)
The Supreme Court of Appeal (SCA) today dismissed an appeal with costs, including the costs
of two counsel, against the judgment of the Gauteng Division of the High Court, Pretoria (the
high court), which set aside certain procurement contracts entered into between the appellant,
Siyangena Technologies (Pty) Ltd (Siyangena) and the first respondent, the Passenger Rail
Agency of South Africa (PRASA).
Siyangena was appointed by PRASA to supply and maintain an integrated security access
management system (ISAMS) at various train stations. This was pursuant to a decision that
was taken by PRASA to initiate a pilot project to upgrade certain stations in preparation for the
2010 FIFA World Cup. The roll-out of the ISAMS programme was extended together with
substantially increasing costs through an ostensibly irregular procurement process. PRASA
approached the high court in March 2018 to have its own decisions to conclude the
procurement contracts to the value of approximately R5.5 billion with Siyangena reviewed and
set aside. The election by PRASA to set aside its own decisions was taken by the reconstituted
Board of Control of PRASA (the Board), which was appointed in August 2014. Prior to this,
the executive management committee fell under the control of the erstwhile Group Chief
Executive Officer (GCEO), Mr Montana, who resigned under a cloud in July 2015 amidst
mounting concern of mismanagement, as well as an ongoing investigation by the Public
Protector into maladministration at PRASA.
The SCA, firstly, dealt with the finding of the high court (differently composed from that which
eventually heard the matter – the ‘first court’) that affidavits of ‘intervening witnesses’ were
inadmissible. Those affidavits arose from the first court’s order that certain personnel from
PRASA, who were implicated in alleged wrongdoing, were entitled to intervene as witnesses
and deliver affidavits in their defence of their alleged wrongdoing. The SCA found that the
order permitting witness affidavits to be filed ought not to have been granted in the first place.
The SCA found further that the order by the first court granting leave to witnesses to intervene
was unprecedented; that there was no support for it in the rules of court or our substantive
law; and that the first court lacked the power to issue such an order, which was to all intents
and purposes a nullity. The SCA thus held that the high court was entitled to disregard the
affidavits produced in terms of that order on the basis that they were inadmissible.
In regard to whether there was a delay in instituting the legality review, and if so whether such
delay was nevertheless reasonable and should be condoned, the SCA found that there was
no ground to interfere with the high court’s decision to condone the delay of 10 months. This
was because the period of delay was not unreasonable in the circumstances, as PRASA had
acted expeditiously once the true reasons for the impugned decisions had come to light. This
was viewed in the context of the widespread corruption under the previous management of
PRASA under Mr Montana, which placed obstacles in the path of the newly constituted Board
to unearth the true state of affairs, by frustrating the flow of information. In order to unearth the
true extent of the mismanagement, the new Board had appointed a team of forensic
investigators. Furthermore, in the context of a litany of breaches of the procurement system,
condonation had to be granted in the interests of justice.
In regard to the high court’s inference of complicity in the corruption on the part of Siyangena,
the SCA concurred with that finding. That remained the only plausible inference on a
conspectus of all of uncontroverted evidence, which displayed a concerted effort on behalf of
officials within PRASA to debase almost all aspects of the procurement process, to the benefit
of Siyangena. The SCA was thus satisfied that the high court was ineluctably driven to
conclude that Siyangena was complicit, alternatively involved in the corruption in relation to
the impugned contracts. Consequently, the SCA held that where there was evidence of
corruption, an order declaring the contracts unconstitutional had to follow.
In regard to remedy, the high court ordered that an independent engineer be appointed in
order to determine whether any of the payments made to Siyangena by PRASA should be set
off against the value of the works done. The SCA found that Siyangena had not been able to
demonstrate any basis on which the SCA should have interfered with a true discretion
exercised by the court below in respect of the relief granted. This was because Siyangena did
not show that the high court had failed to exercise its discretion judicially.
The SCA held that Siyangena was rightly found by the high court to have been ‘complicit to
the corruption, impropriety and maladministration’. It was thus inconsistent with notions of
justice and equity that it should have been allowed to profit from the unlawful procurement
contracts. Additionally, the SCA rejected the argument that the high court order was imprecise
and incapable of implementation, as the parties were entitled to re-enrol the matter for the
court to make a determination if the parties were unable to agree on certain matters. Moreover,
the SCA found that there was precedent for an order, for instance, where an independent third
party was appointed to assess the financials of the contracts to determine the appropriate
accounting reconciliation. Accordingly, the SCA held that there was the need for an
independent, qualified third party to assess and determine the financial value of the works.
That approach ensured that Siyangena would not be benefitted unduly and that PRASA would
not be paying for services not rendered. Fairness was achieved and justice was ensured for
both parties.
Lastly, the SCA, notably, commented on the size of the court record and the failure of the
appellant to have produced a core bundle. This was particularly necessary where the record
was voluminous; the record which was placed before the SCA was made up of 41 volumes,
comprising almost 8000 pages. Notwithstanding, according to Siyangena’s practice note,
approximately 1000 pages were relevant and necessary to read, excluding a further 2000
pages relevant to the ‘intervening witnesses’.
The SCA found that in light of the blatant disregard by Siyangena’s attorneys, who bore the
primary obligation for the preparation of the record in accordance with the rules, and their
misguided view that it was necessary for the SCA to trawl through approximately 8000 pages,
a disallowance of costs for non-compliance with the rules should have followed. The SCA thus
held that the appellant’s attorneys were not entitled to recover any of the costs associated with
the preparation, perusal or copying of the record.
~~~~ends~~~~ |
2674 | non-electoral | 2014 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 947/13
Reportable
In the matter between:
STATE BANK OF INDIA
FIRST APPELLANT
BANK OF BARODA
SECOND APPELLANT
and
DENEL SOC LIMITED
FIRST RESPONDENT
ABSA BANK LIMITED
SECOND RESPONDENT
UNION OF INDIA
THIRD RESPONDENT
Neutral citation:
State Bank of India v Denel SOC Limited (947/13) [2014] ZASCA
212 (3 December 2014)
Coram:
Brand, Bosielo, Theron and Mbha JJA and Fourie AJA
Heard:
24 November 2014
Delivered:
3 December 2014
Summary:
Interpretation of on demand guarantees ─ whether demands compliant
with terms of guarantees ─ whether a South African court has jurisdiction where a
guarantee expressly provides that it should be governed and construed in accordance
with the exclusive jurisdiction of the Indian courts.
ORDER
On appeal from: South Gauteng High Court, Johannesburg (Malindi AJ sitting as
court of first instance)
1 The appeal is upheld to the extent reflected in the substituted order that follows.
2 Each party is to pay its own costs on appeal.
3 The order in the court below is substituted by the following order:
‘1 The first respondent is interdicted from making payment in respect of the
counter guarantees listed in annexure A to the applicant’s notice of motion
dated 25 May 2011, excluding counter guarantee number 821-02-0002584G,
pending finalisation of the arbitration and court proceedings already instituted
or to be instituted in India, pertaining to the principal guarantees to which the
counter guarantees relate.
2 The respondents are declared liable for payment of the costs of the
application, including the costs of the Part A proceedings, which costs are to
include the costs consequent upon the employment of two counsel.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Fourie AJA (Brand, Bosielo, Theron and Mbha JJA concurring):
[1] The question in this appeal is whether the first respondent, Denel Soc Limited
(Denel), is entitled to an interdict prohibiting its banker, the second respondent, Absa
Bank Limited (Absa), from honouring its undertaking to pay on eight counter
guarantees issued by Absa in favour of the appellants, State Bank of India and Bank
of Baroda (collectively referred to as the Indian banks). The court a quo (per Malindi
AJ) granted the interdict and the Indian banks have appealed against the whole of
the judgment and the order granted. The appeal is with the leave of the court a quo.
Background
[2] During the period January 2000 to April 2002, Denel and the third respondent,
the Union of India (the UOI), concluded four written contracts in terms of which Denel
undertook to supply the UOI with defence related equipment. As security for the due
performance of its contractual obligations, Denel was required to furnish one
performance and seven warranty guarantees (the principal guarantees) to the UOI,
in the format set out in the annexures to the contracts.
[3] Denel instructed Absa, with whom it has a banker-client relationship, to attend
to the issuing of the principal guarantees. Absa thereupon instructed the Indian
banks to issue the eight principal guarantees in favour of the UOI. In turn, Absa
issued eight counter guarantees in favour of the Indian banks in consideration for the
eight principal guarantees issued by the Indian banks.
[4] In due course the UOI contended that Denel had breached its contractual
obligations and called upon the Indian banks to pay the amounts of the principal
guarantees to it. The Indian banks duly complied and then called upon Absa to pay
the corresponding amounts due in terms of the counter guarantees. Absa initially
refused to comply with the demands of the Indian banks, contending that the claims
made in terms of the counter guarantees ‘were not worded under and in terms of the
guarantees issued’. Absa subsequently changed its mind and advised Denel that it
intended making payment to the Indian banks of the amounts due in terms of the
eight counter guarantees and to recover the aggregate payments of USD 3 776 197
from Denel.
[5] Denel disputed that the UOI was entitled to call up the principal guarantees
and maintained that Absa was accordingly not lawfully bound to honour the counter
guarantees. However, the changed attitude of Absa prompted Denel to approach the
South Gauteng High Court, Johannesburg, on an urgent ex parte basis and it was
granted an interim interdict restraining Absa from making payment to the Indian
banks on the counter guarantees. The Indian banks opposed the confirmation of the
interim interdict but, as mentioned earlier, the interim order was made final by
Malindi AJ. This order effectively interdicted Absa from making payment in respect of
the counter guarantees, pending the final determination of arbitration and court
proceedings in India between UOI and Denel pertaining to the principal guarantees.
Legal Principles
[6] The parties are agreed as to the applicable legal principles, but differ on the
application of these principles to the peculiar facts of this case. A convenient starting
point is the principle that South African courts, like their international counterparts,
should jealously guard the international practice that banks honour the obligations
they have assumed in terms of guarantees issued by them. In Loomcraft Fabrics CC
v Nedbank & another 1996 (1) SA 812 (A) Scott AJA at 816E-G approved the
following dictum of Kerr J in R D Harbottle (Mercantile) Ltd & another v National
Westminster Bank Ltd & others [1977] 2 All ER 862 (QB) at 870b-d:
‘The machinery and commitments of banks . . . must be allowed to be honoured, free from
interference by the courts. Otherwise, trust in international commerce could be irreparably
damaged.'
[7] This court has pronounced on the nature of ‘on demand’ guarantees such as
the principal and counter guarantees in this case, and described same as ‘not unlike
irrevocable letters of credit’ which establish a contractual obligation on the part of the
guarantor to pay the beneficiary on the occurrence of a specified event. See
Lombard Insurance Co Ltd v Landmark Holdings (Pty) Ltd & others 2010 (2) SA 86
(SCA) para 20; Minister of Transport and Public Works, Western Cape, & another v
Zanbuild Construction (Pty) Ltd & another 2011 (5) SA 528 (SCA) para 15 and
Guardrisk Insurance Co Ltd & others v Kentz (Pty) Ltd [2014] 1 All SA 307 (SCA)
para 14. In Loomcraft Fabrics at 816C-817F, this court stressed the importance of
allowing banks to honour their obligations under irrevocable undertakings without
judicial interference. It was held that an interdict restraining a bank from paying in
terms of such an undertaking, will not usually be granted save in the most
exceptional cases. In this regard reliance was placed on the following observation
made in Intraco Ltd v Notis Shipping Corporation (The Bhoja Trader) [1981] 2 Lloyd’s
Rep 256 (CA) at 257:
‘Irrevocable letters of credit and bank guarantees given in circumstances such that they are
the equivalent of an irrevocable letter of credit have been said to be the life blood of
commerce. Thrombosis will occur if, unless fraud is involved, the courts intervene and
thereby disturb the mercantile practice of treating rights thereunder as being the equivalent
of cash in hand.’
[8] A ‘first demand’ guarantee, such as the principal guarantees, is independent
of the underlying contract which gives rise to the guarantee. Therefore, regardless of
a dispute between the parties to the underlying contract, the guarantee must be paid
on demand. Likewise, a counter guarantee is independent of the underlying contract
and is also independent of the principal guarantee. See the authorities referred to in
para 7 above and the doctoral thesis by Michelle Kelly-Louw at the University of
South Africa in October 2008, Selective Legal Aspects of Bank Demand Guarantees
at 72.
[9] A bank issuing an on demand guarantee is only obliged to pay where a
demand meets the terms of the guarantee. Such a demand, which complies with the
terms of the guarantee, provides conclusive evidence that payment is due. From this
it follows that the beneficiary in the case of an on demand guarantee should comply
with the requirements stipulated in the guarantee. In Frans Maas (UK) Ltd v Habib
Bank AG Zurich [2001] Lloyd’s Rep Bank 14 para 58, it was put as follows:
‘The question is: what was the promise which the bank made to the beneficiary under the
credit, and did the beneficiary avail himself of that promise? . . . It is a question of a
construction of the bond. If that view of the law is unattractive to banks, the remedy lies in
their own hands.’
As was stated in Minister of Transport and Public Works, Western Cape & another v
Zanbuild Construction (Pty) Ltd & another, supra, para 13, all that is required for
payment is a demand by the beneficiary, stated to be on the basis of the event
specified in the guarantee. Whether or not the demand is compliant will turn on an
interpretation of the guarantee.
[10] The only exception to the rule that the guarantor is bound to pay without
demur, is where fraud on the part of the beneficiary has been established. The party
alleging fraud has to establish it clearly on a balance of probabilities. Fraud will not
lightly be inferred and a party has to prove that the beneficiary presented the
guarantee to the bank knowing that the demand was false. Mere error,
misunderstanding or oversight, however unreasonable, would not amount to fraud.
See Loomcraft Fabrics at 817G-H and Guardrisk Insurance paras 18 and 19.
The application of the legal principles
[11] I will first consider the terms of the relevant guarantees. With regard to the
seven principal warranty guarantees, the Indian banks undertook to pay the UOI in
the event that the President of India submits a written demand that Denel has ‘not
performed according to the warranty obligations’ under the contract concluded
between Denel and the UOI. In the principal performance guarantee issued by the
Indian banks, the undertaking was to pay the UOI, in the event that the President of
India declares ‘that the goods have not been supplied according to the contractual
obligations’ under the contract concluded between Denel and the UOI. In each of the
eight principal guarantees it was recorded that the UOI’s written demand would be
conclusive evidence that such payment is due, which payment would be effected
upon receipt of such written demand.
[12] The eight counter guarantees issued by Absa to the Indian banks in
consideration for the eight principal guarantees issued by the latter to the UOI,
typically contain an undertaking along the following lines:
‘We Absa Bank Limited . . . hereby irrevocably and unconditionally confirm that we
undertake to pay you on your first written demand by authenticated SWIFT message stating
that you have been called upon to make payment under and in terms of your guarantee. . . .’
Although there are some minor differences in the wording of the counter guarantees,
it does not detract from the basic undertaking given in each of the eight counter
guarantees, namely that Absa would be liable to make payment upon receipt of a
written demand by the Indian banks stating that they have been called upon to make
payment under and in terms of their principal guarantees. I should add that the
amount of each counter guarantee is the same amount guaranteed in terms of its
corresponding principal guarantee.
[13] The next step is to consider whether the demands made by the beneficiaries
for payment in terms of the respective guarantees, complied with the terms of the
relevant guarantees. In each of the seven principal warranty guarantees the written
demand made by the UOI was basically similarly worded, namely, that, as the goods
have not been supplied (by Denel) in accordance with the contractual obligations,
payment in terms of the principal guarantee is demanded. It is immediately apparent
that these demands differ from the wording of the seven principal guarantees which
prescribe a demand that Denel has not performed according to the warranty
obligations under the contract concluded with the UOI.
[14] Turning to the written demands made by the Indian banks in respect of the
seven warranty counter guarantees, the sole inquiry is whether the Indian banks
have addressed a written demand to Absa stating that they have been called upon to
make payment under and in terms of their corresponding principal warranty
guarantees. If so, Absa would be obliged to honour the counter guarantees without
demur. If not, Absa would not be liable to make any payment in respect thereof.
[15] It is convenient to first deal with the following six warranty counter
guarantees.
Absa counter guarantees nos 821-02-0009417G; 821-02-0009756G; 821-02-
0009989G; 821-02-0010334G; 821-02-0011743G and 821-02-0010566G
[16] In respect of each of these counter guarantees, the Indian banks in their
demand to Absa merely repeated the demand made upon them by the UOI under
the respective principal guarantees. As I have indicated earlier, the UOI demanded
payment from the Indian banks on the basis that Denel had not supplied the goods in
accordance with its contractual obligations. It is clear that the demands made under
the six corresponding principal guarantees, as well as the demands made under the
six counter guarantees, do not comply with the terms of the respective guarantees.
What was required in terms of the principal guarantees, is a demand that Denel had
not performed according to the warranty obligations under the aforementioned
contract. Similarly, a demand in terms of the six counter guarantees has to state that
the Indian banks have been called upon to make payment under and in terms of their
guarantee. This means that the demand should be premised on Denel’s failure to
supply the goods in accordance with the warranty obligations under the contract.
[17] However, both in respect of the six principal warranty guarantees and the
corresponding warranty counter guarantees, the demand is expressly premised on a
failure by Denel to comply with its contractual obligations and not a failure to comply
according to the warranty obligations under the contract. It accordingly follows that,
in respect of each of the six counter guarantees under discussion, the demands
made by the Indian banks do not comply with the terms of the counter guarantees. In
the absence of compliant demands, Absa is not obliged to make payment to the
Indian banks under these counter guarantees.
[18] I now deal with the remaining warranty counter guarantee and the
performance counter guarantee issued by Absa in favour of the Indian banks.
Absa counter guarantee no 821-02-0002584G
[19] This is the seventh warranty counter guarantee issued by Absa in favour of
the Indian banks. It has the same wording as the six warranty counter guarantees
dealt with above, except for an ultimate paragraph which reads as follows:
‘This counter guarantee shall be governed by and construed in accordance with the Indian
laws and is subject to the exclusive jurisdiction of courts in India.’
In their heads of argument and on appeal counsel for the Indian banks submitted
that the effect of this clause is to oust the jurisdiction of a South African court in
regard to this counter guarantee. Therefore, it was submitted, the court a quo should
not have interdicted Absa from making payment in terms thereof. I may add that this
defence was not foreshadowed in the appellants’ papers in the court below nor was
it raised in their application for leave to appeal.
[20] In considering this submission, it has to be borne in mind that there is a
banker-client relationship between Absa and Denel. The latter mandated the former
to make payment in terms of the warranty counter guarantees and it has to be
accepted that Denel was aware of the terms of the counter guarantee now under
discussion. From this it follows that Denel was aware that, if a dispute would arise
with regard to this counter guarantee, it would have to be interpreted in accordance
with Indian law and by an Indian court. In fact, the ultimate paragraph of this counter
guarantee expressly provides that it shall be governed and construed in accordance
with Indian law and be subject to the exclusive jurisdiction of the Indian courts.
[21] A dispute has now arisen as to whether or not the demand made by the
Indian banks under this counter guarantee, complied with the terms of the counter
guarantee. This necessitates a construction of the wording of the counter guarantee,
which, in terms of the counter guarantee, has been reserved for the exclusive
jurisdiction of the Indian courts. In my view, this constitutes a complete ouster of the
jurisdiction of a South African court to deal with the question whether or not the
demand complied with the terms of the counter guarantee.
[22] If a South African court were to assume jurisdiction by granting interdictory
relief with regard to this counter guarantee, it may place Absa in an untenable
position if the Indian banks, as they would be entitled to do, were to approach an
Indian court for relief. Absa may then be faced with two conflicting decisions. I
therefore conclude that the court a quo did not have the necessary jurisdiction to
grant interdictory relief in regard to this warranty counter guarantee.
Absa counter guarantee no 821-02-0009587G
[23] This counter guarantee relates to the one principal performance guarantee
issued by the Indian banks. As mentioned above, the undertaking given by the
Indian banks, in their principal guarantee, was to pay the UOI in the event of the
President of India submitting a written demand that the goods supplied by Denel
were not in accordance with the contractual obligations. In terms of the counter
guarantee Absa, in turn, undertook to pay the Indian banks upon their written
demand stating that they (the Indian banks) have been called upon to make payment
under and in terms of their principal performance guarantee.
[24] The written demand of the Indian banks to Absa in this instance, stated the
following:
‘We advise that we have been called upon by Ministry of Defence, Government of India to
pay the above guaranteed amount . . . for non-fulfilment of contractual obligations.’
[25] It is clear that the principal performance guarantee issued by the Indian
banks, did not contain an undertaking to pay the UOI in the event of Denel failing to
comply with its contractual obligations, but only in the event that the goods supplied
by Denel were not in accordance with its contractual obligations. However, the
demand under the counter guarantee expressly states that payment by the Indian
banks to the UOI was made upon the non-fulfilment of contractual obligations, which
is not the trigger event for the invocation of the principal performance guarantee or
the corresponding counter guarantee. It therefore follows that Absa is not liable to
make payment under this counter guarantee.
Conclusion
[26] To summarise, I hold the view that, save for the Absa counter guarantee no
821-02-0002584G, the court below correctly held that the requirements were met for
the granting of prohibitory interdictory relief to Denel. Having regard to the general
rule that a court should only grant interdictory relief of this nature in the most
exceptional circumstances, I believe that Denel has satisfied this requirement. Absa
is threatening to make payment under the seven counter guarantees in
circumstances where the demands of the beneficiary (the Indian banks) are clearly
non-compliant, and Denel has no other suitable remedy to protect its rights pending
the finalisation of the arbitration and court proceedings in India.
[27] I should mention that counsel for the appellants did question the locus standi
of Denel, to seek interdictory relief with regard to the counter guarantees, as it was
not a party thereto. However, as explained above, there is a banker-client
relationship between Absa and Denel in terms of which Denel mandated Absa to
issue the counter guarantees to the Indian banks. In my view, this contract of
mandate would be subject to an implied term that Absa would only make payment to
the Indian banks in circumstances where the demands of the Indian banks comply
with the terms of the relevant counter guarantees. From this it follows that Denel
would be entitled to approach the court for interdictory relief if Absa were to threaten
to make payment of a counter guarantee, in circumstances where the demand made
upon Absa is non-compliant. In effect, Denel would be asking for specific
performance of the contract of mandate, in the negative sense of non-performance
of an act impliedly forbidden by the contract of mandate.
[28] In view of my findings above, it is not necessary to consider whether the
Indian banks acted fraudulently (as alleged by Denel) in demanding payment under
the counter guarantees.
[29] In the result the appeal should succeed in respect of the Absa counter
guarantee number 821-02-0002584G.
[30] A formal aspect arose with regard to the terms of the court a quo’s order.
What the order essentially referred to was an interdict precluding Absa from making
payment on the counter-guarantees pending the finalisation of arbitration
proceedings in respect of those guarantees. During argument, the appellants raised
the objection, however, that arbitration proceedings in India do not concern the
counter-guarantees but the principal guarantees to which the counter-guarantees
relate. As a solution we then suggested that the problem could be resolved by a
simple amendment to the court’s order. At the time no objection of prejudice was
raised by the appellants, but they were nonetheless given the opportunity to make
submissions with regard to the terms of the amended order, should they wish to do
so. During the late afternoon of Friday, 28 November 2014, when this court’s
judgment was ready for delivery, the appellants saw fit to file a four page document
raising arguments of substance which should have been raised much earlier. But, be
that as it may, I see no merit in the argument. Moreover, it is clear to me that the
proposed formal amendment to the court a quo’s order cannot result in any prejudice
to the appellants. Consequently that amendment will be made.
[31] Finally, with regard to the costs of the appeal, it should be borne in mind that,
although the Indian banks have been successful on appeal in respect of one counter
guarantee, the jurisdictional defence upon which it succeeded was only raised on
appeal. In the circumstances I believe that it would be just and equitable to order that
each party should bear its own costs on appeal.
[32] In the result the following order is made:
The appeal is upheld to the extent reflected in the substituted order that
follows.
Each party is to pay its own costs on appeal.
The order in the court below is substituted by the following order:
‘1
The first respondent is interdicted from making payment in respect of
the counter guarantees listed in annexure A to the applicant’s notice of motion
dated 25 May 2011, excluding counter guarantee number 821-02-0002584G,
pending finalisation of the arbitration and court proceedings already instituted
or to be instituted in India, pertaining to the principal guarantees to which the
counter guarantees relate.
The respondents are declared liable for payment of the costs of the
application, including the costs of the Part A proceedings, which costs are to
include the costs consequent upon the employment of two counsel.’
___________________
P B Fourie
Acting Judge of Appeal
APPEARANCES:
For the appellant:
S du Toit SC, with him K Hassim SC
Instructed by:
A W Jaffer Attorney, Pretoria
Symington & De Kok, Bloemfontein
For the respondent:
N G P Maritz SC, with him E C Labushagne SC
Instructed by:
Gildenhuys Malatji Inc, 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
3 December 2014
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.
State Bank of India and another v Denel SOC and others
(947/13) [2014] ZASCA 212 (3 December 2014)
In this appeal the SCA was required to interpret on demand guarantees furnished by a commercial
bank. In particular, the SCA had to determine whether the demands for payment under the
guarantees were compliant with the terms of such guarantees. It held that, in the case of seven of the
eight guarantees concerned, the demands were not compliant and interdictory relief could be granted
to prohibit payment being made in terms thereof. With regard to the eighth guarantee, which
expressly provides that it should be governed and construed in accordance with the exclusive
jurisdiction of the Indian courts, the SCA held that South African courts do not have jurisdiction to
decide whether a demand made thereunder was compliant.
--- ends --- |
3844 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 1120/2020
In the matter between:
THEMBINKOSI MEKUTO
APPLICANT
and
THE STATE
RESPONDENT
Neutral Citation:
Thembinkosi Mekuto v The State (1120/2020) [2022] ZASCA 86
(08 June 2022)
Coram:
MOLEMELA, GORVEN and HUGHES JJA and TSOKA and
MUSI AJJA
Heard:
This matter was finalised without oral argument in terms of s 19(a)
of the Superior Courts Act 10 of 2013
Delivered:
08 June 2022
Summary:
Criminal law and procedure – reconsideration of an order refusing leave
by two judges of the SCA – whether the court below and the two SCA judges, ought
to have granted leave or not – applicant showed special circumstances only in respect
of the attempted murder charge – sentence of 15 years’ imprisonment imposed for
attempted murder set aside and replaced with 10 years’ imprisonment.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Davis, Goliath
and Henney JJ, sitting as court of appeal):
1. The application for condonation of the late filing of the application for
reconsideration in terms of s 17(2)(f) of the Superior Courts Act is granted.
2. The application for reconsideration is granted in respect of the sentence imposed
on count 3, and the order of the two judges of the SCA refusing leave to appeal is
varied and replaced with one granting the applicant leave to appeal on that aspect.
3. Save for paragraph 2 hereof, the application for reconsideration is dismissed.
4. The appeal in respect of the sentence imposed on count 3 is upheld and the order
of the full court is set aside and replaced with the following:
‘(a)
The appeal against the sentence imposed in respect of count three, attempted
murder, is upheld.
(b)
The sentence imposed by the trial court in respect of count three, attempted
murder, is set aside and replaced with the following:
‘The accused is sentenced to 10 years’ imprisonment; this sentence is antedated to
15 December 2010.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Molemela JA (Gorven and Hughes JJA and Tsoka and Musi AJJA concurring)
[1] Mr Thembinkosi Mekuto (the applicant) and four other persons were arraigned
in the Western Cape Division of the High Court, Cape Town (the trial court). The
applicant was accused no 2 in the trial court. The facts that led to the applicant’s
conviction by the trial court are undisputed. On the morning of 18 December 2007, two
security officers deployed to transport money from Pick n Pay Supermarket to Absa
Bank in Hermanus came under fire from a group of armed robbers. The robbers
ordered them to drop the money bags on the floor. The security guards duly dropped
the money bags. Despite complying with the orders of the robbers, the robbers shot
at the security guards at close range. One of the security officers, Mr Norawuzana (the
deceased), was fatally injured. He died on the scene. The other security guard, Mr
Mabhikwana, was apparently saved by the metal plate of his bulletproof vest. This
enabled him to run away and seek cover in one of the shops.
[2] The robbers took the money bags and drove off in a getaway motor vehicle.
Their motor vehicle collided with a kerb a few kilometres from the crime scene. The
motor vehicle was abandoned by the robbers, who fled on foot in different directions.
As they fled from the crashed motor vehicle, they were spotted and pursued by
civilians who kept them in sight and communicated their movements to the police. Four
of the robbers, including the applicant, were arrested in the immediate vicinity of the
abandoned motor vehicle. The bags containing the money and the firearms were
recovered. Another suspect subsequently handed himself over to the police. All five
suspects were charged with robbery with aggravating circumstances (count one),
murder (count two), attempted murder (count three), possession of unlicensed
firearms (count four) and illegal possession of ammunition (count five). Two of them
were also charged with car theft. The applicant was not indicted on that charge. All the
accused persons were legally represented.
[3] The applicant and his co-accused were all convicted as charged. The trial court
found no substantial and compelling circumstances that warranted a deviation from
the minimum sentences prescribed in terms of the Criminal Law Amendment Act 105
of 1997 (CLAA) in respect of counts one, two and four. It accordingly sentenced all the
accused persons to 15 years’ imprisonment in respect of robbery with aggravating
circumstances, life imprisonment in respect of the murder charge, and 15 years’
imprisonment on the counts relating to the unlawful possession of firearms and
ammunition, which were taken together for purposes of sentence. A sentence of 15
years’ imprisonment was imposed in respect of the attempted murder charge.
[4] Aggrieved by this result, the applicant and his co-accused applied for leave to
appeal against all of his convictions and sentences to the full court. The trial court
granted the erstwhile accused no 1 (first appellant) leave to appeal against convictions
and sentences, while the applicant and his other co-accused persons were granted
leave to appeal against sentences only. The first appellant’s appeal was upheld and
the convictions and sentences were set aside. The appeals of the applicant and the
other co-accused persons were unsuccessful. The applicant then applied to this Court
for special leave to appeal and also applied for the late filing of his application to be
condoned. Although this Court granted him condonation, his application for leave to
appeal was dismissed on 12 November 2020.
[5] It appears that when the applicant learned that his erstwhile co-accused, Mr
Sibongile Luphumlo Mpuqe (Mr Mpuqe) had been granted special leave to appeal
against his sentences to this Court, he decided to bring an application in terms of s
17(2)(f) of the Superior Courts Act 10 of 2013 (s 17(2)(f) application) for the
reconsideration and, if necessary, variation of the decision of the two judges who
dismissed his application for special leave to appeal. The basis of his application was
that there was disparity in the manner in which his and Mr Mpuqe’s applications for
special leave to appeal were dealt with by this Court. On 31 March 2021, the decision
to dismiss the applicant’s application for leave to appeal was referred to this Court for
reconsideration, and if necessary, variation as envisaged in s 17(2)(f). In the same
order, his application for special leave to appeal and condonation were referred for
oral submissions in terms of 17(2)(d) of the Superior Courts Act. The order required
the parties to be prepared to argue the merits of the appeal is special leave was
granted.
[6] In the intervening period, Mr Mpuqe’s appeal against sentence succeeded in
respect of the attempted murder charge. In the judgment Mpuqe v S (Mpuqe),1 this
Court set aside the order of the full court and replaced the sentence imposed by the
trial court on that count with a sentence of 10 years’ imprisonment. An important aspect
to bear in mind is that in Mpuqe, leave to appeal against the sentences had already
been granted by this Court. In this matter, what is before us for adjudication is whether
to reconsider and, if necessary, vary the decision to refuse to grant special leave to
appeal, and to consider the application for special leave to appeal. Both parties agreed
that this Court may dispose of the matter without oral argument within the
contemplation of s 19(a) of the Superior Courts Act.
[7] A preliminary issue before us is whether to condone the delay in bringing the s
17(2)(f) application. The State did not oppose this application. Having considered the
circumstances that led to the application being brought at a late stage, it is in the
interests of justice to grant it. What remains as an issue before us for adjudication is
the reconsideration and, if necessary, variation of the decision of the two judges who
dismissed the application for special leave. In essence, this Court has to decide
whether or not the two judges of the SCA ought to have found that there were
reasonable prospects of success and exceptional circumstances warranting the
granting of special leave to appeal against the sentences imposed on the applicant.2
[8] The applicant conceded that both the statutory requirements of ‘special leave’
and justification for reconsideration of a prior order of the SCA refusing leave entail
the applicant showing the existence of grounds that are out of the ordinary.3 This
1 Mpuqe v S (53/2021) [2022] ZASCA 37 (4 April 2022).
2 Notshokovu v The State [2016] ZACSA 112 para 2.
3 In Smith v S [2011] ZASCA 15, the test for the granting of special leave to appeal was formulated as
follows: ‘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.3 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.’
concession was correctly made.4 Of significance is that what is before us is not an
appeal on the merits against the sentences but a reconsideration of the decision
refusing special leave to appeal.5 It is to that issue that I now turn.
Should leave to appeal against the sentences imposed on the applicant have
been granted?
Robbery with aggravating circumstances (count one)
[9] There was no direct attack aimed at the sentence imposed in respect of the
charge of robbery with aggravating circumstances. Thus, no specific submissions
were made regarding why there were any prospects of success in respect of the
sentence imposed on the applicant on this charge. It was not disputed that the
indictment correctly categorised the offence of robbery with aggravating
circumstances as one falling within the purview of s 51(2) of the CLAA, in respect of
which the sentence of 15 years’ imprisonment is the prescribed sentence for a first
offender. Significantly, it was conceded that the indictment gave an ‘extensive
description’ of the circumstances giving rise to the robbery charge. An appeal court is
only at large to interfere with a sentence imposed by a trial court if there has been a
material misdirection or the sentence is so grossly disproportionate as to induce a
sense of shock.6 Unless submissions are made which raise these features, it cannot
be said that leave to appeal should have been granted on this count. Since no such
submissions were made on count 1, nothing more need be said on this count.
[10] In any event, I have not detected any misdirection committed by the trial court
in respect of the minimum sentence imposed on the applicant. In my view, there are
no substantial and compelling circumstances that warrant deviating from the
applicable minimum sentence of 15 years’ imprisonment imposed on the applicant.
The full court justifiably dismissed the appeal directed at this sentence. It follows that
the two judges who considered the applicant’s application for special leave to appeal
against this sentence correctly dismissed the application in relation to count 1.
4 Notshokovu v The State fn 2 above para 9.
5 Ibid para 2.
6 S v Sadler [2000] ZASCA 13; [2000] 2 All SA 121 (A) para 8.
Murder (count two)
[11] In respect of the murder conviction, the applicant was sentenced to life
imprisonment as envisaged in s 51(1) of the CLAA. However, the indictment described
the murder as one envisaged in s 51(2) of the CLAA. In dismissing the applicant’s
appeal in respect of this count, the full court found that despite the indictment
categorising the murder as one envisaged in s 51(2) of the CLAA, the applicant’s right
to a fair trial was not compromised by the fact that the trial court imposed a sentence
considered to be a minimum sentence within the contemplation of s 51(1) of CLAA,
namely life imprisonment. It had, inter alia, noted that at the time when the first
appellant before it was required to record his plea in respect of the different counts,
the trial court had asked his counsel whether he (the first appellant) understood the
law relating to minimum sentences. When the first appellant answered in the negative,
the trial court had then afforded his counsel an opportunity to explain what the law
pertaining to minimum sentences entailed.
[12] The full court accepted that at that stage, the legal representatives representing
the rest of the accused persons would in all probability have taken advantage of that
opportunity to individually explain to their own clients about the applicable minimum
sentences. It considered that opinion to be bolstered by the absence of any objection
from any of the appellants’ counsel regarding the applicability of life imprisonment as
a minimum sentence.
[13] In S v Legoa,7 the following was stated:
‘The matter is, however, one of substance and not form, and I would be reluctant to lay down
a general rule that the charge must in every case recite either the specific form of the
scheduled offence with which the accused is charged, or the facts the State intends to prove
to establish it. … The accused might in any event acquire the requisite knowledge from
particulars furnished to the charge or, in a superior court, from the summary of substantial
facts the State is obliged to furnish. Whether the accused’s substantive fair trial right, including
his ability to answer the charge, has been impaired, will therefore depend on a vigilant
examination of the relevant circumstances.’ (Own emphasis).
7 S v Legoa 2003 (1) SACR 13 (SCA) para 21.
[14] In Kolea v S,8 this Court emphatically stated that the CLAA does not create new
offences. It held that a formal application to amend the charge is not always required.
The test is whether the accused suffered any prejudice which impacted this or her right
to a fair trial.
[15] In relation to Mpuqe, it was evident from the trial court’s judgment that Mr
Mpuqe had made a confession which was found to be admissible, and that his counsel
had, before the closing of the state case, agreed that the evidence led at the trial-
within-a-trial be regarded as evidence in the main trial. In considering Mr Mpuqe’s
appeal in relation to the charge of murder, this Court took into account that the trial
court had specified that it was convicting him in circumstances where the murder count
was committed by persons acting in furtherance of a common purpose (as
contemplated in Part I(d) of Schedule 2), and also that the murder was one incidental
to the commission of a robbery (as contemplated in Part I(c)(ii) of Schedule 2). Those
aspects brought the murder charge within the provisions of s 51(1) of the CLAA, which
stipulates a mandatory sentence of life imprisonment.
[16] Cognisance was also taken of the statements made by Mr Mpuqe’s counsel
when addressing the court in mitigation of sentence, which acknowledged the
applicability of life imprisonment as the minimum sentence. Having considered all the
relevant circumstances, and being of the view that life imprisonment sentence was, in
any event the only appropriate sentence, this Court concluded that Mr Mpuqe’s right
to a fair trial had not been infringed by the fact that a life sentence was imposed on
him despite the indictment having categorised the murder as one referred to s 51(2)
of the CLAA.
[17] In M T v The State; A S B v The State; Johannes September v The State,9 the
Constitutional Court stated that although it is desirable that the indictment refer to the
relevant penal provision of the CLAA, this should not be understood as an absolute
rule. It also reaffirmed the trite principle that each case must be judged on its particular
facts.10
8 S v Kolea [2012] ZASCA 199; 2013 (1) SACR 409 (SCA) para 18.
9 M T v The State; A S B v The State; Johannes September v The State [2018] ZACC.
10 Ibid para 40.
[18] In relation to this matter, it is important to note that the applicant faced exactly
the same charges as Mr Mpuqe. Section 51(1) read with Part I(c)(ii) of Schedule 2 of
the CLAA prescribes the imposition of life imprisonment for a murder committed in the
course of committing a robbery with aggravating circumstances. The applicant
conceded that, as regards the robbery charge, the indictment gave an extensive
description of the circumstances in which the offence was committed. The person
named as the deceased in the murder charge was the same person that was
mentioned as the victim of the robbery. There could not have been any doubt that the
murder described in the indictment fell squarely within the purview of Part I(c)(ii) of
Schedule 2 of the CLAA, in respect of which the prescribed minimum sentence is life
imprisonment within the contemplation of s 51(1) of the CLAA. Under those
circumstances, it is indeed difficult to understand how any of the defence counsel
could have laboured under the impression (and consequently informed their client)
that the applicable minimum sentence for the murder charge they were facing was 15
years’ imprisonment as contemplated in s 51(2) of the CLAA and not life imprisonment
contemplated in s 51(1) of the CLAA.
[19] It was contended on behalf of the applicant that there is no factual basis from
which the full court could possibly infer that the applicant’s own counsel had explained
the meaning of the minimum sentence provisions to him. The following statement
made by the applicant’s counsel in court speaks for itself:
‘Then, furthermore, Your Lordship, it is – we have agreed on, right at the beginning, that this
is, indeed – the minimum sentences are applicable. … We further submit, M’Lord, that there
are sufficient reasons and justification for the Court to deviate from imposing this minimum
sentence imposed by the law, and that the Court not impose a minimum sentence, but a much
lesser sentence than life imprisonment, M’Lord. That is all, M’Lord.’ (Own emphasis).
[20] Notwithstanding the statement in the above passage, I am prepared to accept
that there is no clear evidence that the applicant's counsel explained to him that a
minimum sentence of life imprisonment would be imposed if he was convicted on this
count. In the circumstances, I am constrained to accept that he might not have known
of this. Sentencing on the basis of the CLAA would, in those circumstances, amount
to a misdirection. In those circumstances, an appeal court would approach sentencing
on the basis of the common law, taking into account the well-known triad of sentence
as set out in S v Zinn,11 namely, the nature of the offence, the offender and the
interests of society.
[21] Bearing in mind that the high court has the inherent jurisdiction to, within its
discretion, impose life imprisonment in appropriate circumstances,12 a sentence of life
imprisonment in the circumstances of this case does not engender a sense of shock.
A balanced consideration of the triad of sentence leaves me with the impression that
life imprisonment was the only appropriate sentence, under the circumstances. The
applicant’s personal circumstances, which must obviously be taken into account in
respect of all the charges, are that at the time of sentencing, he was a 35 year old
man, employed as a taxi driver, married with two children aged eight; he was also the
father of two other children born from another relationship. I consider next the nature
of the offence.
[22] As stated before, the murder was committed by persons acting with a common
purpose. It was committed in the course of the commission of robbery with aggravating
circumstances. As correctly observed by the trial court, the evidence revealed that the
robbery was carefully planned, and its success depended on the killing of the security
guards. The callous killing of the deceased was executed in full view of members of
the public, with no regard for the sanctity of life. Several fatal shots were directed at
the deceased at close range, aimed at parts of the body where death would be instant.
These are serious aggravating factors.
[23] Moreover, it is evident that the motivation for this gruesome killing of the
deceased was greed. In contrast, the deceased was killed while he was performing
his duties. He was the sole breadwinner in his home. His death not only traumatised
his wife and children but also caused his family enormous financial hardship, as they
had to ask for financial assistance in order to transport his body to his hometown for
burial.
11 S v Zinn 1969 (2) SA 537 (A) at 540G.
12 Kekana v The State [2018] ZASCA 148; 2019 (1) SACR 1 (SCA); [2019] 1 All SA 67 (SCA) para 28.
[24] With regard to the legitimate needs of society, it must be borne in mind that
offences of this nature have reached alarming proportions. It is a crying shame that
the brutal killing of persons in full view of the public has become common-place.
Society is justifiably outraged by this abhorrent crime, which has seriously impacted
the enjoyment of the constitutionally protected right to life. While rehabilitation is an
important objective of punishment, it is manifest that violent crimes will be stemmed
only if the punishment objectives of deterrence and retribution are consistently brought
to the fore when imposing sentence.13 Not only must it be made clear to criminals that
crime will not benefit them, but would-be perpetrators, too, must similarly be deterred
by the realisation that violent crimes are deservedly visited with severe sentences.
[25] For all the reasons mentioned above, I am satisfied that a balanced
consideration of the triad of sentence called for the imposition of a sentence of life
imprisonment. This therefore means that in the specific circumstances of this case, a
sentence of life imprisonment was the only appropriate sentence for the applicant,
regardless of the applicability of the CLAA. In circumstances where a sentence of life
imprisonment is considered the only appropriate sentence, granting special leave to
appeal against that sentence merely because the indictment stipulated that s 51(2)
was applicable would be a text book example of putting form above substance. Of
significance is that given all the aggravating factors alluded to, earlier, an appeal court
would be unlikely to tamper with the sentence. Thus, the applicant’s application for
special leave to appeal against the sentence of life imprisonment was justifiably
dismissed by the two judges of this Court. It follows that there is no compelling reason
why we should reconsider or vary the refusal of leave to appeal against the sentence
imposed in respect of count two.
Possession of firearms and ammunition without a licence (counts four and five)
[26] Section 3(1) of the Fire Arms Control Act 60 of 2000 (FCA) provides that:
‘No person may possess a firearm unless he or she holds for that firearm –
(a)
a licence, permit or authorisation issued in terms of this Act; or
13 S v Mhlakaza and Another [1997] ZASCA 7; [1997] 2 All SA 185 (A); 1997 (1) SACR 515 (SCA) para
10.
(b)
a licence, permit authorisation or registration certificate contemplated in item 1, 2, 3,
4, 4A or 5 of Schedule 1.’
In similar vein, s 90 of the FCA prohibits possession of ammunition without a licence.
[27] The indictment in relation to the unlawful possession of the firearms pertinently
described the firearms possessed by the applicant and his co-accused as semi-
automatic and mentioned the applicability of s 51(2) of the CLAA. Section 51(2)(a) of
Part 2 of Schedule 2 provides as follows:
‘Notwithstanding any other law but subject to subsections (3) and (6), a regional court or a
High Court shall sentence a person who has been convicted of an offence referred to in —
(a)
Part II of Schedule 2, in the case of—
(i) a first offender, to imprisonment for a period not less than 15 years;
(ii) a second offender of any such offence, to imprisonment for a period not less than
20 years; and
(iii) a third or subsequent offender of any such offence, to imprisonment for a
period not less than 25 years.’14
[28] It was contended on behalf of the applicant that the sentence of 15 years’
imprisonment imposed by the trial court should have been regarded as a maximum
sentence in accordance with the provisions of s 3 of the Firearms Control Act 60 of
2000 (the FCA). It was also contended that the aforementioned provision appears to
be at odds with the provisions of s 51(2)(a) of the CLAA, set out above, which prescribe
the same period of imprisonment as a minimum sentence.
[29] The court in Swartz v S15 held that when s 51 of the CLAA was substituted in
terms of s 1 of the Criminal Law (Sentencing) Amendment Act 38 of 2007, the
legislature’s use of the phrase ‘notwithstanding any other law’ meant that the minimum
sentences were intended to supersede the general penalty provisions of the FCA. This
finding found this Court’s approval in S v Thembalethu,16 where it was held that the
phrase ‘notwithstanding any other law’ words in s 51(2) meant that the sentencing
14 Although this is not the only offence covered there, part II of Schedule 2 of the CLAA refers to any
offence relating to possession of an automatic or semi-automatic firearms which is dealt with in this
case.
15 Swartz v S [2014] ZAWCHC 113; 2016 (2) SACR 268 (WCC) para 8.
16 S v Thembalethu 2009 (1) SACR 50 (SCA) para 6.
regime in the CLAA took precedence over that laid down in the Arms and Ammunition
Act 75 of 1969. This Court also held that:
‘In my view once it is proved in a trial that an accused is guilty of an offence in terms of which
he or she unlawfully possessed a firearm . . . and it is proved or admitted that the firearm was
“semi-automatic” the application of its provisions relating to sentencing is triggered. . . .’17
It being undisputed that the weapons used in the robbery were semi-automatic
firearms, the finding made in the passage above puts paid to the applicant’s
submissions regarding the perceived conflict between the sentencing regime
envisaged in the FCA and the CLAA.
[30] In this matter, the trial court found that there were no substantial and compelling
circumstances justifying the imposition of a lesser sentence than the applicable
minimum sentence of 15 years’ imprisonment in respect of the charge of unlawful
possession of firearms. Many horrific offences are committed with the aid of
unlicensed firearms and ammunition. A major consideration in this matter is that the
semi-automatic firearms and ammunition were not merely possessed, they were
actually used in the commission of a cold-blooded murder and attempted murder
without any consideration for the safety of members of the public.
Some
of
the
shots aimed at the fleeing security guard hit a parked vehicle. That more casualties
were not claimed in the incident can only be attributed to sheer luck.
[31] As stated before, the applicable minimum sentence for the unlawful possession
of semi-automatic firearms is 15 years’ imprisonment. Bearing all material
considerations in mind, I am not persuaded that there was any error or misdirection
on the part of the trial court in imposing the 15 years’ imprisonment on counts four and
five. The fact that both counts were taken together for purposes of sentence is a clear
sign that the trial court tempered with what could otherwise have been perceived as a
harsh sentence. The full court correctly refused to interfere with the sentence imposed
by the trial court in counts four and five. It follows that the two judges of this Court
correctly refused the applicant’s application for leave to appeal against the sentence
imposed in respect of this charge. Consequently, there is no valid reason why their
17 S v Thembalethu fn 16 para 7.
decision to refuse leave in respect of counts four and five should be reconsidered or
varied.
[32] The upshot of the preceding paragraphs is that in relation to count one, two,
four and five, the applicant has failed to demonstrate any special circumstances which
merit a further appeal to this Court. This means that special leave to appeal to this
Court was correctly refused in relation to those specific counts. The charge of
attempted murder is, however, on a different footing.
Attempted murder (count three)
[33] It is convenient to now turn my attention to the charge of attempted murder.
Attempted murder is a common-law offence in respect of which the trial court was at
large to impose a sentence it considered appropriate. It is a trite principle of our law
that the imposition of sentence is pre-eminently the prerogative of the trial court. To
justify interference on appeal, 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. 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.
[34] It was contended on behalf of the applicant that an important consideration is
that in respect of this count, the sentence imposed on Mr Mpuqe was set aside and
replaced with a sentence of 10 years’ imprisonment. This, in my view, does not detract
from the trite principle that each case must be decided on its merits. An examination
of the circumstances relevant to this specific charge is necessary. The triad of
sentence, namely, the nature of the offence, the offender and the interests of society
will therefore be taken into account.18
[35] I have noted that the circumstances under which the applicant committed this
offence are identical to those of Mr Mpuqe. It has not been shown that the applicant’s
18 S v Zinn fn 11 above.
level of participation in relation to the commission of attempted robbery was more
culpable than that of Mr Mpuqe. Furthermore, the personal circumstances of the
applicant are not much different from those of Mr Mpuqe. Thus, there is no reason why
the applicant’s sentence ought to be more severe than that of Mr Mpuqe. There are
therefore special circumstances that impel this Court to reconsider and vary the
decision to refuse leave to appeal in respect of count three. In my view, a proper case
has been made for the granting of special leave in respect of the sentence imposed
for the attempted murder charge. As special leave could only have been granted to
this Court, we are therefore at large to consider the sentence in respect of count three
afresh.
[36] An important consideration in this matter is that the complainant in this charge,
Mr Mabhikwana, did not sustain any injuries, thanks to the metal plate underneath the
bullet-proof vest that he was wearing. It is quite striking that the sentence imposed on
this charge is the prescribed minimum sentence for an actual murder falling within the
purview of s 51(2) of the CLAA. The applicant’s personal circumstances have already
been alluded to. The offence committed by the applicant remains a serious offence
that involves violence. What is more aggravating is that several shots were fired at the
complainant despite the fact that he offered no resistance to his assailants. As stated
before, some of the shots directed at the security guard who survived the ordeal
missed him and hit a parked motor vehicle. These aggravating factors have a bearing
on the sentence that is considered appropriate for attempted murder.
[37] I am of the view that the sentence that is warranted is one that reflects society’s
revulsion at the prevalence of violent crimes committed in such a brazen fashion. In
my view, an appropriate sentence for the applicant in relation to the attempted murder
is 10 years’ imprisonment.
[38] In the result, the following order is made:
1. The application for condonation of the late filing of the application for
reconsideration in terms of s 17(2)(f) of the Superior Courts Act is granted.
2. The application for reconsideration is granted in respect of the sentence
imposed on count 3, and the order of the two judges of the SCA refusing leave
to appeal is varied and replaced with one granting the applicant leave to appeal
on that aspect.
3. Save for paragraph 2 hereof, the application for reconsideration is dismissed.
4. The appeal in respect of the sentence imposed on count 3 is upheld and the
order of the full court is set aside and replaced with the following:
‘(a)
The appeal against the sentence imposed in respect of count three,
attempted murder, is upheld.
(b)
The sentence imposed by the trial court in respect of count three,
attempted murder, is set aside and replaced with the following:
‘The accused is sentenced to 10 years’ imprisonment; this sentence is antedated
to 15 December 2010.’
______________________
M B MOLEMELA
JUDGE OF APPEAL
Appearances:
For Applicant:
None
For Respondent:
None | 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:
08 June 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
Thembinkosi Mekuto v The State (1120/2020) [2022] ZASCA 86 (07 June 2022)
Today the Supreme Court of Appeal (SCA) handed down a judgment upholding in part an
appeal against the decision of the full court of the Western Cape Division of the High Court,
Cape Town (the full court). The issue for determination was whether the refusal to grant Mr
Thembinkosi Mekuto (the applicant) special leave to appeal had to be reconsidered and varied
within the contemplation of s 17(2)(f) of the Superior Courts Act 10 of 2013.
The applicant and four other persons were arraigned in the Western Cape Division of the High
Court, Cape Town (the trial court). The applicant was accused no 2 in those proceedings. On
the morning of 18 December 2007, two security officers deployed to transport money from
Pick n Pay Supermarket to Absa Bank in Hermanus came under fire from a group of armed
robbers. The robbers ordered them to drop the money bags on the floor. The security guards
duly dropped the money bags. Despite complying with the orders of the robbers, the robbers
shot at the security guards at close range. One of the security officers, was fatally injured and
died on the scene. The other security guard, was apparently saved by the metal plate of his
bulletproof vest. The robbers took the money bags and drove off in a getaway motor vehicle.
All five suspects were arrested and charged with robbery with aggravating circumstances
(count one), murder (count two), attempted murder (count three), possession of unlicensed
firearms (count four) and illegal possession of ammunition (count five).
The applicant and his co-accused were all convicted as charged. The trial court accordingly
sentenced all the accused persons to 15 years’ imprisonment in respect of robbery with
aggravating circumstances, life imprisonment in respect of the murder charge, and 15 years’
imprisonment on the counts relating to the unlawful possession of firearms and ammunition,
which were taken together for purposes of sentence. A sentence of 15 years’ imprisonment
was imposed in respect of the attempted murder charge. Aggrieved by that result, the
applicant and his co-accused applied for leave to appeal against all of their convictions and
sentences to the full court. The trial court granted accused no 1 (first appellant) leave to appeal
against convictions and sentences, while the applicant and his other co-accused were granted
leave to appeal against sentences only. The first appellant’s appeal was upheld and the
convictions and sentences were set aside. The appeals of the applicant and the other co-
accused persons were unsuccessful. The applicant then applied to the SCA for special leave
to appeal but his application was dismissed on 12 November 2020.
The applicant subsequently brought an application in terms of s 17(2)(f) of the Superior Courts
Act 10 of 2013 for the reconsideration and, if necessary, variation of the decision of the two
judges who dismissed his application for special leave to appeal. The issue for determination
was whether or not the two judges of the SCA ought to have found that there were reasonable
prospects of success and exceptional circumstances warranting the granting of special leave
to appeal against the sentences imposed on the applicant.
Regarding count one, robbery with aggravating circumstances, the SCA held that it had not
detected any misdirection committed by the trial court in respect of the minimum sentence
imposed on the applicant. The SCA found that there were no substantial and compelling
circumstances that warranted deviating from the applicable minimum sentence of 15 years’
imprisonment imposed on the applicant. The SCA held that the applicant’s application for
special leave to appeal against the sentence of life imprisonment was justifiably dismissed by
the two judges of the SCA; it consequently held that there was no compelling reason why it
should reconsider or vary the refusal of leave to appeal against the sentence imposed in
respect of count two. As regards count four and five, the SCA held that the full court correctly
refused to interfere with the sentence imposed by the trial court in counts four and five; it
therefore held that the two judges of the SCA correctly refused the applicant’s application for
leave to appeal against the sentence imposed in respect of that charge. Consequently, there
was no valid reason why their decision to refuse leave in respect of counts four and five should
be reconsidered or varied. The SCA held that count three was on a different footing. The SCA
held that the circumstances under which the applicant committed that offence were identical
to those of his former co-accused, Mr Mpuqe. and that it had not been shown that the
applicant’s level of participation in relation to the commission of attempted robbery was more
culpable. Furthermore, the personal circumstances of the applicant were not much different
from those of Mr Mpuqe, whose sentence had since been reduced to 10 years’ imprisonment
on appeal. The SCA found that there was no reason why the applicant’s sentence ought to
have been more severe than that of his former co-accused. It therefore held that there were
special circumstances that impelled it to reconsider and vary the decision to refuse leave to
appeal in respect of count three. The SCA held that an appropriate sentence for the applicant
in relation to the attempted murder was 10 years’ imprisonment.
~~~~ends~~~~ |
1557 | non-electoral | 2008 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No:006/08
SELVIN PILLAY
First Appellant
MAKGALA SOLOMON MOTLANTHE
Second Appellant
and
IQBAL SHAIK
First Respondent
EDWARD JOHN HAMMOND
Second Respondent
MAURICE LESLIE WENHAM
Third Respondent
LUCA GIOVANNI LIVIERO
Fourth Respondent
AHMED SAEED VAWDA
Fifth Respondent
MICHAEL HUGH BLAKE
Sixth Respondent
SWALEDALE 9 INVESTMENTS CC
Seventh Respondent
MTR TRADING CC
Eighth Respondent
MOONEY FORD ATTORNEYS
Ninth Respondent
DUSKY DOLPHINS
SHAREBLOCK (PTY) LTD
Tenth Respondent
THE REGISTRAR OF COMPANIES AND
CLOSE CORPORATIONS, PRETORIA
Eleventh Respondent
THE REGISTRAR OF DEEDS,
PIETERMARITZBURG
Twelfth Respondent
Neutral citation:
Pillay v Shaik (006/08) [2008] ZASCA 159 (27 November
2008)
Coram:
FARLAM, LEWIS, JAFTA, MAYA JJA et KGOMO AJA
Heard:
3 NOVEMBER 2008
Delivered:
27 November 2008
Summary:
Contract – formalities – whether agreements of sale between
parties invalid because prospective seller did not sign –
application of doctrine of quasi-mutual assent.
______________________________________________________________
ORDER
On appeal from:
the Pietermaritzburg High Court (Nicholson, K Pillay and
Madondo JJ sitting on appeal from a judgment of the Durban High Court
(Balton J))
The following order is made:
A
The appeal against the order of the court a quo is upheld with costs
including the costs of two counsel.
B
The order of the court a quo is set aside and replaced by an order in
the following terms:
'1
Subject to the order made in paragraph 2, the appeal is dismissed with costs,
including the costs of two counsel.
The order made in the court a quo is set aside and replaced by an order in
the following terms:
"(a)
The following order is made in case no 690/2004:
1.
An order is granted declaring the agreement between the first to sixth
defendants ("the sellers") and the plaintiff ("the purchaser") for the purchase
of the entire members' interest in and to the seventh defendant to be of full
force and effect and binding between the parties, with terms as set out in the
document annexed as annexure "A" to the plaintiff's declaration with the
seventh defendant being reflected as the close corporation referred to in that
document, the sellers' acceptance of the agreement having taken place by
conduct, instead of signature.
An order is granted directing the sellers to comply with their
obligations under the sale agreements and in particular, they are ordered and
directed to deliver and hand over to Mooney Ford Attorneys in trust, the
documents set out in paragraphs 8.1.1.1 to 8.1.5 (inclusive) of the sale
agreement in respect of the seventh defendant.
An order directing the sellers to bring about the state of affairs
warranted in clauses 9.1 to 9.6 (inclusive) of the sale agreement (in particular
by ensuring that the sectional title unit referred to in the sale agreement is
owned by the seventh defendant at the date of transfer of the members'
interest to the purchaser).
In the event of the sellers' failing to comply with the order contained in
paragraphs 2 and 3 hereof, or any one of those paragraphs, then the
purchaser is given leave to deliver an application to this court, on the same
papers, supplemented in so far as may be necessary, for an order:
(a)
declaring the sellers to be in contempt of court;
(b)
for their committal to prison for contempt of court.
In addition, in the event of the sellers' failing to comply with
paragraphs 2 and 3 of this order, the Sheriff of Durban is authorised to do all
things necessary, in so far as the sellers are concerned, to cause the actions
contained therein to be fulfilled.
In the event of the sellers' failing to comply with the orders contained
in paragraphs 2 and 3 hereof, and the purchaser's failing to obtain the
transfer contemplated in paragraph 5 hereof within a reasonable period of
time from the granting of this order, then the sellers shall be liable, jointly and
severally, the one paying the other to be absolved, on application by the
purchaser, on the same papers supplemented in so far as may be necessary,
to pay damages in an amount to be determined by the court, together with
return of the deposit paid by the purchaser together with interest thereon at
the legal rate of 15.5% per annum from due date to date of payment.
7. The sellers are ordered to pay the purchaser's costs of suit.
(b)
The following order is made in case no 19979/04:
An order is granted declaring the agreement between the first to sixth
defendants ("the sellers") and the plaintiff ("the purchaser") for the purchase
of the entire members' interest in and to the seventh defendant to be of full
force and effect and binding between the parties, with terms as set out in the
document annexed as annexure MM2 in the application papers (in the form
referred to in the Plaintiff's replying affidavit) with the seventh defendant being
reflected as the close corporation referred to in that document, the sellers'
acceptance of the agreement having taken place by conduct, instead of
signature.
An order is granted directing the sellers to comply with their
obligations under the sale agreements and in particular, they are ordered and
directed to deliver and hand over to the eighth defendant in trust, the
documents set out in paragraphs 8.1.1.1 to 8.1.5 (inclusive) of the sale
agreement in respect of the seventh defendant.
An order directing the sellers to bring about the state of affairs
warranted in clauses 9.1 to 9.6 (inclusive) of the sale agreement (in particular
by ensuring that the sectional title unit referred to in the sale agreement is
owned by the seventh defendant at the date of transfer of the members'
interest to the purchaser).
In the event of the sellers' failing to comply with the order contained in
paragraphs 2 and 3 hereof, or any one of those paragraphs, then the
purchaser is given leave to deliver an application to this court, on the same
papers, supplemented in so far as may be necessary, for an order:
(a)
declaring the sellers to be in contempt of court;
(b)
for their committal to prison for contempt of court.
In addition, in the event of the sellers' failing to comply with
paragraphs 2 and 3 of this order, the Sheriff of Durban is authorised to do all
things necessary, in so far as the sellers are concerned, to cause the actions
contained therein to be fulfilled.
In the event of the sellers' failing to comply with the orders contained
in paragraphs 2 and 3 hereof, and the purchaser's failing to obtain the
transfer contemplated in paragraph 5 hereof within a reasonable period of
time from the granting of this order, then the sellers shall be liable, jointly and
severally, the one paying the other to be absolved, on application by the
purchaser, on the same papers supplemented in so far as may be necessary,
to pay damages in an amount to be determined by the court, together with
return of the deposit paid by the purchaser together with interest thereon at
the legal rate of 15.5% per annum from due date to date of payment.
The sellers are ordered to pay the purchaser's costs of suit."'
______________________________________________________________
JUDGMENT
FARLAM JA (Lewis, Jafta,Maya JJA et Kgomo AJA concurring)
[1] During 2002 the first to sixth respondents, Messrs Shaik, Hammond,
Wenham, Liviero, Bowda and Blake (whom I shall call in what follows 'the
developers'), marketed to members of the public interests in a sectional title
property development, known as the Lazy Lizard, situated at Umdloti on the
North Coast of KwaZulu-Natal. Each unit in the development was to be owned
by a close corporation. The member's interests in each of these close
corporations were offered for sale. The developers caused standard form
documents to be drawn up for completion by prospective buyers and they also
prepared a schedule setting forth the prices at which the interest in each close
corporation was to be sold. The prices fixed varied, depending on the unit
which each close corporation was to own. Although all six developers were to
be parties to the contracts of sale, the first to fifth respondents were at all
times represented by the sixth respondent, Mr Michael Hugh Blake.
[2] Goldprop Umhlanga CC, a firm of estate agents trading as Pam
Golding Properties, were appointed together with another firm of estate
agents to market the development. The ninth respondent, Mooney Ford, a
firm of attorneys, acted at all times as the developers' attorneys. (Although
Mooney Ford was cited as a respondent in the applications which were
referred for trial no relief was given against it and it did not participate in the
appeals to the full bench or to this court.)
[3] The first appellant, Mr Selvin Pillay, and the second appellant, Dr
Makgala Solomon Motlanthe, decided to buy into the development. On 18
June 2002 Mr Pillay signed one of the standard form agreements and offered
to buy for R699 000 the member's interest in the close corporation to which
unit 402 was to be allocated. On 22 April 2002 Dr Motlanthe signed a
standard form agreement and offered to buy for R709 000 the member's
interest in the close corporation to which unit 502 was to be allocated.
[4] Subsequently, after unit 402 had been allocated to the seventh
respondent, Swaledale Investments CC, and unit 502 to the eighth
respondent, MTR Trading CC, disputes arose between the developers and Mr
Pillay and Dr Motlanthe as to whether the offers made by them had been
accepted on behalf of the developers.
[5] On 26 January 2004 Mr Pillay brought an application against the
developers, Swaledale Investments CC, Mooney Ford, the eleventh
respondent (the Registrar of Companies and Close Corporations) and the
twelfth respondent (the Registrar of Deeds, Pietermaritzburg). In this
application he sought orders, inter alia, interdicting and restraining the
registration and/or transfer of the membership interest in and to Swaledale
Investments CC to any person and/or entity apart from himself, interdicting
and restraining the transfer of unit 402 in the development to any person
and/or entity apart from himself or Swaledale Investments CC, and declaring
that the agreement allegedly concluded between the developers (as sellers)
and himself (as purchaser) for the purchase of the entire member's interest in
and to Swaledale Investments CC to be of full force and effect.
[6] On 28 January 2004 an interim order was granted interdicting and
restraining the respondents from transferring any membership interest in
Swaledale Investments CC and from registering transfer of proposed unit 402
to any person or entity pending the final determination of the application.
Thereafter an opposing affidavit was filed on behalf of the developers and
Swaledale Investments CC and a replying affidavit on behalf of Mr Pillay.
[7] On 31 May 2004 the matter was referred to trial on a date to be
arranged with the registrar and it was ordered that the interim order granted
on 28 January 2004 was to remain operative pendente lite. It was further
ordered that the application was to stand as the summons and the opposing
affidavit as the appearance to defend. Mr Pillay was directed to file a
declaration within a certain period and the developers directed to file a plea
within a further period after service of the declaration. The order also provided
that the pleadings would be deemed to be closed if Mr Pillay failed to file a
replication within a certain period after service of the plea.
[8] In December 2004 an application similar to that brought earlier by Mr
Pillay was brought by Dr Motlanthe against the developers, MTR Trading CC,
Mooney Ford, the registrars who had been cited in Mr Pillay's application and
the tenth respondent, Dusky Dolphin Shareblock (Pty) Ltd, the owner of the
land on which the Lazy Lizard scheme was being developed. This application
related to the member's interest in MTR Trading CC, which Dr Motlanthe
alleged had been sold to him by the developers, and unit no 502.
[9] An interim interdict was granted on 22 December 2004. Thereafter an
answering affidavit was filed on behalf of the developers and MTR Trading CC
and a replying affidavit on behalf of Dr Motlanthe. Subsequently an order was
made by consent referring the matter to trial, providing that the founding
papers were to stand as a single summons and directing that a declaration,
plea and replication should be filed within certain periods, that a Rule 37
conference be held on a fixed date and that the parties make discovery by a
date 15 days thereafter.
[10] The applications brought by Mr Pillay and Dr Motlanthe were
consolidated and the consolidated trial proceeded before Balton J in the
Durban High Court. She gave judgment in favour of Mr Pillay and Dr
Motlanthe. There is an error in her judgment because after stating that she
was granting judgment in their favour she proceeded in the paragraphs
following to make orders only in respect of the relief sought by Mr Pillay and
made no orders relating to the relief sought by Dr Motlanthe.
[11] No relief was granted against Dusky Dolphins Shareblock (Pty) Ltd, the
Registrar of Companies and Close Corporations, and the Registrar of Deeds,
Pietermaritzburg, and they also did not participate in the appeals to the full
bench or to this court.
[12] The developers and the two close corporations appealed to the Full
Bench of the Pietermaritzburg High Court which allowed the appeal, with
costs and made certain ancillary orders relating to costs which it is
unnecessary to detail. The judgment of the full bench was delivered by
Nicholson J, with whom K Pillay and Madondo JJ concurred. The learned
judge found that as the alleged agreements of sale on which Mr Pillay and Dr
Motlanthe relied were not signed on behalf of the alleged sellers, the
developers, they were not binding. He came to this conclusion because he
found that it was the intention of the parties that the agreements would be
binding only when signed by the sellers. This finding rendered it unnecessary
for him to consider the question on which the judgment of Balton J was based,
namely whether on the application of the doctrine of quasi-mutual assent the
agreements in question were binding.
[13] The present appeal is before us with special leave granted by order of
this court.
[14] During the course of the trial it became clear that the material facts are
not in dispute and I shall endeavour to summarise them as briefly as possible.
[15] The copies of the standard form agreement signed by Mr Pillay and Dr
Motlanthe were handed to representatives of Pam Golding Properties. In July
2002 Mr Pillay arranged, with the consent of Mooney Ford, for his deposit of
R104 850 to be paid to them by a firm of attorneys in Pretoria who were
handling another property transaction for him. By letter dated 19 November
2002 Mooney Ford acknowledged receipt of the deposit. Dr Motlanthe's
deposit of R106 350 was paid into Mooney Ford's trust account on 23 April
2002, the day after he signed the standard form agreement.
[16] The standard form agreement, which as I have said was drawn up for
the developers, was headed 'Agreement for the Purchase of a member's
interest in a Close Corporation (owning a sectional Title Unit).'
[17] Clause 5.1 provided for the deposit to be paid to Mooney Ford within
seven days 'of signature hereof by the parties to this agreement'.
[18] Clause 8 provided that the sellers would as soon as reasonably
possible 'after the date of signature of this Agreement' deliver to Mooney Ford
in trust, pending fulfilment by the purchaser of his obligations to pay the full
purchase price, certain documents.
[19] Clause 15 provided as follows:
'15.1
This agreement constitutes the sole and exclusive memorial of the agreement
between the Seller and the Purchaser and no alteration, variation, deletion or
consensual cancellation hereof shall be binding on either the Seller or the
Purchaser unless reduced to writing and signed by both parties;
15.2
No waiver by either party of any of such party's rights under this agreement
shall be binding on such party unless such waiver is reduced to writing and
signed by the party effecting such waiver;
15.3.1 Any dispute arising from this contract notwithstanding that the amount of the
dispute may exceed the jurisdiction of the Magistrates' Court may be referred
to the Magistrates' Court having jurisdiction over the parties and by their
signature hereto the parties give their consent in writing to submit to the
jurisdiction of the Magistrates' Court.'
[20] At the end of the document there was provision for the parties and their
witnesses to sign, separate demarcated positions being made available for
the signatures of the purchaser and the seller.
[21] On 24 April 2002, that is the day after Dr Motlanthe paid his deposit,
Pam Golding Properties wrote to him stating that they had pleasure in
enclosing for his records a copy of the agreement of sale in respect of unit
502, confirming receipt of his deposit, calling for guarantees for the balance of
the purchase price and thanking him for purchasing the property.
[22] On 26 April 2002 Mooney Ford wrote to Dr Motlanthe confirming that
they held the deposit of R106 350 which would be invested in an interest
bearing account on his behalf and requesting him to arrange a guarantee in
their favour for R359 000 for the balance of the purchase price.
[23] As the signed offer which Dr Motlanthe had sent by telefacsimile
transmission to Pam Golding Properties was illegible (because their fax
machine was malfunctioning) he re-signed the agreement on 30 April 2002
and sent it by telefacsimile transmission to Mooney Ford, who wrote to him on
12 May 2002 confirming that they had received the re-signed agreement and
requesting a guarantee for the balance of the purchase price.
[24] On 15 May 2002 Mooney Ford wrote to the sixth respondent, Mr Blake,
attaching a copy of the latest schedule reflecting details of the purchasers of
member's interests in close corporations to which units were to be allocated
and confirming that the funds held by them by way of deposits paid by the
purchasers totalled R1 933 102. The schedule reflected the name of Dr
Motlanthe as a purchaser who had paid his deposit and indicated that the
guarantee was still outstanding.
[25] On 28 June 2002 Mooney Ford wrote to Mr Pillay forwarding two pages
of the agreement as replacement pagesfor initialling and return.
[26] On 16 July 2002 Mooney Ford sent Mr Blake a copy of a letter under
cover of which they sent ABSA Bank Limited, the financiers of the
development, an updated schedule of sales. The attached schedule listed,
inter alia, unit 402 as having been sold to Mr Pillay and unit 502 as having
been sold to Dr Motlanthe.
[27] On 24 July 2002 Mooney Ford wrote to Mr Pillay, confirming having
requested him to fax a copy of the agreement signed by him and confirming
that he would let them have payment of the deposit of R104 850.
[28] On 13 August 2002 Mooney Ford wrote a letter to Mr Pillay and
advised him that Swaledale 9 Investments CC, the seventh respondent, was
the close corporation to which his unit had been allocated.
[29] On 29 November 2002 Mooney Ford wrote to Dr Motlanthe confirming
that they were in receipt of 'a copy of the signed agreement' and
acknowledging receipt of his deposit of R106 350, which had been invested.
They also stated that they had received confirmation from his investment
advisers that they held funds sufficient to cover the balance of the purchase
price. He was asked to provide copies of his identity document and marriage
certificate. These documents were clearly required, as the heading to the
letter indicated, for the opening of the sectional title register of the
development and the transfer of the member's interest in MTR Trading CC,
the eighth respondent (to which unit 502 had been allocated), from the
developers to him.
[30] On 6 January 2003 Mooney Ford wrote to Mr Blake attaching 'the latest
schedule': this schedule included the sales to Mr Pillay and Dr Motlanthe, with
details given of the purchase prices, the units, the close corporations to which
they had been allocated and the deposits received.
[31] Copies of further schedules reflecting sales to Mr Pillay and Dr
Motlanthe were sent to Mr Blake on 23 January 2003 and 3 February 2003.
[32] On 24 June 2003 Mooney Ford wrote to Dr Motlanthe stating that in
terms of the contract signed by him the developers had requested them to
address him in relation to the finishes of the fittings in unit 502 and that the
provisional sum had been adjusted, based on the final prices received by the
suppliers. They requested him to make arrangements for payment of the sum
of R23 530 directly into their trust account.
[33] On 17 July 2003 Mooney Ford wrote to Dr Motlanthe confirming that
they required a guarantee in the sum of R602 650 with the guarantee to be
expressed as payable upon registration of the opening of the sectional title
register and transfer of the member's interest concerned to Dr Motlanthe.
[34] Two days later, on 19 July 2003 Mooney Ford wrote again to Dr
Motlanthe referring him to 'clause 13 of the agreement of sale entered into by
you' and calling upon him to furnish guarantees within 14 days, failing which
'the seller shall be entitled to cancel the agreement without further notice to
you'. A copy of this letter was sent to Mr Blake.
[35] On 21 July 2003 Dr Motlanthe's bankers, the Standard Bank Ltd, sent
the requisite guarantee to Mooney Ford's bankers, First National Bank Ltd.
[36] On the same day, at a meeting attended by the attorney acting for Mr
Pillay and Dr Motlanthe, the estate agents concerned and Mr Blake, Mr Blake
indicated that the developers were not bound by the purported agreements
between them and Mr Pillay and Dr Motlanthe. He had not signed the offers
signed by Mr Pillay and Dr Motlanthe and when asked by the estate agents to
sign he refused.
[37] On 23 July 2003 Mooney Ford wrote a letter to Pam Golding Properties
which read as follows:
'It has become apparent, following on from the meeting that was held at Mr Blake's
offices on Monday that the offers to purchase units 402 and 502 Lazy Lizard, which
were submitted . . . by your office, have not been accepted.
In the circumstances, our client has decided that it will not accept these offers by Mr
S Pillay and Dr Motlanthe respectively. If they are interested in increasing the offering
price, our client may be prepared to consider their offers.
We are making arrangements for the deposits to be refunded to these two
purchasers together with the interest which has accrued thereon.'
[38] On 4 August 2003 Mooney Ford wrote to Dr Motlanthe advising him
that his offer to purchase unit 502 had not been accepted by the seller and
that they were making arrangements for the deposit paid by him to be
refunded to him, with interest. On 5 August 2003 a similarly worded letter was
sent by Mooney Ford to Mr Pillay.
[39] A dispute then arose between Mr Pillay and Dr Motlanthe on one hand
and the developers on the other as to whether valid agreements of sale had
been concluded in terms of which the member's interest in Swaledale 9
Investments CC had been sold to Mr Pillay and the member's interest in MTR
Trading CC had been sold to Dr Motlanthe.
[40] As I have said, Balton J gave judgment in favour of Mr Pillay and Dr
Motlanthe. Following the decision of Goldin J in Rhodesian Business and
Property Sales (Pvt) Ltd v Henning 1973 (1) SA 214 (R) at 217H where it was
held that the sale of shares in a company, even if the company owns only
land and the shares are purchased for that reason only, is not a sale of land,
the learned judge came to the conclusion that the agreements in question in
this case did not have to be in writing and that s 2(1) of the Alienation of Land
Act 68 of 1981 did not apply.
[41] She held that Mr Pillay and Dr Motlanthe had succeeded in proving that
the conduct of the developers had led them to believe that valid agreements
had been entered into with them and that the agreements were binding and of
full force and effect between the parties.
[42] Her judgment on this part of the case was based squarely on the
doctrine of quasi-mutual assent. In this regard she relied on the well-known
statement of Blackburn J in Smith v Hughes (1871) LR 6 QB 597 at 607,
which is quoted in para 55 below and which has been frequently cited with
approval in this court and in other courts in South Africa (see, eg, Sonap
Petroleum (SA) Pty Ltd v Pappadogianis 1992 (3) SA 324 (A) at 239F-H,
where references are given to some of the other cases).
[43] On appeal to the full bench, as indicated earlier, the court found it
unnecessary to deal with the quasi-mutual assent point because it held that
the parties' intention had been that there would be no binding agreements
between them unless they were signed by or on behalf of the buyers and the
sellers. It is important to stress that it accepted, as counsel on both sides had
accepted, that '(t)he Close Corporations Act 69 of 1984 does not require the
sale of a member's interest to be in writing even if it relates to immovable
property.' Reference was made to the Rhodesian Business and Property
Sales case on which Balton J had relied. I take it that by the phrase 'even if it
[ie, the sale of the member's interest] relates to immovable property' the
learned judge meant 'even if the close corporation in which the interest was
sold only owns immovable property and the interest was purchased for that
reason only', to adapt the dictum of Goldin J to which I referred earlier.
[44] In coming to the conclusion to which he did, Nicholson J endeavoured
to apply the law as set out in a series of decisions of which the leading one is
Goldblatt v Fremantle 1920 AD 123. The passage cited by him in his
judgment appears at pp 128-9 of the report and reads as follows:
'Subject to certain exceptions, mostly statutory, any contract may be verbally entered
into; writing is not essential to contractual validity. And if during negotiations mention
is made of a written document, the Court will assume that the object was merely to
afford facility of proof of the verbal agreement, unless it is clear that the parties
intended that the writing should embody the contract. (Grotius 3.14.26 etc.) At the
same time it is always open to parties to agree that the contract shall be a written one
(see Voet 5.1.73. V. Leeuwen 4.2., sec. 2, Decker's note); and in that case there will
be no binding obligation until the terms have been reduced to writing and signed. The
question is in each case one of construction. In the present instance the learned
Judge, after considerable hesitation, dealt with the matter on the basis that the
parties were bound by their verbal agreement, but that it was a condition of that
agreement that it should be executed in writing within a reasonable time by both of
them. Such a condition he regarded as a concurrent one, which there was a
reciprocal obligation to perform. The point of construction is not easy; but in my
opinion the better view is that there was no contract until its terms had been
confirmed by both parties in writing. For it was definitely agreed that the particulars
arranged would be reduced to writing by Fremantle, and should be confirmed in
writing by Goldblatt. The former was to formulate under his own signature what he
considered to be the result of the interview, and the latter was to confirm in writing,
also under his signature, the result thus submitted. That amounted, in my opinion, to
an agreement that the contract should be concluded not verbally, but in writing. And
a written contract involved the signature of both. Such a contract, in the words of
Maasdorp J (Richmond v Crofton 15 SC at page 189) "cannot be said to have been
fully executed until the consent of the parties has been expressed by the signature
upon the document or documents constituting the written contract."'
[45] Nicholson J was influenced in coming to the conclusion he did by what
he called 'the form of the contract' presented to the prospective purchasers by
Pam Golding Properties. He pointed to its heading (which I have quoted in
para 16 above), the references to signature in clause 5.1 (quoted in para 17
above), clause 8 (quoted in para 18 above) and clause 15 (quoted in para 19
above), and the fact that there was provision at the conclusion of the
document for the signatures of the parties.
[46] He also found support for his views in a passage in the judgment of
Snyman J in Meter Motors (Pty) Ltd v Cohen 1966 (2) SA 735 (T) at 736C-
737G. That case was an action brought against a person who had signed as
surety for the obligations of a company which was allegedly liable as
purchaser under a hire purchase agreement. Exception was taken to the
declaration on the ground that the hire purchase agreement sued on, which
was annexed to the declaration, was not signed by the seller, although it was
clear from the document that the parties thereto had intended it to be the only
agreement between the parties and that it had to be signed to be binding. The
court, however, came to the conclusion that the document had been signed
on behalf of the seller and the exception was dismissed.
[47] In the passage in Meter Motors, quoted extensively by Nicholson J in
the court a quo, despite its being obiter, Snyman J considered, as a result of a
reading of clauses in the document, that for a contract to be concluded in that
case, a document had to be signed by both parties. The key sentence in this
part of his judgment appears at 737 B where the following was said:
'. . . if on this document it appears that the parties intended the document to be the
very agreement between the parties, then that document must be signed.' (The
emphasis is mine.)
[48] This statement was made after references to Wessels, The Law of
Contract in South Africa, 2 ed, vol 1, and part of the extract from Goldblatt v
Freemantle quoted above.
[49] After quoting from the Meter Motors case, Nicholson J said that it
seemed to him that in the present case there were even more features which
pointed to the fact that the agreement was to be binding on the parties only
when both had signed.
[50] I do not agree with the court a quo's conclusion that there could be no
binding contracts between the parties unless each was signed by or on behalf
of the buyers and the sellers. In my opinion it is clear from Goldblatt v
Freemantle, supra, and the authorities cited therein that, in the absence of a
statute which prescribes writing signed by the parties or their authorised
representatives as an essential requisite for the creation of a contractual
obligation (something that does not apply here), an agreement between
parties which satisfies all the other requirements for contractual validity will be
held not to have given rise to contractual obligations only if there is a pre-
existing contract between the parties which prescribes compliance with a
formality or formalities before a binding contract can come into existence.
That this is so is clear, for example, from C W Decker's annotation on Van
Leeuwen's Roman Dutch Law 4.2 sec 1 (not sec 2 as Innes CJ says at 129)
where he pointed out (Kotzé's translation, 2 ed, vol 2, p 12) that we no longer
uphold the distinction drawn in Roman law between real, verbal, literal and
consensual contracts because all contracts with us are made with consent.
With regard to written contracts he referred to an observation by Samuel
Strykius (Modern Pandect 2.14.7) as follows:
'. . . we must regard the written contracts as distinct, in so far as we should bear in
mind that although the writing does not constitute the essentiality of the contract,
which is contained in the mutual consent of the parties, they may nevertheless agree
that their verbal agreement shall be of no effect until reduced to writing, in which case
the agreement cannot before signature have any binding force, although there exists
mutual consent; and it cannot be said that the writing served not in perfecting the
transaction, but only as proof thereof . . ., since here it is agreed that the consent
should not operate without the writing, which must be observed as a legitimate
condition.'
[51] The passage in Wessels cited in the judgment in the Meter Motors
judgment supports this approach. The learned author refers to Institutes 3.23.
pr, and says that '[t]he plain meaning of this passage seems to be that if the
parties agree to have their contract of sale in writing, then until a document is
drawn up there is no vinculum juris and therefore no actionable contract. This
is the interpretation which Voet (18.1.3) gives to this passage and it seems
difficult to justify any other.'
[52] In the present case there were clearly no agreements between the
parties that the mutual consent between them would not operate in the
absence of a document embodying its terms signed by both buyer and seller.
There were in fact no negotiations between the parties before Mr Pillay and Dr
Motlanthe signed their offers. It follows that I am satisfied that the basis on
which the case was decided by the full bench cannot be upheld. It follows also
that the passage in the Meter Motors case on which Nicholson J relied, in so
far as it is inconsistent with what I have said, is incorrect. I think that it is more
correct to say on the facts of the present case that these offers prescribed a
particular form of acceptance (cf Driftwood Properties (Pty) Ltd v McLean
1971 (3) SA 591 (A) at 597 D), Withok Small Farms (Pty) Ltd v Amber Sunrise
Properties Ltd (664/07) [2008] ZASCA 131 (21 November 2008) and E Allan
Farnsworth, Contracts, 2ed, 53.13, pages 151-2).
[53] This raises the question as to whether the doctrine of quasi-mutual
assent can be applied in circumstances where acceptance does not take
place in accordance with a prescribed mode but the conduct of the offeree is
such as to induce a reasonable belief on the part of the offeror that the offer
has been duly accepted according to the prescribed mode. Viewed in the light
of basic principle, the question must surely be answered in the affirmative
because the considerations underlying the application of the reliance theory
apply as strongly in a case such as the present as they do in cases where no
mode of acceptance is prescribed and the misrepresentation by the offeree
relates solely to the fact that there is consensus.
[54] It is now necessary to consider whether on the application of the
doctrine of quasi-mutual assent Mr Pillay and Dr Motlanthe have established
their entitlement to the relief sought.
[55] The approach to be adopted in a case such as this was set out in
Sonap Petroleum (SA) (Pty) Ltd v Pappadogianis, supra, at 239F to 240 B, as
follows:
'If regard is had to the authorities referred to by the learned Judges (see Logan v Beit
7 SC 197 at 215; I Pieters and Company v Salomon 1911 AD 121 at 137; Hodgson
Bros v South African Railways 1928 CPD 257 at 261; Van Ryn Wine and Spirit Co v
Chandos Bar 1928 TPD 417 at 422-4; Irvin & Johnson (SA) Ltd v Kaplan 1940 CPD
647 and, one could add, Collen v Rietfontein Engineering Works 1948 (1) SA 413 (A)
at 430-1), I venture to suggest that what they did was to adapt, for the purposes of
the facts in their respective cases, the well-known dictum of Blackburn J in Smith v
Hughes (1871) LR 6 QB 597 at 607, namely:
"If, whatever a man's real intention may be, he so conducts himself that a reasonable
man would believe that he was assenting to the terms proposed by the other party,
and that other party upon the belief enters into the contract with him, the man thus
conducting himself would be equally bound as if he had intended to agree to the
other party's terms."
In my view, therefore, the decisive question in a case like the present is this: did the
party whose actual intention did not conform to the common intention expressed,
lead the other party, as a reasonable man, to believe that his declared intention
represented his actual intention? Compare Corbin on Contracts (one volume edition)
(1952) at 157. To answer this question, a three-fold enquiry is usually necessary,
namely, firstly, was there a misrepresentation as to one party's intention; secondly,
who made that representation; and thirdly, was the other party misled thereby? See
also Du Toit v Atkinson's Motors Bpk 1985 (2) SA 893 (A) at 906C-G; Spindrifter
(Pty) Ltd v Lester Donovan (Pty) Ltd 1986 (1) SA 303 (A) at 316I-317B. The last
question postulates two possibilities: Was he actually misled and would a reasonable
man have been misled? Spes Bona Bank Ltd v Portals Water Treatment South Africa
(Pty) Ltd 1983 (1) SA 978 (A) at 984D-H, 985G-H.'
[56] The answers to the questions set out in that passage, when applied to
the facts of this case, are clear: the party whose actual intention did not
conform to the common intention expressed (ie, that there were contracts on
the terms set forth on the standard form) was Mr Blake, acting for himself and
the other developers. He led Mr Pillay and Dr Motlanthe, as reasonable men,
to believe that the declared intention represented his actual intention. With
regard to the three-fold enquiry: (a) there was a misrepresentation as to his
intention; (b) made by his agents (in the various letters sent by Mooney Ford
to Mr Pillay and Dr Motlanthe which unmistakably represented that the offers
had been accepted and binding contracts had come into existence); and (c)
Mr Pillay and Dr Motlanthe were actually misled as reasonable men in their
position would have been.
[57] It is clear on the evidence that Mooney Ford had authority to call for
and receive deposits paid under contracts for the sale of member's interests in
the close corporation to which units were to be allocated; to call for
guarantees under the contracts; to allocate close corporations, from the list
made available to them by Mr Blake's accountants, to particular units; to call
for copies of identity documents and marriage certificates so as to be able to
open the sectional title register and transfer member's interests; to write to the
buyers regarding the finishes of the units and to ask for additional payments
occasioned by changes thereto; and to give notices under clause 13 of the
standard form contracts threatening cancellation.
[58] All these acts, which they were authorised to perform on behalf of Mr
Blake and his fellow developers, amounted in my view to a clear
representation that the offers made by Mr Pillay and Dr Motlanthe had been
duly accepted.
[59] Although the acceptance by the developers of the Pillay and Motlanthe
offers did not comply with the prescribed mode of acceptance they conducted
themselves in such a manner as to induce the reasonable belief on the part of
Mr Pillay and Dr Motlanthe that the developers were accepting the offers
according to the prescribed mode.
[60] It follows in my view that Balton J correctly held, on the basis of the
doctrine of quasi-mutual assent, that the developers were bound by the
agreements in respect of units 402 and 502.
[61] The following order is made:
A
The appeal against the order of the court a quo is upheld with costs
including the costs of two counsel.
B
The order of the court a quo is set aside and replaced by an order in
the following terms:
'1
Subject to the order made in paragraph 2, the appeal is dismissed with costs,
including the costs of two counsel.
The order made in the court a quo is set aside and replaced by an order in
the following terms:
"(a)
The following order is made in case no 690/2004:
1.
An order is granted declaring the agreement between the first to sixth
defendants ("the sellers") and the plaintiff ("the purchaser") for the purchase
of the entire members' interest in and to the seventh defendant to be of full
force and effect and binding between the parties, with terms as set out in the
document annexed as annexure "A" to the plaintiff's declaration with the
seventh defendant being reflected as the close corporation referred to in that
document, the sellers' acceptance of the agreement having taken place by
conduct, instead of signature.
An order is granted directing the sellers to comply with their
obligations under the sale agreement and in particular, they are ordered and
directed to deliver and hand over to Mooney Ford Attorneys in trust, the
documents set out in paragraphs 8.1.1.1 to 8.1.5 (inclusive) of the sale
agreement in respect of the seventh defendant.
An order directing the sellers to bring about the state of affairs
warranted in clauses 9.1 to 9.6 (inclusive) of the sale agreement (in particular
by ensuring that the sectional title unit referred to in the sale agreement is
owned by the seventh defendant at the date of transfer of the members'
interest to the purchaser).
In the event of the sellers' failing to comply with the order contained in
paragraphs 2 and 3 hereof, or any one of those paragraphs, then the
purchaser is given leave to deliver an application to this court, on the same
papers, supplemented in so far as may be necessary, for an order:
(a)
declaring the sellers to be in contempt of court;
(b)
for their committal to prison for contempt of ourt.
In addition, in the event of the sellers' failing to comply with
paragraphs 2 and 3 of this order, the Sheriff of Durban is authorised to do all
things necessary, in so far as the sellers are concerned, to cause the actions
contained therein to be fulfilled.
In the event of the sellers' failing to comply with the orders contained
in paragraphs 2 and 3 hereof, and the purchaser's failing to obtain the
transfer contemplated in paragraph 5 hereof within a reasonable period of
time from the granting of this order, then the sellers shall be liable, jointly and
severally, the one paying the other to be absolved, on application by the
purchaser, on the same papers supplemented in so far as may be necessary,
to pay damages in an amount to be determined by the court, together with
return of the deposit paid by the purchaser together with interest thereon at
the legal rate of 15.5% per annum from due date to date of payment.
The sellers are ordered to pay the purchaser's costs of suit.
(b)
The following order is made in case no 19979/04:
1.
An order is granted declaring the agreement between the first to sixth
defendants ("the sellers") and the plaintiff ("the purchaser") for the purchase
of the entire members' interest in and to the seventh defendant to be of full
force and effect and binding between the parties, with terms as set out in the
document annexed as annexure MM2 in the application papers (in the form
referred to in the Plaintiff's replying affidavit) with the seventh defendant being
reflected as the close corporation referred to in that document, the sellers'
acceptance of the agreement having taken place by conduct, instead of
signature.
2.
An order is granted directing the sellers to comply with their
obligations under the sale agreement and in particular, they are ordered and
directed to deliver and hand over to the eighth defendant in trust, the
documents set out in paragraphs 8.1.1.1 to 8.1.5 (inclusive) of the sale
agreement in respect of the seventh defendant.
An order directing the sellers to bring about the state of affairs
warranted in clauses 9.1 to 9.6 (inclusive) of the sale agreement (in particular
by ensuring that the sectional title unit referred to in the sale agreement is
owned by the seventh defendant at the date of transfer of the members'
interest to the purchaser).
In the event of the sellers' failing to comply with the order contained in
paragraphs 2 and 3 hereof, or any one of those paragraphs, then the
purchaser is given leave to deliver an application to this court, on the same
papers, supplemented in so far as may be necessary, for an order:
(a)
declaring the sellers to be in contempt of court;
(b)
for their committal to prison for contempt of court.
In addition, in the event of the sellers' failing to comply with
paragraphs 2 and 3 of this order, the Sheriff of Durban is authorised to do all
things necessary, in so far as the sellers are concerned, to cause the actions
contained therein to be fulfilled.
In the event of the sellers' failing to comply with the orders contained
in paragraphs 2 and 3 hereof, and the purchaser's failing to obtain the
transfer contemplated in paragraph 5 hereof within a reasonable period of
time from the granting of this order, then the sellers shall be liable, jointly and
severally, the one paying the other to be absolved, on application by the
purchaser, on the same papers supplemented in so far as may be necessary,
to pay damages in an amount to be determined by the court, together with
return of the deposit paid by the purchaser together with interest thereon at
the legal rate of 15.5% per annum from due date to date of payment.
The sellers are ordered to pay the purchaser's costs of suit."'
……………..
IG FARLAM
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
G D HARPUR SC
U LENNARD
Instructed by:
Lutge Magigaba Inc
Durban
Hill, McHardy & Herbst
Bloemfontein
FOR RESPONDENT:
L C A WINCHESTER SC
Instructed by:
Mooney Ford Attorneys
Durban
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:
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
S Pillay and Another v I Shaik and Others
The Supreme Court of Appeal today allowed an appeal brought by Mr Selvin Pillay
and Dr Makgala Solomon Motlanthe against a judgment delivered in the
Pietermaritzburg High Court in favour of six developers, relating to two units in a
property development known as the Lazy Lizard at Umdloti on the North Coast of
KwaZulu Natal.
In the Pietermaritzburg High Court, Mr Justice Nicholson, with whom Ms Justice K
Pillay and Mr Justice Madondo concurred, upheld an appeal from a judgment in
favour of Mr Pillay and Dr Motlanthe given by Ms Justice Balton in the Durban High
Court. They held that the agreements for the sale of members' interests in the close
corporations to which the units in question were allocated, on which Mr Pillay and Dr
Motlanthe relied, were not binding because they were not signed by the sellers. The
Supreme Court of Appeal held that this was not correct as there was no prior
agreement between the parties that the sale agreements had to be in writing and
signed.
The Supreme Court of Appeal held further that though the offers to purchase signed
by Mr Pillay and Dr Motlanthe in effect required the prospective sellers to sign, the
sellers by their conduct had led Mr Pillay and Dr Motlanthe reasonably to believe that
they had duly accepted the offers and they were accordingly bound. |
3536 | non-electoral | 2021 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 121/2020
In the matter between:
GOVAN MBEKI MUNICIPALITY APPELLANT
and
NEW INTEGRATED CREDIT SOLUTIONS (PTY) LTD RESPONDENT
Neutral citation:
Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd
(121/2020) [2021] ZASCA 34 (7 April 2021)
Coram:
NAVSA ADP and DAMBUZA and MOCUMIE JJA and KGOELE and
GOOSEN AJJA
Heard: 10 March 2021
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 10h00 on 7 April 2021.
Summary:
Procurement by municipality of debt management services – quintessentially
a constitutional issue – factors to be applied in considering delay in self-review by public
authority – contract invalid for want of compliance with applicable regulations and
constitutional imperatives – s 172(1)(b) applied – just and equitable remedy to avoid denying
accrued rights – part of contract not set aside – concern about frequency of late self-review
applications where contract periods have run their course and no sanctions for aberrant
officials.
ORDER
On appeal from: Mpumalanga Division of the High Court, Middelburg (Brauckmann AJ
sitting as court of first instance):
1 The appeal and cross-appeal succeed only to the extent reflected in the substituted order
set out hereafter.
2 In respect of the appeal, no order is made as to costs.
3 The order of the court below is set aside and substituted as follows:
‘(a) The contract for the provision of debt management services, concluded by the parties
during September 2015, which is the subject of this action, is declared unconstitutional
and invalid but is set aside only in relation to recovery by the defendant of the
commission of 2.5% in respect of debts younger than 60 days, so as to preserve the
accrued rights of the defendant as set out in (b) below.
(b) The defendant is thus not precluded from recovery of the commission of 16.5% on debts
older than 60 days in the amount calculated by the arbitrator, Justice Harms.
(c) No order is made as to costs.’
JUDGMENT
Navsa ADP (Dambuza and Mocumie JJA and Kgoele and Goosen AJJA concurring)
Background
[1] This case concerns the validity of a debt management services agreement
concluded between the appellant, the Govan Mbeki Municipality (the GMM), a municipality
established in terms of s 1 of the Local Government: Municipal Structures Act 117 of 1998,
and the respondent, New Integrated Credit Solutions (Pty) Ltd (NICS). This appeal and
cross-appeal are directed against an order of the High Court, Mpumalanga Division,
Middelburg, in terms of which only a part of that agreement was declared invalid,
unconstitutional and void ab initio. The GMM sought to have the entire agreement declared
invalid, whilst NICS contended that the entire agreement was valid and enforceable. The
appeal and cross-appeal are before us with the leave of the court below. This case is part
of an ever growing, and frankly disturbing, long line of cases where municipalities and organs
of state seek to have their own decisions, upon which contracts with service providers are
predicated, reviewed and overturned, for want of legality, more often than not after the
contracts have run their course and services have been rendered thereunder.1 But more
than that, as will be demonstrated hereunder, after failing in the most basic fashion in their
duty to ensure they comply with constitutional norms and statutory prescripts, and after
compounding the initial errors and, as in this case, litigating at large, organs of state falsely
seek to claim the moral high ground. All of this at public expense and free of sanctions
against the functionaries involved. The background, culminating in the present appeal, which
is convoluted and tortuous, is set out hereafter.
[2] During the last quarter of 2014 the Newcastle Municipality issued a tender notice,
published in two local newspapers, inviting bids from service providers for debt management
services. The notice indicated that on 17 October 2014 there would be a compulsory briefing
session by the municipality regarding the bids. The briefing session occurred on that day,
and it was made clear that tenders were being invited only in respect of the management of
debts older than 60 days and the contract duration would be 36 months. The debts to be
managed were in relation to rates, taxes and services rendered by the Newcastle
Municipality to residents and others within its area of jurisdiction.
[3] The closing date for the submission of bids was 5 November 2014. Seventeen
service providers submitted their bids. NICS submitted a bid for ‘Debt Collection (debt
60 days and older)’. It set out the terms of its bid as follows, ‘NICS will charge 16.5%
(including VAT @ 14%) on all successfully recovered revenue’. It submitted an alternative
1 In Altech Radio Holdings (Pty) Ltd and Others v City of Tshwane Metropolitan Municipality [2020] ZASCA
122 para 1, Ponnan JA said the following: ‘State self-review is a novel, but burgeoning, species of judicial
review that has occupied the attention of our courts in a number of recent decisions. Although it seems
axiomatic that unlawful conduct must be undone, to borrow from Dr Seuss “simple it’s not”. Particularly
worrisome are public procurement cases, where, as here, an organ of state seeks to undo its own prior
decisions.’
proposal, which for present purposes we need consider no further. The Newcastle
Municipality’s bid adjudication committee resolved that NICS be appointed to provide debt
management services in relation to debts exceeding 60 days. On 3 February 2015 NICS
was advised that it was the preferred bidder. This was confirmed by the Municipality in a
written communication on 25 March 2015, wherein NICS was informed that it would be
responsible for collecting debts exceeding 60 days, and that its services would be utilised
for a period of 36 months, on the basis of ‘commission of 16.5% on collected debt from
customers exceeding 60 days’.
[4] Consequently, on 30 April 2015, a written agreement was concluded between the
Newcastle Municipality and NICS for the provision of debt management services. The
agreement, notably, included a clause that the latter would be entitled to commission of
2.5 percent on amounts collected on debts younger than 60 days. The circumstances under
which this clause was added are dealt with in para 11 below.
[5] The GMM, being aware that the Newcastle Municipality had procured debt
management services from NICS, but apparently, at that stage, not certain about the details
of the bid and the bid adjudication process, acting in terms of reg 32 of the Municipal Supply
Chain Management Regulations,2 which provides that a Supply Chain Management Policy
may allow an accounting officer to procure goods or services for a municipality or municipal
entity under a contract secured by another organ of state, sought the consent of the
Newcastle Municipality to procure such services from NICS.
[6] In seeking consent from the Newcastle Municipality the GMM, on 31 July 2015, wrote
as follows:
‘Govan Mbeki Municipality would like to request procurement in terms of Section 32 of the Municipal
Supply Chain Management Regulations for the service of New Integrated Solutions (Pty) Ltd.
We therefore require your consent in writing and send the following to us:
Letter of consent.
Appointment letter for New Integrated Solutions (Pty) Ltd.
2 General Notice 6868, GG 27636, 30 May 2005.
Copy of bid or proposal.
Any other document that will enable us to consider their appointment.’
The letter was signed by the GMM’s Municipal Manager.
[7] On 12 August 2015 the Newcastle Municipality wrote back as follows:
‘It is hereby confirmed that the Newcastle Municipality has no objection if the Govan Mbeki
Municipality utilizes this tender . . . subject to the conditions applicable to the tender.
Accompanying this tender are the following necessary documentations:
(i) Copy of an advert
(ii) Copy of contract form
(iii) Copy of appointment letter
(iv) Copy of BAC minutes
(v) Copy of BEC report
(vi) Copy of SLA
(vii) Copy of bid document
Also note that it is the responsibility of the Govan Mbeki Municipality to obtain consent from the
service provider.’
[8] Regulation 32 provides that this mechanism for procuring goods or services, may be
resorted to only if:
‘a)
the contract has been secured by that organ of state by means of a competitive bidding process
applicable to that organ of state;
b)
the municipality or entity has no reason to believe that such contract was not validly procured;
c)
there are demonstrable discounts or benefits for the municipality or entity to do so; and
d)
that other organ of state and the provider have consented to such procurement in writing.’
(Emphasis added.)
[9] NICS agreed to provide the services sought by GMM. Consequently, on
12 September 2015, the GMM and NICS concluded a written agreement for the provision of
debt management services for a period of three years, until 31 August 2018 – from the
effective date, 1 September 2015. It essentially adopted the Newcastle Municipality’s
contract regime. The written agreement contained an extensive list of obligations undertaken
by NICS. It also included an agreement to submit to arbitration in the event of a dispute
arising from the agreement. It included a standard clause that the decision of the arbitrator
shall be final and binding on the parties and may be made an order of court. The following
are the material contractual provisions which set out NICS’ primary obligations:
‘5.1
Time is of essence in the execution of the obligations by the NICS under this Contract. In
particular, the NICS shall at all material times ensure complete compliance of the
implementation of its obligations to ensure complete compliance to set Targets.
. . .
6.1
NICS herein undertakes to, and shall within the duration of this Contract:
(i)
In respect of Debt Management and Debt Administration
6.1.1
Collect and administer debt collection and debt administration services and all monies
recovered shall be paid directly into the Municipal banking account;
6.1.2
Identify and evaluate possible write-offs of outstanding debt;
6.1.3
Perform debt management, including:
. . .
6.1.5
Prepare and submit management reports every month, quarter, and annual performance of
its obligations, including . . .’
[10] It is necessary to note that the remuneration for the provision of the debt
management services set out in the agreement between the GMM and NICS was in identical
terms to the agreement between the Newcastle Municipality and NICS, as set out in para 3
above, namely commission of 16.5 percent of collected debts exceeding 60 days and
2.5 percent of collected debts younger than 60 days.
[11] It was uncontested that at the time that the Newcastle Municipality published the
tender notice for debt management services, referred to in para 2 above, it contemplated
establishing a debt management unit of its own to manage debts younger than 60 days.
That did not eventuate because of budgetary constraints. And when that realisation struck
home, the Newcastle Municipality, according to its Director: Financial Management,
Ms Haripersad, who testified at the trial in the court below, referred to later in this judgment,
turned to NICS ‘to see if they would help us with collecting debts under 60 days’. That led to
negotiations between NICS and the Newcastle Municipality that resulted in the
abovementioned agreement during September 2015. In justifying the addition of the
management of younger debts, the Newcastle Municipality sought refuge in what they
considered to be their power in terms of s 116(3) of the Local Government Municipal Finance
Management Act 56 of 2013 (the LGMFMA), which entitles a variation of an existing
contract, provided the variation is within certain parameters. As will be demonstrated later,
this approach was flawed, as accepted by Ms Haripersad, because the variation was outside
of the statutory limitation and because no resolution to that effect had been tabled for
approval by the Council of the Newcastle Municipality.
[12] Two months thereafter, on 7 November 2016, unsurprisingly, the Auditor-General of
South Africa sent a letter to the Newcastle Municipality that essentially took issue with the
provision made in the agreement with NICS for the additional 2.5 percent commission for
debt management services in relation to debts younger than 60 days, which had not been
called for in the tender notice and had not been part of the bid by either NICS or any of the
other bidders, or considered in the evaluation or adjudication of the bids. The Auditor-
General complained that the procurement process was thus unfair to other suppliers and
tenderers of like services. In the written communication the Auditor-General, inter alia, said
the following:
‘[W]e believe the procurement process was not fair as other suppliers were disadvantaged and the
chosen supplier might not have been the lowest if the price awarded were taken into account into
evaluation or the other companies’ prices might have been different if the changed scope of the work
might have been known. Given that the variation was signed before awarding of contract, the
municipality should have therefore started the procurement process afresh if it was now intended to
change the scope of the work to give other companies a fair opportunity. The amount paid to the
supplier above the 16.5% is therefore considered to be irregular.
It should also be noted that the fact the company is entitled to a percentage from all debtors below
60 days is considered not to be cost effective as that might be inclusive of debtors that would pay
without the need for debt collectors thus resulting in expenditure in vain and that could have been
avoided.’
[13] A few months thereafter, in February 2017, the GMM, apparently itself now having
been made aware of the above, purported to terminate in writing its agreement with NICS,
by reliance, first, on s 217 of the Constitution,3 which it quoted in full, asserting that ‘it is
evident that neither [NICS], nor any of the other unsuccessful bidders was invited or
requested to submit a bid for the collection of any outstanding debts from customers “under
60 days”’. It went on to say that for that reason the additional clause, catering for the
additional 2.5 percent commission was ultra vires and void. The GMM went further, and
placed reliance on reg 32, which it also quoted in full. In this regard, the GMM professed
ignorance of the Newcastle Municipality’s failure to adhere to these statutory prescripts. The
following part of the letter bears repeating:
‘In the result your client is not entitled to claim 2,5% commission in respect of monies collected from
our client’s customers in respect of current accounts. Your client’s “entitlement” to claim 2,5%
commission on debt collected from our client’s customers (with specific reference to current
accounts) was not subjected to a competitive bidding process referred to and provided for in
Regulation 32(1)(a) of the Municipal Supply Chain Management Regulations.’
[14] The bases for termination did not stop there. The GMM went on to state that NICS
had failed to fulfil its contractual obligations. The following appears in the letter of
termination:
‘14. The obligations of our client pursuant to the conclusion of the agreement are reciprocal. Your
client has not complied with its responsibilities and obligations referred to and contained in the
agreement, with specific reference to clauses 5.1, 6.1 and 6.2.6.
15.
In addition your client is only entitled to 16,5% commission on the debt which it has collected
from our client’s customers. Your client is most definitely not entitled to claim payment in
respect of all the amounts which our client’s customers have paid into our client’s bank account
since 1 September 2015 (ie our client’s gross revenue or income).
. . .
17.
Your client’s conduct therefore constitutes a material breach of the agreement, which entitles
our client to terminate the entire agreement with 30 days’ notice, as envisaged in clause 10.1.2
thereof.
3 Section 217 provides that where an organ of state contracts for goods or services it must do so in accordance
with a system which is fair, equitable, transparent, competitive and cost-effective.
18.
Our client therefore gives notice to your client of its decision to cancel or to terminate the entire
agreement, as provided for in clause 10.1.2, read together with the provisions of clause 11.2
thereof.’
(Emphasis added.)
[15] Finally, the letter of termination stated that in the event of contestation by NICS of its
right to terminate the agreement, the GMM consented, in advance, to arbitration. It is
necessary to pause here to note that at this stage, approximately 17 months after the
conclusion of the agreement and approximately 18 months after all the bid related
documents had been supplied by the Newcastle Municipality, the only challenge by the
GMM to the validity of the agreement, as distinct from the alleged breaches of the
agreement, was the add-on of the 2.5 percent in relation to debts younger than 60 days.
As is evident from what is set out in para 15 of the letter, an entitlement to commission by
NICS was at that stage recognised by the GMM in relation to amounts actually collected in
relation to debts older than 60 days, subject, of course, to its claims in relation to the
breaches.
[16] NICS did not accept the GMM’s entitlement to terminate the agreement and
consequently, on 1 March 2017, approached the high court for relief, seeking an interdict
against the purported cancellation, ostensibly pending further proceedings. On 6 March
2017 the GMM launched a conditional counter-application for an order that the contract for
the provision for debt management services entered into on 12 September 2015 ‘be
declared unconstitutional, invalid and unlawful, and void ab initio’. The urgent application by
NICS was settled by agreement between the parties, on the basis that the issues raised be
referred to arbitration before retired Justice Harms. The counter-application remained in
abeyance. That agreement was made an order of court on 14 March 2017. Paras 2, 3, 4
and 5 of that order are relevant:
‘2. The issue of the validity of the Respondent’s purported termination and the amount owed to the
Applicant is referred to arbitration, before retired Judge Harms, to take place from the 8th to the
12th of May 2017;
3. The Applicant shall leave the Respondent’s site by the 22nd of March 2017;
4. The Respondent’s purported termination is suspended pending the outcome of the arbitration;
5. The Respondent shall continue to provide the following information to the Applicant:
5.1 PF05; PF06; PG09 and PF10 on a daily basis; and
5.2 PF15 on a monthly basis.’
[17] The arbitration proceedings were finalised, and an award, dated 23 August 2017,
was made in favour of NICS. The arbitrator held that the GMM’s purported cancellation of
the agreement on the basis of the alleged breaches of the agreement in question was invalid
and of no force and effect. Ultimately, the arbitrator ordered the GMM to pay NICS an
amount of R22 344 374.32 in respect of debts older than 60 days and R23 767 462.03 in
respect of debts younger than 60 days. The arbitrator held that he had jurisdiction to deal
with the termination of the agreement, other than on the basis of its constitutional validity.
That issue, as accepted by the parties before him, was beyond his remit. During September
2018 an arbitration appeal panel dismissed GMM’s appeal against the arbitrator’s decision.
[18] For a better appreciation of the issues that ultimately crystallised, both in the court
below and before us, it is necessary to have regard to the relevant, extensive parts of the
arbitral award by Justice Harms, and thereafter his material conclusions. Counsel did not
suggest before us that the arbitrator’s findings on the contractual terms and the obligations
of the parties were flawed and presently challengeable. In any event, they appear to me to
be correctly reasoned. In dealing with the peculiarities of the agreement, after referring to
the general obligations of NICS, the arbitrator noted the following:
‘47
Against these generalities one then must have regard to clause 6 as a whole. Clause 6.1 sets
out the obligations of NICS under four headings, namely (i) in respect of debt management
and debt administration; (ii) preparation and submission of reports; (iii) infrastructure; and (iv)
operating costs.
The debt management and administration obligation under (i) is extensive. It can for present
purposes be broken down into two sections: namely debt collection (clause 6.1.1) and debt
management (clause 6.1.3 with at least 15 sub-items).
Clause 6.1.1 is rather inelegantly drawn and reads as follows:
“Collect and administer debt collection and debt administration services and all monies
recovered shall be paid directly into the Municipal banking account.”
Accepting that it deals with more, it at least obliges NICS to “collect” municipal debts and
ensure that “all monies recovered shall be paid directly into the Municipal banking account.”
It is not necessary to deal with the other obligations undertaken by NICS in terms of clause
10.1 save to add that it undertook to carry all costs related to the performance of its debt
collection and management services.
Against that background one has to turn to the obligations placed on the Municipality in terms
of clause 6.2 (reproduced earlier) and in particular the payment clause as quoted.
It is clear that NICS is not paid per function performed but by result. And the percentage
commission is calculated with reference to the amount of the debt collected. But debt is not
only collected by NICS. It is also collected by the Municipality since it is a duty of the
Municipality to issue invoices and rendering revenue management services thereto (clause
6.2.1).
All monies collected are paid into the Municipality’s banking account. These payments are not
earmarked and cannot be earmarked. In other words, it is not possible to identify which
payments are made pursuant to the efforts of NICS or otherwise. As Mr Mabusa said, it is
simply not possible to prove a causal link between a debt collection action and payment, and
that the contract is impossible of performance on the Municipality’s interpretation. This is why
the Municipality wished to enter into an addendum which would have provided for the creation
of a trust account into which the NICS moneys had to be paid.
The concession during argument by counsel for the Municipality that the causal link test –
which was the issue between the parties – cannot be the test was fairly made. However, his
proposed “subsequent to” test (subsequent to a text message, email, letter or telephone call)
does not make any business sense.
This means that if one gives business efficacy to the agreement, the reference to “debt
collected” refers to debts paid into the Municipality’s account and not to debt factually or
causally collected by NICS, always remembering that NICS has to do substantially more than
debt collecting.
There is a qualification. One does not in ordinary parlance refer to debt collection where a
debtor pays within the grace period for payment (that accords with NICS’s understanding of
the contract, at least sometimes) or until handover of the debt to the debt administrator. What
this means in respect of the <60 days’ accounts, the calculation of the commission of 2,5%
has to be based on all payments made on account after handover to NICS of the outstanding
debts for collection. The same issue does not arise in respect of the >60 days’ accounts.’
[19] The following were the conclusions reached by the arbitrator:
‘58
The Municipality amended its plea shortly before the hearing. Therein it made a tender.
The tender was repeatedly confirmed during evidence and in argument. It tendered payment
of “all debts that were collected by [NICS] since the inception of the [contract] at the rate of
16,5%, meaning in respect of debts older than 60 days. (I understood from the argument that
it also made a tender in respect of the 2,5% on the >60 days debts provided NICS establishes
that it “collected” those debts but since the tender was not properly formulated I shall ignore
it.) The tender was not in the alternative and was subject to one condition only and that was
the proof of causation (collection). It is not understood how in these circumstances the
Municipality could proceed with its other defences such as cancellation, non-performance and
lack of reciprocity.
The evidence cast light on the Municipality’s problems around the contract and it is apparent
that the Municipality is mainly to blame. First, the Municipality was over-eager to find a solution
for its debt problems. It took over the Newcastle contract regime without giving consideration
to the fact that its administrative structure differs from that of Newcastle Municipality and that
it had different problems. It also did not give proper attention to the list of exclusions which
meant that its bulk industrial clients (such as Sasol) were included in the commission structure.
The Municipality gave scant or no attention to the obligation to pay commission on <60 days
accounts. Importantly, the Municipality did not follow up the issue of the setting of targets and
was then unhappy about the result of the debt collecting process. This could have been
prevented if targets had been set. The Municipality is the author of its own problems by
agreeing that debt collected by NICS should be paid into the Municipality’s account and not
providing for a trust account or another method of earmarking of payments.
It will be necessary to make declaratory orders and leave it to the parties to make the necessary
calculations. If an additional award is required, the parties may approach me in writing within
one month of this award.’ (Emphasis added.)
As stated above the amounts due were later quantified.
[20] The GMM, on 21 June 2017, approximately 22 months after the effective date, whilst
the arbitration was being conducted, instituted the action in the court below, seeking a
declarator that the entire agreement between it and NICS be declared unconstitutional,
invalid, unlawful and void ab initio, alternatively, that the part of the agreement relating to
the additional 2.5 percent for managing debts younger than 60 days be reviewed, declared
unconstitutional and set aside because it had not been subject to a competitive bidding
process and there were no demonstrable discounts or benefits in respect thereof. The stated
bases for the action were that the agreement was in conflict with s 217 of the Constitution
and reg 32, and for the first time, reliance was placed on reg 51, which reads as follows:
‘CONTRACTS PROVIDING FOR COMPENSATION BASED ON TURNOVER –
If a service provider acts on behalf of a municipality or a municipal entity to provide any service or
acts as a collector of fees, service charges or taxes and the compensation payable to the service
provider is fixed as an agreed percentage of turnover for the service or the amount collected, the
contract between the service provider and the municipality or municipal entity must stipulate -
(a) a cap on the compensation payable to the service provider; and
(b) that such compensation must be performance based.’
The GMM also contended that the agreement was in contravention of the provisions of the
LGMFMA, including s 116(3).4
[21] The GMM stated that the delay in seeking relief was justified and prayed that it be
overlooked. After NICS raised a special plea of lis pendens, the counter-application by
GMM, was withdrawn. NICS, in defending the action, insisted that the delay in seeking relief,
which essentially was a legality review, was inordinate and that it should not be entertained
and that the claim by the GMM be dismissed with costs. In relation to the merits of the legality
challenge NICS denied that the agreement was invalid and that it did not comply with s 217
of the Constitution, or was in contravention of any of the applicable statutory prescripts.
In the alternative, NICS pleaded that in the event that the court held that it was compelled
to declare the contract invalid, justice and equity dictated that the court preserve the rights
already accrued by NICS. The matter proceeded to trial in the court below. The trial
4 Section 116(3) provides for a specific procedure to be followed by a municipality if it intends to amend a
contract concluded in terms of its supply chain management policy, including providing reasons having to be
tabled in council.
commenced on 4 November 2019, more than a full year after the contract period had run its
course.
[22] After hearing fairly limited evidence and considering submissions by the parties, the
court below (Brauckman AJ), with reference to Harnaker 2 v Minister of the Interior,5 held
that notwithstanding that the principal relief sought by the GMM was in the form of a
declaratory order, rather than, strictly speaking, by way of an application for a review, the
delay rule in relation to reviews was applicable. In dealing with the reasonableness of the
delay, Brauckman AJ considered that the GMM had been unaware of the illegality
complained of, namely, the inclusion by the Newcastle Municipality of remuneration for
collection of debts younger than 60 days without the proper tender procedures being
followed in relation thereto until it wrote the letter of termination in February 2017, and that
less than a month had passed before it launched its counter-application. The court below
therefore concluded that there had been no undue delay on the part of the GMM, even if
one were to accept that it would have become aware of the illegality of the agreement when
the Auditor-General raised the issue with the Newcastle Municipality in November 2016.
[23] The court went on to consider the prescripts of reg 32, against the constitutional
imperatives set out in s 217 of the Constitution, namely that when an organ of state in the
national, provincial or local sphere of government procures goods or services it must do so
in accordance with a system that is fair, equitable, transparent, competitive and cost-
effective. It held that the GMM was bound by all the requirements of reg 32, which must be
read conjunctively. It found, essentially in line with the Auditor-General’s conclusions, that
the bids received by the Newcastle Municipality were only in relation to collection of debts
older than 60 days. The court below had regard to the evidence led on behalf of the GMM
that it had intended to set up its own debt collection unit in relation to debts younger than 60
days but that it was held back by budgetary constraints, resorting at the eleventh hour to
including in the agreement a provision relating to the collection of debts younger than 60
days, and that NICS ‘gladly accepted the windfall’.
5 Harnaker v Minister of the Interior 1965 (1) SA 372 (C) at 375C.
[24] The court below agreed with the Auditor-General, that permitting the NICS to receive
commission on debts younger than 60 days was not cost-effective because persons in that
category included those who would have paid anyway, without the need for debt collectors,
and that if other bidders had been allowed to bid for both, the percentage commission on
either category might have been lower. Brauckman AJ went on to conclude that there had
thus been no fair, transparent, equitable, competitive and cost-effective process and that the
inclusion of the additional 2.5 percent commission offended against reg 32 and s 217 of the
Constitution. It had regard to the submission on behalf of the GMM that the relief sought was
not constitutional in nature and found it unpersuasive. This is an aspect to which I will revert
later in this judgment. The court below did not deal at all with the provisions of reg 51.
[25] The court below considered whether to set aside the agreement between NICS and
the GMM in its entirety. It took the view that the offending part could be severed from the
good. In this regard it relied on the decision of this Court in Retail Motor Industry
Organisation and Another v Minister of Water and Environmental Affairs and Another.6
[26] The court held that it was bound to declare that part of the agreement that catered
for the collection of debts younger than 60 days unconstitutional and unenforceable. It went
on to make the following order:
‘1. That the reference to “as well as 2,5% to debt collected to customers under 60 days” contained
in clause 6.2.5 of the “contract for provision of debt management services” be declared
unconstitutional invalid unlawful and void ab initio;
2. That the defendant will not be entitled to recover any compensation/commission in respect of
the debts recovered by the plaintiff from customers under 60 days for the duration of the
agreement between plaintiff and defendant;
3. That the defendant is ordered to pay the plaintiff’s costs, including the costs consequent upon
the employment of three counsel where applicable.’
6 Retail Motor Industry Organisation and Another v Minister of Water and Environmental Affairs and Another
[2013] ZASCA 70; 2014 (3) SA 251 (SCA) at paras 46 and 47.
[27] It is against the aforesaid conclusions and resultant orders that the present appeal
and cross-appeal are directed. It was contended on behalf of the GMM that the court below
erred in holding that the clause relating to the collection of debts older than 60 days was
severable and that the agreement ought to have been set aside in its entirety. In argument
in the court below the GMM apparently had abandoned any reliance on a claim for relief
based on constitutional validity and called on the court below to disregard any references to
the unconstitutionality of the agreement where they appear in the GMM’s particulars of
claim. The GMM submitted that as a consequence, the court below was precluded from
invoking the provisions of s 172(1)(b) of the Constitution, which entitles a court, after
declaring any law or conduct to be unconstitutional and invalid, to make an order that is just
and equitable, including but not limited to limiting the retrospective effect of the declaration
of invalidity. That contention was persisted in before us. It was submitted, with reference to
this Court’s decision in Municipal Manager: Quakeni Local Municipality and Another v FV
General Trading CC,7 that the GMM’s challenge was a self-review challenge, rather than a
constitutional challenge. It was contended that the decision in Blue Nightingale Trading 397
(Pty) Ltd t/a Siyenza Group v Amathole District Municipality8 was authority for the proposition
that a failure to adhere to the prescripts of reg 32 should result merely in a declaration of
invalidity. Presumably, also in order to further counter NICS’ submissions in relation to delay
and a resort to s 172(1)(b), it was contended before us that the GMM’s case in essence was
that it had raised a collateral challenge to NICS’ ‘coercive attempts to coerce payment’.
[28] On behalf of NICS it was contended that the delay by the GMM in seeking relief in
the court below was unreasonable and ought not to have been overlooked, and for that
reason alone the claim for a review and setting aside of the agreement ought to have been
dismissed. NICS also submitted that reg 32, applied to the facts of this case, does not impact
on the validity of the agreement between the GMM and NICS, as distinct from its effect on
the agreement between the latter and the Newcastle Municipality. Furthermore, it was
asserted on behalf of NICS that the GMM’s claim, properly analysed, is based on the
7 Municipal Manager: Quakeni Local Municipality and Another v FV General Trading CC [2009] ZASCA 66;
2010 (1) SA 356 (SCA); [2009] 4 All SA 231 (SCA).
8 Blue Nightingale Trading 397 (Pty) Ltd t/a Siyenza Group v Amathole District Municipality [2015] ZAECELLC
16; [2016] 1 All SA 721 (ELC); 2017 (1) SA 172 (ECG).
principle of legality, which is essentially a constitutional challenge and that s 172 of the
Constitution comes into operation, and that in the exercise of its discretion the court below
ought to have held that NICS was entitled to payments of the amounts computed and
awarded by the arbitrator.
[29] Is the categorisation by the GMM of its challenge to the validity of the agreement as
a collateral challenge, thereby compelling adjudication justified? It will generally avail a
person to mount a collateral challenge to the validity of an administrative act where he or
she is threatened by a public authority with ‘coercive action, precisely because the legal
force of the coercive action will most often depend upon the legal validity of the
administrative act in question’.9 Classically, that is how it was formulated by this Court.
[30] In Merafong City v Anglogold Ashanti Ltd,10 the Constitutional Court was considering
an appeal from this Court, which had relied on the aforesaid formulation in denying relief to
the public authority, Merafong City. In that case the Constitutional Court was dealing with a
decision by the Minister of Water Affairs and Forestry in July 2005, which had overturned a
decision by Merafong City to levy a surcharge on water for industrial use by Anglogold
Ashanti. Merafong City had taken advice that the Minister had acted beyond her powers
and, in consequence, threatened to cut off Anglogold Ashanti’s water supply, unless it paid
the surcharge. Anglogold Ashanti paid under protest and negotiations ensued to see if an
agreement could be reached. The negotiations failed. In April 2011 Anglogold Ashanti
launched proceedings in the high court, seeking to compel Merafong City to comply with the
Minister’s ruling. Merafong raised a conditional counter-application seeking a declarator that
the Minister had acted beyond her powers. The Constitutional Court had regard to this
Court’s formulation, referred to in the preceding paragraph, in these terms:
‘Only an individual whom a public authority threatens with coercive action can [raise a collateral
challenge]; and no one outside the category. Never a public authority. This approach squeezes
collateral challenge into a rigid format – one format that neither doctrine nor practical reason appears
to warrant.’
9 See Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 at para 35.
10 Merafong City v Anglogold Ashanti Ltd [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017 (2) SA 211 (CC),
wherein the Constitutional Court had regard to that formulation.
The Constitutional Court, after exploring decided cases over the years, went on to say the
following (at para 55):
‘While reactive challenges, in the first instance, and perhaps in origin, protect private citizens from
state power, good practical sense and the call of justice indicate that they can usefully be employed
in a much wider range of circumstances. There is no practical, or conceptual, justification for
straitjacketing them to private citizens. It is readily conceivable, for instance, that an organ of state
may through legal proceedings seek unjustly to subject another organ of state to a form of coercion.
Where appropriate, that other should be able to raise a defensive or reactive challenge. Categorical
exclusions should be eschewed. A reactive challenge should be available where justice requires it
to be. That will depend, in each case, on the facts.’
(Emphasis added.)
[31] In the next paragraph the Constitutional Court said the following:
‘The permissibility of a reactive challenge by an organ of state must depend on a variety of factors,
invoked with a “pragmatic blend of logic and experience”. And – as in Bengwenyama – it would be
imprudent to pronounce any inflexible rule.’ (Citations omitted.)
[32] At para 69 of Merafong, the Constitutional Court noted that in the classical field of
operation of reactive challenges, namely, where an individual was provided a defence to
resist the enforcement of the law he or she was not confronted with before, as where the
State threatens consequences or ‘coerces’ payment, the virtue is that delay plays no role,
and a court is bound to entertain such a challenge. In my view, it is for that very reason that
the GMM strained to style its challenge a collateral or reactive challenge. However, the
Constitutional Court in relation to Merafong City, the public authority concerned, said the
following:
‘Here, Merafong was well aware of the Minister’s decision, which was specifically addressed to it.
It does not dispute that it knew that a legal challenge was immediately available to it. This means
that Merafong’s reactive challenge is of the category that necessitates scrutiny in regard to delay.’11
The Constitutional Court went on to say that delay in that context, though relevant, need not
be conclusive.12 In stating this and remitting the matter to the high court, the Constitutional
Court said that the Minister in that case had expressed the view that the reactive challenge
11 Merafong City para 72.
12 Merafong City para 77.
could be considered by the court. The high court was directed by the Constitutional Court to
consider the legality of the Minister’s decision and, if necessary, what remedy was to be
granted.
[33] In the present case I struggle to understand why the challenge by the GMM is
reactive, or collateral. In my view that characterisation has been resorted to expediently.
The GMM was not coerced, least of all by NICS. It drove the process of piggybacking on the
Newcastle Municipality’s procurement process. Years later, faced with the Auditor-General’s
interrogation of the Newcastle Municipality’s tender process and the resultant contract, it
was spurred into action and purported to terminate the contract on the basis provided by the
Auditor-General. It also complained that NICS had breached the agreement. By approaching
the high court on an urgent basis NICS only sought to preserve its contractual position to
which it had been bound by the agreement with the GMM. At that stage the only part of the
agreement considered offensive was the 2.5 percent add-on, which one will be reminded
was at the instance of Newcastle Municipality, and replicated by the GMM. It was never
suggested that NICS, in either instance, had solicited the add-on. In both the letter of
termination and in the action ultimately instituted, the GMM took the lead in its frontal attack
on the validity of the agreement. To describe that challenge as reactive is an exercise in
distortion.
[34] I now turn to deal with the true nature of the review we are here concerned with and
will then consider the question of delay in relation thereto. It is now firmly established that
self-review by organs of state are not reviews in terms of the Promotion of Administrative
Justice Act 3 of 2000 (PAJA), but rather are legality reviews.13 Unlike the control period of
180 days provided for in PAJA and a court’s discretion in extending that period, where the
interest of justice so requires, a court dealing with a legality review has no such fixed period
within which an application must be brought. In Buffalo City Metropolitan Municipality v Asla
Construction (Pty) Ltd,14 the Constitutional Court, with reference to prior decisions, and
13 See State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited [2017] ZACC 40;
2018 (2) BCLR 240 (CC); 2018 (2) SA 23 (CC) and Buffalo City Metropolitan Municipality v Asla Construction
(Pty) Limited [2019] ZACC 15; 2019 (6) BCLR 661 (CC); 2019 (4) SA 331 (CC).
14 Asla above.
comparing the discretion under PAJA to the discretion to be exercised in a legality review,
said the following in relation to when the time period starts to run:
‘[I]n both assessments the proverbial clock starts running from the date that the applicant became
aware or reasonably ought to have become aware of the action taken.’15
(Emphasis added.)
[35] The Constitutional Court went on to state the following:
‘The approach to undue delay within the context of a legality challenge necessarily involves the
exercise of a broader discretion than that traditionally applied to s 7 of PAJA. The 180-day bar in
PAJA does not play a pronounced role in the context of legality. Rather, the question is first one of
reasonableness, and then (if the delay is found to be unreasonable) whether the interests of justice
require an overlooking of that unreasonable delay.’16
At para 51 the Constitutional Court explained that an assessment of the reasonableness of
the delay must involve, amongst others, the explanation for the delay. The entire period of
the delay must be explained. Where the delay can be explained and is justified then it is
reasonable, and the merits of the review can be considered. Where there is no explanation
for the delay, the delay will necessarily be unreasonable.
[36] In Asla, the Constitutional Court taught that even if the unreasonableness of the
delay has been established, it cannot be evaluated in a vacuum. The next leg of the test is
to see if it ought to be overlooked. It went on to state the following:
‘Courts have the power in a legality review to refuse an application where there is an undue delay in
initiating proceedings or discretion to overlook the delay. There must however be a basis for a court
to exercise its discretion to overlook the delay. That basis must be gleaned from the facts made
available or objectively available factors.’17 (Citations omitted.)
[37] The Constitutional Court in Asla, with reference to its prior decisions, described the
appropriate approach as follows:
‘The approach to overlooking a delay in a legality review is flexible. In Tasima I, Khampepe J made
reference to the “factual, multi-factor, context-sensitive framework” expounded in Khumalo. This
15 At para 49.
16 At para 50.
17 At para 53.
entails a legal evaluation taking into account a number of factors. The first of these factors is potential
prejudice to affected parties as well as the possible consequences of setting aside the impugned
decision. The potential prejudice to affected parties and the consequences of declaring conduct
unlawful may in certain circumstances be ameliorated by this court’s power to grant a just and
equitable remedy and this ought to be taken into account.’18 (Citations omitted.)
[38] Theron J, in Asla set out another factor to be taken into account in considering
whether to overlook delay, namely the nature of the impugned decision. She went on to
state the following:
‘This, in essence, requires a consideration of the merits of the legal challenge against that decision.’19
In the next paragraph she expounded on it as follows:
‘This court has made plain that even within the context of PAJA, the extent and nature of the deviation
from constitutional prescripts directly impacts upon an application for condonation in terms of s 7 of
PAJA. In the context of legality review, in Khumalo, Skweyiya J . . . explained that “an additional
consideration in overlooking an unreasonable delay lies in the nature of the impugned decision and
considering the legal challenges made against that decision”.’
Theron J went on to cite, with approval, the following dictum in the decision of this Court in
South African National Roads Agency Ltd v Cape Town City:20
‘It is true that in [the Supreme Court of Appeal’s judgment in Opposition to Urban Tolling Alliance]
this court considered it important to settle the court’s jurisdiction to entertain the merits of the matter
by first having regard to the question of delay. However, it 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
dictate that the delay should be condoned. It would have to include a consideration of whether the
non-compliance with statutory prescripts was egregious.’ (Emphasis added.)
[39] In Asla, the Constitutional Court spoke thus:21
‘[T]he extent and nature of the illegality may be a crucial factor in determining the relief to be granted
when faced with a delayed review. Therefore, this court may consider, as part of assessing the delay,
the lawfulness of the contract under the principle of legality.’
18 At para 54.
19 At para 55.
20 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.
21 Asla para 58.
[40] The Constitutional Court in Asla noted yet a further factor for consideration, namely
the conduct of an applicant. In this regard it pointed out, as our courts have done repeatedly
in the past, that a much higher standard is required of organs of state. On this aspect it cited
the following dictum in MEC for Health, Eastern Cape and Another v Kirland Investments
(Pty) Ltd t/a Eye and Laser Institute:22
‘[T]here is a higher duty on the state to respect the law, to fulfil procedural requirements and to tread
respectfully when dealing with rights. Government is not an indigent or bewildered litigant, adrift on
a sea of litigious uncertainty, to whom the courts must extend a procedure-circumventing lifeline.
It is the Constitution’s primary agent. It must do right, and it must do it properly.’
In Merafong,23 it was said that it is the State’s duty to rectify unlawful decisions.
[41] Finally, with reference to its decision in State Information Technology Agency SOC
Limited v Gijima Holdings (Pty) Limited,24 where it was held that even where there was no
basis to overlook an unreasonable delay the court is nevertheless compelled to declare the
State’s conduct unlawful, because s 172 (1)(a) of the Constitution enjoins a court to declare
invalid any law or conduct that it finds to be inconsistent with the Constitution,25 the
Constitutional Court in Asla recognised the tension between the delay rules and the
injunction to declare conduct unlawful that conflicts with the Constitution. The Constitutional
Court in Asla reflected on a long line of cases that held that the State must apply timeously
to courts and the implication in Gijima that time hurdles must yield to that injunction. On this
aspect the Constitutional Court in Asla said the following:
‘The Gijima principle should thus be interpreted narrowly and restrictively so that the valuable
rationale behind the rules on delay are not undermined. At the same time, this is not a matter in
which the Gijima principle can be ignored and thus impliedly overruled. So the injunction it creates –
to declare invalid that which is indisputably and clearly inconsistent with the Constitution – must be
followed where applicable.’26
22 MEC for Health, Province of Eastern Cape NO and Another v Kirland Investments (Pty) Ltd t/a Eye & Laser
Institute [2013] ZASCA 58; 2014 (3) SA 219 (SCA) para 82.
23 Merafong para 61.
24 2018 (2) SA 23 (CC) [2017] ZACC 40.
25 Gijima para 52; and paras 63, 65 and 66 of Asla.
26 Asla para 71.
[42] In Asla the Constitutional Court went on to hold that there was no reason in that case
to overlook the delay. However, it held that the contract in the case was clearly unlawful and
declared it unconstitutional. It was common cause that the contract in that case had been
practically completed and the Constitutional Court said the following in relation to the
agreement in that case:
‘In these circumstances, justice and equity dictate that the Municipality should not benefit from its
own undue delay and in allowing the respondent to proceed to perform in terms of the contract.
I therefore make an order declaring the Reeston contract invalid, but not setting it aside so as to
preserve the rights to that the respondent might have been entitled. It should be noted that such an
award preserves rights which have already accrued but does not permit a party to obtain further
rights under the invalid agreement.’27
[43] The minority judgment in Asla (Cameron J and Froneman J with Khampepe J
concurring) chose another route, reaching the same practical result. The minority considered
that although the cases in which a public authority’s delay in bringing self-review is so
prodigiously and lamentably inexcusable are rare, they exist, and thought the case before
them was one such instance. The minority postulated that in such a case there was no public
interest or constitutional necessity for pronouncing on the validity of what was being
challenged. The minority pointed to academic criticism against Gijima for having selected
legality as the pathway for public authority self-review. The minority took the view that
drawing a distinction between PAJA and legality self-review promoted bifurcation. They
considered that Gijima warranted re-consideration because it departed from earlier
decisions. It accepted that the case before it was not the case to do so, not least of all
because it did not have the benefit of submissions in that regard.28
[44] The minority in Asla recognised the tension created by prior decisions, where despite
not overlooking delay they had sought to ‘impose a square on [a] circle’ by nevertheless
inquiring into the legality of the conduct by the public authority and granting a deserving
subject just and equitable relief, as was done by the majority. They noted that where there
was no delay a declaration of unlawfulness should invariably be made – it was the default
27 At para 105.
28 At paras 109 and 112.
position that accords with the principle of legality. It was an affirmation that the State was
complying with its duty to correct suspected unlawful decisions, expeditiously and diligently.
The minority described this as a win-win for the rule of law.29
[45] The minority saw the delay rule at common law as serving the public interest in the
certainty and finality of decision-making. The minority said the following:
‘It is an opportunity for the state to demonstrate that its self-review seeks to promote open,
responsive and accountable government rather than the self-interest of state officials seeking to
evade the consequences of their prior decision.’30 (Emphasis added.)
[46] The minority accepted that even where a delay was found to be unreasonable,
according to precedent, our courts retained a discretion to overlook the delay provided that
it was in the interests of justice to do so. This evaluation was done with reference to the
effect of the delay on the parties and the nature of the impugned decision. It explained how
it differed from the majority as follows:
‘We suggest an alternative route. This is that, in the absence of adequate explanation for
unreasonable delay, courts should not intervene to inquire into a final and determinative holding into
unlawfulness, unless the seriousness of the unlawfulness at issue warrants overlooking the manifest
deficiencies in the state actor’s case.’31 (Emphasis added.)
The minority went on to hold that on the facts before the Constitutional Court it was not in
the interests of justice to entertain the self-review. The minority stated that ‘resorting to
s 172(1)(a) is not necessary to arrive at a just outcome’.32 The following passage of the
minority judgment, on the path to that conclusion bears repeating:
‘When determining the unreasonableness of the delay and exercising its discretion whether to allow
consideration of the review, the court must balance the seriousness of the possible illegality with the
extent and unreasonableness of the delay. In the circumstances of this case, the delay is sufficiently
more inexcusable than the possible illegality is egregious, and the balance tips against this Court’s
intervention.’33
29 At para 118.
30 At para 120.
31 At para 127.
32 At para 149.
33 At para 147.
The minority agreed that it would be ‘grossly unjust’ to deprive the respondent in that case
of its contractual bargain and to leave it to an enrichment claim, that the municipality in that
case had submitted must suffice.34 I pause to note that the same claim was made by the
GMM in the present case.
[47] Appreciating that our law on self-review has become somewhat encrusted, it would
nevertheless be presumptious of us to become embroiled in the differences between the
majority and minority judgments in Asla. Our courts might, in time, after adjudicating a string
of cases with various permutations streamline an approach to self-review, or the legislature
might intervene, in a constitutionally compliant manner, to cover all forms of review, including
those that pertain to the executive and provide for how delay is to impact on such reviews.
The Constitutional Court might, in time, revisit prior decisions. An aspect however, that is
of immediate concern, noted at the commencement of this judgment, is that self-review is
now a burgeoning and troubling phenomenon. As recorded by the Constitutional Court in
Asla, corruption and maladministration are inconsistent with the rule of law and are the
antithesis of open, accountable and democratic government.35 The functionaries involved
are almost never subject to scrutiny and sanctions and in some cases falsely assume the
moral highground. The problem, as the cases demonstrate, is that corrective action, by way
of self-review, is usually sought a considerable time after an impugned decision was made
and disciplinary steps against those concerned might face time problems. However, if the
maladministration or corruption is discovered late by conscientious officials seeking to take
corrective and appropriate action, courts might insist in the future that public authorities
seeking time indulgences set out the steps they took in relation to the misconduct by errant
officials, that resulted in the need for corrective action, including, but not limited to disciplinary
actions, and where appropriate, criminal proceedings. All the more so, if the corruption or
maladministration was hidden from disclosure by inept or corrupt officials. If a service
provider was complicit then questions might be asked about what steps were taken by the
public authority in relation to such complicity. Beyond the courts, these aspects might even
be catered for by legislation. We must all of us, in every branch of the State and civil society,
34 At para 148.
35 At para 96.
make every effort to protect public monies and ensure that our country’s necessary
developmental goals as envisaged by the Constitution, in the interest of all our people are
met.36 However, for present purposes we are bound to follow the rules dictated by the
majority in Asla. It is to that task that I now turn.
[48] How long was the delay in the present case and was it unreasonable? First, one must
determine when the clock started running and how far the delay extended. In this case, as
in other cases, the allied issue of the higher standard of conduct that can be expected of
state officials already at this stage arises, which invites scrutiny of the conduct of the officials
concerned. In the present case alert and constitutionally conscientious officials would have
been intent on ensuring that the constitutional procurement imperatives and the
requirements of reg 32 were met. After all, it will be recalled that already in July 2015 the
request to piggyback on the Newcastle Municipality bid and contract, relying expressly on
the provisions of reg 32, was made. The underlying documents were sought and provided
during August 2015. From the GMM’s presently asserted perspective of the flaws in the
agreement with NICS, for failure to meet constitutional imperatives and the requirements of
regs 32 and 51, supported by the views of the Auditor-General, the evidence led during the
arbitration, the findings of the arbitrator and the evidence adduced during the trial in the court
below, the conclusion is ineluctible, that the most cursory scrutiny of the documents received
from the Newcastle Municipality would have revealed that the agreement was of
questionable validity. At that early stage, before the agreement in question was concluded,
the documents would have revealed to the GMM that in respect of the agreement as a whole
the requirements of reg 32(a) to (c), set out in para 8 above, and the applicable constitutional
imperatives, had not been met. The GMM ought reasonably to have known or have been
aware from inception, at the time that it received the documents, and certainly at the time of
the conclusion of the agreement in September 2015 that the agreement was of questionable
validity.
36 At para 99 of Asla the following appears:
‘The important principle at play in this matter is how this court manages complex institutional settings of
corruption and maladministration, particularly at local government level and where the organ of state has not
taken the court into its confidence.’
[49] In the present case the GMM would have seen that the Newcastle Municipality had
included in the agreement the add-on in relation to debts younger than 60 days, without
having called for submisions in regard thereto in the invitation to tender. It ought to have
done its own calculations, which would have demonstrated that the add-on was not within
statutory permissable amendments, as conceded by Ms Haripersad. A basic check would
have revealed that, in any event, the Newcastle Municipality’s officials had not tabled the
intended amendment before the council as required by s 116(3) of the LGMFMA, referred to
in para 20 above. Scrutiny of the Newcastle Municipality bid and contract would have brought
home to it the many flaws it now complains about, which the Auditor-General red-flagged.
It would have been abundantly clear to the GMM that constitutional imperatives in relation to
procurement were not being met and that the applicable regulations were being flouted.
The alarm bells for the GMM ought to have started ringing even before it concluded the
agreement with NICS. At the latest the clock started running when its agreement with NICS
was concluded. Moreover, early on in the execution of the agreement the GMM would have
experienced the issues identified later by the arbitrator, namely how cost-inefficient it all was,
and how one could not determine whether payments were made as a result of intervention
by NICS. That too ought to have spurred it into better enquiry of the propriety of the
agreement. The court below erred in having regard only to the time from which the Auditor-
General raised the queries with the Newcastle Municiplaity or shortly thereafter.
[50] In addition, when it wrote the letter of termination, approximately 17 months after the
effective date, the GMM was concerned, certainly as far as the question of legality was
concerned, only with the question of the 2.5 percent add-on commission. This is clear from
what is set out in para 13 above. Approximately 18 months after the effective date, the
counter-application by GMM referrred to above was launched. That was interrupted by the
settlement in respect of the application by NICS, which was made an order of court.
The parties then went to arbitration and during that process accepted that the arbitrator’s
jurisdiction did not extend to the question of a legality challenge. When assessing the delay
and moral culpability in relation thereto, sight should not be lost of the tender by the GMM,
albeit in unacceptable form, referred to by the arbitrator in his award, in respect of both
categories of debts.
[51] The arbitration process was further extended by the appeal to an arbitration appeal
panel. However, during the arbitration proceedings, as stated above, on 21 June 2017,
approximately 22 months after the effective date the GMM instituted the action culminating
in the present appeal. When the GMM was met with a special plea of lis pendens it only then
withdrew its counter-application. However, the GMM was ordered to pay the costs incurred
in relation to the special plea, including the costs of two counsel, limited to the time up to the
date of delivery of the notice of withdrawal of the counter-application. By the time the trial
started in the court below the contract period had expired.
[52] Mr Mokgatsi, the erstwhile Chief Financial Officer of the GMM, when being led at the
trial in the court below, was asked when, after the conclusion of the agreement with NICS,
the GMM first considered there might be a problem with the validity of the agreement. His
response was not to address that question, but rather to speak to the failure by NICS to meet
contract ‘deliverables’. He said there had been ‘a problem with the execution of what was
contained in the agreement’. Much of what followed afterwards was by way of leading
questions by counsel representing the GMM, relating to the events set out above. Effectively,
there was no explanation for the delay. Little surprise then that condonation is not dealt with
at all in the heads of argument on behalf of the GMM. Counsel appear to have been content
to rest on the contention that the review in question was a collateral challenge. By any
measure there was undue and unreasonable delay, both in initiating and finalising review
proceedings. Should it be overlooked? It is to that issue that I now turn.
[53] In this assessment, as appears from what is set out above, the merits of the matter,
including the degree of non-compliance with statutory prescripts must feature. In the present
case there can, in my view, be no doubt, especially in relation to the 2.5 percent add-on that
there was non-compliance by the Newcastle Municipality with reg 32 and that the non-
compliance was egregious. There had been no competitive bidding process in relation
thereto. No thought was given to whether there were demonstrable discounts or benefits for
the Newcastle Municipality. All the indications were to the contrary. It could rightly be
expected that a substantial, if not the greater percentage of consumers, would pay their
accounts within the first 60 day period, as noted by the arbitrator and recognised by the
Auditor-General. In relation to the bid as a whole and the resultant agreement no thought
appears to have been given to how recovery of revenue would or could be connected to
efforts made or steps taken by the service provider. There was no cap placed on the
commission to be earned. Therefore, the prescripts of both reg 32 and reg 51 were not even
close to being adhered to. In respect of the tender itself it is necessary to record at this stage
that there was no indication at all that NICS was remiss in any way in either not bidding in
the form invited or insisting on particular contractual provisions. However, in respect of the
add-on it could not have been lost on NICS that it was receiving preferential treatment, as
opposed to other bidders, and it was not being asked to revisit the commission on which it
had put in a bid. It was more than a windfall that it was glad to accept. That unwarranted
benefit was repeated in the GMM agreement. As the computation by the arbitrator proves,
the commission on the under 60 day period was especially lucrative, earning NICS
approximately R1 million more than it did on the over 60 day revenue. It bears repeating that
the total earned in relation to debts younger than 60 days amounted to more than R23 million
based on a fraction of the commission in relation to debts older than 60 days. By any
measure this is startling. To add insult to consumer injury, payments by the GMM’s bulk
consumers were included in the computation of what was earned by NICS. There is
eveything fundamentally wrong with all of this. This will be borne in mind when an order is
made at the end of this judgment.
[54] There is no merit to the submissions on behalf of NICS that the flaws attendant upon
the Newcastle Municipality bid process and the resultant agreement did not translate into a
flawed agreement between NICS and the GMM. One cannot build on such a flawed
foundation. There was a duty on the GMM to satisfy itself that the bid process was in
accordance with constitutional norms and in line with statutory prescripts. All the more so
when the documentation was sought, ostensibly to do just that. As recorded by the arbitrator
the GMM did not do its own needs analysis. It accepted unthinkingly that it should replicate
the Newcastle Municipality agreement and did not concern itself with constitutional
imperatives or statutory prescripts. If anything, it compounded Newcastle Municipality’s
many errors.
[55] As to the conduct of the GMM itself, it is necessary to repeat that it is clear that there
was a most serious and egregious breach by its officials of their constitutional duties. There
was no concern shown for good governance, or what was in the best interests of its customer
base. There was, at source, no scrutiny to see whether any of the material prescripts of the
applicable regulations were met. No consideration was given to the constitutional imperatives
of fair, equitable, transparent, competitive and cost-effective procurement of services. It was
only spurred into action with the threat of the Auditor-General looming. And even then it
embarked on a protracted litigation course with concomitant costs at public expense. It must
have occurred to its legal representatives that the question of legality was the overarching
anterior question. Yet, the counter-application remained in place while the GMM continued
to press on with the arbitration process before instituting action in the court below. The GMM
was accordingly made to bear the costs of the special plea because it had left its counter-
application in abeyance. Before us, as in the court below the GMM was represented by two
senior counsel and by one junior counsel. All of this at extra cost to ratepayers and other
customers.
[56] There was a strange irony in the submissions by the GMM, that it was egregious to
have the agreement in question remain in stead, at great cost to the public purse. There was
ostensible righteous indignation where there was no actual righteousness on the part of the
GMM’s office bearers. The contrary is true. It is as if they were in denial of how all of this
came to pass. The submission that NICS could pursue its rights by way of an enrichment
action, when seen against the background set out above is equally difficult to understand,
especially, as it would involve further litigation with attendant costs. That too against the
finding by the arbitrator as to what could and could not be established. To borrow from the
words of Theron J in Asla, the Municipality had a flippant attitude towards its obligations
under the Constitution that reeked of impropriety.37 The words of the minority are equally
applicable. The minority judgment described the attitude and conduct of the Municipality in
that case as follows: ‘The Municipality’s hands are thoroughly smudged and grimy.’38
[57] As to prejudice, there is of course prejudice to the public purse when remuneration
is agreed without regard to efficiencies and costs savings and when it is open ended and
37 At para 98.
38 At para 144.
there are no means of measuring effort against results. There is also prejudice to a service
provider when it has performed what appears to be extensive services without remuneration.
In Natyawa v Makana Municipality,39 the Constitutional Court pointed out that nullification of
an administrative decision long after it was taken may be ameliorated by the benefits of a
wide remedial power to grant a just and equitable remedy in terms of s 172(1)(b). The same
applies to self-review.
[58] As in Asla there is, in the present case, no reason to overlook the delay. But, as in
Asla, the agreement in the present case is clearly unlawful and there is a duty to declare it
so. There is no merit to the surprising submission on behalf of the GMM that the present
case is one that is simply a legality challenge without constitutional overtones. The complete
answer is to be found in Asla. I can do no better than to quote the relevant passages:
‘There is a clear basis for jurisdiction as the matter concerns s 217 of the Constitution. It deals with
procurement by an organ of state, judicial review of a decision by an organ of state and the question
of a just and equitable remedy in terms of s 172 (1)(b) of the Constitution. Lawful procurement is
patently a constitutional issue.
In this court, the Municipality relies on a legality review. By its nature, legality review raises a
constitutional question. It is founded upon the rule of law, which is a founding value of our
Constitution.’40 (Citations omitted.)
The abandonment of reliance on constitutional invalidity by the GMM in argument in the court
below was opportunistic and expedient and designed to obviate the need for a just and
equitable order in terms of s 172(1)(b) of the Constitution, including relief to be afforded to
NICS. The abandonment could not transform a case that was quintessentially constitutional
into one which was not. I turn hereafter to deal with the court’s powers in terms of s 172(1)(b)
of the Constitution.
[59] In Gijima the Constitutional Court described a court’s power in terms of s 172(1)(b)
as wide and bounded only by considerations of justice and equity.41 In that case the
Constitutional Court declared the award of the contract unlawful but with a rider that the
39 Natyawa v Makana Municipality [2019] ZACC 43 (CC) at paras 50-51.
40 At paras 35 and 36.
41 At para 53.
service provider not be divested of rights that would have accrued but for the declaration of
invalidity.42 In Electoral Commission v Mhlope & Others the Constitutional Court spoke thus:
‘Section 172(1)(b) clothes our courts with remedial powers so extensive that they ought to be able to
craft an appropriate or just remedy, even for exceptional, complex or apparently irresoluble situations.
And the operative words in the section are “any order that is just and equitable”. This means that
whatever considerations of justice and equity point to as the appropriate solution to a particular
problem, it may justifiably be used to remedy that problem. If justice and equity would best be served
or advanced by that remedy then it ought to prevail as a constitutionally sanctioned order
contemplated in s 172(1)(b).’43
[60] In Asla the majority and minority agreed that the service provider there should not be
deprived of accrued rights and made an order to that effect. In this case, in assessing a just
and equitable remedy there are several factors to consider. In this regard, the provisions of
the agreement that militate against constitutional prescripts and the applicable regulations in
the manner described above, have to be seen alongside the remarks and the findings by the
arbitrator, set out in para 18 above, which appear to be sound and which the parties in any
event, in relation to the contractual issues, agreed to be bound by. Paragraphs 53 to 57 of
the arbitartor’s award are apposite, as are his findings at paras 58 to 60 and what was stated
by the court below at para 77 of its judgment.
[61] As stated above, in the present case, NICS benefited by a calculation of commission
on all amounts paid into the Municipal accounts, regardless of whether they were connected
to NICS’ efforts to recover debt. The amounts paid into those accounts included payment
from bulk consumers from which one would ordinarily not expect defaults. There was no way,
ex post facto, of determining which amounts were paid because of efforts by NICS. In relation
to debts under 60 days amounts paid into the GMM’s account would include amounts paid
in the regular course by scrupulous consumers who were intent on paying on time. It is thus
no surprise that the amount calculated by the arbitrator on the much smaller 2.5 percent rate
is greater than the amount calculated in relation to the much higher 16.5 percent rate on
debts older than 60 days. The amounts are set out in para 17 above. In relation to debts
42 At para 54.
43 2016 (5) SA 1 at para 132.
younger than 60 days the probabilities are high that the greater part of monies paid into the
the GMM’s account was paid in the ordinary course rather than being due to the efforts of
NICS. The opposite is probably true for debts older than 60 days. Even then, there must be
some percentage due to people paying late without intervention by NICS. The amount of
close to R24 million in relation to debts under 60 days is quite staggering and, as already
alluded to above, is more than just a windfall as described by the court below. One must, of
course, bear in mind, as found by the arbitrator, that there was a range of services provided
by NICS which extended beyond debt collection. The total amount calculated by the
arbitrator as being due to NICS is more than R46 million. One cannot but marvel at this.
[62] One further factor to be taken into account in considering what is just and equitable
is that in relation to debts older than 60 days NICS was in no better or worse position than
other service providers. It put in a bid on terms that were accepted. There is no indication
that it sought to impose any of the terms of the agreement in relation thereto. In respect of
commission on debts younger than 60 days NICS must have known it was in an unjustifiably
advantaged position in relation to other bidders. As stated earlier it had not, as a quid pro
quo, been requested to revisit its bid on debts older than 60 days that might result in a cost
benefit for the Newcastle Municipality. But then neither were any of the other bidders afforded
that opportunity. NICS was thus, in relation to the 2.5 percent add-on, complicit in the
unlawful conduct of the GMM. A message should be sent to service providers that they will
not be allowed to reap the benefits of such complicity. On the other hand, the GMM should
not be permitted because of its own unreasonable delay to unduly benefit at the expense of
NICS in respect of work done and services rendered in relation to debts older than 60 days.
[63] In my view, therefore, a just and equitable result would be to not deprive NICS of the
benefits that accrued under the agreement in relation to commission earned on debts older
than 60 days, but to do so in relation to all the commission in relation to debts younger than
60 days. For all practical purposes the result is the same as that reached by the high court,
save that we arrive at that result for very different reasons. The high court erred by not
holding that the entire agreement was invalid and not following the prescripts of Asla and in
not considering the proper application of s 172(1)(b) of the Constitution. Peculiarly, the result
would have been the same if the delay had been overlooked and the review entertained,
save that the argument might have been made that the GMM would have been entitled to
costs, which in turn might have been met with the response that the GMM‘s conduct
precluded that result. Furthermore, the result would have been the same if one had engaged
in the balancing exercise in relation to egregiousness of the invalidity in juxtaposition to the
unreasonableness of the delay, and the alternate route proposed by the minority in Asla,
referred to in para 46 above. Especially in relation to the 2.5 percent add-on. The order made
by the high court will, of course, have to be set aside and substituted in line with the
conclusions reached above. In relation to costs, each party in the court below would have
achieved a degree of success and in my view, bearing in mind the conduct of each of the
parties the best course in relation to proceedings in the court below and the appeal in this
court is to make no order as to costs. It should be borne in mind that NICS was ordered by
the court below to pay the GMM’s costs, including the costs of three counsel, where so
employed.
[64] The following order is made:
1 The appeal and cross-appeal succeed only to the extent reflected in the substituted order
set out hereafter.
2 In respect of the appeal, no order is made as to costs.
3 The order of the court below is set aside and substituted as follows:
‘(a) The contract for the provision of debt management services, concluded by the parties
during September 2015, which is the subject of this action, is declared unconstitutional
and invalid but is set aside only in relation to recovery by the defendant of the
commission of 2.5% in respect of debts younger than 60 days, so as to preserve the
accrued rights of the defendant as set out in (b) below.
(b) The defendant is thus not precluded from recovery of the commission of 16.5% on debts
older than 60 days in the amount calculated by the arbitrator, Justice Harms.
(c) No order is made as to costs.’
__________________________
M S NAVSA
ACTING DEPUTY PRESIDENT
Appearances:
For appellant:
M C Maritz SC, with him F W Botes SC and D D Swart
Instructed by:
Cronje, De Waal – Skosana Inc., Secunda
Kramer Weihmann Attorneys, Bloemfontein
For respondent:
M M Rip SC, with him C M Rip
Instructed by:
De Jager Inc., Pretoria
Jacobs Fourie 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:
7 April 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
Govan Mbeki Municipality v New Integrated Credit Solutions (Pty) Ltd (121/2020) [2021]
ZASCA 34 (7 April 2021)
Today, the Supreme Court of Appeal (SCA) upheld an appeal and cross-appeal only to the
extent reflected in the substituted order of the SCA for that of the Mpumalanga Division of the
High Court, Middelburg (the court below). No order was made as to costs.
The case concerned the validity of a debt management services agreement concluded
between the appellant, the Govan Mbeki Municipality (the GMM), and the respondent, New
Integrated Credit Solutions (Pty) Ltd (NICS). The appeal and cross-appeal were directed
against an order of the high court, in terms of which only a part of that agreement was declared
invalid, unconstitutional and void ab initio. The GMM sought to have the entire agreement
declared invalid, whilst NICS contended that the entire agreement was valid and enforceable.
The SCA, notably, made the point that the case was part of an ever growing, and disturbing,
long line of cases where municipalities and organs of state sought to have their own decisions,
upon which contracts with service providers were predicated, reviewed and overturned, for
want of legality, more often than not after the contracts had run their course and services had
been rendered thereunder, and after having failed in their duty to ensure that they complied
with constitutional norms and statutory prescripts. The background to the appeal is set out in
brief hereafter.
During 2014, the Newcastle Municipality issued a tender notice that invited bids from service
providers for debt management services. It was made clear that tenders were invited only in
respect of the management of debts older than 60 days and the contract duration was 36
months. On 30 April 2015, a written agreement was concluded between the Newcastle
Municipality and NICS for the provision of debt management services. The agreement,
notably, included a clause that NICS was entitled to commission of 2.5 percent on amounts
collected on debts younger than 60 days.
On 12 September 2015, the GMM and NICS concluded a written agreement for the provision
of debt management services for a period of three years, until 31 August 2018 – from the
effective date, 1 September 2015. It essentially adopted the Newcastle Municipality’s contract
regime. The GMM acted in terms of reg 32 of the Municipal Supply Chain Management
Regulations (the Regulations), whereby the GMM procured goods or services under a contract
secured by another organ of state. Notably, the remuneration for the provision of the debt
management services set out in the agreement between the GMM and NICS was in identical
terms to the agreement between the Newcastle Municipality and NICS, namely commission
of 16.5 percent of collected debts exceeding 60 days and 2.5 percent of collected debts
younger than 60 days.
In February 2017, the GMM purported to terminate its agreement with NICS by reliance on s
217 of the Constitution, on reg 32, and on the allegation that NICS had failed to fulfil its
contractual obligations. Notably, it asserted that the clause in the agreement with regard to
commission of 2.5 percent on amounts collected on debts younger than 60 days was not
subjected to a competitive bidding process provided for in reg 32(1)(a) of the Regulations. The
GMM professed ignorance of the Newcastle Municipality’s failure to adhere to these statutory
prescripts. On 1 March 2017, NICS approached the high court for urgent relief, seeking an
interdict against the purported cancellation. On 6 March 2017, the GMM launched a
conditional counter-application for an order that the contract for the provision for debt
management services entered into on 12 September 2015 be declared unconstitutional,
invalid and unlawful, and void ab initio. The urgent application by NICS was settled by
agreement between the parties, on the basis that the issues raised be referred to arbitration.
The counter-application remained in abeyance, until it was eventually withdrawn. The
arbitration proceedings were finalised, and an award, dated 23 August 2017, was made in
favour of NICS. The arbitrator held that the GMM’s purported cancellation of the agreement
on the basis of the alleged breaches of the agreement in question was invalid and of no force
and effect. The arbitrator held that he had jurisdiction to deal with the termination of the
agreement, other than on the basis of its constitutional validity.
On 21 June 2017, approximately 22 months after the effective date, whilst the arbitration was
being conducted, the GMM instituted the action in the court below, seeking a declarator that
the entire agreement between it and NICS be declared unconstitutional, invalid, unlawful and
void ab initio; alternatively, that the part of the agreement relating to the additional 2.5 percent
for managing debts younger than 60 days be reviewed, declared unconstitutional and set
aside, because it had not been subject to a competitive bidding process and there were no
demonstrable discounts or benefits in respect thereof. The stated bases for the action were
that the agreement was in conflict with s 217 of the Constitution, reg 32, reg 51, and the
provisions of the Local Government Municipal Finance Management Act 56 of 2013
(LGMFMA), including s 116(3). The GMM stated that the delay in seeking relief was justified
and prayed that it be overlooked. NICS, in defending the action, insisted that the delay in
seeking relief, which essentially was a legality review, was inordinate and that it should not be
entertained and that the claim by the GMM be dismissed with costs. In relation to the merits
of the legality challenge, NICS denied that the agreement was invalid and that it did not comply
with s 217 of the Constitution, or was in contravention of any of the applicable statutory
prescripts. In the alternative, NICS pleaded that in the event that the court held that it was
compelled to declare the contract invalid, justice and equity dictated that the court preserve
the rights already accrued by NICS. The trial in the court below commenced on 4 November
2019, more than a full year after the contract period had run its course.
On appeal, the SCA found, firstly, that the challenge by the GMM was not reactive or collateral,
and that this characterisation had been resorted to by the GMM expediently. The SCA held
that there was undue and unreasonable delay, both in initiating and finalising the review
proceedings, and that there was, effectively, no explanation for the delay. This, on the grounds
that the GMM ought reasonably to have known or have been aware from inception, at the time
that it received requested documents from the Newcastle Municipality, and certainly at the
time of the conclusion of the agreement in September 2015, that the agreement was of
questionable validity. The SCA held, further, that there was no reason to overlook the delay.
This, on the grounds that the prescripts of both reg 32 and reg 51 were not adhered to and no
consideration was given to the constitutional imperatives of fair, equitable, transparent,
competitive and cost-effective procurement of services. Moreover, it was clear that there was
a most serious and egregious breach by the GMM of its constitutional duties. Notwithstanding,
in accordance with precedent, the SCA held that the agreement in this case was clearly
unlawful and there was a duty to declare it so. Nevertheless, a just and equitable order in
terms of s 172(1)(b) of the Constitution, including relief to be afforded to NICS, was
appropriate. The SCA held that the GMM should not be permitted, because of its own
unreasonable delay, to unduly benefit at the expense of NICS in respect of work done and
services rendered in relation to debts older than 60 days. Accordingly, the SCA held that a
just and equitable result would be to not deprive NICS of the benefits that accrued under the
agreement in relation to commission earned on debts older than 60 days, but to do so in
relation to all the commission in relation to debts younger than 60 days.
~~~~ends~~~~ |
533 | non-electoral | 2016 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 050/2016
In the matters between:
DOBSA SERVICES CC
APPELLANT
and
DLAMINI ADVISORY SERVICES (PTY) LTD
FIRST RESPONDENT
ZOLILE ABEL DLAMINI
SECOND RESPONDENT
DLAMINI ADVISORY SERVICES (PTY) LTD
FIRST APPELLANT
ZOLILE ABEL DLAMINI
SECOND APPELLANT
and
DOBSA SERVICES CC
RESPONDENT
Neutral citation: Dobsa v Dlamini Advisory Services; Dlamini Advisory Services
v Dobsa (050/2016) [2016] ZASCA 131 (28 September 2016)
Coram:
Bosielo, Petse, Mathopo and Mocumie JJA and Schoeman AJA
Heard:
6 September 2016
Delivered:
28 September 2016
Summary: Civil Procedure ─ Costs ─ Award of costs is at the discretion of the court of
first instance ─ Power of appellate court to interfere with the exercise of such judicial
discretion circumscribed.
ORDER
On appeal from: Gauteng Local Division of the High Court, Johannesburg (Reyneke
AJ sitting as court of first instance):
Both appeals are dismissed with costs.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Petse JA (Bosielo, Mathopo and Mocumie JJA and Schoeman AJA concurring):
[1] These two appeals are concerned with two costs orders granted in the Gauteng
Local Division of the High Court, Johannesburg (Reyneke AJ) in two interrelated
applications. The appellant in the first appeal is Dobsa Services CC (Dobsa), a close
corporation which carries on business as, inter alia, an auditing and accounting
corporation in Braamfontein, Johannesburg. The first respondent is Dlamini Advisory
Services (Pty) Limited (the company) which is a private company conducting business
as business advisory and consulting services provider in Parktown of which the second
respondent, Mr Zolile Abel Dlamini (Dlamini), is the managing director. In the second
appeal the company and Dlamini are the appellants and Dobsa is the respondent. For
the sake of convenience, I will henceforth refer to the company and Dlamini collectively
as the company unless the context dictates otherwise.
[2] In the first appeal the court a quo awarded costs against Dobsa which had
unsuccessfully opposed an application for an interdict to stay enforcement of the
judgment granted by default in its favour. The company against which the default
judgment had been granted sought an order staying the enforcement of such judgment
pending the outcome of an application to rescind the default judgment. The second
appeal raises the question whether the company which had applied for rescission of the
default judgment sought an indulgence from the court a quo and must therefore bear
the costs of such application even though it was successful in its application as the
court a quo found. These issues arise against the following backdrop.
[3] During November and December 2010 Dobsa, on the one hand, and the
company and Dlamini as the administrator of Bakubung Ba-Ratheo Traditional
Community (Bakubung Ba-Ratheo), on the other hand, concluded a written contract in
terms of which Dobsa undertook to render certain forensic investigation services to
Bakubung Ba-Ratheo on behalf of the company and Dlamini at an agreed remuneration
rate of R1 350 per hour subject to the terms and conditions spelt out in the parties’
written contract. Initially all had proceeded well between the parties. It appears that
some work was done and Dobsa was paid for such work.
[4] During March to May 2011, a dispute arose between the parties in relation to
payments that Dobsa claimed were overdue. So as to induce the company to settle the
alleged overdue amounts, Dobsa withheld its forensic report and insisted that it would
not release it to the company without payment upfront. On its part, the company
asserted that it would not be possible to pay without it being provided with the forensic
report first. The respective positions taken by the parties became entrenched and this
resulted in a stalemate. This led to what appears to have been an irretrievable
breakdown of the parties’ contractual relationship.
[5] As indicated, Dobsa asserted that there were further moneys owing to it. On
6 June 2013 it instituted an action against the company in the Gauteng Local Division of
the High Court, Johannesburg comprising four claims (styled Claims A, B, C and D).
Claim A was for payment of R191 085.87 being the balance of the amount owing in
respect of services rendered in January 2011. Claim B was for payment of R213 034.10
in respect of services rendered in February 2011. Claim C was for payment of
R253 360 in respect of services rendered in March 2011. And Claim D was for payment
of R467 856 which represented the amount that the appellant alleged it would have
earned, but for the respondent’s repudiation, had the contract been allowed to run its
course, ie until May 2011.
[6] Dobsa’s summons was served on the company on 19 June 2013. Despite having
been served with the summons, the company, through inadvertence, failed to defend
the action. It bears mentioning that upon service of the summons on the company,
Dlamini transmitted it by email to his attorney with whom he had had an attorney and
client relationship for some 15 years for the latter to defend the action. It was
uncontested that the email address to which the summons was sent by Dlamini was
incorrect and therefore the summons did not reach his attorney, hence the failure to
defend the action. Upon the expiry of the dies induciae, Dobsa applied for and obtained
default judgment against the company on 1 August 2013. On 28 October 2013 Dobsa
caused to be issued a writ of execution against the company.
[7] On 23 October 2013 the company ascertained that default judgment had been
granted against it. On 29 October 2013, and unbeknown to them that a writ of execution
had already been issued on 28 October 2013, the company’s attorneys addressed a
letter to Dobsa’s attorneys proposing that they stay further action against the company
pending the outcome of a rescission application that they were instructed to launch,
stating that:
‘Given that it [appeared] that the judgment was granted . . . some three months ago, there
[could] be little prejudice to [Dobsa] in holding off.’
They went on to indicate that in the event that Dobsa was not prepared to provide an
undertaking to hold further enforcement of the judgment in abeyance, the company
would bring an urgent court application for its stay. Thereafter a series of letters were
addressed to Dobsa’s attorneys which elicited no response. In the event, no
undertaking was given by Dobsa’s attorneys. On 12 November 2013 the company
launched an application to rescind the judgment granted against it by default.
[8] But, Dobsa was unrelenting. It proceeded to instruct the sheriff to remove the
company’s goods pursuant to the attachment. Consequently, on 28 November 2013,
the company launched an urgent application for an interdict restraining Dobsa from
removing the company’s goods pursuant to the attachment effected on 26 November
2013 and ancillary relief. Dobsa opposed the application. It contested not only the issue
of urgency but also questioned the company’s bona fides in bringing such application,
contending that the application was a stratagem merely to delay and frustrate Dobsa’s
attempts to obtain satisfaction of its judgment. It is apparent from the record that Dobsa
essentially adopted the attitude that: (a) the company was indubitably indebted to it in
the amount of the judgment; (b) the rescission application was contrived and that the
company had no bona fide defence to its claim; and (c) it was entitled to enforce the
judgment that was properly granted in its favour until and unless it was rescinded.
[9] On 3 December 2013, the interdict application came before Victor J whose
judgment was delivered on 5 December 2013, granting the interdict sought. The learned
judge reserved the costs of the application for determination in the rescission
application. In the course of her judgment the learned judge made the following
observations: (a) the company had done everything possible to avoid instituting the
application; (b) it was clear that Dobsa was not amenable to accommodate the
company whilst its rescission application was pending; (c) the company had not been
wilful in failing to defend the action; (d) it appeared that the acrimony between the
parties had spilt over to their attorneys; and (e) the company had a bona fide defence to
the claim particularly in relation to the arbitration clause as contained in the parties’
written contract.
[10] In due course the application for rescission came before Reyneke AJ who, on
9 June 2014, delivered a judgment rescinding the judgment. The learned judge ordered
that the costs of the application for rescission be paid by the company (as applicants).
And that the costs of the application for the stay of the enforcement of the judgment
reserved by Victor J for determination in the application for rescission be borne by
Dobsa.
[11] The court a quo expressed similar views as those of Victor J in relation to the
conduct adopted by Dobsa. It also took note of the fact that the company had made out
a case for rescission. Apropos the costs relating to the interdict application, the court a
quo considered various judgments dealing with the interpretation of rule 49(11)1 of the
Uniform Rules of Court that are discordant. One view2 was that to the extent that rule
49(11) provides that the operation and execution of a judgment is automatically
suspended when, inter alia, an application for rescission is made it was ultra vires and
of no force and effect. The contrary view was that the rule was not ultra vires.3 The
1 Since repealed by Department of Justice and Constitutional Development Regulations, GN R317,
GG 38694, 17 April 2015, with effect from 22 May 2015. Presumably Uniform rule 49(11) was
repealed because it was inconsistent with s 18 of the Superior Courts Act 10 of 2013 which in
essence provides that the operation and execution of a decision which is the subject of an application
for leave to appeal or an appeal is suspended pending the decision of the application or appeal. An
application for rescission is not mentioned in this section.
2 See in this regard: United Reflective Converters (Pty) Ltd v Levine 1988 (4) SA 460 (W) at 463J-
464C; see also Nel v Le Roux NO & others 2006 (3) SA 56 (SE) at 59I-J.
3 Khoza & others v Body Corporate of Ella Court 2014 (2) SA 112 (GSJ); Peniel Development (Pty)
Ltd & another v Pietersen & others 2014 (2) SA 503 (GJ).
court a quo adopted the latter view. In the event, it took note of the following: (a) that the
writ was issued after the rescission application had been launched (which is factually
incorrect); (b) the company could not be faulted for resorting to litigation given Dobsa’s
unpreparedness to suspend its execution proceedings against the company despite the
pending rescission application in the face of the decisions in Khoza and Peniel. As to
the costs in relation to the rescission application, the court a quo relied on authorities
such as Meintjies NO v Administrasieraad van Sentraal-Transvaal 1980 (1) SA 283 (T);
Iveta Farms (Pty) Ltd v Murray 1976 (1) SA 939 (T) and Zarug v Parvathie NO 1962 (3)
SA 872 (D). The first two of these decisions are to the effect that in an application for
rescission of default judgment the applicant seeks an indulgence and must therefore
bear the costs reasonably incurred in opposing the application. And the latter of the
three decisions is to the effect that a party opposing a rescission application ought not
to be required to do so at their peril even if rescission is ultimately granted.
[12] Motivated by the considerations outlined above (para 9 and 11), the court a quo
made the costs orders which are now the subject of present appeals. Both parties were
aggrieved by the costs orders granted against them by Reyneke AJ. Consequently, they
sought and were granted leave to appeal against the respective costs orders to this
court. What is therefore before this court on appeal are the following orders: (a) the
order awarding costs against Dobsa in the application for an interdict staying execution;
and (b) the order awarding costs against the company in relation to the rescission
application.
[13] But counsel contended that the ambit of the appeal is much wider and that
Uniform rule 49(11) was the central issue on appeal. Thus, counsel argued, it was
necessary for this court to settle the controversy generated by the discordant judgments
mentioned earlier (para 11) by interpreting Uniform rule 49(11) so as to offer guidance
for the future. I am not persuaded that there is any justification in embarking on such a
course on the facts of this case. As already indicated, Uniform rule 49(11) has since
been repealed. And in light of the enactment of s 18 of the Superior Courts Act 10 of
2013, I am not persuaded, contrary to what counsel contended for, that the controversy
generated by Uniform rule 49(11) is likely to arise again.
[14] Accordingly, these being appeals in relation to awards of costs, it is necessary to
briefly set out the principles relating to the nature and proper exercise of the discretion
vested in a judicial officer when making an order as to costs and the circumstances in
which an appellate court can interfere with the exercise of that discretion. The discretion
of the nature under consideration in these appeals has been described as ‘a discretion
in the strict or narrow sense’.4 Accordingly, the appellate court’s power to interfere on
appeal is limited to instances where it is found that the court of first instance did not
exercise the discretion judicially, or acted upon a wrong principle, or exercised its
discretion capriciously, or did not bring its unbiased judgment to bear on the question or
did not act for substantial reasons.5 And as the Constitutional Court put it, albeit in a
different context:
‘. . . the lower court had not exercised its discretion judicially, or that it had been influenced by
wrong principles or a misdirection on the facts, or that it had reached 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.’6
That the appellate court would probably have come to a different conclusion had it sat
as a court of first instance is of no moment. The appellate court would still not be
entitled to interfere solely on that ground.7
[15] In the present appeals there was no suggestion that the learned judge in the
court a quo was not mindful of the parameters of the discretion vested in her. Counsel
for Dobsa sniped at the judgment8 of the court a quo in which the learned judge said
that Dobsa had heedlessly went ahead to issue a writ after the company had launched
its rescission application. Whilst this statement was clearly incorrect, it was not the sole
consideration that weighed in the court a quo’s mind.
[16] Before us, it was contended on behalf of the company that the court a quo
committed a misdirection or did not bring its unbiased judgment to bear on the question
4 Ganes & another v Telecom Namibia Ltd 2004 (3) SA 615 (SCA) para 21; Beinash v Wixely 1997
(3) SA 721 (SCA) at 739G-I.
5 See for eg: Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A) at 781I-782B and the
authorities therein cited; Kruger v Le Roux 1987 (1) SA 866 (A) at 871F-G; Cronje v Pelser 1967 (2)
SA 589 (A) at 592H-593C.
6 National Coalition for Gay and Lesbian Equality & others v Minister of Home Affairs & others 2000
(2) SA 1 (CC) para 11.
7 Penny v Walker 1936 AD 241 at 260; Molteno Bros v South African Railways 1936 AD 408 at 417;
Cronje v Pelser at 592H-593A.
8 Para 26.
of costs in adopting the view that the company was essentially seeking an indulgence.
To my mind, neither of the contentions advanced by Dobsa and the company can be
sustained. That an applicant in a rescission application is in essence seeking an
indulgence has often been affirmed in a number of decisions.9
[17] More importantly, in relation to Dobsa’s appeal, is the fact that both in the
application for an interdict and the application for rescission, the company explained
how it came about that default judgment was granted. Significantly, it asserted that it
had at the outset intended to defend the action and to that end had instructed attorneys
to enter an appearance to defend. But, inadvertently, the summons was sent to an
incorrect email address. This mishap was only discovered when the company was
informed of the default judgment by Dobsa on 23 October 2013. These assertions were
not and could not be seriously contested by Dobsa.
[18] Whilst Dobsa was perfectly within its rights to enforce its judgment, this does not,
however, mean that in so doing it was not at risk of an adverse costs order in the event
that its opposition to the interdict was unsuccessful as it happened. In light of the
circumstances of this case as outlined above (paras 9 and 11) its stance was not only
ill-conceived but also unreasonable. It ought to have reflected dispassionately on the
merits of the rescission application. But, lo and behold, it allowed its better judgment to
be clouded by the obdurate attitude it adopted that the company had no triable defence
to its claim. In these circumstances, it cannot be said, by any stretch of the imagination,
that the court a quo did not exercise the discretion vested in it properly.
[19] Before concluding there is another issue that requires mention. As indicated,
these appeals are essentially about the costs orders made by the court a quo. That
being so, I cannot discern why it was thought necessary to grant leave to this court as
the appeals could have been dealt with by the full court. Hence the company belatedly
attempted to have the appeals withdrawn from this court and determined in the full
court. This court has on occasions lamented the frequency with which leave is granted
9 Phillips t/a Southern Cross Optical v SA Vision Care (Pty) Ltd 2000 (2) SA 1007 (C) at 1015G-H;
Greeff v Firstrand Bank Ltd 2012 (3) SA 157 (NCK) para 49; Minnaar v Van Rooyen NO [2015]
ZASCA 114; 2016 (1) SA 117 (SCA) para 20.
to this court in respect of matters not deserving of its attention.10 The unfortunate
consequence of this tendency is that complex cases deserving of the attention of this
court wait longer for enrolment than would otherwise have been the case as they have
to compete with cases that are not.
[20] For all the aforegoing reasons, therefore, there is no basis to interfere with the
costs awards made by the court a quo. Thus, both appeals cannot succeed.
[21] In the result the following order is made:
Both appeals are dismissed with costs.
_________________
X M PETSE
JUDGE OF APPEAL
10 Shoprite Checkers (Pty) Ltd v Bumpers Schwarmas CC & others 2003 (5) SA 354 (SCA); [2003] 3
All SA 123 para 23; MTN Service Provider (Pty) Ltd v Afro Call (Pty) Ltd [2007] ZASCA 97; 2007 (6)
SA 620 (SCA) para 24.
APPEARANCES:
For the appellant in the Dobsa appeal: R Ram
(with him I Monnahela)
Instructed by:
DMS Attorneys, Sandton
Molefi Thoabala Attorneys, Bloemfontein
For the respondents:
G G M Quixley
Instructed by:
Barry Aaron & Associates, Johannesburg
Honey Inc, Bloemfontein
For the appellants in the Dlamini
Advisory Services appeal:
G G M Quixley
Instructed by:
Barry Aaron & Associates, Johannesburg
Honey Inc, Bloemfontein
For the respondent:
R Ram
(with him I Monnahela)
Instructed by:
DMS Attorneys, Sandton
Molefi Thoabala 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
28 September 2016
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Dobsa v Dlamini (20458/2014); Dlamini Advisory Services v Dobsa
(19729/2013) [2016] ZASCA 131 (28 September 2016)
MEDIA STATEMENT
The Supreme Court of Appeal today dismissed two appeals against a judgment of the Gauteng Local
Division of the High Court, Johannesburg, concerning two separate costs orders granted against the
parties separately in two interrelated applications. In the court a quo, costs were ordered against
Dobsa in its unsuccessful opposition of an application by Dlamini, for an interdict to stay execution of
the judgment granted by default in Dobsa’s favour, and the second, against Dlamini in respect of its
successful application for rescission of the default judgment. The question was whether the appellate
court had the power to interfere with the discretion vested in a judicial officer when making an order
as to costs. The Supreme Court of Appeal held that there was no suggestion that the judge a quo
was not heedful of the bounds of the discretion vested in her and thus, it could not interfere with either
costs orders. In the result both appeals were dismissed with costs.
--- ends --- |
1290 | non-electoral | 2010 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 277/08
THE CITIZEN 1978 (PTY) LIMITED
First Appellant
KEVIN KEOGH
Second Appellant
MARTIN WILLIAMS
Third Appellant
ANDREW KENNY
Fourth Appellant
and
ROBERT JOHN McBRIDE
Respondent
Neutral citation:
The Citizen v McBride (277/08) [2010] ZASCA 5 (26 February
2010)
Coram:
STREICHER, MTHIYANE, PONNAN, MHLANTLA JJA and
TSHIQI AJA
Heard:
2 NOVEMBER 2009
Delivered:
26 FEBRUARY 2010
Summary:
Defamation – amnesty in terms of s 20 of the Promotion of
National Unity and Reconciliation Act 34 of 1995 – persons to
whom amnesty had been granted in respect of an offence no longer
considered to have committed the offence.
ORDER
On appeal from: Witwatersrand Local Division (Maluleke J sitting as
court of first instance)
The following order is made:
(i)
The appeal is partially upheld.
(ii)
The appellants are ordered, jointly and severally, to pay 75%
of the respondent’s costs.
(iii)
The order of the court below is set aside and replaced with
the following order:
‘(a)
The fourth, fifth and sixth defendants are ordered, jointly and
severally, to pay to the plaintiff the sum of R150 000 together with
interest thereon at the rate of 15,5% per annum calculated 14 days from
date of service of summons to date of payment.
(b)
The seventh defendant is ordered jointly and severally with
the fourth, fifth and sixth defendants to pay to the plaintiff R100 000 of
the said sum of R150 000 in paragraph (a) above, together with interest
thereon at the rate of 15,5% per annum calculated 14 days from date of
service of summons to date of payment.
(c)
The fourth, fifth, sixth and seventh defendants are ordered
jointly and severally to pay to plaintiff the costs of suit.’
JUDGMENT
STREICHER JA: (MHLANTLA & TSHIQI JJA concurring)
[1] The respondent, Robert John McBride, succeeded against the
appellants in a defamation action instituted in the Witwatersrand Local
Division and was awarded damages in an amount of R200 000, R100 000
thereof against the first, second, third and fourth appellants jointly and
severally and R100 000 thereof against the first second and third
appellants jointly and severally. The latter was a composite award in
respect of several claims. With the leave of the court below the appellants
now appeal to this court against the whole of its judgment.
[2] The respondent’s claims were based on editorials and articles
published in The Citizen, a newspaper widely distributed throughout
South Africa and widely read by the general public. The first appellant
(fourth defendant in the court below) is the publisher and the second
appellant (the fifth defendant) is the editor of The Citizen. The third and
fourth appellants (the sixth and seventh defendants respectively) are
newspaper journalists.
[3] On 10 September 2003, under the heading ‘McBride tipped to head
Metro cops’ The Citizen reported as follows:
‘Robert McBride – former operative in the ANC’s military wing, Umkhonto
we Sizwe, who bombed a Durban bar in 1986, killing several people including three
women – could be heading to the Ekurhuleni Metro as Chief of Police.
The Citizen learnt from a reliable source inside the Metro that McBride`s name
was mentioned as a possible replacement for Mongezi India, the former Metro police
chief who resigned recently.
. . .
McBride, as an MK operative, was attached to a Special Operations Unit. He
served four years on death row after being convicted for the car bomb explosion at the
Magoo’s and Why Not bars near the Durban beachfront in 1986.
He was widely condemned for the attack on what was widely perceived to be a
“soft” civilian target though McBride insisted that the pub was frequented by SADF
military personnel from a nearby barracks. No soldiers were killed or injured in the
massive explosion.
Later McBride applied for and was granted amnesty for the attack by the Truth
and Reconciliation Commission (TRC) due largely to the fact that the ANC claimed it
had ordered McBride to attack the pubs, contrary to its initial denials that it was
involved in the bombing.
But as McBride was deemed to be acting on the orders of a political
organisation he qualified for amnesty.
Later he was arrested and charged with gun running in Mozambique.
He claimed that he was in fact part of an undercover investigation into gun
running out of Mozambique.
He was subsequently released and sent home.’
[4] On 11 September 2003 the following article appeared in the
Citizen of that date under the heading ‘No comment on McBride’ and the
sub-heading ‘Tipped as top cop for E Rand metropole’:
‘THE Ekurhuleni metropole on the East Rand was noncommittal yesterday
over a newspaper report that controversial Foreign Affairs official Robert McBride
could be their next Metro Police Chief.
McBride, currently director at the Department of Foreign Affairs and head of
consular services, was sentenced to death during the apartheid era for his role in the
bombing of a Durban beach-front bar.
The sentence was later commuted. The Truth and Reconciliation Commission
also granted him amnesty.’
[5] The respondent did not complain about these articles but based his
claim on two editorials and five articles that were published in The
Citizen during the period 11 September 2003 to 30 October 2003. The
first editorial published on 11 September 2003 under the heading ‘Here
comes McBride’ read as follows:
‘ROBERT McBride’s candidacy for the post of Ekurhuleni Metro Police Chief
is indicative of the ANC’s attitude to crime.
They can’t be serious.
He is blatantly unsuited, unless his backers support the dubious philosophy:
set a criminal to catch a criminal.
Make no mistake, that’s what he is. The cold-blooded multiple murders which
he committed in the Magoo’s Bar bombing put him firmly in that category. Never
mind his dubious flirtation with alleged gun dealers in Mozambique.
Those who recommend him should have their heads read.
McBride is not qualified for the job.
If he is appointed it will be a slap in the face for all those crime-battered folk
on the East Rand who look to the government for protection.’
[6] Thereafter in an article written by the third appellant in response to
an invitation to take part in a radio debate about forgiveness and
published under the heading ‘Beware ambush broadcasters operating
under false pretences’ on 18 September 2003 it was stated:
‘I have no relationship with Robert McBride. It is not for me to forgive him.
But his track record as a multiple murderer and a suspect in gun dealing make him
unsuitable as a metro police chief in a country wracked by crime.
Forgiveness presupposes contrition.
McBride still thinks he did a great thing as a “soldier”, blowing up a civilian
bar.
He’s not contrite. Neither are Winnie or Boesak. They are not asking for
forgiveness.
. . .
Those who want to forgive McBride don’t have to push for him to get this
sensitive job. The two issues are separate.
In fact our comment was not about forgiveness but rather about suitability.’
[7] In response to a letter from the respondent’s attorneys demanding
an apology and claiming damages suffered as a result of defamatory
allegations in the editorial and article, The Citizen on 22 September 2003
under the heading ‘Bomber McBride to sue The Citizen’, repeated the
contents of the editorial and said:
‘McBride was found guilty of the 1986 Durban bombings in which three
civilian women were killed.
He was released in September 1992, at the same time as multiple murderer
Barend Strydom.
In 1998 he was detained in a Mozambique jail on suspicion of gun-running.
Neither his arrest nor subsequent release were fully explained.
The Citizen continues to believe he is not the right person to be in charge of
any police force in a major metropole in this crime-ridden country.’
[8] The editorial and articles were commented upon by the then
president of South Africa, Thabo Mbeki, in his weekly internet
newsletter. In this newsletter he said:
‘The ANC, its allies and supporters accepted that those who had been granted
amnesty would afterwards be treated like any other citizen. There would have been no
point to the TRC process if we insisted that we would act in a manner that sought to
penalise those who had been granted amnesty.
During the last nine-and-a-half years of our liberation, both our movement and
government have respected this approach.
. . .
I do not know whether Mr McBride was ever or is interested to be Chief of
Ekurhuleni Metropolitan Police. I do not know whether he has the competence to
serve in this capacity. What I know is that it would be fundamentally wrong that he is
denied the possibility to be appointed to any position, simply because of what he did
during our struggle for liberation for which he apologised and for which he was
granted amnesty. We will not agree that Mr McBride should be condemned for having
been a liberation fighter.
In essence what ‘The Citizen’ is suggesting is that we were wrong to have
chosen the option of the TRC. It is arguing that Nelson Mandela was mistaken when
he said so many times in the past – let bygones be bygones!’
[9] The Citizen thereupon, in an editorial published on 20 October
2003, commented as follows under the heading ‘Thabo Mbeki’s straw
man’:
‘You might think our globe-trotting leader, presiding over a party riven by conflict,
would have more important things to do than endorse bomber Robert McBride’s right
to become Ekurhuleni Metro Police Chief.
. . .
In his usual circuitous, obfuscatory language, Mbeki hints darkly at “the grave
implications of what The Citizen is seeking to achieve”.
He then wanders off down a side road of his own making, about attitudes to
the TRC and “the path of national reconciliation”.
Rubbish.
Our coverage was aimed solely at making the irrefutable point that McBride is
unsuitable to head any decent police force.
We stand by that opinion.
At his insistence, the President’s functionaries emphasise race in every sphere;
so he can spare us the lecture on national reconciliation.’
[10] The next day, being the 21 October 2003 The Citizen published an
article by the fourth appellant (‘the Kenny article’). He referred to
President Mbeki’s weekly newsletter and said:
‘At a time of public conflict within the ANC government . . . President Mbeki
devoted his weekly newsletter to attacking The Citizen for suggesting that Robert
McBride is unsuitable for high office in the police.
The three most notorious non-governmental killers of the late apartheid period
were Clive Derby-Lewis, Barend Strydom and Robert McBride.
Each was a wicked coward who obstructed the road to democracy.
Derby-Lewis, who targeted a specific political enemy, Chris Hani, is the only
one not to be freed. The other two killed innocent people.
Strydom looked his helpless victims in the eyes before he murdered them.
McBride did not even do this. He planted a bomb in a bar and slunk off, not caring
whether it killed men, women or children.
It was the act of human scum.
. . .
McBride’s bomb was planted in 1986, at a time when apartheid was clearly in
retreat and when legal avenues of resistance were opening up.
His murder of the innocent women strengthened the hand of die-hard
apartheid supporters, and had the effect of prolonging the wretched regime.
Contrary to Mbeki’s suggestion, I know of few public voices, and not that of
The Citizen, which opposed the idea of the TRC.
Court cases against the criminals of the apartheid era would have taken a
thousand years.
The TRC was well conceived. Its execution, however, was criticised for bias.
The more apartheid reformed, the greater the violence against it.
When it effectively ended in 1990, the violence reached its zenith.
There were more political murders per year from 1990 to 1994 than in any
year of apartheid.
These were mostly ignored by the TRC.
If the ANC regards Robert McBride as a hero of the struggle, it should erect a
statue of him – perhaps standing majestically over the mangled remains of he women
he slaughtered.
If he wants to serve the community, he should work among Aids orphans or
help to improve the provision of pensions to the poor.
He should most certainly not be made a policeman.’
[11] On 22 October 2003 the third appellant wrote in The Citizen of that
date, under the heading ‘Mbeki no conciliator’ that:
‘For Mbeki to project himself as a great supporter of the TRC is laughable. It’s
a ruse to whitewash McBride.
. . .
Mbeki’s support for bomber McBride is consistent with his long-held view
that any liberation force action was justified.
This unfeeling attitude doesn’t help genuine reconciliation. For example, in his
latest weekly Internet newsletter he airbrushes over the horrible reality of McBride’s
deed in murdering civilians.’
[12] In yet another editorial in The Citizen of 30 October 2003 under
the heading ‘McBride cops job’ it was said:
‘We believe we performed a civic duty on September 10 by alerting readers to the
possibility that Robert McBride could be named Ekurhuleni’s Metro Police chief.
We said he was not the right person for the job. We maintain that view, as do a
great many readers.
But obviously a decision had already been taken.
President Mbeki even devoted one of his lengthy Internet messages to
defending McBride and attacking The Citizen.
The bomber has support in high places, but that doesn’t detract from the evil
of his multiple murders, or make him a suitable policeman.
His appointment speaks volumes about the ANC’s attitude to crime.
God help Ekurhuleni.’
[13] The respondent thereupon instituted action against the appellants
for the payment of damages as a result of him having been injured in his
reputation and dignity. In respect of each of the editorials and articles he
alleged that its publication was wrongful and unlawful in that it was
understood by readers and intended to have one or more of the following
meanings:
’13.1 that the plaintiff is not suited for the position of Head of the Ekurhuleni Metro
Police Force;
13.2
that the plaintiff is a criminal;
13.3
that the plaintiff is a murderer;
13.4
that, despite the plaintiff having been a soldier and a disciplined member of
Umkhonto we Sizwe (“MK”), the former armed wing of the African National
Congress (“ANC”), he remains a criminal and a murderer;
13.5
that, despite the plaintiff having participated in the attack on the Magoo’s Bar
as part of the armed struggle waged by the ANC and MK to eradicate the system of
apartheid, he remains a criminal and a murderer;
13.6
that, despite the plaintiff having been granted amnesty in terms of section 20
of Act 34 of 1995 for, inter alia, his participation in the attack on the Magoo’s Bar, he
remains a criminal and a murderer;
13.7
that, despite the provisions of section 20(10) of Act 34 of 1995 being
applicable to the plaintiff’s conviction for his participation in, inter alia, the attack on
the Magoo’s Bar, he remains a criminal and a murderer;
13.8
that, despite the plaintiff having been absolved from all liability for, inter alia,
his participation in the attack on the Magoo’s Bar, he remains a criminal and
murderer;
13.9
that the plaintiff has made common cause, or attempted to make common
cause, with gun dealers in Mozambique;
13.10 that the plaintiff has been involved in illegal activities with gun dealers in
Mozambique;
13.11 that the plaintiff has made common cause, or attempted to make common
cause, with criminals in Mozambique;
13.12 that the plaintiff has been involved in illegal activities with criminals in
Mozambique; and
13.13 that the plaintiff is morally corrupt.’
[14] The appellants in their plea denied all the aforesaid allegations. In
the alternative they raised a plea of fair comment and alleged that the
statements in the editorials and articles were not statements of fact, but
comments concerning matters of public interest, namely the candidacy of
plaintiff for the post of Ekhurhuleni Metro Police Chief and his
unsuitability for the post; that the comments were fair and that the facts
on which the comments were based were true.
[15] In answer to a request for further particulars to identify each and
every fact which the appellants alleged to be true the appellants replied
that the facts upon which the comments were based were the following:
‘The Plaintiff is a murderer as a result of him planting a bomb in Magoo’s Bar during
1986, when several people were killed;
The Plaintiff was detained in Mozambique on alleged arms trafficking between
Mozambique and South Africa.’
[16] In summary, it is alleged by the respondent that the editorials and
articles are defamatory of him and impaired his dignity in that it is stated:
(i) that he is not suited for the position of Head of the Ekurhuleni Metro
Police Force; (ii) that he is a criminal; (iii) that he is a murderer; and (iv)
that he has been involved in illegal activities with gun dealers in
Mozambique.1 The editorials and articles clearly do contain express
statements to the effect that the respondent is not suited for the position of
Head of the Ekurhuleni Metro Police Force; that he is a criminal and that
he is a murderer. They also, by implication, contain a statement that the
respondent is morally corrupt. Each of these statements would affect the
good name and reputation of the respondent and is therefore defamatory
of him. Each of these statements is also insulting of the respondent and
would therefore have impaired his dignity.2 The defences available in
respect of defamation are also available in respect of an impairment of
dignity. I therefore do not consider it necessary to refer to both the
impairment of the respondent’s dignity and the defamation and shall
1 It is also alleged that the respondent made common cause with gun dealers in Mozambique without
classifying the gun dealers as criminal gun dealers as is done in the next paragraph but that would not
have been defamatory of the respondent.
2 See Neethling, Potgieter and Visser Law of Delict 5 ed p 321.
henceforth, in dealing with the defences raised, only refer to the aspect of
defamation.
[17] The court below held that the allegations of fact commented upon
in the editorials and articles were essentially untrue and not accurately
stated and that the defence of fair comment could for that reason not be
sustained.
[18] The court below would seem to have found that the statement that
the respondent’s ‘dubious flirtation with alleged gun dealers in
Mozambique’ amounted to a statement that the respondent was actually
involved in illegal activities with gun dealers in Mozambique. I do not
agree. Reference to the respondent’s activities in Mozambique is made in
the ‘Here comes McBride’ editorial, the ‘Bomber McBride to sue The
Citizen’ article and the ‘Beware ambush broadcasters’ article. In the
editorial it is said that the respondent is a criminal ‘never mind his
dubious flirtation with alleged gun dealers in Mozambique’; in the
‘Bomber McBride’ article the editorial is repeated and stated that in
‘1998 he was detained in a Mozambique jail on suspicion of gun-
running’; and in the ‘Beware ambush broadcasters’ it is said that ‘his
track record as a multiple murderer and a suspect in gun dealing make
him unsuitable as a metro police chief’. It is not alleged that the
respondent was actually involved in illegal activities with gun dealers in
Mozambique. It is alleged that the respondent’s flirtation with alleged
gun dealers in Mozambique is suspicious and may have been criminal but
that it is not necessary to get to the bottom of that to determine whether
he is a criminal because the murders that he committed put him firmly in
that category. In other words it is alleged that the respondent may have
been involved in criminal gun dealing in Mozambique or that there are
facts indicating that he may have been involved in criminal gun dealing in
Mozambique not that he was indeed involved in criminal gun dealing.
That allegation is itself defamatory of the respondent but that is not what
he is complaining about, possibly for good reason, such as a realisation
that the defamation could be justified on the basis of truth and public
benefit.
[19] That leaves the defamatory statements that the respondent is not
suited for the position of Head of the Ekurhuleni Metro Police Force, that
he is a criminal, a murderer and morally corrupt. The statement that the
respondent is a criminal and that he is morally corrupt derives from and
thus does not add anything to the statement that he is a murderer. It is
therefore only necessary to deal with the statements that the respondent is
not suited for the position of Head of the Ekurhuleni Metro Police Force
and that he is a murderer.
[20] The publication of a defamatory statement gives rise to a
presumption that it’s publication was wrongful and with the intention to
inflict injury. The onus is on a defendant to rebut one or other of these
presumptions on a preponderance of probabilities.3 The lawfulness of a
defamatory publication, as in the case of any other ‘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’.4 A
number of standard defences to an allegation of unlawfulness have
nevertheless developed. One such defence is the defence of fair comment
raised by the appellants. Another such defence is the defence of truth for
3 Hardaker v Phillips 2005 (4) SA 515 (SCA) para 14.
4 National Media Ltd and others v Bogoshi 1998 (4) SA 1196 (SCA) at 1204D-E.
the public benefit. The elements of the defence of fair comment are the
following:
(i)
the relevant statement must constitute comment (or opinion);
(ii)
the comment must be fair;
(iii)
the facts commented upon must be true; and
(iv)
the comment must be about a matter of public interest. 5
[21] According to the appellants’ plea the matter that was being
commented upon, which was a matter of public interest, was the
candidacy of the respondent for the post of Ekurhuleni Metro Police
Chief and his suitability for the post. The true facts upon which that
comment was based were, according to the appellants, the fact that the
respondent was ‘a murderer as a result of him planting a bomb in
Magoo’s Bar during 1986, when several people were killed’ and the fact
that the respondent ‘was detained in Mozambique on alleged arms
trafficking between Mozambique and South Africa’.
[22] In its judgment the court below summarised the facts which were
common cause as follows:
‘[2]
At all material times during 1986 plaintiff was a member of Mkhonto we
Sizwe (“MK”), a military wing of the African National Congress which was then
involved in an armed struggle for political liberation against the apartheid security
forces of the Republic of South Africa. On 14 June 1986 a unit of MK under the
leadership of the plaintiff and acting within the context of the liberation struggle as
aforesaid, carried out an attack by planting and exploding a car bomb outside the
Magoo’s Bar / Why Not Restaurant, in Durban and as a result whereof three female
patrons were killed and many other patrons were injured. Plaintiff was subsequently
arrested, charged and convicted and sentenced to death in 1987 for the three counts of
murder and 79 counts of attempted murder and other charges related to the operation.
5 Marais v Richard and another 1981 (1) SA 1157 (A) at 1167E-G.
[3] After some four years in death row, plaintiff was reprieved from the death
sentence in 1991 and on 28 September 1992 he was released from prison. Plaintiff
applied for amnesty to the TRC (Truth and Reconciliation Commission) which was
granted on 19 April 2001 in terms of section 20 of the Promotion of National Unity
and Reconciliation Act No 34 of 1995 (the TRC Act) for his conduct in the armed
struggle including the attack on the Magoo’s Bar / Why Not Restaurant which was
carried out on 14 June 1986 and for which he was convicted and sentenced to death
and subsequently reprieved.
[4] During March 1998 plaintiff was arrested and detained for six months in
Mozambique on allegations or suspicions of espionage, criminal conspiracy and
gunrunning and was subsequently released without being charged after the allegations
against him were quashed by the Supreme Court of Mozambique. At the time plaintiff
was employed as a foreign affairs representative for the National Intelligence
Coordinating Committee (NICCO) Plaintiff had travelled to Mozambique in his
private or personal capacity.’
[23] The question that arises is whether the subsequent granting of
amnesty to the respondent rendered the statement that he was a murderer
false. In terms of the Promotion of National Unity and Reconciliation Act
34 of 1995 a committee known as the Committee on Amnesty was
established to consider applications for amnesty. Amnesty could in terms
of s 20(1) be granted in respect of offences which related to ‘an act
associated with a political objective committed in the course of the
conflicts of the past in accordance with the provisions of subsections (2)
and (3)’. For example, in terms of subsection (2)(d) the offence had to be
committed by, amongst others, a member of a publicly known political
organisation or liberation movement in the course and scope of his or her
duties and within the scope of his or her express or implied authority. It
had to be directed against, amongst others, members of the security forces
of the State engaged in a political struggle against that political
organisation or liberation movement and had to be committed bona fide
in furtherance of the struggle.
[24] Sections 20(7)(a), (8) and (10) of the TRC Act provide as follows:
‘(7)(a) No person who has been granted amnesty in respect of an act, omission or
offence shall be criminally or civilly liable in respect of such act, omission or offence
and no body or organisation or the State shall be liable, and no person shall be
vicariously liable, for any such act, omission or offence.’
‘(8)
If any person –
(a)
has been charged with and is standing trial in respect of an offence constituted
by the act or omission in respect of which amnesty is granted in terms of this section;
or
(b)
has been convicted of, and is awaiting the passing of sentence in respect of, or
is in custody for the purpose of serving a sentence imposed in respect of, an offence
constituted by the act or omission in respect of which amnesty is so granted,
the criminal proceedings shall forthwith upon publication of the proclamation
referred to in subsection (6) become void or the sentence so imposed shall upon such
publication lapse and the person so in custody shall forthwith be released.’
‘(10) Where any person has been convicted of any offence constituted by an act or
omission associated with a political objective in respect of which amnesty has been
granted in terms of this Act, any entry or record of the conviction shall be deemed to
be expunged from all official documents or records and the conviction shall for all
purposes, including the application of any Act of Parliament or any other law, be
deemed not to have taken place: Provided that the Committee6 may recommend to the
authority concerned the taking of such measures as it may deem necessary for the
protection of the safety of the public.’
[25] The respondent was convicted of murder but as a result of amnesty
having been granted to him the conviction is in terms of s 20(10) to be
deemed not to have taken place and in terms of s 20(7)(a) he cannot be
held criminally or civilly liable for the offences he had committed.
6 The Committee referred to is the Committee on Amnesty.
[26] The appellants submitted that notwithstanding the granting of
amnesty the respondent was a murderer as it was a fact that he had
committed the crime of murder and that he was convicted and sentenced
to death for such crime. They tried to derive some support for this
submission from the decision of this court in Du Toit v Minister of Safety
and Security and another [2008] ZASCA 125; 2009 (1) SA 176 (SCA)
and the decision of Constitutional Court on appeal to it.7 In my view these
decisions are of no assistance to the appellants. That case dealt with the
effect of amnesty on past events namely the legal consequences that
flowed from the commission and conviction of an offence which were
complete before the date on which amnesty was granted.
[27] The epiloque to the Constitution of the Republic of South Africa
Act 200 of 1993 (the Interim Constitution) which in terms of s 232(4)
thereof is deemed to form part of the substance thereof, provided:
‘This Constitution provides a historic bridge between the past of a deeply
divided society characterised by strife, conflict, untold suffering and injustice, and a
future founded on the recognition of human rights, democracy and peaceful co-
existence and development opportunities for all South Africans, irrespective of colour,
race, class, belief or sex.
The pursuit of national unity, the well-being of all South-African citizens and
peace require reconciliation between the people of South Africa and the
reconstruction of society.
The adoption of this Constitution lays the secure foundation for the people of
South Africa to transcend the divisions and strife of the past, which generated gross
violations of human rights, the transgression of humanitarian principles in violent
conflicts and a legacy of hatred, fear, guilt and revenge.
7 Du Toit v Minister for Safety and Security of the Republic of South Africa and another [2009]
ZACC 22; 2009 (6) SA 128 (CC).
These can now be addressed on the basis that there is a need for understanding
but not for vengeance, a need for reparation but not for retaliation, a need for ubuntu
but not for victimisation.
In order to advance such reconciliation and reconstruction, amnesty shall be
granted in respect of acts, omissions and offences associated with political objectives
and committed in the course of the conflicts of the past. To this end, Parliament under
this Constitution shall adopt a law determining a firm cut-off date, which shall be a
date after 8 October 1990 and before 6 December 1993, and providing for the
mechanisms, criteria and procedures, including tribunals, if any, through which such
amnesty shall be dealt with at any time after the law has been passed.
With this Constitution and these commitments we, the people of South Africa,
open a new chapter in the history of our country.’
[28] Pursuant to its obligation in terms of the Interim Constitution
Parliament passed the Promotion of National Unity and Reconciliation
Act 34 of 1995 (‘the Act’). The provisions of the epiloque were repeated
in the preamble to the Act. The long title reads: ‘To provide for . . . the
granting of amnesty to persons who make full disclosure of all the
relevant facts relating to acts associated with a political objective
committed in the course of the conflicts of the past . . ..’
[29] According to the Shorter Oxford Dictionary amnesty means
‘forgetfulness; an intentional overlooking’ or ‘an act of oblivion, a
general overlooking or pardon of past offences by the ruling authority’. In
Azanian Peoples Organisation (Azapo) and others v President of the
Republic of South Africa and others 1996 (4) SA 671 (CC) para 35
Mahomed DP said in regard to the meaning of the word:
‘The word has no inherently fixed technical meaning. Its origin is to be found in the
Greek concept of “amnestia” and it indicates what is described by Webster’s
Dictionary as “an act of oblivion”. The degree of oblivion or obliteration must depend
on the circumstances. It can, in certain circumstances, be confined to immunity from
criminal prosecutions and in other circumstances be extended also to civil liability.
Describing the effects of amnesty in treaties concluded between belligerent parties, a
distinguished writer states:
“An amnesty is a complete forgetfulness of the past; and as the treaty of peace
is meant to put an end to every subject of discord, the amnesty should constitute its
first article. Accordingly, such is the common practice at the present day. But though
the treaty should make no mention of it, the amnesty is necessarily included in it,
from the very nature of the agreement.
Since each of the belligerents claims to have justice on his side, and since
there is no one to decide between them (Book III, § 188), the condition in which
affairs stand at the time of the treaty must be regarded as their lawful status, and if the
parties wish to make any change in it the treaty must contain an express stipulation to
that effect. Consequently all matters not mentioned in the treaty are to continue as
they happen to be at the time the treaty is concluded. This is also a result of the
promised amnesty. All the injuries caused by the war are likewise forgotten; and no
action can lie on account of those for which the treaty does not stipulate that
satisfaction shall be made; they are considered as never having happened.”’
[30] From the aforesaid it is clear that the purpose of amnesty provided
for in the Interim Constitution was to advance reconciliation and
reconstruction of our society on the basis that there is no need for
retribution or victimisation. Provision had to be made for the
reintegration into the South African society of many people who had
taken part in the armed struggle for liberation. It is, amongst other things,
to give effect to this intention that the Act was passed and that provision
was made that a person who had been granted amnesty in respect of an
offence should not be criminally or civilly liable in respect of the offence,
that any entry or record of the conviction should be deemed to be
expunged from all official documents or records and that the conviction
should for all purposes be deemed not to have taken place. I have no
doubt that the intention was not only that people to whom amnesty had
been granted should not be held criminally and civilly liable for offences
committed by them in the course of the conflicts of the past and with the
political object of liberation, but also that they should be considered not
to have committed the offences and that those offences should not be held
against them, so that they could be reintegrated into society. Without an
agreement on that basis a negotiated settlement may well not have been
possible.
[31] The intention was to close the book on human rights transgressions
of the past in order to achieve reconciliation. As was said by the
Constitutional Court in the Du Toit case in para 55:
‘[T]he primary aim of the Act was to use the closure acquired as a stepping stone to
reconciliation for the future. Amnesty was an important tool in this process and one
without which the process would not have been agreed to by all parties, and could not
have taken place.’
And in para 56:
‘The conscious decision by the legislature was that amnesty would allow people not
to be trapped in the painful past, but to be given a pardoned freedom to go forth and
contribute to society. Amnesty may forgive the past, but in South Africa it is intended
to have the inherently prospective effect of national reconciliation and nation-
building, for the past can never be undone. Only the future may be forged as desired.’
[32] In the Azapo case Didcott J referring to a basic object promoted by
the statute said:8
‘Once the truth about the iniquities of the past has been established and made known,
the book should be closed on them so that the catharsis thus engendered may divert
the energies of the nation from a preoccupation with anguish and rancour to a future
directed towards the goal which both the postscript to the Constitution and the
preamble to the statute have set by declaring in turn that
8 At 701G-I.
“. . . the pursuit of national unity, the well-being of all South African citizens and peace
require reconciliation between the people of South Africa and the reconstruction of society”’.
[33] For these reasons I am of the view that once amnesty had been
granted to the respondent he could no longer be branded a criminal and
murderer in respect of the offences in respect of which such amnesty had
been granted to him. That is not to say that the respondent’s actions and
the consequences of his actions are to be considered not to have taken
place. It is a fact that the respondent placed the bomb that killed a number
of people and it is a fact that he was convicted of the murder of those
people. The amnesty granted to the respondent could not obliterate those
facts or erase them from the historical record but had the effect that the
respondent is no longer considered to be a criminal in respect of the deeds
committed by him. The granting of amnesty was an attempt to shape the
future not to undo the past. The statement in the editorials and articles
that the respondent is a murderer is therefore false.
[34] I need not address the question whether a defence of fair comment
based on some facts which are true and others which are not true could
succeed. Counsel for the appellants did not submit that the defence of fair
comment in respect of the defamatory allegation that the respondent was
not suited for appointment as Ekurhuleni Metro Police Chief should
nevertheless succeed on the basis that although the allegation that the
respondent was a criminal and a murderer was not true, the allegation that
there were facts indicating that he may have been involved in criminal
gun dealing in Mozambique was true. It is quite understandable that they
did not do so. It is only in the first editorial, the ‘Bomber McBride’ article
(in which that editorial was repeated) and the ‘Beware ambush
broadcasters’ article that the comment is based on the allegation that the
appellant is a murderer as well as the allegation that he is a suspect in gun
dealing. In the other editorial and articles the comment is based solely on
the allegation that he is a murderer.
[35] It follows that the appellant’s pleaded defence of fair comment on a
matter of public interest, being the suitability of the respondent for
appointment as Ekurhuleni Metro Police Chief, should have been
dismissed by the court below on the ground that the facts on which the
comment was based are not true.
[36] The statement that the respondent is not suitable for appointment as
Ekurhuleni Metro Police Chief is not the only defamatory statement on
which the respondent’s action was based. The action was also based on
the allegation that the respondent is a murderer. In respect of this
defamatory allegation the appellants did not raise a defence apart from
the general denial of the respondent’s allegations. The alternative defence
of fair comment namely that the statements made in the editorials and
articles were not statements of fact but comments concerning matters of
public interest, was, for the reasons that follow, not intended to apply to
the allegation that the respondent is a murderer. First, it is not alleged that
the question whether or not he was a murderer was of public interest, the
public interest alleged is ‘the candidacy of (the respondent) for the post of
Ekurhuleni Metro Police Chief and his suitability therefor’; and second, it
is specifically stated in the respondent’s further particulars that the
alleged comments were based on the ‘true’ fact that the respondent was a
murderer.
[37] Before us counsel for the appellants nevertheless submitted that the
statement that the respondent was a murderer was not a statement of fact
but in itself constituted fair comment on the facts stated in the article that
appeared in the Citizen of 10 September 2003 ‘Mc Bride tipped to head
Metro cops’, ie on the facts that led to his conviction on several charges
of murder and attempted murder, as well as the fact that he had been
granted amnesty. Counsel for the appellants submitted that the authors of
the editorials and articles were simply expressing their opinion that
notwithstanding amnesty the respondent was a murderer. Counsel
contended that the expression of that opinion was fair. Not having
pleaded this defence and having stated expressly that it was a fact that the
respondent was a murderer, the defence of fair comment is, on the
pleadings, not open to the appellants in respect of the allegation that the
respondent is a murderer. See in this regard Golding v Torch Printing &
Publishing Co (Pty) Ltd and others 1948 (3) SA 1067 (C) at 1083 where
Ogilvie Thompson AJ said:
‘As a matter of pleading, it is my opinion essential that when the defence of fair
comment is raised the plea should, by appropriate averment, set out the essential
elements whereupon, in the light of the circumstances of the particular case, the
defence is founded.’
But the defence would in any event have failed had it been properly
raised.
[38] Whether the effect of amnesty is that a person who had been
convicted of murder is no longer a murderer is a matter on which
opinions may differ and such opinion if genuinely held and relevant may
constitute fair comment.9 The question is however whether the statement
was an expression of opinion as contended for by the appellants.
9 Marais v Richard and another 1981 (1) SA 1157 (A) at 1167F-H.
[39] The appellants submitted that it is explicit in the respondent’s
cause of action that readers of The Citizen would have understood the
assertion that he is a murderer as a comment or opinion. The respondent
did plead that the readers of The Citizen would have understood the
editorials and articles to mean that he is a murderer (i) despite him having
been a member of MK; (ii) despite him having participated in the attack
on the Magoo’s bar as part of the armed struggle waged by the ANC and
MK to eradicate the system of apartheid; and (iii) despite him having
been granted amnesty. These allegations were, however, made as an
alternative to the allegation that the editorials and articles were
understood by the readers of The Citizen to mean that the respondent is a
murderer. The question thus remains whether the allegation that the
respondent is a murderer was made as a statement of fact or amounted to
comment.
[40] In Marais v Richard and another10 this court held that in order to
determine whether an allegation is a statement of fact or an expression of
opinion, the primary question is how the ordinary reasonable reader
would have understood it. Jansen JA, who delivered the judgment, said
that whether the ordinary reasonable reader would have regarded it as a
statement of fact or an expression of opinion should depend largely on the
content of the allegation, the context in which it is used and the
circumstances known to the reader.
[41] A statement that the respondent is a murderer may be intended as a
statement of fact or may be intended as a comment based on certain facts.
Whether the ordinary reasonable reader would understand it as the one or
the other depends on all the circumstances. If made without reference,
10 At 1168G-H.
express or implied, to the facts upon which the statement is based, more
particularly the fact that amnesty had been granted to the respondent, it
will be understood as a statement of fact and not as comment.11 Absent
amnesty, it is a well known fact that the respondent is a murderer and it is
unlikely that anybody who chose to ignore amnesty would be expressing
an opinion that he is a murderer.
[42] Counsel for the appellants submitted that in the light of all the
relevant facts relating to the offences committed by the respondent
including the fact that amnesty had been granted to him which were
notorious and had been mentioned in other articles published in The
Citizen, the ordinary reasonable reader would have interpreted the
statements that the respondent is a murderer as an expression of opinion
and not a statement of fact. However, if the statement that the respondent
is a murderer was intended as an expression of opinion or a comment, it
is in the editorials and articles themselves that such an implication (either
express or implied) of the facts upon which the opinion or comment is
expressed must be found. That is so because, as stated above, whatever
the prior knowledge of the readers about the subject matter, the assertion
that the respondent is a murderer may be either a statement of fact or an
expression of opinion and unless, having regard to all the circumstances,
there is some indication express or implied in the editorials and articles
that it is the expression of an opinion or inference in respect of the
relevant facts, it would be understood by ordinary reasonable readers as a
statement of fact. Compare in this regard Telnikoff v Matusevitch [1992] 2
AC 343 (HL). That case concerned a libel action brought by Telnikoff
against Matusevitch based on a letter written by Matusevitch to a
11 See in this regard Kemsley v Foot and others [1952] 1 All ER 501 (HL) at 504H-505H referred to
with approval in Johnson v Beckett and another 1992 (1) SA 762 (A) at 780F-G and 782G.
newspaper in reaction to an article written by Telnikoff and published by
the newspaper. One of the issues to be decided was whether statements
made in the letter were statements of fact or comment and the question
arose whether regard could be had to the whole of the article, not only
the sentence from it quoted in the letter, to determine this issue. The
house of lords held that it was not permissible to do so. Lord Keith of
Kinkel said:12
‘In my opinion the letter must be considered on its own. The readers of the letter must
have included a substantial number of persons who had not read the article or who, if
they had read it, did not have its terms fully in mind. If to such persons the letter
appeared in paragraphs 6 and 7 to contain statements of fact about what the plaintiff
had written in his article, which as I have already indicated might well be the case,
then in the eyes of those persons the plaintiff would clearly be defamed. The matter
cannot turn on the likelihood or otherwise of readers of the letter having read the
article. In some cases many readers of a criticism of some subject matter may be
familiar with that subject matter but in other cases very few may be, for example
where that subject matter is a speech delivered to a limited audience. The principle
must be the same in either case.’
He added at 354B-C:
‘There can be no doubt that where the words complained of are clearly to be
recognised as comment, and the subject matter commented on is identified, then that
subject matter must be looked at to determine whether the comment is fair.’
[43] In the ‘Here comes McBride’ editorial it is stated that the
respondent committed cold blooded multiple murders. That statement is
repeated in the article ‘Bomber McBride to sue The Citizen’ and then the
author of the article added:
‘McBride was found guilty of the 1986 Durban bombings in which three civilian
women were killed.
12 At 352E-G.
He was released in September 1992, at the same time as multiple murderer Barend
Strydom.’
In the ‘Beware ambush broadcasters’ article it is said that the respondent
has a track record as a multiple murderer. In the Kenny article reference
is again made to the murders committed by the respondent and he is
unfavourably compared with Clive Derby-Lewis and Barend Strydom.
Clive Derby-Lewis was convicted of the murder of Chris Hani and
Barend Strydom was convicted of the murder of several people. In the
‘Mbeki no conciliator’ article reference is again made to ‘Mc Bride’s
deed in murdering civilians’. In the editorial ‘McBride cops job’ it is said:
‘The bomber has support in high places, but that doesn’t detract from the evil of his
multiple murders, or make him a suitable policeman.’
In none of these editorials or articles is any mention made of the fact that
amnesty had been granted to the respondent and in none of them is any
express or implied indication to be found that a comment or opinion in
respect of the effect of amnesty on the offences committed by the
respondent is being expressed. In the absence of any such indication it is
not possible to construe the statement that the respondent is a murderer
simply as an expression of an opinion on the effect of amnesty.
Moreover, in the Kenny article the respondent is classified in the same
category as Derby-Lewis and Barend Strydom both of whom had not
been granted amnesty which in itself is an indication that, far from
expressing an opinion on the effect of amnesty, the fact that amnesty had
been granted to the respondent was ignored by the author.
[44] For these reasons, had a defence of fair comment been raised in
respect of the defamatory allegation that the respondent is a murderer, it
would not have succeeded. It follows that the respondent’s action in the
court below in so far as it is based on the defamatory allegations that he is
unsuited to be appointed to the post of Ekhurhuleni Metro Police Chief
and that he is a criminal, a murderer and morally corrupt should have
succeeded whereas it should not have succeeded in respect of the
allegation that he had been involved in illegal activities with gun dealers
in Mozambique.
[45] I now turn to the question of damages. The court below awarded
R100 000 damages against the first to fourth appellants jointly and
severally in respect of the Kenny article and an additional R100 000
against the first to third appellants in respect of the other articles. It must
have done so because the Kenny article contained no reference to the
respondent’s activities in Mozambique and because the statement that the
respondent is a murderer were repeated several times over a period of
more than a month.
[46] Before us counsel for the appellants did not persist in an argument
advanced in their heads of argument that, in the event of this court finding
that the appeal in respect of the appellants’ liability should be dismissed
the court below misdirected itself in respect of its award of damages.
However, the damages awarded against the first, second and third
appellants have to be adjusted in the light of my finding that the court
below should not have found that they had made the defamatory
allegation that the respondent had been involved in illegal activities with
gun dealers in Mozambique. In my view a fair and just adjustment would
be to reduce the award against the first, second and third appellants by an
amount of R50 000.
[47] The downward adjustment of the damages awarded to the
respondent should not have any effect on the costs order made by the
court below. On appeal the fourth appellant has achieved no success. He
should therefore be liable for the respondent’s costs of appeal, but only in
respect of the claim against him. The other appellants have achieved a
measure of success in having had the damages awarded against them
reduced by R50 000. But although the damages award, which is a
composite award in respect of several claims, is reduced, their appeal is
largely unsuccessful. In this court the question whether the respondent’s
action should have succeeded in respect of the allegations in respect of
his activities in Mozambique was of relatively minor importance. Some
recognition should nevertheless be given in the costs order to the limited
success achieved by the appellants on appeal. In my view it would be fair
and just if the respondent is awarded 75% of his costs on appeal against
the appellants jointly and severally.
[48] In the result the following order is made:
(i)
The appeal is partially upheld.
(ii)
The appellants are ordered, jointly and severally, to pay 75%
of the respondent’s costs.
(iii)
The order of the court below is set aside and replaced with
the following order:
‘(a)
The fourth, fifth and sixth defendants are ordered, jointly and
severally, to pay to the plaintiff the sum of R150 000 together with
interest thereon at the rate of 15,5% per annum calculated 14 days from
date of service of summons to date of payment.
(b)
The seventh defendant is ordered jointly and severally with
the fourth, fifth and sixth defendants to pay to the plaintiff R100 000 of
the said sum of R150 000 in paragraph (a) above, together with interest
thereon at the rate of 15,5% per annum calculated 14 days from date of
service of summons to date of payment.
(c)
The fourth, fifth, sixth and seventh defendants are ordered
jointly and severally to pay to plaintiff the costs of suit.’
_________________
P E STREICHER
JUDGE OF APPEAL
MTHIYANE JA: (dissenting)
[49] I have had the benefit of reading the judgment of my colleague,
Streicher JA and regret that I am unable to agree with the reasoning and
the conclusion to which he has come. The reason, which relates to the
claim of defamation based on the statement that the plaintiff was unfit for
appointment as a Metro Police Chief because he is a murderer, is that we
differ over the proper interpretation of the relevant provisions of the
Promotion of National Unity and Reconciliation Act 34 of 1995 (‘the
TRC Act’). That difference will need to be explained more fully after
dealing with the basis for the respondent’s (plaintiff’s) claim and the
relevant legal principles. Broadly speaking however we are in agreement,
as he says in para 41 that as a matter of fact the plaintiff is a murderer.
Where we disagree is in the conclusion (in para 33) that the effect of the
provisions of the TRC Act is that he may no longer be described as such
and is no longer to be regarded as a murderer thereby rendering a
statement to that effect false and hence fatal to the defence of fair
comment advanced by the appellants (the defendants). In my view the
relevant provisions of the TRC Act under which amnesty is granted do
not have that effect. The result of our disagreement on this point is that I
would uphold the defence of fair comment and also the appeal.
[50] The statements relevant to the plaintiff’s action are contained in
two editorials and five articles published in The Citizen newspapers
between September and October 2003. In the offending statements the
authors contended that the plaintiff was not suitable for appointment as
the Head of the Ekurhuleni Metro Police Force for two reasons. First, that
he is a murderer and in consequence he is also described in the first
editorial as a criminal. The articles and editorials cite the bombing by the
plaintiff of Magoo’s bar, his conviction and sentence for murder and
attempted murder to justify their stance. Second, reference is made to the
plaintiff’s arrest and detention in Mozambique on the suspicion of gun-
running although this is clearly treated as being of less significance.
[51] The plaintiff took offence to these statements and instituted action
for defamation, alleging in his particulars of claim that the said
allegations were defamatory (and injurious) of him, because he had been
granted amnesty by the Truth and Reconciliation Commission (the TRC)
for the murders and the other offences he had committed, and his
convictions had thereby been expunged. He took offence to the
allegations pertaining to his arrest and detention in Mozambique claiming
that they amounted to saying that he had been involved in unlawful
activities involving gun dealers in that country.
[52] In their defence the defendants pleaded that the published
statements constitute comment or opinion, which was fair and related to a
matter in the public interest. They contended that the factual allegations
being commented upon were true.
[53] Although the plaintiff had pleaded that the allegation that he was
unsuitable for the post of Metro Police Chief was in itself defamatory of
him, the evidence presented at the trial on his behalf and by himself
limited his complaint to two grounds. The first was that he was labelled a
murderer and a criminal notwithstanding that he had been granted
amnesty under the TRC Act. The second was that the statements relating
to his arrest and detention carried the imputation that he had consorted
with gun-runners in Mozambique notwithstanding that the charges
against him arising out of these allegations had been quashed by the
Supreme Court of Mozambique.
[54] At the trial it seemed that the allegation in relation to the plaintiff’s
suitability for the position of police chief fell away as a basis for the
defamation claim, when reliance thereon was disavowed by the plaintiff.
The plaintiff’s apparent change of tack was recorded and dealt with by
Maluleke J when he said:
‘it was correctly conceded on behalf of the plaintiff that the statements that “he
[meaning the plaintiff] is blatantly unsuited for the post of Ekurhuleni Metro Police
Chief” and is, not qualified for the job’ qualify to be comment or an opinion and that
such a statement is not an allegation of fact and cannot be defamatory.’
My colleague’s judgment proceeds on the basis that the plaintiff’s
suitability was still in issue on appeal. With this I have no difficulty. Even
if it is in issue it is, in my view, disposed of together with the defence
relating to the claim that he is a murderer. If it is fair comment then the
statement that he is not suitable is also justified on the same basis.
[55] In conclusion Maluleke J held that the impugned statements
(relating to the murder and the allegations of gun-running in
Mozambique) could not be understood by the right thinking reader of The
Citizen to be ‘a comment or an opinion but rather as an allegation of fact’
which could only be justified if it was true or accurately stated.’ The
learned judge continued that ‘the statement that the plaintiff is a
“criminal, a coldblooded multiple murderer” . . . who behaves
suspiciously with gun-runners in Mozambique will be defamatory in the
absence of proof that such allegations are in fact true and accurately
stated.’
[56] In my view the above conclusion is in the context of the offending
articles read as a whole, flawed as I will attempt to show presently.
[57] Before dealing with the question whether the defence of fair
comment is sustainable it is necessary to refer to the relevant texts. They
comprise the two editorials and the articles quoted in paragraphs 3 to 10
of my colleague’s judgment. For convenience they will not be repeated
here save for two which will be dealt with in full. For the rest it will
suffice to refer merely to the headings of the texts.
[58] Of the articles referred to above that which appeared on 10
September 2003 and quoted in paragraph 3 does not form the subject of
the complaint. The article in question made the front page of The Citizen
under the heading ‘McBride tipped to head Metro Cops’ and dealt with
the possibility that the plaintiff might be appointed as the new chief of
police for the Ekurhuleni Metropolitan Municipality. It traced the
plaintiff’s past activities and alluded to the fact that he had served four
years on death row upon being convicted of murder and other offences,
arising out the explosion of a bomb he had planted in consequence of
which three women were killed and 79 persons injured. The article stated
that the plaintiff was widely condemned for the attack on what was
perceived to be a soft civilian target, although the plaintiff insisted that
the pub, the site of the attack, was frequented by SADF military
personnel from the main local barracks. The article referred to his
application for and the grant of amnesty to him by the TRC. It was also
reported that the plaintiff was on a later occasion arrested, detained and
charged with gun-running in Mozambique and sent home.
[59] The above article set the scene for the fierce and robust debate that
followed on the plaintiff’s suitability for appointment to the post of police
chief. The impact was felt in the higher echelons of political power,
which saw the then President, Thabo Mbeki, joining the debate through
his weekly news letter. The president was critical of those who opposed
the appointment of the plaintiff. The full text of his comment appears in
paragraph 8 of my colleague’s judgment.
[60] Subsequent to what may be referred to as a forerunner article on 10
September 2003, The Citizen carried an editorial on 11 September
entitled ‘Here comes McBride’. I quote the text in full. It reads as
follows:
‘Robert McBride’s candidacy for the post of Metro Police Chief is indicative of the
ANC’s attitude to crime.
They can’t be serious, he is blatantly unsuited, unless his backers support the dubious
philosophy: set a criminal to catch a criminal.
Make no mistake that is what he is. The cold-blooded multiple murders which he
committed in the Magoo’s Bar bombing puts him firmly in that category.
Never mind his dubious flirtations with alleged gun dealers in Mozambique. Those
who recommend him should have their heads read. McBride is not qualified for the
job. If he is appointed it will be a slap in the face for all those crime battered folk on
the East Rand who look to the government for protection.’
[61] The second item I wish to refer to appeared in The Citizen on 21
October 2003 and is referred to in paragraph 10 of my colleague’s
judgment as ‘the Kenny article’. It reads as follows:
‘At a time of public conflict within the ANC government . . . President Mbeki’s
devoted his weekly newsletter to attacking The Citizen for suggesting that Robert
McBride is unsuitable for high office in the Police.
The three most notorious non-government killers of the later apartheid period were
Clive Derby-Lewis, Barend Strydom and Robert McBride.
Each was a wicked coward who obstructed the road to democracy.
Derby-Lewis who targeted a specific enemy, Chris Hani, is the only one not to be
freed. The other two killed innocent people. Strydom looked his helpless victims in
the eyes before he murdered them.
McBride did not even do this. He planted a bomb in a bar and slunk off not caring
whether he killed men, women or children.
It was the act of human scum.
. . .
McBride’s bomb was planted in 1986, at a time when apartheid was clearly in retreat
and when legal avenues of resistance were opening up.
His murder of the innocent women strengthened the hand of die-hard apartheid
supporters, and had the effect of prolonging the wretched regime.
Contrary to Mbeki’s suggestion, I know of few public voices and not that of The
Citizen who opposed the idea of the TRC.
Court cases against the criminals of the apartheid era would have taken a thousand
years.
The TRC was well conceived. Its execution however, was criticised for bias.
The more apartheid reformed, the greater the violence against it.
When it effectively ended in 1990, the violence reached its zenith.
There were more political murders per year from 1990 to 1994 than in any year of
apartheid.
These were mostly ignored by the TRC.
If the ANC regards Robert McBride as a hero of the struggle it should erect a statue of
him ─ perhaps standing majestically over the mangled remains of the women he
slaughtered.
If he wants to serve the community, he should work among Aids orphans or help
improve the provisions of pensions to the poor.
He should most certainly not be a policeman.’
[62] In my view on a proper reading of the above articles the right
thinking reader of The Citizen would have been left with the impression
that the authors are clearly and principally commenting or expressing an
opinion on the suitability of the plaintiff as a candidate for appointment as
police chief. As I see it the reader would have understood the writers to
be arguing, rightly or wrongly, that because of the plaintiff’s involvement
in the bombing of Magoo’s bar and the Why Not restaurant in 1986,
which had fatal and disastrous consequences for many innocent people,
and his subsequent conviction and sentence, he ought not to be appointed
to the post of chief law enforcement officer of a large municipality.13
Despite the strong and robust language used and the somewhat extreme
(if not, right-wing) views expressed, the articles and editorials remain
comment or opinion on the issue of his suitability for the position of the
Metro Police Chief. The other articles I have not quoted also deal with the
plaintiff’s suitability for that post.
[63] I agree with Maluleke J that the appointment of a police chief is a
matter of public interest. I also think judicial notice can be taken of the
fact that with the advent of the Constitution and the new democratic order
South African citizens feel very strongly about who gets to be appointed
to public office and do not hesitate to venture opinions in matters of that
nature. Accordingly the right thinking reader of The Citizen would have
to be aware of this and his or her right to freely express an opinion in
matters of public interest. In this regard it has been said:
13 Reference is also made to his arrest and detention in Mozambique, which I deal with separately but
this is in passing and is not the major thrust of the original editorial.
‘In cases of comment on a matter of public interest the limits of comment
are very wide indeed. This is especially so in the case of public men.
Those who fill public positions must not be too thin-skinned in reference
to comments made upon them.’ (Pienaar & Another v Argus Printing and
Publishing Co Ltd)14 It therefore follows that the impugned statements
would prima facie have been protected as free speech.
[64] In Khumalo & Others v Holomisa15 we were reminded of the
importance of the right of freedom of expression. This right has been
acknowledged by the Constitutional Court and other South African courts
as integral to democratic society for many reasons. We are also reminded
that freedom of expression is constitutive of the dignity and autonomy of
human beings and that without it the ability of citizens to make
responsible political decisions and to participate effectively in public life
would be stifled. Dealing with the role of the media (that is The Citizen in
this case, as it is one of the defendants) the Constitutional Court said:
‘In a democratic society, then, the mass media play a role of undeniable importance.
They bear an obligation to provide citizens both with information and with a platform
for the exchange of ideas which is crucial to the development of a democratic culture.
As primary agents of the dissemination of information and ideas, they are, inevitably,
extremely powerful institutions in a democracy and they have a constitutional duty to
act with vigour, courage, integrity and responsibility. The manner in which the media
carry out their constitutional mandate will have a significant impact on the
development of our democratic society. If the media are scrupulous and reliable in the
performance of their constitutional obligations, they will invigorate and strengthen
our fledging democracy. If they vacillate in the performance of their duties, the
constitutional goals will be imperilled. The Constitution thus asserts and protects the
14 1956 (4) SA 310 (W) at 318D-G.
15 2002 (5) SA 401 (CC) at para 21.
media in the performance of their obligations to the broader society, principally
through the provisions of s 16.’16
Section 16 reads as follows:
‘(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 . . .’.
[65] The right to free speech is of course not unlimited as pointed out in
Khumalo17 and must be construed in the context of the values enshrined
in the Constitution, in particular the values of human dignity, freedom
and equality. It is the task of the law of defamation to hold a balance
between these competing interests.
[66] Against the background of the above broad principles of the right
to free speech and expression of opinion and the limits placed on that by
the countervailing interest in dignity it remains to consider whether the
defence of fair comment or opinion advanced by the defendants is
sustainable. The nature of the defence was articulated by Cameron JA in
Hardaker v Phillips18 as follows:
‘Defendants in this country first sought to invoke the deference as early as the 19th
century; and it was authoritatively imported into our law from the English law of libel
nearly 90 years ago in Crawford v Albu (1917 AD 102 at 114.) Innes CJ explained
that the defence “rests upon the right of every person to express his real judgment or
opinion upon matters of public interest.”’
Drawing on that explanation by Innes CJ this court in Marais v Richard
& ‘n Ander19 summarised the requirements of the defence as follows: (i)
The statement must constitute comment or opinion; (ii) it must be fair;
(iii) the factual allegations being commented upon must be true; and (iv)
16 Para 24.
17 Para 25.
18 2005 (4) SA 515 (SCA) at para 26.
19 1981 (1) SA 1157 (A) at 1167F.
the comment must relate to a matter of public interest. If the defence of
fair comment is well-founded it follows that a claim for defamation that is
based on the facts on which that comment is based must also fail because
it will be justified.
[67] I turn to consider whether the impugned statements comply with
the requirements of fair comment or opinion. The test for fair comment is
whether the reasonable reader would understand the statements as a
comment. One of the hallmarks of comment is that it is connected to and
derived from discernible fact. In each of the offending statements it is
clear that the authors are expressing an opinion as to the suitability of the
plaintiff as a candidate for the post of police chief. The two editorials and
the articles that caused offence appear to be part of a series of interrelated
commentary on the suitability of the plaintiff as a candidate for the
position of police chief. One has only to consider the sequence and
context in which the statements are made to come to the conclusion that
this constitutes comment or opinion. The article dated 10 September 2003
entitled ‘McBride tipped to head Metro cops’ provided the background
facts and served as a launching pad for the subsequent editorials and the
rest of the articles on the subject of the plaintiff’s pending appointment to
the position he had applied for. The location of the two editorials within
the comment and opinion section of the newspaper and the proper
construction to be placed on the editorials and articles suggest nothing
other than comment and free expression of views as to whether the
plaintiff should be appointed as police chief. Accordingly, the conclusion
is in my view inescapable that the impugned statements constitute
comment or opinion and requirement (i) in Marais v Richard has
therefore been met. The concluding sentence in the Kenny article says it
all where it is asserted:
‘He should mostly certainly not be made a policeman.’
It is arguable that the reference in the article to the plaintiff being a
murderer was also comment or opinion to advance the view that the
plaintiff was not the right person for the job but in view of my later
conclusions it is unnecessary for me to explore this. The statement that he
was a criminal is clearly dependent upon the statement that he is a
murderer. If the latter is correct the plaintiff can hardly complain about
the former. It is the factual correctness of the latter statement that matters.
[68] To this may be added the fact that the plaintiff was a public figure,
having previously been the subject matter of public commentary, on
occasion both controversial and critical, and the focus of many a
newspaper publication. Where one is dealing with the criticism of a
public figure a measure of leeway is allowed by our courts and the limits
of public criticism are wider as compared to a private individual
(Mthembi-Mahanyele v Mail & Guardian Ltd).20
[69] The second requirement is that the offending statement ‘must be
fair’. What the authors of the editorials and the articles did was to base
their assertions that the plaintiff was not suitable for appointment on two
grounds namely that the plaintiff had committed murder and other crimes
for which he was convicted and sentenced to death. In their minds, rightly
or wrongly, a person with that track record ought not to be a police chief.
The second matter that they advanced as a disqualification was his
alleged activities in Mozambique for which he was arrested and detained
for 6 months. The question is whether, based on those matters, the
comment that the plaintiff was unsuited for appointment as a Metro
police chief was fair. In determining whether the comment is ‘fair’ there
20 2004 (6) SA 329 (SCA) at 356A-E.
is no room for consideration of the merit of the comment of opinion. As
Cameron JA observed in Hardaker,21
‘More importantly, whether the jibe is “fair” does not in law depend solely or even
principally on reason or logic. In Crawford v Albu, Innes CJ suggested that the use of
the word “fair” in connection with the defence “is not very fortunate”. This is because
it is not what the court thinks is fair (a critical comment or opinion, Innes CJ said,
need not “necessarily commend itself to the judgment of the Court”). Nor does the
comment have to “be impartial or well-balanced”. Indeed, “fair” in this context means
only that the opinion expressed must be one that “a fair man, however extreme his
views may be, might honestly have, even if the views are prejudiced”. Hence Innes
CJ's observation that the defendant “must justify the facts; but he need not justify the
comment”.’
[70] I have already alluded to the fact that the views expressed in the
impugned statement may well be regarded as extreme or even right-wing
but on the above test they cannot be taken to be unfair. To succeed in
their defence all that was required of the defendants was to justify the
facts and not their comment and it was sufficient for them to show that
they were expressing a genuine view on the subject of whether the
plaintiff should be appointed as police chief. The plaintiff has not raised
malice on the part of the defendants and none has been proved.
Accordingly, requirement (ii) relating to fairness has been met.
[71] The third requirement, which holds the key to the outcome of this
case, is that the factual allegations being commented upon must be true. If
they are and the defence of fair comment is established in relation to the
comment or opinion based on those facts then it follows a fortiori that the
publication of the stated fact is justified. The statement that the plaintiff
was not suitable for appointment was not a factual allegation. It was a
21 Para 32.
comment and as indicated above the plaintiff, rightly or wrongly,
conceded that it cannot found a claim for defamation. The allegations in
relation to murder and the commission by the plaintiff of the other crimes
were expressly said to be the facts on which the comment or opinion on
the suitability of the plaintiff for appointment as chief of the Metro Police
was based. Their factual accuracy is thus fundamental.
[72] In principle I have difficulty with the notion that a person who has
been convicted of the crime of murder may not be described as a
murderer or as a criminal if he has been granted amnesty. In Crawford v
Albu,22 Innes CJ had occasion to address the subject where he said:
‘The ordinary meaning of criminal is one who has committed a crime, that is, an
offence against society punishable by the State. As generally used it connotes moral
guilt.’
The plaintiff placed a car bomb outside a bar and when it exploded three
people were killed and many injured. This is not in dispute and he does
not cavil at being described as a ‘bomber’. Nor does he suggest that his
conviction on charges of murder and attempted murder was wrong. My
colleague says that these facts cannot be obliterated from the historical
record and that it is a well known fact that he is a murderer, but then goes
on to suggest that the granting of amnesty rendered that fact false ─ a
suggestion with which I join issue. This is by no means intended to
downplay the broader motives which the plaintiff may have had, namely
to free the then downtrodden majority of the people of this country from
the evil system of apartheid.
[73] It follows therefore that the reference to the plaintiff as a murderer
or a criminal is strictly speaking factually correct. The question is
22 At 118.
whether it is in law rendered untrue or false by the granting of amnesty.
In my view the TRC Act does not have this effect. The consequences of
the granting of amnesty in respect of the murder and other offences
committed by the plaintiff and for which he was convicted is governed by
s 20 of the TRC Act. The relevant portion of s 20 reads as follows:
‘(7) (a) No person who has been granted amnesty in respect of an act, omission or
offence shall be criminally or civilly liable . . . and no person shall be vicariously
liable, for any such act, omission or offence.’
‘(8) If any person ─
(a)
. . .
(b)
has been convicted of, . . . an offence constituted by the act or omission in
respect of which amnesty is so granted . . . the sentence so imposed shall
upon such publication lapse . . .’.
Section 20(10) reads as follows:
‘Where any person has been convicted of any offence constituted by an act or
omission associated with a political objective in respect of which amnesty has been
granted in terms of the Act, any entry or record of the conviction shall be deemed to
be expunged from all official documents or records and the conviction shall for all
purposes, including the application of any Act of Parliament or any other law, be
deemed not to have taken place: Provided that the Committee may recommend to the
authority concerned the taking of such measures as it may deem necessary for the
protection of the safety of the public.’ [Emphasis added]
[74] The consequences of a grant of amnesty are dealt with first in s
20(7)(a), which provides that no person who has been granted amnesty
‘shall be criminally or civilly liable’ in respect of the actions that gave
rise to the application for and grant of amnesty. The later provisions of
that section deal with the situation where criminal or civil proceedings
have been commenced and held in abeyance pending consideration of the
application for amnesty and also with the position of persons who have
already been tried and sentenced for crimes in respect of which amnesty
is granted. In the former instance the grant of amnesty puts an end to the
proceedings and in the latter the prior criminal proceedings are rendered
void, the sentence imposed lapses and the person is released. In terms of
s 20(10) any entry or record of the conviction is deemed to be expunged
from all official documents or records and the conviction shall ‘for all
purposes’ be deemed not to have taken place. It is this last provision that
is relevant for present purposes.
[75] In Du Toit v Minister of Safety and Security & Another23 the
Constitutional Court considered the scope and effect of s 20(10) and said:
‘The section is couched in very broad terms and appears capable of the widest
possible interpretation. A purely literal and decontextualised reading might suggest
that the grant of amnesty has the effect of expunging not only the record of the
conviction and sentence imposed on the perpetrator, but also all consequences that
follow that conviction and sentence, past, present and future. There are, however,
serious difficulties with that interpretation.24
Read in its context it is inconceivable that the purpose of s 20(10) of the
Reconciliation Act could be the undoing of the past to a limitless degree. Not even the
applicant contends for unrestricted retrospectivity. For, indeed, factual events that
occurred in the past cannot be undone.’25
In that case the Constitutional Court held that the effect of a grant of
amnesty was not to reverse the consequence of the appellant’s conviction
that his service with the South African Police Services was terminated in
accordance with the regulations governing that service. It is significant
that in doing so it said that an interpretation of s 20(10) that it expunged
all the consequences of the appellant’s conviction and sentence including
future consequences occasioned serious difficulties. In my view such an
interpretation in the present case illustrates the legitimacy of that concern.
23 2009 (6) SA 128 (CC).
24 Para 31.
25 Para 32.
[76] The plaintiff contends that the effect of the grant of amnesty is that
it is now impermissible to say that he committed murder or is a murderer
irrespective of the factual accuracy of that description. That is a far-
reaching construction of s 20(10) that does not appear expressly in the
language of the section. It is necessary to consider that language in order
to see what it does say before turning to consider from whence the
respondent derives his contention.
[77] In the first place what the section says expressly is that the entry or
record of any conviction shall be deemed to be expunged from all official
documents or records. In other words the records of conviction that are
produced in criminal courts on a daily basis in this country on the form
SAP 69 are, in the case of a person granted amnesty, to be read on the
basis that any reference to their convictions are expunged. Any other
official record kept for any purpose that refers to those convictions is to
be read as if reference to it had been expunged. The purpose of the
deeming provision is to avoid the need to trawl through all public
documents that record the conviction and amend them to delete that
reference. Instead the simpler expedient is adopted of deeming such
reference to have been expunged. Accordingly all public records of the
plaintiff’s conviction are effectively expunged and show that, as far as
official records in this country are concerned, he has not been convicted
of the crime of murder.
[78] Altering public records is one thing, but expunging from the
historical record the fact of what the plaintiff did is another. That can only
be said to follow, if at all, from the further provision that his ‘conviction
shall for all purposes . . . be deemed not to have taken place’. However
this relates only to his conviction and is a ‘catch-all’ provision intended to
supplement the deemed expungement of the convictions from official
records. It does not in terms relate to what may be said about the plaintiff
arising from the conduct that gave rise to the application for and grant of
amnesty. The section nowhere says that it is no longer permissible to
refer to what the plaintiff did that caused him to apply for amnesty. That
would be contrary to the requirement of his application that he make a
full disclosure to the Committee on Amnesty of all relevant facts
concerning the act, omission or offence associated with a political object
in respect of which he sought amnesty. In the case of the plaintiff those
facts are set out in the passage from the judgment of the court below
quoted in paras 22 and 33 of my colleague’s judgment. The offences were
the murders and attempted murders he committed when he planted a car
bomb outside Magoo’s Bar/Why Not Restaurant in Durban, killing three
women and injuring many other patrons. Those are part of the public and
historical record of this country. As Langa CJ said in the passage quoted
above ‘factual events that occurred in the past cannot be undone’. If, as
my colleague says, they are part of the historical record and not
obliterated by the grant of amnesty I fail to see on what basis it has
become impermissible to say simply and in summary of their effect that
the plaintiff is a murderer. That is a conventional description in common
parlance of someone who perpetrates such acts and to say it is false in
these editorials and articles is, with respect, not correct and involves an
alteration of the historical record.
[79] It is hardly surprising that s 20 does not in its terms require that the
historical record be altered so that there can be no reference to the
plaintiff’s deeds. That would be wholly contrary to the expressed purpose
of the TRC Act which was amongst other things ‘to establish the truth in
relation to past events as well as the motives for and circumstances in
which gross violations of human rights have occurred, and to make the
findings known in order to prevent a repetition of such acts in future’.26
The interim Constitution that sanctioned the entire process of the Truth
and Reconciliation Commission, including the amnesty process, protected
the right of freedom of expression as the Constitution now does.27 It is in
my opinion wholly contrary to that constitutional guarantee to require that
the facts of our historic past should be disregarded and, if stated, treated
as false, which is what the respondent wishes this court to do.
[80] I do not differ from my colleague in his broad statement of the
purpose of the TRC Act or the importance of the role of the Truth and
Reconciliation Commission, including the amnesty process, in furthering
the purpose of reconciliation in this country. Where we differ is that in
establishing the amnesty process the TRC Act quite clearly spells out the
consequences of the grant of amnesty and those stated consequences do
not involve a blotting out of the historical record nor do they impose a
prohibition on saying that persons to whom amnesty was granted may no
longer be described as having committed the offences for which they
obtained amnesty.
[81] In my view the reference to the plaintiff as a murderer is not false
because as a matter of historical record that is a correct statement and it is
a statement the truth of which the plaintiff had to acknowledge when he
applied for amnesty. It is unnecessary in order for the statement to be true
that the person about whom it is made has been convicted of that offence,
although the respondent had been so convicted, or that any conviction is
26 The purpose is stated in both the long title to the TRC Act and its preamble.
27 Section 16(1) of the Constitution. In particular s 16(1)(b) protects the right to impart information.
still to be held against him in the public record. The Biblical descriptions
of Cain, Moses and King David as murderers28 have never so far as I am
aware been challenged as false because they had not been convicted in a
court of law of that crime. Accordingly the primary foundation for the
defence of fair comment, namely that the comment is upon facts that are
themselves truly stated is established. I should add in this regard that, as
appears from the various articles and editorials, the facts giving rise to the
description of the plaintiff as a murderer are briefly mentioned and their
accuracy is not challenged. Equally the fact that he was granted amnesty
was also stated at the outset and is in any event well-known.
[82] I conclude therefore that the fact of the murders and other criminal
acts perpetrated by the plaintiff having taken place is not obliterated in
the sense that mention thereof may not be made if an occasion arises. The
TRC Act does not have the effect of obliterating these facts. The impact
of the relevant sections referred to above is limited to protecting
convicted persons (such as the plaintiff) from civil or criminal liability as
a consequence of an act committed with a political motive (ss (7)(b)).
Secondly the effect is that the sentences imposed on the plaintiff lapsed
(ss (8) (b))). Thirdly the offence is deemed not to have taken place in the
sense that the ‘any entry or record of the conviction shall be deemed to be
expunged from all official or documents records . . . ’. The TRC Act does
not proscribe all reference to the criminal conduct that formed the subject
matter of an amnesty application, in the sense that if one does so he or she
would be liable for defamation. That construction will have a chilling
effect on freedom of expression guaranteed under the Constitution and is
not required by the wording of s 20 or the fact that what is sought and
granted is amnesty. Accordingly requirement (iii) of the defence of fair
28 Genesis 4 vs 8; Exodus 2 vs 14 and 2 Samuel 12 vs 9.
comment is satisfied insofar as the statement that the plaintiff is a
murderer is concerned. For the reasons given by my colleague in para 18
of his judgment I agree that there is no falsehood in relation to the
plaintiff’s activities in Mozambique nor any foundation for a separate
claim for defamation based on these statements.
[83] The fourth and final requirement is that the comment must relate to
a matter of public interest. In this particular case the comment could
relate to a matter of public interest only if it was germane to the issues in
those proceedings. This is because there is no discernible value in
protecting litigants who make irrelevant comments to injure the
reputation of others. In this case the comment was relevant. The reference
in the articles to the plaintiff’s conviction for murder was, in the context
of the view, contended for by the authors of the articles, relevant to the
plaintiff’s alleged unsuitability as police chief and it was a matter of
public interest. The reference to the bombing incident was not a question
of raking up the ashes of the past but, as the defendants saw it, bore
relevance to the law enforcement post applied for by the plaintiff. There
can be no question that this was relevant to that appointment.
[84] The position applied for is of great importance and aroused public
interest and the plaintiff himself was a public figure. At the time of the
publication of the offending articles he was the Director of Foreign
Affairs. It is not disputed that the question of the plaintiff’s appointment
to the position was a matter in which the public was legitimately
interested. Accordingly the (iv) fourth requirement of fair comment was
met.
[85] In my view the defence of fair comment raised by the defendants is
well taken and should have been upheld by the court a quo. I would
accordingly uphold the appeal and dismiss the plaintiff’s claims with
appropriate orders for costs.
____________________
KK MTHIYANE
JUDGE OF APPEAL
PONNAN JA:
[86] I have had the benefit of reading the judgments of my colleagues
Streicher and Mthiyane. I concur in the order proposed by Streicher JA
and agree in general with the comprehensive reasons given by him for the
conclusions to which he has come. That Mthiyane JA arrives at a
different destination is attributable, as he himself acknowledges, to the
view that he takes on the reach of the amnesty granted to the respondent
under the provisions of the TRC Act. I feel constrained to disagree with
my learned colleague and to explain separately the line that I take in
attempting to resolve this complex and troublesome issue.
[87] The task of building a new democratic social order, given the deep
conflict that dominated our social landscape, was a difficult one. It
ultimately became manifest to the minority who controlled the levers of
state power that the only way out of that quagmire was to negotiate a
different (hopefully brighter) future with those who had sought to resist
that domination. Those negotiations culminated in an interim Constitution
that ushered in our new democratic political order. There was an
appreciation even at that stage that much of what had occurred during that
protracted period of internal political dissension could never ever be fully
reversed and that nation building required a selfless and generous
commitment to reconciliation and national unity. The genesis of amnesty
is founded in that pragmatic appreciation. But for it the negotiated
settlement and our new social contract may well have been stillborn.
Amnesty was born out of the recognition that notwithstanding the
lingering pain and personal reticence of some to it, that painful chapter of
our history had to be brought to a close.
[88] It is against that historical backdrop that the matter must be
viewed. For, it informed the epilogue to the interim Constitution,
pursuant to which the TRC Act came to be enacted. Mahomed DP
thought it more reasonable to infer that what the epilogue contemplated
was legislation that would be wide enough to allow for an amnesty that
would protect a wrongdoer who told the truth from both the criminal and
civil consequences of his or her admissions (AZAPO29 para36). But for
the promise of amnesty the ‘historic bridge’ contemplated in the epilogue
might not have seen the light of day and the prospect of unending revenge
and retaliation may well have continued to bedevil us. The grant of
amnesty was dependent on the perpetrator of the misdeed making full
disclosure of all relevant facts. Were it not so, it could hardly have
engendered the catharsis that Didcott J talks of (AZAPO para 59].
[89] What is clear from s 20(7), read with s 20(8), (9) and (10) of the
TRC Act, is that, once a person has been granted amnesty in respect of an
act, omission or offence, the offender can no longer be held criminally
liable for such offence and no prosecution can be maintained against him
or her (AZAPO para 7). Tellingly, what the Act envisaged was the grant
of amnesty not just in respect of ‘offences’ but also ‘acts’ and
29 Cited in para 29 of Streicher JA’s judgment.
‘omissions’. Subsection 10 provides in clear and unambiguous terms that
the conviction shall for all purposes be deemed not to have taken place.
That such is the case was recognized by Langa CJ who stated: ‘In return,
the weight of the offence is lifted from the perpetrator’s shoulders with a
guarantee of immunity from prosecution, a clean criminal record, and the
assurance that never again can the conviction be counted against him or
her’ (Du Toit30 para 28). Consistent with that theme, subsection 8
provides for the discontinuation of criminal proceedings that have not yet
been finalized, the voiding of criminal proceedings, the lapsing of
sentences and the release forthwith of persons in custody. Accordingly,
from the date on which amnesty is granted, the direct legal consequences
of the criminal conduct for which amnesty was granted will no longer
obtain (Du Toit para 43).
[90] Whilst the TRC Act seeks to advance reconciliation and promote
national unity, it cannot undo, obliterate or blot out what has happened in
the past. There was thus a conscious decision on the part of the
legislature, acting in accordance with the mandate given to it by our new
social contract, that people not be trapped in the painful past but that they
‘be given a pardoned freedom to go forth and contribute to society’ (Du
Toit para 56). That entails, as it must, a conscious acknowledgement that
not only should the perpetrators not be considered to have committed the
offences in question but moreover that those offences should not count
against them. Were that not to be so, the grant of amnesty would be
rendered meaningless and illusory. There would thus be little incentive
for a perpetrator to seek amnesty.
30 Cited in footnote 7 of Streicher JA’s judgment.
[91] Amnesty was not to be had simply for the asking. The Truth and
Reconciliation Commission established in terms of the Act was required
to facilitate the granting of amnesty to persons who made ‘full disclosure
of all the relevant facts relating to acts associated with a political
objective’ (s 3(1)(b)). The main objective of the Commission as set out in
s 3 was to promote national unity and reconciliation ‘in a spirit of
understanding that transcends the conflicts and divisions of the past’. The
Act enjoined the Commission to establish as complete a picture as
possible of ‘the causes, nature and extent of the gross violations of human
rights’ committed during the relevant period. Amnesty was thus but one,
yet significant, facet of the entire TRC process. The whole TRC process
was in no small measure dependent for its success on perpetrators,
particularly of gross human rights violations, making full and frank
disclosure. I can hardly imagine that those perpetrators would have
embraced the process if it were to have been suggested to them that
notwithstanding the grant of amnesty, they could never ever rid
themselves of the stigma and moral opprobrium of their deeds. Moreover,
such an approach would run counter to the ‘spirit of understanding’
postulated by the Act and far from transcending would actually have
exacerbated the conflicts of the past. After all as Langa CJ put it (Du Toit
para 52): ‘… section 20 (7) to (10) pays due regard to the interplay of
benefit and disadvantage so important to the process of national
reconciliation’.
[92] The historical purpose of the legislation and the social need it was
designed to address, as also the scheme established by the provisions of
s 20 (7) to (9) as already discussed, all point ineluctably to the conclusion
that it was impermissible to continue to brand the respondent a murderer
and criminal in respect of those acts and offences for which amnesty had
been granted to him. Any other approach would be to treat the respondent
as if amnesty had not been sought and obtained by him. That could hardly
have been the intention of the legislature, which plainly envisaged a
change in the status of the person who had successfully applied for
amnesty.
[93] The grant of amnesty to the respondent heralded the promise of his
reintegration into South African society. To continue branding him a
criminal and murderer runs counter to that promise. It strikes me as
inconsistent that he be obliged to continue wearing the mantle of a
criminal or murderer notwithstanding the fact that his conviction is
‘deemed not to have taken place’ and any record of it is ‘deemed to be
expunged from all official documents or records’. After all, expunging
the conviction means that the person no longer has a previous conviction
(Du Toit para 45). That is not to suggest that the fact that the respondent
planted a bomb that killed several people for which he was convicted is
likewise deemed not to have occurred. On the contrary that remains as
deeply embedded in this nation’s psyche as it does in our national
records. The granting of amnesty to the respondent does not and cannot
obliterate or erase the fact of those occurrences. That would be at odds
with the notion of establishing as complete a picture as possible. What
s 20(7) does do is it changes the legal consequences of the acts for which
amnesty was granted, for the future, from the date on which amnesty was
granted (Du Toit para 40). It must follow that to have ignored the grant
of amnesty as the appellants had done in describing the respondent was
plainly impermissible. Streicher JA can hardly be faulted therefore in
concluding that the statement in the editorials and articles that the
respondent is a murderer (made with full knowledge of the grant of
amnesty and the respondent’s changed status it must be added) is
therefore false.
[94] In my view our template for transition - an imperfect one some
have suggested – clearly contemplated two parallel yet intertwined
processes. Neither, I daresay, conceptually incompatible with the other.
First, disclosure with as full a recordal as possible by the Commission of
the deeds of perpetrators and, second, amnesty. The second was clearly
designed to go hand in hand with the first, and as was intended, altered
markedly the standing of the perpetrator. That it did without a re-writing
of our history. The first ensured as much. Thus when the Act came to be
passed, sections 20(7) to (10) expressly encapsulated the various formal
and procedural consequences of amnesty designed to achieve that end.
[95] I have favoured an interpretation that not only accords with the
scheme of s 20 but also best achieves the goal of reconciliation and
national unity (Du Toit para 50). The primary aim of the Act as the
Constitutional Court has pointed out is to ‘use the closure acquired as a
stepping stone to reconciliation for the future’ (Du Toit para 55).
Amnesty was an important tool in that process, for without it, the closure
sought could not have been achieved. Nor, without it, could the much
desired and anticipated consensus between the political foes during the
negotiation process have materialized. To thus render the effect of
amnesty nugatory would be the very antithesis of all that our negotiated
settlement has come to symbolize.
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For appellant:
S Symon SC
S Stein
Instructed by:
Willem de Klerk Attorneys, Greenside
Honey Attorneys, Bloemfontein
For respondent:
P W Makhambeni
Instructed by:
Mashiane Moodley Monama Inc, Sandton
Lovius Bloch 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:
26 February 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.
* * *
THE CITIZEN 1978 (PTY) LTD & OTHERS v ROBERT JOHN McBRIDE
The Supreme Court of Appeal (by a majority) today partially upheld an appeal against a
judgment in the High Court, Johannesburg in favour of Robert John McBride who had
instituted action for damages against the Citizen newspaper, its editor and some journalists
(‘the appellants). His claims were based on editorials and articles (‘the articles’) published in
the Citizen. He alleged and the High Court held that the articles were defamatory of him in
that it was stated:
(i) That he is not suited for the position of Head of the Ekurhuleni Metro Police Force;
(ii) That he is a criminal;
(iii) That he is a murderer; and
(iv) That he has been involved in illegal activities with gun dealers in Mozambique.
The SCA held that it had not been alleged in the articles that McBride had been involved in
illegal activities with gun dealers in Mozambique but only that there were facts indicating that
he may have been involved in such gun dealing. To that extent the appeal succeeded.
During 1986 McBride was a member of Mkhonto we Sizwe (“MK”), a military wing of the
African National Congress which was then involved in an armed struggle for political
liberation against the security forces of the Republic. On 14 June 1986 a unit of MK under
the leadership of McBride and acting within the context of the liberation struggle, carried out
an attack by planting and exploding a car bomb outside the Magoo’s Bar / Why Not
Restaurant, in Durban as a result whereof three female patrons were killed and many other
patrons were injured. McBride was subsequently convicted of murder and of several other
offences relating to the bombing attack and sentenced to death. On 19 April 2001 McBride
was granted amnesty in terms of s 20 of the Promotion of National Unity and Reconciliation
Act (‘the Reconciliation Act’) in respect of the offences committed by him.
When it became known that McBride could be appointed as Ekurhuleni Metro Police Chief
the Citizen in a number of articles expressed the opinion that he was not suited for the
position because he was a murderer and a criminal. In the action instituted against them the
appellants pleaded that the statement that McBride was unfit to be appointed Ekurhuleni
Metro Police Chief constituted fair comment based on facts that were true namely that
McBride was a murderer and a criminal having placed the bomb and having killed several
people in Magoo’s Bar.
In terms of the Reconciliation Act amnesty could be granted in respect of offences which
related to an act associated with a political objective committed in the course of the conflicts
of the past. The Act provides that no person who has been granted amnesty in respect of an
offence may be held criminally liable for such offence. Where a person has been convicted
of such an offence any record of the conviction is deemed to be expunged from all official
documents or records and the conviction is for all purposes deemed not to have taken place.
The SCA held that the purpose of amnesty provided for in the interim constitution was to
advance reconciliation and reconstruction of our society on the basis that there was no need
for retribution or victimisation. Provision had to be made for the reintegration into the South
African society of many people who had taken part in the armed struggle for liberation. It
was, amongst other things, to give effect to this intention that the Reconciliation Act was
passed and that provision was made that a person who had been granted amnesty in
respect of an offence should not be held criminally or civilly liable for the offence, that any
entry or record of the conviction should be deemed to be expunged from all official
documents or records and that the conviction should for all purposes be deemed not to have
taken place. The SCA stated that it had no doubt that the intention was not only that people
to whom amnesty had been granted should not be held criminally and civilly liable for
offences committed by them in the course of the conflicts of the past and with the political
object of liberation, but also that they should be considered not to have committed the
offences and that those offences should not be held against them, so that they could be
reintegrated into society. The intention was to close the book on human rights
transgressions of the past in order to achieve reconciliation. Without an agreement on that
basis a negotiated settlement may well not have been possible.
The SCA concluded that once amnesty had been granted to McBride he could no longer be
branded a criminal and murderer in respect of the offences in respect of which such amnesty
had been granted to him. That is not to say that his actions and the consequences of his
actions are to be considered not to have taken place. It is a fact that he placed the bomb that
killed a number of people and it is a fact that he was convicted of the murder of those
people. The granting of amnesty could not and was not intended to obliterate those facts or
erase them from the historical record, it was an attempt to shape the future not to undo the
past. It had the effect that McBride is no longer considered to be a criminal and a murderer
in respect of his actions.
For these reasons the appellants appeal against the High Court’s judgment awarding
damages to McBride for having been defamed by having been called a murderer and a
criminal unsuited for appointment as the Ekurhuleni Metro Police Chief was dismissed. |
2487 | non-electoral | 2014 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
NOT REPORTABLE
Case No: 182/13
In the matter between:
COMWEZI SECURITY SERVICES (PTY) LTD FIRST APPELLANT
MOHAMED SHAFFIE MOWZER NO SECOND APPELLANT
and
CAPE EMPOWERMENT TRUST LTD
RESPONDENT
Neutral citation:
Comwezi Security Services v Cape Empowerment Trust
(182/13) [2014] ZASCA 22 (28 March 2014)
Coram:
Mpati P, Lewis, Bosielo and Wallis JJA and Van Zyl AJA
Heard:
10 March 2014
Delivered:
28 March 2014
Summary:
Contract – repudiation – election not to accept repudiation – effect of
repudiation on contractual obligations – repudiating party placing
reliance on failure of innocent party to comply with its contractual
obligations – obligation to perform may in appropriate circumstances
be excused or suspended – repudiating party not to obtain an
advantage from its own unlawful conduct – innocent party not expected
to perform a futile or useless act.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Western Cape High Court, Cape Town (Traverso DJP sitting as
court first instance):
The appeal is dismissed with costs including those of two counsel.
The period of ten days in para 21.2 of the order of the high court dated
5 December 2012 is to be construed as a reference to ten days from the date
of this judgment.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Van Zyl AJA (Mpati P, Lewis, Bosielo and Wallis JJA concurring)
[1] The issue which arises for decision in this appeal requires us to consider the
conflict between two principles of law expressed as follows: A „“[p]arty may not
repudiate a contract and at the same time seek the advantage of a stipulation in the
very contract he has repudiated”. What is the theory that justifies such a principle?
Against it there is the argument that an unaccepted repudiation is a “thing writ in
water” not affecting legal rights in any way . . . and that therefore all contractual
rights remain available to the repudiating party.‟1
1 Per Mahoney JA in Nina’s Bar Bistro (Pty) Ltd (Formerly Mytcoona Pty Ltd) v MBE Corporation
(Sydney) Pty Ltd [1984] 3 NSWLR 613 (CA) at 633.
[2] The background facts relevant to the dispute between the parties appear from
the judgment of this court in Comwezi Security Services (Pty) Ltd & another v Cape
Empowerment Trust Ltd.2 The first appellant, Comwezi, borrowed R4 million from
the respondent, Cape Empowerment Trust Ltd (CET). Repayment of this amount
was secured by way of a cession and pledge of shares in Comwezi held by the
Grapsy Trust (the trust), which is represented by the second appellant, Mr Mowzer,
in his capacity as its trustee. Comwezi failed to repay the loan and the parties
entered into settlement negotiations. These culminated in the conclusion of a
settlement agreement in terms of which the loan would be discharged by way of the
issue to CET of 25 ordinary shares in the issued share capital of Comwezi.
[3] The settlement agreement entitled CET to conduct a comprehensive due
diligence investigation in respect of the affairs of Comwezi before deciding finally
whether to take up the shares in settlement of the amount owing to it. Both Comwezi
and the trust accepted the obligation to co-operate with CET in conducting this
investigation, and to lend their assistance. This included the obligation to make all
documentation relating to Comwezi available for inspection. The relevant provisions
in this regard are found in clause 7 of the settlement agreement:
„7 DUE DILIGENCE INVESTIGATION
7.1
CET shall be entitled, immediately after the Signature Date to conduct a
comprehensive due diligence investigation in respect of the affairs of Comwezi.
7.2
Comwezi and the Grapsy Trust shall co-operate with CET in conducting the due
diligence investigation and shall procure that CET and its duly authorised
representatives are given every reasonable assistance in this regard, and that all
documentation of Comwezi are made available for inspection.
7.3
. . .
7.4
. . .
7.5
. . .
7.6
CET shall have the sole and absolute discretion to proceed with or abandon this
Settlement Agreement based on the outcome of its own findings and conclusions
from the due diligence investigation.
7.7
CET shall, for purposes of the resolutive condition contained herein, notify Comwezi
by not later than 3 months after the Signature Date whether or not it is satisfied with
2 Comwezi Security Services (Pty) Ltd & another v Cape Empowerment Trust Ltd (759/11) [2012]
ZASCA 126 (21 September 2012).
the outcome of its due diligence investigation and accordingly whether it wishes to
proceed with this transaction, provided that if CET fails to so notify Comwezi
timeously, CET shall be deemed not to be satisfied.‟
[4] In terms of clause 10, which was described as a resolutive condition, CET had
to complete the investigation and notify Comwezi in writing that it was satisfied with
the outcome thereof within 3 months after the date of the signing of the said
agreement. If it did not do so, the settlement agreement would lapse, and the parties
would revert to their respective positions under the loan agreement. CET was given
the right to waive or „relax‟ the resolutive condition. Clause 10 in its entirety reads as
follows:
„10 RESOLUTIVE CONDITION
10.1
The Parties agree that this Settlement Agreement is subject to the resolutive
condition that CET has completed the due diligence investigation set out in clause 7
in respect of Comwezi and has notified Comwezi in writing that it is satisfied with the
outcome thereof by no later than 3 (three) months after the Signature Date.
10.2
In the event of CET not notifying Comwezi that it is satisfied with the outcome of the
due diligence investigation, this Settlement Agreement will automatically fail and be
of no further force and effect and the Parties shall restore the status quo ante as near
as possible and no party shall have any claim against the other party arising from this
Settlement Agreement and for the avoidance of doubt, the Parties will then only be
able to rely on the terms of the Loan Agreement to enforce its rights against the
other.
10.3
The resolutive condition contained herein is imposed for the benefit of CET and may
be waived or relaxed, in writing, by CET prior to the period of 3 (three) months after
the Signature Date.‟
[5] Relying on the power in clause 10.3, CET from time to time extended the
three month period. It needed to do so by reason of Comwezi‟s failure to comply with
its obligation to co-operate with the due diligence investigation and to provide the
necessary documentation to enable it to complete the investigation. The last
extension was until 4 November 2011. Before the expiry of the extended time period
CET approached the high court on application (the first proceedings) seeking an
order to compel Comwezi to provide it with certain specified documentation; to assist
CET in conducting the investigation; and to allow it access to Comwezi‟s premises.
Comwezi and the trust resisted the application, inter alia on the basis that
clause 10.3 of the settlement agreement did not entitle CET to extend the three
month period as it had purported to do, and that the settlement agreement had
lapsed as a result. The high court held that the extensions were permissible and that
the agreement remained in force. On 10 October 2011 it granted an order in favour
of CET compelling Comwezi to co-operate with CET in the due diligence
investigation. Comwezi was given 10 days to comply with the order.
[6] Comwezi lodged an appeal against that order. This court (per Wallis JA)
found that on a proper interpretation of clause 10.3, it afforded CET the right to
extend the period in which it had to inform Comwezi that it was satisfied with the
outcome of the due diligence investigation, and by necessary inference, the period
within which it was to conduct that exercise.3 On 21 September 2012 the appeal was
dismissed with costs. CET subsequently attempted to execute the order of the high
court of 10 October, only to be informed by Comwezi that because the three month
period had not been extended beyond 4 November 2011, the settlement agreement
had lapsed and that it would not comply with the order. It is common cause that CET
did not extend the date for the finalization of the due diligence investigation, or the
date for notifying Comwezi of the outcome of that investigation beyond 4 November
2011.
[7] This prompted CET once again to approach the high court for assistance. It
applied for a declaratory order that the settlement agreement had remained valid and
binding, and that Comwezi must comply with the order of 10 October 2011. The high
court (per Traverso DJP) granted the relief sought. It is this order which forms the
subject matter of this appeal. Relying on the decisions in Erasmus v Pienaar4 and
Moodley & another v Moodley & another5 the high court found that the failure of
Comwezi to comply with its obligations in terms of the settlement agreement. This,
the court said, constituted a repudiation of the agreement, and it „not only entitles the
innocent party to cancel, but that, for as long as the repudiation endures, it suspends
the obligation of the innocent party to perform in terms of the agreement‟.
3 Comwezi Security Services (Pty) Ltd & another v Cape Empowerment Trust above para 13.
4 Erasmus v Pienaar 1984 (4) SA 9 (T).
5 Moodley & another v Moodley & another 1990 (1) SA 427 (D).
[8] It was correctly acknowledged in argument by counsel for Comwezi that the
refusal of Comwezi to cooperate in the due diligence investigation and its unjustified
insistence that clause 10.3 of the agreement did not entitle CET to extend the time
period for completing the investigation, constituted a wrongful repudiation of the
agreement. The test to determine whether conduct amounts to a repudiation which
justifies cancellation is „. . . whether fairly interpreted it exhibits a deliberate and
unequivocal intention no longer to be bound.‟6 It is not in issue that CET, by insisting
that Comwezi comply with its contractual obligation to render assistance in the
investigation, elected not to accept the repudiation. The effect of that election was
that the agreement remained in place and each party remained subject to all its
obligations and liabilities. Comwezi relies on the following legal proposition in support
of its contention that CET‟s failure to extend the time period beyond 4 November
2011 has resulted in the agreement lapsing:
„A repudiation, as was once said, is “a thing writ in water” . . . . It merely affords the injured
party an election to terminate the agreement by accepting the repudiation . . . and unless
and until that happens the repudiator's obligation to perform and the other party's right to
receive performance remain wholly unaffected.‟7
[9] Comwezi‟s contention is that the failure of CET to cancel the agreement
meant that it was bound to continue to extend the time period in clause 10 if it
wished to maintain the contract in force. It argued that the failure of CET to do so
beyond 4 November 2011 meant that the resolutive condition had not been fulfilled
and the agreement had lapsed. Its noting of an appeal against the order of
10 October 2011 and the prosecution thereof cannot, according to Comwezi, in any
way assist CET. It said that the effect of the appeal was simply to suspend the
operation and the execution of the order. It did not operate to extend the period
provided for in clause 10 of the agreement, or obviate the need for CET to take the
steps it was obliged to take under the contract to keep it alive.
[10] What is immediately apparent from Comwezi‟s submission (that its own
unaccepted repudiation did not take away its entitlement to take advantage of the
claimed failure of CET to comply with the terms of the agreement) is its inequity.
6 Per Williamson J in Street v Dublin 1961 (2) SA 4 (W) at 10B-C. See Datacolor International (Pty)
Ltd Intamarket (Pty) Ltd 2001 (2) SA 284 (SCA) para 1.
7 Per Hefer JA in Culverwell & another v Brown 1990 (1) SA 7 (A) at 28E-F.
What it amounts to is the following: Comwezi refused to cooperate in the due
diligence investigation and to make the documentation requested available, on the
basis that clause 10.3 did not entitle CET to extend the three month period in
clause 10.1, and that the agreement had lapsed as a consequence. It adopted that
position in the first proceedings. But now that its interpretation of clause 10 has been
found to be incorrect and it must comply with its obligation to participate in the due
diligence investigation, Comwezi seeks to rely on CET not having further extended
the three month period beyond 4 November 2011. What it effectively seeks to do, to
its own advantage, is to rely on the terms of the agreement it had elected to
repudiate. „It does not appear to me to be sound law to permit a person to repudiate
a contract, and thereupon specifically to found upon a term in that contract which he
has thus repudiated.‟8
[11] It is correct that repudiation as such does not have any effect on the rights
and duties of the parties to a contract, as long as the innocent party is willing,
prepared and able to perform his obligations. However, it is recognised that the
repudiation of one party may in appropriate circumstances excuse the innocent party
from taking measures which it would otherwise have been obliged to take, or may
suspend the performance of his own obligations, until such time as the repudiating
party indicates his willingness to give effect to the contract. Appropriate
circumstances would be that the innocent party cannot proceed without the co-
operation of the repudiating party, or that the principle of mutuality of performance
would entitle the innocent party to withhold its own performance.9 This rule has its
origin in the English law from where repudiation as a form of breach of contract
made its way into our own law.10 In Erasmus v Pienaar the court (per Ackermann J)
dealt extensively with this rule and concluded that there exists sufficient authority for
it to form part of our law. The decision in Erasmus has found approval in a number of
subsequent decisions,11 including decisions of this court.12
8 Municipal Council of Johannesburg v D Stewart & Co (1902) Ltd 1909 HL 53 at 56 referred to in
Hurwitz’s Trustees v Magdeburg Fire Insurance Co 1917 TPD 443 at 448 and Erasmus v Pienaar
1984 (4) SA 9 (T) at 24B.
9 Moodley above at 431E-F.
10 S W J van der Merwe, L F van Huyssteen, M F B Reinecke and G F Lubbe Contract General
Principles 4 ed (2012) at 308 and Crest Enterprises (Pty) Ltd v Rycklof Beleggings (Edms) Bpk 1972
(2) SA 863 (A) at 869C-H.
11 Moodley at 430E-431I; Culverwell & another v Brian 1988 (2) SA 468 (C) at 475I-J.
[12] The rationale for this rule is twofold: A party to a contract should not by its
own unlawful conduct be allowed to obtain an advantage for himself to the
disadvantage of his counterpart. „It is a fundamental principle of our law that no man
can take advantage of his own wrong‟13 and „to permit the repudiating party to take
advantage of the other side‟s failure to do something, when that failure is attributable
to his own repudiation, is to reward him for his repudiation‟.14 The converse is that
the innocent party is not expected to make the effort or incur the expense of
performing some act when, by reason of the repudiation, „it has become nothing but
an idle gesture‟.15 This is consistent with the general principle that the law does not
require the performance of a futile or useless act. These principles are of general
application and may find application in a variety of circumstances. The doctrine of
fictional fulfilment of contractual terms is, for example, similarly based on the
principle that a contractant cannot take advantage of its own wrongful conduct to
escape the consequences of the contract.16
[13] Comwezi submitted that the principle in Erasmus and Moodley does not find
application on the facts of the present matter. The argument was that this case does
not deal with the failure of the innocent party to comply with a contractual obligation,
but rather the failure of CET to exercise a contractual power or authority to extend
the time period in clause 10.1 so as to prevent the fulfilment of a resolutive condition.
It was submitted that the exercise of that power was not in any way dependent on
the co-operation or the due performance by Comwezi of its own contractual
obligations. It is correct that clause 10.3 of the agreement does not provide for a right
in the sense that there is a correlative duty. It is rather a power or authority that is „an
ability on the part of a person to produce a change in a given legal relationship by
doing or not doing a given act‟. Its correlative is not a duty but a liability.17
12 GNH Office Automation CC v Provincial Tender Board, Eastern Cape 1998 (3) SA 45 (SCA) at 51F-
G; Ashcor Secunda (Pty) Ltd v Sasol Synthetic Fuels (Pty) Ltd (624/10) [2011] ZASCA 158
(28 September 2011) para 8 and Food and Allied Workers Union v Ngcobo NO & another [2013] 7
BLLR 648 (SCA) para 50.
13 P M Nienaber „The Effect of Anticipatory Repudiation: Principle and Policy‟ (1962) Cambridge Law
Journal 213 at 225, quoted with approval in Food and Allied Workers Union v Ngcobo & another para
50.
14 Moodley at 431F-G.
15 Moodley at 431G-H and Erasmus at 22E-H.
16 Macduff & Co Ltd (in liquidation) v Johannesburg Consolidated Investment Co Ltd 1924 AD 573 at
591 and Koenig v Johnson & Co Ltd 1935 AD 262 at 272.
17 G W Paton A Textbook of Jurisprudence 4 ed (1972) at 293.
[14] The difficulty with this argument is, however, that it focuses too narrowly on
clause 10.3 of the agreement. The rights and obligations of the parties must be
determined from the agreement as a whole. Clause 7.1 gave CET a contractual right
to conduct a due diligence investigation. Clause 7.2 in turn placed an obligation on
Comwezi to co-operate with CET in conducting that investigation. On a construction
of clause 10.1, read with clauses 7.7 and 10.2, it clearly imposed a time limit on the
envisaged investigation. It placed a contractual obligation on CET to complete it
within three months or an extended time period as determined by it under
clause 10.3. Clause 10.1 is clearly a term containing a resolutive time clause. „‟n
Tydsbepaling kan op twee maniere aan „n verbintenis toegevoeg word, t.w.
opskortend en ontbindend. Ontbindend is die tydsbepaling wanneer die verbintenis
of verbintenisse uit die ooreenkoms slegs tot op „n sekere dag werking sal hê . . . .‟18
The label which the parties to the agreement attached to it cannot turn it into a
resolutive condition. There is a fundamental difference between a condition and a
term containing a time clause. The former is subject to a future uncertain event. The
latter on the contrary deals with the performance by a party of an obligation within a
stipulated period.19 Clause 10.1 falls in the latter category.
[15] The position is therefore that CET was clearly willing and able to comply with
its contractual obligations. Due to Comwezi‟s refusal to co-operate, CET was
prevented from completing the due diligence investigation within the required time
period, that is, the time period as determined in accordance with the terms of the
agreement. Its obligation to complete the investigation within that period was
dependent upon Comwezi‟s co-operation. Its attempt at enforcing Comwezi‟s
contractual obligation to render the necessary assistance was met with a wrongful
insistence that clause 10.3 of the agreement did not entitle CET to extend the three
month period, and that the failure of CET to complete the investigation within that
period meant that the agreement was no longer in existence. The position taken by
Comwezi therefore amounted to an intimation that it would be an act of futility for
18 J C de Wet and A H van Wyk Kontrakreg en Handelsreg 5 ed Vol 1 at 146. „A time clause may
either be suspensive or resolutive in its operation. It is resolutive when the obligation or obligations
arising from the contract shall only be operative until a certain day.‟ (my translation)
19 De Wet and Van Wyk at 146; A J Kerr The Principles of the Law of Contract 6 ed at 457; Jurgens
Eiendomsagente v Share 1990 (4) SA 664 (A) at 674I and Venter Agentskappe (Edms) Bpk v De
Sousa 1990 (3) SA 103 (A) at 111D-F.
CET to act in terms of clause 10.3 of the agreement. In these circumstances it would
have served no purpose whatsoever for CET to continue to extend the time period in
which to conclude the due diligence investigation.
[16] I therefore conclude that on the facts of this matter CET‟s contractual
obligation to complete the due diligence investigation within the determined time
period was suspended from 11 October 2011 when the high court in the first
proceedings found that Comwezi was in breach of its obligations in terms of the
agreement.
[17] In the result:
The appeal is dismissed with costs including those of two counsel.
The period of ten days in para 21.2 of the order of the high court dated
5 December 2012 is to be construed as a reference to ten days from the date
of this judgment.
___________________
D van Zyl
Acting Judge of Appeal
APPEARANCES
For Appellant:
S P Rosenberg SC (with him P B J Farlam)
Instructed by:
Edward Nathan Sonnenbergs Inc, Cape Town
Lovius Block Attorneys, Bloemfontein
For Respondent:
M J Fitzgerald SC (with him P van Eeden)
Instructed by:
Hayes Inc, Cape Town
Naudes 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:
28 March 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.
COMWEZI SECURITY SERVICES (PTY) LTD & ANOTHER
V
CAPE EMPOWERMENT TRUST LTD
The parties in this appeal concluded a settlement agreement in a dispute about the
repayment of a loan. In terms of the agreement the respondent had the right to
conduct a due diligence investigation into the affairs of the first appellant. The
agreement obliged the appellants to co-operate with and to assist the respondent
in the investigation. The respondent had to complete the investigation within three
months but had the authority to extend that time period.
When the appellants failed to comply with their obligation to co-operate in the
investigation, the Western Cape High Court granted an order compelling them to
do so. In subsequent proceedings for the enforcement of that order the appellants
contended that the agreement had lapsed. The reason advanced was that the
respondent had failed to extend the time period in which it was obliged to complete
the investigation.
The Supreme Court of Appeal found that the failure of the appellants to co-operate
in the investigation was a repudiation of their contractual obligations. It held that
the principle that a party to a contract may not repudiate its obligations and at the
same time seek the advantage of a stipulation in the very same contract, and that a
contractant is not expected to perform a futile act, found application on the facts of
the matter. The high court was accordingly correct that the agreement had not
lapsed and that the appellants must comply with their contractual obligations. The
appeal was dismissed. |
144 | non-electoral | 2017 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1146/2017
In the matter between:
NATIONAL DIRECTOR OF PUBLIC
PROSECUTIONS APPELLANT
and
KALMAR INDUSTRIES SA (PTY) LTD
RESPONDENT
Neutral citation: National Director of Public Prosecutions v Kalmar Industries
SA (Pty) Ltd (62/17) [2017] ZASCA 142 (2 October 2017)
Coram:
Navsa ADP, Leach and Majiedt JJA and Ploos van Amstel and
Schippers AJJA
Heard:
17 August 2017 and 27 September 2017
Delivered:
2 October 2017
Summary: Forfeiture of property : Section 50(1) of the Prevention of Organised
Crime Act 121 of 1998 : whether property, a lifting platform and equipment
alleged to have been stolen, susceptible to seizure : whether NDPP ought to have
become involved in commercial dispute.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Eastern Cape Local Division of the High Court, Port Elizabeth
(Plasket J sitting as court of first instance):
The following order is made:
1 The appeal is dismissed with costs.
2 The wasted costs occasioned by the respondent’s failure to appear at the hearing
of the appeal on 17 August 2017 shall be paid by the appellant’s Bloemfontein and
Johannesburg attorneys, jointly and severally; and shall not be recovered from the
respondent.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Schippers AJA (Navsa ADP, Leach and Majiedt JJA and Ploos van Amstel
AJA concurring):
[1] The principal issue in this appeal is whether a Swift 001 purpose-built lifting
platform (the platform) and certain tools, equipment and other items (the
equipment) were firstly, susceptible to a preservation of property order under s 38
of the Prevention of Organised Crime Act 121 of 1998 (POCA) and consequently,
to a forfeiture order in terms of the provisions of s 48 read with s 50 of POCA. The
court a quo found that they were not, and held that the appellant (the NDPP) had
not met the jurisdictional requirements for the grant of both a preservation of
property order and a forfeiture order.
Factual background
[2] The background to the forfeiture application can be shortly stated. The
respondent (Kalmar) is a wholly-owned subsidiary of Cargotec Corporation
(Cargotec), a company incorporated in Helsinki, Finland, which carries on business
as a manufacturer and supplier of port lifting equipment. In 2008 Kalmar
concluded a written agreement with Transnet Ltd (Transnet) to supply and deliver
inter alia, 22 rubber tyred gantry cranes (RTGs) to Transnet at the Port of Ngqura
(the harbour). In terms of the contract, the warranty period on the painting of each
RTG was seven years after the delivery date.
[3] In 2010 an inspection of the RTGs revealed that they were corroded and
Kalmar accepted a warranty claim to refurbish them. Kalmar agreed with Transnet
that the warranty work on all 22 RTGs would commence in October 2012 and be
completed in 18 months, ie by April 2014. Kalmar then engaged the services of Q6
Management Projects Africa (Pty) Ltd (Q6) as a subcontractor, to provide a
solution to the refurbishment of the RTGs, referred to in the papers as ‘the rust
project’.
[4] Mr Douglas Reed (Reed), a shareholder of Q6 and the manager of the rust
project, said that Q6 had agreed to do the project at an estimated cost of R1.24
million plus VAT per RTG and to that end, designed and commissioned the
platform. Reed said that the platform was built for Q6 by Storm Engineering at a
cost of some R2.4 million. Q6 claimed that it was the owner of the platform and
that it had paid all the costs relating to the research, design and fabrication thereof,
save for one payment of R229 824, that the parties had agreed Kalmar would pay
and which was a bridging funding arrangement only.
[5] The platform is a utility vehicle which is more effective than scaffolding. It
is essentially a lifting platform secured by guard rails which is assembled, moved
into position and secured to a RTG. Workmen are then lifted on the platform to
those sections of the RTG which require refurbishment. The platform was designed
in compliance with national legislation governing occupational health and safety,
more specifically, the regulations relating to lifting machines and lifting tackle.
The Department of Labour approved the use of the platform in the harbour on
certain conditions, inter alia, that it could only be operated by trained and certified
platform drivers; and that moving or supporting of persons in suspension on the
platform had to be done under supervision of Q6, Transnet or Kalmar. The
platform was moved to an area in the harbour designated by Transnet for the rust
project (the site), which, Reed said, was fenced and secured at the instance of Q6,
and the project commenced around August 2012.
[6] In December 2012 Q6 completed the refurbishment of RTG No 19, which
was handed to Kalmar and returned to Transnet. The next RTG (No 20) was
completed in February 2013. However, on 8 February 2013 Q6 informed Mr
Anton Burchell (Burchell), the Managing Director of Kalmar, that it was
exercising a lien over RTG No 20, as a result of a dispute about payment to Q6 by
Kalmar. Reed said that on 23 February 2013 RTG No 20 had been illegally
removed from the site, but that Transnet had returned it to the site later that night.
On 28 February 2013 Burchell and a Kalmar employee returned to the site and
demanded that RTG No 20 be released, which was refused.
[7] Reed claimed that on 8 April 2013 the locks and fence to the site were cut
and that Kalmar’s employees removed RTG No 20. Q6 laid a criminal charge of
theft with the police, apparently because RTG No 20 was subject to a lien by Q6.
On the same day Transnet informed Q6 that its access to the harbour had been
withdrawn and it was forced to leave the site. Reed claimed that Kalmar continued
using the platform and other equipment belonging to Q6 in the rust project. Q6 laid
a second charge of theft in respect of the platform and the equipment. Reed alleged
that Kalmar stole Q6’s property and used it as its own. Both theft charges were laid
in September 2014. Mr Vicus Luyt (Luyt), a director of Q6, stated that when the
platform and equipment were taken by Kalmar, he approached a mediator to
resolve the dispute, which yielded no results; and that Q6 then ‘followed a criminal
path in order to expedite recovery of [its] clearly stolen property’.
[8] Burchell denied the theft charges and that Q6 owned the platform. Kalmar’s
opposition to the forfeiture application may be summarised as follows. The costs of
refurbishing the first RTG had not been finalised between the parties due to Q6’s
failure to furnish supporting documentation of its costs to Kalmar. Reed had
undertaken to finalise the pricing of the remaining RTGs by 7 January 2013, which
he failed to do. Kalmar did not sign-off on RTG No 19, because the work was
defective and documentation relating to, inter alia, the warranty on paintwork was
outstanding. Despite this, Kalmar paid Q6 what was owing to it in respect of RTG
No 19. Kalmar subsequently cancelled the subcontract with Q6. There was no
agreement entitling Q6 to exercise a lien over Transnet’s property. Transnet, and
not Kalmar, had removed RTG No 20 on 8 April 2013 to a new site in the harbour,
allocated by Transnet to Kalmar to continue with the rust project.
[9] According to Burchell, Kalmar did not use the platform after Q6 had been
removed from the site by Transnet. The subcontractor who succeeded Q6 had used
it for a brief period, but was asked by Transnet to cease doing so. Burchell alleged
that Kalmar paid all the costs in relation to the manufacture and commissioning of
the platform and that it was agreed between him and Reed that Kalmar owned it.
According to Burchell, the value of the platform is R229 824 - the amount Kalmar
had paid to Storm Engineering.
[10] In February 2015 the sheriff of the court, together with Reed and other
employees of Q6, went to the site where the rust project was being continued,
dismantled the platform and removed it. On 10 February 2015 the NDPP obtained
a preservation of property order, ex parte, in respect of the platform and
equipment, and launched the forfeiture application on 6 February 2015.
The applications under POCA should never have been brought
[11] Section 38(1) of POCA authorises the NDPP to apply to a high court, ex
parte, for a preservation of property order; and s 38(2) enjoins the court to make
such an order if there are reasonable grounds to believe that the property concerned
is an instrumentality of an offence referred to in Schedule 1 to POCA, or the
proceeds of unlawful activities.
[12] Section 48(1) provides that if a preservation of property order is in force, the
NDPP may apply to a high court for an order forfeiting to the State the property
subject to the preservation order. Section 50(1) of POCA, in material part, reads:
‘The High Court shall, subject to section 52, make an order applied for under section 48(1) if the
Court finds on a balance of probabilities that the property concerned-
(a) is an instrumentality of an offence referred to in Schedule 1;
(b) is the proceeds of unlawful activities . . . .’
[13] The first question that arises is why did the NDPP apply on the strength of
these provisions to the court a quo for preservation and forfeiture orders under
POCA? The documents available to the NDPP, even before the preservation
application was launched on 10 February 2015, all pointed to a commercial dispute
between two contracting parties: Q6 and Kalmar, not to the commission of a crime.
[14] Thus, in his affidavit annexed to the founding papers in the preservation
application, Luyt referred to correspondence sent on behalf of Q6 to Cargotec in
September 2014, relating to the need to redress Q6’s rights to recovery of its
property (the platform and equipment) and the outstanding issues surrounding the
agreement. Likewise, Reed’s affidavit makes it clear that the dispute between the
parties was commercial. Q6 claimed ownership of the platform and equipment, and
payment for work done under the rust project; and it alleged that the parties had
agreed in July 2012 that the refurbishment would cost Kalmar R1.24 million for
each RTG. Kalmar, on the other hand, claimed that Q6 did not comply with the
agreement: Q6 failed to present invoices showing the costs of refurbishment or
warranty certificates from the paint supplier relating to the first RTG (No 19); and
that Reed had not made good on his promises since November 2012 to furnish
evidence of Q6’s actual costing. Burchell claimed that Kalmar had paid for the
assets on site. Burchell denied that Q6 had any lien in respect of RTG No 20, and
proposed that Kalmar pay Q6 the sum of R434 873.40 by 8 February 2013 for its
release.
[15] In addition, Burchell’s warning statement on behalf of Kalmar dated 20
January 2015, relating to the theft charges, placed it beyond doubt that the dispute
between Q6 and Kalmar was purely commercial. That statement essentially
contains Kalmar’s version set out above. In the statement Burchell said that
Kalmar had agreed to pay all start-up costs to Q6 or the various suppliers directly;
and that Transnet had removed RTG No 20 and the equipment from Q6’s
possession and returned them to Kalmar, after various meetings between Transnet,
Kalmar and Q6 and threats of civil action. Burchell went on to say that Q6 failed to
take legal action for the delivery of the platform (it had threatened to approach the
high court for that relief on more than one occasion); neither did Q6 take any
action against Transnet.
[16] Even the facts upon which the NDPP relied for the contention that the
platform and equipment were instrumentalities of an offence (and for the claim that
they constituted the proceeds of unlawful activities), underscored the commercial
nature of the dispute. The founding affidavit stated that Kalmar caused Q6 to be
ejected from the site when it refused to pay for the work Q6 had done and
disregarded its lien over a refurbished RTG (No 20). Kalmar then ‘unlawfully
appropriated to itself’ the platform and equipment and used them for the further
refurbishment of Transnet’s RTGs. Despite demand, Kalmar refused to restore the
property to its owners.
[17] But the contention that Kalmar had unlawfully appropriated the platform and
equipment was unsustainable on the evidence: there were real disputes of fact as to
whether Kalmar had stolen the platform and equipment and whether they were
instrumentalities of an offence or the proceeds of crime. Kalmar’s version was that
the costs of refurbishment had not finally been agreed upon, so there could be no
lien over RTG No 20 and no theft, and further that Transnet had removed the RTG
(the first theft charge). Kalmar alleged that it had paid all the start-up costs in
relation to the rust project, including those relating to the platform and the
equipment and that it was the owner thereof (the second theft charge). The court a
quo proceeded on the assumption that the platform and equipment had been stolen,
but made it clear that theft was in dispute and had not been proved. And having
regard to the commercial nature of the dispute between Q6 and Kalmar, it could
hardly have been contemplated that such theft could be proved.
[18] Furthermore, the NDPP knew or must have known that there were
numerous, genuine disputes of fact which could never have been resolved on the
papers. Those disputes related to the terms of the agreement between Kalmar and
Q6; ownership of the platform and equipment; the return of RTG No 20 to
Transnet; the circumstances under which Q6 was ejected from the site; and the use
of the platform and equipment by Kalmar thereafter. The caution by this Court that
motion proceedings ‘are all about the resolution of legal issues based on common
cause facts’, was simply ignored.1 The disputes had to be determined on Kalmar’s
version: its denial of the allegations by Q6 could not be said to be far-fetched or
clearly untenable.2 So, for example, on Q6’s own version, the costs of
refurbishment of the RTGs had never been finalised and warranties relating to the
paintwork were outstanding, and it resorted to criminal proceedings when
mediation to resolve the contractual disputes had failed.
[19] But more fundamentally, the commercial dispute between Q6 and Kalmar
was far removed from the objectives of POCA, which according to its long title,
was enacted, inter alia, to combat organised crime, money laundering and criminal
gang activities; and to prohibit certain acts relating to racketeering activities.3 And
the dispute had nothing to do with the purposes of civil forfeiture of property under
Chapter 6 of POCA, which include removing incentives for crime; deterring
persons from using or allowing their property to be used in crime; eliminating or
1 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA) para 26.
2 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C.
3 National Director of Public Prosecutions & another v Mohamed NO & others 2002 (2) SACR 196 (CC); 2002 (4)
SA 843 (CC) para 14.
incapacitating the means by which crime may be committed; and advancing the
ends of justice by depriving those involved in crime of the property concerned.4
[20] On this basis alone, the appeal falls to be dismissed. Given the commercial
dispute, it is hardly surprising that since Q6 laid charges of theft some three years
ago, the NDPP has still not decided whether to institute criminal proceedings
against Kalmar or Burchell. Instead, scarce public resources and valuable time
were wasted on an application for a preservation order; and thereafter a forfeiture
order, both of which were doomed to failure from the outset, because the platform
and equipment were neither instrumentalities of crime, nor the proceeds of
unlawful activities.
[21] An ‘instrumentality of an offence’ is defined in POCA as
‘. . . any property which is concerned in the commission or suspected commission of an offence
at any time before or after commencement of this Act, whether committed within the Republic or
elsewhere.’
[22] This Court has held that in giving meaning to the term, ‘instrumentality of
an offence’, the focus is not on the wrongdoer, but on the role the property plays in
the commission of the crime. The question is whether a functional relation between
property and crime has been established.5 The property must play a part, in a
reasonably direct sense, in those acts which constitute the actual commission of the
crime in question.6 The word ‘instrumentality’ itself suggests that the property
4 National Director of Public Prosecutions v RO Cook Properties (Pty) Ltd; National Director of Public
Prosecutions v 37 Gillespie Street Durban (Pty) Ltd & another; National Director of Public Prosecutions v
Seevnarayan 2004 (2) SACR 208 (SCA) para 18.
5 Cook Properties fn 4 para 21; NDPP v Mohamed fn 3 para 17.
6 Cook Properties fn 4 para 32.
must be instrumental in and not merely incidental to the commission of the
offence.7
[23] In Cook Properties,8 Mpati DP and Cameron JA said that the words
‘concerned in the commission of an offence’, must
‘be interpreted so that the link between the crime committed and the property is reasonably
direct, and that the employment of the property must be functional to the commission of the
crime. . . . In a real or substantial sense the property must facilitate or make possible the
commission of the offence.’
[24] Thus, the courts have held that the following were instrumentalities of
offences: a houseboat with particular attractions to lure minors into falling prey to
sexual offences;9 a ski-boat and diving equipment used to harvest perlemoen
unlawfully and the vehicle used to convey that perlemoen;10 a house specially
adapted and equipped to manufacture or conduct a trade in drugs;11 and a house
used to sell liquor unlawfully.12
[25] The facts upon which the NDPP relied for the contention that the platform
and equipment were instrumentalities of the crime of theft - that Kalmar caused Q6
to be ejected from the site when it refused to pay for the work Q6 had done; that
Kalmar disregarded Q6’s lien over RTG No 20 and used the platform and
equipment for the further refurbishment of Transnet’s RTGs; and that Kalmar
refused to restore them to Q6 - did not establish that the platform or the equipment
7 Cook Properties fn 4 para 31.
8 Ibid, affirmed in Prophet v National Director of Public Prosecutions 2006 (2) SACR 525 (CC); 2007 (6) SA 169
(CC) para 56.
9 DPP (NSW) v King [2000] NSWSC 394 para 22, cited in Cook Properties fn 4 para 34.
10 National Director of Public Prosecutions v Engels 2005 (1) SACR 99 (C) paras 39-40.
11 Prophet v National Director of Public Prosecutions 2005 (2) SACR 670 (SCA) paras 28-29; National Director of
Public Prosecutions v Parker 2006 (1) SACR 284 (SCA) paras 20-23 and paras 39-43.
12 Van der Burg & another v National Director of Public Prosecutions & another [2012] ZACC 12; 2012 (2) SACR
331 (CC) para 31.
had been used to commit any offence, let alone theft. The term ‘instrumentality’
denotes that the property concerned must serve as an instrument or means to
achieve a particular end - the commission of an offence. That is the only sense in
which the concept ‘instrumentality of an offence’ is employed in POCA, and why
forfeiture under POCA constitutes civil in rem proceedings: it is the property itself
that is proceeded against as if it were living and not inanimate.13 Put differently,
instrumentalities are treated as a form of ‘guilty property’.14
[26] In this case the platform and equipment were not instrumentalities of the
crime of theft, but the very things alleged to have been stolen, as the court a quo
correctly held. In other words, the platform and equipment were the objects of the
alleged theft: they were not used as a means to commit or facilitate the crime of
theft.
[27] The NDPP did not meet the jurisdictional requirement in s 50(1)(a) of
POCA for the grant of a forfeiture order, and the court a quo rightly dismissed that
application and discharged the preservation order.
[28] Neither were the platform and equipment the ‘proceeds of unlawful
activities’, which, POCA states,
‘means any property or any service, advantage, benefit or reward which was derived, received or
retained, directly or indirectly, in the Republic or elsewhere, at any time before or after the
commencement of this Act, in connection with or as a result of any unlawful activity carried on
by any person, and includes any property representing property so derived.’
[29] POCA defines ‘unlawful activity’ as meaning
13 Brooks & another v National Director of Public Prosecutions [2017] ZASCA 42; 2017 (1) SACR para 16.
14 United States v Bajakajian 524 US 321 (1998) at II.
‘. . . conduct which constitutes a crime or which contravenes any law whether such conduct
occurred before or after the commencement of this Act and whether such conduct occurred in the
Republic or elsewhere.’
[30] The definition ‘proceeds of unlawful activities’ essentially requires that the
property in question be ‘derived, received or retained’ in connection with or as a
result of an unlawful activity.15 The accrual of property, advantage or reward must,
directly or indirectly, flow from the unlawful activity in some way.16
[31] The NDPP’s claim that the platform and equipment constituted the proceeds
of crime is absurd. First, the NDPP failed to establish, on a balance of
probabilities, any criminal conduct on the part of Kalmar or Burchell. In this regard
there are genuine disputes of fact, as outlined above. Second, the platform and
equipment did not constitute property or an advantage or benefit derived, received
or retained as a result of crime. They were not returns accrued from any unlawful
activity. On the contrary, the platform was built by Storm Engineering and the
equipment was brought to the site pursuant to the subcontracting agreement
between Kalmar and Q6.
[32] The NDPP did not meet the jurisdictional requirement in s 50(1)(b) of
POCA either. It follows that on this ground also, the application for a forfeiture
order had to fail.
[33] What all of this shows, is that the applications for a preservation of property
order and a forfeiture order, were ill-conceived and should never have been
15 Cook Properties fn 4 para 64.
16 Cook Properties fn 4 paras 71-72.
brought by the NDPP. They were far removed from the main purpose of POCA: to
give effect to South Africa’s international obligation to ensure that criminals do not
benefit from their crimes.17 In the result, limited public resources have been
wasted, and the costs of the abortive POCA applications as well as the costs of this
appeal will ultimately be borne by taxpayers. The NDPP’s decision to apply in this
case for preservation and forfeiture orders under POCA, is inexplicable, irrational,
and must be severely deprecated.
Costs
[34] What remains is liability for the wasted costs occasioned by the respondent’s
failure to appear at the hearing of the appeal on 17 August 2017. When the appeal
was called that day, only the NDPP was represented and the appeal had to be
postponed and costs reserved. Pursuant to this Court’s directive, the respondent’s
attorneys filed affidavits to explain what had occurred. It is common ground that
on 13 June 2017 Mr Philip Botha (Botha) of JG Botha Attorneys, Kalmar’s local
attorneys, received the notice of set down of the appeal. Botha has stated on oath
that on 15 June 2017, he sent the notice of set down via email to Mr Warren
Sundstrom (Sundstrom) of McClarens, Kalmar’s attorneys in Johannesburg, but
was unable to explain why Sundstrom had not received that email. He stated that
he had searched the email inbox on his computer for any indication of a failed
transmission message regarding the email sent to Sundstrom on 15 June 2017, but
found none; and that it appeared impossible to trace the route of that email as his
email service was hosted by Google in the United States.
[35] Sundstrom, in his affidavit, stated that he did not receive the notice of set
down via email from Botha on 15 June 2017. Had he received it, Kalmar would
17 NDPP v Mohamed fn 3 para 16.
have been represented at the hearing of the appeal on 17 August 2017. McLarens
appointed Mr Mogamat Nassiep (Nassiep), an information and communication
technology expert, to conduct an independent enquiry on the relevant server to
establish whether McLarens received the email of 15 June 2017, to which was
attached the notice of set down of the appeal. In his affidavit Nassiep confirmed
that McLarens did not receive the email sent by Botha.
[36] On the facts before us, we are not in a position to determine which firm of
attorneys was responsible for the respondent’s failure to appear at the hearing on
17 August 2017. What is clear, however, is that neither the NDPP nor Kalmar
should be held responsible for the wasted costs incurred in relation to the
proceedings of 17 August 2017. In the circumstances, fairness dictates that the
appellant’s Bloemfontein and Johannesburg attorneys should be held liable jointly
and severally for the wasted costs of 17 August 2017.
[37] The following order is made:
1 The appeal is dismissed with costs.
2 The wasted costs occasioned by the respondent’s failure to appear at the hearing
of the appeal on 17 August 2017, shall be paid by the appellant’s Bloemfontein and
Johannesburg attorneys, jointly and severally; and shall not be recovered from the
respondent.
_________________
A Schippers
Acting Judge of Appeal
Appearances
For Appellant:
H J Van Der Linde SC
Instructed by:
State Attorney, Port Elizabeth
State Attorney, Bloemfontein
For Respondent:
C B Garvey
Instructed by:
McLarens Attorneys, Johannesburg
J G Botha 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
2 October 2017
STATUS
Immediate
National Director of Public Prosecutions v Kalmar Industries SA (Pty) Ltd
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 SCA today dismissed an appeal by the National Director of Public Prosecutions (NDPP)
against the dismissal of his application for an order that a lifting platform and tools and
equipment, be forfeited to the State in terms of the provisions of the Prevention of Organised
Crime Act 121 of 1998 (POCA). The NDPP claimed that the platform and equipment were
instrumentalities of an offence (theft) and the proceeds of unlawful activities as contemplated
in POCA.
The SCA held that the NDPP should not have brought proceedings under POCA because the
platform and equipment were the subject of a commercial dispute between two contracting
parties, Q6 Management Projects Africa (Pty) Ltd (Q6) and Kalmar Industries SA (Pty) Ltd
(Kalmar). Both had claimed ownership of the platform and equipment in terms of an
agreement between them. This commercial dispute was far removed from the objectives of
POCA: to combat organised crime, money laundering and criminal gang activities. The
dispute had nothing to do with the purposes of civil forfeiture of property under POCA, which
include removing incentives for crime and deterring persons from using property in crime.
Moreover, the platform and equipment were not instrumentalities of the crime of theft, but the
very things alleged to have been stolen. Neither were they the proceeds of unlawful activities:
they did not constitute property or a benefit derived as a result of crime.
The SCA found that the NDPP should not have become involved in the commercial dispute
between Q6 and Kalmar. Consequently, scarce public resources and valuable time were
wasted on an application for a preservation order; and thereafter a forfeiture order, both of
which were doomed to failure from the outset, because the platform and equipment were
neither instrumentalities of crime, nor the proceeds of unlawful activities. The SCA also found
that the NDPP’s decision to apply for preservation of property and forfeiture orders under
POCA was inexplicable, irrational and had to be severely deprecated.
---end--- |
1324 | non-electoral | 2010 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 187/09
HEATHER WENDY SMITH
Appellant
and
CHARLES PARSONS N.O.
First Respondent
FRITZ ALBERT VOLKER N.O.
Second Respondent
JEREMY ALAN SMITH
Third Respondent
THE MASTER OF THE HIGH COURT
Fourth Respondent
Neutral citation:
Smith v Parsons (187/07) [2010] ZASCA 39 (30 March 2010)
Coram:
LEWIS, HEHER, MHLANTLA, LEACH JJA and SERITI AJA
Heard:
5 March 2010
Delivered:
30 March 2010
Summary:
Wills Act 7 of 1953 – Question is whether the suicide note
written by the deceased was intended to be an amendment
of his will as contemplated by section 2(3) of Wills Act.
Wording of note and the surrounding circumstances indicate
that the deceased intended it to be his will. Master of high
court directed to accept note as amendment to will for
purpose of the Administration of Estates Act 66 of 1965.
_____________________________________________________
ORDER
_____________________________________________________
On appeal from: Kwazulu–Natal High Court (Durban and Coast Local
Division) (Luthuli AJ sitting as court of first instance).
(a)
The appeal is upheld with costs, including the costs of two counsel where
so employed.
(b)
The order of the court a quo is set aside and replaced with the following:
‘1
The Master of the High Court is directed to accept the document annexed
to the Notice of Motion as Annexure "A", as an amendment to the will of the late
Walter Percival Smith (identity number 511027 50335 089) for the purposes of
the Administration of Estates Act 66 of 1965.
The costs of the application are costs in the winding up of the deceased's
estate.
The third respondent is to pay the costs occasioned by his opposition,
which include costs of two counsel where so employed.’
_______________________________________________________
JUDGMENT
_______________________________________________________
Seriti AJA (Lewis, Heher, Mhlantla and Leach JJA concurring)
Introduction
[1] This is an appeal which emanates from the Durban and Coast Local
Division of Kwazulu-Natal High Court. The appellant, who was the applicant in
the court below, launched an application seeking an order directing the Master of
the High Court to accept a document, which was termed a suicide note, as an
amendment to the will of the late Walter Percival Smith (herein called the
deceased) for the purposes of the Administration of Estates Act 66 of 1965.
[2] The first and second respondents, who are the executors of the estate of
the deceased, elected not to oppose the application. The fourth respondent, the
Master of the High Court, also did not oppose the application. The application
was opposed only by the third respondent, Jeremy Smith who is the son of the
deceased.
[3] Smith filed a conditional counterclaim seeking certain relief in the event
that the application was granted. The court below dismissed the application and
consequently did not deal with the conditional counterclaim. The parties have
agreed that if the appeal is successful, the counterclaim will have to be
adjudicated by the high court.
[4] The court below (Luthuli AJ), found that the suicide note was written by
the deceased personally. However, he held that the deceased did not
unequivocally intend the suicide note to be an amendment of his will. The
appellant is appealing against the latter finding with the leave of the court below.
Issues for determination
[5] Both parties agree that the only issue to be decided in this appeal is
whether the suicide note written by the deceased was intended by him to be the
his will as contemplated by section 2(3) of the Wills Act 7 of 1953.
[6] Section 2(3) of the Wills Act, reads as follows:
'If a Court is satisfied that a document or the amendment of a document drafted or
executed by a person who has died since the drafting or execution thereof, was intended
to be his will or an amendment of his will, the court shall order the Master to accept that
document, or that document as amended, for the purposes of the Administration of
Estates Act, 1965 (Act 66 of 1965), as a will, although it does not comply with all the
formalities for the execution or amendment of wills referred to in subsection (1)'.
[7] Thus if the document in issue is shown to have been drafted or executed
by a person since deceased who intended the document in issue to be his or her
will, or an amendment of his or her will, the court must direct the Master of the
High Court to accept that document as a will or an amendment to it – see Van
Wetten & another v Bosch & others1 and Harlow v Becker NO & others.2
[8] In order to ascertain whether the deceased intended the suicide note to be
an amendment to his will, the document itself must be examined and the
surrounding circumstances must be taken into account – see Van Wetten paras
15 -16.
Background facts
[9] The deceased was a senior pilot employed by South African Airways. His
wife died on 4 September 2002. Smith was their only child. After the death of his
wife, the deceased met the appellant, they developed a relationship and in
January 2003, the appellant moved into the house of the deceased where they
lived together. At that time, the appellant was employed by British Airways as a
customer service agent based at the Durban International Airport.
[10] Whilst living together, the deceased, who was earning much more than
the appellant, assisted the appellant financially with accommodation and food.
Essentially he supported her financially and at some stage he provided her with a
motor vehicle for her to use. During February 2004, the appellant, after an
argument with the deceased, left his home and went to stay on her own. During
February 2005 the appellant returned to the United Kingdom, her country of
origin.
[11] She kept in contact with the deceased. He visited her and persuaded her
to come back to South Africa to stay with him. She returned in December 2005
and again went to live with the deceased.
[12] On the morning of 25 February 2007 she left home and went to work. The
deceased was at home. Whilst at work, she spoke to the deceased over the
telephone. On her return, she discovered that he had committed suicide. He had
1 2004 (1) SA 348 (SCA) para 14.
2 1998 (4) SA 639 (D) at 647C-D
shot himself in the bathroom. The suicide note under consideration was found on
the kitchen counter. A crucifix had been placed on top of it.
[13] The suicide note reads as follows:
'(De)ar Heather,
Thanks for all you have done and tried to do for me –
I'm sorry I've been miserable – I do love you, but this depression and continuous pain
and battle with my health is no longer tolerable. If I've hurt you it has not been intentional
– please forgive me. I love Jeremy more that I can express and I'm sorry if I have not
been the best Father to Him. God knows I've tried. Forgive me Jeremy.
Heather you can have this house, you will obviously?3 sell it and should meet all your
future needs. Also I authorise Standard Bank to give you immediate access to Plusplan
– there is R579,000.00 which will not leave you battling. My love (and forgiveness) to
your folks – they are fine people. There are also several thousand Rands in the bottom
drawer of the safe.
Forgive me – it's not your fault. Move on, I pray you will find happiness that I couldn't
give you.
God – forgive me.
Lastly – Please tell Barry and SAA it's no reflection on our pilot-body – wonderful people.
I've just had enough of fighting this health on a daily basis.
God Bless you always, my blessings upon Jeremy for his future – He's strong and will
come through O.K. Please look after Him for me.
My will is in the Brown envelope in the safe. I leave everything else to Jeremy as stated
therein.
Bless you – Wally xxx
Sunday 25/02/07 xxx.
The intention of the deceased
[14] The suicide note is dated 25 February 2007 which is the date on which the
deceased died. The appellant left for work in the morning and came back home
just after 14h00. It can safely be inferred that the deceased wrote, or at least
signed and dated the note, that morning. He had a will in the safe. It follows that
3 This correctly reflects text of the note.
he probably knew that formalities are required for making a will. For reasons that
follow he clearly intended the note to be an amendment to his will.
[15] In the note the deceased wrote that 'Heather you can have this house, you
will obviously? sell it and should meet all your future needs.' In this statement,
the deceased is giving clear instructions on what should happen to his house.
There is no ambiguity in the statement. The house would devolve on the
appellant on his death.
[16] The note further stated that 'Also I authorise Standard Bank to give you
immediate access to Plusplan – there is R579,000.00 which will not leave you
battling.' Smith's counsel submitted that the deceased, when writing this note,
could not have thought that he was giving instructions to the bank. But the
question whether the bank could have acted on his instructions does not come
into the picture. What is relevant is the intention with which he wrote the
instruction. My view is that the deceased was expressing an instruction that the
money in the account should be given to the appellant. The instruction clearly
demonstrates his wish as to what should happen to the money.
[17] Another telling indication that the deceased wanted the note to be acted
upon are the following words at the end of the note: 'My will is in the Brown
envelope in the safe. I leave everything else to Jeremy.' He was conscious of the
fact that he had a will and that it did not make provision for the appellant, hence
the instructions contained in the suicide note making provision for her. The
instructions are clear and unequivocal. It can thus reasonably be inferred that
when he wrote the suicide note, the deceased intended that his instructions
would be implemented by the bank and his executors.
[18] Counsel for Smith submitted that when he wrote the suicide note the
deceased intended to give instructions for the drafting of a formal amendment to
his will. One of the reasons for the submission is hat there was no formal
signature on the note – just the name ‘Wally’. I find no merit in this submission.
The deceased could not have thought about drafting instructions for the
amendment to his will as he knew that he was about to commit suicide. And
signing the note as ‘Wally’ was the most natural way to sign an essentially
personal letter, albeit one with instructions as to the disposition of his property. A
formal signature is not required to meet the requirements of s 2(3) of the Wills
Act. The section requires only that the document is drafted or executed with the
intention of making or amending a will.
[19] The note was placed by the deceased, who was apparently a committed
Christian at a place where it could be seen, under a crucifix. This fact fortifies my
view that he wanted the instructions contained in it to be implemented on his
death.
[20] I agree with the submission by appellant’s counsel that the words used in
the suicide note indicate that the deceased was expressing his clear instruction
that, save for the house, the money in the Plusplan account and cash in the safe,
the residue of his estate should go to Smith.
Donatio mortis causa
[21] Smith's counsel further submitted that the language in the suicide note is
that of a donatio mortis causa rather than a will and as such fails to comply with
the formalities required by the Wills Act and was not accepted by the applicant
prior to the deceased's death.
[22] For a donatio mortis causa to be valid it must be executed with the same
formalities as are required for a will – see Jordaan & others NNO v De Villiers.4 It
is common cause that the suicide note does not comply with the formalities
required for a valid will. But in my view the deceased did not have a donation in
mind: he was regulating the disposition of the estate in anticipation of death. He
did not contemplate a donation that would have to be accepted by the appellant.
[23] I am satisfied that the suicide note was intended by the deceased to be an
amendment of his will as contemplated by s 2(3) of the Wills Act.
4 1991 (4) SA 396 (C) at 402E-H, and Lawsa (reissue) vol 31 para 370 and the authorities
cited.
Order
[24] (a)
The appeal is upheld with costs, including the costs of two counsel
where so employed.
(b)
The order of the court a quo is set aside and replaced with the following:
‘1
The Master of the High Court is directed to accept the document annexed
to the Notice of Motion as Annexure "A", as an amendment to the will of the late
Walter Percival Smith (identity number 511027 50335 089) for the purposes of
the Administration of Estates Act 66 of 1965.
The costs of the application are costs in the winding up of the deceased's
estate.
The third respondent is to pay the costs occasioned by his opposition,
which include costs of two counsel where so employed.'
________________
W L SERITI
Acting Judge of Appeal
APPEARANCES:
For appellant:
C J Pammenter SC
Instructed by:
Anthony Whatmore & Company, Durban North
Webbers, Bloemfontein
For respondent:
A W M Harcourt SC
Instructed by:
J H Nicolson Stiller & Geshen, Durban
Honey Attorneys 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:
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.
* * *
Ms. Heather Wendy Smith was staying together with the late Mr. Walter Percival
Smith (no relationship). They were lovers. Mr. Smith committed suicide. Prior to
committing suicide he wrote a ‘suicide note’ in which he stated that Ms. Smith (his
girlfriend) can have a house situated at 688 Kingsway, Athlone Park, Amanzimtoti,
Kwa-Zulu Natal and about R 579,000 00 which was in a Plus Plan savings
account. Mr. Jeremy Allan Smith, son of the deceased, challenged the validly of
the suicide note.
The Supreme Court of Appeal found that the ‘suicide note’ amends the formal will
of the deceased. In terms of the formal will, the deceased left his entire estate to
the son, Mr. Jeremy Allan Smith. |
51 | non-electoral | 2017 | SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 734/2015
In the matter between:
FIRSTRAND BANK LTD
APPELLANT
and
KJ FOODS CC (IN BUSINESS RESCUE)
RESPONDENT
Neutral citation: FirstRand Bank Ltd v KJ Foods CC (In business
rescue) (734/2015) [2015] ZASCA 50(26 April 2017).
Coram:
Mpati AP, Theron, Seriti, Van Der Merwe JJA and
Schoeman AJA
Heard:
7 September 2016
Delivered: 26 April 2017
Summary: Companies Act 71 of 2008 : proposed business rescue plan :
proper interpretation of section 153(1)(a)(ii) and 153(7) : the
determination whether a vote by a creditor against the adoption of a
proposed business rescue plan was inappropriate and ought to be set aside
entails a single enquiry : a court will set aside a vote on the ground that its
result was inappropriate if it is reasonable and just to do so : thus entails a
value judgment : effect of the court setting aside vote : once vote is set
aside, proposed business plan considered to have been adopted ex lege :
no further vote envisaged by the Act.
________
ORDER
___
On appeal from: Gauteng Division of the High Court, Pretoria
(Mavundla J sitting as court of first instance):
1 Paragraph 1 of the order of the court a quo is amended to read:
‗In terms of the provisions of section 157(7) of the Companies Act 71 of
2008 the vote of the respondent against the adoption of the revised
business rescue plan exercised on 2 December 2013 is set aside.‘
2 Paragraph 2 of the order of the court a quo is set aside.
3 The appeal is otherwise dismissed.
___
JUDGMENT
___
Seriti JA (dissenting):
[1] This is an appeal against a judgement and order of the Gauteng
Division of the High Court, Pretoria (Mavundla J) setting aside in terms of
s 153(7) of the Companies Act 71 of 2008 (the Act), a vote against the
adoption of a proposed revised business rescue plan. The court a quo
found that the vote of the appellant against the proposed business rescue
plan was inappropriate and consequently granted an order in terms of
which the voting result of rejection was set aside. The court further
ordered that the proposed revised business rescue plan be adopted by the
affected parties in terms of the Act. Finally, it ordered the respondent to
pay the costs of the application, which costs were to include the
reasonable expenses and disbursements of the joint business rescue
practitioners. The appeal is before this court with leave of the court a quo.
[2] The principal issue in this appeal is the proper interpretation of
section 153(1)(a)(ii) and 153(7) of the Act. In particular, the questions
that arise are (i) whether the court a quo was correct in finding that the
appellant‘s vote against the proposed business rescue plan was
‗inappropriate‘ (ii) whether the court a quo was correct to set aside the
voting result of the rejection of the proposed business rescue plan and (iii)
whether the court a quo had any power to refer the rejected plan to the
affected persons ‗to be adopted‘ by them.
Factual Background
[3] The relevant facts of this case are briefly the following. The main
business of KJ Foods CC is the production and supply of bread to cash
and carries and the informal market. The respondent has been in existence
for a period exceeding 20 years and employs approximately 220
employees. It is managed by its sole member, Mr S C B Tuna who has
managed and maintained the respondent for a period exceeding 20 years.
[4] The respondent started to experience financial distress towards the
end of 2012. On 15 July 2013 the respondent resolved to be placed under
business rescue proceedings in terms of s 129 of the Act. One of the
reasons advanced for the respondent‘s financial distress was that the
respondent was in arrears with its payments towards its account with one
of its major supplier of flour, Pioneer Foods, which negatively affected
the respondent‘s business. The respondent, on the same date approached
two business rescue practitioners (practitioners) namely Messrs W
Cawood and J C Beer and requested them to accept appointments as its
practitioners. They both accepted the appointments, and business rescue
commenced on 17 July 2013. On 24 July 2013 the appointed practitioners
informed the respondent‘s creditors about their appointment.
[5] The practitioners investigated the affairs of the respondent. It was
established that the financial distress was caused by various factors,
which included the down turn in the bread baking industry since
September 2012 due to lower consumer demands and an increase in direct
and indirect input costs. The situation was exacerbated by a persisting
accounting error which occurred in the books of the respondent. This
resulted in an outstanding tax liability of approximately R4 million. At
the beginning of 2013 the respondent paid the tax liability in full and that
placed further pressure on the respondent‘s cash flow.
[6] The first meeting of creditors took place on 6 August 2013.
Various creditors of the respondent attended the meeting. Pioneer Foods
was also represented. Representatives of the appellant arrived at the
meeting after the meeting had been concluded and adjourned. However
they were allowed to provide the practitioners with their claim, which
was subsequently included in the respondent‘s business rescue plan. The
minutes of the said meeting recorded that ‗all affected parties present at
the meeting were in agreement that the respondent‘s business can be
successfully rescued subject to a brief moratorium being put in place in
the proposed business rescue plan‘.
[7] Following the first meeting of creditors a business rescue plan was
published on 28 August 2013. The initial plan was revised in the light of
new claims that had not been included in the initial rescue plan and,
furthermore the existing creditors of the respondent required certain
amendments to be effected.
[8] A second meeting of creditors took place on 10 October 2013. The
purpose of the meeting was to discuss and vote on the revised business
rescue plan. That meeting was adjourned and after certain adjustments
were made, a final business rescue plan was published on 21 November
2013.
[9] The third meeting of creditors (a continuation of the adjourned
meeting of 10 October 2013) took place on 2 December 2013. An
annexure which was prepared by the practitioners and presented to the
meeting indicated that the respondent owed different creditors a total
amount of R40 992 192.42. First National Bank (FNB) and Wesbank,
both secured creditors, were owed R6 337 587.37 in respect of a loan and
R5 645 948.20 for financing a number of vehicles respectively. The
annexure further indicated that Pioneer Foods which was not a secured
creditor was owed an amount of R12 884 850. The combined value of the
concurrent claims against the respondent represented an amount of
approximately R 28 million.
[10] Creditors were invited to make proposals with regard to possible
further amendments to the plan but no proposals for possible further
amendments were made. At the third meeting of creditors the appellant
held a voting interest of 29.81 per cent and the remainder of the creditors
held a voting interest of 70.19 per cent.
[11] When no further amendments were made to the business rescue
plan and no new proposals were made, the creditors proceeded to the
voting stage. All the creditors in attendance at the meeting voted in favour
of the business rescue plan except the appellant who voted against its
adoption. Section 152(2) of the Act requires 75 per cent of the creditors
voting interest to vote in favour of the business rescue plan for it to be
adopted. The requisite 75 per cent of the creditors voting interests was not
obtained with the result that the final business rescue plan was rejected.
The appellant voted against the adoption of the rescue plan because in its
view the plan was vague and that the appellant had no faith in the plan.
The appellant raised various criticisms of the plan. Among others, the
appellant stated that the amended business rescue plan provided no basis
that consumer demands would increase, that the direct and/or indirect
input costs would decrease and/or that the respondent‘s cash flow would
increase. Furthermore, the appellant was of the view that the proposed
plan would not achieve the postulated results due to erroneous arithmetic
and assumptions. The appellant was also of the view that the respondent‘s
revenue will be less and/or its costs of sales will be higher and/or its
monthly expenses would be more – with the consequences that the
predicted figures in the forecasted figures were wrong and not workable.
[12] The amended business rescue plan postulated that if the plan was
adopted, the secured and statutory preferent creditors and concurrent
creditors would receive 100 cents in the rand, but in the event of
immediate liquidation, the secured and statutory preferent creditors would
receive 100 cents in the rand and the concurrent creditors would receive
51 cents in the rand. The business rescue plan also stipulated that ‗all
liabilities in terms of instalment agreements and covering bonds with
Wesbank, FNB and ABSA would be repaid in terms of the original
finance agreements‘.
[13] The final business rescue plan envisaged full payment to all
creditors over certain periods. All creditors (excluding secured creditors)
would be repaid over a period of 52 months, secured creditors would have
to wait slightly longer as their repayments were to be made in the
instalment amounts and time periods reflected in the original financing
agreements. The appellant as secured creditor of the respondent would
receive 100 cents in the rand in liquidation and in the business rescue
scenario. The appellant would also receive interest on its claim in the
business rescue scenario which interest would not necessarily be received
by the appellant in liquidation. The amended business rescue plan
stipulated that the implementation of the business rescue plan will be
monitored for a period of two to four months subsequent to the adoption
thereof.
[14] As stated earlier, the appellant voted against the adoption of the
proposed business rescue plan. The practitioners regarded the vote of the
appellant as inappropriate and consequently the practitioners issued an
application in terms of s153 of the Act seeking the setting aside of the
vote by the appellant.
[15] As at 18 November 2013 FNB‘s claim was R6 337 587.37. By July
2016 the outstanding amount had been reduced to R5 294 272.57.
Wesbank was one of the secured creditors of the respondent. It had
provided vehicle asset finance to the respondent for the purchase of 56
motor vehicles. Its claim as at 18 November 2013 amounted to
R5 645 948.20. The respondent continued making payments to Wesbank
and as at 13 June 2014, 11 of the 56 vehicles purchased by the respondent
had been paid for in full.
[16] The position by the time of the hearing of the application was that
the respondent had maintained all payments due to the appellant in terms
of the existing agreements between the parties. The monthly payments
were honored as provided for in the business rescue plan. As at 1
February 2016, taking into account the payments made by the respondent
to the appellant, the claims of the appellant had dropped in value, and
they represented a voting interest of approximately 20.73 per cent. The
claim of FNB will be settled in full in terms of the original finance
agreement by November 2022. This claim is secured.
[17] In a report dated 26 July 2016 and prepared by the practitioners at
the request of Mpati AP, it is stated that the business rescue plan has been
implemented. As at 21 July 2016, Absa, which was one of the secured
creditors was paid in full. Wesbank and FNB were also secured creditors
and as at date of business rescue they were owed R5 645 948.20 and
R6 337 587.37 respectively. As at 21 July 2016, Wesbank‘s claim was
reduced to R402 430.30 and FNB‘s claim was reduced to R5 294 272.57.
[18] As at the inception of business rescue the claims of unsecured
creditors were R18 145 448.83 in total and as at 21 July 2016 that amount
had been reduced to R8 933 795. According to the said report as at the
commencement of business rescue the debts of the respondent amounted
to R30 265 457.05 and as at 21 July 2016 the debts had been reduced to
R14 630 498.03. The report further states that the respondent company
was performing in line with the projected income and expenditure levels
as predicted in the business rescue plan.
Legal Framework
[19] Section 152(2) of the Act states that in a vote for the proposed
business rescue plan same will be approved on a preliminary basis if:
‗(a) it was supported by the holders of more than 75% of the creditors‘ voting interest
that were voted; and
(b) the votes in support of the proposed plan included at least 50% of the independent
creditors‘ voting interest, if any, that were voted.‘
[20] As stated earlier the appellant held approximately 29 per cent of
the voting interest and consequently the business rescue plan could not be
approved as the appellant voted against its adoption. The proposed
revised business rescue plan was accordingly rejected.
[21] Section 152(3) provides that:
‗If a proposed business rescue plan -
(a)
is not approved on a preliminary basis . . . the plan is rejected, and may be
considered further only in terms of s 153.‘
[22] Section 153(1)(a) states that:
‗If a business rescue plan has been rejected . . . the practitioner may –
(i)
seek a vote of approval from the holders of voting interests to prepare and
publish a revised plan; or
(ii)
advise the meeting that the company will apply to a court to set aside the result
of the vote by the holders of voting interests or shareholders, as the case may be, on
the ground that it was inappropriate.‘
[23] Section 153(7) provides the following:
(i) ‗ On an application contemplated in subsection (i) (a) (ii), . . ., a court may order
that the vote on a business rescue plan be set aside if the court is satisfied that it is
reasonable and just to do so, having regard to –
(a) the interests represented by the person or persons who voted against the proposed
business rescue plan;
(b) the provision, if any, made in the proposed business rescue plan with respect to
the interests of that person or those persons; and
(c) a fair and reasonable estimate of the return to that person, or those persons, if the
company were to be liquidated.
[24] Section 5(1) stipulates that the Act must be interpreted and applied
in a manner that gives effect to the purposes as set out in s 7. Section 7(k)
stipulates that the purpose of the Act 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.‘
Discussion
[25] The remedy of s 153(1) may only be employed when the business
rescue plan has been rejected. The business rescue practitioner invokes
the provisions of s 153(1)(a)(ii) when he or she is of the view that the
result of the vote was inappropriate. The provisions of s 153(1)(a)(ii)
target the result of the vote which a business rescue practitioner considers
to be inappropriate.
[26] The appellant‘s counsel contended that there are two stages in the
enquiry. First, the court must establish whether the vote was inappropriate
(s 153(1)(a)(ii)) and if so, then the court must consider whether it would
be reasonable and just to set aside the result of the vote, taking into
account the factors listed in s 153(7). The respondent‘s counsel submitted
that the principal issue on appeal concerns the meaning and proper
interpretation of s 153(1)(a)(ii) and 153(7) of the Act.
[27] In Shoprite Checkers (Pty) Ltd v Berryplum Retailers CC (Murray
NO, Mitateko, Shirelele NO Intervening Parties)(47327/2014) [2015]
ZAGPPHC 255; 2015 JDR 0558 (GP) para 40 Tuchten J said that ‗a court
considering an attack on a vote under s 153(7) must first determine whether the vote
was inappropriate. Only if it finds that the vote was inappropriate, can the court
proceed to consider whether, taking this into account, it would be reasonable and just
to set the vote aside.‘
[28] In Ex Parte Target Shelf 284 CC (Commissioner for the South
African Revenue Service and Business Partners Ltd Intervening Parties)
(21955/14; 34775/14) [2015] ZAGPPHC 740; 2015 JDR 2219 (GP),
Gauteng Division, Pretoria Kubushi J agreed with Tuchten J on the two
stage enquiry but held that the court should proceed to the second stage
even if it had come to the conclusion that the vote was not inappropriate.
In that case she found the vote of Business Partners against the adoption
of the business rescue plan was not inappropriate and thereafter examined
whether the court can set aside the vote in terms of s 153(7) of the Act.
(See also P Delport & Q Vorster Henochsberg on the Companies Act 71
of 2008 (Service Issue 12, 2016) at 536(2)).
[29] The court a quo followed the same reasoning. It first enquired
whether the vote of the appellant was inappropriate, and after finding that
the vote was inappropriate, it invoked the provisions of s 153(7). In
my view a court must first determine whether or not the vote was
inappropriate and if so, invoke the provisions of s 153(7). The court‘s
discretionary powers afforded by s 153(7) become applicable once the
jurisdictional fact of inappropriateness has been found or established.
[30] In Natal Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18 Wallis JA while
dealing with the approach to interpretation of documents said:
‗The present state of the law can be expressed as follows: 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‘.
(See also Cloete Murray & another NNO v Firstrand Bank Ltd t/a
Wesbank [2015] ZASCA 39; 2015 (3) SA 438 (SCA) para 30).
[31] In the present matter the appellant‘s counsel contended that the test
to be applied in order to determine whether the vote is ‗inappropriate‘ or
not is a subjective test. A vote cannot be held to be inappropriate so it was
argued, if the creditor‘s reasons for voting against adoption of the
proposed business rescue plan reflect a bona fide vote to advance or
protect that creditor‘s interests. Counsel further contended that having
regard to the language used in the relevant section and in its immediate
context, this suggests that an inappropriate vote is a dissenting vote that
does not honestly reflect the creditor‘s perception of its own interests. He
submitted further that the exercise of a right, such as the right to vote
against the adoption of the business rescue plan will be mala fide and
therefore inappropriate, if it is used for a purpose for which it was not
primarily intended, but also intended to achieve an improper result. In his
view, the test to be applied is a subjective test and not an objective test. A
creditor has no duty so the argument, continued to consider the position
of other persons and therefore the vote cannot be inappropriate if it was
intended to advance that specific creditor‘s interests.
[32] On the other hand, the respondent‘s counsel submitted that the
word ‗inappropriate‘ does not mean that something was unlawful or
improper. In the current context, it simply means that the vote gave rise to
a result that is not suitable to the situation at hand. He further contended
that the inappropriateness pertains to the result of the vote having regard
to merits of the matter. The inappropriateness of the vote relates to the
manner in which the company or other creditors perceive the vote against
the plan. An appropriateness of the vote is not viewed at application stage
from the perspective of the dissenting creditor.
[33] In order to determine the meaning of the word ‗inappropriate‘ the
intention of the legislature must be determined by giving the word its
ordinary grammatical meaning which the context dictates. The apparent
purpose of the Act assists in the process of interpreting or ascertaining the
meaning of the word inappropriate. The Shorter Oxford English
Dictionary 6ed (2007) defines the word ‗inappropriate‘ as unsuitable,
improper, wrong, inadvisable, misguided, undesirable, misplaced, etc. As
mentioned, s 7(k) stipulates that the purpose of the Act 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.
In my view, the word inappropriate refers to or means an act which
unduly undermines the achievement of the purpose of the Act, which is
stipulated in s 7(k). Any vote which unduly undermines the achievement
of the rescue of a financially distressed company will be inappropriate.
[34] In the present matter, the vote of the appellant resulted in the
rejection of the proposed business rescue plan, which rejection was to the
detriment of the respondent and other affected creditors. The vote of the
appellant had the ability to frustrate the efficient rescue and recovery of
the financially distressed respondent. In my view, the test to be applied is
an objective test and not a subjective test. In this matter the vote against
the adoption of the business rescue plan was inappropriate. The adoption
of the amended business rescue plan would not have prejudiced the
appellant in any manner whatsoever as the business rescue plan stated
that ‗[a]ll liabilities in terms of the instalment agreements and covering
bonds with Wesbank, First National Bank and ABSA will be repaid in
terms of the original finance agreements‘. The provision made in the
proposed business rescue plan for the payments to the appellant does not
deviate from any payment that the appellant stood to receive in terms of
the initial agreement between the parties. The appellant is a secured
creditor and if, for any reason the business rescue plan does not yield the
anticipated results, the appellant can fall back on its security to recover
the balance of the money owed to it. If the proposed business rescue plan
is successfully implemented all the affected creditors will benefit. In my
view the vote of the appellant against the adoption of the proposed
amended business rescue plan was ‗improper‘ or ‗misplaced.‘
[35] As stated earlier s 153(7) of the Act provides that a court may order
that the vote on a business rescue plan be set aside, if the court is satisfied
that it is reasonable and just to do so. The subsection further provides that
when making its decision, the court must have regard to the interests
represented by the person or persons who voted against the business
rescue plan, the provision made in the proposed business rescue plan with
respect to the interests of that person or persons and a fair and reasonable
estimate of the return to that person, or those persons, if the company
were to be liquidated.
[36] The appellant is a secured creditor of the respondent. The
respondent never defaulted on any payments due to the appellant, neither
before nor after the commencement of the business rescue. Provision
made for payments to the appellant in the proposed business rescue plan
does not differ from any payment that the appellant stood to receive in
terms of the initial agreements between the parties. The appellant, as
secured creditor of the respondent, will receive 100 cents in the rand in
liquidation and will also receive 100 cents in the rand in a business
rescue. The interests of the appellant will therefore not be compromised
in the business rescue scenario.
[37] Furthermore the business rescue has certain obvious advantages to
other affected persons. In a business rescue, the concurrent creditors will
receive 100 cents in the rand and in liquidation the concurrent creditors
will receive 51 cents in the rand. The business rescue, as compared to
liquidation benefits both secured and concurrent creditors.
[38] Section 136(1) of the Act provides that during a company‘s rescue
proceedings, employees of the company continue to be so employed on
the same terms and conditions. The only exception to this provision is
where changes to the employee‘s status occur in the ordinary course of
attrition or where the employees and the company agree to different terms
and conditions. On the other hand s 38(1) of the Insolvency Act 24 of
1936 provides that the contracts of service of employees whose employer
has been sequestrated are suspended with effect from the date of the
granting of a sequestration order. The suspended contracts of
employment, depending on certain circumstances, may be terminated
during the sequestration or liquidation process. In the business rescue
scenario, the employees of the company will retain their employment
whereas in the sequestration or liquidation scenario employees may lose
their employment.
[39] The facts of this case clearly indicate that it is reasonable and just
that the vote on the business rescue plan should be set aside.
[40] The appellant‘s counsel contended that s 153 of the Act does not
give the court any power (expressly or impliedly) to order that a rejected
plan be adopted by an affected person. On the other hand the respondent‘s
counsel contended that once the court sets aside the dissenting vote, the
business rescue plan is deemed to have been ‗adopted.‘
[41] I agree with the contention that the court has no powers to refer
back the business rescue plan to the affected parties for adoption thereof.
The vote on the business rescue plan, which was set aside was substituted
by the court order. The business rescue plan was deemed approved and
there was no need to refer the business rescue plan to the affected parties
for adoption.
[42] The respondent has succeeded substantially in this appeal. If there
was no settlement agreement referred to hereunder the respondent would
have been entitled to its cost.
[43] However, after the matter was argued in this court a judgement was
prepared. Before the judgment was ready for delivery the parties
informed the Registrar of this court that the matter had been settled. It
appears that Mr and Ms Tuna were sued by the appellant in their capacity
as sureties for payment of the amounts owed by the respondent to the
appellant. In terms of the settlement agreement, the two sureties
undertook to pay the sum of R12 million on or before 5 December 2016,
in full and final settlement of the respondent‘s indebtedness to the
appellant. However, in paragraph 5 of the settlement agreement it is
stated that –
‗[Appellant] and KJ Foods (in business rescue) agree as follows: (a) (Appellant) does
not withdraw the appeal and judgement will be delivered by the Supreme Court of
Appeal;
(b) This agreement of settlement be noted.‘
The Settlement
[44] The settlement agreement reached between the parties means that
there is no longer a lis between the parties to this appeal. However, in a
letter from Koster Attorneys accompanying the copy of the agreement, it
is argued on behalf of both parties that ‗the industry can greatly benefit
from a judgement dealing with section 153 (1) read with section 153 (7)
of the Act, and the Honourable Court is with the greatest respect
requested to, notwithstanding the settlement reached, deliver judgement
in the matter….‘Although the merits of the case are now no longer
relevant , I agree with the submission that this court‘s interpretation of
section 153(1) and (7) of the Act will benefit the industry. It is for that
reason that judgement will be delivered despite the settlement agreement.
[45] In terms of the settlement reached each party ‗ is liable for payment
of its own costs‘. No costs order will be therefor be made.
[46] Save for paragraph (ii) of the order of the court a quo, which is
hereby set aside, the appeal is otherwise dismissed.
[47] In the result, I would have made the following order:
1 Paragraph 1 and 3 of the order of the court a quo are confirmed.
2 Paragraph 2 of the order of the court a quo is set aside.
__________________
W L SERITI
JUDGE OF APPEAL
Schoeman AJA (Mpati AP, Theron and Van der Merwe JJA
concurring)
[48] This appeal concerns the question whether it was reasonable and
just, in terms of s 153(7) of the Companies Act 71 of 2008 (the Act) for
the Gauteng Division of the High Court, Pretoria (Mavundla J) to set
aside a vote by the appellant, Firstrand Bank Ltd (Firstrand) against the
adoption of a business rescue plan in respect of the respondent, KJ Foods
CC (KJ Foods). Firstrand‘s vote against the adoption of the business
rescue plan had resulted in the rejection of the plan. The ancillary
question is: what are the consequences for business rescue proceedings,
once the result of such a vote had been set aside.
[49] After the matter was argued in this court a judgment was prepared.
Events however overtook the delivery of the judgment: the parties
informed the Registrar of this court that the matter had been settled due to
a settlement that had been reached between Mr and Ms Tuna, who signed
as sureties for KJ Foods‘ indebtedness to Firstrand. KJ Foods and
Firstrand however agreed that Firstrand did not withdraw the appeal and
that a judgment ‗will be delivered by the Supreme Court of Appeal.‘ In an
attorneys‘ letter accompanying a copy of the settlement agreement both
parties expressed a view that ‗. . . the industry can greatly benefit from a
judgement dealing with section 153 (1) read with section 153 (7) of the
Act, and the Honourable Court is with the greatest respect requested to,
notwithstanding the settlement reached, deliver judgement in the matter
. . .‘. I agree.
[50] I have read the judgment of Seriti JA but unfortunately I disagree
with his finding that a two pronged approach is necessary to determine
whether the result of a vote should be set aside. Furthermore, the effect of
the setting aside of the vote has not been addressed with sufficient detail
in my colleague‘s judgment. Due to the view I take in this matter it is
necessary to set out the background facts.
Background
[51] KJ Foods has been a producer and supplier of bread to the informal
sector of the community and cash and carry wholesalers and a customer
of Firstrand for more than 20 years. On 17 July 2013 KJ Foods
commenced business rescue proceedings after it had experienced
financial distress that I will elaborate on later. Messrs Cawood and De
Beer were appointed as the business rescue practitioners (the
practitioners) on 24 July 2013. A first meeting of creditors took place on
6 August 2013 and on 28 August 2013 a business rescue plan was
published. The second meeting of creditors was postponed and after
further claims were proved and claim figures revised, the final revised
business rescue plan was published on 21 November 2013.
[52] In terms of this business rescue plan KJ Foods owed a total amount
of R40 992 192.42. The secured creditors were Absa Bank Ltd and
Firstrand. The latter‘s claim consisted of a secured loan by First National
Bank (FNB) to KJ Foods in an amount of approximately R6 million and
motor vehicle finance agreements between the latter and Wesbank in a
total amount of approximately R5.5 million. Absa‘s claim was for an
amount of R141 541.95. The main concurrent creditor was Pioneer Foods
(commonly known as Sasko) whose claim was in excess of R12 million.
The total claims of the independent concurrent creditors were R17
152 435.30.
[53] The revised business rescue plan, made provision for secured
creditors to be paid in full, in terms of the instalment agreements and
covering bonds in their favour. It was postulated that concurrent creditors
would also be paid in full, but if KJ Foods were to be liquidated, the
secured creditors would be paid in full, while the concurrent creditors
would only receive 51 per cent of the money owing to them.
[54] Firstrand held 29 per cent of the creditors‘ voting interests. It voted
against the adoption of the plan and due to its vote, the business rescue
plan could not be approved on a preliminary basis, as 75 per cent of
creditors‘ voting interests that had voted had to approve the business
rescue plan.1 The practitioners advised the meeting that application will
be made to court in terms of s 152(3)(a) to set aside the result of the vote,
on the grounds that it was inappropriate. Thereafter the meeting was
adjourned.
[55] On 13 December 2013 an application was launched for a
declaratory order that ‗the result of the vote by the holders of voting
1 In terms of s 152 (2) of the Act, a proposed business rescue plan will be approved on a preliminary
basis if, in a vote called for its approval, (a) it was supported by the holders of more than 75 per cent of
the creditors' voting interests that were voted; and (b) the votes in support of the proposed plan
included at least 50 per cent of the independent creditors' voting interests, if any, that were voted.
interests . . . rejecting the revised business rescue plan, be set aside‘ on
the grounds that it was inappropriate and that the business rescue plan be
adopted. On 10 October 2014 the high court ordered that the result of the
vote be set aside ‗on the grounds that the voting against the plan was
inappropriate‘; that the revised business rescue plan be adopted by the
parties and that the costs of the application, including the costs of the
practitioners, be paid by Firstrand. On 23 April 2015 reasons were given
for the mentioned order and subsequently leave to appeal to this court
was granted on 12 August 2015.
The Financial Position of KJ Foods
[56] Before September 2012 KJ Foods sold approximately five million
loaves of bread per month. However, the input costs of the bread baking
industry increased sharply with a concomitant increase in the price of
bread and a downturn in consumer demand. Therefore, in September
2012, due to a sharp decline in market demand, sales volumes decreased
to 2.8 million loaves per month. KJ Foods was also indebted to the South
African Revenue Service in the amount of approximately R4 million due
to an accounting error by a bookkeeper. This amount was paid at the
beginning of 2013 and this resulted in further cash-flow problems.
[57] Prior to the commencement of business rescue proceedings, the
only member of KJ Foods, Mr Tuna, informed representatives of
Firstrand that he contemplated commencing business rescue proceedings
due to difficulties with one of the suppliers, Pioneer Foods. This resulted
in Firstrand immediately freezing KJ Foods‘ trading account, which was
approximately R1 million overdrawn.
The Creditors’ Meetings
[58] At the first creditors‘ meeting the practitioners refused to admit
three further claims totalling R 16 430 923 which included a claim where
KJ Foods bound itself as surety for the obligations of Nancefield
Properties towards Firstrand in the amount of R13 867 281.13. Following
the first meeting of creditors, a rescue plan was duly published.
[59] On 10 October 2013, the second meeting of creditors was held. At
this meeting, the initial rescue plan was considered. Firstrand raised
certain issues with the plan, including the fact that it excluded the surety
liability in respect of Nancefield Properties and that the plan was vague
and provided no basis upon which KJ Foods could be rescued. The
meeting was, thereafter, duly adjourned and a decision taken to publish an
adjusted plan within 21 business days.
[60] Prior to the publishing of the revised business rescue plan the
Department of Trade and Industry (the DTI) deposited an amount of
approximately R2,7 million into K J Foods‘ then frozen account held with
Firstrand. The deposit represented a non-repayable grant by the DTI in
favour of KJ Foods. Firstrand used this amount to pay off the value of
The overdraft held on KJ Foods‘ account. Firstrand retained
R1 006002.17 of the amount paid by the DTI, and refused to release this
amount. A further amount of approximately R20 000 was paid into the
frozen account of the KJ Foods on or during 16 November 2013. A
revised business rescue plan was published incorporating the payment of
the R2.7 million by the DTI. The revised business rescue plan was aimed
at substantially improving the creditors‘ ability to recover their debt and
to rescue the company as opposed to immediate liquidation.
[61] The practitioners envisaged that concurrent creditors would be
repaid over a period of 52 months and that the liabilities in respect of
instalment agreements and covering bonds of Firstrand and ABSA would
be repaid in terms of the original finance agreements.
[62] The amended business rescue plan was voted upon during the
second meeting of creditors on 2 December 2013. It did not include the
approximately R13 million liability for which KJ Foods stood surety for
Nancefield Properties. The business rescue plan stated that the reason for
exclusion of the surety liability was that the obligation of the principal
debtor was up to date. The practitioners opined that the surety claim did
not fall under the definition of ‗affected party‘ for purposes of the alleged
claim.
The Rescue Plan
[63] According to the plan, the elected practitioners were required to get
the cash flow to the optimal level while simultaneously negotiating and
restructuring the repayment terms of the debt. With regards to the
employees, the practitioners did not envisage any changes in their number
or the terms and conditions of employment if the business rescue plan
was adopted. In relation to the benefits of adopting the plan as opposed to
liquidation of the entity, it noted that creditors stood to receive a
substantially better return, while KJ Foods stayed in business and 220
employees retained their jobs.
The Financial Position after Implementation of the Plan
[64] As from the date of the launching of the application, the
practitioners implemented the business rescue plan. The parties were
requested to provide details regarding the implementation of the plan
before the hearing of the appeal. From the information provided on 26
July 2016 it is apparent that (a) the secured debt of Firstrand regarding the
commercial property finance loan had diminished from R6 337 587.37 to
R5 294 272.57 and the business rescue practitioners had kept up with
payments in terms of the original agreements; (b) Wesbank‘s debt in
respect of vehicle financing had been reduced from the disputed amount
of R5 645 948.20 to R402 430.30 with KJ Foods keeping up with
payments in terms of the agreements; (c) ABSA‘s secured debt of
R141 541.95 had been paid in full; and (d) the unsecured debts had been
brought down from R18 145 448.83 in November 2013 to R8 933 795.16
in July 2016.
[65] From the above it is apparent that business rescue has benefitted all
the creditors. The agreements between the company and Firstrand have
been strictly adhered to and payments have been made in compliance
with those agreements.
The Parties’ Contentions
[66] It is apposite at this stage, to set out the parties‘ respective
entrenched positions. Firstrand contended that the decision of the high
court to set aside its vote in the business rescue was wrong. It averred that
the enquiry in relation to the question whether the vote in the business
rescue must be set aside in an application of this nature, is two-pronged.
First, it must be determined whether Firstrand‘s vote was inappropriate,
and second, if so, whether it would be reasonable and just to set aside the
result of the vote. It relied on two high court judgments namely, Shoprite
Checkers (Pty) Limited v Berryplum Retailers CC2 and Ex Parte Bhidshi
2 Shoprite Checkers (Pty) Limited v Berryplum Retailers CC (Murray NO, Mikateko, Shirilele NO
Intervening Parties) 2015 JDR 0558 (GP).
Investments CC3 to support its contentions. It was argued in this court that
the question whether it was reasonable and just to set aside a vote
rejecting the adoption of a rescue plan can only be considered after it had
been found that such a vote was inappropriate. Therefore, if the vote was
appropriate, the application must fail for then there is no need to consider
whether it was just and reasonable to set aside the vote. KJ Foods, on its
part, submitted that the court a quo‘s finding that Firstrand‘s vote against
the rescue plan was inappropriate should be upheld. KJ Foods submitted
that s 153 of the Act allowed the court a quo a discretion which it
exercised around the parameters of what it considered to be ‗reasonable
and just‘. It further contended that the language of s 153(7) did not
support the interpretation propagated by Firstrand.
[67] Before us, Firstrand heavily criticised the rescue plan. It argued
that the plan would fail to achieve the result postulated due to erroneous
arithmetic and assumptions and conditions that will cause one creditor to
be preferred over the others. It submitted that forecasts made in the plan
were not workable, that the plan was vague and erroneous, and that its
failure to deal with the disputed claims exacerbated this. It bemoaned the
fact that the plan allegedly caused preferences and relegated secured
creditors to a subordinate status of concurrent creditors, because they
were paid last and could not rely on their security, as they would have
been entitled to in liquidation proceedings.
The Salient Provisions of the Act
[68] Business rescue is the development and implementation of a plan
to rescue an entity by restructuring its affairs, business, property, debt and
other liabilities in a manner that maximises the likelihood of the entity
3 Ex Parte Bhidshi Investments CC 2015 JDR 2161 (GP).
continuing in existence on a solvent basis. If it is not possible for the
entity to so continue in existence, the plan must be developed and
implemented in a manner that results in a better return for the entity's
creditors or shareholders than would result from its immediate
liquidation.4 The manner in which the plan envisaged in s 128(1)(b)(iii)
must be developed and approved is dealt with in, amongst others, ss 1505
and 151.6 In terms of s 151(1) the plan must be considered at a meeting of
creditors and any other holders of a voting interest.7 Section 152(1)(d)(ii)
of the Act directs the practitioner to adjourn the meeting in order to revise
the plan for further consideration. Approval of the plan occurs in terms of
s 152(2) which reads:
‗In a vote called in terms of subsection (1)(e), the proposed business rescue plan will
be approved on a preliminary basis if-
(a) it was supported by the holders of more than 75% of the creditors' voting interests
that were voted; and
(b) the votes in support of the proposed plan included at least 50% of the independent
creditors' voting interests, if any, that were voted.‘
An independent creditor is defined in s 128(1)(g) as a person who is a creditor of the
company, including an employee of the company who is a creditor in terms of s
144(2) and who is not related to the company, a director, or the practitioner, subject to
4 Section 128(1)(b)(iii) of the Act.
5 In terms of s 150(1) of the Act, the practitioner, after consulting the creditors, other affected persons,
and the management of the company, must prepare a business rescue plan for consideration and
possible adoption at a meeting held in terms of s 151.
6 Section 151 reads:
‗(1) Within 10 business days after publishing a business rescue plan in terms of section 150, the
practitioner must convene and preside over a meeting of creditors and any other holders of a voting
interest, called for the purpose of considering the plan.
(2) At least five business days before the meeting contemplated in subsection (1), the practitioner must
deliver a notice of the meeting to all affected persons, setting out-
(a) the date, time and place of the meeting;
(b) the agenda of the meeting; and
(c) a summary of the rights of affected persons to participate in and vote at the meeting.
(3) The meeting contemplated in this section may be adjourned from time to time, as necessary or
expedient, until a decision regarding the company's future has been taken in accordance with sections
152 and 153.
7 A ‗voting interest‘ means an interest as recognised, appraised and valued in terms of subsecs 145 (4)
to (6) of the Act. These provisions deal with participation by creditors respect of any decision
contemplated in Chapter 6 of the Act.
subsection (2).8
[69] Section 152(3)(a) states that if a proposed business rescue plan is
not approved on a preliminary basis, as contemplated in subsection (2),
the plan is rejected, and may be considered further only in terms of s 153.
Section 153 determines:
‗(1)(a) If a business rescue plan has been rejected as contemplated in section 152 (3)
(a) . . . the practitioner may-
(i) . . . ;
(ii) advise the meeting that the company will apply to a court to set aside the result of
the vote by the holders of voting interests or shareholders, as the case may be, on the
grounds that it was inappropriate.‘9
[70] In this instance the business rescue plan was not approved but
rejected in terms of s 152(3)(a) because it could not muster the required
support of holders of more than 75 per cent of the creditors' voting
interests that were voted; and it is not clear from the papers whether there
were independent creditors who voted. The application to set aside the
vote was brought in terms of the provisions of s 153(7) which reads as
follows:
‗(7) On an application contemplated in subsection (1)(a)(ii), or (1)(b)(i)(bb), a court
may order that the vote on a business rescue plan be set aside if the court is satisfied
that it is reasonable and just to do so, having regard to-
(a) the interests represented by the person or persons who voted against the proposed
business rescue plan;
(b) the provision, if any, made in the proposed business rescue plan with respect to the
interests of that person or those persons; and
8 Section 128 (2) states that for the purpose of subsection (1)(g), an employee of a company is not
related to that company solely as a result of being a member of a trade union that holds securities of
that company.
9 Professor Piet Delport et al Henochsberg on the Companies Act 71 of 2008 Companies Act 71 of 2008
and Commentary (eds) (Service issue 10, May 2015) at 530, the provisions of this section amount to a
last-gasp attempt to have a proposed business rescue plan approved by (1) attacking the rejection of the
plan by the holders of the creditors‘ voting interests as ―inappropriate‖.
(c) a fair and reasonable estimate of the return to that person, or those persons, if the
company were to be liquidated.‘
[71] Whilst s 153(1)(a)(ii) makes provision for a company seeking to be
placed under business rescue to apply to a court to set aside ‗the result of
the vote‘, s153(7) confers on that court a discretion to order that ‗the vote
on a business rescue plan be set aside‘ if it is satisfied that it is reasonable
and just to do so, having regard to the factors listed in subsec (7)(a) to (c).
It is clear from a reading of those factors that the vote that may be set
aside is not the entire vote on the business rescue plan, but only the vote
exercised against the approval or adoption of the plan. The factors
referred to apply only in respect of the person or persons ‗who voted
against the proposed business rescue plan‘. It follows that once the vote
against the approval of the plan is set aside the result thereof, namely the
rejection of the plan, will be nullified. The difference in the wording of
subsecs (1)(a)(ii) and (7) of s 153 is, therefore, of no real consequence.
The Different Interpretive Approaches of the High Courts
[72] There are a few cases of the high courts which have dealt with the
interpretation of s 153(1)(a)(ii) and (7) of the Act, with divergent views. I
have mentioned, in para 21, that Firstrand relied on the interpretation
adopted in Shoprite Checkers (Pty) Limited v Berryplum Retailers CC
(Murray NO, Mikateko, Shirilele NO Intervening Parties) and Ex Parte
Bhidshi Investments. Seriti JA has discussed Shoprite Checkers in para 27
of his judgment, thus it is not necessary to deal with again.
[73] In the earlier case of Copper Sunset Trading 220 (Pty) Ltd v Spar
Group Ltd & another10, the Limpopo Division of the High Court,
10 Copper Sunset Trading 220 (Pty) Ltd v Spar Group Ltd & another 2014 (6) SA 214 (LP) para 38.
Polokwane, Makgoba J focused solely on the attitude of the creditors who
voted against the business rescue plan. The first respondent‘s attitude in
voting against the business rescue plan was found to be self-serving and
unreasonable, while the second respondent‘s vote against the business
rescue plan was irrational for, absent such plan, it would receive no
dividend.11
[74] It is clear from the cases referred to above that the provisions of s
153 have given rise to considerable uncertainty. I agree with Leach JA in
African Banking Corporation of Botswana Ltd v Kariba Furniture
Manufacturers (Pty) Ltd & others where he said that it was not unfair to
comment that many of the provisions of the Act relating to business
rescue, and s 153 in particular, ‗were shoddily drafted.‘12I turn to consider
the appropriate approach to the provisions under discussion.
The Correct Interpretation of Section 153(1)(a)(ii) and (7) of the Act
[75] In interpreting the provisions of the Act the principles enunciated
in Natal Joint Municipal Pension Fund v Endumeni Municipality13 and
Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd14 find application.
These cases and other earlier ones,15 provide support for the trite
proposition that the interpretive process involves considering the words
used in the Act in the light of all relevant and admissible context,
including the circumstances in which the legislation came into being.
11 See ibid para 37, where the court described the first respondent‘s ‗attitude‘ as unreasonable, and that
of the second respondent as irrational.
12 African Banking Corporation of Botswana Ltd v Kariba Furniture Manufacturers (Pty) Ltd & others
[2015] ZASCA 69; 2015 (5) SA 192 (SCA) para 43.
13 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA) para 18.
14 Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd [2015] ZASCA 111; 2016 (1) SA 518 (SCA) para
27.
15 See for instance, Jaga v Dönges NO & another; Bhana v Dönges NO & another 1950 (4) SA 653
(A) at 662G-H and 664E-H. See also Bastian Financial Services (Pty) Ltd v General Hendrik
Schoeman Primary School 2008 (5) SA 1 (SCA) paras 16-19, and the cases cited therein.
Furthermore, as was said in Endumeni, ‗a sensible meaning is to be
preferred to one that leads to insensible or unbusinesslike results‘. Thus
when a problem such as the present arises the court must consider
whether there is a sensible interpretation that can be given to the relevant
provisions that will avoid anomalies.16 Accordingly, in this instance, the
proper approach in the interpretation of the provisions is one that is in
sync with the objects of the Act, which includes ‗[enabling] the efficient
rescue and recovery of financially distressed companies, in a manner that
balances the rights and interests of all relevant stakeholders.‘17(My
emphasis.)
[76] In interpreting s 153(1) and (7) the words of the Act are taken into
consideration. However, these words must not be considered in isolation,
but in the light of the context of the provision, the Act as a whole and the
purpose for which it was enacted. The interpretation is ‗essentially one
unitary exercise‘.18
[77] In DH Brothers Industries (Pty) Ltd v Gribnitz19 Gorven J said the
following about chapter 6 of the Act, dealing with business rescue:
‗I respectfully agree that the chapter as a whole reflects ―a legislative preference for
proceedings aimed at the restoration of viable companies rather than their destruction‖
but only of viable companies, not of all companies placed under business rescue.‘
[78] It is so that there is no definition of ‗inappropriate‘ in the Act. I do
16 Panamo Properties (Pty) & another v Nel & others NNO [2015] ZASCA 76; 2015 (5) SA 63 (SCA)
para 27.
17 Section 5(1) of the Act directs that its interpretation and application must give effect to the purposes
stated in s 7 of the Act. Section 7(k) states that one of these 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;‘
18 Bothma-Batho Transport (Edms) v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176;
2014 (2) SA 494 (SCA) para12.
19 DH Brothers Industries (Pty) v Gribnitz NO & others 2014 (1) SA 103 (KZP) para 10.
not have any issue employing the dictionary meaning to the word, as was
done in the cases highlighted above, in terms of which ‗inappropriate‘ is
described as meaning, ‗not suitable or proper in the circumstances‘.
Despite my acceptance of this definition, I am readily aware that it is still
the court‘s role to ascertain the legal meaning of the word. As G E
Devenish Interpretation of Statutes (1992) said (at 141), this meaning
will normally correspond with the ordinary grammatical meaning of the
word, but this may not always be the case since the meaning of the word
is determined by language and legal context. 20
[79] Firstrand‘s counsel argued that it is the subjective view of Firstrand
in voting against the business rescue plan that determines whether the
vote was inappropriate. This submission is unsustainable in light of the
wording of s 153(1). I agree with the authors of Henochsberg21 that if
‗. . . creditors are to be allowed to exercise their votes freely it has to be
assumed that they would only vote in support of the business rescue plan
if its implementation would be to their benefit.‘ If the issue was to be
approached on the basis as proposed by counsel for Firstrand, the
probabilities are that it would always be appropriate if the plan is to a
creditor‘s advantage as it is difficult to think of circumstances where the
creditors‘ votes for the rejection of a business rescue plan would be
inappropriate.22 However, Henochsberg suggests that the provisions of s
153(7)(a) to (c) provide some insight as to what the court should take into
account when determining whether it would be reasonable and just to set
aside the vote on a business rescue plan on the grounds of the vote being
inappropriate‘.23
20 See in this regard, City of Johannesburg v Engen Petroleum Ltd & another [2009] ZASCA 5; 2009
(4) SA 412 (SCA) para 11.
21 Henochsberg op cit Vol 1at 530.
22 Henochsberg at 530. See, however, Copper Sunset Trading fn 10 above.
23 Henochsberg at 530.
[80] It is clear that s 153(1)(a)(ii) and s 153(1)(b)(i)(bb) are inextricably
linked to s 153(7). On an application to set aside the result of a vote in
terms of any of these subsections, the court is enjoined by s 153(7) to
determine only whether it is reasonable and just to set aside the particular
vote, taking into account the factors set out in s 153(7)(a) to (c) and all
circumstances relevant to the case, including the purpose of business
rescue in terms of the Act. Put differently, the vote would be set aside on
application on the grounds that its result was inappropriate, if it is
reasonable and just to do so in terms of s 153(7). To my mind this entails
a single enquiry and value judgment.
[81] In opposing the application Firstrand averred that its vote against
the business rescue plan was ‗appropriate‘. It argued that the employees
of the company would not lose their employment as the business would
be sold as a going concern. Furthermore, the deponent to the answering
affidavit stated that the creditors would not receive a substantially better
return as compared to liquidation, but that the ‗creditors would be in a far
worse position if the plan is approved and implemented‘.
[82] The argument that liquidation would not negatively affect the
position of the employees is fallacious. The winding-up of a company
results in the suspension of all employee contracts without
remuneration.24 Business rescue, on the other hand, protects employees as
they continue, subject to certain provisions, to be employed by the
company on the same terms and conditions that applied prior to the
company being placed under business rescue. 25
24 Section 38 of the Insolvency Act 24 of 1936.
25 S 136(1)(a) of the Act.
[83] It is clear that the allegation that the creditors would be worse off
with business rescue is wrong. The court a quo mentioned that the
dividend, with liquidation, would be 39 cent in the rand. However, at this
stage, the concurrent creditors have already been paid approximately 70
per cent of their claims, with payments still being made.
[84] The determination that a vote was inappropriate is therefore a value
judgment made after consideration of all the facts and circumstances. The
view held by the practitioners that the result of the vote was inappropriate
in the instant matter was clearly based on the proposition that Firstrand‘s
claim would be paid in full with business rescue and payment would be
on the same terms that Firstrand and KJ Foods had agreed when the
contract or contracts were initially concluded. The only exception in this
regard was the overdraft of KJ Foods, which had already been paid in
full. Furthermore, with business rescue, all the other creditors, both
secured and unsecured, would also be paid in full, whereas with
immediate liquidation, the unsecured creditors would be paid at most 51
per cent of their claims. Liquidation would also have the result that
approximately 200 employees would be rendered unemployed.
[85] It is clear, when taking Firstrand‘s interests into consideration, that
the only negative feature for it would be that it would not be paid its full
claim immediately, but payment would be in terms of the contracts
entered into between the parties. Therefore, it would still be paid in full
albeit, not immediately. Taking all these factors into consideration, being
the interests of Firstrand, the employees of KJ Foods and other creditors,
it is indeed reasonable and just to set aside the vote against the approval
or adoption of the rescue plan in terms of the provisions of s 153(7) of the
Act.
[86] In this instance, it is clear from the implementation of the plan that
Firstrand‘s reservations were unfounded. I am of the view that it was
reasonable and just to set aside Firstrand‘s vote.
What is the Effect of Setting Aside the Result of the Vote?
[87] In terms of the provisions of s 153(2)(b) after the practitioners had
informed the meeting that they intended bringing an application to set
aside the result of the vote, the meeting was adjourned until the court has
disposed of the contemplated application.
[88] Firstrand contended that the business rescue plan must again be put
to the vote at the resumption of the postponed meeting. That, however,
does not result in a businesslike interpretation, for if the creditor who
voted against the adoption of the business rescue plan were to vote once
more against it, the whole process would start all over again, causing a
possible never-ending loop. The Act clearly does not envisage another
round of voting. In my view a businesslike interpretation is that the vote
rejecting the business rescue plan having been set aside, it follows by
operation of law that the business rescue plan would be considered to
have been adopted, for, as stated above, no further voting is envisaged. At
the resumption of the meeting of creditors that had been adjourned in
terms of s153(2)(b), it would only be necessary for the business rescue
practitioner to report on the outcome of the application to court.
[89] Therefore, once the result of the vote is set aside the business
rescue plan is adopted, by the operation of law. That being the position,
the declaratory order of the court a quo that the revised business rescue
plan be adopted by the affected parties is superfluous, as it is a natural
consequence of the setting aside of the result of the vote.
[90] Due to the settlement agreement referred to above, it is appropriate
that no costs order is made in the appeal.
[91] The following order is made:
1 Paragraph 1 of the order of the court a quo is amended to read:
‗In terms of the provisions of section 157(7) of the Companies Act 71 of
2008 the vote of the respondent against the adoption of the revised
business rescue plan exercised on 2 December 2013 is set aside.‘
2 Paragraph 2 of the order of the court a quo is set aside.
3 The appeal is otherwise dismissed.
_______________________
IRMA SCHOEMAN
ACTING JUDGE OF APPEAL
APPEARANCES:
For Appellant:
L Meintjes
Instructed by:
Rorich, Wolmarans & Luderitz Inc
c/o Symington & De Kok Attorneys
For Respondent:
J L Van der Merwe SC with
L K Van der Merwe
Instructed by:
Koster Attorneys, Pretoria
c/o Botha & De Jager 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 April 2017
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
FirstRand Bank Ltd v KJ Foods CC (In business rescue) (734/2015) [2015] ZASCA
50(26 April 2017)
MEDIA STATEMENT
The Supreme Court of Appeal, on 26 April 2017, dismissed an appeal against a judgment of the
Gauteng Division of the High Court, Pretoria (Mavundla J) concerning the interpretation of sections
153(1)(a)(ii) and 153(7) of the Companies Act 71 of 2008 (the Act).
The main issue in the appeal was whether it was reasonable and just, in terms of s 153(7) of the Act
for the court a quo to set aside a vote by the appellant, Firstrand Bank Ltd (Firstrand) against the
adoption of a business rescue plan in respect of the respondent, KJ Foods CC (KJ Foods).
Firstrand’s vote against the adoption of the business rescue plan had resulted in the rejection of the
plan. Linked to the main issue, was the question of what the consequences for business rescue
proceedings were, once the result of such a vote had been set aside.
KJ Foods has been operating as a supplier of bread to the informal sector of the community and cash
and carry wholesalers and has also been a customer of Firstrand for more than 20 years. It
commenced business rescue proceedings in July 2013 after it had experienced financial distress.
Business rescue practitioners were appointed, and after several contentious creditors’ meetings, a
business rescue plan was proposed. Firstrand took issue with the proposed business rescue plan,
which led to it being revised several times. When the creditors were required to vote on the adoption
of the plan, Firstrand voted against its adoption. As Firstrand held 29 per cent of the creditors’ voting
interests and had voted against the adoption of the plan, the business rescue plan could not be
approved on a preliminary basis. The Act requires 75 per cent of creditors’ voting interests that had
voted to approve the business rescue plan. The practitioners accordingly approached the court a quo
for an order in terms of s 152(3)(a) of the Act, to set aside the result of the vote – on the ground that it
was inappropriate. The court a quo ordered that the result of the vote be set aside ‘on the grounds
that the voting against the plan was inappropriate’ and that the revised business rescue plan be
adopted.
In a majority judgment in the SCA, Schoeman AJA held that in an application to set aside the result of
a vote (in terms of s 153(1)(a)(ii) and s 153(1)(b)(i)(bb) – which the court held are inextricably linked
to s 153(7)), the court is enjoined by s 153(7) to determine only whether it is reasonable and just to
set aside the particular vote, taking into account the factors set out in s 153(7)(a) to (c) and all
circumstances relevant to the case. This includes the purpose of business rescue in terms of the Act.
Put differently, the majority said, the vote would be set aside on the grounds that its result was
inappropriate, if it is reasonable and just to do so in terms of s 153(7). And according to the majority,
this entails a single enquiry and value judgment.
As a consequence, the majority held, once the result of the vote is set aside, the business rescue
plan is adopted – by the operation of law. Therefore, the declaratory order of the court a quo that the
revised business rescue plan be adopted was superfluous. Seriti JA in his minority judgment agreed
that the court a quo could not order the adoption of the rescue plan, but reasoned that the court a quo
had no power to refer back the business rescue plan to the affected parties for adoption thereof.
Seriti JA also agreed that the vote against the adoption of the business rescue plan should be set
aside, however, he differed with the majority that the enquiry was a single one. According to Serirti
JA, the court must first determine whether or not the vote was inappropriate and if so, invoke the
provisions of s 153(7). In other words, the court’s discretionary powers afforded by s 153(7) become
applicable once the jurisdictional fact of inappropriateness is established.
--- ends --- |
2970 | non-electoral | 2015 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20058/2014
In the matter between:
AFRICAN EXPLORATION MINING AND FINANCE
CORPORATION (PTY) LTD
FIRST APPELLANT
STRATEGIC FUEL FUND ASSOCIATION
SECOND APPELLANT
and
MINISTER OF MINERAL RESOURCES FIRST RESPONDENT
DIRECTOR-GENERAL OF MINERAL RESOURCES SECOND RESPONDENT
REGIONAL MANAGER: MPUMALANGA THIRD RESPONDENT
TAVISTOCK COLLIERIES (PTY) LTD FOURTH RESPONDENT
XSTRATA (PTY) LTD
FIFTH RESPONDENT
DUIKER MINING (PTY) LTD SIXTH RESPONDENT
Neutral Citation: African Exploration v Minister of Mineral Resources (20058/2014)
[2015] ZASCA 77 (27 May 2015)
Coram:
Lewis, Willis and Saldulker JJA and Meyer and Gorven AJJA
Heard:
5 May 2015
Delivered: 27 May 2015
Summary: Where the holder of an old order mining right, under the Mineral and
Petroleum Resources Development Act 28 of 2002, is exercising the right on the day
before the coming into effect of the Act (1 May 2004), no one else, after its
conversion, may apply for a prospecting right in respect of the same mineral on the
same land.
___________________________________________________________________
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Raulinga J sitting as
court of first instance).
The appeal is dismissed with costs including those of two counsel.
___________________________________________________________________
JUDGMENT
Lewis JA (Willis and Saldulker JJA and Meyer and Gorven AJJA concurring)
[1] At the core of this appeal is the question whether the decision of the Minister
of Mineral Resources to convert an old-order mining right to a mining right under the
Mineral and Petroleum Resources Development Act 28 of 2002 (the Act) can be
impugned by the appellants. That in turn depends on whether the right was being
exercised before the respondent lodged its ‘application’ for conversion. On the
periphery, however, there are a number of other issues that were raised by the
appellants in the court a quo, and these formed the basis for the decision of that
court. I propose to deal very briefly with some of the grounds on which the decision
of the court a quo was based, the factual matrix and provisions of the Act and
Schedule II to the Act (which contains the applicable transitional arrangements), and
then the core issue.
[2] On 15 February 2010 the first appellant, African Exploration Mining and
Finance Corporation (Pty) Ltd (AFEX), applied to the Minister in terms of s 16 of the
Act for a coal prospecting right in respect of various portions of the farm Klippoortje
32 IS. The application was rejected by the Regional Manager of the Department of
Mineral Resources, Mpumalanga, the third respondent, on 10 March 2010. The
basis for the rejection was that the fourth respondent, Tavistock Collieries (Pty) Ltd
(Tavistock), held an old order coal mining right in respect of the same (or much the
same – the degree of overlap is not important in this appeal) land.
[3] Some six weeks later, on 29 March 2010, the second respondent, the Director
General of the Department of Mineral Resources, acting as the delegate of the
Minister, converted Tavistock’s old order right into a mining right. The conversion
was done in terms of item 7(3) of Schedule II of the Act: Tavistock had lodged its old
order mining right for conversion some three years earlier, on 6 December 2007.
[4] In March 2011 AFEX applied to the Gauteng Division of the High Court
(Raulinga J) for an order setting aside both the decision to convert Tavistock’s old
order right taken by the Director General, and the decision refusing its application for
a prospecting right, as well as for other forms of relief. As will immediately be
observed, the outcome of the former application is determinative of the latter, for it is
only if the conversion of Tavistock’s old order right can be impugned that AFEX
could conceivably be able to apply for a prospecting right in respect of the same
land. The Strategic Fuel Fund Association (SSF), the second appellant, was formerly
the holder of the right to mine coal on the property. (I shall not refer to SSF as the
second appellant expressly unless relevant to the context, but it should be
understood that when I refer to AFEX’s contentions, the reference is to those of SSF
as well.)
[5] The court a quo dismissed AFEX’s application, finding that it lacked standing
to bring the review; that it had failed to exhaust internal remedies under the
Promotion of Administrative Justice Act 3 of 2000 (PAJA) (s7(2)(c)) and under
s 96(3) of the Act, and had also failed to apply for exemption from the requirement
that it exhaust internal remedies; and that it had not complied with the time limits
imposed by the PAJA for instituting review proceedings. Leave to appeal was
granted by the court a quo. The first, second and third respondents (the State
respondents) have not participated in the appeal and abide the decision of this court.
[6] The court a quo also found that the application by AFEX for the right to
prospect had been made in respect of mine dumps on the land only, and not for
prospecting in situ. That finding need not detain this court: the application form did
indeed state that the application was in respect of particular portions of the land and
added in parentheses, after coal, ‘waste dumps’. The argument of AFEX that this
was a mistake, and that it was clear from the application as a whole that it was an
application to prospect for coal in situ, is relevant only if it is found that AFEX had
standing to apply for a review of the conversion of Tavistock’s old order right in the
first place.
[7] Because of the approach it took to the procedural points, the court a quo did
not enter into the merits of the application in regard to standing. As I have said, the
only basis on which the review of the decision to refuse its application for
prospecting rights on the property could be successful was if Tavistock was not the
holder of mining rights over the same properties. And that entails an examination of
whether the conversion of the old order rights held by Tavistock was itself
impeachable. The merits of the decision to convert by the Director General must thus
be examined.
Factual background and relevant provisions of the Act
[8] Before turning to the core issue, which determines whether Tavistock had
standing to bring the application in the court a quo, some context is necessary.
Some of the context, as well as the principles on which the Act and Schedule II are
based, are set out in Xstrata South Africa (Pty) Ltd & others v SFF Association 2012
(5) SA 60 [2012] ZASCA 20 (SCA). That case involved a different aspect of the
dispute in respect of the old order rights on Klippoortje and several of the players are
the same.
[9] The judgment of this court sets out the purpose of the Act, the scheme of the
legislation in ensuring the transition from the previous mining rights dispensation to
the current one, the preservation of old order mining rights in order to ensure security
of tenure and the manner in which conversion to mining rights under the new
dispensation is to take place. It is convenient at this point to mention that the
transitional phase and the conversion process are the subject also of the decision of
the Constitutional Court in Minister of Mineral Resources & others v Sishen Iron Ore
Co (Pty) Ltd & another 2014 (2) SA 603 (CC) 2013 ZACC 45. I shall not rehearse the
principles set out in these decisions save in so far as they bear upon this appeal.
[10] In 2001, the respondent in Xstrata, SSF, entered into a notarial exchange
agreement with Tavistock and Duiker Mining (Pty) Ltd (Duiker). Tavistock is a wholly-
owned subsidiary of Duiker, which itself is a wholly owned subsidiary of Xstrata (Pty)
Ltd (Xstrata), an international mining company. The agreement was the product of a
settlement between the parties who had been in dispute about SSF’s storage of fuel
tanks in disused mine shafts in Mpumalanga. Tavistock was the holder of the right to
exploit coal deposits on one of the properties where the tanks were stored. The
presence of the containers, and leakage of oil from them, precluded Tavistock from
mining in the vicinity of the storage pipes. Tavistock accordingly instituted action
against SFF. The litigation between SFF and Tavistock was settled on the basis that
Tavistock’s (and Duiker’s) rights in the areas where they could not mine were
exchanged for rights held by SFF to exploit the coal deposits in other areas. The
exchange took the form of a notarially executed lease agreement.
[11] It is the terms and performance of its obligations by Tavistock under the lease
agreement that are in issue in this case, since AFEX asserted that Tavistock had
failed to perform its obligations under the lease, and that in the circumstances it was
not exercising its rights before the date on which the Act came into operation –
1 May 2004. The terms of the lease are important since the question whether
Tavistock was exercising the old order mining right before the date when the Act
came into operation is determinative of whether Tavistock’s mining right under the
former dispensation changed into an old order mining right under the Act, which
could in turn be converted to a mining right in terms of item 7 of Schedule II.
[12] The appellants do not deny that Tavistock became the holder of the old order
right when the Act came into operation: they argue only that that right had ceased to
exist because of non-performance of its obligations under the lease before
conversion took place. The provisions of item 7 of Schedule II determine when and
whether a mining right under the Minerals Act 50 of 1991 and the common law
become an old order right, and the procedure and principles governing the
conversion of that right to a mining right under the Act.
[13] The definition of an old order mining right in the Schedule includes any mining
lease ‘in force immediately before the date on which this Act took effect and in
respect of which mining operations are being conducted’. Item 7 reads:
‘7
Continuation of old order mining right
(1) Subject to subitems (2) and (8), any old order mining right in force immediately before
this Act took effect continues in force for a period not exceeding five years from the date on
which this Act took effect or the period for which it was granted, whichever period is the
shortest, subject to the terms and conditions under which it was granted or issued or was
deemed to have been granted or issued.
(2) A holder of an old order mining right must lodge the right for conversion within the period
referred to in subitem (1) at the office of the Regional Manager in whose region the land in
question is situated together with-
(a) the prescribed particulars of the holder;
(b) a sketch plan or diagram depicting the mining area for which the conversion is required
which area may not be larger than the area for which he or she holds the old order mining
right;
(c) the name of the mineral or group of minerals for which he or she holds the old order
mining right;
(d) an affidavit verifying that the holder is conducting mining operations on the area of the
land to which the conversion relates and setting out the periods for which such mining
operations conducted;
(e) a statement setting out the period for which the mining right is required substantiated by
a mining work programme;
(f) a prescribed social and labour plan;
(g) information as to whether or not the old order mining right is encumbered by any
mortgage bond or other right registered at the Deeds Office or Mineral and Petroleum
Registration Office;
(h) a statement setting out the terms and conditions which apply to the old order mining
right;
(i) the original title deed in respect of the land to which the old order mining right relates, or
a certified copy thereof;
(j) the original old order right and the approved environmental management programme or
certified copies thereof; and
(k) documentary proof of the manner in which, the holder of the right will give effect the
object referred to in section 2(d) and 2(f)
(3) The Minister must convert the old order mining right into a mining right if the holder of
the old order mining right-
(a) complies with the requirements of subitem (2);
(b) has conducted mining operations in respect of the right in question;
(c) indicates that he or she will continue to conduct such mining operations upon the
conversion of such right;
(d) has an approved environmental management programme; and
(e) has paid the prescribed conversion fee.
(3A) If the applicant does not comply with the requirements of the subitem (2) and (3), the
Regional Manager must in writing request the applicant to comply within 60 days of such
request.
(3B) If the applicant does not comply with subitem 3A, the Minister must refuse to convert
the right and must notify the applicant in writing of the decision within 30 days with reasons.
(3C) If the application relates to land occupied by the community, the Minister may impose
such conditions as are necessary to promote the rights and interests of the community,
including conditions requiring the participation of the community.
[Note that subitems 3A, 3B and 3C were inserted by an amendment to the Act in 2008.]
(4) No terms and conditions applicable to the old order mining right remain in force if they
are contrary to any provision of the Constitution or this Act.
(5) The holder must lodge the right converted under subitem (3) within 90 days from the
date on which he or she received notice of conversion at the Mineral and Petroleum Titles
Registration Office for registration and simultaneously at the Deeds office or the Mineral and
Petroleum Titles Registration Office for deregistration of the old order mining right, as the
case may be.
. . .
(7) Upon the conversion of the old order mining right and the registration of the mining right
into which it was converted the old order mining right ceases to exist.
(8) If the holder fails to lodge the old order mining right for conversion before the expiry of
the period referred to in subitem (1) the old order mining right ceases to exist.’
The nature and continuation of Tavistock’s rights
[14] AFEX, as I have said, accepted that Tavistock’s rights under the mining lease
with SFF became old order mining rights on 1 May 2004 when the Act took effect.
SFF had granted the right to mine coal in various seams on the properties to
Tavistock, which was a holder of a mining licence in terms of the Minerals Act and in
fact conducted mining operations by virtue of both the lease and the licence prior to
the date when the Act came into operation. It has also not contended that Tavistock
was not entitled to lodge that right for conversion into a mining right on 6 December
2007.
[15] However, AFEX contended that Tavistock had lost its old order right prior to
conversion under item 7 of Schedule II. Its argument is based upon an interpretation
of the notarial mineral lease between SFF and Tavistock, which was concluded
pursuant to the settlement agreement between Tavistock and SFF. SFF recorded
that it was willing to grant to Tavistock the ‘sole and exclusive right to search for,
mine, win, recover and for its own benefit and account dispose of, coal in, on and
under the property, together with the further rights’ set out in the lease. Tavistock
accepted that right in respect of ‘No 4 seam coal’ and ‘No 5 seam coal’. The lease
was to endure until the ‘No 4 seam coal and the No 5 seam coal . . . which can
profitably be exploited by [Tavistock] is exhausted’.
[16] AFEX argued that the provisions of clause 7.5 of the lease, which required
mining at a particular rate, had not been met by Tavistock in 2009. The subclause
reads:
‘The Lessee [Tavistock] shall commence mining the coal reserves which are the subject of
the mineral lease within a period of three years from the date of execution hereof. Failure to
do so by the Lessee shall not constitute a breach of this mineral lease, but the Lessee shall
be restricted in terms of this Lease to mining only the tonnages reflected in clause 8.1 below
and not the tonnages reflected in 8.2 and 8.3 below. Furthermore, once the Lessee has
commenced mining it shall have a period of 24 months to reach and maintain a mining rate
of 1 600 000 run of mine tons of coal per annum. Failure to do so by the Lessee shall not
constitute a breach of this mineral lease, but the Lessee shall be restricted in terms of this
Lease to mining only the tonnages reflected in clause 8.1 below and not the tonnages
reflected in 8.2 and 8.3 below. In such event the Grantor [SFF] shall itself be entitled to such
rights or be entitled to dispose of the rights referred to in 8.2 and/or 8.3.’
[17] Clause 8, titled ‘Consideration’, entitled Tavistock to mine certain quantities of
coal without paying any royalty to SFF (royalty free coal), but required it to pay
royalties in respect of the remainder. Clauses 8.1, 8.2 and 8.3 read:
'8 Consideration
As consideration for the rights hereby granted, the Lessee shall pay to the Grantor a royalty
calculated and payable as provided hereunder:
8.1 In respect of the first 29 523 000 of mineable in situ tons of No 4 seam coal reserves
mined by the Lessee, in respect of the first 6 046 000 of mineable in situ tons of No 5 seam
coal reserves mined by the Lessee and in respect of 200 000 tons of run-of-mine No 4 seam
coal mined by the Lessee, there shall be no royalty payable. It being recorded that in
exchange for the rights to mine this tonnage the Lessee has ceded and assigned to the
Grantor certain rights more fully specified in the exchange agreement to which a draft of this
lease was annexed as annexure D.
8.2 In respect of the balance of the No 4 seam coal reserves on the property, namely
18 738 000 of mineable in situ tons, the Lessee shall pay to the Grantor a royalty of 4,25%
of the selling price of the No 4 seam coal mined from the property and sold by the Lessee.
8.3 In respect of the balance of the No 5 seam coal reserves on the property namely 7 507
000 mineable in situ tons, the Lessee shall pay to the Grantor a royalty of 3,5% of the
selling price of the No 5 seam coal mined from the property and sold by the Lessee.'
[18] Accordingly, failure to satisfy the obligations imposed in terms of clause 7.5
would not constitute a breach of the mining lease, but would result in
Tavistock's right to mine being restricted to specified tonnages of coal and it would
cease to be entitled to mine these areas once the coal was exhausted. The limits
that would then apply were that Tavistock would be entitled to extract the quantity of
coal specified in clause 8.1 of the lease (the royalty free coal) and would lose the
right to extract and dispose of the royalty coal.
[19] AFEX argued that clause 7.5 required Tavistock to mine more than 1 600 000
tons per annum: in 2009 it mined less than that and it accordingly lost the right to
mine royalty coal. As a result Tavistock lost its old order right in 2009. It was
therefore not able to convert the old order right, and the conversion effected by the
Director General was invalid.
[20] Tavistock, on the other hand, contended that the AFEX case was based on a
misinterpretation of the effect of the Act on pre-existing mineral rights, and a
misunderstanding of the legal nature of old order – transitional – rights. In this regard
they referred to Xstrata where this court, referring to item 7, said (para 10):
‘[T]hese provisions do not serve to preserve common law rights. Instead, for the period of
five years specified in item 1, [that is, item 7.1] or such lesser period as may elapse until the
conversion of the old order right into a mining right under the Act, they create a new right,
statutory in origin, embodying the rights previously enjoyed under the relevant old order
right, together with an entitlement to convert that right into a mining right under the Act.’
[21] And in para 21 this court, referring to the same lease in issue here, said that
Tavistock’s right to mine no longer had its origin in the mineral lease. Instead it had
acquired a statutory right – the old order right – ‘on the same terms and conditions
as it had hitherto enjoyed’. SFF, since it was not exercising any rights to mine coal
on the properties at the time when the Act came into operation, lost any residual right
it might have had.
[22] Tavistock’s old order right, after 1 May 2004, comprised the terms of the
notarial lease (the written consent), the provisions of the common law in so far as
these were then applicable (SFF had the common law right to mine the coal on the
property), and the terms of the mining licence that Tavistock held in terms of s 9(1) of
the Minerals Act. Tavistock could not, however, transfer the old order right it acquired
on 1 May 2004: only the person actually exercising the right – conducting mining
operations – before 1 May 2004 could be the holder of an old order right.
Accordingly, the last provision of clause 7.5 of the lease could not, after that date, be
given effect: SFF could no longer rely on its right under that clause to mine the
royalty coal itself, or to dispose of it to a third party, if Tavistock did not meet the rate
of mining required in the clause. The right had ceased to exist.
[23] Tavistock contended also that the obligations imposed on it under clause 7.5
were contrary to the terms of the old order right since no one other than it could have
any right to the coal on the property. In this regard it referred to item 7(4) of Schedule
II which provides that ‘No terms applicable to the old order right remain in force if
they are contrary to any provision of the Constitution or this Act’. There is some
debate about whether item 7(4) applies to old order rights or to converted rights,
given its position in the item, which is after the provisions that deal with the process
of conversion. In Xstrata (para 13) Wallis JA considered the debate but refrained
from deciding it. There is no need for me to decide it either. It is plain, in my view,
that since the rights to royalty coal could no longer revert to SFF, the provision that
they would do so if the mining rate to be maintained fell below the target, was no
longer enforceable. SFF had lost its right to mine the royalty coal even if Tavistock
did not meet the agreed target. That makes the last sentence of clause 7.5
meaningless after 1 May 2004.
[24] In any event, it is not necessary to determine the matter on the basis of the
fate of clause 7.5. For it has not been shown that Tavistock did not meet its target or
was in breach of its obligations. AFEX alleged that Tavistock started mining
operations in 2001 and had since mined all of the non-royalty coal in no 4 seam.
However, from January 2009 to the end of December of that year, it had mined only
760 539 run-of-mine tons of coal, which it said was ‘significantly less than the
1 600 000 ton target’. It relied on an audit report of Xstrata mining operations
prepared by Mr A J van Zetten in April 2009.
[25] The report contained production figures from 2001 to 2008, and made
forecasts from 2009 to 2013. The figure relied upon by AFEX appears in an
attachment to an email dated 22 October 2009 in respect of actual figures for the
months of January to August 2009 only. There is thus no evidence that Tavistock did
not reach its target in that year, on the assumption that it was obliged to do so. AFEX
argued that Tavistock was in a position to state what its coal production was, and
failed to do so. In my view there is no reason why it should have done. Moreover,
when the application was brought in 2011 not all the coal in seam 5 had yet been
exhausted and that in seam 4 had yet to be mined when the old order right was
lodged for conversion. There is thus no evidence of failure to exercise the old order
right such that conversion should not have taken place.
[26] In the circumstances, as the entire basis for AFEX’s application to review the
conversion of the old order right by the Director General falls away, so too do he
issues that impinge on the process of conversion. The Minister (and his delegate) did
not have the authority to refuse to convert the old order right. Item 7(3) of Schedule II
states as much: the Minister must convert the old order right into a mining right if the
holder complies with the requirements of subitem 2; has conducted mining
operations in the area in question; indicates that it will continue to do so; has an
approved environmental management plan and has paid the prescribed fee. The
Minister does not have a discretion. And if the requirements are not satisfied, the
holder is given an opportunity to meet them by virtue of the subitems introduced in
2008 – 3A, 3B and 3C, set out above. (See in this regard M O Dale and others South
African Mineral and Petroleum Law (Service issue 15, December 2014, Sch II 83-
84.)
[27] Even if that were not the case, AFEX failed to pursue any appeal that it might
have had in terms of s 96 of the Act timeously, either against the decision to convert
or the rejection of its application for prospecting rights on the property. And given the
view that I take, that it could not have applied successfully for a prospecting right in
land in respect of which Tavistock had a mining right, it had no standing to challenge
the conversion. It is accordingly not necessary to consider the argument that there
were special circumstances that warranted exemption from the requirements of s 96.
It was thus precluded from pursuing the review application. It is also not necessary to
consider whether AFEX met the requirements for pursuing an appeal under the
section. And since AFEX had no standing to bring the review, its argument that the
conversion procedure was unfair is also not relevant.
[28] In the circumstances the appeal is dismissed with costs including those of two
counsel.
_______________________
C H Lewis
Judge of Appeal
APPEARANCES
For Appellant:
W H G van der Linde SC (with him A
Friedman)
Instructed by:
ENSAfrica, Johannesburg
Webbers, Bloemfontein
For Fourth, Fifth and Sixth
Respondents
G L Grobler SC (with him J L Gildenhuys)
Instructed by:
Norton
Rose
Fulbright
South
Africa,
Sandton
Matsepes 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
22 May 2015
STATUS
Immediate
African Exploration v Minister of Mineral Resources [2015] ZASCA 77
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 1 May 2004, Tavistock Collieries (Pty) Ltd, a wholly owned subsidiary
(through a holding company) of Xstrata (Pty) Ltd, became the holder of an old
order mining right when the Mineral and Petroleum Resources Development
Act 28 of 2002 came into operation. Its former rights under a mineral lease
with the Strategic Fuel Fund Association (SSF), in terms of which it was
granted the exclusive right to prospect and mine for coal by SSF on portions
of the farm Klippoortje in Mpumalanga, were transformed into old order rights
when the Act came into effect.
In December 2007 Tavistock lodged its old order right for conversion with the
Deaprtment of Mineral Resources. In due course, in March 2010, the right
was converted in terms of item 7 of Schedule II to the Act by the Director
General. But before that happened, African Exploration Mining and Finance
Corporation (Pty) Ltd (AFEX) applied for a prospecting right in respect of coal
in the same area of Klippoortje in which Tavistock conducted mining
operations. That application was rejected because Tavistock already held the
rights applied for.
AFEX and SSF applied to the Gauteng Division of the High Court for an order
setting aside the conversion of Tavistock’s old order right, and setting aside
the decision to refuse its application. AFEX raised several grounds of review.
The Gauteng Division refused the application on procedural grounds,
amongst others AFEX’s failure to pursue any right of appeal to the Minister
under the Act before making the application, and its lack of standing to
impugn the conversion.
The SCA today dismissed AFEX and SSF’s appeal to it. The appellants
argued that on the date when the Act came into effect Tavistock had not
complied with its obligations under the mineral lease in that it had not met
specified mining targets, and that accordingly its rights had reverted to SSF.
The conversion of Tavistock’s right was thus of no force, they argued. The
SCA found, however, that Tavistock had as a matter of fact complied with its
obligations under the lease, and that it was not possible for rights to revert to
SSF in terms of the lease once an old order right had vested in Tavistock. The
appeal thus could not succeed.
- - - - |
3840 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 846/2021
In the matter between:
CITY OF EKURHULENI METROPOLITAN
MUNICIPALITY
APPELLANT
and
TAKUBIZA TRADING & PROJECTS CC
FIRST RESPONDENT
ZUTARI (PTY) LTD
SECOND RESPONDENT
NTIYISO CONSULTING (PTY) LTD
THIRD RESPONDENT
Neutral citation: City of Ekurhuleni Metropolitan Municipality v Takubiza
Trading & Projects CC and Others (Case no 846/2021) [2022]
ZASCA 82 (03 June 2022)
Coram:
PONNAN and MABINDLA-BOQWANA JJA and MEYER,
MATOJANE and PHATSHOANE AJJA
Heard:
26 May 2022
Delivered:
03 June 2022
Summary: Tender – award of after expiry of tender validity period – once tender
validity period expired – tender process completed, albeit unsuccessfully.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Gauteng Division of the High Court, Johannesburg (Victor J,
sitting as court of first instance):
(1)
The appeal is dismissed with costs.
(2)
The appellant’s Johannesburg and Bloemfontein attorneys shall not be entitled
to recover any of the costs associated with the preparation, perusal or copying of the
record from the appellant.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Ponnan JA (Mabindla-Boqwana JA and Meyer, Matojane and Phatshoane
AJJA concurring)
[1] In March 2020, the appellant, the City of Ekurhuleni Metropolitan
Municipality (the Municipality), published an invitation to tender under reference
PS-F07-2020 (the tender) for the appointment of finance meter management
consultants to manage the Municipality’s electricity and water meter readings and
credit control processes on an ‘as and when’ required basis for a 36-month period.
Appointments were sought to be made in respect of two separate areas, namely the
North East (area 1) and South West (area 2). The total value of the tender amounted
to some R117 million, being approximately R37 million in respect of area 1 and R79
million in respect of area 2.
[2] The initial closing date for the tender was 24 April 2020. However, due to the
COVID-19 pandemic and resultant national lockdown, the closing date had to be
extended to 11 June 2020. The bid validity period was 120 days from the closing
date, being 9 October 2020. On that date at 11h47, Ms Sanjuka Makhan, the ICT
Acquisition Specialist: Supply Chain Management in the Finance Department of the
Municipality, despatched the following email to all 24 bidders:
‘SUBJECT: REQUEST FOR EXTENSION OF VALIDITY: PS-F 07-2020
THE APPOINTMENT OF FINANCE METER MANAGEMENT CONSULTANTS TO
MANAGE THE CITY OF EKURHULENI’S WATER AND ELECTRICITY METER
READINGS AND CREDIT CONTROL PROCESSES, ON AN AS AND WHEN REQUIRED
BASIS FROM 01 JULY 2020 UNTIL 30 JUNE 2023.
Contract number PS-F 07-2020 120 day validity period will expire on 09 October 2020.
You are kindly requested to indicate whether you are accepting the extension of validity until 31
December 2020.
Please confirm by completing the note below and return by e-mail to:
Sanjuka.Makhan@ekhuruleni.gov.za
Kindly note that the confirmation is required on or before 9 October 2020. . . .’
[3] According to the Municipality:
‘91 . . . The email was sent to [Aurecon South Africa Pty Ltd (Aurecon)] at the email address:
benoni@aurecon.com. A short while later, Ms Makhan received a “no delivery notification” from
Microsoft Outlook which included no delivery in respect of [Aurecon].
. . .
According to Ms Makhan, pursuant to receiving the notification from Microsoft Outlook,
she discovered that some email addresses of bidders had been captured incorrectly on the system
– it included [Aurecon’s] email address. She states that once the typographical errors were
corrected she re-sent the email separately to affected bidders.
The letter was subsequently sent to [Aurecon] on 9 October 2020 at 15h32 to the correct
email address: benoni@aurecongroup.com. [Aurecon] emailed its confirmation on 12 October
2020 at 16h43 . . .
Ms Makhan states that there was not a deliberate delay to any specific bidder to jeopardize
them in any way. The extension notices were sent to all the bidders by the close of business on 9
October before the validity period had ended. Ms Makhan concedes that it would have been
preferable to have sent the letter to the bidders earlier.
96.
According to Ms Makhan, all the bidders, bar one, agreed to the extension, with three other
bidders also indicating their agreement after the deadline. Bidder 8 did not respond to the extension
letter. None of the bidders were disqualified from being evaluated due to their late response to the
letter, or in the case of bidder 8, due to its non-response. A bidder would only have been excluded
if it had responded to the extension letter and explicitly rejected the extension of the validity
period.’1
[4] On 19 November 2020, the Bid Evaluation Committee of the Municipality
(the BEC) recommended to the Bid Adjudication Committee (the BAC) that the
second respondent, Zutari (Pty) Ltd (previously known as Aurecon South Africa
(Pty) Ltd (Aurecon)), and the third respondent, Ntiyiso Consulting (Pty) Ltd
(Ntiyiso), be awarded the tender for area 1 and area 2, respectively. On 23 November
2020, the BAC accepted the recommendation of the BEC. The City Manager and
the Chairperson of the BAC approved the award to each of Aurecon and Ntiyiso on
24 November 2020 and, by letter dated 17 December 2020, they were informed of
their appointment.
[5] Having informally learnt on 11 January 2021 that it was unsuccessful, the first
respondent, Takubiza Trading & Projects CC (Takubiza), caused an urgent review
1 This being the explanation advanced in the answering affidavit filed on behalf the Municipality.
application to be issued out of the Gauteng Division of the High Court, Johannesburg
(the high court). The application was heard by Victor J on 22-23 April 2021, who,
in a judgment delivered on 14 of June 2021, set aside the award to both Aurecon and
Ntiyiso, but suspended the declaration of invalidity for a period of 150 days to enable
the Municipality to commence with a new tender process.
[6] Takubiza’s primary contention, which found favour with the high court, is that
the award to each of Aurecon and Ntiyiso had been made after the tender validity
period had already lapsed. In support of that contention, Takubiza called in aid a line
of high court authority commencing with the judgment of Southwood J in Telkom
SA v Merid Training (Pty) Ltd and others; Bihati Solutions (Pty) Ltd v Telkom SA
and others (Telkom SA).2 In that matter, Telkom published a request for proposals in
order to appoint service providers. The request stipulated a closing date and a tender
validity period of 120 days from the closing date, during which offers made by
bidders would remain open for acceptance. By the time the tender validity period
had expired, no decision had been taken by Telkom, and the tender validity period
had not been extended. Despite this, Telkom continued to evaluate and shortlist the
bidders. It was only after the tender validity period had expired that Telkom sent e-
mails to the 15 shortlisted bidders requesting them to agree to an extension of the
tender validity period. Some, including the six successful bidders, agreed to do so.
The decision to accept the bids of the six respondents was taken only after the expiry
of this further period. Before any contract was concluded with the six bidders,
Telkom decided, on legal advice, to apply for the setting aside of its own decision.
2 Telkom SA Limited v Merid Training (Pty) Ltd and Others; Bihati Solutions (Pty) Ltd v Telkom SA Limited and others
[2011] ZAGPPHC 1.
[7] Southwood J took the view that:
‘The question to be decided is whether the procedure followed by the applicant and the six
respondents after 12 April 2008 (when the validity period of the proposal expired) was in
compliance with section 217 of the Constitution. In my view it was not. As soon as the validity
period of the proposals had expired without the applicant awarding a tender the tender process was
complete ─ albeit unsuccessfully ─ and the applicant was no longer free to negotiate with the
respondents as if they were simply attempting to enter into a contract. The process was no longer
transparent, equitable or competitive. All the tenderers were entitled to expect the applicant to
apply its own procedure and either award or not award a tender within the validity period of the
proposals. If it failed to award a tender within the validity period of the proposals it received it had
to offer all interested parties a further opportunity to tender. Negotiations with some tenderers to
extend the period of validity lacked transparency and was not equitable or competitive. In my view
the first and fifth respondents’ reliance only on rules of contract is misplaced.’3
[8] Telkom SA was followed by Plasket J in Joubert Galpin Searle Inc & others
v Road Accident Fund & others (Searle).4 The facts in Searle were these: On 13 July
2012, the respondent, the Road Accident Fund (RAF), advertised a ‘request for
proposals’ with the description ‘Panel of Attorneys for [RAF] to provide specialist
litigation services’. The RAF invited suitably qualified legal firms from all provinces
to be listed on a panel of attorneys to provide specialist litigation services in various
specified categories. The closing date for the submission of bids was 20 August 2012
and the tender validity period was ‘90 days from the closing date’. It would appear
that the process was complex and time-consuming and did not always run smoothly.
The Bid Evaluation Committee (the BEC) finalised the evaluation of all of the bids
on 21 September 2012. An evaluation report was finalised by the BEC on 2
3 Ibid para 14.
4 Joubert Galpin Searle Inc and Others v Road Accident Fund and Others [2014] ZAECPEHC 19; [2014] 2 All SA
604 (ECP); 2014 (4) SA 148 (ECP).
November 2012 and tabled before a meeting of the Procurement Control Committee
(the PCC) on 5 December 2012. On 5 August 2013, the RAF wrote to bidders to
inform them that it had taken a decision to proceed with its proposal concerning the
extension of the tender validity period. It asked bidders to ‘amend and renew’ their
bids in accordance with this decision by 13h00 on 14 August 2013.
[9] Plasket J, who took the view that the judgment in Telkom SA was ‘essentially
on all fours with [Searle]’,5 observed:
‘[68] As with this case, what had to be decided, according to Southwood J, was “the legal
consequence of a failure by a public body to accept, within the stipulated validity period for the
(tender) proposals, any of the proposals received.” In deciding this issue, Southwood J’s starting
point was four inter-related propositions. They are that: (a) the decision to award a tender is an
administrative action and the PAJA therefore applies; (b) generally speaking, once a contract has
been entered into following the award of a tender, the law of contract applies; (c) but a contract
entered into contrary to prescribed tender processes is invalid; and (d) consequently, “even if no
contract is entered into, all steps taken in accordance with a process which does not comply with
the prescribed tender process are also invalid.”
. . .
[70] I am in agreement with Southwood J for the reasons given by him. As a result, it is my view
that, in this case, once the tender validity period had expired on or about 20 November 2012, the
tender process had been completed, albeit unsuccessfully.’
[10] Telkom SA and Searle have been cited with approval in several subsequent
judgments.6 However, the argument advanced on behalf of the Municipality is that
5 Ibid para 66.
6 See, inter alia, SAAB Grintek Defence (Pty) Ltd v South African Police Services and Others [2015] ZAGPPHC 1;
2015 JDR 0080 (GP); Tactical Security Services CC v Ethekwini Municipality 2017 JDR 1558 (KZD); Secureco (Pty)
Ltd v Ethekwini Municipality and Others [2016] ZAKZDHC 14 and Ethekwini Municipality v Mantengu Investments
CC and Others [2020] ZAKZDHC 11.
this weighty body of authority is distinguishable because, so the argument goes,
here, unlike in those matters, the Municipality took steps (in the form of the
notification from Ms Makan) before the expiration of the validity period. As I shall
endeavour to show, there are several reasons why any distinction, as may exist
between those matters and the present, is a distinction without a difference.
[11] First, the Municipality has quite inexplicably advanced no explanation as to
why the notification was despatched on the very last day of the tender validity period.
That aside, second, a real difficulty for the Municipality is that the notification from
Ms Makan, required ‘confirmation’, for good reason, from all of the bidders ‘on or
before 9 October 2020’, which, did not happen. Conceptually, there can be no
difference between the situation encountered here, where the confirmation sought is
not received by the organ of state within the stipulated period, and that dealt with in
Telkom SA and Searle (and the cases that followed them), where the notification is
only despatched by the organ of state after the period has expired. Surely, both stand
on the same footing: and in both, so it seems to me, the same consequence must
inexorably follow. It is difficult to appreciate why an organ of state would be better
placed, merely because it has despatched a request to which it has not received a
favourable response before the expiration of the validity period, compared to one
that only takes such a step after the expiry of that period. Here, the despatch of the
notification plainly did not serve to achieve its intended purpose and, in truth, was
so late as to be more illusory than real.
[12] Third, to borrow once again from Plasket J (Searle para 74):
‘. . . By the time the tender validity period has expired, there is nothing to extend because, as
Southwood J said in Telkom, the tender process has been concluded, albeit unsuccessfully. The
result, in this case, is that the RAF had no power to award the tender once the bid validity period
had expired and it had no power to extend the period as it purported to do. In the language of s
6(2)(a)(i) of the PAJA, the decision-maker – the board, in this instance – “was not authorised” to
take the decision. Put in slightly different terms, there were no valid bids to accept, so the RAF
had no power to accept the expired bids.’
In Tactical Security Services CC v Ethekwini Municipality and Others,7 which
considered the question whether the validity of bids can be extended by agreement
after they had expired, Ploos van Amstel J pointed out that a tender is defined in the
Preferential Procurement Regulations as ‘a written offer in the prescribed or
stipulated form in response to an invitation by an organ of state for the provision of
services, works or goods, through price quotations, advertised competitive tendering
processes or proposals’.8 He accordingly held that without an extension, the tender,
like any other offer, falls away, if it is not accepted in time. Accordingly, that come
the 10th of October, there was no longer a valid tender from Aurecon for the
Municipality to accept.
[13] Fourth, as was held by the high court, the validity period is indeed one of the
fundamental ‘rules of the game’, being the period within which the process should
be finalised. To extend the tender validity period, the consent of all the participants
to the tender process is required. Unless there is a timeous request and favourable
response from all the tenderers prior to the expiry of the tender, the tender comes to
an end. The view taken by the high court in this matter accords with the judgment of
the full court (Daffue JP and Mhlambi J) in Defensor Electronic Security (Pty) Ltd
v Centlec SOC Ltd, where the following was said:
7 Tactical Security Services CC v Ethekwini Municipality 2017 JDR 1558 (KZD).
8 Ibid para 10.
‘. . . It is the applicant’s case that the first respondent awarded the tender to the second respondent
after expiry of the tender validity period and without a prior request for extension and approval of
all relevant bidders. The tender validity period expired on 2 March 2021. Although the first
respondent relied on letters addressed to applicant and second respondent dated 1 March 2021, the
day before expiry of the tender, there is no proof that the request for extension was communicated
to the bidders prior to the expiry and the bidders consented to the extension of the period prior to
expiry thereof. In fact, applicant has proved that the request for extension was sent by e-mail to it
as late as 23 March 2021. It is the applicant’s case that once the tender validity period has expired,
it was not possible to resuscitate it. A new bid process had to be initiated in order to ensure that all
interested parties were provided a further opportunity to tender. I am in respectful agreement with
the judgment of Southwood J in Telkom SA Ltd v Merid Training (Pty) Ltd and others; Bihiti
Solutions (Pty) Ltd v Telkom SA and others relied upon by Mr Cilliers. I therefore also agree with
the applicant’s counsel that in the absence of the required proof that there was after the expiry date
no longer any valid tender process. The tender award has to be set aside for this reason alone.’9
[14] Fifth, the signification of confirmation by Aurecon on the 12th could not
somehow have had the effect of turning the clock back to the 9th and breathing life
into the process with retrospective effect to that date. What the argument advanced
on behalf of the Municipality boils down to is that whereas, as a fact, there was
confirmation only on the 12th, it fell to be treated as if, to all intents and purposes,
that had occurred on the 9th. What then of the period that intervened between the 9th
and 12th (namely the 10th and 11th); what would the status of the tender process have
been in that period? If not completed, then what? If completed, albeit unsuccessfully,
then how could it possibly be resuscitated? What if, instead of the 12th, the
confirmation from Aurecon had only come much later, say after several more days,
9 Defensor Electronic Security (Pty) Ltd v Centlec SOC Ltd and another [2021] ZAFSHC 315 para 8.
weeks or months? What would the status of the tender have been in that extended
period between the 9th and confirmation?
[15] It goes without saying that a tender process cannot be open-ended. Certainty
has to be the touchstone.10 I can thus conceive of no reason why the principle so
firmly established in Telkom SA and Searle does not find application here. It follows
that the appeal must fail.
[16] It remains to comment on the lamentable state of the record. It consists of 12
main volumes consisting of 2244 pages and one supplementary volume of 111
pages. It is replete with all manner of irrelevant material. Much of it is barely legible,
with inadequate line numbering and no proper cross-referencing to speak of. Bulk
was added by pasting photostatic copies over other pages, resulting often enough in
pages sticking together and having to be prised apart. No heed was paid to the
requirement that volumes should be so bound that upon being opened they will
remain open or that, in use, the binding will not fail.
[17] Such was the state of the record, that the registrar would have been entitled to
have rejected it. An order striking the matter from the roll may also not have been
unwarranted. However, prior to the hearing of the appeal, the appellant was invited
to file supplementary heads of argument to address the failure to properly comply
with the rules and what consequence, if any, should follow. In those heads, it was
stated somewhat euphemistically that ‘there were shortcomings in the preparation of
10 Tahilram v Trustees, Lukamber Trust and Another [2021] ZASCA 173; 2022 (2) SA 436 (SCA) para 24.
the record’. The heads then proceed to identify some of the shortcomings, but not all
of them.
[18] Given the unnecessary volume and the state of the record as a whole some
sanction must follow. This Court has previously expressed its displeasure at records
that include unnecessary documents of the kind encountered here and has, where
appropriate, ordered costs to be paid by attorneys de bonis propriis or disallowed the
costs of perusing the record.11
[19] Despite having filed a record in excess of 2300 pages, we were told in the
practice note filed by Counsel for the Municipality that only some 350 pages were
relevant. From the bar, Counsel accepted that even that was an over-estimation.
Indeed, from what is set out earlier in this judgment, it is patent that the facts fall
within a very narrow compass. On the point held to be decisive of the appeal, the
record ought not to have exceeded one volume. It would not be right for the residents
of the Municipality to be burdened with costs that should not have been incurred in
the preparation, perusal and copying of the record.
[20] In the result:
(1)
The appeal is dismissed with costs.
(2)
The appellant’s Johannesburg and Bloemfontein attorneys shall not be entitled
to recover any of the costs associated with the preparation, perusal or copying of the
record from the appellant.
11 Municipal Manager: Qaukeni and Others v F V General Trading CC [2009] ZASCA 66; 2010 (1) SA 356 (SCA);
[2009] 4 All SA 231 (SCA) para 31 and the cases there referred to.
_________________
V M Ponnan
Judge of Appeal
APPEARANCES
For appellant:
N H Maenetje SC (with U Dayanand-Jugroop)
Instructed by:
Seanego Attorneys, Pretoria
Blair Attorneys, Bloemfontein
For first respondent:
A P J Els (with K N Peterson)
Instructed by:
Albert Hibbert Attorneys, Pretoria
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:
03 June 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
City of Ekurhuleni Metropolitan Municipality v Takubiza Trading & Projects CC and Others (Case no
846/2021) [2022] ZASCA 82 (03 June 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with costs, an appeal
against a decision of the Gauteng Division of the High Court of South Africa, Johannesburg (the high
court).
In March 2020, the appellant, the City of Ekurhuleni Metropolitan Municipality (the Municipality),
published an invitation to tender under reference PS-F07-2020 (the tender) for the appointment of
finance meter management consultants to manage the Municipality’s electricity and water meter
readings and credit control processes on an ‘as and when’ required basis for a 36-month period.
Appointments were sought to be made in respect of two separate areas, namely the North East (area
1) and South West (area 2). The initial closing date for the tender was 24 April 2020. However, due to
the COVID-19 pandemic and resultant national lockdown, the closing date had to be extended to 11
June 2020. The bid validity period was 120 days from the closing date, being 9 October 2020. On that
date at 11h47 the Municipality sent an email notification to all of the bidders enquiring whether they
would accept an extension of validity until 31 December 2020. The Municipality required confirmation
‘on or before 9 October 2020’. However, the notification was not delivered to one of the bidders, who
was ultimately successful, namely, Aurecon South Africa (Pty) Ltd (Aurecon). It was subsequently re-
sent at 15h32 that day to the correct email address. Aurecon only responded, some three days after
the bid validity period had expired, on 12 October 2020.
On 19 November 2020, the Bid Evaluation Committee of the Municipality (the BEC) recommended to
the Bid Adjudication Committee (the BAC) that Aurecon and Ntiyiso Consulting (Pty) Ltd (Ntiyiso), be
awarded the tender for area 1 and area 2, respectively. On 23 November 2020, the BAC accepted the
recommendation of the BEC. The City Manager and the Chairperson of the BAC approved the award
to each of Aurecon and Ntiyiso on 24 November 2020 and, by letter dated 17 December 2020, they
were informed of their appointment. Having informally learnt on 11 January 2021 that it was
unsuccessful, Takubiza Trading & Projects CC (Takubiza), caused an urgent review application to be
issued out of the high court. The application was heard on 22 - 23 April 2021, and on 14 June 2021 the
court set aside the award to both Aurecon and Ntiyiso, but suspended the declaration of invalidity for a
period of 150 days to enable the Municipality to commence with a new tender process.
Takubiza’s primary contention, which found favour with the high court, was that the award to each of
Aurecon and Ntiyiso had been made after the tender validity period had already lapsed. The SCA
reasoned that: firstly, there was no explanation from the Municipality as to why the notification was
despatched on the very last day of the tender validity period. Secondly, a real difficulty for the
Municipality was that their notification, for good reason, required confirmation from all of the bidders on
or before 9 October 2020, which, did not happen. The Court further held that an organ of state cannot
be better placed merely because it had despatched a request to which it was yet to receive a response
before the expiration of the validity period. In truth, the despatch of the notification was so late as to be
more illusory than real. Thirdly. by the time the tender validity period had expired, there was nothing to
extend because, the tender process had been concluded, albeit unsuccessfully. Come the 10th of
October, there was no longer a valid tender from Aurecon for the Municipality to accept. Fourthly, the
SCA agreed with the high court that the validity period was indeed one of the fundamental rules of the
game, being the period within which the process should be finalised. To extend the tender validity period
the consent of all the participants to the tender process was required. Unless there was a timeous
request and favourable response from all the tenderers prior to the expiry of the tender, the tender came
to an end. Lastly, the SCA held that the signification of confirmation by Aurecon on the 12th could not
somehow have had the effect of turning back the clock to the 9th and breathing life back into the process
with retrospective effect to that date. A tender process cannot be open-ended. Certainty has to be the
touchstone. The SCA accordingly concluded that the appeal must fail.
The SCA expressed its displeasure at the lamentable state of the appeal record, which was replete with
all manner of irrelevant material. Much of the record was barely legible, with inadequate line numbering
and no proper cross-referencing to speak of. Bulk was added by pasting photostatic copies over other
pages in the record, resulting often enough in pages sticking together that had to be prised apart. No
heed was paid to the requirement that volumes should be so bound that upon being opened they will
remain open or that, in use the binding would not fail. The SCA took the view that given the unnecessary
volume and the state of the record as a whole some sanction must follow. The Court had previously
expressed its displeasure at records that include unnecessary documents of the kind encountered here
and had, where appropriate, ordered costs to be paid by attorneys de bonis propriis or disallowed the
costs of perusing the record. The SCA concluded that it would not be right for the residents of the
Municipality to be burdened with costs that should not have been incurred in the preparation, perusal
and copying of the record. In the result, the SCA held that the appellant’s Johannesburg and
Bloemfontein attorneys should not be entitled to recover any of the costs associated with the
preparation, perusal or copying of the record from the appellant.
~~~~ends~~~~ |
44 | non-electoral | 2017 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 523 & 548/2016
In the matter between:
TLHALEFI ANDRIES MASHAMAITE
FIRST APPELLANT
L D LANGA
SECOND APPELLANT
N S MONTANE
THIRD APPELLANT
M A TSEBE
FOURTH APPELLANT
M R LEBELO
FIFTH APPELLANT
VAALTYN KEKANA
SIXTH APPELLANT
SANNY TLHAKU
SEVENTH APPELLANT
SAMUELA MATHEBULA
EIGHTH APPELLANT
LESIBA JACOB MASHALA
NINTH APPELLANT
LESIBA JACKSON MATHEBATHE
TENTH APPELLANT
RAMASELA LINAH MAHLAELA
ELEVENTH APPELLANT
MOKGAETI FRANCINAH MUTSHIMYA
TWELFTH APPELLANT
RAMOKONE MINKY MOLEKOA
THIRTEENTH APPELLANT
DAVID MAGONGOA
FOURTEENTH APPELLANT
LESETJA CHARLES KGANYAGO
FIFTEENTH APPELLANT
MONICCA SENOAMADI
SIXTEENTH APPELLANT
ERNEST RANTHUPA
SEVENTEENTH APPELLANT
NELSON NGWETJANA
EIGTHTEENTH APPELLANT
NAKEDI MABULA
NINETEENTH APPELLANT
NELLY MONENE
TWENTIETH APPELLANT
LESIBA JAIRUS LEBELO
TWENTY-FIRST APPELLANT
L G LEGODI
TWENTY-SECOND APPELLANT
EMILY MANGANYE
TWENTY-THIRD APPELLANT
LEBOGANG BRENDA MOKGOTHO
TWENTY-FOURTH APPELLANT
MAPHUTHI RAHAB LEBELO
TWENTY-FIFTH APPELLANT
MAMMA MILOANA
TWENTY-SIXTH APPELLANT
ENOCK MANAMELA
TWENTY-SEVENTH APPELLANT
LAWRENCE SOMO
TWENTY-EIGHT APPELLANT
RAISIBE ANDRINA MATSEMELA
TWENTY-NINETH APPELLANT
ZUNAID SURTEE
THIRTIETH APPELLANT
MANKOPANE MICHAEL RAPATSA
THIRTY-FIRST APPELLANT
MALESELA FRANS MOKWELE
THIRTY-SECOND APPELLANT
LESETJA PHILLEMON ERIC GWANGWA THIRTY-THIRD APPELLANT
MAHLODI JOSEPHINE MADIBA
THIRTY-FOURTH APPELLANT
MADIBANA CATHY LENTSOANE
THIRTY-FIFTH APPELLANT
MAPULA SHIRLEY TEFU
THIRTY-SIXTH APPELLANT
MANKALE SOLOMON MOLABA
THIRTY-SEVENTH APPELLANT
and
MOGALAKWENA LOCAL MUNICIPALITY
FIRST RESPONDENT
SHELLA WILLIAM KEKANA
SECOND RESPONDENT
MEMBER OF THE EXECUTIVE COUNCIL
THIRD RESPONDENT
FOR COGHSTA, LIMPOPO
And
MEMBER OF THE EXECUTIVE COUNCIL
FIRST APPELLANT
FOR COGHSTA, LIMPOPO
MOGALAKWENA LOCAL MUNICIPALITY
SECOND APPELLANT
and
SHELLA WILLIAM KEKANA
FIRST RESPONDENT
THAPELO MATLALA
SECOND RESPONDENT
TLHALEFI ANDRIES MASHAMAITE
THIRD RESPONDENT
L D LANGA
FOURTH RESPONDENT
N S MONTANE
FIFTH RESPONDENT
M A TSEBE
SIXTH RESPONDENT
M R LEBELO
SEVENTH RESPONDENT
VAALTYN KEKANA
EIGHTH RESPONDENT
SANNY TLHAKU
NINTH RESPONDENT
SAMUEL MATHEBULA
TENTH RESPONDENT
LESIBA JACOB MASHALA
ELEVENTH RESPONDENT
LESIBA JACKSON MATHEBATHE
TWELTH RESPONDENT
RAMASELA LINAH MAHLAELA
THIRTEENTH RESPONDENT
MOKGAETI FRANCINAH MUTSHIMYA
FOURTEENTH RESPONDENT
RAMOKONE MINKY MOLEKOA
FIFTHTEENTH RESPONDENT
DAVID MAGONGOA
SIXTEENTH RESPONDENT
LESETJA CHARLES KGANYAGO
SEVENTEENTH RESPONDENT
MONICCA SENOAMADI
EIGHTEENTH RESPONDENT
ERNEST RANTHUPA
NINETEENTH RESPONDENT
NELSON NGWETJANA
TWENTIETH RESPONDENT
NAKEDI MABULA
TWENTY-FIRST RESPONDENT
NELLY MONENE
TWENTY-SECOND RESPONDENT
LESIBA JAIRUS LEBELO
TWENTY-THIRD RESPONDENT
LG LEGODI
TWENTY-FOURTH RESPONDENT
EMILY MANGANYE
TWENTY-FIFTH RESPONDENT
LEBOGANG BRENDA MOKGOTHO
TWENTY-SIXTH RESPONDENT
MAPHUTI RAHAB LEBELO
TWENTY-SEVENTH RESPONDENT
MAMMA MILOANA
TWENTY-EIGHTH RESPONDENT
ENOCK MANAMELA
TWENTY-NINETH RESPONDENT
LAWRENCE SOMO
THIRTIETH RESPONDENT
RAISIBE ANDRINA MATSEMELA
THIRTY-FIRST RESPONDENT
ZUNAID SURTEE
THIRTY-SECOND RESPONDENT
MANKOPANE MICHAEL RAPATSA
THIRTY-THIRD RESPONDENT
MALESELA FRANS MOKWELE
THIRTY-FOURTH RESPONDENT
LESETJA PHILLEMON
ERIC GWANGWA
THIRTY-FIFTH RESPONDENT
MAHLODI JOSEPHINE MADIBA
THIRTY-SIXTH RESPONDENT
MADIBANA CATHY LENTSOANE
THIRTY-SEVENTH RESPONDENT
MAPULA SHIRLEY TEFU
THIRTY-EIGHTH RESPONDENT
MANKALE SOLOMON MOLABA
THIRTY-NINETH RESPONDENT
P P SELEPE
FORTIETH RESPONDENT
Neutral citation: Mashamaite & others v Mogalakwena Local Municipality &
others (523 /2016) and MEC, Limpopo & another v Kekana & others (548/2016)
[2017] ZASCA 43 (30 March 2017)
Coram:
Maya AP, Theron and Dambuza JJA and Fourie and Schippers AJJA
Heard:
28 February 2017
Delivered: 30 March 2017
Summary: Res Judicata : the same cause, between the same parties for the same
relief : the court a quo was precluded from granting a substantive order of
reinstatement.
Motion proceedings : an applicant must, in the founding papers, disclose facts that
would make out a case for the relief sought : the relief granted by the court a quo
was inconsistent with the facts and averments contained in the papers : relief
improperly granted.
Employee on suspension : an employee who is suspended does not have authority
to act on behalf of an employer during the period of suspension, unless called upon
to perform duties during that period.
Section 16(1)(a)(i) of the Superior Courts Act 10 of 2013 : mootness :
circumstances have altered to such an extent that part of the judgment has become
moot : order will have no practical effect.
Contempt of court : respondents failing to establish that the MEC acted wilfully
and mala fide in failing to comply with a court order : not entitled to a declarator.
Costs order : discretionary and not lightly interfered with on appeal : absence of
grounds on which a court, acting reasonably, could have made the order : appeal
court entitled to interfere.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Hiemstra AJ
sitting as court of first instance):
1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the court a quo is set aside and substituted with the following:
„(a) The application is dismissed.
(b) The second applicant is directed to pay the costs of the application including
the costs of two counsel.
(c) The second applicant is directed to pay the costs reserved on 23 December
2014.‟
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Theron JA (Maya AP, Dambuza JA, Fourie and Schippers AJJA concurring):
Introduction
[1] This appeal concerns the affairs of the first respondent, the Mogalakwena
Local Municipality, Limpopo (the municipality) and what has in effect become a
power struggle between the municipality, its councillors and the municipal
manager.
Background
[2] Mr Kekana, (Kekana) (second respondent in Case No 523/2016), was
previously the municipal manager of the municipality. The subject matter of this
appeal is an urgent application (Case No 89657/14) launched on 19 December
2014 by Kekana, with the municipality as co-applicant against the appellants, in
which he sought certain interdictory relief, pending the finalisation of review
proceedings. In that application, the first appellant, the Member of the Executive
Council of the Limpopo Province responsible for the Department of Co-operative
Governance Human Settlements and Traditional Affairs (the MEC), was cited as
the first respondent. The second to thirty-seventh appellants (the appellants) were
councillors of the municipality at the time.
[3] In Part A of the urgent application, Kekana sought an order, inter alia, (i)
interdicting Mr Lebelo (Lebelo) (fifth appellant in Case No 523/2016) from
convening meetings of the council; (ii) interdicting the appellants from executing
certain resolutions adopted by the council; (iii) interdicting Mr Mashamaite
(Mashamaite), (first appellant in Case No 523/2016) the then mayor, from
performing any acts as mayor of the municipality; (iv) interdicting all councillors
of the municipality from giving instructions to officials unless authorised by
legislation; (v) interdicting Mr Selepe (Selepe) (fortieth respondent in Case No
548/2016) from performing any functions as acting municipal manager and (vi)
declaring that he, Kekana, was the municipal manager of the municipality. He also
sought a rule nisi calling upon the MEC to show cause why she should not be held
in contempt of an order issued by Tuchten J under Case No 35248/2014 on 17 June
2014. In Part B of the application (the review) Kekana sought the review and
setting aside of, inter alia, the decision taken by the MEC to convene a special
council meeting on 6 November 2014, resolutions taken by the council on 6
November 2014 and 4 December 2014 and the decision to appoint Selepe as acting
municipal manager.
[4] It was common cause that at the time Kekana launched the application, he
was on suspension pending a disciplinary enquiry, having been placed on
suspension by the council on 4 December 2014. Part A of the application was
heard on 23 December 2014. The court a quo (Ismail J), did not grant interim relief
and that portion of the matter was adjourned sine die. The review continued in the
ordinary course.
[5] In the meanwhile the municipality proceeded with the disciplinary enquiry
against Kekana. He was found guilty of gross misconduct and dismissed by the
municipality on 31 March 2015. On 20 April 2015, Kekana launched an urgent
application in the Gauteng Division, Pretoria, challenging his suspension, the
disciplinary proceedings and his dismissal. On 1 June 2015, the urgent application
was dismissed on the ground that that court did not have jurisdiction to entertain
the matter. Hughes J found that the Labour Court had jurisdiction to „adjudicate the
dispute as asserted‟ by Kekana.
[6] Kekana then approached the Labour Court, seeking an order reviewing and
setting aside the decision of the council to dismiss him and seeking reinstatement.
The Labour Court (Baloyi AJ) reserved judgment. While judgment in the Labour
Court was pending, the review application was heard in the court a quo on 3 and 4
February 2016. Judgment in respect of the review application was also reserved.
On 26 February 2016, the Labour Court dismissed the application with costs. An
application for leave to appeal against such dismissal is pending before the Labour
Court. On 1 April 2016, the court a quo (Hiemstra AJ) granted an order declaring
that the MEC was in contempt of the order granted by Tuchten J, reinstating
Kekana as municipal manager, declaring the meetings held on 6 November and 4
December 2014 unlawful and setting aside all decisions and resolutions taken by
the council at these meetings. It is against this order that the appellants appeal, with
the leave of the court a quo.1
[7] It is necessary, prior to dealing with the issues in this matter, to set out the
history of the relationship between Kekana and the appellants. During the course of
2014 and 2015, Kekana had brought multiple applications on behalf of the
municipality against various council members, including the appellants.
[8] Kekana asserted the conflict between him and Mashamaite arose in 2013 and
was caused by his resistance to bow to pressure from Mashamaite and his
supporters to engage in corrupt activities and unauthorised and irregular spending
of the municipality‟s funds. According to Kekana, Mashamaite and his supporters
had, on 12 July 2013, orchestrated his removal as municipal manager. He was
however reinstated as municipal manager on 11 October 2013. It would appear that
Kekana was instrumental in the decision of the council to appoint forensic
investigators, KPMG, to investigate alleged irregularities by Mashamaite and
certain other council members. The investigation found that Mashamaite had
abused the mayor‟s discretionary fund and he was subsequently removed from
office as mayor on 17 April 2014. Twenty three councillors who had supported
1 There were two cases on appeal before us. In case number 523/2016 the appellants are the 37 former council
members of the municipality, the municipality is the first respondent, Kekana the second respondent and the MEC
the third respondent. In case number 548/2016 the MEC is the first appellant, the municipality the second appellant
and Kekana a respondent together with the 37 former council members. Both cases are appeals against the judgment
and order of Hiemstra AJ. They were argued as one composite matter and that is how it will be dealt with in this
judgment.
Kekana and had, on 11 October 2013, voted for his reinstatement as municipal
manager, were subjected to disciplinary proceedings and expelled from the ANC
on 21 September 2014. The Speaker and Mayor were among those dismissed,
leaving the municipality without these functionaries.
[9] In his founding affidavit, Kekana explained that he had, on 4 November
2014 brought an urgent application under Case number 80496/2014 to remove the
South African Police Service (SAPS) and the appellants from the premises of the
municipality which they had violently invaded and occupied during the afternoon
of 3 November 2014.
[10] By notice dated 4 November 2014, the MEC invited councillors of the
municipality to a special council meeting to be held on 6 November 2014. It was at
this meeting that Lebelo was elected as Speaker and Mashamaite re-elected as
Mayor. Kekana alleged that as from 6 November 2014, there were two factions,
each claiming to be the legitimate council of the municipality with the one faction
allegedly under the leadership of Mashamaite and Lebelo.
[11] Kekana stated that a number of councillors had, on 24 November 2014, and
with the assistance of members of the SAPS, violently invaded the municipal
premises, which resulted in him bringing an urgent ex parte application on 26
November 2014. After hearing oral evidence Preller J granted an order directing
that the SAPS, Mashamaite and the other respondents in that matter, immediately
vacate the municipal premises.
[12] It was common cause that Lebelo, in his capacity as Speaker, had, on 4
December 2014, convened a meeting of the council and it was at this meeting that
the council adopted a resolution to suspend Kekana. Kekana alleged that the
purported council led by Mashamaite and Lebelo had adopted resolutions with far
reaching consequences for the municipality. According to Kekana, this had led to
the shutdown of ordinary municipal services as well as the financial department of
the municipality. He alleged that the main purpose of the December 2014
application was to restore the municipality to a functional state.
Issues
[13] It is against this backdrop that the following issues must be decided:
Was the court a quo precluded from granting the relief of reinstatement on the
basis of the doctrine of res judicata?
Did Kekana have authority to institute proceedings on behalf of the
municipality?
Are some of the orders appealed against moot?
Was it established that the MEC‟s non-compliance with the order granted by
Tuchten J was wilful and mala fide?
Was the court a quo justified in directing that the appellants pay the reserved
costs of the hearing on 23 December 2014?
Was the court a quo precluded from granting the relief of reinstatement on the
basis of the doctrine of res judicata?
[14] It was contended on behalf of the appellants that having regard to the
doctrine of res judicata, it was not competent for the court a quo to have granted
the relief of reinstatement when the same relief had previously been sought by
Kekana before Hughes J and dismissed with costs.
[15] Res judicata is the Latin term for „a matter adjudged‟ and is the legal
doctrine that bars continued litigation for the same cause, between the same parties
and where the same thing is demanded.2 The underlying rationale of the doctrine
of res judicata is to give effect to the finality of judgments3 and an „avoidance of a
multiplicity of litigation or conflicting judicial decisions on the same issue or
issues‟.4
[16] The court a quo justified its pronouncement on the issue of reinstatement as
follows:
„[59] On 13 May 2015 the 2nd applicant brought an urgent application against the Municipality,
the MEC, Mr P.P. Selepe, the newly appointed Acting Municipal Manager, and other interested
parties in this court under case number 28113/15. He sought to have his suspension and the
disciplinary proceedings against him set aside. The matter came before Hughes J. She dismissed
the application on the grounds that the High Court lacked jurisdiction in the matter. She found
that only the Labour Court had such jurisdiction. The 2nd applicant then instituted proceedings in
the Labour Court where judgment is still pending.
[60] In my respectful opinion the judgment of Hughes J on this score is clearly wrong.‟
[17] On the facts, both the definitional requirements of the res judicata doctrine
and its justification are met. The cause of action was the same. The dispute before
Hughes J primarily concerned Kekana‟s suspension and the disciplinary
proceedings against him. The parties were the same, namely, Kekana, the
municipality and the MEC. The relief sought was the setting aside of his
suspension and dismissal.
2 See generally Molaudzi v S (2015) ZACC 20; 2015 (8) BCLR 904 (CC); 2015 (2) SACR 341 (CC) para 11. Royal
Sechaba Holdings (Pty) Ltd v Coote and another [2014] ZASCA 85; (2014) 3 All SA 431 (SCA); 2014 (5) SA 562
(SCA).
3 Molaudzi para 16.
4 Royal Sechaba para 21.
[18] The logic of the doctrine is an avoidance of a multiplicity of proceedings,
with its consequent risk of producing conflicting outcomes on the same subject
matter. The rationale for the doctrine was defeated by the approach taken by the
court a quo. The court a quo concluded that Hughes J was „clearly wrong‟ and that
it could as a result disregard her judgment. In doing so, it created the very problem
which the operation of the doctrine seeks to avoid – a multiplicity of litigation with
conflicting judgments on the same issues.
[19] In any event, the court a quo, consisting of a single judge, had no jurisdiction
to sit as an appeal court in respect of the order of Hughes J and, in effect, set it
aside. It is clear from the passage of the judgment quoted in paragraph 16 above,
that the court a quo was aware that Kekana had instituted proceedings in the
Labour Court challenging his suspension and dismissal and that these proceedings
were pending in that court. It is difficult to understand how the judge, with full
knowledge of the pending litigation in the Labour Court, could nevertheless order
that Kekana be reinstated. In the circumstances, the court a quo erred in granting a
substantive order of reinstatement.
[20] Furthermore, and as already mentioned, at the time Kekana launched the
application, he was on suspension. He had, in the application, sought the setting
aside of his suspension and had set out the facts in support of this relief.
[21] It is trite that an applicant in motion proceedings must, in the founding
papers, disclose facts that would make out a case for the relief sought, and
sufficiently inform the other party of the case it was required to meet.
[22] Kekana could not, when he launched the application, have demonstrated
circumstances justifying an order for reinstatement as he had not yet been
dismissed. It was further common cause that the relief of reinstatement had not
been sought by Kekana or argued on his behalf in the court a quo. The relief
granted by the court a quo was inconsistent with the facts and averments contained
in the papers and did not accord with the relief sought in the notice of motion. In
my view, a case for reinstatement was not made out in the papers. Such relief was
improperly granted.
Did Kekana have authority to institute proceedings on behalf of the municipality?
[23] The appellants have both in the court a quo and on appeal, challenged the
authority of Kekana to cite the municipality as a co-applicant in the December
2014 application. In his founding affidavit, Kekana alleged that as municipal
manager, he was the Head of Administration of the municipal council and its
accounting officer and as such responsible for the safety of the employees of the
municipality and for ensuring that the municipality provided services to the public
and conducted its business in an orderly fashion. He relied on a resolution adopted
by the council on 21 July 2014 which authorised the municipal manager to seek
legal advice, approach an appropriate legal forum and do whatever may be
necessary „to protect the interests of the municipality‟.
[24] An employee who is on suspension does not perform her usual duties.
Feetham J in Gladstone v Thornton’s Garage5 put the matter thus:
„When an employee is “suspended” it appears to me that apart from any express instructions he
must hold himself available to perform his duties if called upon; though for the time being he is
debarred from doing his work.‟
5 1929 TPD 119.
It must follow that an employee who is suspended does not have authority to act on
behalf of an employer during the period of suspension, unless called upon to
perform duties during that period.
[25] The resolution on which Kekana relied authorised the municipal manager to
take legal steps to protect the interests of the municipality. He was suspended from
his position as the municipal manager at the time he instituted these proceedings
and as a result of his suspension, was debarred from performing any duties as
municipal manager.
[26] During January 2015, the municipality filed a notice withdrawing as a party
to the proceedings. In its judgment, the court a quo recorded that whether or not the
municipality was a party to the proceedings was an issue in the proceedings.
Although it did not make a clear pronouncement on this issue, a reading of the
judgment as a whole suggests that it found that the municipality was a party to the
proceedings. It is evident from the following extract of the judgment that the judge
did not consider the notice of withdrawal to be valid:
„On 25 January 2015 the impugned council purported to withdraw the Municipality as an
applicant in this matter‟. [Emphasis added.]
On appeal, Mr Dreyer, informed the court that he appeared on behalf of both
Kekana and the municipality.
[27] In any event, the municipality was a necessary party to these proceedings
and had to be before court as it had a direct and substantial interest in any order
that might issue.6 In the circumstances, and for the purposes of this judgment, it is
accepted that the municipality was before court in these proceedings.
Are some of the orders appealed against moot?
[28] In terms of paragraphs 6 and 7 of the order of the court a quo, the resolutions
taken at the meetings of 6 November and 4 December 2014 relating to the election
of Lebelo and Mashamaite as Speaker and Mayor of the council, respectively, the
election of the new executive committee of the council and the suspension of
Kekana, were declared unlawful and set aside. These issues have become moot,
mainly in consequence of the local government elections that were held in August
2016. It was common cause that Lebelo ceased to be the Speaker and a new
Speaker had been elected and that a new Mayor had been elected in the place of
Mashamaite. A new executive committee has also been constituted. Furthermore,
the decision to suspend Kekana has become academic as it was subsequently
overtaken by his dismissal on 31 March 2015.
[29] Section 16(2)(a)(i) of the Superior Courts Act 10 of 2013 is relevant and
reads:
„When 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 Constitutional Court has stated that „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.‟7
6 Golden Dividend 339 (Pty) Ltd & another v Absa Bank Limited (569/2015) [2016] ZASCA 78 (30 May 2016) para
10.
7 National Coalition for Gay and Lesbian Equality & others v Minister of Home Affairs and Others 2000 (2) SA 1
(CC); 2000 (1) BCLR 39 (CC) see fn 18 therein.
[30] Having regard to the facts in this matter, I am of the view that paragraphs 6
and 7 of the order granted by the court a quo will have no „practical effect or
result‟ within the meaning of s 16(2)(a)(i) of the Superior Courts Act. This is a
case in point where, after judgment in the court a quo, circumstances have altered
to such an extent that part of the judgment has become moot.8
[31] It is apposite to mention at this stage that the respondents steadfastly
defended this relief and persisted in the contention that it was not moot. This will
be relevant when determining the question of costs.
Was it established that the MEC’s non-compliance with the order granted by
Tuchten J was wilful and mala fide?
[32] Para 1.1.2 of the order granted by Tuchten J on 17 June 2014 interdicted the
(then) MEC from:
„interfering in any way whatsoever with the ability or right of the council of the applicant, its
municipal manager or any of its officials to exercise powers or perform functions vested in them
under the Constitution or any other applicable legislation‟.
[33] Kekana alleged that the MEC, in calling the SAPS to the municipal
premises, convening the council meeting of 6 November 2014 and appointing
Selepe as acting municipal manager, violated the order of 17 June 2014. In respect
of the first indictment regarding the SAPS, Kekana relied on a radio interview in
which the MEC had said:
„I believe the Council has the power, if he [Kekana] continues to close them out that is why you
have seen the police there on Monday. The police were sent by the MEC, because the councillors
were feeling pain because people who were expelled were in offices and they went to report a
8 Minister of Justice and Correctional Services and Others v Estate Late James Stransham-Ford & others
(531/2015) [2016] ZASCA 197; [2017] 1 All SA 354 (SCA) para 22.
case of trespassing and the police went there and removed them, and even now council will take
a resolution if he [Kekana] continues to stop them from entering the municipality‟. (Emphasis
added.)
[34] The MEC has alleged that she had seconded Selepe to the municipality as its
acting manager „upon request by [the] council of the [municipality] through a
resolution that was properly adopted by that council to that effect‟. She relied on
the provisions of s 54A(6)(a) of the Local Government: Municipal Systems Act, 32
of 2000 (the Systems Act) which provides that a municipal council may request the
MEC for local government to second a person, „to act in the advertised position‟ as
municipal manager, until such time as a suitable candidate has been appointed.
[35] As previously mentioned, the MEC had, on 6 November 2014, convened a
meeting of councillors of the municipality. In her affidavit the MEC explained that
she had received a written request from 36 council members that she convene a
special meeting, in terms of s 29(2) of the Local Government : Municipal
Structures Act 117 of 1998 (the Structures Act), for the purpose of electing a
Speaker and a Mayor as these posts were vacant following the expulsion of the 23
councillors.
[36] The MEC made the following averments as to why she convened a special
meeting of the council:
„17. . . . The second applicant is aware that 23 ANC councillors had been expelled by the ANC
and by virtue of their expulsion they ceased to be members of council . . . Among the 23 expelled
councillors, both the Mayor and the Speaker were expelled. This means that the municipality was
left without a Speaker and an Executive Mayor. The meeting could not be convened by the
Speaker because there was no Speaker. The meeting could not be convened by the Municipal
Manager ("Kekana") because he did not recognize the PR Councillors who were appointed and
he flatly refused to convene any meeting . . .
18. As I have pointed out above, the second applicant made it abundantly clear that he was not
going to call any meeting because he did not recognize the new councillors. In the absence of the
Municipal Manager and the Speaker I am authorized by the Structures Act to convene such
meeting in order to ensure that the municipality is able to get on with the business of the
municipality of service [delivery by] ensuring that both the Speaker and the Mayor are elected. It
would have been a serious dereliction of duty on my part if I elected to do nothing and allow the
municipality to be held to ransom by the second applicant.
…
21.1 I confirm that the second applicant‟s attorneys addressed a letter to me . . . [The letter
recorded that the proposed meeting would be unlawful and in violation of the interdict granted
by Tuchten J on 17 June 2014 restraining the MEC from interfering with the affairs of the
municipality.] It is clear from the reading of the said letter that the second applicant‟s attorneys
have no understanding whatsoever of the provisions of the Structures Act nor do they appreciate
the statutory obligation imposed on me as the Member of the Executive Council. The contents of
the said letter were clearly misguided and wrong.‟
[37] The court a quo made an order that:
„1
The first respondent is declared to be in contempt of the order granted by His Lordship
Mr Justice Tuchten under case number 35248/2014 on 17 June 2014.
The first respondent is incarcerated for a period of 60 days.
The order contained in paragraph 2 above is suspended for a period of five years on
condition that the first respondent does not unlawfully interfere with the affairs of the
Mogalakwena Local Municipality during the period of suspension. This order applies to any
successor to the MEC.‟
[38] In granting this order, the court a quo reasoned:
„63. As appears from the above, the MEC has thereafter, in alliance with Mashamaite and his
supporters, imperiously interfered in the affairs of the council. Amongst others, she was
instrumental in the violent invasion of the council offices on 3 November 2014 and 24
November 2014; she invited councillors to a special council meeting to be held on 6 November
2014 at the request of a contrived majority of councillors; she unlawfully convened the meeting
of 6 November 2014 and she appointed the 40th respondent as acting municipal manager without
any statutory authority to do so.
64. Counsel for the MEC, Mr Mokhari SC, pretended to be utterly perplexed about the basis
upon which it is alleged that the MEC had been in contempt of the order. His perplexity is
curious. The order is unambiguous. The MEC had been interdicted from interfering in the affairs
of the municipality. Despite the order she blatantly continued to interfere in the most high-
handed manner‟.
[39] I consider now whether the requirements for the grant of the order had been
satisfied. It has been held, with the advent of the Constitution, that the principles of
contempt must accord with constitutional dictates.9 One of these dictates is that the
order must be served on or brought to the attention of interested persons.10 The
failure to notify interested parties of an order granted against them violates all
precepts of fairness and what can be considered just in a constitutional democracy.
[40] The first difficulty in this matter and one recognised by the court a quo, is
that there was uncertainty as to which MEC was before court when the order of
Tuchten J was issued. This is apparent from the following paragraph of the
judgment:
„I cannot determine from the papers who exactly the MEC was from time to time during the
events that are the subject matter of these proceedings. In the earlier stages the MEC was Mr
Kgetjepe and in the later stages it was Ms M.G. Makhurupetje‟.
9 Pheko & others v Ekurhuleni City [2015] ZACC 10; 2015 (5) SA 600 (CC); 2015 (6) BCLR 711 (CC) para 33.
10 Ibid, para 32.
Counsel for the respondents conceded that the order was not made against the
current MEC, but her predecessor. There was a feeble attempt to evade the
consequences of this concession by contending that the order was made against the
office of the MEC. A reading of the order puts paid to this contention.
[41] The prejudice to the MEC was real and significant. The order granted by
Tuchten J, which was not served on her, had set in motion a process that could lead
to her incarceration in circumstances where she may not have been aware of the
details of the order and the obligations it placed on her.
[42] Kekana did not prove that the order was served on the MEC. In any event,
the Constitutional Court has held that it would suffice if the order was brought to
the notice of the alleged contemnor as against personal service, stating that:
„When a court order is disobeyed, not only the person named or party to the suit but all those
who, with the knowledge of the order, aid and abet the disobedience or wilfully are party to the
disobedience are liable‟.11
Kekana‟s attorneys did bring the existence of the order to the attention of the MEC
in a letter to her dated 6 November 2016, advising her that she had no authority to
call the scheduled meeting and reminding her of the order granted by Tuchten J. In
any event and having regard to my finding below about the requirements of
wilfulness and mala fides, it is not necessary to decide whether the order and the
details thereof, had been brought to the attention of the MEC with sufficient
particularity.
[43] An applicant in civil contempt proceedings must prove the requisites of
contempt, namely, (a) the existence of a court order; (b) service or notice thereof;
11 Pheko, para 47.
(c) non-compliance with the terms of the order; and (d) wilfulness and mala fides
beyond reasonable doubt.12 This Court has held that the breach or non-compliance
must have been committed „deliberately and mala fide‟.13
[44] Once an applicant has proved the required elements of contempt, the
respondent bears an evidential burden in relation to wilfulness and mala fides. The
respondent must produce evidence that establishes a reasonable doubt as to
whether the non-compliance was wilful and mala fide, failing which contempt will
have been established beyond a reasonable doubt.14 Cameron JA in Fakie NO v
CCII Systems (Pty) Ltd,15 explained the nature of the test in determining whether
the breach was committed „deliberately and mala fide‟:
„. . . A deliberate disregard is not enough, since the non-complier may genuinely, albeit
mistakenly, believe him or herself entitled to act in the way claimed to constitute the contempt.
In such a case, good faith avoids the infraction. Even a refusal to comply that is objectively
unreasonable may be bona fide (though unreasonableness could evidence lack of good faith).
These requirements – that the refusal to obey should be both wilful and mala fide, and that
unreasonable non-compliance, provided it is bona fide, does not constitute contempt – accord
with the broader definition of the crime, of which non-compliance with civil orders is a
manifestation. They show that the offence is committed not by mere disregard of a court order,
but by the deliberate and intentional violation of the court‟s dignity, repute or authority that this
evinces.‟ (Footnotes omitted.)
[45] There was no evidence to support a finding by the court a quo that the MEC
had „imperiously interfered in the affairs of the council‟ and that she had been
„instrumental in the violent invasion of the council offices‟. This was incorrect and
12 Fakie NO v CCII Systems (Pty) Ltd 2006 (4) SA 326 (SCA) para 30; Compensation Solutions (Pty) Ltd v
Compensation Commissioner (072/2015) [2016] ZASCA 59; (2016) 37 ILJ 1625 (SCA) para 15.
13 Fakie para 9; Jayiya v Member of the Executivee Council for Welfare, Eastern Cape & another 2004 (2) SA 611
(SCA ) paras 18 and 19.
14 Fakie para 42.
15 Ibid, paras 9 and 10.
is not borne out by the record. It is clear from her explanation that the MEC had
„sent‟ police to the municipality because she believed that Kekana had unlawfully
prevented newly elected councillors from gaining access to the municipality.
[46] Section 54A(6)(a) of the Systems Act does authorise the MEC, at the request
of the municipality, to second a person to act as municipal manager, but the section
seems to suggest that the secondment can only be made once the post has been
advertised. This was not a point that was argued before us.
[47] It is accepted that the MEC did not have the power to convene the meeting.
In terms of s 29(1) of the Structures Act the Speaker of a municipality has
authority to call meetings of the council, but a majority of the councillors may, in
writing, request that the Speaker convene a meeting. In terms of s 29(2) the
municipal manager, and in her absence, a person designated by the MEC for local
government in the province, must, within 14 days after the council has been
declared elected, call the first meeting of the council.
[48] The decision of the MEC to convene the meeting of 6 November 2014 must
be considered in context. This was not a new council recently elected, but an
existing council where a substantial number of councillors had been replaced
pursuant to their expulsion from the party that had nominated them to the council.
The duty to convene a council meeting under s 29 would have ordinarily fallen on
the Speaker, who was one of the expelled councillors. According to the MEC,
Kekana refused to call a meeting. The MEC believed she had authority to call the
meeting and in fact considered it her duty to ensure that a meeting was called to
elect a Speaker and a Mayor and restore functionality to the municipality. The
defence of the MEC is that she believed that she acted within her legitimate role of
overseeing the affairs of the municipality and if it is found that she was in breach
of the order granted by Tuchten J, then such breach was not wilful or mala fide.
The MEC‟s version must be carefully scrutinised. It should be rejected on the
papers only if it is far-fetched or clearly untenable.16
[49] In light of the explanation proffered by the MEC, her decisions to second
Selepe as acting municipal manager, convene the council meeting of 6 November
2014 and her role in reporting the matter to the police, cannot be construed as a
deliberate and intentional desire to show disrespect to the court by not complying
with its order. It thus cannot be said that her non-compliance with the order was
wilful and mala fide. The contempt order against her ought not to have been
granted as all the requirements for the grant of this relief had not been met.
Was the court a quo justified in directing that the appellants pay the costs reserved
at the hearing of 23 December 2014?
[50] At the hearing of the urgent application on 23 December 2014, the court
dismissed certain prayers contained in Part A of the notice of motion and
adjourned part of the application sine die. In addition, it refused to grant interim
relief and struck the matter from the roll due to lack of urgency. It reserved the
question of costs for later determination.
[51] The court a quo ordered that the appellants were to be responsible for the
costs reserved on 23 December 2014. It gave no reasons for this order.
16 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 653 C-D; Els v Weideman
2011 (2) SA 125 (SCA) paras 52-54.
[52] In awarding costs the court exercises a judicial discretion with which a court
of appeal will not readily or lightly interfere. The power of interference is limited
to instances of vitiation by misdirection or irregularity, or the absence of grounds
on which a court, acting reasonably, could have made the order under scrutiny.17
The latter applies in this matter.
[53] Kekana was not successful in obtaining relief from the court on 23
December 2014. He had approached the court, seeking urgent relief. The matter
was struck off the roll and prosecuted in the normal course. In addition to that,
certain relief that he had sought, was dismissed. There was no reasonable basis for
the court a quo to grant an order directing that the appellants pay the costs reserved
on 23 December 2014.
[54] For these reasons, the following order is granted:
1 The appeal is upheld with costs including the costs of two counsel.
2 The order of the court a quo is set aside and substituted with the following:
„(a) The application is dismissed.
(b) The second applicant is directed to pay the costs of the application including
the costs of two counsel.
(c) The second applicant is directed to pay the costs reserved on 23 December
2014.‟
________________
LV Theron
Judge of Appeal
17 Attorney General, Eastern Cape v Blom & others 1988 (4) SA 645 (A) 670D-E; Haupt t/a Soft Copy v Brewers
Marketing Intelligence (Pty) Ltd & others 2006 (4) SA 458 (SCA) para 50.
APPEARANCES:
For the Third Respondent:
WR Mokhari SC (with KT Mokhatla)
in Case No 523/2016 and
the First Appellant in Case
No 548/2016:
Instructed by:
Hogan Lovells (SA) Inc, Pretoria
Symington & De Kok Attorneys,
Bloemfontein
For the 1st to 37th Appellants:
TK Tsatsawane (with C Lithole)
in Case No 523/2016 and the
2nd to 38th Respondents in Case
No 548/2016
Instructed by:
The State Attorney, Pretoria
The State Attorney, Bloemfontein
For the Respondents in
JH Dreyer SC (with JAL Pretorius)
Case No 523/2016 and the
Second Appellant and First
Respondent in Case No
548/2016:
Instructed by:
Mohale Inc., Pretoria
Honey & Partners, Bloemfontein | MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
MASHAMAITE & OTHERS V MOGALAKWENA LOCAL MUNICIPALITY &
OTHERS CASE NO 548 & 523/2016
From: The Registrar, Supreme Court of Appeal
Date: 29 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 of the Supreme Court of Appeal.
The Supreme Court of Appeal (SCA) today upheld an appeal by the appellants,
setting aside the order of the Gauteng Division of the High Court, Pretoria and
dismissing the application in the court a quo.
This appeal concerns the affairs of the Mogalakwena Local Municipality, Limpopo
(first respondent) and its councillors and the municipal manager. Mr Kekana,
(Kekana) (second respondent) was previously the municipal manager of the
municipality and the subject of this appeal was an urgent application launched in
December 2014 by Kekana, with the municipality against the appellants. During the
course of 2014 and 2015, Kekana brought multiple applications on behalf of the first
respondent, against various council members, including the appellants. The issues
that arose in this appeal were as follows: was the court a quo precluded from
granting the relief of reinstatement on the basis of res judicata; did Kekana have the
authority to institute proceedings on behalf of the first respondent; are some of the
orders appealed against moot; was it established that the non-compliance of the
Member of Executive Council of the Limpopo Province (MEC) with the order granted
by the court a quo, was wilful and mala fide and whether the court a quo was justified
in directing that the appellants pay the reserved costs of 23 December 2014.
The SCA held that the court a quo erred in granting a substantive order of
reinstatement for two reasons. First, it was precluded, by virtue of the doctrine of res
judicata, from pronouncing on this matter as it had already been adjudicated upon.
Second, Kekana had not made out a case for the grant of such relief. The court also
held that: Kekana was on suspension at the time proceedings were instituted and as
a result he could not act on behalf of the municipality; paragraphs 6 and 7 of the
order granted by the court a quo will have no practical effect or result and that, that
part of the judgment has become moot; all requirements for the grant of a contempt
order against the MEC was not met and should not have been granted and there
was no reasonably basis for the court a quo to have granted an order directing costs
that the costs reserved on 23 December 2014 be paid by the appellants. |
2825 | non-electoral | 2012 | IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
CASE NO: 803/2011
Reportable
In the matter between:
THE DIRECTOR OF PUBLIC PROSECUTIONS FIRST APPELLANT
MINISTER OF JUSTICE AND CONSTITUTIONAL
DEVELOPMENT
SECOND APPELLANT
and
ANDREW LIONEL PHILLIPS RESPONDENT
Neutral Citation:
The DPP and Minister of Justice and Constitutional
Development v Phillips (803/11) [2012] ZASCA 140 (28
September 2012)
Coram:
NAVSA, CLOETE, SHONGWE and TSHIQI JJA and
PLASKET AJA
Heard:
3 September 2012
Delivered:
28 September 2012
Summary:
Permanent stay of prosecution – Criminal Procedure Act 51
of 1977 – Constitution – assertion of fair trial rights – right
to have trial begin and conclude without unreasonable
delay – undue delay by the Director of Public Prosecutions
in prosecuting appeal – trial having endured for many years
– factors to be taken into account and weighed in
determining whether permanent stay of prosecution
warranted
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Satchwell J
sitting as court of first instance).
(1)
The appeal is dismissed with costs, including the costs of two counsel.
(2)
Paragraph 1 of the order of the court below is altered to read as
follows:
‘1. The appeal of the first respondent (“Director of Public Prosecutions”) against the
judgment and order handed down by Mr S.P. Bezuidenhout in the Regional
Magistrates Court for the Regional Division of Gauteng in case No 41/1899/00 on 26
November 2008 in which the Learned Magistrate acquitted the applicant (“Andrew
Lionel Phillips”) is permanently stayed.’
______________________________________________________________
JUDGMENT
______________________________________________________________
NAVSA JA (Cloete, Shongwe and Tshiqi JJA and Plasket AJA concurring)
Introduction
[1] This is an appeal, with the leave of this court, against a judgment of the
South Gauteng High Court, Johannesburg (Satchwell J). It arises because of
an abortive appeal – at least up until now – in terms of s 310 of the Criminal
Procedure Act 51 of 1977 (the Act), by the first appellant, the Director of
Public Prosecutions (the DPP), against an acquittal by the Johannesburg
regional court of the respondent, Mr Andrew Lionel Phillips.
[2] Pending the appeal in terms of s 310 – referred to in the preceding
paragraph, which, it must be said at the outset, the DPP did not prosecute
with any real intent or efficiency – Phillips brought an application in the court
below, in terms of which he initially sought, inter alia, that the appeal be
permanently struck off the roll on the basis that s 310, read with s 39(2)1 of
the Constitution, did not authorize the hearing of an appeal by the State
against an acquittal. He contended that this was particularly so where the
necessary consequence of a successful appeal would be the re-opening of
the criminal trial as this would result in him being tried twice for the same
offence. An alternative basis was that, if s 310 did authorize such an appeal, it
was unconstitutional and therefore invalid. Later, he added to the relief
sought, an order that the prosecution against him be permanently stayed on
the bases referred to above, as well as on the basis of an unjustifiable delay
in the prosecution of the appeal. In this regard, it was contended that the
delay in prosecuting the appeal which in itself was inordinate, had to be
considered alongside the elapsed time from his arrest through a very lengthy
trial. It was submitted that this infringed his right in terms of s 35(3)(d) of the
Constitution to have his trial begin and conclude without unreasonable delay.
[3] Phillips was successful. The court below struck the appeal from the roll
on the basis of the inordinate delay in finalizing both the trial and the appeal
and declared the DPP’s right to appeal the acquittal permanently stayed. The
court also ordered the DPP and the second appellant, the Minister of Justice
and Constitutional Development (the minister), jointly and severally, to pay
Phillips’ costs. It is against these conclusions that the present appeal is
directed.
[4] A detailed background leading up to the appeal is set out hereafter. For
reasons that will become apparent and, in part, due to the manner in which
the present appeal arose, the record before us is undesirably sketchy,
compounding an already shambolic litigation history.
1 Section 39(2) provides:
‘When interpreting any legislation, and when developing the common law or customary law,
every court, tribunal or forum must promote the spirit, purport and objects of the Bill of Rights.’
Background
[5] Phillips was arrested and detained on 2 February 2000 and, on 22
December 2000, certain of his property was attached in terms of the
provisions of the Prevention of Organised Crime Act 121 of 1998 (POCA).
The charges on which he had been arrested, and later prosecuted, are related
to the keeping of a brothel and alleged further breaches of the law, apparently
connected to that main activity. More specifically, the following were the
charges faced by Phillips:
Contraventions of:
i
Section 2 of Act 23 of 1957 (Keeping a brothel);
ii
Section 10(a) of Act 23 of 1957 (Procuring females to have carnal
intercourse);
iii
Section 12A of Act 23 of 1957 (Foreseeing that a person may have
intercourse against payment of a fee);
iv
Section (1)(a) of Act 23 of 1957 (Living off the proceeds of prostitution);
v
Section 32(1)(a) of Act 96 of 1991 (Contravening the Immigration Act);
and
vi
Perjury.
[6] In January 2004 the trial commenced in the regional court,
Johannesburg. Phillips pleaded not guilty to the charges and proceedings in
that court continued until November 2006. During the duration of the State’s
case a number of prosecutors were engaged in the prosecution. After the
State closed its case on 20 November 2006, Phillips applied for a discharge in
terms of s 174 of the Act, which was refused.
[7] The defence case was scheduled to commence on 2 June 2008. Prior
and subsequent to that date Phillips’ legal representatives sought further
information from the prosecuting authority. On 24 June 2008 Phillips raised an
additional plea in terms of s 106(1)(h)2 of the Act, namely, that a number of
2 Section 106(1)(h) reads as follows:
‘When an accused pleads to a charge he may plead–
. . .
the prosecutors who conducted his prosecution lacked title to prosecute. The
regional magistrate considered the question whether such a plea could be
raised at any stage of the trial as opposed to only at the beginning when an
accused is required to plead to the charges, and answered it affirmatively in
favour of Phillips. The magistrate went on to consider whether the
appointment as prosecutors of members of the private bar, to assist in
Phillips’ prosecution, had taken place in terms of the National Prosecuting
Authority Act 32 of 1998 (the NPA Act). He concluded, after considering
relevant sections of that Act, that they had participated in the prosecution
unlawfully and held that this had the result of vitiating the entire prosecution.
He then proceeded to acquit Phillips on all the aforesaid charges. This
occurred on 26 November 2008.
[8] Aggrieved, the DPP required the magistrate, in terms of s 3103 of the
Act, to state a case for consideration on appeal by the South Gauteng High
Court. On 26 January 2009 the magistrate formulated the questions of law as
follows:
‘i)
Is it permissible to raise a plea in terms of section 106(1)(h) of the CPA at any
stage of a trial or could it only be raised before the commencement of the
trial?
ii)
If a plea succeeds in terms of section 106(1)(h) of the CPA, is a court
compelled to acquit the accused in view of the peremptory provisions of
section 106(4)4 of the CPA, or may it resort to alternative relief instead?
(h) that the prosecutor has no title to prosecute.’
3 Section 310(1) of the Act provides as follows:
‘When a lower court has in criminal proceedings given a decision in favour of the accused on
any question of law, including an order made under section 85(2), the attorney-general or, if a
body or a person other than the attorney-general or his representative, was the prosecutor in
the proceedings, then such other prosecutor may require the judicial officer concerned to
state a case for the consideration of the provincial or local division having jurisdiction, setting
forth the question of law and his decision thereon and, if evidence has been heard, his
findings of fact, in so far as they are material to the question of law.’
4 Section 106(4) reads as follows:
‘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.’
iii)
Does section 20 of the National Prosecuting Authority Act 32 of 1998 (the
NPA) provide for the appointment of prosecutors or does it merely regulate a
prosecutor’s powers and functions?
iv)
Is the taking of an oath in terms of section 32 of the National Prosecuting
Authority Act of 1998 a prerequisite for a person appointed in terms of section
38(1) of the Act?
v)
If, during the course of a trial, more than one person acted as prosecutor, and
one or more of them are not properly appointed as such, will this affect the
entire trial, or only those portions which were dealt with by the prosecutor not
properly appointed?’
[9] Delays occurred in the prosecution of the appeal, with the DPP and
Phillips’ legal representatives ostensibly unable to agree about the extent of
the appeal record, and whether the record, allegedly improperly compiled,
could be ‘corrected’.5 It appears that the full record of the trial, at that stage,
was voluminous – apparently comprising more than 6000 pages. The DPP
then contended that, given the narrow ambit of the questions formulated by
the magistrate in terms of s 310 of the Act, a very limited part of the record
was relevant. Phillips’ legal representatives disagreed. Correspondence was
exchanged between the parties and the Deputy Judge President of the high
court concerning the appeal. The Deputy Judge President insisted that an
appeal record be prepared and the appeal be enrolled in the ordinary course.
Several months passed without any real progress being made by the DPP in
the prosecution of the appeal. In July 2009 Phillips launched the application
referred to in para 2 above, requesting that it be considered at the hearing of
5 Rule 67 of the Rules Regulating the Conduct of the Proceedings of the Magistrates’ Courts
of South Africa regulates the preparation of a record of proceedings on appeal to the high
court. Rule 67(5) provides:
‘Upon an application for leave to appeal being granted the registrar or clerk of the court shall
prepare a copy of the record of the case, including a transcript thereof if it was recorded in
accordance with the provisions of rule 66(1), and place such copy before the judicial officer
who shall within 15 days thereafter furnish to the registrar or clerk of the court a statement in
writing showing–
(a) the facts he or she found to be proved;
(b) his or her reasons for any finding of fact specified in the appellant’s statement of
grounds of appeal; and
(c) his or her reasons for any ruling on any question of law or as to the admission or
rejection of evidence so specified as appealed against.’
the appeal. I shall, later in this judgment, revert to correspondence between
the DPP’s office and the Deputy Judge President which is an aspect that has
to be addressed, and in respect of which the DPP’s office is deserving of
censure.
[10] It is necessary to record that subsequent to Phillips’ acquittal by the
magistrate, his legal representatives wrote to the curator appointed in terms of
the provisions of POCA to Phillips’ seized assets, concerning the release
thereof, notifying him of an intended application to the high court for a
rescission of the restraint order in terms of which his assets were being held.
Because of the pending appeal, the threatened application did not eventuate.
[11] Subsequent to the launching of the application to have the appeal
struck from the roll, and after failed attempts to reach agreement on the
compilation and extent of the record, Phillips filed a supplementary affidavit
indicating that, over and above the legal bases already provided for striking
the matter from the roll, he would rely on the additional ground of the
inordinate delay in prosecuting the appeal.
[12] In opposing the application, the DPP contended that the appointment
of private counsel as prosecutors had occurred in terms of the provisions of
the NPA Act. Because of the basis on which the present appeal is to be
decided, it is not necessary to consider any further the legality of the
appointment of private counsel.
[13] In respect of the delay in the prosecution of the appeal, the DPP stated
that Phillips’ legal representatives had contributed thereto by not reaching
agreement on the nature and extent of the record to be placed before the high
court, acting as a court of appeal. The DPP persisted in the view that the plea
in terms of s 106 of the Act (that had been upheld), raised legal issues within
a narrow compass that required the appeal record to comprise only the
documents related to the plea itself and the magistrate’s reasons for
upholding it. It was contended that the issues on appeal were legal issues that
did not involve the facts or evidence placed before the regional court during
the trial. The following part of the answering affidavit by Ms Xolisile Jennifer
Khanyile, on behalf of the DPP, is relevant:
‘I further submit that the matter could have been dealt with expeditiously by placing a
core bundle of documents and the relevant portions of the record before the court of
appeal.’
[14] In her opposing affidavit, Khanyile assured the court below that the
filing of an appeal record ‘is being attended and a workable record has now
been obtained and will be filed in due course. I have also been informed that
the process is near to completion’. It is common cause that by the time
Phillips launched his application to have the appeal struck from the roll,
namely 3 July 2009, the record, as envisaged by the DPP, had not been filed.
Before us counsel on behalf of the DPP rightly conceded that it was
inexcusable that this had not been done.
[15] Moreover, it is common cause that, when the application for the striking
of the appeal from the roll and for the permanent stay of the prosecution was
ripe for hearing, no appeal record of any kind had been filed and an appeal
could thus not properly have been enrolled. This was recognized and
expressly recorded by Satchwell J at para 31 of her judgment. She went on to
hear the application as a single judge, which is the usual manner in which
applications are heard in motion court. Counsel representing the DPP
ultimately and expressly agreed in the court below that Satchwell J was
entitled to hear the application sitting as a single judge.
[16] Satchwell J considered the delay in the prosecution of the appeal,
related in the main to the filing of the record, to be the primary question to be
addressed. She stated that since the DPP was dominus litis in the appeal, it
was his primary responsibility to ensure its compilation and filing with the court
of appeal. She had regard to the DPP’s tardiness in obtaining funding for
obtaining the record. The learned judge noted that it took almost eight months
after the DPP’s notice of appeal before his office applied for such funding.
Satchwell J took into account that details of the difficulties the DPP allegedly
encountered in respect of the record that had been supplied by the service
provider, had not been communicated to Phillips’ legal representatives. This,
she reasoned, rightly caused them to be sceptical, which scepticism was
borne out by the service provider failing to provide the record because of non-
payment of its fees. Against that background, so Satchwell J reasoned, it was
disingenuous for the DPP to approach Phillips’ legal representatives to agree
to a limited record. The real reason for the delay, she held, was funding and
bureaucratic ineptitude. Satchwell J had regard to the inexplicable extensive
delays that occurred subsequent to the record being supplied by the service
provider. This, she reasoned, was due to waning enthusiasm for the pursuit of
the appeal on the part of the DPP. She rejected a plea on behalf of the DPP
to have regard to systemic problems, both in the magistrate’s court and the
office of the DPP.
[17] The court below stated the following:
‘ 52. I cannot find other than that the DPP has been dilatory in attending to
procurement of the record, naïve in failing to appreciate the need for funds to be
made available in advance of contracting with service providers, stubborn in seeking
to resolve the problems of an inadequate record by unilateral reconstruction thereof,
disingenuous in advising that the DPP was still reconstructing alternatively that
portion only of the record need be utilized.
53. I am in agreement with the view of the DPP that there has been “an inordinate
delay” in filing the record. The result has been an inordinate delay in pursuing the
appeal. This delay can be laid at the door of the DPP and nowhere else.’
[18] Satchwell J went on to consider whether the delay was such as to
justify a permanent stay of the DPP’s appeal. The following is the greater part
of the factors the court below considered relevant:
‘ 59. First, more than eleven years have elapsed since Phillips was arrested. Seven
years have passed since he first pleaded. The trial concluded some four and a half
years ago. There has been a hiatus of two and a half years since judgment was
handed down. I have no knowledge that any delay has been irregularly or
deliberately occasioned by Phillips in order to frustrate the conduct of the trial.
60. Second, the State noted its appeal two years and five months ago on 17th
February 2009. That appeal has not yet been heard which delay, as I have already
discussed in this judgment, must be ascribed to the office of the DPP.
61. Third, absent a complete record, the epic continues without land in sight. There is
no indication when or how the missing portions of the record will be reconstructed to
the approval of an appeal court. Even if this task were completed in the course of
2011, it is unlikely that a date for the hearing of the appeal could be allocated before
2012 – twelve years after arrest, in the sixth year after acquittal, three years after
noting an appeal. I repeat that such further delay would continue to fall upon the
shoulders of the office of the DPP.
62. Fourth, Phillips was charged with four counts in terms of the Sexual Offences Act
No 23 of 1957, one count in terms of the Aliens Control Act No 96 of 1991 and one
count of perjury.
63. Fifth, this is not an appeal by a convicted accused but an appeal by the
prosecution against the acquittal of Phillips. The purpose of the appeal is to have his
acquittal set aside and have him referred back to trial. I leave, for this moment, the
question of the constitutionality or otherwise of section 310 of the CPA. Instead, I
note that the clear intention and possible result of the appeal will be to once again
place Phillips in jeopardy of conviction. I am mindful of section 35(3)(m) of the
Constitution which prohibits that an accused person “be tried for an offence in
respect of an act or omission for which that person has previously been either
acquitted or convicted.” Accordingly, if such an appeal is permitted, this would
constitute an extraordinary process. At the very least, it would have to be prosecuted
with greater diligence, knowledge of law and cognizance of constitutional principles
than required in ordinary appeals. Intrinsic to such requirements is promptitude.
64. Sixth, if Phillips’ acquittal is overturned and the trial is reopened, then Phillips will
have to mount his defense at least eleven to twelve years after he was initially
charged. The prejudice to Phillips is considerable: witnesses become unavailable
and neither Phillips nor defense witnesses can be expected to remember events
more than eleven years ago clearly or confidently. Au contraire, the State has already
led all its evidence and closed its case some five to seven years ago when events
were less distant. There can be no doubt that the prosecution in this trial would have
an unfair advantage over the defence.
65. Seventh, Phillips suffers ongoing prejudice as a result of the delays in pursuit of
and finalizing this appeal. Some of these would be suffered by all accused persons in
his position. Others are unusual and unique to himself.
a. First, for over a decade he has been identified as an accused person with
criminal charges pending against him. He is described in this application as
the “notorious accused”, whose frequently successful litigation against the
NPA shows “the attitude and character of the accused.” The stigma in all
circles in South Africa is considerable. There must have been and continues
to be anxiety and stress in contemplating this apparently neverending saga. It
is not inappropriate to describe this as the “exquisite agony of the accused”.
Where imposition of psychological stress and social stigma is unwarranted,
such imposition would violate Phillips’ constitutional rights to dignity and
personal security.
b. Secondly, the financial burden cannot have been or continue to be
inconsiderable. The State has disclosed it has spent “millions” on this
litigation and so, I must assume, has Phillips.
c. Thirdly, Phillips exercises no control over the future conduct of this process.
He is precluded from finalizing the criminal proceedings against him. He is
dependant upon the office of the DPP to finalise this matter and their
endeavours, thus far, cannot inspire confidence that this ordeal will be
expeditiously concluded.
d. Fifth, certain of Phillips’ assets were restrained at the instance of the NPA in
terms of Chapter 5 of POCA in December 2000. No judge of the South
Gauteng Division can fail to have knowledge of this restraint and the
differences of opinion between Phillips and the curator of these assets over
the past eleven years. Notwithstanding his acquittal by a court of competent
jurisdiction, these assets have not been released from restraint and returned
to Phillips unencumbered. For so long as the appeal is pending, these assets
are not returned to Phillips. This is most significant curtailment of Phillips’ use
and enjoyment of his property.’
[19] The court below went on to conclude that any prosecutorial appeal and
any ensuing trial would place Phillips in double jeopardy. This is another
aspect to which I will revert in due course.
[20] Satchwell J was satisfied that Phillips’ right to a fair trial had been
infringed by the delay in finalizing the appeal. She took the view that the delay
in prosecuting the appeal served inevitably and irremediably to taint the
overall substantive fairness of the trial. The learned judge reasoned that an
appeal may be struck from the roll in exceptional circumstances and that it is
a measure to be resorted to with due caution. She concluded as follows:
’75. I take the view that the appropriate remedy is to order a permanent stay of the
appeal noted by the DPP against the conviction of Phillips. The appeal will therefore
be permanently struck off the roll.’
[21] Although the court below did not find it necessary to consider the
constitutionality of s 310 of the Act, it nevertheless thought it necessary to
criticize the deponent who opposed the application on behalf of the minister,
for failing to engage with the question whether such limitation which s 310
might impose on fair trial rights, was justified in terms of s 36 of the
Constitution. The minister’s deponent was criticized for merely referring to the
work of the South African Law Commission which had found that such
limitation is permitted in certain foreign jurisdictions. I shall say something
about this in due course.
[22] Before us the DPP and the minister relied on only three grounds of
appeal. First it was submitted that Satchwell J sitting as a single judge had no
jurisdiction to hear a matter related to the appeal in terms of s 310. In this
regard sections 22 and 13 of the Supreme Court Act 59 of 1959 were relied
upon. The relevant part of s 22 reads as follows:
‘The appellate division or a provincial division, or a local division having appeal
jurisdiction, shall have power–
(a) . . .
(b) to confirm, amend or set aside the judgment or order which is the subject of
the appeal and to give any judgment or make any order which the
circumstances may require.’ (Emphasis added.)
The relevant parts of s 13 read as follows:
‘Constitution of courts of provincial or local divisions-
(1)(a) Save as provided in this Act or any other law, the court of a provincial or local
division shall, when sitting as a court of first instance for the hearing of any civil
matter, be constituted before a single judge of the division concerned: Provided that
the judge president or, in the absence of both the judge president and the deputy
judge president, the senior available judge of any division may at any time direct that
any matter be heard by a full court consisting of so many judges as he may
determine.
(b) . . .
(2)(a) The court of a provincial or local division shall, except where it is in terms of
any law required or permitted to be otherwise constituted–
(i) for the hearing of any appeal against a judgment or order of an inferior court, be
constituted before not less than two judges.’ (Emphasis added.)
[23] It was submitted on behalf of the DPP that counsel representing him
and the minister had wrongly agreed in the court below that Satchwell J had
jurisdiction to hear the application and that they were not bound by his error of
law.
[24] The second point relied on before us is that the DPP could not be
blamed for the delay in filing the appeal record. As stated earlier, it was
contended that the delay was occasioned principally by the unreasonable
insistence of Phillips’ legal representatives to have a full record placed before
the court that would hear the appeal in terms of s 310. It was submitted that
an appeal in terms of s 310 is, by its nature, a very limited one and that
findings of fact are not susceptible to alteration on appeal. Thus, so it was
argued, only a limited record was required to be placed before the court that
would hear the appeal.
[25] The third point relied on by the DPP and the minister was that the relief
granted by the court below had not been properly foreshadowed in the
application brought by Phillips or in the supporting documentation. This point
can be dealt with briefly and immediately. Counsel on behalf of the DPP and
the minister rightly did not press this point with any enthusiasm or conviction.
There is no merit whatsoever in this point. The further basis for seeking a
striking of the appeal from the roll, namely the undue delay in prosecuting the
appeal, was communicated by way of a letter to the DPP and was fully
traversed in a supplementary affidavit as was the consequence of reliance on
that additional ground, namely a permanent stay of the appeal. The DPP and
the minister could have been under no illusion as to the nature and extent of
the relief sought by Phillips. In any event, the notice of motion was amended
ex abudante cautela.
[26] As noted by the court below, the DPP had not, up until the application
had been heard, sought condonation for the inordinate delay in filing the
appeal record. Indeed, as stated before, as things presently stand, no appeal
record of any kind has been filed.
Conclusions
Jurisdiction
[27] It is common cause that the DPP had removed the appeal against the
magistrate’s decision from the roll on the day prior to the hearing of the
application by Satchwell J.
[28] It was rightly conceded by counsel representing the DPP and the
minister that, notionally, one could have an application to the high court in
respect of a trial that has not been completed and that the application could
be unrelated to substantive issues raised on appeal by the prosecution in
terms of s 310 of the Act. Counsel was constrained to accept that in those
circumstances the high court could hear the application in the ordinary course.
In those circumstances a single judge would usually hear the matter.
[29] The submission on behalf of the minister and the DPP in respect of the
jurisdictional point is misplaced. It fails to take into account that the appeal in
terms of s 310 could not be heard because no record of any kind had been
finalized or filed. Thus, it could as a first step not be properly enrolled. If the
appeal in terms of s 310 had in fact been heard by the high court constituted
as a court of appeal, that court would have been confined to dealing with only
those issues raised as a result of the magistrate’s conclusions in relation to
the plea by Phillips in terms of s 106 of the Act and to procedural matters
directly related to that appeal.
[30] An appeal court becomes seized of an appeal when it has been duly
prosecuted in terms of the rules of that court, and in accordance with any
applicable statutory provision.6
[31] The application before Satchwell J was not interlocutory and certainly
was not accessory or subordinate to the appeal in terms of s 310 of the Act.7
It was a self-standing application, distinct from the main proceedings. This is
particularly so in respect of reliance by Phillips on the delay in the prosecution
of that appeal, which he contended ultimately infringed his rights to a fair trial
guaranteed by s 35(3) of the Constitution. I agree with the submission that this
part of his case is based on distinct facts which arose, in the main,
subsequent to the order that is intended to be appealed against in terms of
s 310 of the Act.
[32] In the event that any accused intends to challenge procedural
irregularities in the magistrates’ court, or raise the kind of issues raised by
Phillips in the application before Satchwell J, particularly in respect of the
undue delay in prosecuting the appeal, it would ordinarily require a proper
notice of motion, specifying the relief sought supported by the necessary
affidavits. Interested parties would have to be given notice and the matter
would ultimately be decided after all the affidavits had been filed. In the
present case that was done. The application was ripe for hearing. The appeal
was not.
[33] Furthermore, a litigant such as Phillips would, according to the DPP
and the minister’s view, have to wait until the DPP finally properly enrolled an
6 See D & H (Pty) Ltd v Sinclaire 1971 (2) SA 157 (W) at 158C-E, citing Campbell v Monto
1952 (3) SA 82 (T) at 84H-85A and R v Kluyts 1951 (1) SA 474 (C) at 478F-H
7 See Massey-Ferguson (South Africa) Ltd v Ermelo Motors (Pty) Ltd 1973 (4) SA 206 (T) at
214G-H.
appeal, if at all. This would mean that a litigant such as the DPP could unduly
frustrate an accused who might well have legitimate grievances concerning
irregularities in a criminal trial or about the prosecution of an appeal, not
directly related to the issues raised in a contemplated appeal.
[34] The concession on behalf of the DPP, set out in para 28 above, was
rightly made and the point was not pursued with any real conviction. It is clear
that the court below was properly constituted in terms of s 13(1)(a) of the
Supreme Court Act 59 of 1959. I do not wish to be understood as laying down
the principle that an application, such as that brought by Phillips, can only be
heard by a single judge.It may be considered necessary or convenient for the
matter to be heard by two, or indeed, by three judges.
Delay in filing the appeal record
[35] It is necessary to record that counsel for the DPP and the minister
rightly admitted that there was no evidentiary material before us, or indeed,
before Satchwell J, that demonstrated any wilful obstruction by Phillips of the
appeal process. As stated earlier, counsel for the DPP and the minister
conceded that, at the very least, the DPP could have filed the limited record
his office insisted was all that was required for the hearing of the appeal in
terms of s 310 of the Act. The DPP could then have abided a decision by the
court of appeal on whether the record was adequate.
[36] In my view the communication and litigation history between the DPP’s
office and Phillips, noted by the court below and recorded in paras 17 and 18
above, in respect of the prosecution of the appeal, as well as its conclusion
that the inordinate and continuing delay can rightly be placed at the door of
the DPP, cannot be faulted.
[37] Rule 51(3) of the Uniform Rules of Court, which applies in general to
the setting down of criminal appeals from magistrates’ courts, provides that
the ultimate responsibility of ensuring that all copies of the appeal record are
in all respects properly before the court, rests on the appellant or his or her
legal representative. Further, it provides that, where an appellant is
unrepresented, that responsibility rests on the DPP. The latter can hardly
escape responsibility when he appeals from the magistrates court in terms of
s 310 of the Act.
[38] Generally speaking, where there is a delay in prosecuting an appeal,
courts require an appellant to apply for condonation for failure to comply with
prescribed time limits and to fully explain why there has been a delay. In
Napier v Tsaperas 1995 (2) SA 665 (A), there was no such application for
condonation when an appellant filed the record more than four months late. At
671A-C this court stated the following:
‘I must not, however, be taken to express, in this judgment, any firm views on the
merits of an application for condonation. For present purposes, it suffices to say that
there appear to be several weaknesses in the explanations offered for the late
lodging of the record, and that the Court, in deciding on condonation, may also have
regard to the appellant’s failure to bring the application timeously. In Rennie v Kamby
Farms (Pty) Ltd 1989 (2) SA 124 (A) at 129G it is said that an appellant, when he
realises that he has not complied with a Rule of Court, should apply for condonation
without delay. His inaction may also be relevant, in my view, when he should have
realised, but did not, that he has not complied with a Rule. The matters to be taken
into account in an application for condonation include the respondent’s interest in the
finality of a judgment, the avoidance of unnecessary delay in the administration of
justice and, last but not least, the convenience of the Court.’
In Napier, absent an application for condonation, this court struck the matter
from the roll.
[39] In Beira v Raphaely-Weiner 1997 (4) SA 332 (SCA) at 337D-E, the
following appears:
‘There is no explanation on the papers for the delay between the second and the
third dates. In the circumstances of this case this is fatal, even should there be
prospects of success, because an application for condonation must be made as soon
as it is realised that the Rules have not been complied with; the petitioner is required
to give a full and satisfactory explanation for whatever delays have occurred; and the
respondent’s interest in the finality of the judgment is a factor which weighs with the
Court . . . .’
[40] In Toyota South Africa Motors (Pty) Ltd v Commissioner, South African
Revenue Service 2002 (4) SA 281 (SCA) para 15, Howie JA, with reference to
Beira, said the following:
‘A party seeking condonation must, among other things, give a full and satisfactory
explanation for whatever delays non-compliance has occasioned; an inadequate
explanation could well bar the grant of condonation . . ..’
[41] It is more than two years beyond the time envisaged by rule 67 of the
magistrates’ court rules for the provision of the record to the court of appeal,
in respect of which, as pointed out above, an appellant holds ultimate
responsibility. As noted by Satchwell J, there is still no end in sight. I recorded
earlier that counsel for the DPP was at pains to explain to this court that he
was unable to justify the failure by the DPP’s office to file even the limited
record it insisted was all that was required. The asserted justification by the
DPP for the inordinate and continued delay was rightly rejected by the court
below. Having regard to the authorities set out above, an application for
condonation in the ordinary course might well be doomed to failure. In
addition, where there has been a flagrant disregard of the rules of court, that
on its own may render prospects of success irrelevant. In this regard see
Darries v Sheriff, Magistrate’s Court, Wynberg 1998 (3) SA 34 (SCA) at 41B-
E.
[42] I interpose to state that, arguably, a more extensive record than
contended for by the DPP was required to answer the questions of law posed
by the magistrate in terms of s 310. It might well have been necessary for the
high court sitting as a court of appeal to consider the extent of the involvement
of the ‘private’ prosecutors and their impact on the trial. As stated earlier, and
as will become clear, that is a question that does not require to be addressed
by us. I merely restate that, in any event, the DPP was entitled to assert his
perspective on the extent of the appeal record by filing the limited record he
contended was justifiable, and then abiding the court of appeal’s decision in
relation thereto.
[43] I now turn to deal with whether the decision by the court below to order
a permanent stay of the prosecution was correct. In order to do so, it is
necessary to address Phillips’ contention that his right to a fair trial was
infringed, more especially because of the delay in prosecuting the appeal.
[44] Section 35(3)(d) of the Constitution provides:
‘Every accused person has a right to a fair trial, which includes the right–
. . .
(d) to have their trial begin and conclude without unreasonable delay.’
[45] Ordinarily, when fair trial rights are asserted on the basis of any of the
sub-categories of s 35, including, for example, the right to have a legal
practitioner assigned by the State, if substantial injustice would otherwise
result, it is pre-eminently a matter for the trial court to adjudicate upon. This
would involve having regard to the alleged infringement of rights and the
resultant prejudice, if any.8 It does not, however, exclude a higher court, in the
event of established facts clearly indicating an infringement of rights, from
making that determination.
[46] In Sanderson v Attorney-General, Eastern Cape 1998 (2) SA 38 (CC),
the Constitutional Court dealt with a case of an accused who was well known
in entertainment circles who had allegedly sexually interfered with two young
girls years before his arrest. For various reasons, there was a lengthy delay in
bringing him to trial in the regional court. The accused approached the high
court seeking a permanent stay of the prosecution on the basis that there had
been an unreasonable and inexcusable two year delay in prosecuting him,
8 See Sanderson v Attorney-General, Eastern Cape 1998 (2) SA 38 (CC) para 30; The Legal
Aid Board (Ex parte) v Pretorius [2007] 1 All SA 458 (SCA) para 43 and Betts v Brady (1941)
316 US 455 at 472.
infringing his rights to a speedy trial as provided for in the interim Constitution.
He failed in the high court and proceeded to appeal the matter in the
Constitutional Court. Kriegler J considered why the right to a trial within a
reasonable time was included as one of the specifically enumerated elements
of a fair trial. He had regard to comparative constitutional provisions. The
Constitutional Court held that liberty, security, trial and non trial-related
interests should all be regarded as protected.
[47] In Sanderson, the Constitutional Court considered that an accused
person is subject to various forms of prejudice and penalty, merely by virtue of
being an accused. That court noted that socially, doubt would have been
sown in the eyes of family, friends and colleagues as to the accused’s integrity
and conduct. The repercussions would vary from case to case but with the
reality of the criminal justice system. In addition to social prejudice, an
accused is subject to invasions of liberty that range from incarceration to
onerous bail conditions to repeated attendance at remote courts for formal
remands. Kriegler J recorded that this kind of prejudice resembled closely the
kind of ‘punishment’ that ought ideally to be imposed on convicted persons.
He had regard to our apartheid past in which the machinery of the criminal
justice system was abused. The response of the Constitution has been
pragmatic. The trial accompanied by the forms of prejudice set out above
must be ‘within a reasonable time’.
[48] The Constitutional Court, in Sanderson¸ addressed the critical question
of how to determine whether a particular lapse of time is reasonable. First, the
amount of elapsed time is obviously central to the enquiry. Factors generally
relied on by the State, such as waiver, the inherent time requirements of the
case and systemic reasons for delay, all seek to diminish the impact of
elapsed time. In Sanderson at para 30 the Constitutional Court said the
following:
‘The courts will apply their experience of how the lapse of time generally affects the
liberty, security and trial-related interests that concern us. Of the three forms of
prejudice, the trial-related variety is possibly hardest to establish, and here as in the
case of other forms of prejudice, trial courts will have to draw sensible inferences
from the evidence. By and large, it seems a fair although tentative generalisation that
the lapse of time heightens the various kinds of prejudice that s 25(3)(a) seeks to
diminish.’
[49] The following were considered to be the most important factors bearing
on the enquiry. First, the nature of the prejudice suffered by the accused, from
incarceration to restrictive bail conditions and trial prejudice even carried
through to mild forms of anxiety. The greater the prejudice, the shorter should
the period be within which the accused is tried. Second, the nature of the case
is important. In this regard, judges must bring their own experiences to bear in
determining whether a delay is over-lengthy. Third, systemic delay should be
considered. Systemic failures, so the Constitutional Court stated, are probably
more excusable than cases of individual dereliction of duty. Nevertheless,
there comes a time when systemic causes can no longer be regarded as
exculpatory.
[50] Kriegler J, in Sanderson, considered that it is by no means only the
accused who has a legitimate interest in a criminal trial commencing and
concluding reasonably expeditiously. At para 37 he stated the following:
‘Since time immemorial it has been an established principle that the public interest is
served by bringing litigation to finality.’
[51] Importantly the Constitutional Court noted that barring a prosecution –
in Sanderson, there was an application for an order in those terms before the
trial began – was far reaching. In that case, because the trial had not begun,
there was no real opportunity to ascertain the real effect of the delay on the
outcome. Kriegler J observed that such an order prevents the prosecution
from presenting society’s complaint against an alleged transgressor of
society’s rules of conduct and that in the absence of significant prejudice to an
accused, it would seldom be warranted. In favour of the prosecution, the
Constitutional Court considered the difficulty in handling complaints of sexual
abuse in children. In Sanderson, after weighing all the necessary factors, the
Constitutional Court held that it was not an appropriate case to order a stay of
the prosecution.
[52] In Bothma v Els 2010 (2) SA 622 (CC), the Constitutional Court dealt
with a 37-year pre-trial delay. It concerned the prosecution of someone for
allegedly having raped a 13-year-old school girl and thereafter repeatedly
subjecting her to sexual abuse. The alleged victim had waited decades before
turning to the criminal justice system. In Bothma, the Constitutional Court
considered that in the balancing of the various factors relating to prejudice to
the accused, the nature of the offence was a necessary counter weight to be
taken into account. It referred with approval to the decision of this court in
Zanner v Director of Public Prosecutions, Johannesburg 2006 (2) SACR 45
(SCA), in which it was considered important to have regard to those
distressed by the horrors of the alleged offence. In Zanner, this court thought
that against the accused’s interests should be juxtaposed the societal demand
in serious offences that an accused should stand trial. The Constitutional
Court noted that child rape is an especially egregious form of personal
violation. It had regard to the fact that only recently have adult women come
to grips with sexual abuse they suffered as children and were more willing to
confront their abusers. This process, however, generally takes quite a long
time. It is clear in Bothma, that the special character of the sexual abuse of
children, its impact on them and the time it takes to come to terms with it, are
especially important when a permanent stay of prosecution is sought in
relation thereto.
[53] In my view, Satchwell J properly weighed up the necessary factors.
Even contemplating that the position of women, as a vulnerable class, might
well have come into play in the trial, given the lack of particularity supplied by
the DPP, it is difficult to take it into account. There is no engagement by the
DPP on affidavit about how such factors impacted on the duration of the trial
and on the delay in the prosecution of the appeal. There is no indication that
the prosecution has endured for so long and the appeal was unduly delayed
due to the difficulties attendant upon a particularly vulnerable class of victims.
There was no reliance thereon by the DPP.
[54] It is true that there is reference by the DPP to foreign nationals who
apparently had testified that they had been brought to South Africa and forced
into prostitution. One would have expected that the DPP, allegedly concerned
about the issues thrown up by the evidence already adduced, would act with
greater purpose and commitment. Should a court, without an end in sight in
respect of the proposed appeal (in terms of s 310) and therefore no indication
of when the trial might resume, in the event of a successful outcome for the
DPP, expect an accused to continue to be in limbo? In the totality of the
circumstances of this case, I think not.
[55] I can find no fault with Satchwell J’s reasoning in her path toward
concluding that a permanent stay of the prosecution was justified. She was
correct in laying the fault for the delay at the door of the DPP. She was correct
to conclude that the inordinate delay was inexcusable. The learned judge was
correct in her reasoning about the impact of the delay on the trial that itself
was unduly prolonged. This was ironic, given that the justification for engaging
‘private’ prosecutors was that it would result in greater efficiency and
expedition.
[56] In my view, the permanent stay of the prosecution ordered by the court
below was justified. I express caution concerning Satchwell J’s remarks about
a successful result in the appeal by the DPP in terms of s 310, resulting in
double jeopardy for Phillips or, indeed, for any accused. It is an open question
whether an irregularity resulting in an acquittal or conviction is in effect a
decision properly arrived at on the merits and whether it truly results in double
jeopardy. The answer to that question might very well depend on the
circumstances of the case, more particularly the nature of the irregularity, the
evidence already heard and the prejudice that might ultimately result for an
accused. We do not make any pronouncement on that issue and it was
unnecessary for the court below to say anything in that regard. Additionally, it
was not necessary for the court below and, considering the reasons provided
above, it is also not necessary for us to engage in a discussion on the
constitutionality of s 310 of the Act. Phillips was arrested more than twelve
years ago. An appeal record has still not been finalised. The time has come to
put an end to a sorry saga. This, the high court below rightly attempted to do.
[57] Satchwell J’s criticism of the deponent on behalf of the minister for
failing to provide justification for the right of an appeal by the DPP in terms of
s 310 was in my view not well-grounded. An extensive international
comparative study of the right by prosecution authorities to appeal decisions
against acquittals was referred to. That study was relevant and would
certainly have been of assistance in the event that the constitutionality of
s 310 of the Act had to be decided.
[58] It is now necessary to address an issue referred to earlier, namely an
unethical letter sent to the Deputy Judge-President of the South Gauteng High
Court by the DPP’s office, concerning the prosecution of the appeal in terms
of s 310 of the Act. In a letter dated 3 June 2010 Mr GS Maema, the then
Acting Director of Public Prosecutions, based at the South Gauteng High
Court, Johannesburg stated, inter alia, the following:
‘1. The accused is the owner of a well-known brothel – The Ranch - that was situated
in Rivonia.
. . .
3. This case is a prime example of human trafficking as some of the prostitutes
testified that they were brought to SA under false pretences and forced to work at
The Ranch. The trafficker testified that he brought the women to SA in conjunction
with the accused. The accused also paid for the traveling expenses of the women
brought to SA.’
[59] Counsel representing the DPP rightly conceded that the letter was
indefensible and ethically questionable. He agreed that it was deserving of
censure. It is unacceptable for the office of the DPP to engage in a
communication, in a tone that was rightly described by Phillips’ legal
representatives as being familiar and collaborative. The Deputy Judge
President rightly registered his dismay in a letter to the DPP’s office. The
office of the DPP should know better than to communicate with the head of a
court on the merits of an appeal before it is heard.
[60] There is one remaining aspect that requires brief attention. The court
below ordered that the appeal in terms of s 310 be permanently struck from
the roll. Given that the appeal in terms of s 310 had not been properly
enrolled, and that, in any event, it had been withdrawn from the roll, that part
of the order of the court below is difficult to understand. The permanent stay
of the prosecution of the appeal ordered by the court below would in any
event have been the end of the litigation path between the parties.
Accordingly the order requires to be adjusted minimally. The parties were
agreed that in the event of an outcome favourable to Phillips, the order was to
be altered in the form that appears hereafter.
[61] The following order is made:
1 The appeal is dismissed with costs, including the costs of two counsel.
2 Paragraph 1 of the order of the court below is altered to read as follows:
‘1. The appeal of the first respondent (“Director of Public Prosecutions”) against the
judgment and order handed down by Mr S.P. Bezuidenhout in the Regional
Magistrates Court for the Regional Division of Gauteng in case No 41/1899/00 on 26
November 2008 in which the Learned Magistrate acquitted the applicant (“Andrew
Lionel Phillips”) is permanently stayed.’
____________________
MS NAVSA
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
P. Ellis SC
Instructed by:
The State Attorney, Johannesburg
The State Attorney, Bloemfontein
FOR RESPONDENT:
MR Hellens SC (with him David Unterhalter SC)
Instructed by
Shannon Little Attorneys, Alberton
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
28 September 2012
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
DPP and Minister of Justice and Constitutional Development v Phillips (803/2011)
[2012] ZASCA 140 (28 September 2012)
The Supreme Court of Appeal (SCA) today dismissed with costs an appeal by
the Director of Public Prosecutions and the Minister of Justice and
Constitutional Development against an order of the South Gauteng High Court
(Satchwell J), in terms of which it ordered a permanent stay of prosecution
against Mr Andrew Lionel Phillips. Mr Phillips was arrested in February 2000
and on 22 December of that year substantial property was attached in terms
of the provisions of the Prevention of Organised Crime Act 121 of 1998. The
charges on which he had been arrested and later prosecuted were related to
the keeping of a brothel and alleged further breaches of the law, apparently
connected to that main activity.
In January 2004 the trial commenced in the regional court, Johannesburg.
Phillips pleaded not guilty to the charges and proceedings in that court
continued until November 2006. During the duration of the State’s case a
number of prosecutors were engaged in the prosecution. After the State
closed its case on 20 November 2006, Phillips applied for a discharge in
terms of s 174 of the Act, which was refused. Subsequently, Mr Phillips raised
a plea in terms of s 106(1)(h) of the Criminal Procedure Act 51 of 1977 (the
Act), namely that a number of prosecutors, who conducted his prosecution,
lacked title to prosecute. That plea was upheld.
Aggrieved, the Director of Public Prosecutions (DPP) required the Magistrate
to formulate questions for an appeal by it to the South Gauteng High Court in
terms of s 310 of the Act. Delays occurred in the prosecution of the appeal,
mainly due to ineptitude on the part of the prosecution authorities. Years had
passed since Mr Phillips’ trial commenced. The contemplated appeal in terms
of s310 by the DPP had not yet materialised, because a record of appeal,
which is the responsibility of his office, has not yet been filed.
Because of the lengthy delay in finalising the appeal, Mr Phillips applied to the
South Gauteng High Court for a permanent stay of his prosecution, on the
basis that, even if it were to run its course, it would, because of the
inexcusably lengthy delay, impinge on his right to a fair trial. Mr Phillips was
successful in the High Court.
This court, in dismissing the appeal, said the following:
‘. . . , [T]he permanent stay of the prosecution ordered by the court below was
justified.
. . .
Phillips was arrested more than twelve years ago. An appeal record has still not been
finalised. The time has come to put an end to a sorry saga.’ |
2433 | non-electoral | 2013 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case No: 575/2012
In the matter between:
GABRIEL BUTHELEZI
APPELLANT
v
PRISCILLA ZANELE NDABA
RESPONDENT
Neutral citation:
Buthelezi v Ndaba (575/2012) [2013] ZASCA 72 (29 May 2013).
Coram:
Brand, Lewis, Cachalia, Majiedt JJA et Saldulker AJA
Heard:
13 May 2013
Delivered:
29 May 2013
Summary:
Alleged medical malpractice – determination of negligence
on the part of the surgeon – not to be inferred from concession by surgeon
that something must have gone wrong during the operation – dependent on
evaluation of the reasoning underlying conflicting expert opinions
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: KwaZulu-Natal High Court, Pietermaritzburg (Jappie J sitting as
court of first instance):
The appeal is upheld with costs.
The order of the court a quo is set aside and replaced with the following:
‘The plaintiff’s claim is dismissed with costs.’
________________________________________________________________
JUDGMENT
________________________________________________________________
BRAND JA (LEWIS, CACHALIA, MAJIEDT JJA et SALDULKER AJA
CONCURRING):
[1] This is a case about alleged medical negligence. The appellant, Dr Gabriel
Buthelezi,
practises
as
a
specialist
gynaecologist
and
obstetrician
in
Pietermaritzburg. On 13 February 2006 he performed a surgical operation known as
a total abdominal hysterectomy on the respondent, Ms Priscilla Ndaba. Some time
after the operation, she began to suffer from urine incontinence. Further examination
by a urologist revealed the cause of her problem to lie in what is known in medical
parlance as a vesico-vaginal fistula which can be described in layman’s terms as a
hole in the posterior wall of the bladder and the contiguous anterior wall of the
vagina. What happened in these circumstances, so the medical experts explained,
was that urine passed from the bladder to the vagina above the control mechanisms
which caused the urine incontinence. Relying on these facts, the respondent
instituted an action against the appellant in the court a quo for the damages she
suffered in consequence of the vesico-vaginal fistula (the fistula) which resulted from
his alleged negligence in performing the hysterectomy operation.
[2] When the matter came before Jappie J in the court a quo he was asked, by
agreement between the parties, to determine the issues pertaining to the appellant’s
liability first while the quantum of the respondent’s alleged damages stood over for
later determination. During the preliminary proceedings that followed, it became
apparent that the only relevant dispute hinged on whether or not the appellant was
negligent and that this question in turn depended on an election between the
opposing views expressed by two medical experts in this regard. On the one hand
Prof R W Green-Thompson testified, on behalf of the respondent, that in his view the
appellant was negligent in performing the hysterectomy operation. On the other
hand, the appellant’s expert witness, Prof L Snyman, took the position that he was
not. At the end of these proceedings Jappie J upheld the respondent’s claim on the
merits with costs. In consequence he ordered the appellant to pay the respondent
such damages as either agreed on or as the respondent may prove at the second
stage of the trial. The appeal against that judgment is with the leave of the court a
quo.
[3] I find it convenient to start the recital of the facts with an introduction of the
medical specialists involved in the order that they testified. First, there was Dr Abdul
Dada, a specialist urologist who was called to testify on behalf of the respondent and
who was responsible for diagnosing and eventually repairing the fistula that caused
the incontinence problem. Secondly, there was Prof Green-Thompson, the former
head of the department of obstetrics and gynaecology at the Faculty of Medicine,
University of KwaZulu-Natal, to whom I have already referred. Thirdly, there was the
appellant himself who testified on his own behalf. Albeit that he was not called as an
expert witness, it transpired that when he performed the operation on the
respondent, he had practised as a specialist in his field for nearly 20 years during
which period he had carried out about 1 000 hysterectomy operations. Finally there
was the appellant’s expert, Prof Snyman, who held a joint appointment as professor
of medicine at the University of Pretoria and the principal specialist at the
department of obstetrics and gynaecology at the Kalafong Hospital in Atteridgeville,
Pretoria.
[4] Before I turn to the differences in opinion between these medical specialists
that emerged during the trial, I propose to deal with the large areas of their testimony
which proved to be common cause. First amongst these was the fact that the fistula
of about one centimetre in diameter, which was observed by Dr Dada some six
weeks later during the remedial operation, did not occur during the hysterectomy,
nor immediately thereafter, but that it progressively developed over the ensuing
period. At the same time the specialists agreed that the development of the fistula
did not start spontaneously, but that it was triggered by something that happened
during the hysterectomy. On this aspect they specifically agreed that the following
factors, singularly or in combination, could not in themselves cause the fistula: the
fact that the respondent was HIV positive; that she suffered from diabetes; that she
had previously undergone a caesarean section; and that she had been struggling
with chronic pelvic infection at the time. Yet, they also concurred that because of
these factors, the respondent was at an increased risk of the formation of a fistula.
[5] An abdominal hysterectomy without complications, so the medical specialists
further agreed, involves the removal of the uterus from the upper part of the vagina,
known as the vaginal vault, and the subsequent closing of the hole in the vault
caused by the removal. The bladder lies anterior to the uterus and although the two
organs are in close proximity, they do not share the same wall nor the same blood
supply. Of critical importance, so the specialists agreed, is to separate the bladder
from the uterus before the operation starts and to protect it from harm during the
operation. Normally the separation presents little difficulty, because the connection
between the two organs consists of what is described as loose areola tissue. But if
the patient had undergone a previous caesarean section, it is likely that there will be
some tethering or adhesions between the two organs which the surgeon has to cut
through with some sharp surgical instrument.
[6] Prof Green-Thompson’s thesis as to what happened in this case is that,
during the hysterectomy operation, some damage was caused to the blood supply to
an area of the bladder wall. The compromised area then became devascularised –
that is, deprived of blood – which in turn led to a progressive tissue necrosis of the
bladder wall and eventually to the formation of the fistula. Because no direct damage
to the bladder wall occurred during the surgery, the problem would not have been
noticeable at the time. The fistula developed and increased over time through
ongoing tissue necrosis in the devascularised part of the bladder wall. That explains
why the respondent’s urine incontinence did not manifest itself immediately
subsequent to the operation, but only some time thereafter.
[7] As to when and how the damage to the blood supply of the bladder wall
occurred, Prof Green-Thompson expressed the view that it happened either when
the bladder was separated from the uterus or when the uterus was removed from
the vaginal vault. In any event, he said, the problem was caused by the appellant’s
failure to ensure that the bladder was kept separate and safe during the course of
the operation. If reasonable precautions had been taken, so Prof Green-Thompson
concluded, the injury to the bladder would not have occurred. What Prof Green-
Thompson’s opinion thus amounted to, as I understand it, was that the fact of the
injury to the respondent’s bladder inevitably gave rise to the inference that
reasonable precautions were not taken and hence that the appellant was negligent.
[8] The appellant’s independent recollection of the operation on the respondent
was virtually non-existent and his contemporaneous notes were not of much
assistance. These recorded only that ‘a standard TAH” ie a total abdominal
hysterectomy was done; that there was some difficulty due to oozing of the vaginal
vault; and that haemostasis was secured, ie that the oozing was stopped. This
meant, so the appellant testified, that it was a straightforward operation; that there
were no complications and no difficulties, save for the oozing of the vaginal vault,
which had soon been resolved. Whether or not there were tetherings or attachments
between the respondent’s uterus and bladder, as a result of her previous caesarean
section, he could not remember. But if there were, he would not regard it as a
problem worthy of mention because he had encountered it on so many occasions in
the past.
[9] The reference to a ‘standard TAH’ in his notes also led him to the inference
that he used the standard technique which he always applied in the many
hysterectomy operations he performed before and after this one. Part of his standard
procedure, so the appellant testified, was firstly to ensure the separation of the
bladder from the uterus before the operation starts and to protect it from harm.
Under cross-examination he confirmed that he had heard of the remedial operation
by Dr Dada about six weeks after the hysterectomy and that he then realised that
the fistula which necessitated the operation probably resulted from something that
happened during the hysterectomy. At that time he therefore gave thought to what
he could have done differently from what he routinely did during the literally
hundreds of other hysterectomy operations that he had performed, but nothing came
to his mind.
[10] He further said under cross-examination that Prof Green-Thompson could be
correct in his thesis that the fistula resulted from damage to the blood supply to the
bladder during the operation and that this could have happened either when he
separated the bladder from the uterus, when he removed the uterus from the vaginal
vault, or even when he stopped the blood oozing from the vault after the removal of
the uterus by putting in stitches. He also conceded the feasibility of the proposition
raised for the first time by the respondent’s counsel in cross-examination, namely,
that the fistula could have resulted from infection which was in turn brought about by
blood collecting in the area where the oozing occurred and which he did not remove.
With reference to this possibility, it was not suggested to the appellant that his failure
to remove the accumulated blood would constitute negligence on his part.
[11] Further statements by the appellant which ultimately weighed heavily with the
court a quo in concluding that he was negligent, emanated from questions by Jappie
J himself. These appear from the following quotation of the evidence in the judgment
of the court a quo:
‘You can’t recall as what you did during the operation in regard to the bladder wall except to
say you would have performed and used your standard technique? – Yes. Would that be fair
to you?
So if the bladder and we must accept because it is common cause that the bladder was
compromised, you can only speculate as to how that may well have happened? – Yes.
You can’t take it any further than that? – No I could not. And if it is suggested to you that it
should not have happened, what would your response be? – . . . [M]y response would be it
should not have happened, I would agree with that. It should not have happened.
But we know it did happen? – . . . Yes.’
[12] In his testimony Prof Snyman underscored the fact that no one really knew
how the fistula came about and that all the theories advanced, including the one by
Prof Green-Thompson, amounted to no more than speculation. Although he did not
deny that Prof Green-Thompson’s thesis could be valid, his view was that there were
other hypotheses that would have an equal claim to validity. Amongst these he
seemed to prefer the possibility of a small cut in the bladder wall which occurred
when the bladder was separated from the uterus, particularly because of the
potential tetherings or adhesions resulting from the respondent’s previous caesarean
section. The injury thus caused, he explained, could have been so small that it was
not noticeable during the operation. Yet, over time and especially in the light of the
respondent’s diabetes and the chronic pelvic infection from which she suffered, the
small injury could have developed into the fistula. Another possibility that he
recognised was the one suggested to the appellant in cross-examination, to wit, that
the fistula resulted from an infection in the vaginal vault which was in turn caused by
accumulated blood in the area of the oozing which had not been removed. With
regard to the latter possibility Prof Snyman stated, however, that failure to remove
the accumulated blood would not constitute negligence per se because ‘[t]here is
good evidence that if you do not remove blood after an operation . . . it does not
cause any problems . . . [because] the body absorbs [the accumulated blood]’.
[13] What Prof Snyman also emphasized was that the occurrence of a fistula does
not in itself justify an inference – as Prof Green-Thompson seemed to suggest – of
negligence on the part of the surgeon. On the contrary, he said, the development of
a fistula is widely recognised as a consequence of hysterectomy operations that
cannot always be avoided, however careful the surgeon might be and whatever
precautionary measures he or she may take. In this regard he referred to
international medical journals that were placed before the court a quo, which
supported his opinion. In one of these it is stated, for example, that:
‘[Even if] the operation . . . [is] performed to an adequate standard . . . it would be generally
agreed that inadvertent bladder injury is a recognised complication of hysterectomy and can
occur even with careful surgical technique.’
[14] I have said at the beginning that the outcome of the dispute as to whether or
not the appellant’s performance of the surgery, which led to the respondent’s injury,
could be described as negligent, ultimately turns on an election between the
opposing views of two expert witnesses. It is true, of course, as the court a quo
accentuated in its judgment, that the determination of negligence ultimately rests
with the court and not with expert witnesses. Yet that determination is bound to be
informed by the opinions of experts in the field which are often in conflict, as has
happened in this case. In that event the court’s determination must depend on an
analysis of the cogency of the underlying reasoning which led the experts to their
conflicting opinions.
[15] That analysis, so it seems to me, was never undertaken by the court a quo in
this case. As I understand its judgment, the court was swayed in favour of the
respondent’s expert by what it regarded as an admission of negligence on his part
by the appellant himself. As appears from the quotation from the appellant’s
evidence by the court a quo, all he admitted, however, was that the injury to the
respondent’s bladder should not have happened unless something went wrong
during the hysterectomy. As I see it, that does not amount to an admission of
negligence. After all, as Lord Denning MR observed in Hucks v Cole [1968] 118 New
LJ at 469:
‘With the best will in the world things sometimes went amiss in surgical operations or
medical treatment. A doctor was not to be held negligent simply because something went
wrong.’
Or as Scott J said in Castell v De Greef 1993 (3) SA 501 (C) at 512A-B:
‘The test remains always whether the practitioner exercised reasonable skill and care or, in
other words, whether or not his conduct fell below the standard of a reasonably competent
practitioner in his field. If the “error” is one which a reasonably competent practitioner might
have made, it will not amount to negligence.’
[16] Turning to the conflicting views of the respective experts, it appears that Prof
Green-Thompson’s underlying reasoning departs from the inference that the injury to
the respondent’s bladder would not have occurred if the appellant was not negligent.
To me that seems reminiscent of an application of the res ipsa loquitur maxim, which
the court a quo quite rightly found inappropriate in this case. I say quite rightly
because, as was pointed out in the locus classicus on medical malpractice, ie Van
Wyk v Lewis 1924 AD 438 at 462, that maxim could rarely, if ever, find application in
cases based on alleged medical negligence. The human body and its reaction to
surgical intervention is far too complex for it to be said that because there was a
complication, the surgeon must have been negligent in some respect. Logic dictates
that there is even less room for application of the maxim in a case like this, where it
has not even been established what went wrong; where the views of experts are all
based on speculation – giving rise to various, but equally feasible possibilities – as to
what might have occurred. Moreover, although Prof Green-Thompson did not deny
the authority of the international publications, put to him in cross-examination, that
contradict his conclusions, he simply seemed to ignore their content. In sum I thus
find Prof Green-Thompson’s opinion ill-supported by his reasoning.
[17] By contrast, Prof Snyman’s opinion, based on his expertise and experience in
practice, that this type of injury may result from a hysterectomy operation despite
reasonable care on the part of the surgeon, appears to be well-supported by views
expressed in international journals in the field. In fact, these publications seem to
indicate that this type of injury to the bladder is generally accepted as one of the
inherent risks of a hysterectomy operation. In these circumstances, I consider that
the court a quo erred in finding that negligence on the part of the appellant had been
established.
[18] In the result:
The appeal is upheld with costs.
The order of the court a quo is set aside and replaced with the following:
‘The plaintiff’s claim is dismissed with costs.’
____________________
F D J BRAND
JUDGE OF APPEAL
APPEARANCES:
For Appellant:
J Marais SC
Instructed by:
MacRobert Inc
DURBAN
Correspondents:
Claude Reid
BLOEMFONTEIN
For Respondent:
F M Moola SC
Instructed by:
Sarawan & Co
PIETERMARITZBURG
Correspondents:
Honey 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:
29 May 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.
Buthelezi v Ndaba (575/2012) [2013] ZASCA 72 (29 May 2013)
The Supreme Court of Appeal (SCA) handed down judgment today in an appeal from the
KwaZulu-Natal High Court, Pietermaritzburg (High Court). The matter involved a specialist
gynaecologist – the appellant – and his erstwhile patient – the respondent – on whom he
performed a surgical operation known as a total abdominal hysterectomy. After the operation
the patient suffered from urine incontinence. Subsequent examination by a urologist revealed
the cause of the patient’s problem to lie in a fistula or hole in the patient’s bladder wall.
Though it was common cause that the hole resulted from something that happened during the
hysterectomy operation, the question was whether it was due to negligence on the part of the
appellant. That was the only issue in both the High Court and on appeal.
In the High Court there was a difference of opinion between expert witnesses on this issue.
The expert called on behalf of the patient expressed the view that the doctor was negligent
while the expert on behalf of the doctor believed that he was not. The High Court accepted
the opinion of the former and thus upheld the patient’s claim.
On appeal, Brand JA, noted that while the final determination of negligence is within the
exclusive purview of the court, it is nevertheless informed by the opinions of experts; where
there is a dispute between such opinions, the court is then called upon to analyse the cogency
of the underlying reasoning thereof. In undertaking such analysis, the SCA held that the
opinion of the expert witness in favour of the patient’s claim was reminiscent of the res ipsa
loquitur (facts speak for themselves) maxim. It is trite law that this is not generally applicable
in matters of medical negligence, due to the complexity of the human body and its reaction to
surgical intervention. Consequently, the underlying reasoning of that expert witness’ opinion
did not withstand the scrutiny of the SCA.
Conversely, the opinion of the expert witness in favour of the appellant doctor’s case –
namely that such injuries may result from a hysterectomy operation despite reasonable care
on the part of the surgeon – was well-supported throughout medical scholarship.
Consequently, this Court held that the court a quo had erred in finding that negligence on the
part of the appellant had been established. Hence the appeal was upheld with costs. |
3671 | non-electoral | 2021 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 421/2020
Case No: 422/2020
In the matter between:
UPS SCS SOUTH AFRICA (PTY) LTD
APPELLANT
and
HENDRIK CORNELIS VAN WYK t/a
RESPONDENT
SKYDIVE MOSSEL BAY
Neutral citation:
UPS SCS South Africa (Pty) Ltd v Hendrik Cornelis van Wyk t/a
Skydive Mossel Bay (421/20) and (422/20) [2021] ZASCA 131
(1 October 2021)
Coram:
PONNAN,
WALLIS,
SALDULKER,
MOKGOHLOA
AND
MABINDLA-BOQWANA JJA
Heard:
19 August 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 at
10h00 on 1 October 2021.
Summary: Contract – terms – contract of carriage concluded by way of exchange
of emails – customer thereafter signing credit application with standard trading
conditions containing exemption from liability for loss or damage – exemption
clauses not brought to the customer’s attention – exemption clauses not part of the
contract – quantum of claim – item destroyed during carriage – replacement value
of item.
__________________________________________________________________
ORDER
__________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Henney J
sitting as court of first instance):
The application in terms of s17(2)(b) of the Superior Courts Act 10 of 2013
for leave to appeal against the whole of the judgment of the court below is
dismissed with costs, such costs to include the costs of two counsel.
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
__________________________________________________________________
JUDGMENT
__________________________________________________________________
Saldulker
JA
(Ponnan,
Wallis,
Mokgohloa
and
Mabindla-Boqwana
JJA concurring):
[1] Mr Hendrik Cornelis Van Wyk, the respondent, is the owner and operator of
a skydiving business, trading under the name and style of Skydive Mossel Bay,
situated at the Mossel Bay Airfield, in the Western Cape. He used Cessna aircraft
for this purpose. In 2007, he sent an aircraft engine for inspection and repair to
America's Aircraft Engines Inc, a specialist in refurbishing aircraft engines in the
United States of America (USA). As he did not immediately need to use it, the engine
remained in the USA for some time. In 2012, when he needed the engine back in
South Africa, he instructed America's Aircraft Engines to proceed with an overhaul
of the engine. This was complete towards the end of 2012 and Van Wyk made
enquiries about transporting the engine back to South Africa (SA). It needed to be
conveyed from Collinsville, Oklahoma, to the George Airport in SA.
[2] In December 2012, Van Wyk contacted the appellant, UPS SCS South Africa
(Pty) Ltd (UPS), the South African branch of an international delivery business. This
resulted in the exchange of a number of emails, of which, the following are pertinent.
(i)
On 12 December 2012, Van Wyk requested a quotation for the conveyance
of a crate containing the aircraft engine by sea from the USA to South Africa. He
asked for the cheapest quotation and for an estimate of how long it would take.
(ii)
On 24 December 2012, UPS represented by Mr Dirk Swanepoel (Swanepoel)
responded to Van Wyk, and attached an estimate of the charges in the amount of
R11 070.05 on a document entitled ‘Seafreight Import Estimate-LCL’ ('the
quotation'). Swanepoel also requested a detailed description and value of the
engine, presumably for the purpose of providing an estimate of the duration of the
transit.
(iii)
On 21 January 2013, Van Wyk replied indicating that the engine had been
shipped to America’s Aircraft Engines in 2007 for an overhaul which was now
completed, and that the cost of the overhaul process was $21 500. Van Wyk
enquired whether the conveyance of the aircraft engine would attract any import
duty, and enquired further about the duration of conveyance via sea freight.
(iv)
On 22 January 2013, the following emails were exchanged between
Swanepoel and Van Wyk:
[a]
At 07h57, Swanepoel informed Van Wyk that the engine would take
approximately 45 days in transit by ocean freight, and that it would not attract import
duty. However, VAT would be payable on the value of the engine, and not just on
the value of the repair. Swanepoel indicated that an ITAC1 certificate might be
required depending on the documentation Van Wyk had available.
[b]
At 9h55, Van Wyk responded to Swanepoel advising him that the value of the
engine and the repair was the same. He added:
'I would like to go ahead with this.
What do you need from me.'
[c]
At 10h14, Swanepoel advised Van Wyk that 'the first step' would be to open
an account with UPS-SCS. He also asked for information in order to see whether an
ITAC permit would be required and the address and contact details for the pick-up
of the cargo and shipment.
[d]
At 10h24, Van Wyk replied that he did not have an account with UPS. He
enquired:
'Can I not just make a full upfront payment?
1 International Trade Administration Commission of South Africa.
Else, send me the procedure for opening an account please’.
[e]
At 10h34, Swanepoel informed Van Wyk that it was not an option not to have
an account for US shipments and that the only way ‘we can move ocean on the US
lane is if a valid account number exists (even if it is a COD account)’. He advised
that shipments to and from the USA were called Regulated Trade and a multitude of
rules and regulations imposed by the US Government and US Customs had to be
complied with. He attached a copy of the credit application to be completed so that
'we can start the process'.
[f]
At 16h12, Van Wyk signed the credit application form and returned it to
Swanepoel. On the relevant portion of the first page and under the heading ‘Credit
Application’, which appears in bold print, Van Wyk filled in his personal and business
details in manuscript. In addition, in the middle of the same page, and in smaller
print, the words ‘Credit Facilities Required’ appear in bold print. Van Wyk entered
the amount of ‘R30 000’ next to the words ‘Credit Limit’ and next to the words
‘Payment Terms’ Van Wyk entered the words ‘Pay Up Front’.
[3] The parties are agreed that this exchange of emails gave rise to a contract in
terms of which UPS would arrange for the engine to be collected from Collinsville,
Oklahoma and conveyed to George. The initial dispute is over the precise terms of
that contract, but first it is necessary to complete the narrative.
[4] On 31 May 2013, Swanepoel sent an email to Van Wyk informing him that
the aircraft engine was scheduled for pick-up the following day at America’s Aircraft
Engines. On 10 June 2013, Van Wyk sent an email to Swanepoel informing him that
there was a change of circumstances, and that he required the engine urgently. The
reason was that an engine on one of his planes was nearing its permissible 1500
flying hours after which it would require to be taken out of service and reconditioned.
A replacement was accordingly needed. He enquired about the cost of transporting
the engine via air freight. Swanepoel's response was that he had made
arrangements for the cargo to be intercepted once it arrived in New York and could
then be sent by air. Swanepoel also informed Van Wyk that the engine was on a
feeder truck from Dallas en route to New York, and that it would then be flown from
New York on a direct service to Johannesburg.
[5] It transpired that this was all academic. The aircraft engine never arrived at
its destination in South Africa. On the afternoon of 12 June 2013, Van Wyk was
informed by Swanepoel, once again by email, that the cargo had been damaged
whilst in transit within the USA. The truck and trailer carrying the aircraft engine had
allegedly caught fire as a result of equipment malfunction, and the truck and its cargo
appeared to be a total loss. He was asked to provide UPS with a quotation or
estimate of the value of the engine. Van Wyk was sent an insurance claim form, but
on 1 October 2013, he was informed by UPS that the shipment had not been insured,
and, that according to the appellant’s terms and conditions for ocean freight
shipments they were only liable to pay US $500 per shipment.
[6] Aggrieved, Van Wyk instituted an action against UPS in the Western Cape
Division of the High Court, Cape Town (high court), for payment of the amount of
R386 140.30 in respect of the loss of the aircraft engine, plus interest and costs.
Subject to a deduction in respect of travelling costs this was the amount that he paid
to obtain a replacement reconditioned engine from a South African supplier.
[7] In the particulars of claim, Van Wyk pleaded that as a result of the various
emails exchanged, a written agreement had come into existence between the
parties on or about 22 January 2013, alternatively on or about 31 May 2013, in
Johannesburg, alternatively in Mossel Bay, for the conveyance of the aircraft engine
by the appellant from Oklahoma, USA to George, SA. He alleged that, the appellant
had failed to deliver the engine, as it had been damaged while in transit in the US,
and was a total loss. In an attempt to pre-empt reliance on various conditions
attached to the credit application, Van Wyk alleged that the agreement was
governed by the provisions of the Consumer Protection Act 68 of 2008 (CPA),
because the agreement was for the ‘supply’ of a ‘service’ as contemplated by the
CPA. He pleaded that he was unaware of those conditions and they were not drawn
to his attention by the appellant as required in terms of ss 49(3) to 49(5) of the CPA.2
2 Sections 49(3) to 49(5) of the Consumer Protection Act 68 of 2008 provides as follows:
‘(3) A provision, condition or notice contemplated in subsection (1) or (2) must be written in plain
language, as described in section 22.
(4) The fact, nature and effect of the provision or notice contemplated in subsection (1) must be drawn
to the attention of the consumer—
(a) in a conspicuous manner and form that is likely to attract the attention of an ordinarily alert
consumer, having regard to the circumstances; and
Insofar as necessary, an order in terms of s 52(4)(a)(ii) of the CPA severing all the
provisions attached to the credit application purporting to limit the risk or liability of
the appellant from the rest of the agreement was sought.
[8] UPS advanced the following defence on the merits of the claim. It admitted
that a written agreement was concluded between the parties on 22 January 2013,
which incorporated standard trading conditions containing wide-ranging clauses
limiting its liability, viz clauses 13.2, 32, 33, 35.2, 36, 36.1, and 36.2.3 It pleaded
(b) before the earlier of the time at which the consumer—
(i) enters into the transaction or agreement, begins to engage in the activity, or enters or
gains access to the facility; or
(ii) is required or expected to offer consideration for the transaction or agreement.
(5) The consumer must be given an adequate opportunity in the circumstances to receive and
comprehend the provision or notice as contemplated in subsection (1).’
3 Clause 13.2: Where the Company employs independent third parties to perform all or any of the
functions required of the Company, the Company shall have no responsibility or liability to its
customers for any act or omission of such third party, even though the Company may be responsible
for the payment of such third party’s charges, but the Company may, if suitably indemnified against
all costs, including attorney and client costs, take such action against the third party on its customer’s
behalf as its customer may direct.
Clause 32: The Company shall not in any circumstances be liable for any loss or damage to goods
or for non-delivery or mis-delivery whether on grounds of breach of contract or negligence, unless it
is proved that the loss, damage non-delivery or mis-delivery occurred whilst the goods were in the
actual custody of the Company and under its actual control.
Clause 33: Subject to the terms of Clause 32 above the Company shall be under no liability
whatsoever, whether on grounds of breach of contract or negligence, in respect of any type of loss
or damage, however arising, and whether in respect of or in connection with any goods or any
instructions, business, advice, information or services or otherwise, unless it is proved that the loss
or damage was caused by gross negligence of the Company.
Clause 35: Notwithstanding anything hereinbefore contained, the Company shall be discharged from
all liability-
Clause 35.2: For loss or non-delivery of the whole of the consignment, however caused, unless notice
be received in writing within 28 (TWENTY-EIGHT) days of the date upon which the good should have
been delivered.
Clause 36: In no case whatsoever shall any liability of the Company, however arising, exceed the
values of the goods or the value declared by the customer for insurance, customs or carriage
purposes, or an amount determined as set out below, whichever is the lowest.
further that Van Wyk had signed the credit application form and was accordingly
bound by its terms, which were written in plain language and sufficiently conspicuous
to attract his attention As the owner of a skydiving business, he would have
understood the meaning and import of the terms and conditions of the agreement
specifically those limiting the liability of the appellant. UPS pleaded that in the event
of it being found that it was liable for the loss of the engine, its liability was limited to
R100 per 1000 kilograms or part thereof in terms of clause 36.2 of the agreement.
[9] In response, Van Wyk filed a replication denying that the standard trading
conditions incorporated in the credit application were applicable to the contract of
carriage between the parties. Van Wyk stated that the contract was concluded upon
receipt by UPS of his email to Swanepoel on 22 January 2013 at 9h55 to ‘go ahead’.
He had not sought credit, and had completed the form as a formality for the purposes
of allocation of an account number by the appellant. Furthermore, the appellant did
not explain to Van Wyk, nor did Van Wyk reasonably understand, that the second
and third pages of the credit application, which had not been furnished to him, prior
to receipt of the credit application, incorporated terms and conditions, which would
apply to the contract of carriage between the parties.
[10] The matter came before Henney J, who found in favour of the respondent,
and made an order in the following terms:
‘a)
The defendant’s special plea is dismissed;
b)
That in terms of section 52(4)(a)(ii) of the Consumer Protection Act 68 of 2008, the
clauses in the agreement concluded between the Plaintiff and the Defendant identified as
annexure PC9.2 purporting to limit the risk or liability of the Defendant, is severed from such
agreement and in the absence of such clauses the Defendant is therefore held liable for the
loss incurred by the Plaintiff, caused by the destruction of his aircraft engine when it was
conveyed from the United States of America, to George in the Western Cape.
Clause 36.1: Inward and outward consignments received or to be forwarded by airfreight- R50 per
consignment:
Clause 36.2: Inward and outward consignments received or to be forwarded by sea freight or other
surface carriage, excluding parcel post – R100 per 1000 kilograms or part thereof.’
c)
The Defendant is to pay an amount of R386 140,30, with interest thereon at the
prescribed rate of 15,5% per annum from 12 June 2013 to date of payment;
d)
That the Defendant pays the costs of suit, including the wasted costs occasioned by
the removal of the matter from the trial roll on 5 September 2018.’
[11] UPS applied for leave to appeal against the judgment and order of the high
court, and on 26 May 2020, Henney J granted leave to appeal to this Court on a
limited basis, viz (i) whether Van Wyk had proven his claim based on the fact that
UPS did not comply with the provisions of the CPA; and (ii) whether Van Wyk had
proved the quantum of its claim. UPS then applied in terms of s 17(2)(b) of the
Superior Courts Act 10 of 2013 for leave to appeal to this Court against the whole
judgment and order of the high court. The two judges who considered the petition
referred the application for leave to appeal for oral argument to this Court in terms
of s 17(2)(d). This application was heard together with the appeal and the arguments
raised therein were considered together with those arising from the terms of the
limited appeal consequent upon Henney J's order.
[12] In finding for Van Wyk, the high court said:
At para 89:
‘In coming back to the credit agreement in this case, also known as PC9.2, it is clearly an
agreement as contemplated in section 49(1)(a),(b) and (c) of the CPA. The clauses on which
the Defendant relies clearly seek to limit exposure to, or indemnify the Defendant against
any liability based on the agreement concluded with the Plaintiff for the damages he
sustained due to the loss of his aircraft engine. The Plaintiff was furthermore presented with
two full pages, which was not very conspicuous or clearly delineated, and in relation to which
no effort was made to draw the Plaintiff’s attention to any of the provisions. It was
furthermore written in extremely small font, which even the court on the original document
found extremely difficult to read, and which contains the very clauses mentioned in section
49(1), against which the act seeks to protect the consumer.’
And at para 92:
‘The Plaintiff in his evidence stated that his attention was not drawn to these provisions. I
furthermore agree with the submissions made by Mr Acton, insofar as this case is
concerned, that a supplier such as the Defendant is not in a position to determine the level
of a sophistication of a customer, particularly in a case when all contact with the customer
had been by email. . . .’
And at para 93:
‘I am furthermore in agreement with the submission that even the most experienced
business person is unlikely to understand the nature and effect of the clauses in question,
without explanation. I also agree with the submission, and as stated above, that it seems
that the obligations placed on a supplier such as the Defendant, are absolute.’
[13] In other words the trial judge proceeded on the footing that the contract
between the parties included the terms and conditions attached to the credit
application. He found for Van Wyk on the basis that those terms were invalidated by
the provisions of the CPA. In my view, however, he erred in holding that the contract
included those terms and conditions. It appears from the exchange of emails that
when Van Wyk gave the ‘go ahead’ on 22 January 2013 at 9h55, the credit
application incorporating the standard trading conditions containing clauses
exempting UPS from liability for loss or damage had not been furnished, nor brought
to Van Wyk’s attention by Swanepoel. Van Wyk made clear that he had not sought
credit. He had only signed the credit application so as to be allocated an account
number, which he was told was required for shipments to and from the USA, where
a number of rules and regulations had to be complied with. Van Wyk understood
that the completion and signing of the credit application was to enable UPS to
capture his details and allocate him an account number, in order for him to get his
aircraft engine back to SA. Despite a lengthy and repetitive cross-examination he
was firm in his evidence that he did not think that he was binding himself 'to all sorts
of fine print that I can't even read'.
[14] As is evident from the pleadings, UPS based its entire case on the proposition
that the credit application form, with the standard terms and conditions, constituted
the contract. It relied on the fact that above Van Wyk's signature on the credit
application appeared the word ‘Conditions’ and the following:
‘The Company reserves the right to discontinue any account and summarily to cancel any
agreement in respect of which payments have fallen in arrears, and in the event of these
being exercised, all amounts owing shall immediately become due and payable on demand.
It is mutually agreed that any action arising between the parties may be instituted in the
Magistrates Court although the cause of action or amount of the action may exceed the
jurisdiction of that court, it is agreed that interest will be charged at a maximum permissible
rate allowed by law on amounts not settled within the agreed terms of credit. I, the
undersigned, hereby certify that I am duly authorised to sign this document, copy of which
has been handed to me and agree to the Terms and Conditions stated therein and
acknowledge that all business will be governed by and subject to the terms of the Standard
Trading Conditions and Terms and Conditions of Carriage printed overleaf, which are in my
possession and by which I agree to be bound for any business which we may conduct with
either or both the Freight and Warehousing Division and the International Express Parcels
Division (United Parcels Services).’
[15] However, Mr Morrison SC, who appeared before us for UPS, in
contradistinction to the pleaded case, changed tack and instead sought to rely upon
the following provision that appeared at the foot of the original quote provided to Van
Wyk by UPS:
‘This estimate is based on rates and rates of exchanges subject to fluctuation beyond our
control.
Credit facilities are subject to completion and approval of our Credit Application form.
All business conducted is subject to our Standard Trading Conditions a copy of which is
available upon request.
Your attention is drawn to the fact that this is an estimate of normal anticipated charges and
is therefore subject to third party charges without any prior notice. This estimate excludes
14%VAT where applicable.’
Mr Morrison contended that according to this the credit facilities were subject to the
completion and approval of the credit application form and all business was
conducted subject to the standard trading and conditions. He contended that the
terms and conditions were part of the quotation that Van Wyk had accepted. This
submission in my view, is opportunistic, as the point now being advanced by
Mr Morrison was never raised in the pleadings, nor in the evidence in the
court a quo. It had never been put to Van Wyk in cross-examination that the quote
represented the agreement between the parties, and that he had bound himself to
the terms and conditions therein. It bears emphasis that no witnesses were called to
testify on the appellant’s behalf at the trial. There was thus simply no evidence to
gainsay the evidence of Van Wyk.
[16] In my view, the attempt to rely on this provision in the quotation cannot be
countenanced. It was not UPS's pleaded case and was not canvassed in evidence
with Van Wyk. One can only speculate as to his response had it been raised with
him. Given the terms of the plea, its introduction would have required an amendment
and, had that been granted, potentially a postponement of the trial in order to amend
the replication. It is not a legal issue arising on the facts of this case as it is apparent
that had it been raised further factual issues would have needed to be canvassed.
UPS therefore had to stand or fall by the case it had pleaded based on the credit
application.
[17] UPS did not explain to Van Wyk that the credit application that he was
required to sign to open the account, incorporated provisions that excluded or limited
UPS’ liability for loss or damage. Furthermore, the standard trading conditions and
the relevant clauses which UPS seeks to rely on appear in fine print, and are not
conspicuously legible. They appear on the second and third pages of the credit
application, which can only be read with extreme difficulty and concentrated effort.
Importantly the credit application was sent without the conditions being attached and
were described by Swanepoel as needing to be completed so that 'we can start the
process'. Nothing was said to Van Wyk to disabuse him of the notion that all of this
was merely a matter of formality.
[18] In this regard the following passage in Mercurius Motors v Lopez [2008]
ZASCA 22; [2008] 3 All SA 238 (SCA); 2008 (3) SA 572 (SCA) para 33, is patently
on point:
‘A person delivering a motor vehicle to be serviced or repaired would ordinarily rightly expect
that the depositary would take reasonable care in relation to the safekeeping of his vehicle
entrusted to him or her. An exemption clause such as that contained in clause 5 of the
conditions of contract, that undermines the very essence of the contract of deposit, should
be clearly and pertinently brought to the attention of a customer who signs a standard
instruction form, and not by way of an inconspicuous and barely legible clause that refers to
the conditions on the reverse side of the page in question. Moreover, the caption
immediately above the signature is misleading in that a customer is directed to that provision
and away from the more important provision in small print on the left-hand side of the
document which refers to the conditions on the reverse side of the document which are
themselves not easily accessible. It will be recalled that Mr Lopez’s unchallenged evidence
was that the conditions on which Mercurius now relies were not brought to his attention.’
(See also Spindrifter (Pty) Ltd v Lester Donovan (Pty) Ltd 1986 (1) SA 303 (A) at
318C and Du Toit v Atkinson’s Motors Bpk 1985 (2) SA 893 (A) at 904I to 905B.)
In the circumstances, Van Wyk did not contract on the basis of the conditions relied
upon by UPS. The position is therefore that UPS undertook as carrier to arrange for
the transport of the engine from the USA to South Africa. It failed to perform and the
engine was destroyed. The fact that at the time of its destruction the engine was in
the possession of a subcontractor does not alter UPS’s position as the carrier under
a contract of carriage. It was under an obligation to cause the engine to be conveyed
in accordance with the contract and it breached that obligation because the engine
was destroyed while in the possession of UPS or its agents. It was accordingly
obliged to compensate Van Wyk for the damages caused by its breach of contract.
[19] As regards the quantum, the measure of the damages is such amount as
was necessary to place Van Wyk in the same position as he would have been in had
the contract been performed. In that event he would have been in possession of a
fully reconditioned engine certified for 1500 flying hours. Van Wyk testified to the
damages he incurred when his engine was destroyed, and that the amount claimed
was for the replacement value of a similar engine. Mr Anderson who is an aircraft
engineer of many years standing and experience testified in substantiation of the
quantum claimed by Van Wyk. His evidence, based on his expertise and experience
regarding the repair and maintenance of engines, as well as the costs to have such
an engine overhauled was not disputed by any other evidence. He was qualified to
testify as to the cost that would have to be incurred to replace such an aircraft engine
with a similar overhauled engine. There appears to be no reason to reject his
evidence, more especially as the appellant called no evidence of its own on this
score. There was nothing to gainsay Van Wyk's evidence that this was what he
needed to pay in order to obtain a replacement engine.
[20] In view of all of the aforegoing, the appeal must fail. In the circumstances, it
is not necessary to deal with the issues relating to the CPA or the National Credit
Act 34 of 2005. For the reasons already stated the application for leave to appeal
must also be dismissed. The introduction of those further issues would not have
affected the outcome of the appeal.
[21] In the result, the following order is made:
The application in terms of s 17(2)(b) of the Superior Courts Act 10 of 2013
for leave to appeal against the whole of the judgment of the court below is
dismissed with costs, such costs to include the costs of two counsel.
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
_____________________________
H K SALDULKER
JUDGE OF APPEAL
APPEARANCES:
For appellant:
L J Morrison SC (with M D Silver)
Instructed by:
David Kotzen Attorneys c/o Lovius Block
Bloemfontein
For respondent:
R A J Acton
Instructed by:
Oosthuisen Marais &
c/o Phatshoane Henney
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 October 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
UPS SCS South Africa (Pty) Ltd v Hendrik Cornelis van Wyk t/a Skydive Mossel Bay (421/20)
and (422/20) [2021] ZASCA 131 (1 October 2021)
_________________________________________________________________________
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an application in terms
of s 17(2)(b) of the Superior Courts Act 10 of 2013 for leave to appeal against the whole of the judgment
of the court below; and also dismissed the appeal, thereby upholding an order of the Western Cape
Division of the High Court, Cape Town (high court).The issue before the SCA was whether the
respondent had proved its claim that the appellant was liable for the damages arising out of a breach
of contract.
The respondent was the owner and operator of a skydiving business. In 2007, he sent an aircraft
engine for inspection and repair to America's Aircraft Engines Inc, a specialist in refurbishing aircraft
engines in the United States of America (USA). As he did not immediately need to use it, the engine
remained in the USA for some time. In 2012, when he needed the engine back in South Africa (SA),
he instructed America's Aircraft Engines to proceed with an overhaul of the engine. This was completed
towards the end of 2012 and the respondent made enquiries about transporting the engine back to
South Africa.
In December 2012, the respondent contacted the appellant, UPS SCS South Africa (Pty) Ltd, the South
African branch of an international delivery business. This resulted in the exchange of a number of
emails, which gave rise to a contract in terms of which the appellant would arrange for the engine to
be collected from the USA and conveyed to SA. The appellant thereafter sent the respondent a credit
application form to be completed so that the process could be started, and which the respondent
signed.
The aircraft engine never arrived at its destination in South Africa as the cargo had been damaged
whilst in transit within the USA. The truck and trailer carrying the aircraft engine had allegedly caught
fire as a result of equipment malfunction, and the truck and its cargo appeared to be a total loss. The
respondent was asked to provide the appellant with a quotation or estimate of the value of the engine
and he was sent an insurance claim form. On 1 October 2013, he was informed by the appellant that
the shipment had not been insured, and that according to the appellant’s terms and conditions for
ocean freight shipments they were only liable to pay US $500 per shipment.
The respondent instituted action against the appellant in the high court, for payment of the amount of
R386 140.30 in respect of the loss of the aircraft engine, plus interest and costs. The high court found
in favour of the respondent. The appellant admitted that a written agreement was concluded between
the parties, and that the written agreement incorporated standard trading conditions containing wide
ranging clauses limiting its liability and that the respondent had signed the credit application and was
bound by its terms. The respondent’s case was that the standard trading conditions incorporated in the
credit application were not applicable to the contract of carriage between the parties. The respondent
had only completed the credit application form as a formality for the purposes of allocation of an
account number by the appellant. He had not sought credit.
The SCA held that the appellant did not explain to the respondent that the credit application, that he
was required to sign, to open the account incorporated provisions that excluded or limited the
appellant’s liability for loss or damages. Furthermore, the standard trading conditions and the relevant
clauses which the appellant sought to rely on appeared in fine print, and were not conspicuously legible.
They appeared on the second and third pages of the credit application, and could only be read with
extreme difficulty and concentrated effort.
The SCA concluded that the respondent, in the circumstances, did not contract on the basis of the
conditions relied upon by the appellant. The position was therefore that the appellant undertook as
carrier to arrange for the transport of the engine from the USA to South Africa. It failed to perform and
the engine was destroyed. It was under an obligation to cause the engine to be conveyed in accordance
with the contract and it breached that obligation because the engine was destroyed while in the
possession of the appellant or its agents. It was accordingly obliged to compensate the respondent for
the damages caused by its breach of contract. |
572 | non-electoral | 2016 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 199/2016
In the matter between:
SABLE HILLS WATERFRONT ESTATE CC
APPELLANT
and
SABLE HILLS WATERFRONT ESTATE HOME
OWNERS’ ASSOCIATION NPC
RESPONDENT
Neutral citation: Sable Hills Waterfront Estate v Sable Hills Waterfront
Estate Home Owners’ Association (199/2016) 2016
ZASCA 170 (24 November 2016)
Coram:
WALLIS and PETSE JJA, DLODLO, MAKGOKA and
SCHIPPERS AJJA
Heard:
14 November 2016
Delivered: 24 November 2016
Summary: Property development – obligation of members of home
owners’ association to pay levies – clause in articles of association
providing that levies be apportioned equally between owners of stands
and units in estate – whether a reference to stands and units as reflected in
the survey diagram attached to the township plan or to stands and units as
registered in the Deeds Registry – question of construction of articles of
association.
ORDER
On appeal from: Gauteng Division, Pretoria of High Court (Fabricius J
at first instance):
The appeal is dismissed with costs.
JUDGMENT
Wallis JA (Petse JA and Dlodlo, Makgoka and Schippers AJJA
concurring)
[1] This is a dispute between the developer of a residential estate
called Sable Hills (the estate) and the estate’s home owners’ association
regarding the developer’s liability to pay levies imposed on members of
the home owners’ association by its board of directors. The respondent,
Sable Hills Waterfront Estate Home Owners’ Association NPC (the
Association) sued the developer, Sable Hills Waterfront Estate CC (Sable
Hills), in the Gauteng Division, Pretoria of the High Court to recover
levies for the period from 1 March to 3 October 2012. The parties agreed
that the outcome of this litigation would serve to determine Sable Hills’
liability to pay levies for the period after 3 October 2012. Fabricius J held
that Sable Hills was liable to pay the levies claimed by the Association.
This appeal by Sable Hills is with his leave.
[2] The facts are pleasantly uncomplicated and were set out in a
special case. Sable Hills acquired the estate on 2 March 2006 in terms of
Certificate of Consolidated Title T022523/06, issued in terms of s 40 of
the Deeds Registries Act 47 of 1937 (the Act). At that stage it had already
been laid out as a township in terms of a General Plan SG No 6889/2005
and on 15 March 2006 the local authority declared it an approved
township. In accordance with the provisions of s 46(1) of the Act the
Registrar of Deeds opened a separate register for the estate reflecting
each of the erven shown on the general plan. One sectional title unit had
been transferred to a third party, so it must also be the case that a
sectional title register had been opened in terms of s 12(1)(b) of the
Sectional Titles Act 95 of 1986 in respect of at least one erf. Between 1
March 2012 and 3 October 2012 certain erven and a sectional title unit in
the estate were transferred by Sable Hills to third parties. Sable Hills
remained the owner of the remainder of what had become on
consolidation Portion 133 of the farm SABLE HILLS no 741,
Registration Division J. R., Province of Gauteng (the remainder).
[3] In 2012 the Board of Directors fixed the levies for the estate in an
amount of R1 750 per stand. Sable Hills adopted the approach that it was
not obliged to pay any levies at all, but, if it was, that the remainder of the
consolidated property constituted a single stand for the purpose of
charging levies. The Association took the view that Sable Hills was
obliged to pay a separate levy in respect of each erf or stand reflected on
the general plan and forming part of the remainder. These divergent
contentions were debated by way of a special case before Fabricius J. In
this court Sable Hills accepts that it is liable to pay levies on a single erf
constituted by the remainder, but disputes its liability to pay a separate
levy in respect of each erf or stand shown on the general plan and falling
within the remainder.
[4] The liability of members of the Association to pay levies arises
under its articles of association. The following clauses are of particular
relevance to this issue. Clause 5.1 provides that the income of the
Association ‘consists mainly of the compulsory monthly levies payable
by members’. The members of the Association are identified in clause
4.1, which provides that the members consist of the developer – a term
defined in clause 1 to mean Sable Hills – and all other persons, including
legal entities, who are registered owners of residential property in the
estate. Clause 5.2.1 provides that:
‘The Directors will from time to time determine the levies payable as provided for in
5.1. All levy payments will be apportioned equally between the owners of Property (ie
between stands and units in the estate) …’
The expression ‘Property’ is defined in clause 1.6 as meaning ‘erven in
the Township and units in the schemes’. Finally, Clause 5.3 provides that:
‘The Directors may enter into an agreement to exempt or partially exempt the
Developer from the payment of levies in respect of any property owned by him and
not yet developed/alienated by him.’
[5] Sable Hills contends that it owns a single stand in the estate, being
the remainder after transfer to individual owners of individual erven. It
argues that the remainder is the only erf recognised as a separate property
for the purposes of the Act and therefore the reference in clause 5.2.1 to a
stand must be understood as referring to the single erf that it owns. While
that erf is shown on the general plan as having been sub-divided into
smaller erven for the purposes of the proposed development, these
smaller erven do not as yet have any separate existence1 and until they do
they should not be taken into account for the purpose of assessing their
liability to pay levies. The Association, for its part, says that the clauses
1 Tshwane City v Uniqon Wonings (Pty) Ltd [2015] ZASCA 162; 2016 (2) SA 247 (SCA) para 10.
in the articles do not refer to pieces of land as reflected separately in the
Deeds Registry, but to the pieces of land shown on the general plan of the
township, which for the purposes of determining the obligation to pay
levies are to be treated separately.
[6] It is correct that it is only when a sub-division of the remainder is
transferred to someone other than the developer that the sub-division has
an existence separate from the remainder, but that does not in my view
dictate the answer to the problem of identifying the stands and units
referred to in clause 5.2.1. The answer lies in the proper interpretation of
that clause in accordance with the established rules for the construction of
documents.2 I start, as one must, with the language of the relevant
provisions.
[7] The articles do not contain definitions of the expressions ‘erven’,
‘stands’ or units’ appearing in the provisions quoted in [4]. When the
township was proclaimed the proclamation occurred in terms of the
General Plan approved by the Surveyor-General and showing the division
of the township into erven. When opening the township register the
Registrar of Deeds did so in accordance with that general plan, as
required by s 46(1) of the Act, which imposes the duty to open a separate
register ‘if land has been sub-divided into lots or erven shown on a
general plan’. The stark difference between the parties is whether the
reference to ‘stands’ in article 5.2.1 is a reference to erven enjoying
separate title in the Deeds Registry, or erven as reflected on the general
plan and in the township register. As regards ‘units’ the articles
2 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA) para 18.
contemplate that sectional title schemes known as Sable Hills 3 and Sable
Hills 4 would be established as part of the overall development. Logically
therefore the references to ‘units’ refers to units in these sectional title
schemes.
[8] Linguistically clause 5.2.1 is open to both possible constructions.
One looks therefore for indications in the articles as a whole that point in
favour of one or the other. One that strikes one immediately is that in
clause 5.2.1 the word ‘stands’ is used and not ‘erven’. The word appears
to have come into South African legal parlance via the Gold Laws, where
it had particular relevance to rights to prospect for and mine gold, but it
has a broad popular meaning3 and is capable of referring to any defined
piece of land, whether or not having a separate legal existence in the
Deeds Registry. In the context of township development one frequently
sees advertisements for the sale of stands in a township and, given the
manner in which township land is registered in the Deeds Registry, that is
usually a reference to the properties reflected on the general plan of the
township, not to existing separate erven.
[9] It is true that in many contexts the words ‘erf’ and ‘stand’ may be
virtually synonymous,4 but whether they are to be treated as such depends
on the context. Here the word ‘stands’ is used to explain or clarify the
meaning of ‘erven’ where it appears in the definition of ‘Property’ in
clause 1.6 of the articles. That follows from the fact that, after saying that
levies are to be apportioned between owners of Property, the clause goes
3 Greathead v Transvaal Government and Randfontein Estate and Gold Mining Co. Ltd 1910 TS 276 at
301; Levy v Phillips 1915 AD 139 at 143.
4 Hull v Rand Township’s Registrar 1913 WLD 221 at 227 and see the definition of ‘erf’ in s 102 of the
Act as including ‘an erf, lot, plot or stand’.
on in parentheses to say ‘ie between stands and units in the estate’. If the
strict meaning of erven as legally separate properties were intended, there
would have been no need for further definition. Accordingly, I think that
the use of ‘stands’ is directed at indicating a broader meaning, that erven
are those shown on the general plan notwithstanding that they do not yet
have a separate existence.
[10] A second pointer in the language of clause 5.2.1 is to be found in
the words ‘in the estate’ in that explanatory phrase. Clearly that
comprehends the whole of the estate. The units in the estate must be the
units identified in the sectional title register or registers existing in respect
of identifiable pieces of land in the estate. That is so whether they are
owned by the developer or by a third party. So, if the developer is also the
developer of the sectional title schemes, in which at least one unit has
been sold, it will be the owner of the other units in that scheme and liable
to pay levies in respect of them on the plain language of clause 5.2.1. If
the reference to units refers to what is reflected in the sectional title
register or registers, there seems to be no reason why the reference to
stands should not be a reference to the stands in the township register.
After all the development of the township provides the context for the
existence of the articles and therefore their interpretation.
[11] These pointers in favour of the Association’s construction of clause
5.2.1 are strongly reinforced by reference to clause 5.3 of the articles.
This provides for the directors to conclude an agreement with the
developer for the total or partial exemption of the latter from the
obligation to pay ‘levies in respect of any property owned by him and not
yet developed/alienated by him’. If Sable Hills’ contentions were correct
it would only be liable to pay one levy in respect of one property owned
by it, namely, the remainder. But the use of the plural ‘levies’ and the
reference to ‘any property’ suggests that the developer, in its capacity as
such, will be the owner of more than one property and incur liability to
pay more than one levy. That will only be the case if the stands shown on
the general plan are the basis for apportioning the levies among owners.
[12] The grounds upon which such an agreement may be concluded are
also instructive. It is only permissible in relation to any property that has
not yet been developed or alienated by the developer. But in the course of
developing a township the developer may develop or build upon some
stands as shown on the general plan and leave others to lie fallow until a
later stage of the development. If the developer is only liable for one levy
in relation to the remainder, and not individual levies in respect of the
stands on the general plan, any development undertaken on any part of
the remainder would exclude the application of clause 5.3. Indeed it
would become largely academic unless the developer abandoned the
township.
[13] The clause is, however, easy to apply if one is dealing with the
apportionment of levies to owners on the basis that they own the land on
which individual stands are laid out in the general plan and each stand is
separate for the purpose of charging the levy. A developer who was intent
on developing say 30 out of 300 stands could legitimately say that the
expenses falling to be discharged from the levies paid by owners were
largely incurred in respect of those stands and the other stands already in
separate ownership, and that it would be fair therefore to exclude the
payment of levies in respect of the 270 stands not yet developed.
[14] Turning from linguistic analysis to the purpose of this provision,
levies are to be raised by the Association to discharge the expenses
incurred by it in respect of the management of the township. The levies
are to be applied to the furtherance of the main objective of the
Association. According to the Memorandum of Association, that is the
maintenance, upkeep and development of the services and facilities of the
estate. This objective enures to the benefit of all members of the
Association, both Sable Hills as the developer and the individual owners
of stands or units. It is for that reason that the obligation to pay levies is
to be apportioned equally among the owners on the basis of their
ownership of the stands shown on the general plan. In the ordinary
course equal apportionment of levies among all owners on the basis
shown on the general plan is a fair result.
[15] I appreciate that the benefit derived by owners of individual erven in
the estate from the expenditure by the Association, may be proportionally
greater than that derived by Sable Hills. That is particularly so where the
township is still in the process of development and many of the stands
constituting the remainder are as yet undeveloped. Thus a security
presence at the entrance to the estate may provide greater benefits to
individual owners than to the developer who may have few security
concerns in relation to undeveloped land. The provision of landscaping
and garden services is likely to be disproportionately directed at existing
residential development rather than still vacant sites. Although they will
be of some benefit to the developer in that they may be attractive to
prospective purchasers of stands in the township, the direct benefit is
more likely to accrue to other owners.
[16] All of this, however, merely shows why clause 5.3 is part of the
articles. It is intended to enable the developer and the Association to
arrive at a situation where the apportionment of levies is fair to all owners
of residential stands or units. The fact that the other stands that are to be
developed as commercial properties, private open space or special use as
a clubhouse, gymnasium, restaurant or boathouse, are excluded for levy
purposes, reinforces the Association’s contentions.
[17] In the heads of argument and the judgment of the court below there
was considerable debate concerning the judgment in Heritage Hill.5 It is
unnecessary to deal with that judgment save to note that the articles of
association of the home owners’ association in that case were
substantially different from those in the present case. For example the
word ‘owner’ was defined as meaning the registered owner and clause 2
provided that any word or expression not otherwise defined would bear
the meaning given to that word in the Deeds Registries Act. That dictated
the extensive references to the Act in the judgments and was perceived to
require consideration of the rating cases.6
[18] The different context of the present case obviates the need to analyse
those judgments or the judgments in the rating cases. As far as Heritage
Hill is concerned the articles being considered were different from those
in this case. As far as the rating cases are concerned the wording of the
relevant ordinances made it clear that they were dealing with registered
ownership in the Deeds Registry and the context is so remote from the
5 Heritage Hill Home Owners’ Association v Heritage Hill Devco (Pty) Ltd 2013 (3) SA 447 (GNP)
and on appeal Heritage Hill Devco (Pty) Ltd v Heritage Hill Home Owners’ Association 2016 (2) SA
387 (GP).
6 Discussed fully in paras 9 to 11 of Tshwane City v Uniqon Wonings, fn 1, supra.
present case as to provide, on its own, grounds for distinguishing the two
situations. It is seldom that a judgment interpreting an ordinary word in
one context is of assistance in illustrating its meaning in a wholly
different context. As Fagan CJ said in the Consolidated Diamonds case:7
‘When we find in a judgment statements which attach meanings to particular words or
phrases, we must remember that the Judge is dealing with those words or phrases in
the context in which they occur and with reference to the subject matter to which they
relate. Beyond that, a statement as to the meaning of a word or phrase would merely
be obiter dictum. I should be loth to read a Judge's elucidation of a word with no
specialised legal meaning as intending to lay down as a matter of law what that word
means independently of the context in which he is dealing with it, for defining the
meaning of words as such is not a Judge's function, but that of a philologist.’
[19] In the result the appeal must fail. It is dismissed with costs.
M J D WALLIS
JUDGE OF APPEAL
7 Consolidated Diamond Mines of South West Africa Ltd v Administrator, SWA & another 1958 (4) SA
572 (A) at 599C-E.
Appearances
For appellant:
W J Vermeulen SC (Heads of argument prepared by
A B Rossouw SC and M Riley)
Instructed by:
Van Zyl Le Roux Inc, Pretoria;
McIntryre & Van der Post, Bloemfontein
For respondent:
A F Arnoldi SC (Heads of argument prepared by S D
Wagener SC)
Instructed by:
Kotzé & Roux Attorneys, Pretoria;
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:
24 November 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.
Sable Hills Waterfront Estate CC v Sable Hills Waterfront Estate
Home Owners’ Association NPC
The SCA today dismissed the appeal by the developer of the Sable
Hills Waterfront Estate against a judgment of the Gauteng Division,
Pretoria of the High Court holding it liable to pay levies on each of the
erven laid out and shown on the general plan of the estate,
notwithstanding that they were not yet registered under separate title in
the Deeds Registry.
The developer contended that it was the owner of a single property
in the estate, namely, the remainder after certain sales of stands and units
had taken place and been registered. As such it argued that in the
apportionment of levies it should only pay a single levy in respect of that
one property. The home owners’ association contended that it had to pay
a levy in respect of each stand shown on the general plan.
The SCA held that the issue was to be determined on a proper
interpretation of the articles of association of the home owners’
association under which the power to raise levies was given to the board
of directors. The articles provided that levies should be apportioned
equally between the owners of stands and units in the estate. The SCA
held that having regard to the wording of the relevant article when
viewed in context that meant that the levies had to be apportioned among
the stands shown on the general plan and not the stands as they existed as
separate entities registered in the Deeds Registry. Accordingly the appeal
was dismissed with costs. |
3003 | non-electoral | 2015 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20229/2014
In the matter between:
NOVARTIS SOUTH AFRICA (PTY) LTD APPELLANT
and
MAPHIL TRADING (PTY) LTD
RESPONDENT
Neutral Citation: Novartis v Maphil (20229/2014) [2015] ZASCA 111 (3 September
2015)
Coram:
Lewis, Majiedt, Pillay, Zondi and Mathopo JJA
Heard:
18 August 2015
Delivered: 3 September 2015
Summary: Contract comprising written document, oral agreement and emails
enforceable: evidence demonstrated intention to conclude contract in this way, as
well as actual authority of representatives to bind the appellant. Principles of
contractual intepretation considered.
___________________________________________________________________
ORDER
On appeal from: Gauteng Local Division of the High Court, Johannesburg
(Boruchowitz J sitting as court of first instance).
The appeal is dismissed with costs including the costs of two counsel where so
employed.
__________________________________________________________________
JUDGMENT
Lewis JA (Majiedt, Pillay, Zondi and Mathopo JJA concurring)
[1] The question to be answered in this appeal is whether a contract between the
parties was concluded: if so, the appellant, Novartis South Africa (Pty) Ltd (Novartis),
would be guilty of repudiation of the contract, and the respondent, Maphil Trading
(Pty) Ltd (Maphil), would be entitled to damages. The contract alleged by Maphil was
in fact negotiated by representatives of a company, Hiline Medical (Pty) Ltd (Hiline),
the shares of which were sold after the events that I shall describe. The name of the
company was changed to Maphil subsequently. All references to Hiline in what
follows apply thus to Maphil as well.
[2] Novartis is a subsidiary of a pharmaceutical drug manufacturer and supplier
based in Switzerland. It operated „divisions‟ (separate trading entities, but not
companies themselves) in South Africa, which in turn supplied medicines to
pharmacies and hospitals. The Sandoz Division supplied generic pharmaceutical
products and the Sandoz Specialty Division (SSD) supplied „ethical‟ or non-generic
products.
[3] In 2004 the Medicines and Related Substances Act 101 of 1965 was
amended to introduce, amongst other provisions, a prohibition on the supply of
medicines according to a bonus or rebate system, or any other incentive scheme.
Regulations under the amended Act provided stringent controls for the pricing of
medicines and the marketing, sale and distribution of pharmaceutical products.
Consequently, Novartis and its divisions had to change their marketing strategies.
[4] The uncontroverted facts were these. The director of the SSD, Mr Ian van der
Spuy, and the business manager, Ms Annie van Jaarsveld, in consultation with other
members of the SSD, came up with the idea of putting the Sandoz brand and logo
on packaging for medical devices (not medicines themselves) that would be seen by
health professionals. The idea was to market the Sandoz brand (its name),
particularly in hospitals, since the medicines themselves could not be advertised.
The strategy was approved not only by SSD but also by the executive committee of
Sandoz (EXCO), and its chairman, Mr John Hallam.
[5] Van Jaarsveld, with the approval of members of SSD which met on 3 August
2004, approached Mr Martin Lambrecht, a director of Hiline, some time in August
2004 and met him in Cape Town in September 2004: she suggested that SSD and
Hiline enter into an arrangement in terms of which Hiline would receive a fee for
putting Sandoz branding on the packaging of devices supplied by Hiline to hospitals.
Lambrecht was amenable to this.
[6] The timing of the approach was fortunate because Hiline was about to put in a
bid for the supply of medical devices to Mediclinic, a national private hospital group.
If SSD committed to paying a fee for the marketing proposed, Lambrecht would be
able to reduce the prices of the items that Hiline was tendering to supply by some R3
million. Lambrecht‟s tender documents had to be submitted to Disa-Med, the
procurement department for Mediclinic. The proposed marketing strategy had been
discussed with the procurement manager of Disa-Med, Ms Anita Hamilton. Indeed, it
was she who had suggested Hiline to SSD as a potential partner in a marketing
arrangement.
[7] The deadline for submitting the tender was 14 October 2004. Lambrecht had,
before then, indicated to Van Jaarsveld that unless he had a commitment from SSD,
he could not give the discounted prices to Mediclinic. On 14 October, Van Jaarsveld
and Van der Spuy went to Cape Town (they were based in the Novartis offices in
Johannesburg) with a draft marketing agreement between SSD and Hiline, signed by
Van Jaarsveld and Van der Spuy for SSD, offering a marketing fee of R3.5 million for
the year 2005. After some amendments effected to it by the SSD representatives at
Lambrecht‟s request, he orally accepted the commitment. I shall discuss the terms of
the marketing agreement itself in due course since Hiline alleged that it formed part
of the contract, the balance of which was concluded orally and by email exchange.
[8] Lambrecht, when testifying for Hiline, explained that the full contract could not
be concluded on 14 October 2014 because Hiline and SSD had yet to agree upon
the exact items on which the Sandoz name would be used and on the details of
logos and naming. Moreover, Hiline did not yet know what items tendered for would
be accepted by Disa-Med. Addendum A to the agreement presented to Hiline by
SSD was headed „Marketing Agreement‟, and typed below that were the words „To
be finalized by 30 November 2004‟. There was never any formalized addition to the
addendum. The marketing arrangements were agreed over the telephone, in emails,
and at a meeting on 12 November 2004, on Hiline‟s version. The marketing
agreement presented to Hiline on 14 October, signed by van Jaarsveld and Van der
Spuy for SSD, was at some time signed by Lambrecht and his brother for Hiline, but
Lambrecht could not remember if the document with their signatures on it was ever
sent to SSD.
[9] The tender by Hiline, in which the prices had been reduced by some R3
million, was in due course accepted by Disa-Med. Hiline proceeded as if there were
a contract with SSD as did SSD. By February of the following year, Hallam had
second thoughts about the feasibility of the contract and after a meeting with a
representative of Mediclinic, at which he discovered that SSD would not get rebates
on medicines. On 4 March 2005 Hallam wrote a letter to Hiline stating that there was
no contract between Novartis and Hiline and that the invoice (with the Sandoz logo
already printed on it) that Hiline had submitted to it for the first monthly payment
would not be paid.
[10] Hiline treated Novartis‟s conduct as a repudiation of the contract between
them, and instituted action in the Gauteng Local Division for damages for breach of
contract. Boruchowitz J found for Maphil (which had, as buyer of the Hiline shares,
taken over the claim) and awarded the sum claimed – the fee that Hiline would have
been entitled to had the contract been performed – and interest. Novartis appeals
with the leave of the trial court. That, in broad outline, is the background to this
appeal.
The contract relied on by Hiline
[11] It is necessary at this point to consider the way in which Hiline pleaded its
claim against Novartis. It alleged that there were two components to the contract on
which it relied: first, the partly written marketing agreement signed by Van der Spuy
and Van Jaarsveld on behalf of SSD and presented to Lambrecht on 14 October
2004, which he accepted for Hiline that day. The written part was annexed to the
particulars of claim. Second, a subsequent partly oral and partly written agreement in
terms of which the marketing activities were agreed, as contemplated in the
document accepted on 14 October 2004. That agreement, Hiline alleged, was
reached on 12 November 2004 at a meeting held in Cape Town with Lambrecht and
his brother Phillip, and Van der Spuy and Ms L Biel, the product manager of SSD, for
SSD.
[12] At that meeting, it was alleged, the parties reached agreement on the Hiline
products that would bear the Sandoz logo, and on putting the logo on Hiline‟s
delivery vehicles. The written part of the agreement on marketing activities
comprised three emails: one from Van Jaarsveld, sent on 30 November 2004 to
Lambrecht; a response from the latter later in the same day, and a further email from
her to Lambrecht, also on the same day.
[13] The first email asked for details of Hiline‟s registration number and banking
account, and set out the Hiline products on which Sandoz logos would be advertised.
It was confirmed that the logo would be put on the Hiline invoices as well. Van
Jaarsveld also advised that a new vendor application form should be completed by a
representative of SSD and sent to her by fax.
[14] It should be noted that Van Jaarsveld also said in that email that she intended
to send a draft agreement for Lambrecht‟s attention and that of Hiline‟s attorney, Mr
Adriaan Hoeben of the firm Sonnenberg Hoffman and Galombik (as it was known
then) in Cape Town. Lambrecht responded saying that the detail for the logo on the
invoices that Hiline used had changed. He attached a document confirming the
details of the marketing activities. The third email confirmed details and said that Van
Jaarsveld would be seeing SSD‟s attorney, Mr Neil Kirby of Werksmans attorneys,
the following day and did not want to „get any of the detail wrong‟.
[15] Hiline pleaded, accordingly, that the marketing agreement on which it relied,
comprising both written and oral agreements, was concluded in the meetings and by
the exchange of emails, ending on 30 November 2004. The material terms of the
agreement were that Hiline would perform marketing activities for SSD at a fee of
R3.5 million for the year 2005, payable in monthly instalments on receipt of an
invoice issued by Hiline to SSD.
[16] Novartis raised a number of defences in its plea: no contract had been
proved; the document signed on 14 October 2004 was inchoate and lacked exigible
content; the parties had intended to conclude a contract only when one was drafted
by an attorney; and none of the representatives of Novartis who purported to bind it
had authority to do so.
The terms of the written document
[17] The preamble stated that the agreement, dated 1 January 2005 to 31
December 2005, was between Hiline and SSD; that Hiline is a medical supplies
company; and that SSD manufactures and sells pharmaceutical products. It was
followed by a heading „Sandoz [SSD] obligations‟, and continued:
„A. Marketing Fee
Sandoz agrees to pay Hiline a marketing fee of R3.5 million per annum. This will be paid as
a fixed monthly marketing fee on receipt of a tax invoice from Hiline, confirming marketing
activities carried out during the previous month.
B. Legal
Sandoz confirms that should the marketing activities under this agreement be challenged
with possible litigation, Sandoz undertakes responsibility of defending this action in total.‟
Under the heading „Hiline Medical Obligations‟ the document continued:
„A. Marketing Activities
1 Hiline agrees to adhere to the marketing activities as outlined in Addendum A.
2 These activities will be confirmed by a tax invoice on a monthly basis.
3 Should Hiline be in a position not to provide these marketing services, Sandoz will be
timeously advised.
4 Hiline agrees that all marketing activities contemplated above, will be in accordance to the
Novartis Code of Conduct (supplied by Sandoz).
B. Payment
Payment of marketing fee will take place thirty (30) days from receipt of tax invoice.‟
[18] There followed various general provisions which included a clause stating that
the agreement could not be amended or modified except by a written instrument
signed by both parties; that the agreement, including addenda, constituted the „entire
agreement and understanding between the parties . . . and shall supersede all prior
oral or written negotiations, agreements or understandings between the parties with
respect to the subject matter of this Agreement‟.
[19] Addendum A, headed marketing agreement, stated no more than that it would
be „finalized by 30 November 2004‟. Addendum B, that dealt with SSD products,
listed four drugs.
The findings of the trial court
[20] Boruchowitz J found that the contract pleaded had been proved. The
documents on which Hiline relied, and the oral evidence of Lambrecht and Van
Jaarsveld, who testified for Hiline, as well as the evidence of Hallam, who gave
evidence for Novartis, supported the conclusion that Hiline and SSD had intended to
enter into a contract on the terms set out in the document styled a marketing
agreement which was concluded when the marketing activities had been agreed by
30 November 2004. The conclusion was supported by the fact that, despite
Novartis‟s argument that the contract had no exigible content, both Hiline and SSD
had started to perform their obligations in terms of the contract. This was the
evidence of Lambrecht, Van Jaarsveld and even Hallam for SSD, who regarded the
contract as binding. I shall deal with their evidence shortly.
[21] Boruchowitz J also considered that the subsequent agreement on marketing
activities was not precluded by the clause that provided that the agreement and
addenda constituted the entire agreement – that referred to prior oral and written
agreements, not to those agreed subsequently, and to which Addendum A expressly
referred. That entailed, in turn, that the agreement was not inchoate since the
marketing activities were in fact agreed by 30 November as contemplated. And the
fact that both parties proceeded to perform their obligations under the contract
necessarily meant that the agreement was not vague, lacking exigible content.
[22] In its plea, as I have said, SSD alleged that none of Van Jaarsveld, Van der
Spuy or Biel had the authority to bind SSD. It was made clear in her evidence that
Van Jaarsveld did not have the authority to bind SSD, but Van der Spuy was the
head of the division and the trial court concluded that even if he did not have actual
authority to bind SSD, he at least had the ostensible authority to do so.
Novartis’s arguments on appeal
[23] Novartis challenges all of these findings on appeal and contends that the trial
court materially misdirected itself in assessing some of the evidence. Its principal
argument, however, is that the trial court did not properly apply the rules relating to
the interpretation of contracts. I shall turn to that argument briefly although, in my
view, the question before us is not what the contract alleged meant. The question, as
I said at the outset, is whether there was a contract at all on the terms alleged by
Hiline.
Interpretation of the contract
[24] The argument of Novartis, as I understand it, is that interpretation is an
entirely objective process: in deciding what a contract means, a court must have
regard to the words used and construe them objectively. Novartis cites in this regard
passages from KPMG Chartered Accountants (SA) v Securefin Ltd & another [2009]
ZASCA 7; 2009 (4) SA 399 (SCA) para 39, and Natal Joint Municipal Pension Fund
v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18
(Endumeni).
[25] The relevant passage in KPMG reads:
„First, the integration (or parol evidence) rule remains part of our law. However, it is
frequently ignored by practitioners and seldom enforced by trial courts. If a document was
intended to provide a complete memorial of a jural act, extrinsic evidence may not contradict,
add to or modify its meaning (Johnson v Leal 1980 (3) SA 927 (A) at 943B). Second,
interpretation is a matter of law and not of fact and, accordingly, interpretation is a matter for
the court and not for witnesses (or, as said in common-law jurisprudence, it is not a jury
question: Hodge M Malek (ed) Phipson on Evidence (16 ED 2005) para 33-64). Third, the
rules about admissibility of evidence in this regard do not depend on the nature of the
document, whether statute, contract or patent (Johnson & Johnson (Pty) Ltd v Kimberly-
Clark Corp [1985] ZASCZ 132 (at www.saflii.org.za), 1985 Burrell Patent Cases 126 (A)).
Fourth, 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” (Delmas Milling Co Ltd v du
Plessis 1955 (3) SA 447 (A) at 455B-C). 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. (See Van der Westhuizen v Arnold 2002 (6) SA 453 (SCA) paras 22
and 23 and Masstores (Pty) Ltd v Murray & Roberts (Pty) Ltd 2008 (6) SA 654 (SCA)
para 7.)‟
[26] The passage relied on by Novartis in Endumeni reads (footnotes omitted):
„Over the last century there have been significant developments in the law relating to the
interpretation of documents, both in this country and in others that follow similar rules to our
own. It is unnecessary to add unduly to the burden of annotations by trawling through the
case law on the construction of documents in order to trace those developments. The
relevant authorities are collected and summarised in Bastian Financial Services (Pty) Ltd v
General Hendrik Schoeman Primary School [[2008] ZASCA 70; 2008 (5) SA 1 (SCA) paras
16-19.] The present state of the law can be expressed as follows. Interpretation is the
process of attributing meaning to the word 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 for the parties other than the one
they in fact made. The “inevitable point of departure is the language of the provision itself” [a
reference to Re Sigma Finance Corp [2008] EWCA Civ 1303 (CA) para 98], read in context
and having regard to the purpose of the provision and the background to the preparation and
production of the document.‟
[27] I do not understand these judgments to mean that interpretation is a process
that takes into account only the objective meaning of the words (if that is
ascertainable), and does not have regard to the contract as a whole or the
circumstances in which it was entered into. This court has consistently held, for
many decades, that the interpretative process is one of ascertaining the intention of
the parties – what they meant to achieve. And in doing that, the court must consider
all the circumstances surrounding the contract to determine what their intention was
in concluding it. KPMG, in the passage cited, explains that parol evidence is
inadmissible to modify, vary or add to the written terms of the agreement, and that it
is the role of the court, and not witnesses, to interpret a document. It adds,
importantly, that there is no real distinction between background circumstances, and
surrounding circumstances, and that a court should always consider the factual
matrix in which the contract is concluded – the context – to determine the parties‟
intention.
[28] The passage cited from the judgment of Wallis JA in Endumeni summarizes
the state of the law as it was in 2012. This court did not change the law, and it
certainly did not introduce an objective approach in the sense argued by Novartis,
which was to have regard only to the words on the paper. That much was made
clear in a subsequent judgment of Wallis JA in Bothma-Botha Transport (Edms) Bpk
v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176; 2014 (2) SA 494
(SCA), paras 10 to 12 and in North East Finance (Pty) Ltd v Standard Bank of South
Africa Ltd [2013] ZASCA 76; 2013 (5) SA 1 (SCA) paras 24 and 25. A court must
examine all the facts - the context - in order to determine what the parties intended.
And it must do that whether or not the words of the contract are ambiguous or lack
clarity. Words without context mean nothing.
[29] Referring to the earlier approach to interpretation adopted by this court in
Coopers & Lybrand & others v Bryant [1995] ZASCA 64; 1995 (3) SA 761 (A) at
768A-E, where Joubert JA had drawn a distinction between background and
surrounding circumstances, and held that only where there is an ambiguity in the
language, should a court look to surrounding circumstances, Wallis JA said (para 12
of Bothma-Botha):
„That summary is no longer consistent with the approach to interpretation now adopted by
South African courts in relation to contracts or other documents, such as statutory
instruments or patents. While the starting point remains the words of the document, which
are the only relevant medium through which the parties have expressed their contractual
intentions, the process of interpretation does not stop at a perceived literal meaning of those
words, but considers them in the light of all relevant and admissible context, including the
circumstances in which the document came into being. The former distinction between
permissible background and surrounding circumstances, never very clear, has fallen away.
Interpretation is no longer a process that occurs in stages but is “essentially one unitary
exercise” [a reference to a statement of Lord Clarke SCJ in Rainy Sky SA v Kookmin Bank
[2011] UKSC 50, [2012] Lloyd‟s Rep 34 (SC) para 21].
[30] Lord Clarke in Rainy Sky in turn referred to a passage in Society of Lloyd’s v
Robinson [1999] 1 All ER (Comm) at 545, 551 which I consider useful.
„Loyalty to the text of a commercial contract, instrument, or document read in its contextual
setting is the paramount principle of interpretation. But in the process of interpreting the
meaning of the language of a commercial document the court ought generally to favour a
commercially sensible construction. The reason for this approach is that a commercial
construction is likely to give effect to the intention of the parties. Words ought therefore to be
interpreted in the way in which the reasonable person would construe them. And the
reasonable commercial person can safely be assumed to be unimpressed with technical
interpretations and undue emphasis on niceties of language.‟
[31] This was also the approach of this court in Ekurhuleni Metropolitan
Municipality v Germiston Municipal Retirement Fund [2009] ZASCA 154; 2010 (2)
SA 498 (SCA) para 13. A further principle to be applied in a case such as this is that
a commercial document executed by the parties with the intention that it should have
commercial operation should not lightly be held unenforceable because the parties
have not expressed themselves as clearly as they might have done. In this regard
see Murray & Roberts Construction Ltd v Finat Properties (Pty) Ltd [1991] ZASCA
130; 1991 (1) SA 508 (A) at 514B-F, where Hoexter JA repeated the dictum of Lord
Wright in Hillas & Co Ltd v Arcos Ltd 147 LTR 503 at 514:
„Business men often record the most important agreements in crude and summary fashion;
modes of expression sufficient and clear to them in the course of their business may appear
to those unfamiliar with the business far from complete or precise. It is accordingly the duty
of the court to construe such documents fairly and broadly, without being too astute or subtle
in finding defects.‟
[32] Novartis argued that the purpose of Addendum A was to provide clarity and
certainty as to the marketing activities to be performed by Hiline. When completed it
would define its obligations. To allow for the substitution of an oral agreement or one
concluded by the exchange of emails, without a formal amendment to the document
to which A was an addendum, would be ungrammatical and would be in disregard of
the purpose to be served by the addendum. The plain meaning of clause II A 1, cited
above, was unambiguous: Addendum A would be the source of Hiline‟s obligations.
There could be no other. Reference to another document was impermissible.
Nothing was set out in Addendum A: thus, it contended, the contract had no exigible
content.
[33] Furthermore, the argument went, what is meant by the words in Addendum A,
„To be finalized by 30 November‟? They could mean only that Addendum A had to
be completed by a written instrument defining the marketing activities. And that was
in turn precluded by the provision of the document that it was the sole memorial of
the agreement. Parol evidence was impermissible to add to the document, it was
contended, and Addendum A could only have been completed with a written
instrument signed by both parties.
[34] That argument can be disposed of by having regard to what the parties
expressly excluded: any variation or addition to the marketing agreement. But that
agreement expressly provided that the marketing activities had to be finalized in the
future – before 30 November 2004. In agreeing such activities in a meeting and by
way of email the parties did exactly what they contemplated in agreeing to the
content of the document. And nothing in the document required that the future
agreement should comply with any formality. Absent a statutory requirement that
particular formalities be adhered to, or an agreement that an instrument will have no
force unless particular formalities are followed, as long as the terms of a contract
satisfy other requirements for contractual validity, the parties may conclude their
contract in any manner they choose. See, most recently in this regard, Pillay &
another v Shaik & others [2008] ZASCA 159; 2009 (4) SA 74 (SCA) para 50.
[35] The argument that the words of the document, signed by Van Jaarsveld and
Van der Spuy on 14 October 2004, must be examined only linguistically, and that the
genesis of the document, subsequent conduct and other facts relevant to the
conclusion of the contract be ignored, is directly contrary to the decisions of this
court cited above, and many others. But, as I have said, the issue here is not what
the parties intended their contract to mean, but whether they intended to bind
themselves contractually. That inevitably requires an examination of the factual
matrix – all the facts proven that show what their intention was in respect of entering
into a contract: the contemporaneous documents, their conduct in negotiating and
communicating with each other, and, importantly, the steps taken to implement the
contract.
Novartis’s contentions based on the evidence
[36] Novartis contends that a number of undisputed and contemporaneous matters
require the court to infer that, on the probabilities, an agreement was not concluded.
The document presented by SSD to Hiline on 14 October 2014 made provision for
the signature of the representatives of both parties, yet only the SSD
representatives, Van Jaarsveld and Van der Spuy, signed on that day. Lambrecht
said that he accepted the SSD commitment orally, and only signed the document for
record purposes (to complete the paperwork, in his words) subsequently. Yet he also
said that he was not ready to „conclude‟ the contract then – the marketing activities
could not at that stage be finalized.
[37] Moreover, Lambrecht wanted to ensure that any agreement reached would
not be in contravention of the Act, and wanted to check it with Hiline‟s attorney. That
he did – asking Hoeben to give comments on the lawfulness of the „proposed
agreement‟. Hoeben responded on 28 October 2004, dealing primarily with the
regulatory regime, but he also expressed the view that the proposed agreement with
which he had been provided needed significant changes and additions in order to get
clarity on the marketing activities.
[38] None of that is inconsistent with Lambrecht‟s evidence that he wanted a
commitment from SSD before he reduced the prices in the tender to Disa-Med and
that the marketing activities had still to be finalized before 30 November. In the face
of persistent cross-examination to the effect that he had not concluded a contract on
14 October, he consistently said that SSD had made a commitment – but that he
wanted still to get legal advice and to see the terms on which the tender would be
awarded before taking the steps to agree on the marketing activities. Hiline‟s case,
as pleaded from the start, was that the contract relied upon was concluded only on
30 November 2004. As at 14 October, therefore, he would not have told Hoeben that
the agreement was concluded. He did not think it was.
[39] Novartis places considerable emphasis on the parties‟ respective dealings
with their attorneys, and draft agreements that were prepared for them to sign. Hiline
did not dispute that it wanted an attorney to draft a contract to govern the relationship
with SSD. Lambrecht wanted the assurance that their venture was lawful. There
were meetings between their respective attorneys in Cape Town. Mr Neil Kirby of
Werksmans attorneys went to Cape Town to meet Hoeben. It was agreed that a
colleague of Kirby, with expertise in the drafting of contracts, would draft the
agreement. In fact, there were regular exchanges between Van Jaarsveld, Kirby and
Hoeben about getting the agreement finalized. It became apparent that the
attorney‟s draft would not be completed before the end of 2004, but it was
anticipated that Kirby would attend to it early in 2005 when business resumed after
the festive season.
[40] Lambrecht and Van Jaarsveld were taxed with the question why they wanted
a contract drafted by an attorney if, as Hiline argued, one was already in place. Van
Jaarsveld had written several emails to SSD indicating that the delay was hampering
the project. On 8 December 2004, for example, she said, in an internal email:
„We cannot finalize our legal agreement until such time that all advertising activities are
completely final and I am getting really worried about the delays and cost implications with
the backwards and forwards and constant tweaking of artwork.‟
[41] She also wrote to Hoeben on the same day stating that there had been „delay
finalizing our agreement‟. She added:
„Remember when you said the most important and most difficult part would be the listing of
marketing/advertising activities? And how vehemently I disagreed?? . . . I won‟t argue with
you again!!‟ . . . Neil will send a draft agreement to you, probably early in January 2005.‟
[42] When testifying, both Lambrecht and Van Jaarsveld said that they had
anticipated a second agreement that would supersede the current one. They had
hoped to have a contract drafted by a lawyer. And since that did not materialize the
contract concluded on 30 November 2004 remained in force. Counsel for Novartis
argued that this was a „stratagem (contrivance)‟ to explain their ongoing meetings
and correspondence with Hoeben and Kirby, and was inconsistent with the
correspondence such as that quoted above.
[43] In my view that criticism is unfair. Both parties did want a lawyer‟s contract to
replace the one drafted by SSD, signed by Van Jaarsveld and Van der Spuy, and
concluded orally and by email correspondence. But they nonetheless regarded the
latter as binding, and took steps to implement it on that understanding. Lambrecht‟s
evidence that the contract was not concluded on 14 October when he was given the
undertaking by van Jaarsveld and Van der Spuy does not assist Novartis. He made it
clear that he wanted legal advice and to know the outcome of Hiline‟s tender to Disa-
Med: but these matters had been resolved by 30 November when the marketing
activities were confirmed.
[44] And complaints about the artwork were of no moment to Hiline: it was entirely
up to SSD to determine how they wanted their logos and name to appear on
packaging and vehicles. In fact SSD had prepared and approved the artwork for
packaging, Hiline invoices, and for Hiline delivery vehicles by the time SSD
repudiated the contract. In rejecting Novartis‟s argument that the agreement was
inchoate because not all of its terms were agreed by 30 November 2004,
Boruchowitz J in the trial court relied on dicta of Corbett JA in CGEE Alsthom
Equipments et Enterprises Electrique, South African Division v GKN Sankey (Pty)
Ltd 1987 (1) SA 81 (A) at 92A-E:
„There is no doubt that, where in the course of negotiating a contract the parties reach an
agreement by offer and acceptance, the fact that there are still a number of outstanding
matters material to the contract upon which the parties have not yet agreed may well prevent
the agreement from having contractual force. A good example of this kind of situation is
provided by the case of OK Bazaars v Bloch . . .[1929 WLD 37] (see also Pitout v North
Cape Livestock Co-operative Ltd . . . [1977 (4) SA 842 (A)] Where the law denies such an
agreement contractual force it is because the evidence shows that the parties contemplated
that consensus on the outstanding matters would have to be reached before a binding
contract could come into existence (see Pitout’s case supra at 851B-C). The existence of
such outstanding matters does not, however, necessarily deprive an agreement of
contractual force. The parties may well intend by their agreement to conclude a binding
contract, while agreeing, either expressly or by implication, to leave the outstanding matters
to future negotiation with a view to a comprehensive contract. In the event of agreement
being reached on all outstanding matters the comprehensive contract would incorporate and
supersede the original agreement. If, however, the parties should fail to reach agreement on
the outstanding matters, then the original contract would stand. (See generally Christie The
Law of Contract in South Africa at 27-8.) Whether in a particular case the initial agreement
acquires contractual force or not depends upon the intention of the parties, which is to be
gathered from their conduct, the terms of the agreement and the surrounding circumstances
(see Pitout’s case supra at 815D-G).‟
[45] I agree that these principles are germane, but would limit their application to
the arrangements in respect of artwork, which was in SSD‟s domain. The material
terms of the contract had in fact been agreed, and I consider that the contract
pleaded and relied on by Hiline was concluded by 30 November 2004 as the trial
court found. It remains to consider whether Van Jaarsveld and Van der Spuy had the
authority to conclude a contract for Hiline.
Authority to conclude the contract
[46] Novartis raised the question of the authority of its representatives in its plea.
Hiline replicated that both Van Jaarsveld and Van der Spuy had authority to
conclude the contract. In giving particulars for trial, Hiline averred that Novartis
operated the two divisions referred to earlier. Van der Spuy was the director of the
SSD. Each division was authorized to perform all actions relevant to its business,
and was conducted by particular committees. Sandoz had an executive committee,
the EXCO, of which Hallam was the chair and Van der Spuy a member. SSD had a
management committee of which Van der Spuy was the chair, and Van Jaarsveld,
the business manager of SSD, a member. Novartis had structured SSD as a
separate business entity.
[47] Van Jaarsveld testified that she did not herself have the authority to conclude
an agreement: her function was to initiate and negotiate agreements. She had to get
the authorization of Van der Spuy for the purpose of making the undertaking to pay a
marketing fee to Hiline.
[48] Hiline argued that the structure of the separate divisions itself gave rise to the
inference that Van der Spuy, at least, had actual authority to conclude the marketing
agreement. That document recorded that it was concluded on behalf of SSD by Van
der Spuy and Van Jaarsveld. Van Jaarsveld was mandated by the SSD
Management Committee, at its meeting on 3 August 2004, to approach Hiline. And
even before then, she and Reinhold Just, who was on the EXCO, had consulted with
their attorney Kirby to get advice on the legality of the venture that the SSD had
approved.
[49] On 22 October 2004, the management committee met and it was minuted that
Hiline would be paid R3.5 million and that the marketing activities would be finalized
by 30 November 2004. At the EXCO meeting of November 2004 it was minuted that
the „JV campaign [the joint venture between SSD and Hiline] utilizing a Surgical
Supplier has been initiated and vetted in depth by Werksmans [Kirby] from a legal
point of view.‟ It would be implemented from January 2005. Hallem chaired that
meeting. Just and Van der Spuy would have been present although the minute in the
record does not reflect who was there.
[50] Another fact supporting the inference that the contract was actually authorized
is that a positive performance appraisal of Van Jaarsveld was done by Van der Spuy
early in February 2005. It was noted that she „did a good job keeping Sandoz on the
map‟. Hallam approved the appraisal. This, as Hiline argued, was irreconcilable with
her having acted without authority. And Hallam, when meeting Mr J Ludorf of
Mediclinic in February 2005 indicated that SSD had a contract with Hiline, a fact that
was uncontroverted.
[51] Nonetheless, Novartis relied on a document setting out the manner in which
contracts could be authorized within the company. Neither of Hallam or Van der
Spuy had that authority in terms of this document. Van Jaarsveld testified that she
had not been aware of its existence and Hallam conceded when being cross-
examined that it was not followed in general. He accepted also that he had decided
to treat the marketing agreement as binding. And when he made that decision in
November 2004 it was a „Sandoz‟ decision, that he did not refer for approval to the
directors of the Novartis board: despite that he conceded that it was an authorized
decision.
[52] Van Jaarsveld wrote to Kirby of Werksmans on 15 February 2005, asking
again when he would furnish the agreement that was being drafted by his colleague,
and said that Hallam had requested a written legal opinion „on the current agreement
with Hiline being binding. He said he had no doubt that it would be, but he would like
expert opinion on this. He knows that they have lowered tender prices on the R3.5
mill from Sandoz.‟
[53] Kirby responded with a letter written on 23 February, addressed to Novartis,
stating that his view was that „a partly-written partly-oral agreement currently exists
between Sandoz and Hiline, which is regulating the relationship between the parties;‟
he further advised that Hiline would be entitled to rely on this agreement to enforce
the obligation to pay the amount of R3.5 million.
[54] On 25 February Van der Spuy, Van Jaarsveld and Just met with Kirby to
discuss the opinion. The only matter they asked to be corrected was to make clear
that the R3.5 million was payable in monthly instalments and not as a lump sum, as
Kirby had indicated. Kirby issued a revised opinion correcting the manner of
payment. None of the Sandoz representatives suggested that the agreement was
unauthorized. Hallam terminated Kirby‟s mandate on 2 March 2005 and asked for a
return of his file. When asked during cross-examination why he had done this, he
responded „he did not tell me the story I wanted to hear and secondly I just felt that
we should try to see if there was another way that we could address the matter‟.
[55] And tellingly, the financial director of Novartis, Ms Maria-Dolores Solè, when
she heard about the joint venture, wrote an email to Hallam complaining that she
was told that commitments had been made. And when, in February 2005, Novartis
repudiated the agreement, Solè instituted disciplinary charges against both Van der
Spuy and Van Jaarsveld. Initially Van Jaarsveld was charged with having been
instrumental in SSD „entering into a contract with Hiline‟. That charge was withdrawn,
because, as Hallam said, if it got out, it would damage Novartis‟s case. A new
charge was laid after Hiline had sent its letter of demand, the complaint being that
Van Jaarsveld had acted without authority. She resigned before the disciplinary
inquiry began. Van der Spuy also resigned from Novartis.
[56] Novartis argued, however, that Van Jaarsveld alone was not authorized to
conclude a contact on her own. Indeed, she said as much. But Van der Spuy, she
said, had such authority and he had not only gone to Cape Town with her to present
the marketing agreement but had also signed it. He was not, thereafter, involved with
the negotiations about marketing activities, and had not been at the meeting of 12
November when Biel and Van Jaarsveld had finalized those activities orally. Nor had
he sent the emails of 30 November. So, the argument went, he had not authorized
the contract as a whole.
[57] The argument is, in my view, absurd. The whole transaction was known about
by members of the SSD, and discussed at management meetings, and Van der
Spuy had certainly approved it in that body. Van der Spuy had signed the new
vendor application form for Hiline, referred to by Van Jaarsveld in her email to
Lambrecht on 30 November, referred to earlier.
[58] So too, Hallam knew about it and approved throughout. Even in the absence
of any company resolution authorizing the contract, it was clearly authorized by
implication by EXCO, chaired by Hallam, as reflected earlier. It is trite that implied
authority, which is actual authority, can arise from the conduct of a person in a
position to represent the company, as Van der Spuy, as divisional director of the
SSD, would have been. As Jennifer A Kunst, Professor Piet Delport & Professor
Quintus Voster Henochsberg on the Companies Act 5 ed (2011), 128-129 (dealing
with the Companies Act 61 of 1973, in force at the relevant times) states, authority
may be implied –
„when it is inferred from the conduct of the parties and the circumstances of the case, such
as when the board of directors appoint one of their number to be a managing director. They
thereby impliedly authorize him to do all things as fall within the usual scope of that office‟.
[59] Van der Spuy was not a director of Novartis. But he was the director of the
SSD, which operated as an independent business entity. He undoubtedly had
implied, actual authority to conclude the contract, which he did. Boruchowitz J found
that SSD‟s representatives were in fact authorized to enter into the marketing
agreement, but nonetheless went on to consider whether Novartis was bound by its
agents‟ ostensible authority – whether it had misrepresented that Van Jaarsveld and
Van der Spuy had authority to conclude the contract, and that Hiline had acted to its
detriment in reasonably relying on that misrepresentation. He found that Novartis
was bound by its representations as to Van der Spuy‟s authority.
[60] I do not think it necessary to consider the issue of ostensible authority. Hallam
and Van der Spuy had actual authority to conclude the contract. And the decision to
treat the contract as binding by Hallam was admittedly authorized.
[61] In all the circumstances, I conclude that the trial court correctly found that
there was an enforceable contract between the parties, repudiated by Novartis. The
order that Novartis pay damages in the sum of R3 418 000 plus interest, and the
costs of suit, must thus be upheld.
[62] Accordingly, the appeal is dismissed with costs including the costs of two
counsel where so employed.
_______________________
C H Lewis
Judge of Appeal
APPEARANCES
For Appellant:
M v R Potgieter SC
Instructed by:
Webber Wentzel Attorneys, Sandton
Honey Attorneys, Bloemfontein
For Respondents:
M J Fitzgerald SC (with him R M G
Fitzgerald)
Heads of argument drawn by
J G
Dickerson SC
Instructed by:
Bowman Gilfillan Inc, Sandton
Matsepes 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
3 September 2015
STATUS
Immediate
Novartis v Maphil [2015] ZASCA 111
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 a judgment of the Gauteng Local
Division which held that the parties had concluded a partly written and partly
oral agreement to market the name and logo of the Sandoz Specialty Division
of Novartis South Africa (Pty) Ltd, the appellant, a company that
manufactured and supplied medicines, on medical devices supplied to
hospitals by Maphil Trading (Pty) Ltd, previously Hiline Medical (Pty) Ltd. The
agreement had been reached after regulations were passed pursuant to
amendments to the Medicines and Related Substances Act 101 of 1965, in
2004, as a result of which Novartis needed to find new marketing strategies
Representatives of the division had approached Hiline and proposed that they
place the Sandoz name and logo on the outer packaging of devices used by
health professionals in hospitals. Hiline was interested in the marketing
arrangement for a fee, but wanted a commitment from Novartis before
reducing prices in a tender it was about to make to a hospital. The
representatives signed a written document, termed a ‘marketing agreement’,
offering a fee of some R3.5 million per year, which they presented to Hiline in
October 2004. The marketing activities to be undertaken by Hiline were to be
finalized by 30 November 2004.
In November 2004 the representatives met in Cape Town, and agreed orally
upon the marketing activities. That agreement was confirmed in a series of
emails exchanged on 30 November 2004. The local division held that there
was a binding contract between the parties, and that when Novartis, in March
2005, refused to pay what was claimed, alleging that there was no binding
contract, it repudiated the contract, entitling Hiline to claim damages.
On appeal, Novartis argued that the terms of the written document precluded
a later oral agreement, and that an interpretation of that document itself
required the court to conclude that no contract had been concluded. It argued
also that the representatives of the division had no authority to conclude a
contract on behalf of Novartis. The SCA rejected both arguments, holding that
the question before it was whether a contract had been concluded at all, and
that the principles of interpretation advanced by Novartis were incorrect. The
SCA held that the contract had indeed been entered into. It also found that the
representatives had actual authority to conclude the contract, and dimissed
the appeal. |
3148 | non-electoral | 2007 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
CASE NO: 215/06
Reportable
In the matter between
JOHANN FÖLSCHER POTGIETER
Appellant
and
ILSE POTGIETER
Respondent
Coram:
Farlam, Cameron et Van Heerden JJA, Hancke et Theron
AJJA
Heard:
22 March 2007
Delivered:
30 March 2007
Summary:
Divorce – custody of minor children – best interests of
child paramount consideration – factual findings made by
trial court relating to parties’ parental capacity –
approach of appeal court to such factual findings –
expert evidence – principles relevant to evaluation of
Neutral citation: This judgment may be referred to as Potgieter v
Potgieter [2007] SCA 47 (RSA)
VAN HEERDEN JA:
[1] The main issue in this appeal is the custody of two minor children,
Engela and Johann Potgieter, now aged 15 and 11 years, respectively.
[2] The appellant, Dr Potgieter, is the father of the children and the
respondent, Mrs Potgieter, is their mother. The parties were divorced on 26
October 2004 by order of the Port Elizabeth High Court (Chetty J) and
custody of the children was awarded to Mrs Potgieter, subject to reasonable
access by Dr Potgieter as specified in the court order. Dr Potgieter was
also ordered to pay maintenance in respect of the children, as well as
rehabilitative maintenance for Mrs Potgieter in the amount of R4650 per
month for 12 months.
[3] Chetty J refused Dr Potgieter’s application for leave to appeal
against the custody order and the costs order made against him, but this
Court subsequently granted leave to appeal to the Full Court of the Eastern
Cape Provincial Division. On 13 January 2006, the Full Court (Erasmus J,
with whom Maqubela AJ and Matthee AJ concurred) dismissed the appeal
with costs. Dr Potgieter now appeals further with the special leave of this
court. The appeal is directed against the custody order, the order for
rehabilitative maintenance in favour of Mrs Potgieter and the costs orders
granted against Dr Potgieter.
[4] Dr Potgieter instituted divorce proceedings in February 2003,
claiming custody of the two children, then aged ten years and 11 months
and seven years and eight months, respectively. Mrs Potgieter opposed the
divorce action and counterclaimed for (inter alia) custody of the children.
[5] At the instance of Dr Potgieter, the trial court directed the family
advocate (Ms René Claassen) to conduct an enquiry in terms of section
4(1) of the Mediation in Certain Divorce Matters Act 24 of 1987. She
appointed Ms Helena Retief, a social worker and family counsellor, to
conduct an investigation into the interests of the children as regards custody
and access, and also engaged the services of Dr Estelle de Wit, a clinical
psychologist, to undertake a psychological assessment of the children. In
their written reports and in their testimony during the trial, both Ms Retief
and Dr de Wit recommended that custody of the children be awarded to Dr
Potgieter, Mrs Potgieter to have restricted rights of access. On the basis of
these reports, this was also the recommendation made by the family
advocate.
[6] At the insistence of Mrs Potgieter, a report was also obtained from a
second clinical psychologist, Ms Carol Vogel. In this report, Ms Vogel
agreed with the recommendations of Dr de Wit and Ms Retief in respect of
custody and access. She was thereafter called by Dr Potgieter as his first
witness during the trial. Like Dr de Wit, Ms Vogel had administered a
psychometric test known as the Minnesota Multiphasic Personality
Inventory-2 (MMPI-2) to both parties. Based on the results of these tests,
each clinical psychologist diagnosed Mrs Potgieter to be suffering from a
borderline personality disorder manifesting itself in, amongst other things,
impulsivity; a pattern of unstable and intense interpersonal relationships;
abuse of prescription drugs; emotional instability and mood swings.
[7] Dr Potgieter also called a psychiatrist, Dr Peter Crafford, to testify
on his behalf at the trial. Dr Crafford had treated Mrs Potgieter for anxiety
and depression over a period of about five months some six years before
the trial. He had also diagnosed her as suffering from ‘marked borderline
personality traits’, with ‘generalised personality disorder’, ‘panic disorder’
and ‘recurrent major depressive disorder’. According to Dr Crafford,
although Mrs Potgieter had initially responded well to electro-convulsive
therapy, the anti-depressants prescribed for her at that stage did not succeed
in keeping her depression at bay. Dr Crafford opined that Mrs Potgieter
had serious problems coping with reality and that her insight into her
problems was very limited. He was of the view that she did not have the
strength of will to persevere with psychiatric treatment, nor was she
motivated to undergo individual psychotherapy. He testified that Mrs
Potgieter’s ‘generalised anxiety disorder’ was a lifelong condition and that,
although it could be treated, was not curable. It was characterised by
excessive uncontrollable worry; mood instability; inability to cope with
change; the avoidance of stressors and the formation of inappropriately
intense and unstable interpersonal relationships. According to Dr Crafford,
Mrs Potgieter’s ‘long-term prognosis’ was not good.
[8] It is important to note that Dr de Wit and Ms Retief premised their
recommendations to a large extent on their ‘factual finding’ that the parties’
housekeeper, Ms Maria Zama, had been the children’s primary caregiver
for a number of years preceding the trial. I will return to this aspect in due
course. So too, the family advocate accepted as a fact in her report the
allegation that Ms Zama, and not Mrs Potgieter, was the children’s primary
caregiver.
[9] The family advocate also called a third clinical psychologist, Mr Ian
Meyer, to testify at the trial. Mr Meyer had been instructed by Mrs
Potgieter’s attorneys during the course of the trial to conduct an
investigation and compile a report, focussing in his assessment on the
parties’ respective parental capacity. In accordance with his instructions,
he did not reassess the children for fear of traumatising them by subjecting
them to a further distressing psychological process. Mr Meyer was of the
view that Dr Potgieter showed greater parental capacity than Mrs Potgieter
and that custody of the children should be awarded to Dr Potgieter. His
opinion was derived largely from his conclusion that, given her ‘ego
strength’, psychiatric history and previous style of coping while she was a
full-time mother and housewife with considerable domestic support, she
might well not be able to cope with the stress of being a single parent and
of managing a household, a job and finances.
[10] Chetty J was unimpressed with the various expert witnesses. He
described Ms Vogel as a ‘poor witness’ who was evasive, unable to answer
questions directly and reluctant to make obvious concessions –
‘The defensive attitude which she displayed towards her report compounded the
problems she experienced under cross-examination and contributed markedly to her
unease in the witness box . . . it became obvious that her recommendation was
inextricably bound to her diagnosis. She was reluctant to concede that even if the
factual substratum upon which her diagnosis rested was different to that which she
accepted her conclusion could be different . . .Cross-examination soon established the
spurious nature of the allegations which she regarded as fact. Those allegations
emanated from the [appellant] and those loyal to him which she unreservedly accepted
as factually correct.’
[11] As Erasmus J pointed out in his judgment in the Full Court, it was
put to Ms Vogel in cross-examination that her strenuous attempts to
‘defend’ her position and her unwillingness to make any concessions in
favour of Mrs Potgieter indicated her lack of objectivity. Her answer was as
follows:
'I cannot be neutral, I have decided in my report that Dr Potgieter is the better custodian
and maybe I am being too defensive of my report. I have written something which took
a long time and [which] I am proud of and I would like to explain why I came to these
findings and I see that they are in line with other people’s findings, so I know that I am
not – it is not just a magical thumbsuck, it is based on as much evidence and
quantitative and qualitative measurements that I could find.’
Erasmus J commented, correctly in my view, that this was indeed an
unfortunate attitude for an expert whose task was to assist the court in an
objective manner.
[12] The trial judge was also critical of Dr de Wit’s evidence for much
the same reasons. As far as Ms Retief was concerned, Chetty J correctly
observed that her report and her testimony made it abundantly clear that
she accepted the allegations contained in Dr de Wit’s report as factually
correct; that she relied heavily on Dr de Wit’s findings, and that her
recommendations were influenced by Dr de Wit to an appreciable degree.
As the family advocate’s opinion was in turn based almost exclusively on
the recommendations in the reports submitted to her by Ms Retief and Dr
de Wit, as well as on the allegations in the pleadings and in the affidavits
filed in the Rule 43 application, Chetty J did not derive any assistance from
her recommendation either.
[13] As stated by the trial judge at the outset of his judgment, the
fundamental principle consistently applied by South African courts in
custody disputes, as indeed in all matters concerning children, is now
entrenched in section 28(2) of the Constitution. This section provides that
‘[a] child’s best interests are of paramount importance in every matter
concerning the child’. (See further Jackson v Jackson 2002 (2) SA 303
(SCA) at 307I-308A, F v F 2006 (3) SA 42 (SCA) para 8 and also Lubbe v
Du Plessis 2001 (4) SA 57 (C) at 66B-67G.) It is not necessary for the
purposes of this judgment to repeat the non-exhaustive, albeit
comprehensive, ‘checklist’ of criteria relevant to the application of the best
interests standard, set out in McCall v McCall 1994 (3) SA 201 (C) along
the lines of the checklist of relevant factors recommended by the English
Law Commission in its Review of Child Law, Guardianship and Custody
Law Com No 172 (1988) paras 3.17 et seq. These criteria – and quite a
few more – have now been encapsulated in section 7(1) of the Children’s
Act 38 of 2005 which was signed into law by the President on 8 June 2006,
but which is not yet in operation.
[14] Determining what custody arrangement will serve the best interests
of the children in any particular case involves the High Court making a
value judgment, based on its findings of fact, in the exercise of its inherent
jurisdiction as the upper guardian of minor children. This being so, an
appeal court will not easily second-guess those findings and conclusions.
This is especially so in a case like the present, where the trial court’s
conclusion – that the best interests of the children ‘demanded’ that custody
be awarded to Mrs Potgieter – was based to a large extent on favourable
credibility findings in favour of Mrs Potgieter and adverse credibility
findings against Dr Potgieter and the expert witnesses. (See generally R v
Dhlumayo 1948 (2) SA 677 (A) and Santam Bpk v Biddulph [2004] 2 All
SA 23 (SCA) para 5; but cf Jackson v Jackson supra at 325B-C.) This was
in fact the approach the Full Court followed on appeal to it.
[15] Counsel for Dr Potgieter contended, however, that both the trial
court and the Full Court had misdirected themselves in their assessment of
the expert evidence. Thus, counsel argued, the material facts on which
both Ms Vogel and Dr de Wit based their opinions had been proved and
Chetty J’s criticism of their evidence was accordingly not justified.
According to counsel, the learned judge had erred by finding that these two
expert witnesses had unreservedly and uncritically accepted the version of
events proffered by Dr Potgieter and those collateral sources loyal to him.
This finding did not take into proper consideration the information gleaned
from the collateral sources consulted by the experts and the results of the
psychometric tests administered by them. Counsel submitted that the trial
judge had incorrectly allowed himself to be influenced by statements put to
the expert witnesses by counsel for Mrs Potgieter in cross-examination
without any factual basis having been laid for such statements and without
any evidence being adduced either by or on behalf of Mrs Potgieter to
support such statements.
[16] The principles applicable to the admissibility and evaluation of
expert opinion evidence are well-established (see, for example, DT
Zeffertt, AP Paizes & A St Q Skeen The South African Law of Evidence
(2003) p 299 ff; PJ Schwikkard & SE van der Merwe Principles of
Evidence 2 ed (2002) p 89 ff and the cases cited by these writers). As
Chetty J pointed out –
‘It is clear . . .that expert opinion is not the mere conjecture, surmise or speculation of
the expert: it is his judgment in a matter of fact. It is equally clear, that whilst in many
cases a court needs and benefits from an expert’s opinion, the expert witness should not
usurp the function of the court.’
(On the proper role and function of expert witnesses in disputes involving
children and families, see further Stock v Stock 1981 (3) SA 1280 (A) at
1296E-F and Jackson v Jackson supra at 311F-G, 323E-324C and 327G-
333I.)
[17] The trial judge did not question the specialised knowledge, training
or experience of the various expert witnesses, but identified his main
problem with such experts as being ‘[their] inability . . .to draw a line
between matters of fact and matters of value thereby distorting the judicial
process by acting like judges.’ For this reason, he considered their
evidence to have ‘no real probative value’.
[18] This was a somewhat unusual case in that, although both Ms Vogel
and Mr Meyer were initially engaged by Mrs Potgieter to investigate the
issue of custody, both ultimately recommended that custody of the children
be awarded to Dr Potgieter. It thus cannot be said that either of them was
partisan in the sense that he or she ‘consistently asserted the cause of the
party’ who had engaged him or her (see Stock v Stock supra at 1296F).
While Chetty J was correct in his criticism of Ms Vogel’s evidence, his
treatment of Mr Meyer’s report and the testimony given by him can
perhaps be criticised as being unduly cursory. The same can be said of the
judgment of the Full Court in this regard.
[19] Chetty J disregarded Dr Crafford’s evidence on the ground that, as
he had last had contact with Mrs Potgieter some six years before the trial,
he was ‘unable to express any meaningful opinion on her present day
condition’. However, Dr Crafford testified that the generalised anxiety
disorder which he had diagnosed when treating Mrs Potgieter was an
incurable lifelong condition and that, without ongoing psychiatric and
psychotherapeutic treatment, the long-term prognosis for Mrs Potgieter was
not good. Chetty J’s dismissal of his evidence as having little probative
value was therefore, in my view, not entirely justified. In this regard, Mr
Meyer also testified that, while the borderline personality disorder from
which, in his opinion, Mrs Potgieter suffers can be ‘contained and assisted’
with (inter alia) medication, there is no cure for this kind of disorder.
[20] These shortcomings notwithstanding, I do not think that either the
trial judge or the Full Court misdirected themselves in the assessment of
the expert evidence as a whole. The main factual findings made by the trial
court were that Mrs Potgieter had looked after the children as their primary
caregiver all their lives; that there was no real evidence that they had
suffered any harm in her care; that despite the trauma and stress caused by
the protracted divorce proceedings, during which the parties continued to
live in the same house with the children, the children were doing very well
at school; that Mrs Potgieter dearly loved the children who reciprocated
this love; and that, while Engela had indicated no real preference as to
which parent she wanted to live with after the divorce, Johann had
expressed a clear desire to live with Mrs Potgieter.
[21] The experts, by contrast, did not base their opinions on these facts
and were by and large not prepared to reconsider their opinions when these
facts were put to them during the course of their testimony. In the words of
Erasmus J:
‘Die problem met die deskundiges se getuienis was nie ’n gebrek aan kundigheid in hul
vakgebied nie, maar in hul skynbaar onkritiese aanvaarding van die weergawe van die
appellant en sy verwysingsbronne.’
[22] The most telling example of this failing on the part of the expert
witnesses was the acceptance by Dr de Wit, Ms Retief and, it would
appear, also Mr Meyer of allegations by Dr Potgieter and by Ms Zama that
the latter was the children’s primary caregiver during a period of several
years preceding the trial. Ms Zama’s evidence did not, however, bear out
these allegations. While her evidence-in-chief portrayed Mrs Potgieter as
an uncaring, neglectful and bullying mother prone to outbursts of rage and
physical abuse directed against both Dr Potgieter and her children, her
evidence under cross-examination revealed quite a different picture. Ms
Zama conceded, albeit somewhat grudgingly, that her function in the
parties’ household was that of a domestic worker who left at half past four
each afternoon, and that Mrs Potgieter was the person who primarily cared
for the children on a day-to-day basis. Ms Zama went so far as to concede
that Mrs Potgieter, with whom she clearly had a difficult and somewhat
turbulent relationship, was in fact ‘’n goeie ma’.
[23] The Full Court concluded that Mrs Potgieter clearly suffers from
personality problems in that she is impulsive, unstable, somewhat inflexible
in her personal relationships and prone to confrontation. She herself
conceded that she had difficulties in managing her finances (one of the
major complaints directed against her by Dr Potgieter). However, it was
common cause that, for some years preceding the trial, she had managed to
keep her depression, which had in the past led to several suicide attempts,
under control with medication. Moreover, it must be remembered that
many of her problems manifested themselves during the parties’
increasingly stormy marriage. Particularly in the relatively lengthy period
leading up to the trial, both parties were subjected to the enormous strain of
living under the same roof while bitterly estranged from each other and in
constant conflict. There would obviously be new stresses on Mrs Potgieter
in her life as a divorcée and single parent, but the trial judge and the Full
Court were of the view that neither her personality problems nor these new
stresses would impact on her parenting ability to such an extent that it
would not be in the best interests of the children to continue being cared for
by her, albeit while they maintained the close relationship they have with
Dr Potgieter.
[24] I do not believe that either court misdirected itself in this regard. In
determining what custody arrangement will best serve the children’s
interests in a case such as the present, a court is not looking for the ‘perfect
parent’ – doubtless there is no such being. The court’s quest is to find what
has been called ‘the least detrimental available alternative for safeguarding
the child’s growth and development’. (See Joseph Goldstein, Anna Freud
& Albert J Solnit Beyond the Best Interests of the Child (1973) p 53, as
cited in Boberg’s Law of Persons and the Family 2 ed (1999) p 528-529 n
117.)
[25] In concluding that maternal deprivation would ‘inevitably have
adverse consequences for [the children’s] development’, Chetty J cited
with ‘wholehearted’ approval the following dictum of Broome J in
Dunsterville v Dunsterville 1946 NPD 594 (at 597):
‘Experience goes to show that a child needs both a father and a mother, and that, if he
grows up without either, he will, to some extent, be psychologically handicapped. But
the maternal link is forged earlier in the child’s life than the paternal, and if not forged
early may never be forged at all. The psychological need of a father, on the other hand,
only arises later. It seems to me that if the father is awarded the custody of these young
children they will in all probability, notwithstanding the loving care which they will
undoubtedly receive from their paternal grandmother, grow up as motherless children,
with all the attendant psychological disadvantages.’
Broome J went on to state that –
‘If, on the other hand, the mother is awarded their custody, at any rate during their years
of infancy, they will not necessarily grow up as fatherless children, for the relationship
between a father and his young children is never one of continuous intimacy, but is
necessarily intermittent.’
[26] In more recent cases, the value systems and societal beliefs
underpinning the ‘maternal preference’ or ‘tender years’ principle have
been challenged and courts have emphasised that parenting is a gender-
neutral function and that the assumption that a mother is necessarily in a
better position to care for a child than the father belongs to a past era. (See,
for example, Van der Linde v Van der Linde 1996 (3) SA 509 (O); Van
Pletzen v Van Pletzen 1998 (4) SA 95 (O); Ex parte Critchfield [1999] 1
All SA 319 (W) and the other cases referred to by LI Schäfer ‘Young
Persons’ in Brigitte Clark (ed) Family Law Service (Issue 45) para E42.
See also Boberg’s Law of Persons and the Family 2 ed (1999) p 534-538
and the authorities there cited.) Chetty J’s reliance on the abovequoted
dictum of Broome J in the Dunsterville case must therefore be seen in the
light of these more recent developments. The later approach, it needs be
added, is in any event consistent with the equality principle enshrined in
section 9 of our Constitution.
[27] It should also be noted that the minor children have been in Mrs
Potgieter’s custody (without the daily presence of Dr Potgieter) for nearly
two and a half years since at least October 2004. If Dr Potgieter had, at any
time during that period, formed the view that the children were suffering
harm of any kind by being in Mrs Potgieter’s custody or that circumstances
had changed to such an extent that there was ‘sufficient reason’ for the
custody order Chetty J granted to be rescinded or varied, he could have
applied to the High Court in terms of section 8(1) of the Divorce Act 70 of
1979. That option obviously remains open to him.
[28] As regards Dr Potgieter’s appeal against the order by Chetty J that
he should pay rehabilitative maintenance to Mrs Potgieter in the amount of
R4650 per month for a period of 12 months, there is ample evidence to
show that Mrs Potgieter required such rehabilitative maintenance and that
Dr Potgieter was able to afford it. Although counsel for Dr Potgieter
submitted that the period of payment of such maintenance should be
reduced to three or four months, he did not point to anything in the
evidence that indicated that Chetty J had erred in his determination of
either the amount or the period of payment. In my view, there was no such
error.
[29] Finally, counsel for Dr Potgieter submitted that, even if the appeal
on the merits were to be dismissed, this Court should make no costs order
on appeal and should in addition set aside the cost orders made against Dr
Potgieter by the trial court and by the Full Court so that each party bears his
or her own costs. In the light of, inter alia, the adverse credibility findings
made by the trial court against Dr Potgieter, I am of the view that there is
no reason to interfere with the cost orders made by the two previous courts
and that Dr Potgieter must be ordered to pay Mrs Potgieter’s costs in this
Court. I do not, however, believe that it was necessary for Mrs Potgieter to
be represented by two counsel in this appeal: indeed, counsel for Mrs
Potgieter did not ask for the costs of two counsel.
[30] In the circumstances, the appeal is dismissed with costs.
B J VAN HEERDEN
JUDGE OF APPEAL
CONCUR:
FARLAM JA
CAMERON JA
HANCKE AJA
THERON 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 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
JOHANN FÖLSCHER POTGIETER v ILSE POTGIETER (Case No 215/06)
The Supreme Court of Appeal today dismissed an appeal by the appellant
father of two minor children against an order awarding custody of the children
to the respondent mother, subject to the father’s right of reasonable access.
An enquiry was conducted by the family advocate during the course of the
divorce proceedings. A number of experts, including three clinical
psychologists and a social worker, prepared written reports and testified at the
trial. The psychologists diagnosed the mother to be suffering from a
borderline personality disorder which manifested itself in, amongst other
things, impulsivity, emotional instability and mood swings. All the experts
recommended that custody of the children be awarded to the father, at least
two of them premising this recommendation on their acceptance of the
allegation that the parties’ housekeeper had been the children’s primary
caregiver for a number of years preceding the trial. However, the High Court
found that the mother had always been the children’s primary caregiver and
that her personality problems did not impact adversely on the children’s
welfare and development. The High Court was unimpressed with the expert
witnesses, criticising their lack of objectivity and their failure to distinguish
between matters of fact and matters of value. The Full Court and the SCA
both agreed with this assessment of the expert evidence.
In dismissing the appeal, the SCA restated the fundamental principle
applicable in custody disputes, namely that the best interests of the children
involved are the paramount consideration in any particular case. The
determination of a custody dispute involves the making of a value judgment,
based on findings of fact made by the trial court relating to the parties’
parental capacity and an appeal court will not easily second-guess those
findings and conclusions.
----ends---- |
2448 | non-electoral | 2013 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 116/2012
Reportable
In the matter between:
EMERGENCY MEDICAL SUPPLIES AND
TRAINING CC (Trading as EMS) APPELLANT
and
HEALTH PROFESSIONS COUNCIL OF
SOUTH ARICA FIRST RESPONDENT
PROFESSIONAL BOARD FOR EMERGENCY
CARE PRACTITIONERS SECOND RESPONDENT
Neutral citation: EMS v Health Professions Council of SA (116/2012)
[2013] ZASCA 87 (31 May 2013)
Coram:
Mthiyane DP, Maya and Shongwe JJA and Erasmus and
Mbha AJJA
Heard:
9 May 2013
Delivered:
31 May 2013
Summary: The nature of the appeal created by s 20 of the Health Professions Act 56
of 1974 ─ whether it is a wide appeal or a restricted appeal, ie an appeal in the
ordinary sense.
_____________________________________________________________________
ORDER
On appeal from: Western Cape High Court, Cape Town (Hlophe JP and
Zondi J sitting as court of first instance):
The appeal is dismissed with costs including the costs of two counsel.
___________________________________________________________
JUDGMENT
MTHIYANE DP (MAYA, SHONGWE JJA, ERASMUS AND
MBHA AJJA CONCURRING):
[1] This appeal is against a judgment and order of the Western Cape
High Court (Hlophe JP and Zondi J) dismissing the appellant’s appeal in
terms of s 20 of the Health Professions Act 56 of 1974 (the Act) against
the decision of the second respondent, the Professional Board for
Emergency Care Practitioners (the Board), to withdraw the appellant’s
accreditation. With the leave of the high court the appellant appeals to
this court.
[2] The appeal follows an earlier appeal to this court by the
respondents against the judgment and order of the Western Cape High
Court, in which Motala J and Manca AJ had held that an appeal under s
20 of the Act is a wide appeal which is not confined to the record which
served before the Board. The appeal was struck from the roll on the basis
that the matter was not properly before the court. Leave had been granted
on the question whether the s 20 appeal was a wide appeal or a narrow
appeal. In granting leave to appeal the learned judges had left out of
account issues such as the ‘the merits of the appeal itself, the striking out
application, and the contentions as to the record’. The case is reported as
Health Professions Council of South Africa & another v Emergency
Medical Supplies and Training CC t/a EMS 2010 (6) SA 469 (SCA). For
convenience I shall refer to the appeal to this court against the decision of
Motala J and Manca AJ, as ‘the earlier appeal’.
[3] There are two questions that require consideration by the court in
the present appeal. The first is whether this appeal is properly before the
court, given that the earlier appeal on the same issue was struck from the
roll. The second question is whether the appeal created by s 20 of the Act
is a wide appeal or a narrow appeal. If this court concludes that s 20
creates a wide appeal then in that event it should have regard not only to
the merits of the case but to the review grounds relied on by the appellant,
such as bias and conflict of interest on the part of the Board members
when the decision to withdraw its accreditation was made, as well as
other review grounds raised by the appellant. But if on the other hand a
conclusion is reached that s 20 of the Act creates a narrow appeal, ie an
appeal in the ordinary sense, the consideration of the appeal by this court
will be confined to the merits of the appeal. However, it will be limited to
the evidence or information on which the Board’s decision was based.
The only determination will then be whether that decision was right or
wrong.
Factual background
[4] In 1999 the appellant applied to the Board for approval to conduct
training of emergency care practitioners ─ the so called paramedics ─ in
four basic ambulance assistance (BAA) courses, three ambulance
emergency assistance (AEA) courses and subsequently between
November 2002 and February 2003, one critical care assistance (CCA)
course. The appellant’s applications for accreditation were granted. By
the end of 2004 the Board discovered that the appellant conducted
training well beyond its original accreditation. The appellant was now
offering training in 11 BAA courses, five AEA courses and two CCA
courses without having obtained approval from the Board to extend the
scope of its accreditation. The Board conducted an investigation into the
matter and also discovered that the facilities, the equipment and the
standard of the offered training were well below par. In November 2006
the Board conducted an examination of the appellant’s students in the
CCA discipline. The students performed poorly. In the same month the
appellant’s accreditation was withdrawn by the Board. This led to an
appeal to the high court in terms of s 20 of the Act which was then
considered by Motala J and Manca AJ.
Is the appeal properly before this court?
[5] Against the above background I turn to a discussion of the issue
whether the present appeal is properly before this court. Counsel for the
appellant submitted that it is not competent for this court to adjudicate on
the question whether the s 20 appeal is a wide appeal or a narrow appeal
as this issue was disposed of in the earlier appeal. This argument is
clearly without merit. On a proper reading of the judgment it is clear that
the court in the earlier appeal refused to hear the appeal piecemeal, given
that there were outstanding issues which also formed part of the s 20
appeal and which could still come before this court on appeal. Leave to
appeal had been granted by Motala J and Manca AJ only on the question
whether the s 20 appeal is a wide appeal or a narrow appeal. The matter
was struck off the roll and there was therefore no final determination of
the issue which would have entitled the appellant to raise a plea of res
judicata. I conclude therefore that the question is still open for
adjudication and that it is competent for this court to deal with it.
Section 20 appeal: wide or narrow appeal?
[6] I turn now to the question whether the appeal created by s 20 of the
Act is a wide appeal or a narrow appeal, ie an appeal in the ordinary
sense. Before doing so it is necessary to briefly discuss how the two
courts below approached the matter. Motala J and Manca AJ adopted the
view that the appeal under s 20 was a wide appeal and that the court was
therefore not restricted to the information that was before the Board when
it made its decision. Having come to this conclusion the learned judges
concluded that they were entitled to have regard to the review grounds
relied on by the appellant. Hlophe JP and Zondi J aligned themselves
with the view that the s 20 appeal was indeed a wide appeal but refused to
hold that it was wide enough to include consideration by the court of the
review grounds contended for by the appellant. The learned judges
expressed themselves as follows:
‘In our view when Motala, J and Manca, AJ held that an appeal under section 20 is a
wide appeal, they could not have meant an appeal of the nature contended for by the
appellant.’
The judges went on to state that this ─ meaning this case ─ was not a
review but an appeal and therefore the court could only concern itself
with the merits of the matter. They aligned themselves with the remarks
of Cameron JA in Rustenburg Platinum Mines Ltd (Rustenburg Section) v
Commission for Conciliation, Mediation and Arbitration 2007 (1) SA
576 (SCA) where the judge of appeal remarked (para 32) that the merits
may sometimes intrude in review proceedings but that this did not
obliterate the distinction between an appeal and a review. In my view the
judges in the court below were no doubt correct in their finding that there
is a clear distinction between an appeal and a review and therefore cannot
be faultered in that regard. See also Bato Star Fishing (Pty) Ltd v Minister
of Environmental Affairs & others 2004 (4) SA 490 (CC) para 45.
Notwithstanding that stance, however, they proceeded to deal in detail
with the review grounds advanced by the appellant in its appeal under s
20 of the Act, namely, appellant’s contentions that an incorrect body took
a decision to withdraw its accreditation; that the Board was biased in that
it prejudged the issue; and that there was a material conflict on the part of
the members of the Board. It seems to me that the court below having
found that the appeal under s 20 was limited to the merits, the need to
consider the review grounds raised by the appellant fell away.
[7] Section 20 affords a person aggrieved a right of appeal and
provides as follows:
‘20 Right to a appeal
(1) Any person who is aggrieved by any decision of the council, a professional board
or a disciplinary appeal committee, may appeal to the appropriate High Court against
such decision.
(2) Notice of Appeal must be given within one month from the date on which such
decision was given.’
[8] In Health Professions Council of SA v De Bruin [2004] 4 All SA
392 (SCA) para 23, this court authoritatively decided that an appeal to the
high court created by s 20 of the Act was an appeal in the ordinary sense,
ie ‘a rehearing on the merits but limited to the evidence or information on
which the decision under appeal was given, and in which the only
determination is whether the decision was right or wrong’. De Bruin was
followed and applied by this court in De Beer v Raad vir
Gesondheidsberoepe van Suid-Afrika 2007 (2) SA 502 (SCA). In De Beer
the argument that the appeal in s 20 of the Act was a review was rejected
as being clearly wrong (see paras 25-26).
[9] Motala J and Manca AJ refused to follow and apply De Bruin.
They adopted the view that De Bruin was distinguishable on the facts
from this case and advanced two reasons for that conclusion. The first
was that the decision in De Bruin and the cases referred to therein dealt
with an appellant who had sought to appeal against a decision which had
been taken consequent upon a disciplinary hearing. In each case, said the
learned judges, the disciplinary proceedings had been recorded and there
was difficulty in determining what constituted the record of the
proceedings. The second reason was that the decision was taken in the
absence of the interested person. This line of reasoning found favour with
Hlophe JP and Zondi J who said in their judgment, that there was no
reason why they should deviate from the judgment of Motala J and
Manca AJ in regard to the nature of the appeal.
[10] In my view the reasons advanced by Motala J and Manca AJ that
this case is distinguishable from De Bruin do not withstand scrutiny. In
the present matter there was a record which served before the learned
judges when they considered the s 20 appeal. There was, for example
Form 169 on which the appellant applied for accreditation. There was
also correspondence and other documentation relevant to the appellant’s
application. There were furthermore affidavits before the judges
explaining the context in which the documentation had been submitted. I
therefore do not agree that there was no record in this matter on which the
appeal could have been considered on the merits. As to the second ground
relating to the absence of an interested person, it with respect, appears to
be a bit of a red herring. There was no necessity for the parties to appear
in person in the present matter. The appeal was conducted through their
representatives and the documentation filed by the respective parties. In
any event none of the parties in this matter would have been capable of
appearing in person. In my view De Beer and De Bruin were correctly
decided and this court is bound by them. It has not been shown that the
two cases were wrongly decided.
[11] In the view which I take of the matter, namely that an appeal
created by s 20 is a narrow appeal, ie an appeal in the ordinary sense, it is
necessary to consider the grounds advanced by the appellant on the
merits.
The merits
[12] In this regard two main issues require consideration. The first
concerns the correctness or otherwise of the decision of the Board to
cancel the appellant’s accreditation. The second concerns the decision
relating to the November 2006 examination. Regarding the first issue the
essence of the complaint against the appellant was that it offered training
beyond its originally approved accreditation. When the appellant applied
for accreditation in 1999 it indicated on Form 169 that it intended to
conduct training in four BAA courses. On 29 July 1999 the Board caused
the appellant’s premises to be inspected and a pre-accreditation report
was compiled. These were considered by the Board on 27 October 1999
and the appellant was informed by a letter dated 8 November 1999 that its
application for accreditation had been granted.
[13] On 10 November 1999 the appellant applied again for accreditation
for three AEA courses. On 12 and 13 July 2000 the Board’s
representatives inspected the appellant’s premises and thereafter
compiled a pre-accreditation report. After considering the matter, the
Board approved the application for accreditation and conveyed its
decision to the appellant by way of a letter dated 30 October 2000.
[14] Between November 2002 and February 2003 the appellant applied
again on the prescribed Form 169 for accreditation to conduct training in
one CCA course. During May 2003 the premises of the appellant were
inspected and a pre-accreditation report was compiled and handed to the
Board. The appellant was subsequently informed by way of a letter that
its accreditation had been granted, subject to its CCA examinations being
moderated by the Board’s education committee member, Mr Dhai. The
appellant’s accreditation was confirmed on 17 November 2003 at a
meeting of the Board.
[15] By the end of 2004 the appellant was, contrary to its original
accreditation, conducting training in 11 BAA courses, five AEA courses
and two CCA courses. The Board’s complaint was that the appellant
deviated from its original accreditation of four BAA courses, three AEA
courses and one CCA course. This was what the appellant originally had
applied and had been granted accreditation for.
[16] The matter became a subject of various correspondences between
the Board and the appellant from 2005 to 2006 and culminated in the
Board revoking the appellant’s accreditation in all the courses in which it
conducted training. The Board has maintained throughout that the
appellant was conducting training beyond its accreditation and that
despite bringing this to the attention of the appellant, the latter simply
ignored this fact and proceeded with training beyond its accreditation.
[17] In argument on appeal before this court counsel for the appellant
did not dispute that the appellant offered more courses than those for
which it had been granted accreditation. The submission advanced on the
appellant’s behalf was that the letters from the Board granting the
appellant accreditation did not limit the number of courses the appellant
could offer in any of the three disciplines, namely BAA, AEA and CCA.
In my view the submission is without merit. The appellant applied for
accreditation to offer training in a specified number of courses and there
is no reason to think that when accreditation was granted it entitled the
appellant to offer more courses than those applied for. The appellant’s
conduct in conducting training in more courses than those applied for was
contrary to the provisions of s 16(1) of the Act, which reads as follows:
‘(1) Notwithstanding anything to the contrary in any other law contained but subject
to the provisions of the Nursing Act, 1978 (Act 50 of 1978), no person or educational
institution, excluding a university or a technikon, may offer or provide any training
having as its object to qualify any person for the practising of any profession to which
the provisions of this Act apply or for the carrying on of any other activity directed to
the mental or physical examining of any person or to the diagnosis, treatment or
prevention of any mental or physical defect, illness or deficiency in man, unless such
training has been approved by the professional board concerned.’
[18] There were other reasons why the Board decided to withdraw the
appellant’s accreditation, such as insufficient equipment, failure to keep
logbooks and the general poor quality of training. I do not intend to deal
with these reasons, because of the finding in the preceding paragraph that
the appellant’s conduct fell foul of the provisions of s 16(1) of the Act.
[19] This brings me to the November 2006 examination as one of the
reasons which led to a decision to revoke the appellant’s accreditation. I
have already indicated that the Board alleged that the quality of training
offered by the appellant was unacceptable to the Board. In support of this
allegation the Board relied on a number of reports including that of a
Board member Mr James Bowen. His November 2006 report noted that
the students who sat for the November 2006 examinations, which was set
by the Board, lacked a deep understanding of theoretical knowledge and
described the grasp of the subjects by the students as superficial. On 7
November 2006 the Executive Committee passed a resolution authorising
the Chairperson of the Education Committee to appoint examiners to
conduct the examinations of the appellant as and when there was
completion of a particular course which required examination. Ms D
Muhlbauer was appointed as the chief examiner to conduct the
appellant’s CCA final examination. Mr Bowen was appointed as the
moderator.
[20] On 15 November 2006 Ms Muhlbauer obtained the Objective
Structure Clinical Examination (OSCE) sheets intended for use in the
CCA examinations from Dr TH Stevens, the appellant’s medical director
and CCA co-ordinator. Upon perusal thereof, she noted that the OSCE
sheets did not cater for all the examinable skills, with no less than 14
skills missing. When she took this matter up with Dr Stevens, she was
advised that the OSCE sheets forwarded to her were in respect of the
skills that the appellant had decided to examine the students on and the
skills that the students had practised for their finals. Dr Stevens also
indicated that the students had been taught four of the 14 skills that Ms
Muhlbauer considered to be missing from the OSCE sheets, with the rest
of the skills having been taught to the students in their hospital phase and
therefore not examined during the OSCE.
[21] From the above it was clear to the Board that the students were not
taught by the appellant in all the skills that they were required to be
proficient. The upshot of this was that none of the students passed the
long question paper, where the highest mark was 41 per cent and the
lowest mark was 22 per cent. Again in the OSCE assessments none of the
students passed the examinations, the pass mark being 75 per cent.
However four students passed the short question paper, four failed the
oral evaluations and only two students were found to be competent in the
simulations. A conclusion was reached that it would be futile to allow any
of these students a reassessment without proper remedial action. Mr
Bowen in his moderation report repeated much of what Ms Muhlbauer
stated in her report. As already indicated above, he concluded that the
students appeared to lack a deep understanding of the theoretical
knowledge and that there was a superficial grasp of the subjects by the
students but insufficient to deeply explore a subject. He also stated that
there appeared to have been an obvious lack in the teaching of the
program in question, as students were unable to demonstrate a detailed
understanding of certain procedures. Finally, he could not recommend
that any of the students be permitted to be registered with the HPCSA.
[22] In argument before us, counsel for the appellant submitted that the
November 2006 examination was so difficult that even medical
specialists could not have been expected to answer at least one of the
questions in the detail required. Counsel relies for this submission on the
report of Dr Cooke who was invited as an expert on the appellant’s behalf
to consider, assess and evaluate the November 2006 examination papers.
Dr Cooke’s report has been placed before us. That is unfortunately not
how I read the report as set out in his letter of 10 May 2007. Dr Cooke
said that the questions were medically correct but pointed out that there
were minor issues with regards to long questions and short questions. He
then went on to say that the questions could be easily understood and
were very clear in their content of case scenario, exact requirements of
answers and subsections. As to the long questions he stated that they were
not misleading. There was, he continued, some minor sense of ambiguity
or ‘trick questions’ in the multiple choice section. He then went on to
offer comment on the mark allocation and acknowledged that the mark
allocation in the long questions is an area which will always carry some
minor degree of subjectivity. His further comments on the paper do not,
in my view, detract from the fairness of the examination and do not
provide support for the contention that the November 2006 examination
paper was unfair and aimed at failing the appellant’s students. In my view
the submissions by counsel regarding the November 2006 examination
paper are without merit.
[23] It bears mention that the first respondent, the Health Professions
Council of South Africa is the statutory custos morum of the medical
profession and that being mainly composed of members of the profession
who know and appreciate the standards demanded of the profession, it
has considerable advantages over a court in the consideration and
evaluation of standards sought to be maintained (De Bruin para 23).
There can therefore be no question that the Board’s assessment of the
November 2006 examination must carry the day.
[24] In the result the following order is made:
The appeal is dismissed with costs including the costs of two counsel.
__________________
K K MTHIYANE
DEPUTY PRESIDENT
APPEARANCES
For Appellant:
PJ Tredoux (with him C Cutler)
Instructed by:
Gillan & Veldhuizen Inc, Cape Town
Matsepes Inc, Bloemfontein
For Respondents:
DI Burger SC (with him T Manchu)
Instructed by:
Gildenhuys Lessing Malatji, Pretoria
Honey 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:
31 May 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.
EMS v HEALTH PROFESSIONS COUNCIL OF SA
The Supreme Court of Appeal (SCA) today dismissed an appeal by Emergency Medical
Supplies (EMS) against an order of the Western Cape High Court dismissing its appeal in
terms of s 20 of the Health Professions Act 56 of 1974 (the Act). The s 20 appeal was
against a decision of the Professional Board for Emergency Care Practitioners (the Board)
withdrawing the EMS’s accreditation to provide training in certain emergency care courses.
EMS had applied for and been granted accreditation to provide training in a limited number
of courses. However, it later emerged that EMS was also providing training in courses for
which it had not received accreditation, contrary to section 16(1) of the Act which
prohibited it from doing so. EMS persisted in offering training in those courses despite
being informed of this fact by the Board. It also emerged that EMS’s equipment was
insufficient; that it failed to keep logbooks and that the training it provided was of general
poor quality – EMS’s students lacked a deep understanding of theoretical knowledge, their
grasp of the subjects was superficial and they had performed poorly in the November 2006
examination. It was for these reasons that the Board withdrew EMS’s accreditation. EMS
then unsuccessfully appealed against this decision to the high court. Aggrieved by the order
of the high court, it then appealed to the SCA.
Before the SCA the first issue was whether the s 20 appeal was a wide appeal or a narrow
appeal. If it was a wide appeal, the SCA said, then the court could consider the review
grounds relied on by EMS. However, if it was a narrow appeal the court would be confined
to the merits of the matter and not be entitled to consider the review grounds. The SCA
held that the s 20 appeal was a narrow appeal and that it was, therefore, confined to the
merits. The second issue related to the November 2006 examination, with EMS contending
that the Board, in setting the question paper, had intended to fail its students. On this issue,
the SCA held that the first respondent, the Health Professions Council of South Africa, is
the moral custodian of the medical profession and that it had considerable advantages over
a court in the consideration and evaluation of standards sought to be maintained. Therefore,
the SCA held, the Board’s assessment of the examination had to carry the day. |
2442 | non-electoral | 2013 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 45/13
Not Reportable
In the matter between:
TSHIFHIWA TSHISILINGO NEMAVHOLA
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation:
Nemavhola v State (45/13) [2013] ZASCA 81(30 May 2013)
Coram:
CACHALIA, PETSE JJA and ERASMUS AJA
Heard:
23 May 2013
Delivered Order:
23 May 2013
Reasons Delivered:
30 May 2013
Summary: Rape ─ conviction ─ sufficiency of proof ─ evidence of penetration
not established ─ alibi in defence reasonably possibly true.
_________________________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Limpopo High Court (Thohoyandou) (Hetisani J sitting as court of
first instance):
1.
The appeal against both the conviction and sentence is upheld.
2.
The conviction and sentence are set aside.
3.
The appellant is to be released from custody forthwith, unless he is held on a
legal warrant other than the warrant of detention in this matter.
4.
Reasons for the order are to follow.
REASONS
ERASMUS AJA (CACHALIA and PETSE JJA concurring):
[1] The appellant was charged and convicted of rape in the Venda High Court on
10 March 2006. He was sentenced to life imprisonment. On appeal to this court and
having considered the record of proceedings in the court below and hearing
argument on the merits of the appeal, this court issued an order in the following
terms:
1.
The appeal against both the conviction and sentence is upheld.
2.
The conviction and sentence are set aside.
3.
The appellant is to be released from custody forthwith, unless he is held on a
legal warrant other than the warrant of detention in this matter.
4.
Reasons for the order are to follow.
These are the reasons:
[2] It was alleged that the appellant raped the complainant, a thirteen year old
girl, on 24 June 2004 at Vondwe in the vicinity of Thohoyandou. The appellant
pleaded not guilty to the charge and denied the offence, he did not disclose the basis
of his defence at the plea stage. It later seemed evident that he also raised an alibi. It
was therefore incumbent upon the State to prove all the elements of the offence,
including the identity of the perpetrator, beyond a reasonable doubt.
[3] The respondent conceded in argument that the conviction of the court a quo
falls to be set aside. I shall consequently confine myself to the two issues which
fatally undermine the finding of the court below. The first is whether the State
succeeded in proving that the complainant was penetrated,1 in a legal sense by the
perpetrator and secondly, whether in any event it could be found that the alibi raised
by the appellant was reasonably possibly true and therefore caused a reasonable
1 See S v MM 2012 (2) SACR 18 (SCA).
doubt as to the identity of the perpetrator.2
[4] The complainant testified that after sunset on 24 June 2004 she was
accompanied by two friends, en route from a shopping centre. They were
approached by two male persons, one of whom she identified as a person by the
name of Tshisilingo Tshiphoto. This person was pointed out by her in court as the
appellant. Immediately upon encountering them, the appellant assaulted her and
dragged her into a bush. At that stage her friends ran away. In the bush the
appellant undressed her and called his friend, Ramatu, who held her legs whilst the
appellant ‘was having sexual intercourse’ with her. Later the appellant stopped what
he was doing when she screamed. They then left for a place next to a shop, where
Ramatu assaulted her with an open hand and cut her hands with a knife. In the
meantime, the complainant must have run away. The complainant mentioned an
incident where a friend of hers by the name of Sheila was assaulted by Ramatu
before the appellant took her into the bush. This is in total contradiction with the
evidence of other witnesses.
2 S v Jochems 1991 (1) SACR 208 (A); S v Malefo and another 1998 (1) SACR 127 (W) 1998 (1)
SACR 127 (W).
[5] In cross-examination of the complainant it was put to her by the appellant that
she was falsely implicating him because he had been the cause of the dissolution of
a previous relationship of hers, which she denied.
[6] One of the friends of the complainant, Daisy Gwedugwedu, testified that she
accompanied the complainant on the night of the incident. Although she never spoke
to the appellant she knew him from sight. According to her the incident happened
after sunset at six o’clock on 23 June 2004. When asked how she knew that it was
six o’ clock her answer was as follows:
‘we have had been told that my lord.
By whom? By the police.’
According to her, when the appellant approached them he said that he ‘wanted’ the
complainant and slapped her with an open hand. She asked him where he was
taking her, whereupon the appellant dragged her into the bushes. She remained
behind. After a while they left and called the police. It became clear from the cross-
examination that this incident happened outside a busy business centre where the
public was moving around and is adjacent to a police station. The friends of the
complainant did not alert the general public of the fact that the appellant took the
complainant into the bushes as Daisy wanted to see what Ramatu was up to. This
explanation seems strange.
[7] The investigating officer testified that he searched for the appellant, under the
name Tshiphoto, for about a year and could not find him. Ultimately, the appellant
was traced, apparently after his father informed the police that he was in custody in a
different town. The appellant was identified by the complainant at a prison as the
person who had raped her.3 The manner in which the court dealt with the
identification of the appellant was inadequate.
[8] The court record reflects that the presiding judge, in an attempt to clarify the
issue of the appellant’s names, ventured into a line of questioning with the
investigating officer about the criminal record centre and therefore the history of the
appellant.
[9] The report of the doctor who examined the complainant shortly after the
incident, reveals that the complainant reported having consensual intercourse three
days prior to the alleged rape. He concluded that there was evidence of penetration
3 Such witness identifications are to be approached with great caution. See S v Mthetwa 1972 (3) SA
766 (A), which case deals with jail-cell identifications and wherein the court enunciates the rule that,
inter alia, the court must have regard to whether or not the circumstances of the identification were
such as to suggest the identity of the accused to the witness. See also PJ Schwikkard and SE Van
der Merwe, Principles of Evidence 3rd Edition (2010) 548; Law of South Africa, Annual Cumulative
Supplement 2011, Volume 9, para 837; Sukwana v S [2007] JOL 19396 (C).
and there were no injuries and he does not exclude penetration. No further evidence
is given as to the time when, if any, penetration may have taken place other than the
consensual intercourse three days prior.
[10] The appellant elected to testify and called witnesses to confirm his alibi and
the complainant’s motive to falsely implicating him in the rape. The appellant’s
evidence was simply, that he had left for Seshego in Polokwane during May 2004,
where he worked at a construction company. He was not in the area on 23 June
2004 when the incident is alleged to have occurred and it was therefore impossible
for him to have committed the offence. The evidence also revealed that the distance
between the two places is approximately 170 kilometres. The appellant was
extensively cross-examined by the prosecutor as to his whereabouts and his
evidence remained unshaken.
[11] Regarding his assertion that the complainant had a motive to falsely implicate
him, he called a witness by the name of Vhutshilo Demana. I find the trial judges’
response to the evidence of Mr Demana disturbing, the following passage from the
record is illuminating:
‘Mr Demana, I put it to you that you are just here to protect your cousin and friend. --- I was
trying to speak the truth my lord.
Ja, but your truth does not involve the period in which the incident took place. --- No.
Do you know when this alleged incident took place? --- I only heard that Lufuno had been
raped and how it happened I do not know.
Accused told the court that the complainant, Lufuno, your ex-lover, according to you, have
laid a false charge of rape against him. In other words, according to, since you also say you
know that she had been raped, he says she was raped by someone else, but because she
hated him, because she alleged that he caused the fall out between you and herself, she
then laid a charge against him, having been raped by someone else, either from Zimbabwe
or Mozambique, she did not worry about that person. She only laid the charge against him
because she hated him because she thought he interfered in your love affair. Did you know
that? --- I know nothing about that my lord.
Are you sure you do not know? --- Yes, my lord.
Thank you, you are excused Mr Demana. You may go and sit in the gallery or you may go
home.’
It is instructive to note that the trial judge was putting statements to the witness that
were not borne out by evidence before the court.
[12] The appellant insisted that he wanted to call his employer where he allegedly
worked at the time of the incident. He was taken by the investigating officer to look
for his employer, but the employer could not be found.
[13] The trial court had accepted the evidence of the complainant that she was
raped by the appellant on the said day, solely on the basis that the complainant
testified to that effect and rejected the appellant’s version as not reasonably possibly
true thus concluding that the appellant must be guilty. This approach is
unacceptable.4
[14] In order for a conviction of rape to be sustained, the state has to prove
beyond a reasonable doubt that all the elements of the offence are present and that
the act was committed by the person so charged. An important element of the
offence that the state must prove is that penetration took place as is required in law.
In the instant matter the court a quo found reliance on the medical evidence to
confirm that penetration took place. In his judgment the learned judge remarked inter
alia as follows:
‘Then the court called Dr M P Thilivhali of Donald Fraser.’
…
‘There is also the evidence of Dr … (indistinct) … who then gave, who read the report, the
4 See State v Sauls 1981 (3) SA 172 (A) at 180.
J88 and gave evidence and was cross-examined.
He came to the conclusion, according to him, that she has been assaulted by the accused.
There is evidence of penetration as shown by an open hymen. Although there is no injury,
this does not exclude penetration.’
[15] There are two problems with the way the judge dealt with the medical
evidence. The doctor did not testify by reading the report or giving evidence or being
cross-examined. The report was handed in by consent at the outset of the trial
without any oral evidence having been led. There is further no indication in the report
to support the conclusion as given by the judge. There is no indication of the identity
of the perpetrator as the judge states in his summary.
[16] The only evidence by the complainant was that the appellant had ‘sexual
intercourse’. There is no evidence on record of what the complainant’s
understanding of the term was, nor, was she asked to explain this.5 It is trite that this
is not enough. The court further found that ‘Later the accused cut her with a knife’,
but on the State’s own evidence that was not correct.
[17] In dismissing the appellant’s evidence that he must have been at his work
place on the date in question, the court a quo found that by reason of the fact that
5 See S v MM, supra, note 1.
the day in question was a Saturday, the appellant would not have worked and would
have travelled home for the weekend.
[18] There was no evidence that 23 June 2004 was on a Saturday. The judge a
quo raised this for the first time in argument with counsel. The record reflects:
‘HETISANI (J):
Now the fact that he said he was at Seshego, did you check that 24
June 2004 was a Saturday?
MR MANWADU:
I did not check.
HETISANI (J): The date of the incident is 23 June 2004. So normally what you do, you
check, this year June, what date will … (indistinct) …
MR MANWADU:
Sorry, my lord, you said a Saturday?
HETISANI (J): The one on which this incident took place, 23 June 2004, was it not a
Saturday? You only work backwards, you look at this year 2006, and then you go back to
2005, you get 2004 will be a Saturday. It was on a Saturday.
MR MANWADU:
Unfortunately … (intervene)
. . . .
MR MANWADU:
I am a little bit lost my lord.
HETISANI (J): No, I am talking about the alibi, which he raised, that, among other things, “I,
the accused, I was at Seshego, I was working an now the incident, if you look at the incident,
it is alleged to have occurred on 23 June 2004. Now, I am just drawing your attention, are
you aware that this thing happened on a Saturday?
MR MANWADU:
I was not aware of the fact that it happened on a Saturday.
HETISANI (J): Then I am making you aware. What is your comment there?
MR MANWADU:
My lord, unfortunately I do not know whether at that construction they
used to work from Monday to Friday or from Monday to Saturday. On that basis I will leave
that in the hands of the court to make a decision.
HETISANI (J): I just wanted to make you aware of that point.’
[19] The quote above illustrates how the court came to the conclusion that 23 June
2004 was a Saturday. Not only is this approach to determine dates and the days of
the week upon which it fell novel, it is also not supported by a search of calendars for
the year 2004.6 The 2004 calendar reveals that 23 June 2004 did not fall on a
Saturday as stated by the judge a quo, but rather on a Wednesday. The basis of the
court’s rejection of the appellant’s version in this regard is therefore fallacious.
[20] In my view, the state failed to prove all the elements of the offence, more
particularly sexual penetration. The evidence of the appellant was of such a nature
that, properly evaluated, the conclusion that it is not reasonably possibly true cannot
6 The court can take judicial notice of the day of the week upon which a particular date fell with
reference to a calendar, as determined in R v Dube 1915 AD 557 at 562.
be reached. Consequently, the appellant is entitled to an acquittal. Hence the order
in para 1 was made.
________________________
N C ERASMUS
ACTING JUDGE OF APPEAL
APPEARANCES
APPELLANT:
M J Manwadu (Attorney)
Thohoyandou Justice Centre
C/O Bloemfontein Justice Centre
RESPONDENT:
R J Makhera
The Director of Public Prosecutions, Thohoyandou
C/O Director of Public Prosecutions, Bloemfontein | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF REASONS DELIVERED IN THE SUPREME COURT OF
APPEAL
Supreme Court of Appeal of South Africa
MEDIA STATEMENT
From:
The Registrar, Supreme Court of Appeal
Date:
30 May 2013
Status:
Immediate
Please note that the media summary is for the benefit of the media and does not
form part of the reasons.
Tshifhiwa Tshisilingo Nemavhola v The State (45/12)
Today the Supreme Court of Appeal handed down the reasons for setting aside the
conviction and a sentence of life imprisonment imposed by the Limpopo High Court on a
charge of rape.
The appellant was in custody from 2005 charged with a rape offence committed in 2004.
He was convicted and sentenced during 2006.
The SCA found that the evidence by the complainant in relation to the sexual conduct was
inadequate and that the trial court misdirected itself by relying on evidence of a medical
practitioner that the doctor never testified.
Further the court below found that the incident happened on a Saturday and therefore
rejecting the alibi evidence. The incident occurred according to the calendar, on a
Wednesday. The court below’s rejecting of the alibi evidence was therefore incorrect.
The appellant was released from custody on 23 May 2013 by order of the SCA.
--ends-- |
3709 | non-electoral | 2021 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 658/2020
In the matter between:
MAMOLATELO ALFRED SELOTA
APPELLANT
and
THE SOUTH AFRICAN LEGAL PRACTICE COUNCIL RESPONDENT
Neutral citation: Selota v SALPC (Case no 658/2020) [2021] ZASCA 169
(3 December 2021)
Coram:
SALDULKER ADP and MATHOPO, VAN DER MERWE and
MOKGOHLOA JJA and WEINER AJA
Heard:
19 November 2021
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
09h45
on
3 December 2021.
Summary:
Appeal – appellant sought a declarator that he was entitled to Fidelity
Fund certificate for 2019 – decision would have no practical effect or result within the
meaning of s 16(2)(a)(i) of the Superior Courts Act 10 of 2013 – matter struck from roll.
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Van Olst AJ sitting as
court of first instance):
The application for condonation and reinstatement of the appeal is dismissed
with costs.
The main matter is struck from the roll with costs.
JUDGMENT
Van der Merwe JA (Saldulker ADP and Mathopo and Mokgohloa JJA and Weiner
AJA concurring)
[1] After hearing the parties on 19 November 2021, we made the order set out
above and indicated that reasons for the order would follow. These are the reasons.
[2] The appellant, Mr Mamolatelo Alfred Selota, was admitted as an attorney on
1 August 2008. He subsequently practised for his own account under the name
MA Selota Attorneys. During June 2018, however, the respondent, the South African
Legal Practice Council established under s 4 of the Legal Practice Act 28 of 2014 (the
LPA), launched an application in the Gauteng Division of the High Court, Pretoria for
an order removing the appellant from the roll of attorneys and for ancillary relief (the
main application). The application was based on a variety of grounds. Apart from
complaining that the appellant had practised as an attorney without a Fidelity Fund
certificate in contravention of s 84(1) and (2) of the LPA, the respondent inter alia
alleged that an expert’s inspection of the appellant’s books had revealed substantial
and persistent trust fund deficits and debit balances on clients’ trust accounts. It also
averred that the appellant had touted for work and overreached his clients. The main
application was eventually set down for hearing on 21 November 2019.
[3] Shortly before that date, however, the appellant issued the application that is
directly relevant to this judgment. The application was brought on an urgent basis, to
be heard together with the main application. The appellant essentially prayed for an
order declaring that he was entitled to a Fidelity Fund certificate for the year 2019.
This application was eventually heard on 17 February 2020 by Van Olst AJ, who on
9 March 2020 dismissed it with costs on the attorney and client scale, but subsequently
granted leave to the appellant to appeal to this Court. The appeal was set down for
hearing on 19 November 2021. However, the appellant failed to timeously file heads
of argument in this Court. Consequently, the appeal lapsed in terms of rule 10(2A) of
the rules of this Court. As a result, the appellant filed an application for condonation of
the late filing of his heads of argument and for reinstatement of the appeal.
The respondent opposed this application.
[4] In the meantime, on 7 February 2020, Rabie J and Avvakoumides AJ ordered
the suspension of the appellant from practising as an attorney pending the finalisation
of the main application (the suspension order). It can be accepted that it was mainly
based on the fact that the appellant had practised without a Fidelity Fund certificate.
That court refused leave to appeal against the suspension order, as did this Court.
Several further attempts by the appellant to overturn the suspension order came to
naught. The President of this Court refused an application under s 17(2)(f) of the
Superior Courts Act 10 of 2013 for the reconsideration of the refusal of leave to appeal
on petition. The Constitutional Court turned down an application for leave to appeal as
well as a subsequent application for leave to adduce further evidence and for
reconsideration of its decision to refuse leave to appeal. The last of these orders was
dated 31 March 2021. Counsel for both parties informed us from the Bar that the main
application had been allocated to a judge for case management and expedition of the
determination thereof and that it was ready to be heard.
[5] It is common cause that the respondent never issued a Fidelity Fund certificate
to the appellant for 2019, on the ground that it was not satisfied that the appellant had
complied with the provisions of Chapter 7 of the LPA in respect of the handling of trust
monies. In terms of s 85(6)(a) of the LPA it had to be so satisfied before it could issue
the certificate. Section 85(7) provides that a Fidelity Fund certificate is valid until
31 December of the year in respect of which it is issued. The relief sought on appeal
in this matter was that the order of Van Olst AJ be set aside and replaced with an order
declaring that the appellant was entitled to a Fidelity Fund certificate for 2019 in terms
of s 85 of the LPA, as from 15 February 2019.
[6] Section 16(2)(a)(i) of the Superior Courts Act provides as follows:
‘When 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 grounds alone.’
The purpose of the provision is to reduce the heavy workload of appeal courts and to
ensure that matters that truly deserve the attention of appeal courts are not delayed by
burdening these courts with matters that fall within the ambit of section 16(2)(a)(i).
See Madibeng Local Municipality v DDP Valuers and Another [2020] ZASCA 70
para 22.
[7] Thus, the question was what practical effect or result the decision sought on
appeal would have. The sole contention of the appellant was that it could have an effect
on the suspension order. We found the submission untenable. In the circumstances
that I have sketched, it is open to serious doubt whether an application to set aside the
suspension order should be entertained at all. But more importantly, the declarator
sought on appeal could have no effect on the suspension order. The respondent rightly
pointed out that the decision sought would not change the fact that the appellant had
practised without a Fidelity Fund certificate. Thus, the main pillar on which the
suspension order had been founded would remain in place notwithstanding success
for the appellant on appeal.
[8] For these reasons, the relief sought on appeal could have had no practical
effect or result and the reinstatement of the appeal would have been senseless.
Thus the application for condonation and reinstatement of the appeal had to be
dismissed and the main matter struck from the roll. Costs had to follow these results.
_______________________
C H G VAN DER MERWE
JUDGE OF APPEAL
Appearances:
For appellant:
C A da Silva SC (with him B Mathlape)
Instructed by:
Rammutla-at-Law Inc., Pretoria
Maree & Partners Attorneys, Bloemfontein
For respondent:
L P J Groome (Attorney with right of appearance)
Instructed by:
Rooth & Wessels, Pretoria
Pieter Skein Attorneys, Bloemfontein | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
MEDIA SUMMARY - JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
Selota v SALPC (Case no 658/2020) [2021] ZASCA 169
From:
The Registrar, Supreme Court of Appeal
Date:
3 December 2021
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.
Today the Supreme Court of Appeal (SCA) provided reasons for an order made on
19 November 2021 dismissing an application for condonation and reinstatement of an appeal with
costs and striking the main matter from the roll with costs.
The appeal was about the appellant, Mr Mamolatelo Alfred Selota, an admitted attorney. During June
2018, the respondent, the South African Legal Practice Council established under s 4 of the Legal
Practice Act 28 of 2014 (the LPA), launched an application in the Gauteng Division of the High Court,
Pretoria for an order removing the appellant from the roll of attorneys and for ancillary relief (the main
application). One of the grounds of application was that the appellant had practised as an attorney
without a Fidelity Fund certificate in contravention of s 84(1) and (2) of the LPA.
The application was brought on an urgent basis, to be heard together with the main application. The
appellant essentially prayed for an order declaring that he was entitled to a Fidelity Fund certificate for
the year 2019. The application was dismissed with costs on the attorney and client scale, by
Van Olst AJ, and the appellant was granted leave to appeal to this Court. The appellant failed to
timeously file heads of argument in this Court and the appeal lapsed. In the meantime, Rabie J and
Avvakoumides AJ issued an order suspending the appellant from practising as an attorney pending
the finalisation of the main application (the suspension order) and refused leave to appeal against the
suspension order, as did this Court. The Constitutional Court turned down an application for leave to
appeal.
The relief sought on appeal was that the order of Van Olst AJ be set aside and replaced with an order
declaring that the appellant was entitled to a Fidelity Fund certificate for 2019 in terms of s 85 of the
LPA. The question was whether the decision sought on appeal would have any practical result or
effect within the meaning of s 16(2)(a)(i) of the Superior Courts Act 10 of 2013. The sole contention of
the appellant was that it could have an effect on the suspension order. The SCA found the submission
untenable and held that the respondent rightly pointed out that the decision sought would not change
the fact that the appellant had practised without a Fidelity Fund certificate. Thus, the main pillar on
which the suspension order had been founded would remain in place notwithstanding success for the
appellant on appeal. As a result, the SCA dismissed the application for condonation and
reinstatement appeal with costs and struck the main matter from the roll with costs. |
4118 | non-electoral | 2023 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 593/2022
In the matter between:
HULISANI VICCEL SITHANGU
APPLICANT
and
CAPRICORN DISTRICT MUNICIPALITY
RESPONDENT
Neutral citation: Hulisani Viccel Sithangu v Capricorn District Municipality (593/2022)
[2023] ZASCA 151 (14 November 2023)
Coram:
ZONDI, MAKGOKA, CARELSE, MOTHLE and HUGHES JJA
Heard:
4 September 2023
Delivered: 14 November 2023
Summary: Application for special leave referred for oral argument in terms of s 17(2)(d)
of the Superior Courts Act 10 of 2013 – whether special leave to appeal should be granted
– interpretation of court order granting leave – full court misinterpreting court order and
deciding the appeal on issues not before it – whether respondent’s employees
responsible for applicant’s injuries – sufficiency of evidence – special leave to appeal
granted but appeal dismissed.
______________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Limpopo Division of the High Court, Polokwane (Makgoba JP,
Kganyago J and Naude-Odendaal AJ sitting as court of appeal):
1 The application for special leave to appeal is granted with no order as to costs.
2 The appeal is dismissed with no order as to costs.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Zondi JA (Makgoka, Carelse, Mothle and Hughes JJA concurring):
[1] This is an application for special leave to appeal against the judgment and order
of the full court of the Limpopo Division of the High Court, Polokwane (the full court). The
full court dismissed, with costs, the applicant’s appeal against the judgment and order of
the high court (the trial court). The trial court (per MG Phatudi J) found that Mr Hulisani
Viccel Sithangu (the applicant), had sued the wrong party and dismissed his delictual
claim against Capricorn District Municipality (the respondent).
[2] Aggrieved by the dismissal of his appeal by the full court, the applicant approached
this Court for special leave to appeal against the judgment and order of the full court. The
application before us was referred for oral argument in terms of s 17(2)(d) of the Superior
Courts Act 10 of 2013 (the Act). The parties were informed that, if called upon to do so,
they should be prepared to address this Court on the merits of the application.
[3] This matter has been bedevilled by two procedural missteps. The first one
occurred in the trial court during the adjudication of a special plea, and the second, during
the appeal before the full court. With regard to the first, the trial court heard arguments on
a special plea of misjoinder, in which the respondent pleaded that it was not the correct
party before court. The trial court reserved its ruling and proceeded to hear the evidence
and arguments on the merits. Thereafter, it dismissed the special plea, and at the same
time, relied on the facts sustaining the special plea, to dismiss the action. As I
demonstrate later, these orders are mutually exclusive. As to the misstep during the
appeal, the full court misconstrued an order of this Court granting special leave to appeal,
and as a result, dealt with the misjoinder defence – an issue that was not before it in terms
of that order. A brief background is necessary to demonstrate how these procedural
missteps occurred and how they impeded an expeditious adjudication of the proceedings.
[4] The applicant was involved in a motor vehicle accident on the road between
Polokwane and Mankweng, when at about 21h00 and near Dalmada, a Toyota minibus
(minibus) he was driving, collided with a cow. He got trapped in the wreckage of his
minibus. Firefighters were called to the scene, and they used ‘the jaws of life’ tool to
extricate the applicant from the wreckage. The J88 medico-legal report, completed by a
doctor who first examined the applicant after the accident, shows that the applicant
sustained multiple fractures on the lower part of his body involving both knees, left and
right tibia and fibula, both ankles and an open fracture of the right heel fat pad.
[5] Subsequently, the applicant instituted a delictual claim against the respondent in
the trial court claiming damages in the amount of R2 800 000. He alleged that the open
fracture of his right heel fat pad was caused by the respondent’s firefighters when they
accidentally cut his fat pad in the process of extricating him from the wreckage.
[6] The respondent defended the action and filed a special plea of misjoinder. It
asserted that the place where the accident occurred, was not within its area of authority
or operation, but fell under the Polokwane Local Municipality. Thus, it did not provide
firefighting services in that area, and that the firefighters who attended the scene would
therefore have been employees of the Polokwane Local Municipality. The respondent
thus averred that the Polokwane Local Municipality should have been sued. Essentially,
its defence was that the applicant had sued the wrong party.
[7] In due course, the matter served before the trial court. Before the trial commenced,
the parties agreed in terms of rule 33(4) of the Uniform Rules of Court that the special
plea should be adjudicated upon first before the merits of the claim. The trial court made
no formal ruling to that effect, but the trial nevertheless proceeded in accordance with the
agreement. The trial court heard arguments on the special plea. During the argument,
counsel for the respondent amplified the ambit of the respondent’s special plea by relying
on ss 84 and 85 read with s 83 of the Local Government: Municipal Structures Act (the
Structures Act).1 The respondent argued that, in terms of s 84 of the Structures Act, the
Member of the Executive Council for Local Government (the MEC) had, on 7 March 2003,
allocated the firefighting services responsibility to the Polokwane Local Municipality as
1 Local Government: Municipal Structures Act 117 of 1998. Chapter 5 thereof deals with functions and
powers of municipalities. Section 83 provides as follows:
‘83 (1) A municipality has the functions and powers assigned to it in terms of sections 156 and 229 of the
Constitution.
(2) The functions and powers referred to in subsection (1) must be divided in the case of a district
municipality and the local municipalities within the area of the district municipality, as set out in this
Chapter.
(3) A district municipality must seek to achieve the integrated, sustainable and equitable social and
economic development of its area as a whole by—
(a) ensuring integrated development planning for the district as a whole:
(b) promoting bulk infrastructural development and services for the district as a whole;
(c) building the capacity of local municipalities in its area to perform their functions and exercise their
powers where such capacity is lacking; and
(d) promoting the equitable distribution of resources between the local municipalities in its area to ensure
appropriate levels of municipal services within the area.’
Section 84 provides for the division of functions and powers between district and local municipalities.
Section 84(1) enumerates functions and powers which are allocated to a district municipality. Section
84(2) and (3) provide:
‘(2) A local municipality has the functions and powers referred to in section 83(1). excluding those
functions and powers vested in terms of subsection (1) of this section in 45 the district municipality in
whose area it falls.
(3) Subsection (2) does not prevent a local municipality from performing functions in its area and
exercising powers in its area of the nature described in subsection (1).’
Section 85 deals with adjustment of division of functions and powers between district and local
municipalities. It provides as follows:
‘85 (1) The MEC for local government in a province may. subject to the other provisions of this section,
adjust the division of functions and powers between a district and a local municipality as set out in section
84(1) or (2) by allocating, within a prescribed policy framework, any of those functions or powers vested—
(a) in the local municipality, to the district municipality; or
(b) in the district municipality (excluding a function or power referred to in section 84(1)(a), (o) or (p)), to
the local municipality.
(2) An MEC may allocate a function or power in terms of subsection (1) only if—
(a) the municipality in which the function or power is vested lacks the capacity to perform that function or
exercise that power; and
(b) the MEC has consulted the Demarcation Board and considered its assessment of the capacity of the
municipality concerned.
(3) Subsection (2)(b) does not apply if the Demarcation Board omits to comply with subsection (4) within
a reasonable period.’
the respondent – a district municipality – did not have staff and firefighting vehicles. This
allocation, the respondent alleged, was published by the MEC in Provincial Gazette No.
878.
[8] The trial court reserved its ruling on the special plea to the end of the trial on the
merits and proceeded to hear evidence. The applicant’s evidence was that, after the
collision, his minibus was extensively damaged, and his legs were trapped and this
prevented him from getting out of the wreckage. He sustained multiple injuries because
of the collision. The paramedics who arrived at the scene shortly after the accident were
unsuccessful in their attempt to get him out of the wreckage to convey him to hospital.
[9] It was common cause that, among other injuries, the applicant sustained the injury
to right heel fat pad and a deep laceration to his right foot. The question relates to what
caused that injury. Was it sustained in the collision or was it caused by the firefighters?
The applicant asserted that the injury was caused by the firefighters in the process of
extricating him from the wreckage, whom he accused of accidentally cutting his right heel
fat pad and causing a deep laceration to his foot.
[10] The applicant’s evidence on this score is that, because of the collision, the brake
booster – a part of the vehicle located next to the steering wheel mechanism, collapsed,
and landed on his right leg. His leg got trapped and this impeded his ability to move. The
applicant stated he could not open the door on the driver’s side because it was damaged.
He remained trapped in the wreckage for one and a half hours during which time, he was
in terrible pain. At some point, he even lost sensation in his left leg. The applicant further
testified that before the firefighters arrived, he asked the onlookers to take off his shoes
because he had a burning sensation in his feet. He was unable to do it himself because
he could not reach his feet as he was trapped and could not bend. His feet were, however,
not trapped.
[11] The applicant could not say how his right heel fat pad was cut because during the
rescue operation, the firefighters told him that he ‘must not look at where they would be
working on [his] leg.’ Even though he had to look away, he testified that he warned them
to be careful and not to touch the leg that was not numb, referring to the right leg. The
moment they began touching his right leg, he asked them not to do so, since he felt that
his right leg had not been injured. The next moment he heard one of the firefighters
exclaiming: ‘Sh...t. Oh Sh...t.’ The applicant testified that he did not see the firefighters
cut his right heel fat pad nor did he understand why the firefighter made those utterances.
The firefighters quickly dressed his deeply lacerated right foot with a bandage. They
placed him in an ambulance and the paramedics conveyed him to Polokwane Mediclinic.
The applicant stated that he only noticed that his right heel was badly injured when the
hospital staff removed the wound dressing.
[12] During cross-examination the applicant was asked, with reference to a J88
medico-legal report, to explain how the firefighters cut his right heel fat pad and the
following exchange occurred between him and counsel for the respondent:
‘Now how did you come to a conclusion that the…[indistinct] was cut by the fire-fighter? ---
Because when my leg was not numb I knew that it was trapped here and I was still wearing my
shoes. And there was no, no wound whatsoever on my legs. And I even asked the people who
were outside to assist me. That is why I am saying even the shoes that I am wearing I ended up
giving them to my daughter, because they were not damaged. The shoes I was using whilst driving
that day.
I want to understand you now. You are saying you were wearing the shoes that day? ---Yes.
And the shoes were not damaged? --- Yes
But later you discovered that your heel has been cut. --- Let me maybe explain it this way. When,
whilst still trapped, because of the pain I was feeling I asked people to assist me to take off my
shoes. And after my leg was cut they immediately bandaged my leg. And because it was numb I
could not see that. I was immediately taken to the ambulance. I only realized that my leg was cut
whilst I was at the hospital when they were removing the bandage that was put on by the fire-
fighters.
Now I am now, I am now confused.
COURT: No. The way I understand is that after the accident has happened and upon arrival of
what he calls the fire-fighters he still had his shoes on’.
[13] Mr Thabang Letanta (Mr Letanta), the head of the emergency management
services at the respondent since 2007, testified for the respondent. He was responsible
for fire and rescue services. Mr Letanta denied that the rescue team could possibly have
cut the applicant’s right heel fat pad off in the process of rescuing him. He explained how
the rescue operation at the scene is carried out: A rescue team usually comprises two to
five members, including a crew leader to assess the scene. This would involve securing
the scene and stabilizing the vehicle involved, to prevent it from moving during the rescue
operation and to cause further injuries to the occupants that should be rescued. Once
that is done, the team then starts cutting the big posts of the vehicle using the cutter. The
jaws of life tools are used to cut the wreckage and remove any piece of metal that may
be in their way. A ram is also used during the operation to separate the different sections
of the vehicle. It is this ram that enables the rescue crew to pull an occupant from the
wreckage. Mr Letanta commented further that in his whole life he never had an experience
where the rescue team ‘are so reckless that [they] even touch the patient.’
[14] At the end of the trial, the trial court dismissed the respondent’s special plea and
the applicant’s claim. It ordered each party to pay its own costs. The trial court’s reasoning
for dismissing the special plea appears from the following passages in the judgment:
‘. . . [I]t was not crystally pleaded in the special plea that the defendant is constrained by a statutory
provision and that the basis of the facts upon which it would be entitled to invoke the particular
legislative measure as a defense was not set forth.
The facts pleaded giving rise to the special plea did not raise among other things, the
decentralization of firefighting services by the then MEC, Local Government and Housing in the
Provincial Gazette No.5 dated 07 March 2003 from the defendant to PLM, a third party not cited
in the present proceedings.
On a closer scrutiny of the special plea as formulated, the reasons for mis-joinder are not only
obscure, but fail to disclose the legal or factual basis upon which PLM and not the defendant
should be imputed with liability in this claim. Evidence would therefore be crucial to determine the
merits and the issue of whether or not the defendant should be held liable in the circumstances.’
[15] In dismissing the applicant’s claim, the trial court reasoned:
‘In the instant case, the evidence of identity as adduced was, in my view, not sufficiently reliable.
The plaintiff did not satisfy the threshold of proving the identity of the firemen who attended him
on a balance of probabilities.’
[16] Court orders are required to be clear and unambiguous. The two orders of the trial
court are mutually exclusive and confusing. It was not open to the trial court to non-suit
the applicant based on the point on which it had earlier found in his favour. The ruling of
the trial court on the special plea effectively meant that the correct defendant was before
it, and from then onwards, the identity of the defendant was no longer in issue. The order
dismissing the special plea was final in effect, and accordingly it was not competent for
the trial court to revisit it when it considered the merits.2 In relation to that issue, the trial
court had become functus officio as its authority over the subject matter had ceased.
[17] As mentioned already, although the trial court had not formally made an order
separating the special plea from the merits, the trial proceeded on the footing that the
issues had been separated. The dismissal of the respondent’s special plea meant that a
separated issue (misjoinder) had been finally decided. This Court, in Nu-World Industries
(Pty) Ltd v Strix Limited,3 held that:
‘The purpose of separating the issue in a suit is to deal finally with a discrete part of it. This is
because that issue might be dispositive of the entire matter. If it proves to be dispositive, the
additional time and expense of dealing with other issues is saved. Other than on appeal, the
judgment cannot be revisited. This is why such a judgment is appealable. It is final in effect,
despite not having disposed of all of the issues in the action.’4
[18] In Thobejane and Others v Premier of the Limpopo Province and Another,5 this
Court had occasion to consider a similar situation, incidentally also from the Limpopo
Division of the High Court. There, the respondents had raised a preliminary point of non-
2 Zweni v Minister of Law and Order [1992] ZASCA 197; [1993] 1 All SA 365(A); 1993 (1) SA 523 (A) at
536B.
3 Nu-World Industries (Pty) Ltd v Strix Ltd [2020] ZASCA 28; 2020 BIP 329 (SCA).
4 Ibid para 16.
5 Thobejane and Others v Premier of the Limpopo Province and Another [2020] ZASCA 176.
joinder of the two parties who, according to the respondents, had a direct and substantial
interest in the relief sought by the appellants. The judge before whom the matter served,
heard arguments on the preliminary point referred to above, and dismissed it. The merits
of the application were then argued, after which the judge reserved judgment.
Subsequently, judgment was delivered in which the judge revisited the respondents’
preliminary point of non-joinder referred to earlier and upheld the very same point which
she had earlier dismissed. This Court held that it was not open for the high court to revisit
the point it had dismissed earlier, as in relation thereto, it had become functus officio and
that its second order undermined the principle of finality of litigation.6
[19] On the facts of this case, it was not desirable to separate the special plea from the
merits. What the trial court could have done would have been to decline the invitation to
separate issues. This is because the facts necessary to determine the special plea, and
those necessary to determine the merits, were inextricably linked. But, having agreed to
determine the special plea first, and having dismissed it, it was not open for the trial court
to revisit the issue as to whether the respondent was the correct defendant before it.
[20] The applicant, not satisfied with the orders of the trial court, sought leave to appeal
from that court. The trial court dismissed his application with costs. Thereafter, the
applicant successfully petitioned this Court for leave to appeal. He was granted leave to
appeal to the full court on a limited basis. The order that was granted by this Court on 27
July 2021 reads:
‘1. Leave to appeal is granted to the Full Court of the Limpopo Division of the High Court,
Polokwane.
2. The costs order of the court a quo in dismissing the application for leave to appeal is set aside
AND the costs of the application for leave to appeal in this court and the court a quo are costs in
the appeal. If the applicant does not proceed with the appeal, the applicant is to pay these costs.
3. The leave to appeal is limited to the following issues:
whether the plaintiff proved on a balance of probabilities that an employee/s of the defendant
negligently cut into or removed his right heel fat pad.’ (Own emphasis.)
6 Ibid para 6.
It is important to emphasise at this point that the respondent did not seek and obtain leave
to cross-appeal against the order of the trial court dismissing the special plea of
misjoinder. Therefore, that order was not challenged.
[21] In due course, the appeal came before the full court. In the full court, there was a
debate regarding the interpretation of the order of this Court granting leave to appeal. The
applicant submitted that the leave to appeal was limited to the issues identified in the
order, and that on a proper construction of the order, the full court did not have authority
to go beyond the issues in respect of which leave to appeal was granted. The full court
rejected the applicant’s construction of the order. In paras 8 and 9 of the judgment it
reasoned as follows:
‘The appellant submitted that this court is limited to determine the issue of negligence only as per
the Supreme Court of Appeal’s order. This contention by the Appellant is however misplaced. It
is clear from the reading of the order that this court has to determine the following issues if the
order is broken down in to compartments, namely: -
(a)
Whether the plaintiff proved on a balance of probabilities;
(b)
that employees of the Defendant;
(c)
negligently cut into;
(d)
or removed his [right] heel fat pad.
Had it been the intention of the Supreme Court of Appeal to only limit the appeal to the
determination of negligence, surely the order would have read to the effect that “The leave to
appeal is limited to the following issues: The negligence of the Defendant’’. The argument and
submissions made by the Appellant that this appeal should be limited to negligence only, should
therefore be rejected.’
[22] Having rejected the applicant’s construction of the order of this Court granting
leave to appeal, the full court proceeded to consider the merits of the appeal. It dismissed
the appeal and reasoned as follows:
‘This court is in agreement with the court a quo’s view that the Appellant failed to prove the identity
of the fire-fighters at the scene and by that also failed to prove that the fire-fighters at the scene
were those in the employ of the Respondent. It should be reiterated that the onus of proof lies
with the Appellant, not the Respondent.
It is clear that the basis of vicarious liability is an employer-employee relationship and that the
employer is held liable for the wrongs committed by his or her employee in the course and scope
of the employee’s employment. Having said that, it is clear that the Appellant failed to prove that
the person who committed the delict was an employee of the Respondent, the scope of the
employee’s duties at the relevant time and that the employee performed the delictual act in the
course and scope of the employee’s employment.
The Appellant therefore failed to prove its basis of its claim against the Respondent and the court
a quo correctly found that the action should be dismissed. In the result the appeal stands to fail
and should be dismissed.’
[23] The question is whether the full court’s interpretation of the order of this Court
granting leave to appeal, is correct. The basic principles applicable to construing
documents also apply to the construction of a court’s judgment or order. The court’s
intention is to be ascertained primarily from the language of the judgment or order as
construed according to the usual, well-known rules.7 As in the case of a document, the
judgment or order and the court’s reasons for giving it, must be read as a whole to
ascertain its intention.8 It is now settled, that when interpreting a document including a
court order, the point of departure should be the language in question, read in context
while also having regard to the purpose of its provision and the background.9
[24] The language and the wording of para 3 of the order of this Court makes it clear
that the issue that was before the full court was limited to the question of whether it was
the respondent’s employees who caused the applicant’s injury to the right heel fat pad.
[25] The context in which this Court granted leave to appeal on a limited basis is that
the special plea disputing the respondent as the correct defendant had been dismissed
7 Firestone South Africa (Pty) Limited v Genticuro AG [1977] 4 All SA 600 (A); 1977 (4) SA 298 (A) at 304D-
E.
8 Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Ltd and Others [2012] ZASCA 49;
2013 (2) SA 204 (SCA) para 13.
9 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA) para 18.
by the trial court. All that remained was to determine whether it was the conduct of the
respondent’s employees that caused the applicant’s injury. In other words, whether the
cut to the applicant’s heel fat pad was caused by the conduct of the employees of the
respondent. It was thus no longer open to the full court on appeal to revisit the issue
regarding the identity of the defendant. That issue was not on appeal before it.
[26] The full court’s construction of the order of this Court granting leave to appeal, is
therefore flawed. It not only failed to read the language of the court order contextually, but
it also failed to have regard to its purpose. The full court accordingly misdirected itself in
approaching the appeal in the manner that it did.
[27] Before this Court, the applicant advanced two grounds on which he relied for the
contention that the application for special leave to appeal should be granted as his appeal
has prospect of success. He submitted firstly, that the trial court having dismissed the
respondent’s special plea of misjoinder, it was no longer open to it to revisit that issue on
appeal. Secondly, the applicant submitted that when an organ of state is sought to be
held vicariously liable for the delict committed by its employees, the standard that is
applicable is that of a reasonable organ of state. He argued that the full court ought to
have found that, ‘by going to [his] foot, where there was no eminent danger, the
employees of the Respondent did not act in good faith in that they failed to take
reasonable precautions to eliminate or minimise the risk of injury which their action may
cause to [him]’.
[28] On the other hand, the respondent argued that the application for special leave
should fail as the appeal has no prospect of success and no special circumstances
justifying its grant have been demonstrated. It submitted that the onus was on the
applicant to prove, on a balance of probabilities, that the injury he sustained on the right
heel was caused by its firefighters. It argued that the evidence adduced by the applicant
failed to establish that this injury was caused by its firefighters. It asserted that the
probabilities are that the relevant injury was directly related to the accident and in support
of this proposition it referred to the J88 medico-legal report which was completed by the
doctor who examined the applicant shortly after the accident. One of the many injuries
recorded on the J88 report is the open fracture of the right heel. The respondent also
referred to the statement the applicant made to the police, relating to the accident, in
which he never mentioned that one of the injuries that he sustained was caused by the
firefighters in the process of extricating him from the wreckage.
[29] I now consider whether the special leave of appeal should be granted, and if so,
whether the appeal should succeed. The granting of leave to appeal is governed by s
17(1)(a) of the Act, which reads:
‘(1) Leave to appeal may only be given where the judge or judges concerned are of the opinion
that –
(a) (i) the appeal would have a reasonable prospect of success; or
(ii) there is some other compelling reason why the appeal should be heard, including
conflicting judgments on the matter under consideration. . .’
[30] With regard to special leave to appeal, the test is more stringent. In Cook v
Morrison and Another, this Court held that:10
‘The existence of reasonable prospects of success is a necessary but insufficient precondition for
the granting of special leave. Something more, by way of special circumstances, is needed. This
may include that the appeal raises the substantial point of law; or that the prospects of success
are so strong that a refusal of leave would result in a manifest denial of justice; or that the matter
is of very great importance to the parties or to the public. This is not a closed list . . .’
[31] The full court misconstrued the order of this Court granting leave to appeal to it. In
the absence of a cross-appeal, it was not open to the full court to revisit the special plea
of misjoinder after the trial court had dismissed it. Like the trial court, the full court
misdirected itself by revisiting the issue which the trial court had finally decided. On its
proper construction, the order of this Court granting leave was clear that the misjoinder
issue had been determined by the trial court and was not on appeal to it. The full court
therefore erred in dismissing the appeal on the basis of an issue that was not before it,
10 Cook v Morrison and Another [2019] ZASCA 8; [2019] 3 All SA 673 (SCA); 2019 (5) SA 51 (SCA) para
8.
and without having considered its merits. The application for special leave should
therefore be granted.
[32] I then proceed to deal with the merits of the appeal. The sole basis on which it was
sought, both on the pleadings and in argument to recover damages from the respondent,
was that it was vicariously liable for the conduct of its firefighters. The conduct relied upon
was the cutting of the applicant’s right heel fat pad. The anterior question therefore, is
whether the respondent’s firefighters cut the applicant’s right heel fat pad. Put differently,
the question is whether the injury to the applicant’s right heel fat pad was caused by the
respondent’s firefighters. The applicant bore the onus to allege and prove that the harm
he sustained was caused by the respondent’s firefighters acting within the course and
scope of their employment.11
[33] The J88 medico-legal report indicates that the applicant sustained multiple
fractures on the lower part of his body involving both knees, left and right tibia and fibula,
both ankles and open fracture of the right heel fat pad. Because of this, it is not
unreasonable to assume that all the injuries sustained by the applicant that evening were
as a result of the accident. On that assumption, the applicant bore an even higher burden
to establish that the injuries to his right heel fat pad were not part of the injuries sustained
in the accident. The applicant cannot say, as a matter of fact, that the firefighters cut his
right heel fat pad as he did not witness it. He surmises that the cut to his right heel fat pad
was caused by the firefighters because before they worked on the minibus and, prior to
them doing this, he ‘had no wounds on [his] legs.’
[34] The applicant’s assumption cannot be correct, because the J88 medico-legal
report clearly shows multiple injuries on his legs, ankles, and feet. Further, in the
statement concerning the accident, which the applicant made to the police on 5 November
2014, he did not blame the firefighters for some of the injuries he sustained at the scene
11 An employer is liable for damage caused by delicts committed by an employee in the course and scope
of the employee’s employment. See, for example, K v Minister of Safety and Security [2004] ZASCA 99;
[2005] 3 All SA 519 (SCA); 2005 (3) SA 179 (SCA); (2005) 26 ILJ 681 (SCA) para 4.
on 17 October 2014. On the applicant’s own version, he stated that his right leg was not
numb. It is therefore improbable that the applicant would not become aware when the
firefighters cut his right heel pad. Thus, in my view, the applicant failed to discharge the
onus on him to prove that the injury to his right heel fat pad was caused by the
respondent’s firefighters, and not by the accident. In the light of all the evidence, the
applicant’s evidence that the injury to his right heel fat pad was caused by the firefighters,
is improbable and his appeal should fail.
[35] The next issue to consider is costs. The full court dismissed the appeal with costs
including the costs of the application for leave to appeal. The applicant submitted that the
full court misdirected itself by making a costs order against him. This was a misdirection,
proceeded the argument, which entitles this Court to interfere with the order by setting it
aside. The basis for this submission was that, by bringing an action against the
respondent, the applicant did not act vexatiously, and that the litigation is against an organ
of state. The applicant contended that in his claim he was asserting his constitutional
rights and that therefore, based on the Biowatch principle12, as a private litigant litigating
against a state organ, he should not be ordered to pay costs should this application for
leave to appeal be dismissed.
[36] While I accept that the applicant should not be ordered to pay the costs of this
application I, however, disagree that the costs liability in this matter should be decided on
the basis of the Biowatch principle. In my view, the basis on which the issue of costs
should be decided is the following. The full court misconstrued the order of this Court
granting leave to appeal. It became necessary for the applicant to bring this application.
Special leave to appeal had to be granted in order to correct the procedural misdirection
committed by the full court. It was not the applicant’s fault that the full court misconceived
the order of this Court. Had the full court considered the appeal to it in accordance with
the terms of the order of this Court granting leave, it would not have decided the matter
on the issue that was not before it. Although it dismissed the appeal, it did so on the wrong
12 Biowatch Trust v Registrar Genetic Resources and Others [2009] ZACC 14; 2009 (6) SA 232 (CC); 2009
(10) BCLR 1014 (CC) 14 paras 21 and 23.
basis. None of the parties was responsible for that. Viewed in this light, it is only fair that
no order as to costs should be made.
[37] In the result the following order issues:
The application for special leave to appeal is granted with no order as to costs.
The appeal is dismissed with no order as to costs.
____________________
DH ZONDI
JUDGE OF APPEAL
Appearances
For the appellant:
S O Ravele
Instructed by:
S O Ravele Attorneys, Louis Trichardt-Makhado
Phatshoane Henney Attorneys, Bloemfontein
For the respondent:
M E Ngoetjana
Instructed by:
N J Morero Inc Attorneys, Polokwane
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:
14 November 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
Hulisani Viccel Sithangu v Capricorn District Municipality (593/2022) [2023] ZASCA 151 (14 November
2023)
Today the Supreme Court of Appeal (SCA) granted an application for special leave to appeal. It further
dismissed Hulisani Viccel Sithangu’s (the applicant) appeal against the full court of the Limpopo Division
of the High Court, Polokwane (the full court) with no order as to costs. The trial court found that the
applicant had sued the wrong party and dismissed his delictual claim against Capricorn District
Municipality (the respondent).
The applicant was involved in a motor vehicle accident on the road between Polokwane and Mankweng,
when at about 21h00 and near Dalmada, a Toyota minibus (minibus) he was driving, collided with a
cow. He got trapped in the wreckage of his minibus. Firefighters were called to the scene, and they
used ‘the jaws of life’ tool to extricate the applicant from the wreckage. The J88 medico-legal report,
completed by a doctor who first examined the applicant after the accident, shows that the applicant
sustained multiple fractures on the lower part of his body involving both knees, left and right tibia and
fibula, both ankles and an open fracture of the right heel fat pad.
Subsequently, the applicant instituted a delictual claim against the respondent in the trial court claiming
damages in the amount of R2 800 000 alleging that the open fracture of his right heel fat pad was
caused by the respondent’s firefighters when they accidentally cut his fat pad in the process of
extricating him from the wreckage. The respondent defended the action and filed a special plea of
misjoinder, asserting that the place where the accident occurred, was not within its area of authority or
operation, but fell under the Polokwane Local Municipality. Thus, it did not provide firefighting services
in that area, and the firefighters who attended the scene would therefore have been employees of the
Polokwane Local Municipality (PLM). The respondent thus averred that the PLM should have been
sued. Essentially, its defence was that the applicant had sued the wrong party.
Before the trial commenced, the parties agreed in terms of rule 33(4) of the Uniform Rules of Court that
the special plea should be adjudicated upon first before the merits of the claim. The trial court made no
formal ruling to that effect, but the trial nevertheless proceeded in accordance with the agreement. The
trial court heard arguments on the special plea. During the argument, counsel for the respondent
amplified the ambit of the respondent’s special plea by relying on ss 84 and 85 read with s 83 of the
Local Government: Municipal Structures Act (the Structures Act). The respondent argued that, in terms
of s 84 of the Structures Act, the Member of the Executive Council for Local Government (the MEC)
had, on 7 March 2003, allocated the firefighting services responsibility to the Polokwane Local
Municipality as the respondent – a district municipality – did not have staff and firefighting vehicles. The
trial court reserved its ruling on the special plea to the end of the trial on the merits and proceeded to
hear evidence.
During the trial, it was common cause that, among other injuries, the applicant sustained the injury to
right heel fat pad and a deep laceration to his right foot. The question to be answered related to what
caused that injury. At the end of the trial, the trial court dismissed the applicant’s special plea and the
and claim, holding that the reasons for misjoinder are not only obscure, but fail to disclose the legal or
factual basis upon which Polokwane Local Municipality and not the defendant should be imputed with
liability in this claim. With regards to the claim, the trial court found that the applicant did not satisfy the
threshold of proving the identity of the firemen who attended him on a balance of probabilities.
Not satisfied with the orders of the trial court, the applicant unsuccessfully sought leave to appeal from
that court. Thereafter, the applicant successfully petitioned the SCA for leave to appeal and was granted
leave to appeal to the full court on a limited basis. Paragraph 3 of the SCA’s order granting leave
directed as follows: ‘The leave to appeal is limited to the following issues: whether the plaintiff proved
on a balance of probabilities that an employee/s of the defendant negligently cut into or removed his
right heel fat pad.’
The respondent did not seek and obtain leave to cross-appeal against the order of the trial court
dismissing the special plea of misjoinder. Therefore, that order was not challenged.
In the full court, there was a debate regarding the interpretation of the SCA’s order granting leave to
appeal. The applicant submitted that the leave to appeal was limited to the issues identified in the order,
and that on a proper construction of the order, the full court did not have authority to go beyond the
issues in respect of which leave to appeal was granted. The full court rejected the applicant’s
construction of the order and proceeded to consider the merits of the appeal. It dismissed the applicant’s
appeal, holding that the trial court’s conclusion on the issue of identity was correct.
In granting special leave to appeal, the SCA reasoned that, since the full court erred in dismissing the
appeal on the basis of an issue that was not before it, and without having considered its merits, the
application for special leave should be granted.
The issues before the SCA was whether the full court’s interpretation of the SCA’s order granting leave
to appeal was correct. Secondly, whether the injury to the applicant’s right heel fat pad was caused by
the respondent’s firefighters.
In coming to a conclusion on the first issue, the SCA held that the language and the wording of
paragraph 3 of the SCA’s order granting leave makes it clear that the issue that was before the full court
was limited to the question of whether it was the respondent’s employees who caused the applicant’s
injury to the right heel fat pad. The context in which the SCA granted leave to appeal on a limited basis
is that the special plea disputing the respondent as the correct defendant had been dismissed by the
trial court and that all that remained was to determine whether it was the conduct of the respondent’s
employees that caused the applicant’s injury. The SCA reasoned that it was thus no longer open to the
full court on appeal to revisit the issue regarding the identity of the defendant in the trial as that issue
was not on appeal before it.
The SCA then concluded that the full court’s construction of the SCA’s order granting leave to appeal
is flawed as it not only failed to read the language of the court order contextually, but also failed to have
regard to its purpose. The full court accordingly misdirected itself in approaching the appeal in the
manner that it did.
Lastly, having granted special leave to appeal, the SCA held that, in the light of all the evidence, the
applicant’s evidence that the injury to his right heel fat pad was caused by the firefighters, is improbable
and his appeal should fail.
--------oOo-------- |
1784 | non-electoral | 2011 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 174/10
In the matter between:
CROXFORD TRADING 7 (PTY) LTD First Appellant
ERROL JOHN HENTY SENEKAL Second Appellant
v
THE BODY CORPORATE OF THE INYONI ROCKS
CABANAS SCHEME NO SS1/1978 Respondent
Neutral citation:
Croxford Trading 7 v The Body Corporate of the Inyoni
Rocks Cabanas Scheme no ss1/1978 (174/2010) [2011]
ZASCA 27 (18 March 2011).
Coram:
Brand, Maya, Cachalia, Shongwe JJA and Petse AJA
Heard:
24 February 2011
Delivered:
18 March 2011
Summary: A developer who owned an interest in the common property of a
sectional title scheme under the Sectional Titles Act 66 of 1971, and
subsequently disposes of the interest, has no ‘right of extension’ that is
transferable. The 1993 Amendment to the Sectional Titles Act 95 of 1986, which
repealed the 1971 Act, but dispensed with the requirement for the developer to
retain an interest in the common property did not remove this requirement in
respect of the 1971 Act.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: KwaZulu-Natal High Court (Pietermaritzburg) (Steyn J sitting
as court of first instance).
The appeal is dismissed with costs.
________________________________________________________________
JUDGMENT
________________________________________________________________
CACHALIA JA (Brand, Maya, Shongwe JJA, Petse AJA concurring):
[1] This is an appeal from the KwaZulu-Natal High Court, Pietermaritzburg
granting an application for a declaratory order against the appellant and
dismissing a counter-application, also for declaratory relief, against the
respondents. With leave of the high court the appellants appeal to this court. The
appeal concerns a developer’s ‘right of extension’ under a sectional titles
scheme.
[2] The Sectional Titles Act 95 of 1986, like its predecessor, the Sectional
Titles Act 66 of 1971, sanctions the construction of a scheme in stages. A
developer intending to add a further phase or phases to a sectional title
development must, when applying to the local authority for the sectional plan to
be registered, reserve a right to extend the scheme. This right is known as the
developer’s ‘right of extension’. Where the developer does not reserve the right,
or the reservation has lapsed, the right to extend the scheme vests in the body
corporate.
[3] Under s 18 read with s 26 of the 1971 Act, a developer could exercise a
right of extension only if it owned at least one unit in the scheme. Moreover,
because the right in favour of the developer was akin to a personal servitude, it
was not transferrable.1 The 1986 Act repealed the 1971 Act, but s 60(1)(b), which
is a saving and transitional provision, preserved a right of extension acquired
under the rescinded Act. In terms of s 25(5) the 1986 Act also created a new
dispensation with regard to the developer’s right of extension which differed from
the previous position in two respects. First, it deemed the right of extension to be
‘a right to urban immovable property which admits of being mortgaged’,2 which is
transferable by the registration of a notarial deed of cession.3 Secondly, it
removed the requirement for the developer or its successor-in-title to have an
interest in the common property. The right of extension under s 25 of the 1986
Act thus became wider in its scope than the content of the right recognized in the
repealed Act.4 It must, however, be emphasized that a right acquired or
exercised under the repealed Act did not bestow any new right under the 1986
Act, but did not prevent the acquisition or exercise of rights under the 1986 Act.5
[4] On 26 February 1993 the 1986 Act was amended, in the words of the
preamble to, among other things, ‘provide for the alienation and mortgaging of a
right to extend a building in terms of the Sectional Tiles Act, 1971’. Section 4 of
the Sectional Titles Amendment Act 15 of 1993 amended s 60(1)(b) of 1986 Act
to read thus:
‘Amendment of section 60 of Act 95 of 1986, as amended by section 25 of Act 63
of 1991
1 Erlax v Properties (Pty) Ltd v Registrar of Deeds & others 1992 (1) SA 879 (A) at 887E-F and
893B-C; S P Catering Investments v Body Corporate of Waterfront Mews & others 2010 (4) SA
104 (SCA) at para 4.
2 Section 25(4)(a).
3 See 24 Lawsa 2 ed para 269. Before s 25(4)(b) of the 1986 Act was amended by s18(a) of the
Sectional Titles Amendment Act 44 of 1997 the real right of extension could be transferred in
totality and with regard to the whole land affected by the registration of a notarial deed of cession.
After the amendment the, the developer is allowed to cede the whole or a share of the right or the
portion of the land affected. The distinction is not relevant in this case.
4 Erlax (above) (n.1) at 889H-890D.
5 See above note 1 at 892D-F.
4.
Section 60 of the Sectional Titles Act, 1986, is hereby amended by the
substitution for subsection (1) of the following subsection:
(1)
(a)
. . .
(b)
a right of extension of a building acquired in terms of section 18 of
the Sectional Titles Act, 1971,
shall be completed or exercised in terms of the provisions of the Sectional Titles
Act, 1971, as if it has not been so repealed: Provided that a right as referred to in
paragraph (b) in respect of which a certificate of real right has been issued –
(i)
shall for all purposes be deemed to be a right to urban immovable
property which admits of being mortgaged; and
(ii)
may be transferred by the registration of a notarial deed of
cession . . .’
[5] The proviso to the amendment introduced language identical to s 25(4) of
the 1986 Act. Its effect was that a right of extension under s 18 of the repealed
Act would for ‘all purposes’ be deemed to be a right to urban immovable property
which admitted of being mortgaged, which was transferable by registration of a
notarial deed of cession. The purpose of amendment was to deal with the
problem that arose after this court’s holding in Erlax Properties (Pty) Ltd v
Registrar of Deeds & others6 that s 60(1) of the 1986 Act did not render the
developer’s rights under the 1971 Act transferrable. The amendment solved this
problem by pertinently permitting the transfer of a right acquired under the 1971
Act. The appellants’ contention is, however, that the amendment went further by
allowing a right of extension acquired under the repealed 1971 Act to be
exercised even though the developer or its successor-in-title has no other
interest in the common property. I will revert to this contention in due course.
[6] But first I must turn to the facts of this case. A sectional title scheme,
known as Inyoni Rocks Cabanas, was registered 1978. The 1971 Act applied at
the time. Inyoni Beach Apartments (Pty) Ltd, the developer, owned a unit – unit
64 – in the scheme and reserved to itself the right, which it had recorded in a
6 1992 (1) SA 879 (A).
conveyancer’s certificate, to extend the development. The certificate was
registered in the developer’s name on 13 October 2003, after the 1993
Amendment had taken effect. The relevant part of the certificate provides:
‘No person whose consent is required in terms of Section 18 of the Act shall be entitled
to withhold his written consent to INYONI BEACH APARTMENTS (PROPRIETARY)
LIMITED, being the developer of this Scheme as owner of Section No 64 or its
successors in title (hereinafter referred to as the developer), preparing and submitting for
its own benefit a scheme to the Local Authority in terms of Section 18 of the Act for
approval, and upon such approval taking all necessary steps to erect extensions and
additional buildings on the land in terms of and as indicated on the sketch plan filed of
record in my Sectional Titles Protocol . . .’
[7] In 2003 the developer transferred unit 64 to a third party and, in 2007, that
party, in turn, transferred the unit to a Trust – the Mahlangu Trust. The Deed of
Cession, in terms of which the developer purported to transfer the right of
extension to the first appellant, was registered on 16 July 2004. So, at the time of
registration, the developer no longer owned the unit and thus had no interest in
the common property of the scheme. Neither did the first appellant.
[8] The Body Corporate of the Inyoni Scheme, the respondent in this appeal,
took the view that because the developer’s right had been acquired under the
1971 Act, it had lost that right when it disposed of the unit. At the time of the
Deed of Cession to Coxford Trading 7 (Pty) Ltd, the developer therefore had no
right to transfer. The Body Corporate thus sought a declarator in the Kwazulu-
Natal High Court directing the Registrar of Deeds to cancel the Deed of Cession.
The first appellant in this appeal and the purported holder of the right of
extension under the Deed, by counter-application, asked for a declaration that
the right vested in it. The second appellant, Mr Errol John Henty Senekal, was
cited in his capacity as a director of and beneficial shareholder in the first
appellant. They maintained that once the certificate was registered in October
1993 the developer’s right of extension became a real right, which was capable
of being mortgaged and transferred to a third party.
[9] As I mentioned at the beginning of this judgment, the high court (Steyn J)
granted the relief that the respondent asked for and dismissed the appellants’
case. The Trustees of the Mahlangu Trust, Inyoni Beach Apartments (Pty)Ltd
and the Registrar of Deeds, KwaZulu-Natal, were respectively the third, fourth
and fifth respondents in the court below. They took no part in those proceedings
and have informed us that they shall abide this court’s decision on appeal.
[10] The appellants contend that under the amended legislation the
developer’s transfer of its right of extension to the first appellant was valid despite
the fact that it no longer owned a unit in the scheme at the time. This is because,
so the contention goes, s 25(5) of the 1986 Act says that the right of extension
may be exercised even though the developer or its successor-in-title has no
other interest in the common property.
[11] To succeed in their contention the appellants must overcome the difficulty
that even though the 1993 Amendment, in s 60(1)(b)(i), deemed the right of
extension ‘for all purposes . . . to be a right to urban immovable property’ which,
when registered, is not dependent upon the ownership of any other property, it
did not expressly dispense with the requirement that the acquisition or exercise
of the right under s 18 of the 1971 Act is contingent on the developer’s ownership
of a section of the common property. In addition it retained the language used in
s 60(1)(b) of the 1986 Act, which says that the right of extension acquired in
terms of s 18 of the repealed Act shall be completed or exercised in terms of that
Act as if it has not been repealed. A plain reading of the amendment therefore
suggests that by disposing of its ownership in the unit the developer no longer
possessed a right of extension that was capable of being transferred.
[12] But this interpretation, contends the appellants, gives rise to an anomaly
or inconsistency: the requirement of ownership of a unit would mean that the
security afforded to a mortgagee of the right of extension would be compromised
if the holder of the certificate parted with ownership of its section in the scheme
and thus ceased to have a share in the common property. Put another way, if the
developer or its successor-in-title ceases to own a section in the scheme, the
right of extension would be lost and would therefore no longer afford any security
to a mortgagee or be worthy of transfer. The ambit of the right would then be
uncertain and could not properly be described ‘for all purposes’ as ‘a right to
urban immovable property’ – a result, the appellants say, the legislature could not
have intended.
[13] The solution to the conundrum, the appellants say, is that because the
language used in the proviso to the amendment in s 60(1)(b) is identical to
s 25(4) of the original 1986 Act, which dealt with rights of extension under that
Act, the construction to be placed upon the consequences of the right of
extension in the amendment should be the same as the consequences for a right
of extension here. And because s 25(5) of the original Act records that a right of
extension described in s 25(4) may be exercised even though the developer or
its successor-in-title has no other interest in the common property, the same
consequence should follow in regard to the interest in the common property in
s 60(1)(b). Therefore, the same words that appear in s 25(5), as it read in the
original 1986 Act, should be read into s 60(1)(b) following the amendment.
[14] Against the background of this court’s reasoning in Erlax Properties7 I do
not think that the appellants have met the problem regarding the language of the
1993 Amendment. In that case one of the declaratory orders sought by the
developer was in effect, to enable it to enjoy the benefits introduced by s 25 of
the 1986 Act even though the rights had been acquired under s 18 of the
repealed Act. However, in refusing the relief this court concluded that s 60(1)(b)
of the 1986 Act did not change or enlarge the content of the rights existing under
the repealed Act.8 As I have said, the lawmaker introduced the 1993 Amendment
cognizant of this judgment. In addition – and despite having dispensed with the
7 See above note 1.
8 Ibid at 892I-893B.
ownership requirement in s 25(5) of the 1986 Act – it refrained from also doing so
in relation to rights acquired under the repealed Act. And, bearing in mind that s
25(5) was a substantial deviation from the structure of the 1971 Act, this could
hardly have been an oversight.
[15] Concerning the appellants’ submission that it is anomalous to subject the
right of a mortgagee or transferee of a real right (in this case the right of
extension) to the ownership of another, it is not unusual for the exercise of a
registered real right to be dependent upon the ownership of another property –
as is the case with a praedial servitude. As far as mortgages are concerned,
nothing would prevent a mortgagee from stipulating a term that precluded the
mortgagor – as holder of the extension right – from divesting itself of its whole
interest in the common property and thereby trigger the forfeiture of its right of
extension in favour of the body corporate.9
[16] The appellants have another string to their bow. They contend that the
matter may be approached on a different basis, which is this: a distinction must
be drawn between the existence of the right and its enforcement by either the
developer or its successor-in-title. The 1993 Amendment concerns the changed
nature of a right of extension that arose under the 1971 Act. It is no longer akin to
a personal servitude, incapable of transfer, but the equivalent of a praedial
servitude that is transferable. Nothing is implied about the nature of continued
ownership of any section in the scheme. Section 18(1) of the 1971 Act did not
characterize the right of extension. It dealt only with who might exercise it ie the
developer or the body corporate. The 1993 Amendment then transformed the
nature of the old right of extension, from one that was not transferable, to one
that was. And because s 18(1) of the 1971 Act dealt with a different kind of non-
transferable right, that section is no longer relevant to identify who might enforce
a real right of extension that was registered after the 1993 Amendment. The
9 Cf Barclays Nasionale Bank Bpk v Registrateur van Aktes Transvaal & ‘n ander 1975 (4) SA
936 (T) 941E-942A.
consequence of this approach is that the registration of the right of extension was
valid and so is the subsequent transfer of the right to the first appellant.
[17] In Erlax this court was content to say that the s 18(1) right of extension is
not transferable, without describing it as personal servitude.10 In S P & C
Catering Investments (Pty) Ltd v Body Corporate of Waterford Mews & others11
this court appeared to accept that the right of extension under the 1986 Act was
a personal servitude.12 Some writers have suggested that it is now classifiable as
a statutory real right sui generis.13
[18] I do not think it necessary for present purposes to decide on the proper
classification of the right of extension. However one chooses to classify the right
in the 1971 Act or after the changes, it is clear that the retention in the 1993
Amendment of the original provision in s 60(1)(b) (that the s 18(1) right of
extension shall be exercised as if the 1971 Act was not repealed) is an
insuperable obstacle to the argument that it is no longer relevant to identify who
may enforce such a right of extension registered after the 1993 Amendment. The
appellants’ alternative contention therefore also has no merit.
[19] To conclude, the developer disposed of its unit in the scheme after the
1993 Amendment took effect and thus ceased to have an interest in the common
property. Thereafter, it purported to transfer its right of extension to the first
appellant by notarial Deed of Cession. But it could not do so because the
existence or exercise of a right of extension was dependent upon its continued
ownership of the relevant unit. It follows that the high court was correct to grant
the declaratory order to the respondent, and refuse it in the case of the
appellants.
10 Above note 7 at 893B-C.
11 2010 (4) SA 104 (SCA).
12 Ibid para 4.
13 P J Badenhorst, J M Pienaar and H Mostert Silberberg and Schoeman’s The Law of Property
5 ed p 458; 24 Lawsa 2 ed para 270.
[20] In the result the appeal must fail.
The following order is made:
The appeal is dismissed with costs.
_______________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
APPELLANTS:
J C King SC
Instructed by Francois Medalie & Co, Pinetown
E G Cooper Majiedt Inc, Bloemfontein
RESPONDENT:
C P Hunt SC
Instructed by E R Browne Inc, Pietermaritzburg
Honey Attorneys, Bloemfontein | REPUBLIC OF SOUTH AFRICA
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
18 March 2011
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form
part of the judgment.
Croxford Trading 7 v The Body Corporate of the Inyoni Rocks Cabanas Scheme no
ss1/11978 (174/2010) [2011] ZASCA 27 (18 March 2011)
The Supreme Court of Appeal (SCA) dismissed an appeal against an order of
the KwaZulu-Natal High Court, Pietermaritzburg. This appeal concerns a
developer’s right of extension, which permits a developer to add a further
phase or phases to a sectional title development.
A sectional title scheme, known as Inyoni Rock Cabanas was registered in
1978. The Sectional Titles Act 66 of 1976 was applicable at this time. The
developer, Inyoni Beach Apartments (Pty) Ltd owned a unit in the scheme and
reserved to itself the right, which it had recorded in a conveyer’s certificate, to
extend the development. The certificate was registered is the developer’s
name on 13 October 2003, after the Sectional Titles Amendment Act 15 of
1993 had taken effect.
In 2003 the developer transferred the unit to the first appellant. The Deed of
Cession, in terms of which the developer purported to transfer the right of
extension to the first appellant, was registered on 16 July 2004. So, at the
time of registration the developer no longer owned the unit and thus had no
interest in the common property of the scheme.
The respondent applied to the high court for a declaratory order directing the
Registrar of Deeds to cancel the Deed of Cession. The first appellant in turn
brought a counter-application asking for an order declaring that the right of
extension vested in it.
The court held that the developer disposed of its unit in the scheme after the
1993 Amendment had taken effect and thus ceased to have an interest in the
common property. Thereafter, it purported to transfer its right of extension to
the first appellant by a notarial Deed of Cession but was unable to do so
because the existence or exercise of a right of extension was dependant upon
its continued ownership of the relevant unit. It followed that the high court was
correct in granting the declaratory order to the respondent, and refusing it in
the case of the appellant.
Therefore, the SCA dismissed the appeal with costs. |
4148 | non-electoral | 2023 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 293/2022
In the matter between:
GRUPO BIMBO S.A.B. DE C.V.
APPELLANT
and
TAKIS BILTONG (PTY) LTD
RESPONDENT
Neutral citation:
Grupo Bimbo S.A.B. v Takis Biltong (293/2022) [2023] ZASCA
175 (14 December 2023)
Coram:
MOLEMELA P, NICHOLLS and MEYER JJA, KOEN and KATHREE-
SETILOANE AJJA
Heard:
8 November 2023
Delivered:
This judgment was handed down electronically by circulation to the
parties’ representatives by email, published on the Supreme Court of Appeal website,
and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on
14 December 2023.
Summary:
Reconsideration of dismissal of application for special leave to appeal ─
cancellation of applicant’s trade mark ─ Takis Fuego ─ likely to deceive or cause
confusion by virtue of similarity to respondent’s Takis Biltong mark.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Davis J and Nemavhidi
AJ concurring and Makgoba J dissenting, sitting as court of appeal):
The application for the reconsideration of the order of this Court granted on
8 March 2022 dismissing the applicant’s application for special leave to appeal is
dismissed with costs.
___________________________________________________________________
JUDGMENT
___________________________________________________________________________
Kathree-Setiloane AJA (Molomela P, Nicholls and Meyer JJA and Koen AJA
concurring):
[1] This is a reconsideration of the order of this Court, dated 8 March 2022,
dismissing the application for special leave to appeal against the order of Davis J and
Nemavhidi AJ (the majority), in the Gauteng Division of the High Court, Pretoria (the
high court). The majority made an order cancelling trademark registration no.
2012/14977 TAKIS FUEGO device in class 30 (the impugned mark). On 31 October
2022, the decision dismissing the application for special leave to appeal against that
order was referred by Petse AP (as he then was) for reconsideration and, if necessary,
variation, in terms of s 17(2)(f) of the Superior Courts Act 10 of 2013 (the Superior
Courts Act). He also referred the application for special leave to appeal for oral
argument in terms of s 17(2)(d) of the Superior Courts Act.
Background
[2] The applicant, Grupo Bimbo S.A.B.DE C.V (the applicant), a Mexican company
which trades in many countries including South Africa, is the proprietor of the
impugned mark. It was registered in South Africa on 6 June 2012 and covers the
following class 30 goods: ‘Bread, pastry, corn flour chips, wheat flour chips, corn
extruded, wheat extruded, pop corns’. The impugned mark is depicted as follows:
[3] The respondent, Takis Biltong Pty Ltd (the respondent), is a South African
company which sells biltong and other snack products in South Africa. It is the
registered proprietor of the following two trademarks (the registered TAKIS LOGO
marks):
[4] Both registered TAKIS LOGO marks were registered on 8 May 2007 in class
29. They cover the following goods: ‘Meat, fish, poultry, and game, preserved meats,
meat extracts, sausages’. On 24 April 2015, the respondent applied to register a
TAKIS LOGO mark and three TAKIS word marks. These applications are still
pending.1 The goods covered by these pending applications are: (a) class 29 – meat,
meat products, processed meat, biltong, meat extracts, potato crisps and chips,
processed nuts, dried fruit; class 30 – sweets and confectionary; and class 31 – nuts
of all kinds (unprocessed), raisins, snack foods of all kinds included in this class’.
[5] The respondent applied to the high court, in terms of s 242 of the Trade Marks
Act 194 of 1993 (the Trade Marks Act), to expunge the impugned mark. Vorster AJ
1 The respondent relied on all these marks in its expungement application.
2 Section 24 of the Trade Marks Act provides:
(the court of first instance) dismissed the application. The respondent appealed
against that decision to the full court. On appeal, the majority set aside the order of
the court of first instance and replaced it with one cancelling the impugned mark. The
majority found that on comparison of the marks in question, they are so similar that
there is a likelihood of confusion or deception arising in the marketplace. Concerning
the goods in question, the majority applied the test in British Sugar PLC v James
Robertson & Sons Ltd3 (British Sugar) and concluded that the goods are similar. It also
found that there was sufficient uncontroverted evidence establishing the requisite
reputation of the respondent. The majority, accordingly, held that the requirements of
ss 10(12), 10(14), 10(16), and 10(17) of the Trade Marks Act4 had been satisfied. The
minority (Makgoba J) found, to the contrary, that although the marks in question are
similar, the goods in question are not. It concluded that there is no likelihood of
deception or confusion arising in the marketplace.
[6] For the applicant to succeed in the application for special leave to appeal
against the order of the majority, it must show something more than the existence of
reasonable prospects of success on appeal. 5 In Cook v Morrison and Another this
Court held:6
‘The existence of reasonable prospects of success is a necessary but insufficient precondition
for the granting of special leave. Something more, by way of special circumstances, is needed.
These may include that the appeal raises a substantial point of law; or that the prospects of
success are so strong that a refusal of leave would result in a manifest denial of justice; or that
the matter is of very great importance to the parties or to the public. This is not a closed list…’
‘(1) In the event of non-insertion in or omission from the register of any entry, or of an entry wrongly
made in or wrongly remaining on the register, or of any error or defect in any entry in the register, any
interested person may apply to the court or, at the option of the applicant and subject to the provisions
of section 59, in the prescribed manner, to the registrar, for the desired relief, and thereupon the court
or the registrar, as the case may be, may make such order for the making, removing or varying the
entry as it or he may deem fit.
(2) The court or the registrar, as the case may be, may in any proceedings under this section decide
any question that may be necessary or expedient to decide in connection with the rectification of the
register.
(3) In the event of the registrar being satisfied that any entry relating to the registration, assignment or
transmission of a trade mark has been secured mala fide or by misrepresentation or that any such entry
was wrongly made or wrongly remains on the register, he shall also have locus standi to apply to the
court under the provisions of this section.’
3 British Sugar PLC v James Robertson & Sons Ltd [1997] ETMR 118, [1996] EWHC 387 (Ch), [1996]
RPC 281.
4 These provisions are quoted later in the judgment.
5 PAF v SCF [2022] ZASCA 101; 2022 (6) SA 162 (SCA) para 24.
6 Cook v Morrison [2019] ZASCA 8; 2019 (5) SA 51 (SCA) para 8.
[7] The only ground that the applicant advanced for the grant of special leave to
appeal was that there is an equal split, between the judge in the court of first instance
and the three judges in the full court, in their findings on the likelihood of deception or
confusion arising between the two marks in question. The applicant contends that this
factor alone demonstrates special circumstances. I disagree as this would mean that
in every case where there is a dissenting judgment, a litigant would be entitled, without
more, to an order granting special leave to appeal in terms of s 16(1)(d) of the Superior
Courts Act.
[8] Although the applicant’s failure to establish special circumstances is sufficient
reason to dismiss the application for special leave to appeal, I will nevertheless
proceed to consider whether there would be a reasonable prospect of success on
appeal. The test of what constitutes a reasonable prospect of success is well
established. The applicant must convince the court that there is ‘a realistic chance of
success on appeal’. In other words, it must demonstrate that ‘there is a sound rational
basis to conclude that there is a reasonable prospect of success on appeal’.7
Are the marks so similar that there is a likelihood of deception and confusion
arising?
[9] The respondent sought to expunge the impugned mark from the trademark
register in terms of s 24 read with ss 10(12), 10(14), 10(16) and 10(17) of the Trade
Marks Act. Section 24 entitles an interested party to apply to court to have the
trademark register rectified by inter alia removing any entry ‘wrongly made in or
wrongly remaining on the register’. Section 10 provides in relevant part:
‘The following marks shall not be registered as trademarks or, if registered, shall subject to
the provisions of sections 3 and 70, be liable to be removed from the register:
. . .
(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
trademark belonging to a different proprietor or so similar thereto that the use thereof in
7 MEC for Health, Eastern Cape v Mkhitha and Another [2016] ZASCA 176 paras16-17.
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 will cause confusion, unless the proprietor of such trade mark
consents to the registration of such mark;
. . .
(16)
a mark which is the subject of an earlier application as contemplated in paragraph (15),
if the registration of that mark is contrary to existing rights of the person making the later
application for registration as contemplated in that paragraph;
(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:
‘Provided that a mark shall not be refused registration by virtue of the provisions of paragraph
(2) or, if registered, shall not be liable to be removed from the register by virtue of the said
provisions if at the date of the application for registration or at the date of an application for
removal from the register, as the case may be, it has in fact become capable of distinguishing
within the meaning of section 9 as a result of use made of the mark.’
[10] Two questions arise for determination in so far as the application of s 10(12) of
the Trade Marks Act is concerned. The first is whether the marks are so similar that
there is a likelihood of deception and confusion arising, and the second is whether the
respondent enjoys a protectable reputation in its registered TAKIS LOGO mark.8 In
relation to the latter question, the applicant has conceded that the respondent enjoys
a protectable reputation in its registered TAKIS LOGO mark in respect of biltong and
droëwors products and can rely on that use and reputation for the purposes of an
attack based on ss 10(12) and 10(17) of the Trade Marks Act.
[11] For purposes of determining the first question, it is important to draw a
distinction between deception and confusion in the comparison of trademarks. Where
two trademarks belonging to different proprietors are compared, deception would
result if their similarity were to cause consumers to assume that goods bearing the
trade marks come from the same source. Conversely, confusion would occur if the
similarity in the trade marks would cause consumers to wonder if the goods had a
8 The wording of s 10(12) is akin to a passing off.
common origin.9 In comparing the marks to determine whether such confusion or
deception is likely to arise, the court must have regard to the impact which the marks
would make on a notional person of average intelligence, having proper eyesight and
buying with ordinary caution and, who is likely to buy the goods to which the marks
are applied.10 The notional use test envisages the use of the trade mark ‘…in a fair
and normal manner in relation to any or all of the goods or services in respect of which
the existing mark is registered and in respect of which the other mark is sought to be
registered’.11
[12] The court must not compare the marks ‘…in the calm, quiet intellectual
atmosphere of a court room or of a study…’ but must notionally transport itself to the
marketplace and stand in the shoes of the potential customer.12 Where the marks
contain a dominant feature or idea, it is the impact which this dominant feature is likely
to make on the mind of the consumer which must be taken into account. This Court,
in Pepsico Inc v Atlantic Industries,13 (Pepsico Inc) articulated the test as follows:
‘In testing for deception and confusion, courts will usually identify the features, if any, of the
respective marks which are dominant. If they share a dominant feature, there is ordinarily a
greater likelihood of deception or confusion. As recently affirmed by this court, in the global
assessment of the marks ‘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.’
[13] Trademarks are remembered by general impressions or some significant or
striking feature and not by a photographic recollection of the whole.14 The idea
conveyed by a mark is likely to impress itself on the mind and remain in the memory
even though the details of the two marks may be very different. This is why the
comparison is to be made between the dominant impression of the mark, or the main
idea or impression left on the mind by each of the marks, having regard to any
essential or salient or leading or striking feature or features in each.15 Since the first
9 Roodezandt Ko-Operatiewe Wynmakery Ltd v Robertson Winery (Pty) Ltd and Another 2014 BIP 24
(SCA) para 4.
10 Plascon-Evans Paints (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 640G-641E.
11 G C Webster & N S Page South African Law of Trade Marks 3 ed (1986) at 6-27 paras 6-12.
12 Oude Meester Groep Bpk & Another v SA Breweries Ltd 1973 (4) SA 145 (W) at 161C-E.
13 Pepsico Inc v Atlantic Industries [2017] ZASCA 109 para 20.
14 Ibid.
15 International Power Marketing (Pty) Ltd v Searles Industries (Pty) Ltd 1983 (4) SA 163 (T) at 168H.
impression of a mark is particularly important, a court must not peer too closely at the
marks to find similarities or differences. In considering whether a mark is confusing
and deceptive, the court must remain mindful that the consumer would not have had
the opportunity of carefully considering the marks and comparing them side-by-side.16
In making the comparison, the court must assume that the trademark applicant will
make normal and fair use of its mark. If the mark is likely to be abbreviated in use, this
must also be considered.17
[14] Applying these considerations to the marks in question, it is evident that the
dominant, integral, or essential element of both marks is the identical word TAKIS. It
is undisputed, in this regard, that TAKIS is an invented word. It has no meaning in the
English language. It is these features of the registered TAKIS LOGO mark which give
it an inherent distinctiveness, such that no person can claim an entitlement to use the
word in a descriptive context. This means that the addition of any other word or logo
will not serve to distinguish. As pointed out by the respondents, the registered TAKIS
LOGO mark has the inherent degree of distinctiveness that puts it into the category of
a class of trademarks such as, for example, SAMSUNG, TOYOTA, MOTOROLA, and
NOKIA. It is the distinct and unique character of the registered TAKIS LOGO mark that
distinguishes it from the SOUL SOUVLAKI matter,18 where this Court found that the
word ‘soul’ is a common word in everyday use.19 On the contrary, TAKIS is not a
common word in everyday use.
[15] A matter which is not intrinsic to the mark, and which has no trade mark
significance must be excluded from the comparison.20 Importantly in this regard, the
word FUEGO21 in the impugned mark does not serve to distinguish the marks. It is a
secondary word which, as disclosed by the applicant, serves to describe the flavour of
the product in a range of TAKIS flavour variations.22 The majority correctly excluded
the word FUEGO from the comparison as it has no trademark significance. By the
16 Adidas AG and Another v Pepkor Retail Limited [2013] ZASCA 3 para 22.
17Oude Meester supra at 161F-G; Budweiser Budvar National Corporation v Anheuser Busch
Corporation 2002 BIP 126 (RTM) at 130.
18 Golden Fried Chicken (Pty) Ltd v Vlachos and Another [2022] ZASCA 150.
19 Supra para 24.
20 Standard Bank of South Africa Ltd v United Bank Ltd 1991 (4) SA 780 (T) at 782G-H and 796J-797A.
21 It is not disputed that ‘fuego’ means ‘fire’ in Portuguese – i.e. hot flavoured chips.
22 Other examples disclosed by the applicant include, TAKIS ORIGINAL, TAKIS SALSA BRAVE, TAKIS
HUAKAMOLE, TAKIS PASTOR and TAKIS FUEGO.
same token, the words ‘biltong’ and ‘very lekker’ in the registered TAKIS LOGO marks,
must also be excluded.
[16] Both marks contain the dominant distinctive common element TAKIS. As held
by the majority, this dominant element renders the marks phonetically, visually, and
conceptually, deceptively or confusingly similar. Visually, it is the word TAKIS that the
consumer sees branded on the goods. The marks are also aurally and conceptually
identical to the consumer. The marks are so similar, if not identical, that they arguably
meet the standard required to be the same in all respects,23 for the purposes of being
deceptively or confusingly similar. Suffice it to say, the marks must only be deceptively
or confusingly similar on one level of comparison.24
[17] Given its distinctive character, the applicant has made no attempt to distinguish
the registered TAKIS LOGO marks from the impugned one. The assertion, in its
answering affidavit, that it intends to oppose the respondent’s pending class 30
applications comes as no surprise. By intending to do so, the applicant has accepted
that the two marks are deceptively or confusingly similar. In the face of this concession,
I see no sound or rational basis for concluding that there is a reasonable prospect of
success on this ground. To sum up on this point, the two marks are sufficiently similar
to create a likelihood of deception or confusion as contemplated in s 10(12) of the
Trade Marks Act.
Are the goods similar?
[18] In New Media Publishing (Pty) Ltd v Eating Out Webservices CC and Another,25
it was held that there is an interdependence between the ‘comparison of marks’ test
and the ‘comparison of goods’ test. As confirmed by this Court in Mettenheimer and
Another v Zonquasdrift Vineyards CC and Others, the greater the similarity between
the marks in question the lesser will be the degree of similarity required between the
goods, and vice versa.26 This is of particular significance in this matter because the
23 Century City Apartments Property Services CC and Another v Century City Property Owners’
Association (Century City) 2010 (3) SA 1 (SCA) para 12.
24 Laboratoire Lachartre SA v Armour-Dial Incorporated 1976 (2) SA 744 (T) at 746H.
25 New Media Publishing (Pty) Ltd v Eating Out Web Services CC 2005 (5) SA 388 (C).
26 Mettenheimer and Another v Zonquasdrift Vineyards CC and Others (Mettenheimer) 2014 (2) SA 204
(SCA) para 11.
trade marks in question are very similar, if not identical. Thus, the lesser will be the
required degree of similarity between the goods in question.
[19] The applicant’s primary ground of appeal is that the majority erred in concluding
that the goods in question are similar. Its core complaint is that because the impugned
marks are registered in different classes, the goods are clearly different. The one
covers plant products and the other meat products. Their only similarity is that they
are both food products, but their composition is vastly different. This argument is
unsustainable as it is common cause that the goods covered by both marks are ‘snack
foods’. The applicant admitted as much in its answering affidavit when it said:
‘Although both are snack foods, [the applicant] is primarily involved in the sale of tortilla chips,
falling into class 30, whereas [the respondent] is primarily involved in the sale of meat
products, falling into class 29. The products of [the respondent] are considered more ‘healthy’
snack foods ….’
‘It is submitted that the meat products (and, indeed, the rest of the range that the [respondent]
claims to sell are considered, by members of the public, as being more ‘healthy’ snacks. I
submit, in this group, are nuts and dried fruit. Crisps are considered as one of the unhealthiest
snacks.’
[20] However, the applicant does not dispute that class 29 meat products on which
the respondent’s registered TAKIS LOGO mark is used include, amongst others,
biltong, dry wors, chicken biltong, game biltong, biltong crisps, stokkies, chilli biltong
crisps, chilli biltong, peri-peri biltong, ostrich biltong, chilli stokkies, beef strips, salami
sticks and cabanossi sticks etc. It, nevertheless, seeks to differentiate biltong crisps
and chilli biltong crisps (as meat products) from ‘potato or corn or other conventional
types of crisps’. In view of its concession that all the goods in question are ‘snack
products’ – which de facto make them similar and related goods – this attempt to
differentiate the goods is pointless.
[21] The undisputed photographic evidence annexed to the respondent’s founding
affidavit confirms that snack foods such as biltong and related snack products are sold
in convenience and retail stores side by side to other snack products including
crisps/chips, ice-creams, popcorn, peanuts, and nuts in general. Not only did the
applicant concede this in its answering affidavit, but it also conceded that the goods in
question are sold in the same trade channels and to the same consumers. Notably,
the Sunday Times’ GenNext Survey lists the registered TAKIS LOGO mark, in its 2012
to 2015 brand survey, as one of the top ten snack food brands, together with other
chip and/or crisp brands. It is common cause, in this regard, that the average
consumer is accustomed to offerings of snack foods such as chips and/or crisps and
biltong at social functions and parties.
[22] In assessing the similarity of the goods concerned, the majority was correct in
taking into consideration the factors set out in British Sugar.27 These factors include
(a) the respective uses of the goods; (b) their respective users; (c) the physical nature
of the goods; (d) the trade channels; (e) where they are found in the supermarkets;
and (f) whether or not they are competitive. On applying these factors to the marks in
question, it is clear that:
(a)
the respective uses of the respective goods are identical – all the goods are
snack foods, and they are consumed as snack foods.
(b)
the consumers who use the goods are identical – a consumer is anyone who
purchases snack foods irrespective of age, gender, race, nationality etc.
(c)
the physical nature of the goods is identical or similar – depending on what
goods are considered. Chips and crisps are identical – be they made of potatoes or
tortillas. This is conceded by the applicant in its answering affidavit. Meat crisps are
also similar to potato or tortilla crisps – they are all crisps. Biltong, droëwors, nuts,
Japanese crackers and other savoury snack foods are similar in nature to snack goods
such as chips and crisps;
(d)
the trade channels through which the goods reach the market are identical;
(e)
the goods are sold, in the case of self-service consumer items in, amongst
others, the same or the identical convenience and retail stores and are placed side by
side on display shelves or even on the same shelf; and
(f)
the goods compete as they are snack foods.
[23] The respondent has, accordingly, established for purposes of s 10(14) of the
Trade Marks Act that the impugned mark was wrongly entered in the trade mark
register as it is (a) identical to or so similar to the respondent’s registered TAKIS LOGO
27 British Sugar fn 3 supra which has been imported into our law. See Mettenheimer fn 26 para 11;
Pepsico Inc fn 13 para 19.
marks; (b) used on the same or similar goods (snack foods) as the respondent’s
registered TAKIS LOGO marks are used; and (c) likely to deceive or cause confusion.
Is the impugned mark likely to take advantage of, or be detrimental to, the
respondent’s registered mark?
[24] Section 10(17) of the Trade Marks Act provides that a mark can be opposed or
cancelled if it is identical to 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. The applicant has conceded that the respondent’s registered
TAKIS LOGO mark is well-known for biltong in South Africa. This means, without the
need for more, that the respondent has the requisite reputation to sustain its s 10(17)
case that the impugned mark is similar to the TAKIS LOGO mark which was registered
some six years prior to it. As indicated, the two marks are, in fact, very similar if not
identical.
[25] What remains for determination is whether the impugned mark would be likely
to take advantage of, or be detrimental to, the distinctive character or repute of the
registered TAKIS LOGO mark. As held by this Court in National Brands Limited v Cape
Cookies CC and Another (Cape Cookies):28
‘Concrete evidence of actual advantage or detriment is not required under s 10(17). Only a
likelihood needs to 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. In any
event, at the time that opposition proceedings are launched, concrete evidence may well not
yet have emerged.’
[26] The applicant’s use of the impugned mark is likely to take unfair advantage of,
or be detrimental to, the distinctive character or the repute of its registered TAKIS
LOGO marks. The respondent has provided the following supportive evidence in its
founding affidavit:
28 National Brands Limited v Cape Cookies CC and Another [2023] ZASCA 93; [2023] 2 All SA 363
(SCA) para 38.
‘[T]he the average consumer would be confused and deceived into believing that the
[applicant’s] product emanates from the [respondent] or is in some way associated with the
[respondent]. The [applicant] will thus unfairly benefit from the reputation for quality and good
products that the [respondent] has worked so hard to achieve over almost 40 years. The
[applicant] will simply get a free marketing reputation at the expense of the [respondent]. It will
enter the marketplace with a substantial reputation and consumer base already in place, and
it will generate revenue at the expense of the [respondent]. This is so because the [applicant]
will be selling snack foods that are identical to and similar to the [respondent’s] products and
it will in fact compete with the [respondent’s goods]. The [applicants] goods will thus divert
sales from the [respondent] and thus negatively impact on [its] revenue and profitability.’
The applicant responded with a bare denial.
Does the respondent have prior existing rights in class 30 goods?
[27] Section 10(16) of the Trade Marks Act allows for the expungement of a mark
which is the subject of an earlier application from the trademark register, if the
registration of that mark is contrary to existing rights of a person making the later
application for registration. The respondent had sought to demonstrate that in respect
of its pending applications in respect of class 30 goods, it had existing rights as of
6 June 2012.29
[28] However, as correctly pointed out by counsel for the applicant during argument,
the respondent had, in so far as its reliance on s 10(16) of the Trade Marks Act is
concerned, only pleaded existing rights in respect of its class 29 goods and not its
class 30 goods. The argument that the applicant thus advanced, is that the majority
had erred in concluding that the respondent had satisfied the requirements of s 10(16)
of the Trade Marks Act. This is not a basis to grant the application for special leave to
appeal. I take this view because the provisions of s 10 of the Trade Marks Act are self-
standing grounds to either oppose the registration of a mark or seek its expungement
from the trademark register. If any one of these grounds is established, then the court
must either refuse the registration or expunge the mark from the register, whichever
is the case.30
29 In terms of s 29(1) of the Trade Marks Act, the registration date of a trade mark is deemed to be the
date when the application for registration was lodged. The applicant lodged its application to register
the impugned mark on 6 June 2012.
30 Cape Cookies fn 28 para 17.
[29] The respondent had succeeded in satisfying the requirements of ss 10(12),
10(14) and 10(17) of the Trade Marks Act. Accordingly, the majority concluded,
correctly so, that the applicant’s impugned mark was an entry wrongly made in, and
wrongly remaining on, the trademark register and it thus fell to be cancelled in terms
of ss 10(12), 10(14) and 10(17) of the Trade Marks Act. For these reasons, I am of the
view that the proposed appeal has no reasonable prospects of success. More
importantly, the applicant has failed to establish special circumstances. The
application for special leave to appeal must, therefore, be dismissed with costs.
[30] In the result, I make the following order:
The application for the reconsideration of the order of this Court granted on 8 March
2022 dismissing the applicant’s application for special leave to appeal is dismissed
with costs.
_______________________
F KATHREE-SETILOANE
ACTING JUDGE OF APPEAL
Appearances
For the appellant:
CE Puckrin SC and R Michau SC
Instructed by:
Hahn & Hahn Inc, Pretoria
Webbers Attorneys, Bloemfontein
For the respondent:
P Cirone
Instructed by:
Kisch IP, Sandton
Phatshoane Henney 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:
14 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 judgments of the Supreme Court of Appeal
Grupo Bimbo S.A.B. v Takis Biltong (293/2022) [2023] ZASCA 175 (14 December 2023)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing with costs an appeal
against the decision of the Gauteng Division of the High Court, Pretoria (the high court).
The applicant, Grupo Bimbo S.A.B.DE C.V (the applicant), a Mexican company which traded in many
countries including South Africa, was the proprietor of the impugned mark. It was registered in South
Africa on 6 June 2012 and covered the following class 30 goods: ‘Bread, pastry, corn flour chips, wheat
flour chips, corn extruded, wheat extruded, pop corns’. The respondent, Takis Biltong Pty Ltd (the
respondent), was a South African company which sold biltong and other snack products in South Africa.
Both registered TAKIS LOGO marks were registered on 8 May 2007 in class 29. They covered the
following goods: ‘Meat, fish, poultry, and game; preserved meats, meat extracts, sausages’. The
respondent applied to the high court, in terms of s 24 of the Trade Marks Act 194 of 1993 (the Trade
Marks Act), to have the impugned mark expunged. Vorster AJ (the court of first instance) dismissed the
application. The respondent appealed against that decision to the full court. On appeal, the majority set
aside the order of the court of first instance and replaced it with one cancelling the impugned mark. The
majority found that on comparison of the marks in question, they were so similar that there was a
likelihood of confusion or deception arising in the marketplace. It also found that there was sufficient
uncontroverted evidence establishing the requisite reputation of the respondent. The majority,
accordingly, held that the requirements of ss 10(12), 10(14), 10(16), and 10(17) of the Trade Marks Act
had been satisfied. The minority (per Makgoba J) found, to the contrary, that although the marks in
question were similar, the goods in question were not. It concluded that there was no likelihood of
deception or confusion arising in the marketplace.
Aggrieved by that outcome, the appellant petitioned this Court for leave to appeal which was dismissed.
The decision dismissing the application for special leave to appeal against that order was referred by
Petse AP (as he then was) for reconsideration and, if necessary, variation, in terms of s 17(2)(f) of the
Superior Courts Act 10 of 2013 (the Superior Courts Act). He also referred the application for special
leave to appeal for oral argument in terms of s 17(2)(d) the Superior Courts Act.
For the applicant to succeed in the application for special leave to appeal against the order of the
majority, it had to show that there were special circumstances in existence. Furthermore, the applicant
had to convince the court that there was a realistic prospects of success on appeal. And in order to do
the applicant had to show that: (a) the marks were not similar and that there was no likelihood of
deception and confusion; (b) the goods were not similar; (c) the impugned mark was unlikely to take
advantage of or be detrimental to the respondent’s registered mark; and (d) the respondent did not have
prior existing rights in class 30 goods.
The SCA held that the applicant failed to establish special circumstances and that factor alone was
sufficient reason to dismiss the application for special leave to appeal. With regards to the prospects of
success, the Court held that the applicant failed to demonstrate that there was a sound rational basis
to conclude that there was reasonable prospect of success on appeal. In respect of point (a) the SCA
held that the two marks were sufficiently similar to create a likelihood of deception or confusion as
contemplated in s 10(12) of the Trade Marks Act. Relating to point (b) the SCA held that for purposes
of s 10(14) of the Trade Marks Act the impugned mark was wrongly entered in the trademark register
as it was identical to the respondent’s registered TAKIS LOGO marks. Coming to point (c) the SCA held
that the applicant had conceded that the respondent’s registered TAKIS LOGO mark was well-known
for biltong in South Africa. That meant, without the need for more, that the respondent had the requisite
reputation to sustain its s 10(17) case that the impugned mark was similar to the TAKIS LOGO mark
which was registered some six years prior to it. And that the applicant’s use of the impugned mark was
likely to take unfair advantage of, or be detrimental to, the distinctive character or the repute of the
respondent’s registered TAKIS LOGO marks. Lastly, as it relates point (d) the SCA held that the
respondent had, in so far as its reliance on s 10(16) of the Trade Marks Act was concerned, only pleaded
existing rights in respect of its class 29 goods and not its class 30 goods. And thus the majority erred
in its finding that the respondent had satisfied the requirements of s 10(16) of the Trade Mark Act. This
however, held the SCA, was not a basis to grant the application for special leave to appeal. The SCA
found that, because the provisions of s 10 of the Trade Marks Act were self-standing grounds to either
oppose the registration of a mark or seek its expungement from the trademark register. If any one of
these grounds was established, then the court must either refuse the registration or expunge the mark
from the register, whichever is the case. It further held that the respondent had succeeded in satisfying
the requirements of ss 10(12), 10(14) and 10(17) of the Trade Marks Act. Accordingly, as found by the
SCA, the majority concluded correctly that the applicant’s impugned mark was an entry wrongly made
in, and wrongly remaining on, the trade mark register and it thus fell to be cancelled in terms of ss
10(12), 10(14) and 10(17) of the Trade Marks Act. For those reasons, the Court held that the proposed
appeal had no reasonable prospects of success. More importantly, the applicant had failed to establish
special circumstances. As a result, the application for special leave to appeal must therefore be
dismissed with costs. |
1315 | non-electoral | 2010 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No 29/09
In the matter between:
THE ROAD ACCIDENT FUND
Appellant
and
NTOMBIZANELE FLORENCE TIMIS
Respondent
Neutral citation: The Road Accident Fund v N F Timis (29/09)
[2010] ZASCA 30 (26 March 2010)
Coram:
Navsa, Heher, Mhlantla JJA, Hurt et Saldulker AJJA
Heard:
1 March 2010
Delivered: 26 March 2010
Summary: Motor vehicle accident ─ death of breadwinner ─ claim
against RAF ─ deductibility of child care grants from the
damages awarded. Held ─ child support grants are directly
linked to the death of the deceased and deductible from final
award.
ORDER
____________________________________________________________
On appeal from: The Eastern Cape High Court, Port Elizabeth
(Liebenberg J sitting as court of first instance).
The following order is made:
1.
The appeal is upheld.
2. The order made by the court below is set aside and replaced with an
order in the following terms:
'There shall be judgment for the plaintiff as follows:
(a)
In her capacity as mother and natural guardian of Siphokazi, payment of the
amount of R136 594.40.
(b)
In her capacity as mother and natural guardian of Zandile, payment of the
amount of R166 386.05.
(c)
In her personal capacity, payment of the amount of R324 586.60.'
JUDGMENT
___________________________________________________________
MHLANTLA JA (NAVSA, HEHER JJA, HURT and SALDULKER
AJJA concurring):
[1] Mr Alfred Vuyisile Makeleni (the deceased) died from injuries
sustained after being struck by a motor vehicle on 28 July 2001. He was
married to Ms Ntombizanele Timis, the respondent in this matter, in
terms of customary law. They had two minor children, namely Siphokazi
born on 24 June 1996 and Zandile born on 25 May 1999. The deceased
was the sole breadwinner. Shortly after his death, the respondent, who
was unemployed, applied for the benefit of her children for a child
support grant in terms of the Social Assistance Act 59 of 1992, which has
since been repealed by the Social Assistance Act 13 of 2004 (the Act).
The application was approved during November 2001.
[2] The respondent instituted action in the High Court, Port Elizabeth
against the Road Accident Fund, a statutory insurer and the appellant in
this matter, for damages arising from the death of her husband. The
matter came before Liebenberg J. The merits already having been
conceded, the learned judge was only required to determine quantum.
One of the issues that had to be decided was whether the amount of the
children's grant received by the respondent after the death of her husband
should be deducted from the damages to be awarded in respect of the
children. At the time of the trial, the total amount of the grants received
by the respondent on behalf of the children was R14 690.
[3] At the end of the trial, the learned judge, after discussing Indrani &
another v African Guarantee and Indemnity Co Ltd,1 disagreed with that
court's conclusion to the effect that the contributions by the State prior to
the award of damages were deductible because they were received by the
children by reason of the death of their father.
[4] Liebenberg J held that the child support grants could not be said to
have been received in consequence of the deceased's death and that the
amount of R14 690 could therefore not be deducted from the final award
made to the children for loss of support by the deceased. The court, after
11968 (4) SA 606 (D).
taking into account the question of contingencies, awarded damages in
respect of the children2 as follows:
In respect of Siphokazi -
R143 939.40
In respect of Zandile
-
R173 731.05
The appellant now appeals against this finding with the leave of the court
below.
[5] The issue on appeal is whether or not the child support grants
should have been deducted by the trial court from the damages awarded
to the respondent in her representative capacity for loss of support.
[6] Each case in which the deduction of a benefit is in issue must, of
course, be considered on its own facts and having regard to the applicable
statutes. It is necessary to have regard to the purpose and objects of the
Act. The purpose of the grant is to supplement the income of indigent
families. The grants are meant for those who have insufficient means to
support themselves and to provide for a child who does not have
maintenance. A child support grant is made in terms of section 6 of the
Act.3 Certain requirements have to be complied with before a person
qualifies for the grant.4 An applicant, inter alia, qualifies for the grant, if
2The damages awarded to the respondent in her personal capacity was in an amount of R324 586.60.
3 Section 6 reads:
'Child support grant
A person is, subject to section 5, eligible for a child support grant if he or she is the primary care giver
of that child.'
4 Section 5 reads:
'Eligibility for social assistance:
(1) A person is entitled to the appropriate social assistance if he or she ─
(a) is eligible in terms of section 6, 7, 8, 9, 10, 11, 12 or 13;
(b) . . . ;
(c) . . . ;
(d) complies with any additional requirements or conditions prescribed in terms of subsection (2); and
(e) applies for social assistance in accordance with section 14(1).
(2) The Minister may prescribe additional requirements or conditions in respect of ─
(a) income thresholds;
(b) means testing;
(c) . . . .'
he or she has no source of income or if the income is below the threshold
level.
[7] In Indrani, a mother brought an action for loss of support suffered
by her and her minor children as a result of the death of her husband from
injuries sustained in a motor vehicle collision. After the death of the
husband, she received certain allowances in respect of maintenance for
the children from the State in terms of section 89(1) of the now repealed
Children's Act 33 of 1960. Fannin J stated that a dependant entitled to
damages for loss of support should be awarded damages only for the
material loss caused by the breadwinner's death.5 The judge held that the
contributions by the State prior to the award of the damages by the court
were deductible because they were benefits received by the children by
reason of the death of their father. A similar approach is to be found in
the judgment of Trollip JA in Santam Versekeringsmaatskappy v
Byleveldt 1973 (2) SA 146 (A) at 173 to 174. It is that fundamental
principle, subject to the considerations set out in the next paragraph, that
has to be applied in this case.
[8] In Zysset & others v Santam Ltd6 the following was stated:
'[I]t is well established in our law that certain benefits which a plaintiff may receive
are to be left out of account as being completely collateral. The classic examples are
(a) benefits received by the plaintiff under ordinary contracts of insurance for which
he has paid the premiums and (b) moneys and other benefits received by a plaintiff
from the benevolence of third parties motivated by sympathy. It is said that the law
baulks at allowing the wrongdoer to benefit from the plaintiff's own prudence in
insuring himself or from a third party's benevolence or compassion in coming to the
5 At 607F-G.
6 1996 (1) SA 273 (C) at 278B-D; and 278H-279C. See also Lawsa Vol 8(1) 2ed para 156 and
Standard General Insurance Co Ltd v Dugmore NO 1997 (1) SA 33 (A) at 42B.
assistance of the plaintiff . . . . Nonetheless, as pointed out by Lord Bridge in Hodgson
v Trapp & another [1988] 3 All ER 870 (HL) at 874a, the benefits which have to be
left out of account, "though not always precisely defined and delineated", are
exceptions to the fundamental rule and "are only to be admitted on grounds which
clearly justify their treatment as such".
. . . .
In the present case, counsel on both sides sought to analyse the benefits received by
the plaintiffs and to compare them with the benefits received in the Dippenaar
case . . . .
It is doubtful whether the distinction between a benefit which is deductible and one
which is not can be justified on the basis of a single jurisprudential principle. In the
past the distinction has been determined by adopting essentially a casuistic approach
and it is this that has resulted in a number of apparently conflicting decisions.
Professor Boberg in his Law of Delict vol 1 at 479 explains the difficulty thus:
"(W)here the rule itself is without logical foundation, it cannot be expected of logic to
circumscribe its ambit."
But, whatever the true rationale may be, if indeed there is one, it would seem clear
that the inquiry must inevitably involve to some extent, at least, considerations of
public policy, reasonableness and justice. . . . This in turn must necessarily involve, I
think, a weighing up of mainly two conflicting considerations in the light of what is
considered to be fair and just in all the circumstances of the case. The one is that a
plaintiff should not receive double compensation. The other is that the wrongdoer or
his insurer ought not to be relieved of liability on account of some fortuitous event
such as the generosity of a third party.'
[9] A plaintiff should not be precluded from obtaining a full measure
of damages. He or she should however not receive double compensation.
In Hodgson v Trapp & another,7 the plaintiff claimed damages for
personal injuries sustained and loss and expenses incurred as a result of a
motor vehicle accident. The trial judge awarded damages. The defendants
7 [1988] 3 All ER 870 (HL).
appealed to the House of Lords to determine whether or not the
attendance and mobility allowances payable to the plaintiff pursuant to
sections 35 and 37 of the Social Security Act should be deducted from the
award made. Lord Bridge stated the following:8
'In the end the issue in these cases is not so much one of statutory construction as of
public policy. If we have regard to the realities, awards of damages for personal
injuries are met from the insurance premiums payable by motorists, employers,
occupiers of property, professional men and others. Statutory benefits payable to
those in need by reason of impecuniosity or disability are met by the taxpayer. In this
context to ask whether the taxpayer, as the "benevolent donor", intends to benefit "the
wrongdoer", as represented by the insurer who meets the claim at the expense of the
appropriate class of policy holders, seems to me entirely artificial. There could hardly
be a clearer case than that of the attendance allowance payable under s 35 of the 1975
Act where the statutory benefit and the special damages claimed for cost of care are
designed to meet the identical expenses. To allow double recovery in such a case at
the expense of both taxpayers and insurers seems to me incapable of justification on
any rational ground.'
[10] Counsel for the respondent submitted that the child support grants
were not causally linked to the death of the deceased as the receipt of
such grants was not a benefit arising from his death and accordingly that
these grants were res inter alios acta.
[11] This submission has no merit. It is not in dispute that the deceased
was responsible for the support of his family during his lifetime. The
position, however, changed upon his death as his family became indigent.
The respondent had to apply for the child care grant as the parent who
had provided maintenance had died. The children received a benefit of a
social grant because they had lost their father, a breadwinner, in
8 At 876F.
circumstances set out in para [1] above. The child support grants are
therefore directly linked to the death of the deceased.
[12] Counsel for the respondent relied further on Makhuvela v Road
Accident Fund.9 In that case, the parents of a minor child had died,
whereafter the grandparents were appointed as foster parents. The
grandmother received a foster care grant. The court had to decide whether
the payment of such a grant was res inter alios acta and not deductible
from the final award of damages. Malan J held that the primary purpose
of the foster care grant was the realisation of the constitutional rights of
the child through the intervention of the foster parent. The grant was paid
to the foster parent and not the child to enable the parents to comply with
their constitutional and other obligations to the child. In Makhuvela, the
court was dealing with a foster care grant which has its own dimensions.
In the present case, we are concerned with the material loss suffered by
reason of the deceased's death and the impact of a social assistance grant
for the benefit of a child. For this reason, it is not necessary to explore the
correctness or otherwise of the judgment in Makhuvela.
[13] In this matter, the State assumed responsibility for the support of
the children as a result of the breadwinner's death. The moneys paid out
in terms of the Road Accident Fund Act and the Social Assistance Act are
funded by the public through two State organs. Not to deduct the child
grant would amount to double recovery by the respondent at the expense
of the taxpayer and this is incapable of justification. In my view, it was
not the intention of the Legislature to compensate the dependants twice.
9 [2009] ZAGPJHC 18; 2010 (1) SA 29 (GSJ).
[14] Although the amount in dispute in the present case may appear to
be small and insignificant, one has to consider the fact that there may be a
multitude of similar claims and with resultant ramifications for the
National Treasury. It seems to me that the principles of fairness, equity
and reasonableness dictate that the grants received should be deducted
from the awards made by the court a quo. As far as equity is concerned,
there is a public interest in the support of indigent children. The
deduction of the grants will not leave the children destitute as their
interests have been met by the final award of the sums of R136 594.40
and R166 386.05 respectively, which represents the true measure of the
damages sustained.
[15] The court a quo accordingly erred in finding that the child support
grants should not be deducted. Its order in that regard must be set aside.
[16] That brings me to the question of costs. The appellant does not
seek a costs order against the respondent. We were, however, provided
with three volumes of unnecessary material, when the parties could have
agreed that the matter be decided in the form of a stated case. It has
become an undesirable and not infrequent practice that parties do not give
due consideration to the rules relating to the composition of records on
appeal. We record, once again our disapproval of this practice.
[17] In the result the following order is made:
1.
The appeal is upheld.
2.
The order made by the court below is set aside and replaced with
an order in the following terms:
'There shall be judgment for the plaintiff as follows:
(a)
In her capacity as mother and natural guardian of Siphokazi, payment of the
amount of R136 594.40.
(b)
In her capacity as mother and natural guardian of Zandile, payment of the
amount of R166 386.05.
(c)
In her personal capacity, payment of the amount of R324 586.60.'
__________________
N Z MHLANTLA
JUDGE OF APPEAL
APPEARANCES:
Counsel for Appellant
:
A Frost
I Dala
Boqwana Loon & Connellan Inc
PORT ELIZABETH
Webbers, BLOEMFONTEIN
For Respondent
:
N Paterson
A Moorhouse
Roelofse Meyer Inc
PORT ELIZABETH
Symington & de Kok
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: 26 March 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
THE ROAD ACCIDENT FUND v NTOMBIZANELE FLORENCE TIMIS
On 26 March 2010 the Supreme Court of Appeal (SCA) upheld an appeal by the
Road Accident Fund (the appellant) against a judgment of the Eastern Cape High
Court, Port Elizabeth. That court had refused to deduct an amount of R14 690 in
respect of child support grants received by Ms Ntombizanele F Timis (the
respondent) on behalf of her two minor children after the death of their father, (the
deceased) from the final award of damages made to the children in respect of the
loss of support flowing from his death.
The deceased, the sole breadwinner in his family, was fatally injured in a motor
vehicle accident. His widow, the respondent, applied for the benefit of their children
for child support grants in terms of the Social Assistance Act 13 of 2004. That
application was approved in November 2001. She also instituted action in the High
Court, Port Elizabeth against the appellant for damages arising from the death of her
husband, including loss of support in respect of herself and the children.
The merits having been conceded the High Court was confined to determining the
quantum of the claim.. It had to decide, inter alia, whether the amount of the child
support grants received by the respondent should be deducted from the damages to
be awarded to her on their behalf. The trial court held that the child support grants
were not received in consequence of the death of the deceased and they should
therefore not be deducted from the final award of damages.
The SCA held that a plaintiff should not be precluded from obtaining the full measure
of damages that he or she is entitled to but should, on the other hand, not receive
double compensation. Furthermore, it held that the payment of the child support
grants was directly linked to the death of the deceased. The moneys paid out in
terms of the Road Accident Fund Act and the Social Assistance Act were funded by
the public and to not deduct the child grant would amount to double recovery by the
respondent at the expense of the taxpayer. The court held that the child support
grants were deductible and accordingly ordered that the amount of R14 690 be
deducted from the final award made to the children.
---ends--- |
2340 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
CASE NO: 683/08
B P SOUTHERN AFRICA (PTY) LIMITED
Appellant
and
MAHMOOD INVESTMENTS (PTY) LIMITED
Respondent
Neutral citation: (683/2008) BP Southern Africa v Mahmood Investments
(683/08) [2009] ZASCA 153 (27 November 2009)
Coram:
HARMS DP, LEWIS, MLAMBO AND MAYA JJA, AND HURT
AJA
Heard:
17 November 2009
Delivered:
27 November 2009
Summary :
Petrol filling station owner obliged in terms of contracts of sale of
property and supply of products to conduct business of filling station: refusal to
comply amounts to a repudiation of both contracts warranting eviction and
retransfer of property to seller/supplier.
ORDER
On appeal from: High Court, Pietermaritzburg (Msimang and Jappie JJ and
Mokgohloa AJ sitting as a full court).
1 The appeal is upheld with costs, including those of two counsel.
2 The order of the court below is altered to read:
‘The appeal is dismissed with costs.’
JUDGMENT
LEWIS JA
(HARMS DP, MLAMBO AND MAYA JJA AND HURT AJA
concurring)
[1] On 3 June 1999 the appellant, BP Southern Africa (Pty) Ltd (BP), entered
into three contracts in respect of a petrol filling station in Umgeni Road, Durban
with Mr Abdul Malek: a sale of property on which the petrol filling station had
been erected by BP, a supply agreement for petrol and related products and an
equipment loan agreement. Malek in each case was acting for an entity yet to be
formed. The respondent, Mahmood Investments (Pty) Ltd (Mahmood
Investments), succeeded to Malek. The dispute between the parties arises from
their different understandings of their rights and obligations under the three
contracts. Before turning to the contracts themselves a brief summary of the facts
is necessary.
[2] Possession of the filling station was given to Mahmood Investments
shortly after 3 June 1999. It is not clear from the papers precisely when that was
but it is common cause that it commenced running the filling station before it took
transfer of the property and before the supply agreement actually became
operative. Transfer of the property to Mahmood Investments took place on 28
September 1999. But before then, it had let the property to Argyle Umgeni
Service Station CC (Argyle). The lease commenced on 1 September 1999 and
was for an initial period of three years. The lease was conditional on a supply
agreement being concluded between BP and Argyle. That was done – though
more about that agreement (the Argyle supply agreement), and an agreement to
suspend the supply agreement with Mahmood Investments, later.
[3] BP supplied Argyle with petrol and other products for some three years.
But it then discovered, during the course of 2003, that Argyle was selling the
products of other suppliers in contravention of the Argyle supply agreement. BP
demanded that Mahmood Investments terminate its lease with Argyle and
resume the operation of the filling station itself. BP removed its dispensing
equipment from the premises and called upon Mahmood Investments to comply
with its obligations under the supply agreement, tendering return of the
equipment. Mahmood Investments indicated that it did not want the pumps
reinstalled and would not operate a filling station from the premises. (I shall
discuss the correspondence between the parties and its legal consequences
later.)
[4] BP accordingly applied to the Durban High Court for an order declaring
that the sale agreement had been cancelled, and evicting Mahmood Investments
from the property. The latter opposed the application and counter applied for the
cancellation of the servitudes that had been registered over the property
pursuant to the agreement of sale. The high court (K Pillay J) granted the orders
sought by BP and dismissed the counter application. Mahmood Investments
appealed with the leave of the high court to a full court (Msimang J, Jappie J and
Mokgohloa AJ concurring) which upheld the appeal and ordered that the
servitudes over the property be cancelled. It is against this order that the appeal
lies, with the special leave of this court.
[5] The issues before us are, first, the meaning to be given to certain
provisions in the agreement of sale, read with the supply agreement and the
equipment loan agreement, and, second, whether there was a breach of the
supply agreement by either of the parties. The court of first instance based its
decision on the meaning to be attributed to the sale agreement, whereas the full
court, on appeal, did not consider it necessary to interpret the provisions in issue,
finding that BP had repudiated the supply agreement, entitling Mahmood
Investments to cancel it, and to have the servitudes over the property reinforcing
the supply agreement cancelled too.
The provisions of the sale agreement in issue
[6] Clause 9, headed ‘suspensive conditions’, provided that:1
'This agreement is subject to the fulfilment of the conditions detailed below within the
time limits as indicated, failing which within a reasonable time.
9.1 signature by both parties of the supply agreement detailed in 11 below at the time of
signing of this agreement.
9.2 registration against the title of the property of the servitude detailed in 10 hereof. . . .
The parties hereto undertake to use their best endeavours to expedite fulfilment of the
conditions detailed above within a reasonable time from date of signature hereof. It is
recorded that the conditions detailed above have been imposed solely for the benefit of
the seller and that the seller shall accordingly be entitled at its sole election to waive
compliance with any one or more of these conditions and/or to extend the period
considered as reasonable for fulfilment thereof.'
[7] Clause 10, headed ‘Servitude’, and which is at the heart of the dispute,
reads:
‘It is a condition of the sale of the property that:
10.1 The said property shall not be used for any purpose other than for the purpose of
conducting thereon the business of a garage, filling and/or service station’ (my
1 The capital letters and emphasis used by the parties are omitted in this clause as well as others
quoted.
emphasis). (I shall refer to the business as a filling station, but that encompasses all the
other functions set out in the provision.)
‘10.2 No petroleum fuels, products and/or lubricants other than those manufactured and
supplied by the seller and/or any other manufacturer/distributor approved by the seller in
writing shall be stored, handled, sold or distributed or dealt with in any manner
whatsoever on or from the said property save with the prior written consent of the
Transferor.
10.3 The purchaser shall not be entitled to alienate, lease, mortgage or encumber the
property in any manner whatsoever without first obtaining the written consent of the
seller, which shall not be unreasonably withheld, as will more fully appear from the
provisions of clause 16.2 of the supply agreement to be entered into between the parties
as provided for in clause 11 below.
10.4 The abovementioned conditions shall be binding on the purchaser and his
successors in title and shall remain in force until the termination of all supply ties
between the parties as provided for in the supply agreement referred to in paragraph 11
below. In the event of a breach of the above-mentioned agreement by the purchaser or
any other dispute leading to the termination of supply ties as embodied in the above
mentioned agreement then the conditions imposed in 10.1 and 10.2 above shall
continue to be of binding force and effect notwithstanding the breach or dispute leading
to such termination for the duration of the time period provided for in the supply
agreement had the termination not taken place.
10.5 It is agreed that the conditions contained in this clause shall be registered against
the title deed of the property as conditions of title simultaneously with the transfer of the
property into the name of the purchaser. The purchaser undertakes to sign all
documents necessary to give effect to the aforegoing.
10.6 The purchaser shall, immediately on termination of all supply ties between the
parties, as provided for in 10.4 above, be entitled to make the necessary application to
note the lapse of the servitude, or to remove the servitude. The seller hereby warrants
and undertakes to sign immediately on request by the purchaser all documents
necessary to effect the noting of the lapse or the removal of the servitude. Should the
seller fail to sign the necessary documents the parties agree that the seller hereby
authorises as the purchaser to act as its agent to sign all such documents on his behalf.'
(The parties are agreed that the word ‘condition’ in clause 10 means term: there
is nothing conditional about it.)
[8] The next provision of note is clause 17 which deals with breach. This
provides that
‘[S]hould the purchaser fail to fulfil any of his obligations as herein provided and remain
in default for a period of 14 (fourteen) days subsequent to written notice requiring him to
remedy such breach, the seller shall have the right either:
(a) to cancel this sale forthwith without further notice to the purchaser and to re-take
possession of the property should possession have been given to the purchaser in
which event all payment(s) made by the purchaser on account of the purchase price
shall be for the seller's account and retained by him as liquidated damages. . .; or
(b) to hold the purchaser bound by any purchase and to claim the payment of the full
amount then owing in respect of the purchase price and interest due, and the
fulfilment of all the terms and conditions hereof.’
[9] The conditions referred to in clause 9 were fulfilled: the supply agreement
was signed by the parties on 3 June 1999, and servitudes were registered
against the title deeds when the property was transferred to Mahmood
Investments on 28 September 1999. At issue, however, is whether clause 10.1
imposes an obligation on Mahmood Investments to operate a filling station on the
property, or whether it is obliged only to refrain from operating any other business
there. If there is a positive obligation to operate a filling station (at least for the
duration of the supply agreement) then plainly Mahmood Investments would be
in breach of contract if it failed or refused to do so. The court of first instance
found that there was such an obligation. The full court made no finding in this
regard. In my view the construction of the provision is crucial to the determination
of the dispute.
[10] BP contends that although the language used is in the negative (the
property ‘shall not be used for any purpose other than for the purpose of a
garage . . .’) the only sensible construction to be given to it is one that obliges
Mahmood Investments to operate a filling station. It makes no commercial sense,
it argues, to construe the provision as merely an undertaking to do nothing at all
with the property if it does not operate a filling station.
[11] It is settled law that a contractual provision must be interpreted in its
context, having regard to the relevant circumstances known to the parties at the
time of entering into the contract: KPMG Chartered Accountants (SA) v Securefin
Ltd.2 It is also clear that a provision must be given a commercially sensible
meaning. In this regard see Bekker NO v Total South Africa (Pty) Ltd3 and
Ekurhuleni Municipality v Germiston Municipal Pension Fund.4 The context,
particularly the fact that the three agreements were concluded on the same day,
is not in dispute.
[12] BP argues that the construction of the provision as imposing a positive
obligation on Mahmood Investments is consonant with the business efficacy of
the agreement. That is to be viewed in the light of all the circumstances relevant
to the sale of the property. These include the fact that BP had developed the
property by constructing a garage and petrol filling station on it. It sold this to
Mahmood Investments on the basis that a supply agreement would be entered
into: indeed the sale was conditional (in the true sense) on the supply agreement
being concluded. This would have made no sense had it been intended that after
the agreement was concluded, and the property transferred to Mahmood
Investments, the latter would be entitled to hold the property and not to operate a
filling station on it. The contract of sale would not have made commercial sense
but for the conclusion of the supply agreement and the operation of the filling
station.
[13] The supply agreement, as I shall show, could well have endured for 10
years, in which time BP’s investment in the filling station would be recovered not
only through the payment of the purchase price but also through the income
generated for BP. Indeed the heading of clause 2 of the supply agreement reads
'Fundamental underlying basis of this agreement’ (my emphasis). Clause 2.1
2 [2009] ZASCA 7 (13 March 2009); 2009 (4) SA 399 (SCA) para 39.
3 1990 (3) SA 159 (T) at 170G-H.
4 [2009] ZASCA 154 (27 November 2009)
records that the dealer (Mahmood Investments) is about to become the owner of
the premises. Clause 2.2 records that BP has invested a substantial amount of
capital for the purpose of optimising the operational and marketing structure of
the premises including the buildings, the forecourt, the dispensing and service
station equipment and the visual standards. These provisions clearly signify that
the underlying basis of the sale agreement is an obligation to operate a filling
station on the premises sold.
[14] Moreover the sale agreement required that servitudes be registered
against the title deed of the property, apparently for the purpose of ensuring that
any successor in title to Mahmood Investments would also operate a filling
station for the duration of the supply agreement. Clause 10.6, set out above,
provided for the procedure to cancel the servitudes on the termination of supply
ties.
[15] The third contract concluded by the parties on 3 June 1999 regulated the
loan of equipment by BP to Mahmood Investments. BP undertook to lend storage
and dispensing equipment, free of charge, to Mahmood Investments for the
purpose of selling the products supplied by BP. Clause 6 provided that BP would
have rights of access to the property to inspect and maintain the equipment. It
also purported to give BP the right to remove the equipment from the property on
termination of the supply agreement. This provision would of course be
unenforceable: it permits spoliation. But it too shows that the sale was dependent
on Mahmood Investments operating the filling station.
Breach of the supply agreement
[16] Each party complains of a breach of the supply agreement by the other.
BP alleges that, by refusing to operate a filling station on the property, Mahmood
Investments was in breach of clause 8 which sets out the obligation of the dealer
to run the filling station, and to stock and supply only BP products. And of course
it alleges as well that this conduct is a breach of the sale agreement such that BP
was entitled to cancel it. Mahmood Investments, on the other hand, alleges that
BP repudiated the supply agreement when it removed the pumps and the
dispensing equipment. The correspondence between the parties’ attorneys in this
regard, and the affidavits in the application, are bedevilled by confusion. The
confusion arose, it appears, because agreements entered into after the property
was let to Argyle were drafted but not signed. It is necessary to clarify the issues,
as well as the duration of the supply agreement, before dealing with the
respective arguments on breach.
[17] The ‘supply period’ is defined in the supply agreement as an initial period
of three years commencing on the date of transfer (28 September 1999), and
terminating on the ‘expiry date’ (defined as the last day in a period of 36 months),
provided that BP had an option to extend the agreement for a further period of
three years, and then a further period of four years. The options would be
‘deemed to have been automatically exercised’ unless BP informed Mahmood
Investments in writing to the contrary, at least 90 days before the expiry of any of
the periods. The supply agreement would thus, in the ordinary course, have run
until 27 September 2009.
[18] Mahmood Investments let the property to Argyle from 1 September 1999.
The lease provided that it was ‘entirely conditional upon the lessee entering into
a supply agreement with [BP]’ which had a servitude registered over the property
‘entrenching their rights to the supply of their branded fuel and related products
to any service station operator leasing the premises’ (clause 4). Clause 5
provided that the premises could be used ‘only for the purposes of conducting
the business of a BP service station in terms of the supply agreement’.
[19] It was thus anticipated that Argyle would enter into a supply agreement
with BP. And indeed one was drafted, together with an equipment loan
agreement between BP and Argyle. But, as I have said, the drafts were not
signed by the parties. They nonetheless acted on the basis that there were
contracts in place and BP supplied products to Argyle from September 1999 until
November 2003.
[20] The supply agreement between BP and Mahmood Investments was
suspended in terms of a ‘suspension of supply agreement’ between BP,
Mahmood Investments and Argyle, also not signed by any of the parties. This
agreement recorded the fact that the Argyle supply agreement was to be
concluded, and provided that the supply agreement between BP and Mahmood
Investments ‘shall be suspended during the currency of the [Argyle] supply
agreement, with effect from the 28 September 1999’. The suspension agreement
also provided that the owner (Mahmood Investments) ‘undertakes, save with the
written consent of BP, to use the premises for the purpose of a garage petrol
filling and service station only’.
[21] BP discovered during 2003 that Argyle was stocking and selling products
of other suppliers. On 6 November 2003 BP’s attorney, Mr S Langa, wrote to
Mahmood Investments advising that Argyle was selling products that BP had not
supplied. He said that BP required Mahmood Investments to ‘remove the current
operator’ from the premises and ‘to take over the operation of the service station
in terms of the supply agreement with yourselves’. If Mahmood Investments
failed to do so within 14 days, the letter stated, BP would have no option but to
terminate the supply agreement with it.
[22] Langa, and no doubt BP, were under the impression that because there
was no signed supply agreement with Argyle, the supply agreement between BP
and Mahmood Investments was still in operation. The parties accept now,
however, that BP had performed in terms of the contracts drafted but not signed
and that those contracts were binding. That includes the suspension agreement.
[23] In fact, therefore, it was the Argyle supply agreement that had been
breached by Argyle. Mahmood Investments’ attorney, Mr A Martin, pointed this
out in a letter dated 12 November 2003. He claimed, however, that the supply
agreement had been superseded by the Argyle supply agreement. This is a
misconstruction of the suspension agreement which provided not that it would be
replaced by the Argyle supply agreement but that the supply agreement with
Mahmood Investments would be suspended for the duration of the Argyle supply
agreement. I shall revert to this issue.
[24] Martin wrote to Langa on 5 January 2004 saying that Mahmood
Investments could do nothing to prevent Argyle from supplying other products,
and that BP, which had been threatening to remove its pumps, should put an end
to the problem by doing that: ‘it is probably best that it do so’.
[25] By 15 April 2004 BP had indeed removed the pumps. Martin wrote directly
to BP, stating that as a result of the removal Argyle was in breach of its lease
which had thus terminated. Martin stated further that Mahmood Investments
wished to redevelop the property and could not do so until the underground tanks
were removed by BP. He demanded that BP remove them by 30 April. Martin
also informed BP that the servitudes had lapsed and that he was preparing
documents for their cancellation which he would send for signature.
[26] To this Langa replied on 21 April, stating that although the pumps had
been removed, the supply agreement had not been terminated, and the
servitudes had not lapsed. Martin’s response to that, on 17 May 2004, was that
the supply agreement had not been suspended but had terminated and that
Mahmood Investments did not intend to operate a filling station itself. Martin
asserted that BP’s conduct in removing the pumps constituted a repudiation of
the supply agreement (despite his previous assertion that the supply agreement
no longer existed) which Mahmood Investments had ‘accepted’.5
5 See Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd 2001 (2) SA 284 (SCA) on the
principles governing repudiation, and the terminology.
[27] Langa’s response, on 29 July 2004, was that Mahmood Investments was
itself in breach of the sale and supply agreements which required it to conduct a
filling station and supply BP products. He pointed out that BP was entitled to
remove the pumps in terms of the supply agreement (in fact the equipment loan
agreement). He did not add that it had been asked to do so by Martin himself.
The letter gave notice to Mahmood Investments in terms of clauses 17 and 18 of
the sale and supply agreements to remedy its breach. Return of the pumps was
tendered should Mahmood Investments give a written undertaking that it would
comply with the notice.
[28] Martin responded on 6 August 2004. It was never the intention of
Mahmood Investments, he said, to run a filling station itself. The supply
agreement had lapsed when the property was let to Argyle. BP had destroyed
the business by removing the pumps. ‘The site and consequently the business is
hopeless. Your client is well aware of this fact.’ He repeated that the removal of
the pumps constituted a repudiation by BP. The tender by BP to reinstall the
pumps was ‘absurd’. He enclosed the documents purporting to cancel the
servitude and demanded removal of the storage tanks.
[29] BP, through Langa, wrote to Mahmood Investments on 29 October 2004
cancelling the sale and supply agreements with immediate effect. It advised also
that it would apply for an eviction order and transfer to it of the property. And so it
did.
[30] The high court granted the application and dismissed Mahmood’s counter
application for the cancellation of the servitudes. As I have said, the court of first
instance found that clause 10.1 of the sale imposed an obligation on Mahmood
Investments to operate a filling station, but the full court on appeal dismissed
BP’s application and ordered that the servitude be cancelled. The basis for that
decision was that even if Mahmood Investments had been obliged to operate a
filling station by the sale agreement (making no finding in this regard), when BP
gave notice to remedy the breach the supply agreement had been terminated
because it was impossible to operate the filling station once BP had removed the
equipment.
[31] In my view, the court below misconstrued the terms of the supply
agreement and failed to take into account the suspension agreement. It did not
consider what the consequences of the breach by Argyle had been agreed by the
parties to be: that the lease of the property to Argyle and the Argyle supply
agreement would terminate, and the supply agreement between the parties
would come back into operation. It is true that when notice was given the pumps
had been removed – but the parties had agreed that BP was entitled to do so in
certain circumstances, and Mahmood Investments had not just consented to their
removal: through Martin it had requested that they be removed.
[32] It was not BP that repudiated the sale and supply agreements. Mahmood
Investments repudiated both contracts in refusing to perform its obligation to
operate a filling station on the property. It evinced a clear intention no longer to
be bound by the contracts, demanding removal of the pumps and the tanks, and
stating that it had no intention of running a filling station.
[33] Counsel for Mahmood Investments argued before us that at the time of
the notice to remedy the breach, and of the cancellation itself, the supply
agreement had terminated. Some five years had elapsed since the agreement
had commenced. The argument fails to take into account that the first three-year
period had been suspended, and began running again only when the Argyle
supply agreement terminated. The supply agreement was thus current when
notice was given in July 2004, and would have been automatically renewed had
BP not terminated it.
[34] Counsel also argued that BP did not rely on repudiation in its founding
papers. It is true that the word ‘repudiation’ is not used. But BP does rely on
breach. And the breach it alleges is a refusal to operate a filling station. That is a
repudiation. The absence of the label is irrelevant.
[35] Accordingly Mahmood Investments repudiated both the sale and the
supply agreements. It communicated its refusal to comply with the provisions
through its attorney on several occasions, as outlined. BP elected to cancel both
agreements, as it had the right to do. It is thus entitled to claim eviction of
Mahmood Investments from the property and transfer of the property to it, as the
court of first instance correctly found.
Order
[36] 1 The appeal is upheld with costs, including those of two counsel.
2 The order of the court below is altered to read:
‘The appeal is dismissed with costs.’
______________
C H Lewis
Judge of Appeal
Appearances
For Appellant:
A I S Redding SC
D J Vetten
Instructed by
Routledge Modise in association with Eversheds
Sandton, Johannesburg
Matsepes Inc
Bloemfontein
For Respondent:
D J Shaw QC
E A Matthis
Instructed by
J H Nicolson Stiller & Geshen
Musgrave
Durban
Symington & de Kok
Bloemfontein | SUPREME COURT OF APPEAL OF SOUTH AFRICA
PRESS RELEASE 27 November 2009
STATUS: Immediate
BP Southern Africa v Mahmood Investments (683/2008) [2009] ZASCA
153 (27 November 2009)
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 SCA today upheld an appeal against a decision of the Durban High Court
(sitting as a full court on appeal) that had itself upheld an appeal against an
order for the eviction of a filling station owner and for retransfer of the property
on which the filling station was erected.
BP had sold the property to Mahmood Investments in June 1999. On the
same day the parties had entered into a supply agreement in terms of which
BP would supply petrol and related products to Mahmood Investments and
the latter undertook to sell only those products. BP also lent dispensing and
other equipment to Mahmood Investments, which had in turn let the property
to a third party, Argyle. Contrary to its own supply agreement with BP, Argyle
supplied other products. Mahmood Investments had accordingly terminated
the lease with Argyle in 2003.
But Mahmood Investments refused to resume running the filling station. BP
accordingly removed its equipment from the property and terminated the
supply agreement with Mahmood Investments. BP claimed that a provision in
the agreement of sale stating that the property ‘shall not be used for any
purpose other than for the purpose of conducting thereon the business of a
garage, filling and/or service station’ imposed a positive obligation to operate
a filling station.
The court of first instance had found that the provision did impose an
obligation to operate the filling station and that, when Mahmood Investments
refused to comply, BP was entitled to evict it and claim retransfer. The SCA,
interpreting the provision in context, and, having regard to the conclusion of
the supply and loan agreements on the same day as the sale, also held that
Mahmood Investments was obliged to operate the filling station. Its refusal to
do so was a repudiation of the sale, and BP was entitled to an order for
eviction and retransfer. The appeal against the order of the full court was thus
upheld. |
4073 | non-electoral | 2023 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 543/2021
In the matter between:
PFC PROPERTIES (PTY) LTD
First Appellant
and
THE COMMISSIONER FOR THE
SOUTH AFRICAN REVENUE
SERVICES
First Respondent
TIANJIN PENGBO WEIYE
SA (PTY) LTD
Second Respondent
(previously 21 PORTLAND ROAD PMB (Pty) Ltd)
(Registration Number 2008/010786/07)
THE REGISTRAR OF DEEDS,
PRETORIA
Third Respondent
CLOETE MURRAY NO
Fourth Respondent
ROSELYN CHANTAL NOEL NO
Fifth Respondent
(in their capacities as Joint Provisional Trustees
Of the Insolvent Estate of Paul de Robillard)
and
Case No: 409/2022
In the matter between:
BRITA DE ROBILLARD NO
First Appellant
CLIFFORD EDWARD ALEXANDER NO
Second Appellant
(in their capacities as Trustees of the De Robillard Family Trust)
and
PFC PROPERTIES (PTY) LTD
First Respondent
(Registration Number: 2003/026791/07)
THE COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION
Second Respondent
THE COMMISSIONER FOR THE
SOUTH AFRICAN REVENUE
SERVICES
Third Respondent
CLOETE MURRAY NO
Fourth Respondent
ROSELYN CHANTAL NOEL NO
Fifth Respondent
(in their capacities as Joint Provisional Trustees
Of the Insolvent Estate of Paul de Robillard)
Neutral citation: PFC Properties (Pty) Ltd v Commissioner for the South
African Revenue Services and Others (Case no 543/21) and Brita De
Robillard NO and Another v PFC properties (Pty) Ltd and Others (Case No
409/22) [2023] ZASCA 111 (21 July 2023)
Coram:
SCHIPPERS, MBATHA, HUGHES and WEINER JJA
and UNTERHALTER AJA
Heard:
15 May2023
Delivered:
21 July 2023
Summary: Winding-up application – business rescue application launched
thereafter – stratagem to avoid winding-up – business rescue application an
abuse of court process – applicants in business rescue application non-suited
– winding-up order correctly granted.
_____________________________________________________________
ORDER
_____________________________________________________________
On appeal from: The Gauteng Division of the High Court, Pretoria, case no
543/2021 (Van der Schyff J sitting as court of first instance);
The KwaZulu-Natal Division of the High Court, Pietermaritzburg, case no
409/2022 (Moodley J sitting as court of first instance):
Case no 543/2021: The appeal is dismissed with costs, including the
costs of two counsel, where so employed.
Case no 409/2022: The appeal is dismissed with costs, including the
costs of two counsel, where so employed.
_____________________________________________________________
JUDGMENT
_____________________________________________________________
Weiner JA (Schippers, Mbatha and Hughes JJA and Unterhalter AJA
concurring)
Introduction
[1] Two related matters came before this Court on appeal. The first
(case no 543/2021) concerned an appeal against a winding-up order granted
against the appellant, PFC Properties (Pty) Ltd (PFC), in favour of the
first respondent, the Commissioner for the South African Revenue Services
(SARS). The winding-up order was granted by the Gauteng Division of the
High Court, Pretoria (Pretoria High Court). The appeal is with the leave of
that court.
[2] The second matter (case no 409/2022) concerned a business rescue
application brought in the KwaZulu-Natal Division of the High Court,
Pietermaritzburg (Pietermaritzburg High Court), after the launch of the
winding-up application, by Mrs Brita De Robillard NO and Mr Clifford
Edward Alexander NO, the trustees (DRFT trustees) of the De Robillard
Family Trust, the sole shareholder of PFC, to place PFC into business rescue
(the business rescue application). The DRFT trustees applied for a
postponement of the application, which was refused. The business rescue
application was thereafter dismissed. The appeal, which is with the leave of
the Pietermaritzburg High Court, is against both these orders.
[3] In opposing the winding-up application, PFC relied on s 131(6) of the
Companies Act 71 of 2008 (the Act), which provides that the launch of a
business rescue application automatically suspends the winding-up
proceedings, until the business rescue application is adjudicated upon.1
Factual overview
[4] PFC is a property and asset owning company. Mr Paul De Robillard
was a director of PFC until 28 February 2011. Mrs Britta De Robillard, his
1 Section 131(6) provides:
‘If liquidation proceedings have already been commenced by or against the company at the time an
application [for business rescue] is made in terms of subsection (1), the application will suspend those
liquidation proceedings until—
(a) the court has adjudicated upon the application; or
(b) the business rescue proceedings end, if the court makes the order applied for.’
wife, was a director from 1 March 2012 until 24 November 2020. SARS had
conducted an audit on PFC for the tax periods 2007/11 and 2011/01 to
2018/12 in respect of VAT and income tax and had issued revised assessments
totalling over R52 million in respect of VAT and over R5 million in respect
of income tax.
[5] In the 2010 tax year, PFC commenced with the construction of a
residential home situated in the Serengeti Golf and Wildlife Estate
(the Serengeti property) in Gauteng. SARS was informed that this was a
property development by PFC and numerous VAT claims were submitted to
SARS in respect of this development. However, Mr and Mrs De Robillard
utilised this property as their matrimonial home.
[6] In September 2012, SARS informed Mr De Robillard that it held him
personally liable for customs and excise related debts incurred by a company
styled Doltek Enterprises (Pty) Ltd (Doltek), in the amount of over
R89 million.2 SARS has been engaged in litigation with Mr De Robillard since
2012.
[7] On 7 November 2012, Mr De Robillard brought an urgent application
to interdict SARS from collecting these debts, pending finalisation of an
action for declaratory relief (the action). This action was instituted in
March 2013, but no steps were taken by Mr De Robillard to prosecute it.
2 In terms of s 103 of the Customs and Excise Act 91 of 1964.
[8] When construction of the Serengeti property was completed in 2014,
PFC claimed input tax on the construction and development costs. In August
2018, SARS issued a letter of audit findings stating that the input tax claimed
was of a private nature and any expenses incurred would be disallowed. In
September 2019, the representatives of PFC, Mani Financial Services (MFS),
requested reasons for SARS’ findings.
[9] On 23 September 2019, SARS furnished PFC with the reasons for its
audit findings. No response was received to the letter. SARS then issued
letters confirming the finalisation of the VAT and income tax audits. PFC filed
an objection on 14 November 2019. On the same day, SARS received a
written request on behalf of PFC to suspend payment of the debts. PFC did
not tender any security and the suspension was refused.
[10] PFC submitted a supplementary request for the suspension of payment
of its tax debt on 13 December 2019, and offered security to SARS. It
described itself as ‘an asset holding company [which] constructs and develops
properties for the reselling in the property market’. PFC undertook not to
dispose of the Serengeti property, as well as two other properties in Dainfern
and Douglasdale. Mr De Robillard stated that the properties were ‘immovable
properties and there is no risk of dissipation of assets, pending the finalisation
of the dispute resolution provided for in Chapter 9 of the TAA.3 Furthermore,
[PFC] is prepared to grant SARS the right to make an endorsement against the
properties owned by [PFC] to the effect that the properties will not be sold, or
3 Tax Administration Act 28 of 2011.
if sold, that the [proceeds] will be kept in trust until the dispute resolution
process has been finalised’.
[11] SARS requested details of the properties and their values, which PFC
provided. On 18 February 2020, MFS, acting on behalf of PFC, undertook to
hold any proceeds of the sale of any of the properties in trust, pending the
outcome of the objections in the tax matters. SARS granted the suspension,
but, due to an oversight, did not register any endorsements against the
properties.
[12] Mr De Robillard did not proceed with the action instituted in 2013.
SARS thus enrolled the matter for hearing. In July 2020, seven years after the
action was instituted, Mr De Robillard withdrew it and tendered SARS’ costs.
The withdrawal of the action enabled SARS to recover the outstanding
amount from Mr De Robillard and in September 2020, SARS demanded
payment of R148 381 928.26. Payment was not forthcoming and on
3 November 2020, SARS applied to sequestrate Mr De Robillard.
[13] Mr De Robillard did not file an answering affidavit dealing with the
merits of the sequestration application. He filed a ‘preliminary answering
affidavit’ with a counter-application to stay the sequestration application until
the interdict granted in 2012 (referred to in para 7) was set aside. He could not
show that the interdict had been granted. Unable to prove these allegations,
his counter-application was dismissed. On 3 November 2020, a provisional
sequestration order was granted against Mr De Robillard. It was confirmed on
24 May 2021.4
[14] The fourth respondent, Ms Roselyn Chantal Noel and the fifth
respondent, Mr Cloete Murray, were appointed as joint trustees in the
insolvent estate of Mr De Robillard5 (the trustees). On 9 December 2020,
Mr Murray visited the Serengeti property and was informed by the
De Robillards, who were still residing there, that PFC was no longer the owner
of the Serengeti property. It had been sold and transferred to the second
respondent, Tianjin Pengbo Weiye SA (Pty) Ltd for R11,5 million in
November 2020, despite being valued at R50 million. Only R1 million of the
purchase price had been paid to PFC. Mr Murray reported this to SARS.
[15] Despite having given SARS security in relation to the properties and its
undertaking that if they were sold, the proceeds would be kept in trust, PFC,
acting through Mr De Robillard, embarked upon a campaign to strip itself of
all its assets against which a creditor could levy execution. In particular, it
sold all three immoveable properties which it had undertaken not to dispose
of. In addition, it disposed of a luxury yacht valued at R45 million in PFC’s
2019 financial statements. It was sold for R12 million. Another yacht valued
at R13 million was sold for R570 000.
[16] As a result of this fraudulent conduct and in the absence of any security,
SARS informed Mr De Robillard, in February 2021, that it was withdrawing
4 An application for leave to appeal is pending in the Pietermaritzburg High Court.
5 Previously the joint trustees were Cloete Murray NO and Roselyn Chantal Noel NO cited as the fourth and
fifth respondents respectively. At the time of the hearing, Cloete Murray had died and Ms Noel was, in terms
of an unopposed amendment, cited as the sole trustee and fourth respondent.
the suspension of payment of PFC’s VAT and income tax. No response was
received to this letter and the suspension of payment was withdrawn. The
objection to the tax assessments was also disallowed by SARS on
11 February 2021.
[17] SARS launched the winding-up application against PFC on
26 February 2021. It was set down for hearing on 23 March 2021. On
19 March 2021, the fourth and fifth respondents in their capacity as the
trustees of the insolvent estate of Mr De Robillard, launched an urgent
application to intervene in the proceedings to wind-up PFC. They requested
that PFC be finally or alternatively provisionally wound-up by the court. The
intervention application was granted and the applications were, by agreement,
removed from the roll and re-enrolled for hearing in the urgent court on
6 April 2021. Times for filing of affidavits were agreed and PFC had to file
its answering affidavit by 23 March 2021.
[18] PFC, despite the agreement, failed to file opposing papers in the
winding-up application. Shortly after the winding-up proceedings had
commenced, PFC’s registered address was suddenly changed from Gauteng,
to an address within the jurisdiction of the Pietermaritzburg High Court. And
on 30 March 2021, a few days before the hearing of the winding-up
application, the DRFT trustees launched the business rescue application in the
Pietermaritzburg High Court.
[19] One court day prior to the hearing of the winding-up application, PFC’s
attorney filed an affidavit dated 1 April 2021. He contended that, in terms of
s 131(6) of the Act, SARS was precluded from proceeding with the winding-
up application, because the business rescue application automatically
suspended the winding-up proceedings until the former application was
adjudicated. PFC failed to deal at all with the allegations in the founding
papers in the winding-up application.
[20] SARS sought leave, in terms of s 133(1)(b) of the Act,6 to proceed with
the winding-up application in the Pretoria High Court. It submitted that the
court had a discretion in terms of that section of the Act to proceed with the
winding-up application. There was no answer to the facts stated in the
winding-up application. After dealing with the submissions of the parties, a
final winding up order was granted on 13 April 2021.
[21] PFC’s argument in the winding-up application was essentially that in
terms of s 131(6) of the Act, the business rescue application in the
Pietermaritzburg High Court suspended the liquidation application, because
business rescue proceedings only begin once the court makes an order to that
effect in terms of s 131(1) of the Act. Accordingly, so it was argued, the
liquidation application could not proceed in accordance with s 133 of the Act.
But as is shown below, the business rescue application was a stratagem: the
DRFT trustees failed to make out a case that it was just and equitable to place
PFC under supervision; and there was simply no prospect of rescuing PFC,
which had disposed of all its assets. For these reasons, and in view of the
decision to which I have come, it is not necessary to consider the proper
6 Section 133(1) provides: ‘During business rescue proceedings, no legal proceeding, including enforcement
action, against the company, or in relation to any property belonging to the company, or lawfully in its
possession, may be commenced or proceeded with in any forum, except—
. . .
(b) with the leave of the court and in accordance with any terms the court considers suitable;
. . .’
interpretation of the relevant sections of the Act or the submissions of the
parties in that regard.
[22] SARS and the trustees filed detailed answering affidavits in the
business rescue application. Unsurprisingly, the DRFT trustees did not file
any affidavit in reply to the facts stated in the answering affidavits, more
specifically, that PFC, an asset holding company, had disposed of all its assets;
that it was factually insolvent; and that in its financial statements, it had falsely
created the impression that the company could be rescued. The DRFT trustees,
predictably, failed to enrol the business rescue application for hearing and
SARS applied for the application to be heard on 8 October 2021.
[23] On 7 September 2021, consistent with their stratagem, the DRFT
trustees filed an application to have the matter postponed on the basis that an
appeal was pending against the winding-up order, which rendered the business
rescue application moot, alternatively not ripe for hearing. The appeal, they
argued, would dispose of the legal uncertainty concerning the interpretation
of ss 131, 132 and 133 of the Act and this would have a material bearing on
the business rescue application. The DRFT trustees also submitted that the
business rescue application had, by ‘implication or inferential reasoning’,
been terminated and converted to winding-up proceedings when the Pretoria
High Court granted the winding-up order. The trustees disputed this and
contended that the business rescue application had to be decided by the
Pietermaritzburg High Court.
[24] The Pietermaritzburg High Court held that the pending appeal of the
winding-up order did not preclude it from determining the business rescue
application. It took into account that the timing of the business rescue
application was cause for concern; and that the affidavits filed by SARS and
the trustees, to which there was no response, were a ‘reliable and useful
indication to assess the bona fides’ of the DRFT trustees and the prejudice to
the other parties. In the light of the prejudice that PFC’s creditors would suffer
on account of delay; the lack of prospects of success of the business rescue
application; and the authorities,7 the application for a postponement was
refused with costs. PFC then did not proceed with the business rescue
application and its counsel left the court.
Was the business rescue application an abuse of process?
[25] In this Court, counsel for the parties were referred to the recent decision
of the Constitutional Court in Villa Crop Protection (Pty) Ltd v Bayer
Intellectual Property GmbH,8 and asked to address the following question:
Whether the conduct on the part of PFC and the trustees of the DRFT in
launching the business rescue application, constituted an abuse of process.
More specifically, the question was whether the DRFT trustees should be non-
suited if it is found that the business rescue application was launched solely
to delay or disrupt the winding-up proceedings; and consequently, whether it
could have the effect of suspending those proceedings in terms of s 131(6) of
the Act.
7 Lekolwane and Another v Minister of Justice and Constitutional Development [2006] ZACC 19; 2007 (3)
BCLR 280 (CC) para 17.
8 Villa Crop Protection (Pty) Ltd v Bayer Intellectual Property GmbH [2022] ZACC 42; 2023 (4) BCLR 461
(CC).
[26] The purpose of business rescue proceedings as stated in s 128(1)(b)(iii)
of the Act,9 is to facilitate the rehabilitation of a company that is financially
distressed. One of the prerequisites for an order placing a company under
supervision is that, in terms of s 131(4)(a) of the Act,10 there must be a
reasonable prospect of rescuing the company.11 Further, it must be just and
equitable to place it under supervision.
[27] Business rescue proceedings are aimed at restoring a company to
solvency, and are not to be abused by a company with no prospects of being
rescued but mainly to avoid a winding-up or to obtain some respite from
creditors.12 In Van Staden and Others NNO v Pro-Wiz (Pty) Ltd,13 this Court
stated:
‘It has repeatedly been stressed that business rescue exists for the sake of rehabilitating
companies that have fallen on hard times but are capable of being restored to profitability
or, if that is impossible, to be employed where it will lead to creditors receiving an
enhanced dividend. Its use to delay a winding-up, or to afford an opportunity to those who
9 Section 128(1)(b)(iii): ‘“business rescue” means proceedings to facilitate the rehabilitation of a company
that is financially distressed by providing for—
…
(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;
10 Section 131(4)(a): After considering an application in terms of subsection (1), the court may— (a) make
an order placing the company under supervision and commencing business rescue proceedings, if the court
is satisfied that— (i) the company is financially distressed; (ii) the company 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 (iii) it is otherwise just and equitable to do so for financial reasons; and there is a reasonable
prospect for rescuing the company.’
11 Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty) Ltd and Others
[2013] ZASCA 68; 2013 (4) SA 539 (SCA); [2013] 3 All SA 303 (SCA) para 29.
12 ABSA Bank Limited v Newcity Group (Pty) Ltd; Cohen v Newcity Group (Pty) Ltd and Another [2012]
ZAGPJHC 144; [2013] 3 All SA 146 (GSJ) para 20 where Sutherland DJP held: ‘Moreover, in this regard,
the risk of abuse or manipulation of the rescue application process, through “un-genuine” applications to
procure an illegitimate immunity must be guarded against.’
13 Van Staden and Others NNO v Pro-Wiz (Pty) Ltd [2019] ZASCA 7; 2019 (4) SA 532 (SCA).
were behind its business operations not to account for their stewardship, should not be
permitted’.14
[28] In Villa Crop the Court dealt with the fate of proceedings launched by
a party with an ulterior motive. Unterhalter AJ espoused the position as
follows:
‘An abuse of process can occur in a variety of ways. The litigation may be frivolous or
vexatious. A litigant may seek to use the legal process for an ulterior purpose or by
recourse to conduct that subverts fundamental values of the rule of law. The behaviour of
the litigant may be so tainted with turpitude that the court will not come to such a litigant’s
aid. The unclean hands doctrine references this latter type of abuse. It is the abusive conduct
of the litigant that, in a proper case, may warrant the exercise of the court’s power to non-
suit such a litigant. The court does so, even though the litigant claims a right that they
would vindicate in the court proceedings. For this reason, the power is to be exercised with
great caution. Put simply, the court enjoys the power to safeguard the integrity of its
process. The court will only exercise this power upon a careful consideration of the
prejudice that this may cause to the abusive litigant, and, in particular, the harm that may
be occasioned to a litigant whose claim of right will not be decided by the court. But the
court’s power to prevent the abuse of its process is not determined by the right that the
abusive litigant claims.’15 (Emphasis added.).
[29] In my view, and for the reasons set out below, the conduct of the DRFT
trustees in launching the business rescue application amounts to an abuse of
process as described in Villa Crop. The facts show that from the outset, the
launch of the business rescue application was a stratagem and that the DRFT
trustees had no intention of prosecuting that application to its conclusion. To
begin with, the address of PFC’s registered office was deliberately changed
14 Ibid para 22, emphasis added.
15 Villa Crop fn 8 para 77.
from Gauteng to KwaZulu-Natal, so that the business rescue application could
be brought in the Pietermaritzburg High Court. In the founding affidavit the
DRFT trustees baldly alleged that SARS’ claim in the liquidation application
that PFC had defrauded SARS, by falsely claiming VAT input expenses
relating to the Serengeti property and disposing of its assets in suspicious
circumstances, were ‘unsubstantiated and based on speculation’. What the
DFRT trustees did not disclose to the court, was that PFC had never answered
SARS’ allegations concerning its fraudulent VAT claims and the dissipation
of its assets, despite its undertaking to file opposing papers in the liquidation
application. That undertaking suggests that PFC had a defence to the
liquidation application and was thus not insolvent – which was not disclosed
to the Pietermaritzburg High Court.
[30] Next, the DRFT trustees sought to explain away Mr De Robillard’s
claim for some R93 million against PFC, recorded as such in its financial
statements from 2011 to 2019. Regarding this claim and recordal, in the
founding affidavit Mrs De Robillard said: ‘I can categorically state that the
entry is incorrect’; and that it was the result of ‘an incorrect journaling
method’. This assertion was unsupported by any document or affidavit by the
relevant accountant, to explain how the so-called incorrect entry came about.
Mrs De Robillard attached draft financial statements of PFC for the year
ending 29 February 2020, which instead recorded Mr De Robillard as a debtor
of PFC in an amount of R37 million. And this, when Mrs De Robillard stated
under oath that she knew nothing about the affairs of PFC, at an enquiry in
terms of ss 417 and 418 of the Act, into the affairs of Doltek, a company of
which Mr De Robillard was a director. It too had been liquidated by SARS.
[31] What is more, the DRFT trustees knew or ought to have known that the
business rescue application had no prospect of success. PFC's very existence
– if it was ever a genuine asset holding company – was destroyed by the
dissipation of all of its assets. It was factually and commercially insolvent.
Yet in the founding affidavit the DRFT trustees claimed that ‘the purchaser of
the property has agreed to re-transfer it to PFC’. This allegation was made
solely to bolster PFC's financial status and to create the impression that it
could be rescued. So too, the new allegation by Mrs De Robillard that Mr De
Robillard was never a creditor of PFC. Other entries in PFC’s 2020 financial
statements seeking to demonstrate that PFC could be rescued, were also
contrary to figures presented in its previous financial statements.
[32] Crucially, both SARS and the trustees filed comprehensive opposing
affidavits in the business rescue application – which were never answered. On
the Plascon-Evans16 rule, an order for business rescue could not be granted on
the facts. And the DRFT trustees were never going to file a replying affidavit.
They failed to enrol the application for hearing. Instead, they filed an
application for its postponement. This was part of the stratagem: to advance a
technical argument – devoid of any factual foundation that PFC could be
rescued – that the application was either moot or not ripe for hearing, so as to
delay (i) the winding-up application; (ii) any enquiry into the stewardship of
PFC by the De Robillards; and (iii) the payment of the tax liabilities of PFC.
[33] This is buttressed by the fact that when the application for a
postponement was refused, counsel for PFC informed the court that they ‘had
16 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A).
no instructions’ to argue the business rescue application, and left the court.
This step enabled PFC to apply for leave to appeal purely on the technical
argument, and is the clearest indicator that the DRFT trustees had no intention
of prosecuting that application, and that it was not brought bona fide. In these
circumstances, there can be no question of any prejudice to PFC because its
claim for business rescue was not determined by the Pietermaritzburg High
Court; or that its appeal against the refusal of the postponement of the business
rescue application, is not decided by this Court.17
[34] All of this explains why the foundation of the business rescue
application comprises the most perfunctory assertion: to pursue an appeal in
respect of PFC’s liability to SARS which, if successful, would be to the
benefit of PFC’s creditors. On its own version, PFC owes SARS R16 million,
which it is unable to pay. So, even if a tax appeal were to succeed (SARS
denied that it has any merit) there would still be a large tax debt due to SARS.
In any event, an appeal could still be pursued by a liquidator. Apart from this,
PFC owes R93 million to Mr De Robillard, claimed by the trustees of his
insolvent estate.
[35] Counsel for the DRFT trustees conceded in this Court that the case for
business rescue is ‘thin’. That is an overstatement. PFC failed to make out a
case that it could be rescued let alone profitable, or that creditors would
receive an enhanced dividend. As was said by Brand JA regarding the
prospect of rescuing a company:
‘It must be a reasonable prospect – with the emphasis on “reasonable” – which means that
it must be a prospect based on reasonable grounds. A mere speculative suggestion is not
17 Villa Crop fn 8 para 77.
enough. Moreover, because it is the applicant who seeks to satisfy the court of the prospect,
it must establish these reasonable grounds in accordance with the rules of motion
proceedings which, generally speaking, require that it must do so in its founding papers.’18
[36] From what is set out above, it is clear that the DRFT trustees have
sought to use the legal process provided for companies which may
legitimately be rescued, for an ulterior purpose – to thwart the winding-up
proceedings and the consequences for the De Robillards that may arise
therefrom. This stratagem, as stated in Villa Crop, ‘subverts fundamental
values of the rule of law’.19 The conduct of the DRFT trustees and PFC is so
tainted with impropriety that this Court must use the power it has to ‘safeguard
the integrity of its process’.20
[37] In so acting, the power of this Court to non-suit the DRFT trustees is
warranted. As a consequence, their ill-fated application should not have been
entertained by reason of its use in a scheme of abuse. Although the application
was correctly dismissed by the Pietermaritzburg high court, it fails in this
court, on appeal, for different reasons.
[38] PFC sought to oppose the liquidation application on the basis of the
moratorium provided for in s 131(6) of the Act. But the legislature could not
have intended that a business rescue application, tainted by abuse, would have
that effect.21 In essence, because the DRFT trustees were non-suited for the
18 Oakdene Square Properties fn 11 para 29.
19 Villa Crop fn 8 para 77.
20 Ibid.
21 Oakdene Square Properties fn 11 paras 32-33; Gormley v West City Precinct Properties (Pty) Ltd and
Another, Anglo Irish Bank Corporation Ltd v West City Precinct Properties (Pty) Ltd and Another [2012]
ZAWCHC 33 paras 12-15.
reasons set out above, the doomed business rescue application was not ‘made’
as envisaged in s 131(6).22 Thus, the moratorium did not come into operation
and did not suspend the winding up proceedings. That being so, there was no
impediment to the winding-up proceedings.
[39] It is clear that PFC is unable to pay its debts, and is commercially and
factually insolvent. Its assets had been siphoned off and dissipated; and it had
lost its substratum. It was not conducting any business activities. Certain
dispositions of its property could be impeached and several transactions
needed to be investigated. It was just and equitable that it be wound up. The
Pretoria High Court’s decision to grant a final order of liquidation is therefore
unassailable.
[40] The following order is therefore issued:
Case no 543/2021: The appeal is dismissed with costs, including the
costs of two counsel, where so employed.
Case no 409/2022: The appeal is dismissed with costs, including the
costs of two counsel, where so employed.
____________________
WEINER JA
JUDGE OF APPEAL
22 Lutchman NO and Others v African Global Holdings (Pty) Ltd and Others: African Global Holdings (Pty)
Ltd and Others v Lutchman NO and Others [2022] ZASCA 66; [2022] 3 All SA 35 (SCA); Nel NO and
Others v Astrotail 109 (Pty) Ltd and Another [2022] ZAGPPHC 873 para 11.
Appearances
For appellants:
P Stais SC (with J Brewer)
Instructed by:
Smit Sewgoolam Inc, Johannesburg
McIntyre Van Der Post, Bloemfontein
For first and third
respondents:
M P Van der Merwe SC (with L G Kilmartin)
Instructed by:
MacRobert Inc, Pretoria
Lovius Block Attorneys, Bloemfontein
For fourth and
fifth respondents:
P J Wallis SC (with L K Olsen)
Instructed by:
Cox Yeats Attorneys, Durban
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:
21 July 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
PFC Properties (Pty) Ltd v Commissioner for the South African Revenue Services and Others (Case
no 543/21) and Brita De Robillard NO and Another v PFC Properties (Pty) Ltd and Others (Case No
409/22) [2023] ZASCA 111 (21 July 2023)
Today the Supreme Court of Appeal (SCA) delivered judgment dismissing with costs, two appeals
against orders of the Gauteng Division of the High Court, Pretoria (case no 543/2021); and the KwaZulu-
Natal Division of the High Court, Pietermaritzburg (case no 409/2022). The first was an appeal against
a winding-up order granted against the appellant, PFC Properties (Pty) Ltd (PFC), in favour of the first
respondent, the Commissioner for the South African Revenue Services (SARS), by the Pretoria High
Court. The second appeal was against an order by the Pietermaritzburg High Court, in terms of which
it dismissed an application to place PFC in business rescue. That application was brought by Mrs Brita
De Robillard NO and Mr Clifford Edward Alexander NO, the trustees of the De Robillard Family Trust
(the DRFT trustees). The said Trust is the sole shareholder of PFC.
PFC owed SARS some R52 million for VAT and R5 million for income tax. Due to PFC’s failure to pay
these tax debts, SARS applied to the Pretoria High Court for its winding-up. The trustees of the insolvent
estate of Mr de Robillard (the insolvency trustees) successfully applied to intervene in the winding-up
proceedings. PFC undertook to file answering papers in the winding-up application, but failed to do so.
A few days before the hearing of the winding-up application, the DRFT trustees launched the business
rescue application in the Pietermaritzburg High Court. SARS and the insolvency trustees filed detailed
answering papers in that application. PFC however, failed to file any replying affidavit. Instead, PFC
applied for a postponement of the business rescue application, a few days before the hearing of the
winding-up application. In the postponement application, PFC contended that in terms of s 131(6) of
the Companies Act 71 of 2008 (the Act), SARS was precluded from proceeding with the winding-up
application, because the business rescue application automatically suspended the winding-up
proceedings until the former application was adjudicated. The Pietermaritzburg High Court refused the
postponement and PFC’s counsel did not proceed with the business rescue application and left the
court. Subsequently, SARS proceeded with the winding-up application in the Pretoria High Court, which
was granted.
The issue before the SCA was whether the conduct on the part of PFC and the DRFT trustees in
launching the business rescue application, constituted an abuse of court process. The SCA held that
that application should not have been considered by reason of its use in a scheme of abuse. The
business rescue application was a stratagem. PFC’s registered address was suddenly changed to
KwaZulu-Natal so that the business rescue application could be brought in the Pietermaritzburg High
Court. The DRFT trustees had no intention of filing a replying affidavit or prosecuting that application to
its conclusion. It had been launched in order to advance a technical argument that it suspended the
winding-up application, so as to delay that application; any enquiry into the stewardship of PFC by the
De Robillards; and the payment of the tax debts of PFC. Consequently, the business rescue application
could not suspend the liquidation application because the former was tainted by abuse. Apart from this,
the DRFT trustees failed to make out a case that there was any prospect of rescuing PFC. All its assets
had been sold-off and it had lost its substratum. The SCA further held that the liquidation order granted
by the Pretoria High Court was unassailable. For these reasons, both appeals were dismissed with
costs.
~~~~ends~~~~ |
3134 | non-electoral | 2007 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Not reportable
Case no: 297/06
In the matter between:
BARRY STEPHEN HASLAM
APPELLANT
and
THE STATE
RESPONDENT
Coram: CLOETE, CACHALIA JJA et THERON AJA
Heard:
8 MARCH 2007
Delivered:
28 MARCH 2007
Summary:
Criminal law - Fraud – Adequacy of proof. State failed to prove the
mechanics of the fraud therefore cannot impute intention to the appellant. Appellant’s version
reasonably possibly true.
Neutral citation: This judgment may be cited as HASLAM v THE STATE
[2007] SCA 33 RSA
________________________________________________________________
THERON AJA/…..
[1] The appellant, a senior and experienced banker, was charged with and
convicted in the Magistrates’ Court, Johannesburg, of ten counts of fraud and
sentenced to ten years’ imprisonment. His appeal to the Johannesburg High
Court was dismissed. He now appeals to this court, with the appropriate leave,
against his conviction and sentence.
[2] The evidence presented at the trial was in essence the following: The
appellant was employed as a relationship manager by Nedcor Bank Limited
(Nedcor) at its Fox Street branch. In that capacity he was responsible for the
accounts of various clients. Until the end of September 1998, the appellant, in
his capacity as relationship manager, had a mandate to approve credit facilities
up to a limit of approximately R150 000. With effect from October 1998, the
credit lending mandate of all relationship managers was withdrawn. All credit
applications had to be channelled to the credit department for investigation,
consideration and approval.
[3] The appellant was, inter alia, responsible for the accounts of Moonstar
Commerce & Industry (Pty) Ltd (Moonstar) and Emperor Fisher International
(Emperor Fisher), the latter company being owned by Mr Zhang (Zhang). Mr
Theuns Botha (Botha) was the managing director and sole shareholder of
Moonstar and for a period assisted in the management of Emperor Fisher. Both
companies were involved in importing raw materials and goods from China into
South Africa.
[4] During 1999, Botha, on behalf of Moonstar, applied to Nedcor for credit
in the form of letters of credit. According to the evidence, a letter of credit is an
irrevocable and autonomous payment instrument issued by a bank which is
particularly favoured for use in international transactions as a payment
mechanism by importers of foreign goods. Once a letter of credit has been
issued an independent contract is established between the issuing bank and the
foreign beneficiary in terms of which the bank is obliged to make payment in
accordance with the letter of credit. Global Business Centre (Global), a unit
within Nedcor, was primarily concerned with the processing and issuing of
letters of credit.
[5] Moonstar’s applications for letters of credit were submitted to the
appellant and it is common cause that the appellant signed the credit application
forms at the bottom right corner in the space marked ‘approved
(relationship/credit officer’s signature)’. He also inserted his signature number
on seven of the forms and his relationship number on a few others. Either
number would enable an employee of Nedcor to determine the appellant’s
position within the bank using the bank’s computer network.
[6] During the period January 1999 to June 1999, ten letters of credit (which
form the subject of the ten counts of fraud) were issued by Global in favour of
Moonstar. At least three of these letters of credit were for the benefit and use of
Emperor Fisher.
[7] Snyman, a credit manager in the employ of Nedcor, who had managed the
credit portfolio of the appellant’s clients, testified about the bank’s procedure in
respect of applications for letters of credit. Snyman said that the appellant, in his
capacity as relationship manager, would receive such applications and submit
each application, together with a motivation, to the credit department. In the
absence of a motivation, Snyman would return the application to the appellant. It
is common cause that the appellant had not attached motivations to any of the
ten application forms under consideration.
[8] It is further common cause that the application forms in respect of the
letters of credit had not been presented to and approved by the credit department
prior to being issued by Global. At the time, the personnel at Global were
unaware of the withdrawal of relationship managers’ credit mandate despite the
fact that such withdrawal had been well publicized within Nedcor. Global,
accepting that the applications met Nedcor’s credit requirements, issued the
letters of credit applied for. It is common cause that Nedcor’s risk in respect of
the letters of credit, was not secured.
[9] Moonstar’s account with Nedcor went into overdraft. It was unable to pay
its debts, including the debt to Nedcor which arose in consequence of Nedcor
making payment pursuant to the letters of credit. Moonstar was liquidated on 25
January 2000. Nedcor suffered considerable financial loss, the actual amount of
which was not proved.
[10] Central to the state’s case is the appellant’s signature on the ten
applications for letters of credit. The evidence presented by the state sought to
show that by signing the applications next to the word ‘approved’, the appellant
effectively placed himself in the position of a bona fide credit manager and by
implication, misrepresented to Global that he had the mandate to approve letters
of credit and that he had completed all the functions and duties of a credit
manager. In this manner the signing of the letters of credit by the appellant
constituted a misrepresentation which Global, to the prejudice of Nedcor, had
acted upon.
[11] The appellant testified that he had appended his signature to the
documents simply to allow the applications to be processed by the credit
department and that Snyman would have disregarded his (appellant’s) signature
for purposes of the department’s decision, as the credit decision was that of
Snyman alone. The appellant stated that he did not intend to bypass the credit
department. According to the appellant his workload had increased
tremendously in consequence of the withdrawal of his credit lending mandate.
Post October 1998 he was required to motivate each and every application for
credit. In respect of applications for specialist products, such as letters of credit,
he would simply ensure that these were put into the system in order to be
processed by the relevant department. It was in fact his burdensome workload
which prompted him to seek alternate employment. It is common cause that the
appellant resigned on 25 May 1999 and left the employ of Nedcor on 25 June
1999 to take up a position with Standard Charter Bank.
[12] The trial court considered the evidence presented by the state sufficient to
justify the conviction of the appellant. The appellant’s version was found to be
inherently improbable. In support of this finding as to the improbability of the
appellant’s version, the trial court stated that it could not accept that an
experienced banker such as the appellant would ‘have just rubber stamped’
Moonstar’s applications for letters of credit. The trial court criticised the
appellant for failing to attach a motivation to the application forms or a note
indicating that he had not considered the merits of each application. The trial
court concluded that the appellant, by appending his signature to the application
forms, had intended to induce Global to believe that Nedcor’s normal credit
lending requirements had been complied with.
[13] On appeal, the high court also found the appellant’s version
‘unacceptable’. The high court further found that the credit department had been
by-passed, and that the appellant ‘did not direct the applications’ through the
appropriate channels ‘in all probability with the intention to circumvent’ the
bank’s credit procedure. It is these findings which the appellant takes issue with
in this appeal.
[14] The crime of fraud consists of unlawfully, and with intent to defraud,
making a misrepresentation which causes actual prejudice or which is
potentially prejudicial to another.1 It is alleged in the charge that the appellant
unlawfully and fraudulently misrepresented that:
(a)
he had authority to approve applications for letters of credit; and/or
(b)
he had complied with Nedcor’s normal lending requirements in approving
the letters of credit; and/or
(c)
he had acted within his lending mandate; and/or
(d)
there were sufficient facilities and/or security in place to ensure
repayment of the letters of credit; and/or
1 See S v Campbell 1991 (1) SACR 503 (NM) at 505b-c and JRL Milton South African Criminal Law and
Procedure Vol 2, 3 ed (1996) p 702.
(e)
he had acted within the normal scope of his duties by approving the
letters of credit.
In this matter, it is difficult to appreciate how the state could succeed in proving
the guilt of the appellant without showing that:
(a)
the appellant was involved in a course of conduct which, to his
knowledge, would and did involve the making of a false representation to
Global; and
(b)
the appellant had knowledge that Global was unaware of the change in the
credit mandate system and would have issued the letters of credit on the
basis of his signature alone.
[15] I turn now to consider whether the bypassing of the credit department was
brought about in consequence of any deliberate and intentional act or omission
on the part of the appellant. The only person who could explain how the
documents ended up with Global was Ms Huey Botha, the wife of Botha, who
had been employed by Nedcor as a foreign representative. In that capacity she
acted as translator/facilitator for the bank’s Chinese speaking clients. According
to her testimony she either received the application forms directly from the
appellant or they were left in her office. This is in stark contrast to the
appellant’s testimony that the application forms were dispatched to Ms Botha
via the bank’s internal messenger system. Ms Botha said that once she received
the application forms it was her responsibility to deliver them to Global. The
procedure she adopted does not accord with the procedure testified to by
Snyman and the appellant. According to Snyman and the appellant the normal
procedure was that the applications were to go from the relationship manager to
the credit department.
[16] It is necessary to record that the trial court made adverse credibility
findings against the Bothas. It considered Botha to be a fairly convincing
witness but one who had only partially told the truth. The trial court adopted the
view that it could rely on Botha’s evidence only where it was corroborated or
not in dispute. It however found Ms Botha to be a ‘very bad witness’ and
concluded that ‘very little evidential weight’ could be attached to her testimony.
[17] In my view, the principal deficiency in the state’s case is its failure to
establish the mechanics of the fraud. If the state is unable to prove the
mechanics of the fraud - how the application forms got from the appellant to
Global, without being channelled through the credit department - on what basis
can it be found that that was the consequence intended by the appellant? There is
no evidence to suggest that the appellant knew that Ms Botha would not follow
standard procedure and instead deliver the application forms directly to Global.
There is in fact evidence to suggest the contrary. Ms Botha testified that the
appellant had not given her specific instructions regarding the application forms.
Botha’s testimony is that the appellant had advised him (Botha) that the
applications for letters of credit would follow the bank’s normal procedures. On
the evidence it cannot be found that the appellant intended to or took any steps,
whether by action or inaction, to cause any of the applications for letters of
credit to bypass the credit department and the contrary finding by the high court
in paragraph [13] above cannot be supported.
[18] I turn to the second issue, namely, whether the appellant knew that Global
was unaware of the change in the credit mandate system. The appellant’s
uncontested evidence is that he had never been to Global’s premises and that he
was not known by the personnel at Global. This evidence was confirmed by the
staff at Global. It is common cause that the withdrawal of the credit mandate of
relationship managers was well publicized within Nedcor. It is surprising that
Global, which is not an independent entity, but a division within Nedcor, was
unaware of the changes in the bank’s credit policy. There is not a shred of
evidence to support a finding that the appellant knew or could safely have
assumed that Global was oblivious of the change.
[19] It is trite that in a criminal matter the state must establish the guilt of the
accused beyond reasonable doubt and that where the explanation of the accused
is reasonably possibly true, then an accused is entitled to be acquitted. In S v
Shackell2 after restating the standard of proof in criminal matters, Brand AJA
stated that it is permissible for a court to test an accused’s version against the
probabilities but hastened to caution that an accused’s version ‘cannot be
rejected merely because it is improbable; it can only be rejected on the basis of
inherent probabilities if it can be said to be so improbable that it cannot
reasonably possibly be true.’ (Emphasis added.) The appellant gave an account
as to why he had appended his signature to the application forms and although it
may be contended that this was not the norm or the most practical way of
2 2001 (4) SA 1 (SCA) para 30.
ensuring that the applications were processed, or even that the appellant may
have been negligent, it is not possible, from that evidence, together with the
evidence led by the state, to make the quantum leap in logic, as did the
magistrate, that by signing the application forms, the appellant had ‘intended to
pretend to Global that credit vetting was done’.
[20] I turn now to consider the evidence relating to ‘gifts’, ‘a job application’
and ‘a trip to China’, all of which, according to the trial court, were
circumstantial factors, pointing towards the guilt of the appellant. The
appellant’s evidence was that he had received gifts from Zhang, such as wine
and royal jelly which were all below the value of R500 and in terms of the
bank’s policy did not have to be declared. Botha was not in a position to dispute
this and there is no reason to believe that the appellant was being untruthful.
Botha in his evidence suggested that the appellant had received cash from Zhang
(R5000 per month). This evidence was also disputed by the appellant. Zhang
was not called as a witness and in the view of the approach adopted by the
magistrate, Botha’s uncorroborated evidence has to be disregarded.
[21] The appellant did not make a ‘job application’ to either Moonstar or
Emperor Fisher. According to the evidence, Botha had made an offer to the
appellant after the latter had indicated his intention to leave the employ of
Nedcor and after the appellant had signed the first letter of credit application
form. It is in any event extremely improbable that the appellant with his
credentials would have considered for a moment taking up employment with
either of the companies, and the suggestion that he may have been induced by
the offer of employment to commit the frauds is so far fetched that it may be
rejected out of hand.
[22] It is common cause that after resigning from the employ of Nedcor, the
appellant accompanied Botha, Zhang and certain other delegates, one of whom
was a high ranking official from the National African Chamber of Commerce
and Industry (Nafcoc), on a trip to China. It is also common cause that Botha
paid for the air tickets. The importance of the trip to China was overstated by
both the trial and high court. First, the appellant, by reason of his expertise in
the banking industry, was invited to be a member of the delegation. Secondly,
the trip occurred subsequent to the appellant leaving Nedcor. Thirdly, upon the
appellant discovering that Botha had misrepresented to their Chinese
counterparts that the appellant was still employed by Nedcor, he immediately
cut short his trip to China. This response, on the part of the appellant, does not
support the high court’s finding of the existence of a ‘special relationship’
between Botha and the appellant.
[23] In my view, there is nothing improbable in the explanation put forward by
the appellant. It seems improbable that the appellant, a senior, highly respected
and sought after banker, would, for no apparent personal gain (apart from the
negligible gifts already mentioned) put his successful banking career on the line
for a simple and unsophisticated series of frauds, which could and should easily
have been detected.
[24] The appeal succeeds and the appellant’s convictions and sentences are set
aside.
L V Theron
Acting Judge of Appeal
CONCUR:
CLOETE 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:
Wednesday 28 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
Haslam v The State
In a judgment today the Supreme Court of Appeal has set aside
the apellant’s conviction of ten counts of fraud.
The appellant was employed as a relationship manager by Nedcor
Bank Limited (Nedcor) at its Fox Street branch. In that capacity he
was responsible for the accounts of various clients. Until the end of
September 1998, the appellant, in his capacity as relationship
manager, had a mandate to approve credit facilities up to a limit of
approximately R150 000. With effect from October 1998, the credit
lending mandate of all relationship managers was withdrawn. All
credit applications had to be channelled to the credit department
for investigation, consideration and approval.
The appellant was, inter alia, responsible for the accounts of
Moonstar Commerce & Industry (Pty) Ltd (Moonstar). During 1999,
Botha, on behalf of Moonstar, applied to Nedcor for credit in the
form of letters of credit. Global Business Centre (Global), a unit
within Nedcor, was primarily concerned with the processing and
issuing of letters of credit. Moonstar’s applications for letters of
credit were submitted to the appellant and it is common cause that
the appellant signed the credit application forms at the bottom right
corner in the space marked ‘approved (relationship/credit officer’s
signature)’. He also inserted his signature number on seven of the
forms and his relationship number on a few others. During the
period January 1999 to June 1999, ten letters of credit (which form
the subject of the ten counts of fraud) were issued by Global in
favour of Moonstar. It is further common cause that the application
forms in respect of the letters of credit had not been presented to
and approved by the credit department prior to being issued by
Global.
Moonstar’s account with Nedcor went into overdraft. It
was unable to pay its debts, including the debt to Nedcor which
arose in consequence of Nedcor making payment pursuant to the
issue of the letters of credit. Moonstar was liquidated on 25
January 2000. Nedcor suffered considerable financial loss.
The SCA, in a judgment by Theron AJA in which Cloete JA and
Cachalia JA concurred, held that there was no evidence to support
a finding that the appellant intended to or took any steps, whether
by action or inaction, to cause any of the applications for letters of
credit to bypass the credit department.
The SCA further held that there was nothing improbable in the
explanation put forward by the appellant that he signed the
application forms simply to allow the applications to be processed
by the credit department. The court reasoned that it was
improbable that the appellant, a senior, highly respected and
sought after banker, would, for no apparent personal gain (apart
from the negligible gifts already mentioned) put his successful
banking career on the line for a simple and unsophisticated series
of frauds, which could and should easily have been detected.
--ends-- |
3129 | non-electoral | 2007 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Reportable
Case Number : 177 / 2006
In the matter between
CITY OF TSHWANE METROPOLITAN MUNICIPALITY
APPELLANT
and
RPM BRICKS PROPRIETARY LIMITED
RESPONDENT
Coram :
HARMS ADP, FARLAM, LEWIS, PONNAN JJA et MUSI AJA
Date of hearing :
5 MARCH 2007
Date of delivery : 27 MARCH 2007
SUMMARY
Estoppel – raising of against a statutory body – distinction between acts which are ultra vires and non-
compliance with internal arrangements – reliance on estoppel in former case – not permissible.
Neutral citation: This judgment may be referred to as :
City of Tshwane Metropolitan Municipality v RPM Bricks (Pty) Ltd [2007] SCA 28 (RSA)
___________________________________________________________________
PONNAN JA
[1] On 5 July 2001 the council of the present appellant, the City of Tshwane
Metropolitan Municipality (the defendant in the court below), resolved to add the
respondent, RPM Bricks Proprietary Limited (the plaintiff in the court below), to its list
of already approved suppliers for the supply and delivery of coal to its Pretoria West
and Rooiwal power stations. For convenience I will refer to the parties by their
appellation in the court below.
[2] The plaintiff was thus duly placed on the council's list of approved coal
suppliers on inter alia the following terms:
(a)
the supply contract was to commence on 1 April 2001 and to endure for a
period of three years;
(b)
the coal was to be despatched by rail to the railway sidings of the respective
power stations;
(c)
the total price for all coal delivered during any calendar month was to be paid
within 30 days after receipt by the city electrical engineer of a fully specified
account;
(d)
the price payable for the coal supplied and delivered had two component
parts, namely, the free on rail ('FOR') price of the coal per ton (which varied
according to the calorific value of the coal) plus the railage cost; and
(e)
the FOR and railage prices were to be fixed for the first year of the contract,
whereafter prices were to increase in accordance with the producer price
index for the previous year.
[3] By letter dated 10 July 2001 the plaintiff was officially informed that it had
been added to the list of coal suppliers of the defendant and that it could proceed
with the execution of the tender. Nothing happened however until May 2002. The
reason for this was that Spoornet, which was buckling under the pressure of existing
orders and did not have any available railway carriages, was unwilling to enter into
transportation contracts with new clients such as the plaintiff. To address this
difficulty, at a meeting with employees of the defendant during May 2002, the plaintiff
expressed a willingness to deliver coal by road. Pursuant to that meeting, on 15 May
2002 the plaintiff despatched a letter to one of the defendant’s employees indicating
that it was willing and able to supply 30 000 tons of coal by road transport. There
followed in that letter a schedule of prices for coal of different calorific values.
[4] On 28 May 2002 the defendant placed an initial order with the plaintiff and,
after a trial run using road transportation, placed several more orders with the
plaintiff for the month of June. On 13 June 2002 the plaintiff despatched a letter to
the defendant in which it recorded:
'As you are aware Transnet at present cannot supply rail trucks and this has now forced everybody to
turn to road transport which in turn has created a golden opportunity for the owners of trucks to
demand very high fees for road transport . . . ‘.
There followed a schedule of prices. The letter continued
'Be rest assured that the moment that Transnet can supply rail trucks again on a regular basis we
trust that we will then be able to reduce our prices as follows . . . ‘.
A schedule of lower prices then followed. Whilst awaiting a response to that letter
the plaintiff continued to deliver coal by road at the price originally agreed with
reference to rail transportation.
[5] By letter dated 22 August 2002 the plaintiff was informed that its application
for an increase in price had been approved and that the new prices, which would
come into effect on 1 July 2002, would be as set out in a document annexed thereto.
The plaintiff implemented its terms with retrospective effect to that date and invoiced
the municipality for the difference between the original price and the increased price
for the months of July and August. These invoices were paid by the defendant. The
plaintiff continued thereafter to supply and deliver coal to the defendant at the
increased price for the remainder of 2002 and the month of January 2003. It invoiced
the defendant and was paid up to and including November 2002.
[6] On 8 January 2003 the plaintiff received a letter from the defendant which
read: 'Your final account for December 2002 to the amount of R1 755 485.80 has been settled
without alterations.'
The consequent payment anticipated by the plaintiff after receipt of that letter did not
materialise. Instead, by letter dated 30 January 2003, the plaintiff was informed that
the incorrect annexure had inadvertently been affixed to the municipality's letter of
22 August 2002. The correct annexure which, it was asserted, had to replace the
previous annexure, was enclosed.
[7] The plaintiff’s subsequent demand for payment for the months of December
2002 and January 2003 elicited the response from the defendant that the plaintiff
had been overpaid for the months of July to November 2002. In consequence, so it
was asserted by the defendant, the plaintiff was in fact indebted to it (the defendant).
[8] The plaintiff caused summons to be issued out of the Pretoria High Court for
payment of the sum of R 2 646 134.40 for what it alleged was the defendant's total
outstanding indebtedness to it for coal supplied and delivered to the latter for the
months of December 2002 and January 2003. In the alternative the plaintiff alleged
that the defendant had retained and utilised the full volume of coal that had been
delivered to it and it therefore had been enriched at the expense of the plaintiff in that
sum. However, the plaintiff deliberately chose not to pursue its claim based on
enrichment in the court a quo.
[9] The first of the various defences raised by the defendant in its plea and the
only one that I will in due course consider was the following: ‘Defendant pleads that
at no time did it resolve to vary the supply contract … as required by s 38(1) of the
Gauteng Rationalisation of Local Government Affairs Act 10 of 19981 (“the Act”) nor
did it comply with the formalities prescribed by s 38(3) of the Act at any stage’. The
plaintiff replicated that the defendant was precluded by the doctrine of estoppel from
relying on s 38 of the Act. Patel J, who heard the matter, granted judgment in favour
of the plaintiff. This appeal is with his leave.
[10] Section 38 of the Act provides:
‘Extending or varying a tender agreement
1 Rationalisation of Local Government Affairs Act 10 of 1998, PN 66, PG 550, 30 October 1998.
(1)
Subject to subsection (2), a municipal council on its own initiative or upon receipt of an
application from the person, body, organisation or corporation supplying goods or services to
the municipal council in terms of this Chapter, may resolve to extend or vary a tender
agreement if-
(a)
the circumstances as contemplated in section 35(2)(a) prevail; or
(b)
with due regard to administrative efficiency and effectiveness, the council deems
appropriate.
(2)
A municipal council may not extend or vary a tender agreement -
(a)
more than once;
(b)
for a period exceeding the duration of the original agreement; or
(c)
for an amount exceeding twenty (20) percent of the original tender value.
(3)
Within one month of the resolution referred to in subsection (1), the matters specified in
subsection (4) must be -
(a)
published by the municipal council at least in an appropriate newspaper circulating
within the boundaries of the municipality; and
(b)
displayed at a prominent place that is designed for that purpose by a municipal
council.
(4)
The matters to be published or displayed are -
(a)
the reasons for dispensing with the procedure specified in section 36;
(b)
a summary of the requirements of the goods or services; and
(c)
the details of the person, body, organisation or corporation supplying the goods or
services.
(5)
The functions of a municipal council in terms of this section may not be assigned nor
delegated.’
[11] It is important at the outset to distinguish between two separate, often
interwoven, yet distinctly different ‘categories’ of cases. The distinction ought to be
clear enough conceptually. And yet, as the present matter amply demonstrates, it is
not always truly discerned. I am referring to the distinction between an act beyond
or in excess of the legal powers of a public authority (the first category), on the one
hand, and the irregular or informal exercise of power granted (the second category),
on the other. That broad distinction lies at the heart of the present appeal, for the
successful invocation of the doctrine of estopppel may depend upon it. (See T E
Dönges & L de van Winsen Municipal Law 2ed (1953) pp 38 – 41.)
[12] In the second category, persons contracting in good faith with a statutory body
or its agents are not bound, in the absence of knowledge to the contrary, to enquire
whether the relevant internal arrangements or formalities have been satisfied, but
are entitled to assume that all the necessary arrangements or formalities have
indeed been complied with (see for example National and Overseas Distributors
Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473 (A); Potchefstroom se
Stadsraad v Kotze 1960 (3) SA 616 (A)). Such persons may then rely on estoppel if
the defence raised is that the relevant internal arrangements or formalities were not
complied with.
[13] As to the first category: failure by a statutory body to comply with provisions
which the legislature has prescribed for the validity of a specified transaction cannot
be remedied by estoppel because that would give validity to a transaction which is
unlawful and therefore ultra vires. (See for example Strydom v Die Land- en
Landbou Bank van Suid-Afrika 1972 (1) SA 801 (A); Abrahamse v Connock's
Pension Fund 1963 (2) SA 76 (W) and Hauptfleisch v Caledon Divisional Council
1963 (4) SA 53 (C).)
[14] Patel J found in effect that this case fell into the second category. For the
reasons that follow I am in respectful disagreement with the learned judge. In the
present case, the defendant's legal capacity to amend the supply contract must be
sought in the provisions of the statute. A resolution by the defendant's council was
prescribed by s 38(1) as a necessary prerequisite for amending or varying the supply
contract. Absent such a resolution, any purported amendment by employees of the
defendant was plainly impermissible. Moreover, s 38(5) specifically prohibited the
defendant's council from delegating or assigning those functions. Here, of course,
we are dealing not merely with the form in which the statute requires a transaction to
be clothed, but with something more fundamental. The statute expressly confers
sole power upon a specified entity, to the exclusion of any other person or entity, to
extend or vary an existing tender agreement. The linguistically plain meaning of the
section severely restricts the power (vires) to enter into a transaction of that kind to
the defendant's council.
[15] Section 217 of the Constitution requires contracts for services or goods by an
organ of state such as the defendant to accord with a system that is fair, transparent,
competitive and cost-effective. Against that backdrop, the mischief that s 38 of the
Act seeks to prevent is plain. It is to eliminate nepotism, patronage, or worse, and to
entrust the council of the defendant with a sole power which is to be exercised
independently by it to achieve those ends. If the conclusion of contracts were to be
permitted without any reference to the defendant's council and without any sanction
of invalidity, the very mischief which the legislation seeks to combat could be
perpetuated.
[16] There are formidable obstacles to the plaintiff’s reliance upon the doctrinal
device of estoppel. Assuming in the plaintiff's favour that all of the requirements for
its successful invocation have been established, this is not a case in which it can be
allowed to operate. It is settled law that a state of affairs prohibited by law in the
public interest cannot be perpetuated by reliance upon the doctrine of estoppel
(Trust Bank van Afrika Bpk v Eksteen 1964 (3) SA 402 (A) at 411H-412B), for to do
so would be to compel the defendant to do something that the statute does not allow
it to do. In effect therefore it would be compelled to commit an illegality (Hoisain v
Town Clerk, Wynberg 1916 AD 236).
[17] The amending of the supply contract was at the instance of the defendant's
employees who were plainly not authorised to do so. The defendant had thus not
acted in fact nor, for that matter, is it considered in law to have acted at all. No
amendment of the supply contract had therefore occurred. The effect of allowing
estoppel to operate would be to breathe life into that which has yet to come into
being. If the amendment were to be 'validated' by the operation of estoppel, the
defendant would be precluded from exercising the powers specifically conferred
upon it for the protection of the public interest.
[18] The fact that the plaintiff was misled into believing that the defendant's
employees were authorised to vary an agreement that had earlier been lawfully
concluded with it can hardly operate to deprive the defendant of that power which
had been bestowed upon it by the legislature. To do so would be to deprive the ultra
vires doctrine of any meaningful effect.
[19] In finding for the plaintiff, Patel J held that the doctrine of estoppel could be
successfully invoked by it in this case. To support this finding he called in aid the
judgment of Boruchowitz J in Eastern Metropolitan Substructure v Peter Klein
Investments (Pty) Ltd 2001 (4) SA 661 (W). In that case Boruchowitz J expressed
the view that the Constitution obliged him to reconsider the existing common law rule
which precludes the raising of an estoppel where its effect is to prevent or excuse
the performance of a statutory duty or discretion, although, as he put it (para 34):
'The difficulty, as I comprehend it, is not with the rule but with its application. The rule itself does not
infringe any provision of the Bill of Rights, and is in conformity with the doctrine of legality implied in
the Constitution. . . . As the facts of the present case amply demonstrate, the blanket application of
the rule may in certain instances run counter to a fundamental rights provision or value which
underpins the Constitution.'
Precisely which fundamental rights provision or constitutional value he had in mind,
the learned judge did not state. Nor, for that matter, does this emerge with any
clarity from the judgment. Boruchowitz J continued (para 40):
'What is required, in the present instance, is not a setting aside of the common-law rule but an
incremental change in its application, necessary to ensure that the underlying values and
constitutional objectives are achieved. Instead of permitting a barrier to the raising of estoppel
against a public authority exercising public power, the common law should be developed to
emphasise the equitable nature of estoppel, and its function as a rule allocating the incidence of loss.'
[20] I accept, as did Boruchowitz J, that courts are enjoined to develop the
common law, if this is necessary. That power is derived from sections 8(3) and 173
of the Constitution. Section 39(2) of the Constitution makes it plain that, when a court
embarks upon a course of developing the common law, it is obliged to ‘promote the
spirit, purport and objects of the Bill of Rights’ (S v Thebus 2003 (6) SA 505 (CC)
para 25). This ensures that the common law will evolve, within the framework of the
Constitution, consistently with the basic norms of the legal order that it establishes
(Pharmaceutical Manufacturers Association of South Africa; In re Ex parte President
of the Republic of South Africa 2000 (2) SA 674 (CC) para 49). The Constitutional
Court has already cautioned against overzealous judicial reform. Thus, if the
common law is to be developed, it must occur not only in a way that meets the s
39(2) objectives, but also in a way most appropriate for the development of the
common law within its own paradigm (Carmichele v Minister of Safety and Security
2001 (4) SA 938 (CC) para 55).
[21] Faced with such a task, a court is obliged to undertake a two-stage enquiry.
First, it should ask itself whether, given the objectives of s 39(2), the existing
common law should be developed beyond existing precedent. If the answer to that
question is a negative one, that should be the end of the enquiry. If not, the next
enquiry should be how the development should occur and which court should
embark on that exercise. (See S v Thebus para 26.)
[22] Had that exercise been undertaken by Boruchowitz J, the first enquiry would,
in my view, have yielded a negative response. With respect to the learned judge, his
reasoning fails to draw the crucial distinction between the two categories to which I
have already alluded. The dicta of this court in Hoisain v Town Clerk, Wynberg, on
the one hand, and National and Overseas Distributors Corporation (Pty) Ltd v Potato
Board, on the other, exemplify that distinction. In Hoisain, Innes CJ stated (at 240):
'It is sought to compel the Town Clerk to place the applicant's name upon the statutory list; he
can only do that upon the grant of a certificate by the Council, which that body has definitely refused
to give. Such a certificate is not in truth in existence. So that the Court is asked to compel the Town
Clerk to do something which the Statute does not allow him to do; in other words we are asked to
force him to commit an illegality. There can be no question of estoppel as far as he is concerned. His
negligence cannot be a substitute for the Council's approval, nor can he by virtue of his mistake be
compelled to bring about a position which he has no power in law to create by his own free will.'
In Potato Board, Schreiner JA stated (at 48A-E):
'We were referred to the case of Hoisain v Town Clerk, Wynberg, 1916 A.D. 236, where a
town clerk had in error issued a certificate for the transfer of a business to the wrong person. INNES,
C.J., at p. 240, dealt with an argument based on the rule in Royal British Bank v Turquand, 119 E.R.
474, and said that it had no application to such a situation as the one before the Court, which was
being asked to force the town clerk to commit an illegality by placing Hoisain's name on a statutory list
which could include only the names of persons to whom the council had granted certificates. The
present is an entirely different kind of case. For here although Mr. Rust had no right as against the
respondent to enter into a contract for the respondent which had not been approved by the Board
there was no illegality if in fact he did so.
The contract being one which the respondent could lawfully enter into and Mr. Rust having
been the proper person to make contracts when an approving resolution by the Board had been
passed, it seems to follow that so far as the outside world was concerned he bound the respondent
when he made a contract without such a resolution. (cf. S.A.I.F. Co-operative Society v Webber, 1922
T.P.D. 49). The rule in Royal British Bank v Turquand, supra, which was followed in Mine Workers'
Union v J.J. Prinsloo, 1948 (3) S.A. 831 (A.D.), applies and any mistake that may have occurred and
led to the appellant's tender being accepted without a supporting resolution by the Board could not
prejudice the appellant. So far as it was concerned there was a properly made contract binding on
the respondent.'
[23] Boruchowitz J concluded (para 40) that:
‘ . . . the proper approach, consistent with s 39(2) is that the Court should balance the individual and
public interests at stake and decide on that basis whether the operation of estoppel should be allowed
in a specific case’.
That approach with respect to the learned judge is fallacious. Estoppel cannot, as I
have already stated, be used in such a way as to give effect to what is not permitted
or recognised by law. Invalidity must therefore follow uniformly as the consequence.
That consequence cannot vary from case to case. 'Such transactions are either all
invalid or all valid. Their validity cannot depend upon whether or not harshness is
discernible in a particular case.' (per Marais JA in Eastern Cape Provincial
Government v Contractprops 25 (Pty) Ltd 2001 (4) SA 142 (SCA) para 9).
Boruchowitz J, I should perhaps add, sought support for his view in the judgment of
Laker Airways Ltd v Department of Trade [1997] 2 All ER 182 (CA), where Lord
Denning MR stated (at 194 D-F):
‘…It [the Crown] can, however, be estopped when it is not properly exercising its powers, but
misusing them; and it does misuse them if it exercises them in circumstances which work injustice or
unfairness to the individual without any countervailing benefit for the public:…’.
Significantly the view expressed by Lord Denning MR has subsequently been
overruled by the House of Lords in R v East Sussex County Council, ex parte
Reprotech (Pebsham) Ltd; Reprotech (Pebsham) Ltd v East Sussex County Council
[2002] 4 All ER 58 para 35.
[24] With respect to Boruchowitz J, what he postulates is, in my view, the
antithesis of that demanded by the Constitution. Section 173 of the Constitution
enjoins courts to develop the common law by taking into account the interests of
justice. The approach advocated by the learned judge, if endorsed, would have the
effect of exempting courts from showing due deference to broad legislative authority,
permitting illegality to trump legality and rendering the ultra vires doctrine nugatory.
None of that would be in the interests of justice. Nor, can it be said, would any of
that be sanctioned by the Constitution, which is based on the rule of law, and at the
heart of which lies the principle of legality.
[25] I accordingly can find no warrant for the approach postulated by Boruchowitz
J. Neither, I must add, do I agree with the conclusion reached by him. It follows that
on this aspect, Boruchowitz J was wrong, as indeed was the learned judge in the
present case. The appeal must therefore succeed. This result may well be perceived
to be an unpalatable one. It is, however, not so. For it must be remembered that
someone in the position of the plaintiff has, in principle, an enrichment action and will
thus not be entirely remediless. In this case, as I have already mentioned, the
plaintiff consciously elected at the trial not to pursue its enrichment claim. It must
therefore bear the consequences of that election.
[26] In the result:
(a)
The appeal succeeds with costs.
(b)
The judgment of the court a quo is altered to one of absolution from the
instance with costs.
V M PONNAN
JUDGE OF APPEAL
CONCUR:
HARMS ADP
FARLAM JA
LEWIS JA
MUSI 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
27 March 2007
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
CASE
CITY OF TSHWANE METROPOLITAN MUNICPALITY v RPM BRICKS (PTY) LTD
(Case No 177 / 06)
Media Statement
Today the Supreme Court of Appeal upheld an appeal by the City of Tshwane against a judgment of
the Pretoria High Court. The judgment of the High Court in the sum of R 2 646 134.40 in favour of the
respondent RPM Bricks was altered to one of absolution from the instance.
The respondent, a supplier of coal, had caused summons to be issued for payment for coal which had
been supplied and delivered to the appellant in consequence of a purported amendment to a supply
contract that had subsisted between the parties. The appellant, in its defence, contended that the
formalities prescribed for the varying of the supply contract by section 38 of the Gauteng
Rationalisation of Local Government Affairs Act 10 of 1998 had not been complied with. The
respondent asserted, in response, that the appellant was estopped from relying on s 38 of the Act to
avoid payment. The High Court agreed with the respondent.
On appeal the SCA held that a distinction had to be drawn between an act beyond or in excess of the
legal powers of a public authority on the one hand, and the irregular or informal exercise of power
granted on the other. According to the SCA, persons dealing with a statutory body are not bound,
when dealing in good faith with a statutory body, in the absence of knowledge to the contrary, to
enquire whether the relevant internal formalities of the statutory body had been satisfied. Accordingly,
in that situation estoppel could be successfully invoked. Where, however, a statutory body had failed
to comply with provisions which the legislature had prescribed for the validity of a specified
transaction, resort could not be had to estoppel for that would give validity to a transaction which is
unlawful and therefore ultra vires. It followed therefore that the High Court was wrong in its conclusion
that estoppel could be successful raised in this case. Accordingly, the appeal had to succeed.
--- ends --- |
2818 | non-electoral | 2012 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case no: 635/11
In the matter between:
DON TOUBIE
Appellant
and
THE STATE
Respondent
Neutral citation:
Toubie v S (635/11) [2012] ZASCA 133 (27 September 2012)
Coram:
HEHER, MHLANTLA, BOSIELO, SHONGWE JJA
and ERASMUS AJA
Heard:
31 August 2012
Delivered:
27 September 2012
Summary:
Criminal law – interpretation of Section 22 of the Supreme Court Act 59
of 1959 and s 322 of the Criminal Procedure Act 51 of 1977 – the effect
of a trial court failing to inform an accused person of the applicability of
the Criminal Law Amendment Act 105 of 1997.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: South Gauteng High Court (Johannesburg) (Malan J, Khampepe J
and Farber AJ sitting as court of appeal)
The appeal is upheld. The order of the full court in paragraphs 4, 5, 6.1 and 6.2 is set
aside and replaced with the following:
“The appellant is sentenced as follows:
1 On count 1 (robbery) ten years’ imprisonment.
2 On count 4 (murder) 25 years’ imprisonment.
3 On count 6 (attempted murder) five years’ imprisonment.
4 On count 9 (possession of firearm) three years’ imprisonment.
5 On count 10 (possession of ammunition) two years’ imprisonment.
6 Five years of the sentence in count 1 and the sentences in counts 6, 9 and 10 shall
run concurrently with the sentence in count 4. Effectively the appellant shall serve 30
years’ imprisonment. The sentences are antedated to 4 September 2001.”
___________________________________________________________________
JUDGMENT
___________________________________________________________________
SHONGWE JA (MHLANTLA, BOSIELO JJA, ERASMUS AJA concurring)
[1] This appeal arose from what the appellant says was a shopping spree for the
new year of 1999 at the Paputsi clothing store in the centre of Johannesburg. Sadly
this ended in a horrific robbery of the staff accompanied by random shooting which
resulted in the death of an innocent passer-by.
[2] As a result of what I have briefly described above, the appellant was
arraigned before Mophosho AJ in the South Gauteng High Court (Johannesburg).
He was convicted as follows: three counts of robbery with aggravating circumstances
as defined in s 1of the Criminal Procedure Act 51 of 1977 (CPA), and sentenced to
six years’ imprisonment on each count; murder, and sentenced to 20 years’
imprisonment; three counts of attempted murder, and sentenced to six years
imprisonment on each count; unlawful possession of firearms, and sentenced to
three years’ imprisonment; and unlawful possession of ammunition, and sentenced
to two years’ imprisonment. The trial court ordered that the sentences on the counts
of robbery, attempted murder and unlawful possession of firearms and ammunition
‘shall run concurrently with each other, but not with the murder sentence’. Effectively
the appellant would serve 26’ years imprisonment.
[3] Immediately after the imposition of sentence, the appellant’s legal
representative (Mr Omar) orally applied for leave to appeal and, inter alia, said the
following: -
‘M’Lord, I informed the court yesterday of my intention or instructions to pursue application
for leave to appeal m’Lord. I did hastily last night apply my mind to the reasons for the
application for leave to appeal as far as the conviction is concerned. As far as the sentence
is concerned it was very general, but it has been included m’Lord. With the permission of
your Lordship, I will hand your Lordship the notice of application for leave to appeal and a
copy to my colleague and address your Lordship. May I proceed m’Lord?.’
Unfortunately Mr Omar’s address to the court as well as the State counsel’s address
do not form part of the record before us, nor does the notice of application for leave
to appeal as undertaken by Mr Omar. Clearly the record before us is to some extent
incomplete and falls short of the requirements in s 316 (4) (a) and (b) of the CPA
which reads as follows:
‘(4)(a) Every application for leave to appeal must set forth clearly and specifically the
grounds upon which the accused desires to appeal.
(b) If the accused applies orally for such leave immediately after the passing of the sentence
or order, he or she must state such grounds, which must be recorded and form part of the
record.’
The trial court granted leave to appeal to the full court of the South Gauteng High
Court (Johannesburg) against conviction.
[4] The full court (Farber AJ, Malan J and Khampepe J concurring) instead of
considering the appeal against conviction only, being of the view that the sentences
imposed by the trial court were inappropriate or incompetent, also dealt with the
sentences. The court gave due notice to the parties that it intended to revisit the
sentences imposed. I shall revert to this aspect later in this judgment. The full court
started by analysing the principles of onus of proof in criminal cases, the standard of
proof beyond reasonable doubt, the approach to be adopted in determining whether
the onus has been discharged in a particular case and the power of an appeal court
to upset the factual findings of a trial court (see S v Toubie 2004 (1) SACR 530 (W)
at 533 e – 535 i). Nothing turns on the legal principles and the conviction for
purposes of this appeal. This appeal concerns a question of law, namely whether the
full court was competent to deal with the question of sentence which was not the
subject of appeal.
[5] It is necessary to briefly state the background of what actually happened on
that fateful day. The State alleged that the appellant together with other persons,
who unfortunately were not charged, entered the store brandishing firearms and
demanded money and started removing some of the goods in the store. They
threatened and assaulted the staff, removed a wrist watch from one Mr Corrie van
Zyl, the store manager, a wallet and some jewellery and a firearm from the security
officer who guarded the store. After the robbers had removed the goods they left the
store. They were confronted by other security officers and a shooting ensued
between the robbers and security officers. Passers-by were shot and injured and one
was fatally wounded; one of the robbers was also killed during the shoot-out. The
appellant, who sustained a bullet wound, was pursued by the security officers and
eventually apprehended. The full court described what happened as ‘bedlam of the
worst kind’.
[6] The appellant did not testify nor did he call any witnesses. He however
handed up a written statement in terms of the provisions of s 115 of the CPA. He
placed himself at the scene of the crime as an innocent person who accompanied
his friend, one Eugene, to buy shoes. He also admitted that when Eugene
discovered that he did not have enough money to pay for the shoes, they decided to
leave the store but returned immediately after agreeing to steal them. He denied
having knowledge that his friends possessed firearms and that he had the intention
to kill anyone.
[7] The full court, after a careful consideration of the facts and the law, came to
the conclusion that the State had proved its case beyond a reasonable doubt on
some of the charges. I agree with that conclusion. It stated that three robbery
charges (counts 1, 2 and 3) should be treated as one, because to separate them
would result in a duplication or splitting of charges. The convictions on counts 2 and
3 were consequently set aside. It found that the State had not proved its case on the
attempted murder charges (counts 5 and 7) beyond reasonable doubt and set aside
the convictions on these charges.
[8] The full court then turned to the question of sentence and the applicability of
s 51 of the Criminal Law Amendment Act 105 of 1997 (the Act) read with Part I of
Schedule 2 thereof. It invoked the provisions of s 322 of the CPA after giving the
requisite notice to the parties. The full court set aside the sentences imposed in
respect of counts 1 and 4 and replaced them with 15 years’ imprisonment and life
imprisonment respectively. More will be said on the Criminal Law Amendment Act
later in this judgment.
[9] Before us the appellant contends that the full court was not competent to deal
with the question of sentence at all as it did not form the subject of the appeal.
Reliance is placed on the provisions of s 22 of the Supreme Court Act 59 of 1959
which reads as follows:
‘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; and
(b) to confirm, amend or set aside the judgment or order which is the subject of the appeal
and to give any judgment or make any order which the circumstances may require.’
[10] Mr Omar contends that the words ‘which is the subject of the appeal’ in s 22
(b) should be interpreted to mean that because the appeal was against conviction
only, the full court could not interfere with the sentence even if it was of the view that
failure to interfere would result in an injustice. This argument is without substance
and falls to be rejected outright. Subsection (b) of s 22 clearly and unambiguously
provides that over and above the power to confirm, amend or set aside the judgment
or order which is the subject of the appeal, the provincial or local division having
appeal jurisdiction is also empowered to ‘give any judgment or make any order which
the circumstances may require’. (See S v Citizen Newspapers (Pty) Ltd en ʼn ander;
S v Perskorporasie van SA Bpk en ʼn ander 1981 (4) SA 18 (A) at 19G-H). It was
held that where there is no appeal against sentence, the Appeal Court is empowered
in terms of section 22 (b) of Act 59 of 1959 to give any judgment or make any order
which the circumstances may require. Immediately after the words ‘subject of appeal’
in sub-(b) of s 22 is the word ‘and’, which is a conjunction, being a word used to
connect clauses, sentences or words in the same clause (The Concise Oxford
Dictionary – Ninth Edition).
[11] Section 22 of the Supreme Court Act is to a great extent complemented by
the provisions of s 322 of the CPA which also deals with the powers of a court of
appeal. It reads as follows:
‘(1) In the case of an appeal against a conviction or of any question of law reserved, the
court of appeal may –
(a) allow the appeal if it thinks that the judgment of the trial court should be set aside on the
ground of a wrong decision of any question of law or that on any ground there was a failure
of justice; or
(b) give such judgment as ought to have been given at the trial or impose such punishment
as ought to have been imposed at the trial; or
(c) make such other order as justice may require:
Provided that, notwithstanding that the court of appeal is of opinion that any point raised
might be decided in favour of the accused, no conviction or sentence shall be set aside or
altered by reason of any irregularity or defect in the record or proceedings, unless it appears
to the court of appeal that a failure of justice has in fact resulted from such irregularity or
defect.
(2) Upon an appeal under section 316 or 316B against any sentence, the court of appeal
may confirm the sentence or may delete or amend the sentence and impose such
punishment as ought to have been imposed at the trial.
(3) Where a conviction and sentence are set aside by the court of appeal on the ground that
a failure of justice has in fact resulted from the admission against accused of evidence
otherwise admissible but not properly placed before the trial court by reason of some defect
in the proceedings, the court of appeal may remit the case to the trial court with instructions
to deal with any matter, including the hearing of such evidence, in such manner as the court
of appeal may think fit.
(4) …
(5) …
(6) The powers conferred by this section upon the court of appeal in relation to the
imposition of punishments, shall include the power to impose a punishment more severe
than that imposed by the court below or to impose another punishment in lieu of or in
addition to such punishment’.
In the present case the full court dealt with the appeal against both the conviction
and sentence. This is notwithstanding the fact that the appellant had appealed
against the conviction only. As mentioned earlier the trial court granted leave against
conviction and was silent on the sentence. It is apposite to refer to s 316 (3)(e) of the
CPA which deals with applications for condonation, leave to appeal and further
evidence. It reads as follows:
‘(3) (e) Upon an appeal under this subsection the provisions of section 322 shall apply
mutatis mutandis with reference to the powers of the Supreme Court of Appeal.’
[12] In S v Shenker & another 1976 (3) SA 57 (A), at 60 A, Galgut JA said
‘The grounds must be clearly and specifically set out. It follows that an applicant for leave to
appeal would have to set out whether he is appealing against the conviction or sentence or
both. However, even if this was not done or even if the trial judge refused leave to appeal
against the sentence, the Court of Appeal is not precluded from exercising the powers
granted to it by section 369 (1) (b).’ (My emphasis)
Section 369(1)(b) of Criminal Procedure Act 56 of 1955 is the predecessor to s 322
of the CPA. For a neat and detailed comparison see S v Toubie (supra) at 530-556
and the cases referred to therein. Subsection (6) of s 322 undoubtedly confers power
to the appeal court to impose punishment more severe than that of the trial court or
to impose another punishment in the place of or in addition to such punishment. In
the present case it is not in dispute that the clerk to Stegmann J, on 28 January
2003, sent a notice to the legal representative of the appellant alerting him of the
possibility that the sentence may be increased in respect of the murder charge from
20 years’ imprisonment to life imprisonment in terms of the minimum sentence
regime. Mr Omar, on behalf of the appellant, responded and undertook to advise the
appellant of his rights. His view was and still is that this appeal was and is about the
propriety of the appellant’s conviction and not the sentence, hence the contention
that the full court was not competent to deal with the issue of sentence.
[13] Section 22 of the Supreme Court Act read together with s 322 of the CPA
must be understood to provide that a court of appeal is empowered to confirm,
amend or set aside a judgment or order which is the subject of the appeal and give
any judgment or make any order which the circumstances may require. (My
emphasis) The intention is for a court of appeal to dispense justice. An appeal court
cannot close its eyes to a patent injustice simply because the injustice is not a
subject of appeal. If, for example, the sentence imposed by the court below is
shockingly inappropriate and in excess of what the law permits, the appeal court is
empowered to interfere to avoid a miscarriage of justice. See R v Deetlefs 1953 (1)
SA 418 (A); R v Myburgh 1922 AD 249; S v F 1983 (1) SA 747 (O) at 752E–754 C;
also see s 309(3) of the Criminal Procedure Act). I am not aware of any later
decision, and Mr Omar did not refer to one overruling these cases. In the result, I find
that his submissions are without substance. Accordingly I find that the full court was
empowered by both s 22 of the Supreme Court Act and s 322 of the CPA to deal
with sentence even though it was not a subject of the appeal.
[14] That however is not the end of this matter. This court mero motu raised the
question relating to the Criminal Law Amendment Act 105 0f 1997 (the Act). The
indictment alleged, and it is not in dispute that the State proved the offence of
robbery with aggravating circumstances as defined in s 1 of the CPA. Had the
appellant been forewarned, by the trial court, that the State was going to rely on the
provisions of the minimum sentence regime the appellant’s conduct would have
attracted the sentence prescribed in accordance with the provisions of s 51(2)(a)
read with Part II of Schedule 2 of the Act. In this case the appellant was also
convicted of murder in circumstances as defined in s 51 (1) read with Part I of
Schedule 2 of the Act. Therefore the sentences in both the robbery and the murder
were subject to subsections 3 and 6 which provide that if the court is satisfied that
substantial and compelling circumstances exist which justify the imposition of a
lesser sentences than the sentence prescribed, (in the case of robbery 15 years
imprisonment is prescribed for first offenders and life imprisonment is prescribed for
murder), it shall enter the circumstances on the record and must therefore impose
such lesser sentence.
[15] The record of the proceedings is however silent on the question whether the
appellant was informed of the provisions of the minimum sentence legislation. The
indictment also does not indicate any reliance on the Act. The first time the trial court
mentioned the legislation and in particular the non-existence of substantial and
compelling circumstances was when it was considering an appropriate sentence.
Notwithstanding the findings that no substantial and compelling circumstances
existed, the trial court imposed a sentence lesser than the prescribed minimum
sentence. In my view, this irregularity is of a double-barrelled nature. First the
appellant was not informed of the applicability of the provisions of the minimum
sentence regime and second, despite finding no substantial and compelling
circumstances, the trial court did not impose the prescribed minimum sentence.
Realizing the mistake of the trial court the full court attempted to rectify that mistake,
but, in my view, it was too late for the reasons set out below. The imposition of the
increased sentences by the full court caused some consternation to the appellant
and resulted in this appeal.
[16] The crimes committed by the appellant fall squarely within the ambit of Part II
of Schedule 2 and Part I of Schedule 2 respectively. The robbery was accompanied
by aggravating circumstances; therefore, the minimum sentence prescribed is 15
years’ imprisonment for a first offender. The murder was committed during the
robbery and was committed by a group of persons acting in the execution of a
common purpose. At the stage when the full court dealt with the question of the
minimum sentence, it was tantamount to closing the stable door after the horse had
already bolted. In S v Jaipal 2005 (1) SACR 215 (CC) Van der Westhuizen J said
that ‘an irregularity is an irregular or wrongful deviation from the formalities and rules of
procedure aimed at ensuring a fair trial’. (See also The State v Mofokeng 1962 (3) SA
551 (A) at 557 and S v Ramovha en ʼn ander 1986 (1) SA 790 (A) at 795H).
[17] In S v Ndlovu 2003 (1) SACR 331 (SCA) para 12, Mpati JA said:
‘And I think it is implicit in these observations that where the State intends to rely upon the
sentencing regime created by the Act a fair trial will generally demand that its intention
pertinently be brought to the attention of the accused at the outset of the trial, if not in the
charge-sheet then in some other form, so that the accused is placed in a position to
appreciate properly in good time the charge that he faces as well as its possible
consequences. Whether, or in what circumstances, it might suffice if it is brought to the
attention of the accused only during the course of the trial is not necessary to decide in the
present case. It is sufficient to say that what will at least be required is that the accused be
given sufficient notice of the State’s intention to enable him to conduct his defence properly.’
[18] In S v Legoa 2003 (1) SACR 13 (SCA) Cameron JA referred with approval to
S v Seleke en andere 1976 (1) SA 675 (T) at 682H. In Seleke the full court said the
following:
‘To ensure a fair trial it is advisable and desirable, highly desirable in the case of an
undefended accused, that the charge sheet should refer to the penalty provision. In this way
it is ensured that the accused is informed at the outset of the trial, not only of the charge
against him, but also of the State’s intention at conviction and after compliance with specified
requirements to ask that the minimum sentence in question at least be imposed.’
(Translation by Cameron JA)
This was said some 18 years before the dawn of our new constitutional dispensation.
It is the more relevant to our times than then, that the right of an accused person to a
fair trial be observed and protected to avoid a miscarriage of justice.
[19] In S v Makatu 2006 (2) SACR 582 (SCA) para 7 Lewis JA held that it is
advisable for an accused person to know from the outset what the implications and
consequences of the charge against him are. This will assist the accused to decide
how he/she was going to conduct the trial, whether to testify and or call witnesses.
[20] Failure to forewarn the accused is in conflict with the provisions of s 35(3)(a)
of the Constitution, 108 of 1996 (the Constitution) which provides that every accused
person has a right to a fair trial which, inter alia, includes the right to be informed of
the charge with sufficient detail to answer it. This court is entitled to raise this issue
mero motu because the irregularity resulted in an injustice and was prejudicial to the
appellant who, in the eyes of the full court deserved life imprisonment for the murder
see (s 322(1)(c) of the CPA). The appellant was legally represented by Mr Omar, a
senior attorney, from the outset of the trial up to this court. I can only assume that Mr
Omar should have been vigilant, but this is no excuse to prejudice the appellant.
[21] The question is, whether the irregularity is of such a nature as to render the
entire proceedings unfair. The answer is no: because not the entire proceedings are
vitiated by the irregularity as this only affects the sentence. The nature of the
irregularity of the sentencing procedure is such that it could be safely separated from
the proceedings as a whole in such a manner that the conviction for robbery and
murder remains intact to satisfy the requirements of a fair trial (Phithela Mapule v
The State [2012] ZASCA 80 para 15).
[22] The irregularity in this case lies in the fact that the appellant was not informed
of the applicability of s 51 of the Criminal Law Amendment Act, either at the plea
stage or during the trial. As the appellant was not informed that he was charged
under the Criminal Law Amendment Act the full court erred in sentencing him in
terms of that Act. He could only have been sentenced, in accordance with the trial
court’s ordinary penal jurisdiction. However, I am of the view that it will not serve any
useful purpose to refer the matter back to the trial court. This court has all the facts
before it and is therefore able to consider the sentence afresh, although the record is
incomplete, nothing of importance is lost, as the missing part is the address to court
by both counsels. However whatever facts the court a quo had before it, this court
also has. This means that the court will consider an appropriate sentence outside the
minimum sentence regime. See Legoa; Ndlovu and Makutu. The appellant has been
in prison since his arrest in December 1998, which is about 14 years. I have a
reasonable apprehension that to refer this matter to the trial court for sentencing will
result in further delays. Such would defeat the purpose of s 35(3)(a) and (d) of the
Constitution and result in a more substantial unfairness. It is clear that both the trial
court and the full court misdirected themselves on sentence. The sentences imposed
have to be set aside. This court is at large to consider the sentence afresh. (See S v
Malgas 2001 (1) SACR 469 (SCA) para 12) (2001 (2) SA 1222; [2001] 3 All SA 220).
I now proceed to deal with the sentence.
[23] I turn now to consider sentence afresh. The offences for which the appellant
was convicted are serious offences. I cannot emphasize this more than it is
necessary. Innocent people were injured and one died because of the conduct of the
appellant and his gang. Society looks up to the courts to protect them and bring to an
end the lawlessness and violent crimes that prevail in the country. The appellant
must consider himself very lucky that only one person died as it was that time of the
year when many people were going about town doing their Christmas and New Year
shopping.
[24] The appellant was 26 years old at the time of the commission of the offences,
unmarried with three children and a first offender. However, his youthfulness should
be seen in the light of his participation in armed robberies. He was a mature adult
and must take responsibility of his action. (See S v Matyityi 2011 SACR 40 (SCA)
para 14). The appellant together with his friends were armed with firearms. When
they decided to rob Paputsi store, they knew or ought to have known that the
firearms would be used. They knew or should have known that they might encounter
resistance and therefore that force would have to be used. The murder of a passer-
by is inexcusable and has to be punished with the most severe sentence.
[25] This court endorses what was said in S v Zinn 1969 (2) SA 537 (A) regarding
the triad. Furthermore this court is alive to the fact that a court must balance the
basic triad without over-emphasizing the one against the other in line with the main
purposes of punishment. In my view an appropriate sentence is one of long term
imprisonment due to the seriousness of these offences.
[26] At the end of the hearing this court was informed that the appellant had been
released on parole on 16 May 2012. It would appear that the parole was granted on
the basis of the sentences imposed by the trial court and not based on the sentences
imposed by the full court The correctional services authorities, apparently did not
have the warrant of detention signed by members of the full court. It is recommended
that a copy of this judgment be brought to the attention of the head of the
correctional services in Boksburg where the appellant was held and another copy to
the Minister of Correctional Services.
[27] In the result the appeal against sentence has to succeed, albeit on a point not
raised by either the appellant or the State.
[28] The appeal is upheld. The order of the full court in paragraphs 4, 5, 6.1 and
6.2 is set aside and is replaced with the following:
“The appellant is sentenced as follows:
1 On count 1 (robbery) ten years’ imprisonment.
2 On count 4 (murder) 25 years’ imprisonment.
3 On count 6 (attempted murder) five years’ imprisonment.
4 On count 9 (possession of firearm) three years’ imprisonment.
5 On count 10 (possession of ammunition) two years’ imprisonment.
6 Five years of the sentence in count 1 and the sentences in counts 6, 9 and 10 shall
run concurrently with the sentence in count 4. Effectively the appellant shall serve 30
years’ imprisonment. The sentences are antedated to 4 September 2001.”
___________________________
J B Z SHONGWE
JUDGE OF APPEAL
HEHER JA (dissenting):
[29] This Court granted the appellant special leave to appeal in terms of
s 316(13)(c) of the Criminal Procedure Act 51 of 1977 against the sentence imposed
on him by the full court of the South Gauteng Division of the High Court. Leave was
limited to the question of whether it was competent for the full court to impose
sentence on counts 1 and 4 where no appeal was noted against sentence and where
leave was not sought from or granted by the trial court against sentence.
[30] Reference to the application to this Court for leave confirms that the narrow
formulation of the order accurately reflected the only ground of appeal relied on by
the appellant in seeking leave. Indeed it was also the only ground addressed in the
heads of argument of the parties and in the oral submissions made to us.
[31] I agree with my brother Shongwe JA that the full court did not err. Whether
relying on s 22(b) of the Supreme Court Act 59 of 1959 or s 322(1)(b) read with
s 322(6) of the Criminal Procedure Act 51 of 1977, that court was empowered to set
aside sentences imposed by the trial court that did not accord with the law – in this
case the minimum sentencing legislation embodied in ss 51(1) and 51(2)(a)(i) of the
Criminal Law Amendment Act 105 of 1997 read with para (c) of the definitions of
‘murder’ in Part I of Schedule 2 and para (a) of the definition of robbery in Part II of
Schedule 2 respectively – and to substitute for such sentences those appropriate to
the offences albeit that the substitutions resulted in increases in the respective
sentences and that the appellant had not appealed to the full court against the
sentences but only against the convictions: S v Citizen Newspapers (Pty) Ltd 1981
(4) SA 18 (A) at 28D-G; S v F 1983 (1) SA 747 (O) at 751; S v Kirsten 1988 (1) SA
415 (A) at 421E-G.
[32] Moreover I find no difference in principle between this case and S v E 1979
(3) SA 973 (A). There an appellant had been charged with rape but convicted by a
judge and assessors of indecent assault. On appeal against his conviction to the full
court, that court substituted a conviction for rape and increased the sentence
accordingly. On a further appeal this Court said (at 977), after considering the
authorities, that where an appeal court is satisfied that the trial court convicted an
appellant of a lesser offence than that with which he was charged, because of a
wrong finding of fact or law, the appeal court is competent, under the Criminal
Procedure Act 51 of 1977, to alter the sentence appropriately and has power either
to remit the case for the imposition of a proper sentence or itself to impose such
sentence. If the court has that power in relation to an error of law that results in an
incorrect conviction it follows that the court should be able to exercise an equivalent
power when such an error results in an incompetent sentence.
[33] For these reasons there was no merit in the appeal and it should, in my view,
be dismissed.
[34] Shongwe JA concludes, however, that there are other grounds for upholding
the appeal, setting aside the compulsory minimum sentences imposed by the court a
quo and reconsidering the sentences. For the reasons which follow I am unable to
agree with him.
[35] During the hearing of the appeal a member of the bench drew attention to the
omission from the indictment of any reference to the provisions of the minimum
sentencing legislation. Counsel for the appellant did not seek to rely on the
shortcoming or to amend his grounds of appeal to incorporate such reliance.
[36] An appeal court will in a proper case allow an enlargement of the issues
beyond the grounds on which leave has been granted: Legal Aid Board v The State
2011 (1) SACR 166 at 176. Whether it will do so depends on the cumulative effect of
a number of considerations, such as
(i)
whether there is sufficient merit in the ground to warrant its inclusion; (ibid at
176b)
(ii)
whether any party may be prejudiced by its inclusion; (ibid at 176c)
(iii)
whether the issue that it raises has been fully canvassed so as to permit of a
fair and complete assessment of its merits: cf Shill v Milner 1937 AD 101 at 105.
[37] The present case requires a negative answer to all three enquiries. I shall
deal with the merits in some detail below. Second, the State was clearly taken by
surprise and in no position to address meaningfully the new ground. Third, the record
was incomplete in respects vital to a proper adjudication and this problem was
exacerbated by the fact that the substance of the complaint had not been drawn to
the attention of either of the lower courts and so we do not have the benefit of their
views. This last aspect, as I shall show, is of particular importance because of the
approach to substantial and compelling circumstances taken by the trial judge in his
judgment on sentence.
[38] The powers of this Court on appeal in criminal matters are regulated by s 322
of the Criminal Procedure Act. Subsection (2) provides
‘Upon an appeal under section 316 [which this is] or 316B against any sentence, the court of
appeal may confirm the sentence or may delete or amend the sentence, and impose such
punishment as ought to have been imposed at the trial.’
[39] Subsection (2) is not made subject to the express proviso to ss (1) that
permits interference with a conviction only if it appears to the court of appeal that a
failure of justice has in fact resulted from an irregularity or defect in the record or
proceedings. Nevertheless, when, as in this appeal, the irregularity is said to have
resulted in an unfair trial, the court’s approach on appeal can be no different from
that which has been established in relation to ss (1).
[40] An irregularity in proceedings does not automatically result in a failure of
justice or an unfair trial. As Cameron JA said in S v Legoa 2003 (1) SACR 13 at para
21:
‘Whether the accused’s substantive fair trial right, including his ability to answer the charge,
has been impaired, will therefore depend on a vigilant examination of the relevant
circumstances.’
See also S v Mabuza and Others 2009 (2) SACR 435 (SCA) at 440e-441g. This is
an approach that accords with the long-established practice in relation to the
determination of whether a failure of justice as contemplated in s 322 has in fact
occurred: R v Rose 1937 AD 467 at 476-7; S v Mushimba 1977 (2) SA 829 (A) at
844H; S v Jaipal 2005 (4) SA 581 (CC) at 599D-601E, and it enables a balance to be
struck between prejudice to the accused and the interest of the public in knowing
that justice has been served. In Hlantalala and Others v Dyantyi NO and Another
1999 (2) SACR 541 (SCA) at para 9 Mpati AJA stressed that ‘no failure of justice will
result if there is no prejudice to an accused’.
[41] No doubt the omission to include reference to the minimum sentencing
provisions in the indictment was an irregularity that could have given rise to an unfair
trial: S v Makatu 2006 (2) SACR 582 (SCA) at 587d. There is however no evidence
whatsoever that it had that consequence in the appellant’s case nor is there any
reason to infer that it did.
[42] The relevant circumstances that bear upon the question of whether the
irregularity in the charge caused any prejudice to the appellant are these:
1.
The appellant was tried in the High Court and was legally represented
throughout the trial and in the two appeals that followed.
2.
The appellant has at no stage relied on the irregularity to impugn the trial
proceedings. He has not, whether in evidence or by affidavit, alleged that he was
unaware of the minimum sentencing requirements or their implications for his case.
Neither has his legal representative asserted his client’s ignorance nor informed the
court that he failed to draw the appellant’s attention to the provisions or explain the
implications to him.
3.
Prejudice to the appellant is a consequence within his peculiar knowledge and
a court need not speculate where he himself is silent. That applies also to his failure
to allege that if he had been properly informed of the minimum sentencing provisions
from the outset of the trial, or at any time during the trial, his prospects would have
improved one iota in relation to sentence.
4.
The appellant’s attorney, who was responsible for preparing the record on
appeal, deliberately omitted all reference to the pre-sentencing proceedings
(apparently comprising pages 257 to 311 of the record). Accordingly this Court is not
informed of whether the appellant was invited to and did (or declined to) adduce
evidence or make submissions in relation to the existence of ‘substantial and
compelling circumstances’ (as envisaged in s 51(3)(a) of the Criminal Law
Amendment Act). Neither the appellant nor his attorney has informed us that he was
not afforded such an opportunity. From his silence and the fact that the trial court
made an express finding concerning the absence of such circumstances it is
reasonable to infer that the provisions of the statute were present to the mind of the
learned judge and that he had taken the steps necessary and appropriate to arrive at
that conclusion.
5.
The senior high court judge in Johannesburg addressed a letter to the
appellant’s attorney in anticipation of the full court appeal in which his attention was
drawn to the finding of the trial court that there were no substantial and compelling
circumstances within the meaning of the statute. The attorney was accordingly
instructed to prepare argument on the competence of the full court to increase the
sentences for murder and robbery with aggravating circumstances and the question
of whether the trial court should not have imposed the statutory minimum sentences
for those offences. The appellant’s attorney replied at some length to the letter but
he did not raise any question concerning the awareness of his client or the
applicability of the prescribed sentences other than in the limited context of the
court’s power to increase the sentences.
[43] In all the circumstances, there being no countervailing evidence to rebut the
inference referred to in point 4 of the preceding paragraph, this Court has no sound
reason to infer that any prejudice to the appellant in fact resulted from the
irregularity. Unfairness in the conduct of the proceedings remains no more than
conjecture. In my view we cannot interfere on so flimsy a foundation.
____________________
J A Heher
Judge of Appeal
APPEARANCES
FOR APPELLANT:
Z Omar
Instructed by:
Zehir Attorneys, Springs;
EG Cooper Majiedt Inc, Bloemfontein.
FOR RESPONDENT:
J M Serepo
Instructed by:
Director of Public Prosecutions, Johannesburg;
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 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.
* * *
DON TOUBIE V THE STATE
The Supreme Court of Appeal (SCA) today upheld the appeal against sentence, however,
held that because of a misdirection by both the trial and court a quo, it was at large to
interfere with the sentence and considered sentencing the appellant afresh outside the
minimum sentence legislation.
What happened was that the appellant was arraigned before the South Gauteng High Court
(JHB) on various charges including robbery with aggravating circumstances in terms of
section 1 of the CPA and murder. He was convicted and sentenced to 6 years’ imprisonment
on the three robbery counts and to 20 years’ imprisonment on the murder count amongst
others. The trial court, when considering sentence found that there were no substantial and
compelling circumstances to justify a lesser sentence than the prescribed one. The indictment
did not mention the fact that the murder had been committed under circumstances provided
for in section 51(1) read with Part I of Schedule II of the Criminal Law Amendment Act 105
of 1997.
The appellant appealed against the conviction only to the full court (South Gauteng High
Court Johannesburg) which partly upheld the appeal by finding that the three robbery counts
were a duplication and dismissed the convictions on counts 2 and 3 of the robbery. It
consequently increased the sentences on robbery to 15 years’ imprisonment and on the
murder to life imprisonment. This it did after duly notifying the appellant of its intention to
interfere with the sentence because both the robbery and murder fell within the provisions of
the minimum sentence legislation. This increase in sentence caused some consternation to the
appellant and resulted in this appeal. Hence the appellant contended that the court a quo (full
court) was incompetent to deal with the question of sentence because it did not form the
subject of the appeal. This contention was based on the appellant’s interpretation of section
22 of the Supreme Court Act 59 of 1959 and section 322 of the CPA.
Based on good authority this court found that section 22 of the Supreme Court Act and
section 322(6) of the CPA confers power to an appeal court to impose punishment more
severe than the trial court or to impose another punishment in place of or in addition to such
punishment. The above interpretation is correct, even if an appellant has noted an appeal
against conviction only, the court of appeal is not precluded from exercising the powers
granted to it by section 322 of the CPA. The Supreme Court of Appeal (SCA) therefore
rejected the appellant’s interpretation of section 22 of the Supreme Court Act and section 322
of the CPA.
The matter did not end, there, this court mero motu raised the question that at no stage was
the appellant informed of the fact that the State was relying on the provisions of the minimum
sentence legislation. Neither did the indictment make mention of the minimum sentence
legislation nor did the trial court forewarn him of the implications of relying on the
sentencing regime. The full court did, however, notify the appellant of its intention to rely on
the minimum sentence legislation but the horse had already bolted. This failure to forewarn
the appellant is an irregularity which resulted in an unfair trial in terms of the Constitution.
To avoid a further injustice, this court sentenced the appellant afresh in accordance with the
trial court’s ordinary penal jurisdiction. |
2815 | non-electoral | 2012 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 640/11
Reportable
In the matter between:
MARIA ANGELINA PAIXÃO
FIRST APPELLANT
MICHELLE ORLANDA SANTOS PAIXÃO
SECOND APPELLANT
v
ROAD ACCIDENT FUND
RESPONDENT
Neutral citation:
Paixão v Road Accident Fund (640/2011) [2012] ZASCA 130
(26 September 2012).
Coram:
Mthiyane DP, Cachalia, Tshiqi, Petse JJA and Southwood AJA
Heard:
10 September 2012
Delivered:
26 September 2012
Summary:
Dependants’ action – Permanent heterosexual life partnership –
reciprocal duty of support established by tacit agreement – Common law
extended to afford protection to dependants.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: South Gauteng High Court, Johannesburg (Mathopo J sitting as
court of first instance):
The appeal succeeds with costs. The decision of the high court is set aside and
replaced with the following:
‗(a)
The respondent is ordered to pay to the first appellant the sum of R1 707 612
million.
(b)
The respondent is ordered to pay the second appellant the sum of R 451 626.
(c)
The respondent is ordered to pay the appellants‘ taxed or agreed costs of the
action which costs are to include the costs of the actuaries, Clemans, Murfin &
Rolland.‘
___________________________________________________________________
JUDGMENT
___________________________________________________________________
CACHALIA JA (Mthiyane DP, Tshiqi, Petse JJA and Southwood AJA concurring):
[1] The main issue in this appeal concerns whether or not the common law
should be developed to extend the dependants‘ action to permanent heterosexual
relationships.
[2] The appellants, Maria Angelina Paixão and her daughter Michelle Orlanda
Santos, sued the respondent, the Road Accident Fund, under s 17(1) of the Road
Accident Fund Act 56 of 1996, for loss of maintenance and support arising from the
death of José Adelino Do Olival Gomes in a motor vehicle collision on 2 January
2008.1 The deceased had been living with the first appellant (Mrs Paixão) and her
children at the time and supported them financially. He had planned to marry her, but
had not yet done so. The South Gauteng High Court, Johannesburg (Mathopo J)2
found that the deceased had supported the appellants out of ‗gratitude‘, ‗sympathy‘
and ‗kindness‘ in return for their assistance during his illness rather than from any
legal duty, and also that it ‗would be an affront to the fabric of our society . . . and
seriously erode the institution of marriage‘ if the dependants‘ action were to be
extended to the appellants. It therefore dismissed their claims against the fund but
granted them leave to appeal to this court.
[3] The essential facts pertaining to the nature of the relationship between the
appellants and the deceased are not in dispute. They emerge from the stated case
and further evidence adduced by three witnesses who testified on behalf of the
appellants – Mrs Paixão herself, Fatima Regina Santos Paixão, her eldest daughter
and Mrs Theresa Goncalves, a close family friend. The fund adduced no rebuttal
evidence. It‘s cross-examination of the three witnesses was aimed at impugning the
appellants‘ assertion that the deceased had had a legal duty rather than merely a
moral commitment to support them.
[4] The facts are these: Mrs Paixão was born in June 1957 on the Portuguese
Island of Madeira, where she received her primary school education up to standard
four. It is not clear when she came to South Africa. She married Manuel Paixão in
1 Section 17 of the Act provides: ‗(1) The Fund or an agent shall—
(a)
subject to this Act, in the case of a claim for compensation under this section arising from
the driving of a motor vehicle where the identity of the owner or the driver thereof has been
established;
(b)
subject to any regulation made under section 26, in the case of a claim for compensation
under this section arising from the driving of a motor vehicle where the identity of neither
the owner nor the driver thereof has been established,
be obliged to compensate any person (the third party) for any loss or damage which the third party
has suffered as a result of any bodily injury to himself or herself or the death of or any bodily injury to
any other person, caused by or arising from the driving of a motor vehicle by any person at any place
within the Republic, if the injury or death is due to the negligence or other wrongful act of the driver or
of the owner of the motor vehicle or of his or her employee in the performance of the employee‘s
duties as employee: Provided that the obligation of the Fund to compensate a third party for non-
pecuniary loss shall be limited to compensation for a serious injury as contemplated in subsection
(1A) and shall be paid by way of a lump sum.‘
2 Paixão and another v Road Accident Fund [2011] ZAGPJHC 68 (1 July 2011).
1980. Three daughters were born of this union: Fatima, Marlize and Michelle, the
second appellant. She is the youngest and was born in February 1991. Manuel
Paixão died in June 2000. After his death Mrs Paixão commenced formal
employment for the first time as a chef in a transport company where her husband
had previously been employed.
[5] Two years later, in 2002, she met the deceased who she had engaged to do
maintenance work on her house. They became good friends. At the time he was
married to Mrs Healdina De Jesus Carreira Melro according to Portuguese law. They
were unhappy and had been living apart for some time.
[6] The relationship between the deceased and Mrs Paixão grew as did his bond
with her daughters. In May 2003, Fatima married. The deceased paid for the
wedding. Fatima testified that he told her that he wished to pay because ‗he felt
responsible for us (and) he wanted to be part of our family . . . of our lives‘.
[7] In October 2003, the deceased fell ill and was hospitalised. Upon his
discharge from hospital Mrs Paixão offered to nurse and support him at her home
until he was able to return to work. He accepted the offer and began living with her
and her two unmarried daughters in a ‗permanent life partnership‘. He was not
formally divorced from his wife at the time. But that marriage was, for all practical
purposes, over.
[8] During their cohabitation, the deceased paid for everything. Mrs Paixão was
retrenched in February 2004, and his was the sole income of their household. The
deceased did not want her to work and undertook to support her and the children. He
assured her that he would marry her as soon as his divorce from his wife was
finalised. He also took care of her, as he had promised to do, by taking full
responsibility for the family‘s food, holidays, university fees of the second daughter,
Marlize, and Michelle‘s school fees. According to Mrs Goncalves he assumed this
obligation ‗because he was living with her (Mrs Paixão) and she was his wife‘. By this
she meant that the community acknowledged that they were living together as if they
were married.
[9] Two significant events occurred in June 2005. First, the deceased divorced
Mrs Melro according to South African law. However, he felt constrained not to marry
Mrs Paixão before his divorce was also concluded and recognised in Portugal.
Second, he executed a Joint Will with Mrs Paixão in which they nominated each
other ‗as the sole and universal heirs of our entire estate and effects of the first dying
of us‘. The Will went on to say that in the event of their simultaneous deaths their
assets were to be consolidated and Mrs Paixão‘s three daughters – referred to in the
Will as ‗our daughters‘ – were to inherit in equal shares. If the event happened
before the daughters turned 21, a trust was to be created for their benefit.
[10] In June 2007 the deceased‘s divorce from his wife was concluded in Portugal.
There were now no legal or practical impediments to his marrying Mrs Paixão and
they began making arrangements to marry. They travelled to Portugal where he
introduced her to his parents, who apparently approved of their relationship. They
planned to be married in Portugal on 12 April 2008. The date was chosen to coincide
with his parents‘ 50th wedding anniversary, which was to be celebrated in Portugal.
To this end, in November 2007, he asked Mrs Goncalves to assist with the flight
details. Sadly, he died two months later before they could make the journey.
Mrs Paixão made arrangements for his body to be flown to Portugal for burial
according to his wishes.
[11] The appellants contend that before and during the period of cohabitation the
deceased had contractually undertaken to maintain and support them, was legally
obliged to do so and would have done so for the remainder of Mrs Paixão‘s life and
until Michelle became self-supporting. The fund maintains that the appellants did not
establish a legally enforceable agreement between the deceased and Mrs Paixão,
and even if they did, the agreement is not enforceable against a third party such as
the fund.
[12] A claim for maintenance and loss of support suffered as a result of a
breadwinner‘s death is recognised at common law as a ‗dependants‘ action‘.3 The
object of the remedy is to place the dependants of the deceased in the same
position, as regards maintenance, as they would have been had the deceased not
been killed.4 The remedy has been described as ‗anomalous, peculiar and sui
generis‘ because the dependant derives her right not through the deceased or his
estate but from the fact that she has suffered loss by the death of the deceased for
which the defendant is liable.5 However, only a dependant to whom the deceased,
whilst alive, owed a legally enforceable duty to maintain and support may sue in
such an action.6 Put differently the dependant must have a right, which is worthy of
the law‘s protection, to claim such support.7 So if a dependant institutes a claim
under the Act, she would be entitled to compensation from the fund for her proven
loss if she establishes this right.8
[13] The existence of a dependant‘s right to claim support which is worthy of the
law‘s protection, and the breadwinner‘s correlative duty of support, is determined by
the boni mores criterion or, as Rumpff CJ in another context put it in Minister van
Polisie v Ewels,9 the legal convictions of the community. This is essentially a judicial
determination that a court must make after considering the interplay of several
factors: ‗the hand of history, our ideas of morals and justice, the convenience of
administering the rule and our social ideas of where the loss should fall‘.10 In this
regard considerations of ‗equity and decency‘ have always been important.11
Underpinning all of this are constitutional norms and values. So the court is required
to make a policy decision based on the recognition that social changes must be
accompanied by legal norms to encourage social responsibility.12 By making the boni
3 Amod v Multilateral Vehicle Accidents Fund 1999 (4) SA 1319 (A) para 6.
4 Legal Insurance Company Ltd v Botes 1963 (1) SA 608 (A) at 614D-F.
5 Santam Bpk v Henery 1999 (3) SA 421 (SCA) at 429E-I.
6 Evins v Shield Insurance Co Ltd 1980 (2) SA 814 (A) at 838A-B.
7 J Neethling, J M Potgieter and P J Visser The Law of Delict 5 ed at 257 n 39; Santam Bpk v Henery
1999 (3) SA 421 (SCA) at 429C-D; Amod v Multilateral Vehicle Accidents Fund 1999 (4) SA 1319
(SCA) para 12. See the commentary on these cases by J Neethling and J M Potgieter ‗Uitbreiding van
die Toepassingsgebied van die Aksie van Afhanklikes‘ (2001) THRHR 484.
8 Section 17(1) of the Road Accident Fund Act 56 of 1996.
9 Minister van Polisie v Ewels 1975 (3) SA 590 (A).
10 Knop v Johannesburg City Council 1995 (2) SA 1 (A) at 27G-I.
11 Amod v Multilateral Vehicle Accidents Fund 1999 (4) SA 1319 (A) para 10.
12 Cf P Q R Boberg The Law of Delict: Aquilian Liability vol 1 at 214.
mores the decisive factor in this determination, the dependants‘ action has had the
flexibility to adapt to social changes and to modern conditions.
[14] Although the precise scope of the dependants‘ action is unclear from the old
Roman-Dutch jurists, there is a strong suggestion that it was not confined only to
those classes of persons to whom the breadwinner had a legal obligation to support,
but was also available to those whom the deceased ‗was accustomed to support
from a sense of duty‘.13 In Amod v Multilateral Vehicle Accidents Fund14 Mahomed
CJ put it thus:
‗[7]
The precise scope of the dependant's action is unclear from the writings of the old
Roman-Dutch jurists. De Groot extends it to ―those whom the deceased was accustomed to
aliment ex officio, for example his parents, his widow, his children . . . .‖ This and other
passages in De Groot's writings perhaps support his suggestion that the action was
competent at the instance of any dependant within his broad family whom he in fact
supported whether he was obliged to do so or not but this is unclear. The same uncertainty
but tendency to extend the dependant's action to any dependant enjoying a de facto close
familial relationship with the breadwinner is also manifest in Voet 9.2.11 who seeks to accord
the dependant's action to the breadwinner's, ―wife, children and the like‖ (―uxori, liberis,
similibusque‖).‘
[15] However, as this court observed in Amod, the old authorities appeared to be
anxious to recognise the existence of a dependants‘ action for the ‗family‘ members
of the deceased.15 But it cannot be stated conclusively that they intended only
relationships by blood or marriage to fall within its ambit.16 And given the sui generis
character of the remedy there seems to be no proper reason to restrict it only to
family or blood relationships when social changes no longer require this.
[16] I mentioned earlier that the remedy was given only to dependants to whom
the deceased owed a legal duty to support or maintain, the courts nevertheless
applied it flexibly. So, even though it did not occur to the jurists of the seventeenth
13 Amod para 7 n 3.
14 Amod para 7.
15 Amod para 8.
16 Santam Bpk v Henery 1999 (3) SA 421 (SCA) at 426F-G.
century to extend the remedy to a husband, the court in Union Government (Minister
of Railways and Harbours) v Warneke17 was able to do so by adapting it to
‗conditions of modern life‘. The remedy was thus gradually extended to include new
classes of persons that fell within its rationale. Hence the courts have recognised a
husband‘s claim for the loss of his injured wife‘s support;18 a claim of a divorcee, who
had been receiving maintenance payments from her erstwhile husband pursuant to a
court order at the time of his death;19 a widow‘s claim arising from a marriage under
African customary law;20 a claim of a Muslim widow whose marriage under Islamic
law had not been registered as a civil marriage under the Marriage Act 25 of 1961;21
and a claim by a partner of a same-sex permanent life relationship, who had tacitly
undertaken reciprocal duties of support with the deceased.22 In extending the
remedy to same sex partnerships Cloete JA said that this ‗would be an incremental
step to ensure that the common law accords with the dynamic and evolving fabric of
our society as reflected in the Constitution, recent legislation and judicial
pronouncements‘.23
[17] The case for the appellants rests on two legs: first that an express or tacit
agreement existed between the appellants and the deceased which created a
binding obligation upon him to maintain and support them, and second, that the
nature of the relationship, being akin to a family relationship, was such that it is
deserving of the law‘s protection. In this regard, Mr Ancer, who appears for the
appellants, submits that their constitutional right to equality and dignity would be
violated if a duty of support is not recognised for permanent life partnerships, but is
in the case of formal marriages.24 Mr Steven Budlender, who appears for the fund,
takes issue with both contentions.
17 Ibid para 9;Union Government (Minister of Railways and Harbours) v Warneke 1911 AD 657 at 665.
18 Abbott v Bergman 1922 (AD) 53 at 55-56.
19 Santam Bpk v Henery 1999 (3) SA 421 (SCA).
20 Zimnat Insurance Co Ltd v Chawanda 1991 (2) SA 825 (ZS).
21 Amod v Multilateral Vehicle Accidents Fund 1999 (4) SA 1319 (SCA).
22 Du Plessis v Road Accident Fund 2004 (1) SA 359 (SCA).
23 Ibid para 37.
24 Section 9 of the Constitution provides:
‗(1)
Everyone is equal before the law and has the right to equal protection and benefit of the law.
(2)
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.
[18] First it must be decided whether there was an agreement creating a binding
legal obligation between the appellants and the deceased. An agreement may be
made expressly or tacitly. An express agreement may be made orally or in writing. A
tacit agreement is inferred from the surrounding circumstances and conduct of the
parties. In either case it is for the court to decide whether a contract probably came
into existence. The high court came to the conclusion that the deceased had merely
promised to take care of the Paixão family, but had not undertaken a legally
enforceable obligation to do so.25
[19] I disagree with this conclusion. In my view, the evidence indicating that the
deceased and the Paixão family had, at least tacitly, undertaken a reciprocal duty of
support is compelling. They began living together in October 2003 when Mrs Paixão
had offered to nurse him at her home after his discharge from hospital. He accepted
the offer and continued living with her after his recovery. The high court held that ‗the
inference that can be drawn from [her] gesture is that after [Mrs Paixão] and her
children looked after him after his discharge from hospital, he felt obliged to repay
their kindness by assisting them with monthly expenses‘. I do not think that this is the
‗most plausible probable inference‘ from a fair reading of all the evidence. 26
[20] The evidence shows that after his recovery he lived with the Paixão family in a
mature, committed and loving ‗family‘ relationship. They were accepted by their
relatives, community and friends as a family unit. They pooled their resources and,
when she was retrenched, he supported the family financially as if they were his
own. Indeed the evidence establishes that he expressly said that he regarded them
(3)
The state may not unfairly discriminate directly or indirectly against anyone on one or more
grounds, including race, gender, sex, pregnancy, marital status, ethnic or social origin,
colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and
birth.
(4)
No person may unfairly discriminate directly or indirectly against anyone on one or more
grounds in terms of subsection (3). National legislation must be enacted to prevent or prohibit
unfair discrimination.
(5)
Discrimination on one or more of the grounds listed in subsection (3) is unfair unless it is
established that the discrimination is fair.‘ (Emphasis added.)
Section 10 provides: ‗Everyone has inherent dignity and the right to have their dignity respected and
protected.‘
25 Paixão and another v Road Accident Fund [2011] ZAGPJHC 68 (1 July 2011) paras 31-33.
26 Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd 1984 (3) SA 155 (A) at 164G-165G;
R H Christie and G B Bradfield Christie‘s Law of Contract in South Africa 6 ed 86-87.
as his family. There can be no stronger indication that he regarded Mrs Paixão and
her daughters as his family than from the content of their Joint Will – he not only
made her the sole heir of his estate but provided for the massing of their estates in
the event of simultaneous death and nominated ‗our children‘ as their heirs also
making provision for them to benefit from a trust. These provisions are common in
wills of married people with children. The facts here are remarkably similar to those
in Du Plessis where the court held that that the plaintiff had proved that the parties
had tacitly undertaken a reciprocal duty of support to one another.27
[21] It is significant that the deceased assumed these obligations while planning to
marry Mrs Paixão as soon as it was practically possible to do so. They would have
married earlier if they were not confronted with the obstacle of his first having to be
officially divorced in Portugal. Put another way there was clearly a tacit agreement
that he would assume the obligation to support the family before the marriage – the
marriage would change nothing except for the relationship being formally
recognised.
[22] The court below held that a mere promise to marry did not attract any legal
obligation on the deceased‘s part. This is correct.28 However, this case does not
concern breach of a promise to marry, but requires us to consider whether or not the
nature of the relationship between the parties gave rise to a reciprocal duty of
support, which the law must protect. In my view the obligations undertaken by the
deceased were akin to a pactum de contrahendo, which is an agreement to make a
contract in the future.29 This is different from a mere promise to contract, which is not
binding. In a case of a pactum de contrahendo one or both parties may undertake to
perform certain duties before the ‗main agreement‘ comes into effect. Such
undertakings are enforceable.30 I find that the most plausible probable inference from
the facts is that the deceased undertook to support and maintain the Paixão family
before formally entering into a marriage contract.
27 Du Plessis v Road Accident Fund 2004 (1) SA 359 (SCA) paras 14-16.
28 Van Jaarsveld v Bridges 2010 (4) SA 558 (SCA) para 8.
29 Per Corbett JA in Hirchowitz v Moolman 1985 (3) SA 739 (A) at 765I.
30 R H Christie and G B Bradfield Christie‘s Law of Contract in South Africa 6 ed 39-40.
[23] Of course the mere fact that the parties had a binding agreement inter se
does not mean that it was enforceable against third parties such as the fund. Put
another way the appellants had to establish not only that they had an enforceable
agreement against the deceased but that the obligations created by the nature of
their relationship were worthy of the law‘s protection.31 As I have said this must be
determined by reference to the boni mores criterion.
[24] Before I consider this question it is necessary to review the cases that have
dealt with problems concerning the duty of support in permanent life partnerships. In
Du Plessis v Road Accident Fund,32 which concerned a dependant‘s action, this
court said that to the extent that the common law denies a survivor of a permanent
life relationship similar to marriage the right to claim support from the fund, but allows
the claim for a spouse of a marriage, the differentiation unfairly discriminates against
him and unjustifiably infringes his right to equality in s 9 of the Constitution.33 It thus
concluded that where same-sex partners have established a reciprocal legal duty of
support that duty was worthy of protection,34 but left open the question whether the
dependants‘ action should be extended generally to unmarried parties in
heterosexual relationships or to any other relationships.35 In extending the protection
of the common law to same-sex partnerships, the court found support in the
judgment of the Constitutional Court in Satchwell v President of the Republic of
South Africa36 which had held that it was unfairly discriminatory to afford statutory
benefits to spouses in heterosexual marriages but not to same-sex partners who had
established a permanent life relationship similar to marriage. The Constitutional
Court, however, emphasised that this did not mean that benefits provided to spouses
in legally recognised marriages should be extended to same sex partners who had
not undertaken reciprocal duties of support37 – an issue that arose in Volks NO v
Roberson.38
31 Neethling et al The Law of Delict at 259.
32 Du Plessis v Road Accident Fund 2004 (1) SA 359 (SCA).
33 Ibid para 25.
34 Ibid para 33.
35 Ibid para 43.
36 Satchwell v President of the Republic of South Africa 2002 (6) SA 1 (CC) para 25.
37 See generally D S P Cronje and J Heaton South African Family Law 3 ed at 249-252, which
discusses the legal protection the courts have given to same-sex life partnerships. Parliament has
since enacted the Civil Union Act 17 of 2006. This Act puts same-sex and heterosexual unions on the
[25] Here the Constitutional Court was concerned with whether the protection
given to a ‗survivor‘ of a marriage under the Maintenance of Surviving Spouses Act
27 of 1990 (the Maintenance Act), which grants to surviving spouses the right to
claim maintenance from the estates of deceased spouses, should also be afforded to
survivors in heterosexual permanent life partnerships. In this regard the court had to
consider whether by excluding survivors of permanent life partnerships from such
protection, the Maintenance Act unfairly discriminated against them on the ground of
their marital status. The court concluded that it was not unfair to distinguish between
survivors of marriage and survivors of heterosexual cohabitation.39 It arrived at this
conclusion because of the importance it attached to ‗the legal privileges and
obligations‘ by the law of marriage which accords benefits to married people but not
to unmarried people. The maintenance benefit in s 2(1) of the Maintenance Act,40 the
court said, was one such benefit.41 In coming to this conclusion the court said the
following:
‗There are a wide range of legal privileges and obligations that are triggered by the contract
of marriage. In a marriage the spouses‘ rights are largely fixed by law and not by agreement,
unlike in the case of parties who cohabit without being married.
. . . The distinction between married and unmarried people cannot be said to be unfair when
considered in the larger context of the rights and obligations uniquely attached to marriage.
Whilst there is a reciprocal duty of support between married persons, no duty of support
arises by operation of law in the case of unmarried cohabitants. The maintenance benefit in
section 2(1) of the Act falls within the scope of the maintenance support obligation attached
to marriage. The Act applies to persons in respect of whom the deceased person (spouse)
would have remained legally liable for maintenance, by operation of law, had he or she not
died.
. . . [I]t is not unfair to make a distinction between survivors of a marriage on the one hand,
and survivors of a heterosexual cohabitation relationship on the other. In the context of the
provision for maintenance of the survivor of a marriage by the estate of the deceased, it is
same footing by allowing both to formalise their unions the effect of which is that they have the same
legal consequences as a civil marriage concluded under the Marriage Act 25 of 1961.
38 Volks NO v Robinson 2005 (5) BCLR 466 BC (CC).
39 Ibid para 60.
40 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.‘
41 Ibid Volks paras 57-60.
entirely appropriate not to impose a duty upon the estate where none arose by operation of
law during the lifetime of the deceased. Such an imposition would be incongruous, unfair,
irrational and untenable.‘
[26] For present purposes I make two observations about this judgment: First,
although the court stated that no reciprocal duty of support arises by operation of law
in the case of unmarried cohabitants it also said that this does not preclude such a
duty from being fixed by agreement42 – the case advanced by the appellants.
Second, the purpose of the Maintenance Act43 is very different from the rationale and
development of the dependants‘ action at common law, which is sui generis. In the
case of the former s 2(1) of the Maintenance Act provides for the reasonable
maintenance needs of a party to a marriage from the estate of a deceased spouse.
The issue before the court was therefore whether a spousal benefit arising from a
legally recognised marriage should also be available to a surviving partner of a life
partnership. The object of the remedy in a dependants‘ action, on the other hand, is
to place the dependants of the deceased, to whom the deceased owed a legally
enforceable duty to support and maintain, in the same position as they would have
been, as regards support and maintenance, had the deceased not been unlawfully
killed by a wrongdoer. The right of a dependant to sue for this loss arises because
the wrongdoer unlawfully caused the termination of a legally enforceable duty of
support – it is not a spousal benefit that accrues to a dependant only by virtue of a
formally recognised marriage.44
[27] Volks, therefore, does not stand in the way of the appellants‘ submission that
the common law may be developed to extend the dependants‘ action generally to
unmarried parties in heterosexual relationships or to any other relationships – the
question left open in Du Plessis v Road Accident Fund.45 It is to this question that I
must now turn.
42 Ibid para 58.
43 Ibid paras 36-39.
44 B Smith and J Heaton ‗Extension of the dependant‘s action to heterosexual life partners after Volks
NO v Robinson and the coming into operation of the Civil Union Act – thus far and no further?‘ (2012)
THRHR 472 at 479.
45 Du Plessis v Road Accident Fund 2004 (1) 359 (SCA) para 43. It follows too that to the extent that
the court in Susara Meyer v Road Accident Fund (Unreported) Case No: 29950/2004 28/3/2006,
found that Volks supported its rejection of a dependant‘s claim of a permanent life partnership, it
erred.
[28] Mr Budlender submits that it is inappropriate for this court to develop the
common law to include unmarried heterosexual relationships within its remit for two
reasons: first, because of practical problems for defendants such as the fund to
refute a plaintiff‘s reliance on a life partnership to support the assertion of a
reciprocal duty of support; second, because the extension of legal protection to
unmarried heterosexual partners should be dealt with comprehensively by
parliament instead of the courts doing so thereby opening the floodgates to
indeterminate liability.
[29] I appreciate that it is not always easy for defendants in the fund‘s position to
refute evidence of a plaintiff dependant‘s assertion that the deceased had
undertaken a duty to support him or her. But this concern, I think, is overstated. A
plaintiff‘s assertion, without more, that he or she was in life partnership, cannot be
taken as sufficient proof of this fact. (In this case the fund conceded that the
relationship was a life partnership.) Proving the existence of a life partnership entails
more than showing that the parties cohabited and jointly contributed to the upkeep of
the common home. It entails, in my view, demonstrating that the partnership was
akin to and had similar characteristics – particularly a reciprocal duty of support – to
a marriage.46 Its existence would have to be proved by credible evidence of a
conjugal relationship in which the parties supported and maintained each other. The
implied inference to be drawn from these proven facts must be that the parties, in the
absence of an express agreement, agreed tacitly that their cohabitation included
assuming reciprocal commitments – ie a duty to support – to each other. Courts
frequently undertake this exercise without much difficulty – as this and other cases
such as Amod, Satchwell and Du Plessis demonstrate. Life partnerships therefore do
not present exceptional evidential difficulties for defendants.47
[30] Mr Budlender‘s second reason, that the courts should not develop the
common law to include heterosexual life partnerships, but rather leave their
regulation to the lawmaker, is also not persuasive. We are not here embarking on an
exercise that impinges on the lawmaker‘s responsibility for law reform in this area,
which has commenced with the South African Law Commission‘s draft Domestic
46 See D S P Cronje and J Heaton (above) at 243.
47 Cf McDonald v Young 2012 (3) SA 1 (SCA) para 14.
Partnerships Bill, 2008;48 we are performing a duty that falls properly within the
province of the courts ie to decide ‗on incremental changes which are necessary to
keep the common law in step with the dynamic and evolving fabric of our society‘.49
The courts have always had this duty and s 173 of the Constitution now explicitly
recognises it.50 What we are required to decide here is whether the evolving fabric of
our society requires the common law to undergo an incremental change to extend
the dependants‘ action to include heterosexual life partners. A failure to confront this
question squarely, when the circumstances of this case and the interests of justice
so require, would be an abdication of our judicial responsibility.
[31] Our courts have emphasised the importance of marriage and the nuclear
family as important social institutions of society, which give rise to important legal
obligations, particularly the reciprocal duty of support placed upon spouses.51 The
fact is, however, that the nuclear family has, for a long time, not been the norm in
South Africa. South Africans have lower rates of marriage and higher rates of extra-
marital child-bearing than found in most countries.52
[32] Millions of South Africans live together without entering into formal marriages.
This is simply a fact of life, although, as Mokgoro J and O‘Regan J observed in
Volks, their circumstances differ significantly:
‗Some may be living together with no intention of permanence at all, others may be living
together because there is a legal or religious bar to their marriage, others may be living
together on the firm and joint understanding that they do not wish their relationship to attract
legal consequences, and still others may be living together with the firm and shared intention
of being permanent life partners.‘53
I would add that in addition to legal or religious constraints that the learned judges
mention, many others are unable to marry for social, cultural or financial reasons.
48 For a critical discussion of this Bill see the LLD Thesis of Bradley Shaun Smith ‗The development of
South African Matrimonial Law with specific reference to the need for and application of a domestic
partnership rubric‘ University of the Free State (2009).
49 Du Plessis & others v De Klerk & another 1996 (3) SA 850 (CC) para 61.
50 Section 173 of the Constitution provides:
‗The Constitutional Court, Supreme Court of Appeal and High Courts have the inherent power to
protect and regulate their own process, and to develop the common law, taking into account the
interests of justice.‘
51 Volks NO v Robinson 2005 (5) BCLR 466 BC (CC) para 52.
52 D Budlender and F Lund ‗South Africa: A Legacy of Family Disruption‘ (2011) Development and
Change 925 at 927-932.
53 Volks NO v Robinson 2005 (5) BCLR 466 BC (CC) para 120.
[33] Among the reasons for the decline in formal marriages is ‗the legacy of family
disruption‘ caused by apartheid‘s migrant labour system,54 which remains a feature
of South Africa‘s current economy. Many migrant workers enter into permanent
relationships and have families, outside of their formal marriages, that they support
and maintain.
[34] Life partnerships have therefore increasingly received legislative and judicial
recognition reflecting the changing boni mores.55 In line with this trend, in Verheem v
Road Accident Fund,56 the North Gauteng High Court recently extended the scope of
the dependants‘ action to cohabiting partners in a heterosexual permanent life
partnership in circumstances remarkably similar to those in this case.57 I pause to
mention that in the present case, Mathopo J held himself not bound by Verheem
because the facts differed. But without considering and deciding that Verheem was
clearly wrong, this was an incorrect basis to distinguish the cases.58
[35] I revert to the circumstances of this case. The facts show that the community
accepted the deceased, Mrs Paixão and her children as a family and did not regard
their cohabitation as opprobrious. Indeed, as I have shown, cohabitation outside of a
formal marriage is now widely practised and accepted by many communities
universally.59 They had, however, chosen to get married, were committed to this
course, and had commenced plans to this end. Crucially they had already
undertaken reciprocal duties of support, agreed to formalise their relationship
through marriage and executed a family will as evidence of their commitment to each
other.
54 D Budlender and F Lund ‗South Africa: A Legacy of Family Disruption‘ (2011) Development and
Change 925 at 927-932.
55 See D S P Cronje and J Heaton (above) Chapter 20 para 20.3.1.
56 Verheem v Road Accident Fund 2012 (2) SA 409 (GNP).
57 Ibid para 12.
58 See generally B S Smith ‗Extension of the dependant‘s action to heterosexual life partners after
Volks NO v Robinson and the coming into operation of the Civil Union Act – thus far and no further?‘
(2012) THRHR 472; ‗The dependant‘s action in the context of heterosexual life partnerships: A
consideration of the Verheem and Paixão cases‘. Paper presented at the Society of Law Teachers of
Southern Africa Conference on 10 July 2012.
59 Volks NO v Robinson 2005 (5) BCLR 466 (CC) para 119.
[36] I mentioned earlier there is some suggestion in the old authorities that the
dependants‘ action was available even to persons to whom the breadwinner felt a
‗sense of duty‘ to support and not only to those to whom a legal duty was owed. The
deceased in this case undertook a duty to maintain and support his adopted ‗family‘
out of a profound, deep and loving sense of duty, and did so. I have found that the
appellants tacitly established the existence of legally enforceable duty of support.
Having regard to the incremental extension of the dependants‘ action through the
times, our ideas of morals and justice, and of equity and decency, I can see no
reason of principle or policy not to extend the protection of the common law to the
appellants here. In my view, the ‗general sense of justice of the community‘ demands
this.60
[37] Having come to this conclusion I need not consider the constitutional question
referred to earlier in para 17 – whether it would amount to unfair discrimination for
the law to give protection to the duty of support arising from a marital relationship but
not to a relationship where the duty arises in the context of heterosexual permanent
life partnerships.
[38] Mr Budlender submits further that if we are inclined to develop the common
law so as to extend its protection to the appellants in the circumstances of this case,
we should limit its effect only to instances where there is an agreement to be
married. In considering this submission I am mindful of the cautionary remarks made
by Corbett JA (as he then was), on the occasion of the Third Oliver Schreiner
Memorial Lecture, that when developing the common law the court should confine
itself to the particular legal problem under consideration rather than expound the law
generally on the topic.61
[39] The difficulty I have with Mr Budlender‘s submission is that extending the
protection of the dependants‘ action only to permanent heterosexual relationships
where there is an agreement to marry requires us to draw an arbitrary line between
60 Schultz v Butt 1986 (3) SA 667 (A) 679B-C.
61 M M Corbett ‗Aspects of the Role of Policy in the Evolution of our Common Law‘ (1987) SALJ 52 at
57.
those relationships and most others where there is no such agreement. The proper
question to ask is whether the facts establish a legally enforceable duty of support
arising out of a relationship akin to marriage. Evidence that the parties intended to
marry may be relevant to determining whether a duty of support exists, as in this
case. But it does not mean that there must be an agreement to marry before the duty
is established. And once a dependant establishes the duty, the law ought to protect
it.
[40] By coming to this conclusion I do not intend to demean the value or
importance that our society places on marriage as an institution as the high court
feared.62 On the contrary, I am extending the protection afforded to the dependants
of the deceased precisely because the nature of their relationship is similar to a
family relationship arising from a legally recognised marriage. I therefore hold that
the dependants‘ action is to be extended to unmarried persons in heterosexual
relationships who have established a contractual reciprocal duty of support.
[41] Mr Budlender also contends that even if Mrs Paixão succeeds in her claim,
her daughter, Michelle, should not. But once it is established that the deceased had
undertaken to support Mrs Paixão and her children, including Michelle, and did so, I
cannot see any reason why Michelle‘s claim should fail. Her claim, like her mother‘s,
arose from the same ‗family relationship‘.
[42] The parties have agreed on the extent of the appellants‘ losses. In the result
the appeal succeeds with costs. The decision of the high court is set aside and
replaced with the following:
‗(a)
The respondent is ordered to pay to the first appellant the sum of R1 707 612
million.
(b)
The respondent is ordered to pay the second appellant the sum of R 451 626.
62 Above para 2.
(c)
The respondent is ordered to pay the appellants‘ taxed or agreed costs of the
action which costs are to include the costs of the actuaries, Clemans, Murfin &
Rolland.‘
__________________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES
For Appellant:
B Ancer SC
Instructed by:
Norman Berger & Partners Inc, Johannesburg
Lovius Block, Bloemfontein
For Respondent:
S Budlender
Instructed by:
Lindsay Keller, Johannesburg
Matsepes Inc, Bloemfontein | THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
MEDIA SUMMARY
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
26 September 2012
STATUS: Immediate
Paixão v Road Accident Fund (640/2011) [2012] ZASCA 130 (26 September 2012)
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) handed down judgment today in an appeal
from the South Gauteng High Court, Johannesburg (High Court). The matter
concerned the common law dependent’s action and, specifically, whether the
common law protection it affords should be available to parties in a permanent
heterosexual life partnership.
Mrs Paixão and her daughter sued the Road Accident Fund for loss of maintenance
and support as a result of the death of Mr Gomes. They contended that Mr Gomes
had contractually undertaken to maintain and support them, was legally obliged to
so, and would have done so for the remainder of Ms Paixão’s life and until her
daughter became self-supporting.
Mrs Paixão and Mr Gomes had been living together and had planned to marry. Mr
Gomes supported Mrs Paixão and her children financially, had formed a strong bond
with the children, and had a joint will wherein they referred to “our daughters”. On
her part, Ms Paixão nursed and supported Mr Gomes when he was unable to work.
They were accepted by their relatives, community and friends as a family unit.
The High Court, in a judgment wherein it was said that it “would be an affront to the
fabric of society” and “seriously erode the institution of marriage” if the dependants’
action would be extended to Ms Paixão and her daughter, found that no legal duty of
support had been owed to them. It dismissed their claims.
The SCA recognised that only those with a legally enforceable duty to maintain and
support could successfully institute the dependant’s action. A dependant must have
a right which is worthy of the law’s protection to claim support. Whether that is so is
determined by the legal convictions of the community, which is in turn determined by
among other things society’s history, its ideas of morals and justice, its perception of
where the loss should fall, and the convenience of administering the rule. The court
found that, as the legal convictions of the community is the decisive factor in the
determination, the dependents’ action has always had the flexibility to adapt to social
changes and modern conditions. It held that there is no reason to restrict the action
to traditional family and blood relationships when social change does not require it.
The SCA recognised that the nuclear family has, for a long time, not been the norm
in South Africa and that millions of South Africans live together without entering into
formal marriages. This was so for religious, legal, social, cultural and financial
reasons. What is more, South Africa’s inherited legacy of family disruption caused
by apartheid’s migrant labour system
On the facts, it found that there was a tacit agreement creating a binding and legal
obligation between Mrs Paixão and her daughter, and Mr Gomes. It found further
that Mrs Paixão and her daughter had established that they had an enforceable
agreement with Mr Gomes and that the obligations created by the nature of their
relationship was worthy of the law’s protection. In coming to this conclusion it found
that the Road Accident Fund would not have undue practical problems in refuting
claims and that not recognising the claim, in deference to the legislator, would be an
abdication of judicial responsibility.
Thus, held the court, where an agreement between parties to a permanent
heterosexual life partnership establishes a reciprocal duty of support it should be
afforded the protection of the common law dependants’ action. The general sense of
justice of the community demanded it. Accordingly, the appeal was upheld. |
3128 | non-electoral | 2007 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case no: 85/06
REPORTABLE
In the matter between:
YAGAMBARAM MOODLEY
APPELLANT
and
NEDCOR BANK LTD
RESPONDENT
Before: Harms ADP, Heher, Cachalia JJA, Snyders, Theron AJJA
Heard: 16 March 2007
Delivered: 27 March 2007
Summary:
Jurisdiction - In an action upon a debt secured by a mortgage over
immovable property, the fact that the property is situated in the
territory over which a high court exercises jurisdiction constitutes a
jurisdictional connecting factor which confers jurisdiction on the court.
Neutral citation: This judgment may be referred to as Moodley v Nedcor [2007]
SCA 27 (RSA)
CACHALIA JA
[1] In an action upon a debt secured by a mortgage over immovable
property the plaintiff is entitled not only to judgment for the amount of
the debt but also to an order declaring the mortgaged property executable
where it is situated within the court’s jurisdiction. If the immovable
property sought to be declared executable is situated within the
jurisdiction of a court other than where the cause of action for the money
claim arose the question arises whether that court has concurrent
jurisdiction over the matter. The question presents itself in this matter
against the following background.
[2] On 30 July 1996 the appellant entered into a loan agreement in
Johannesburg in terms of which the respondent, a commercial bank,
agreed to lend and advance to the appellant the sum of R180 000 upon
security of a mortgage bond registered against an immovable property
situated in the Durban area (‘the property’) within the Province of
Kwazulu-Natal.
[3] On 10 August 2000 the respondent (as plaintiff) instituted
proceedings against the appellant (as defendant) in the Pretoria High
Court for the recovery of the sum of R191 720,38 being the capital
amount which it alleged was then due and payable in terms of the
agreement. As is the practice in matters of this nature, the respondent also
sought an order declaring the property executable. On 12 September 2000
the respondent obtained judgment against the appellant and a warrant of
execution was thereafter issued against the property. The appellant then
brought an application to stay the sale in execution. The dispute was
settled on 8 November 2002 and the settlement agreement made an order
of court. This agreement also became a subject of dispute and the
litigation recommenced. This time the appellant applied successfully for
the order of 12 September 2000 to be rescinded.
[4] Following the rescission of the order the appellant filed a plea and
counterclaim on 2 February 2004. In his special plea, he alleged that the
Pretoria High Court lacked jurisdiction over the matter because the
property was situated within the Province of Kwazulu-Natal, and also
because his chosen domicilium citandi et executandi was there. The
special plea was clearly bad because the Pretoria High Court obviously
had jurisdiction over the matter on the basis that the cause of action arose
there.1 Inexplicably however, on 31 May 2004, the respondent withdrew
its action and paid the appellant’s wasted costs.
[5] On 15 June 2004 the respondent instituted fresh proceedings
against the appellant in the Durban High Court based on the same cause
of action. This time the amount claimed was R365 291,06, more than
double the amount of the original loan, the increase having resulted from
further interest that had accumulated on the loan. Once again the
respondent sought an order that the property be declared executable. The
appellant instructed the same attorney who had represented him in the
Pretoria High Court to defend this action. A plea was filed and the matter
set down for hearing in the Durban High Court. However, three days
before the trial was to commence, the appellant instructed another firm of
attorneys to represent him. This necessitated a postponement of the
hearing and on 2 September 2004 the newly instructed attorneys filed an
amended plea and three special pleas on his behalf. The special pleas
1 See s 19(1)(a) of the Supreme Court Act 59 of 1959 referred to below at para 8. Section 6(2) of the
Act confers concurrent jurisdiction on the Transvaal Provincial Division (TPD), also referred to as the
Pretoria High Court, in the areas of jurisdiction of the Witwatersrand (WLD), also referred to as the
Johannesburg High Court.
related to a plea that the court lacked jurisdiction to entertain the action; a
plea that the same dispute was pending before the Pretoria High Court by
virtue of the appellant not having withdrawn his counterclaim against the
respondent in that court; and a plea (in the nature of an exception rather
than a special plea) that the respondent’s particulars of claim lacked
averments to sustain its cause of action.
[6] The matter was argued before Jappie J on 8 November 2004 and on
2 February 2005 he dismissed each of the special pleas. On 29 August
2005 the judge heard the appellant’s application for leave to appeal
against his judgment and on 7 October 2005 he refused the application in
respect of the three special pleas. This court however granted leave on the
first special plea only ie, whether the Durban High Court had jurisdiction
to entertain the action.
[7] There are two issues in this appeal. The first, as mentioned in the
opening paragraph, is whether the Pretoria High Court has exclusive
jurisdiction over the matter by virtue of the cause of action having arisen
there, as the appellant contends it does, or whether, as the respondent
asserts, the Durban High Court has concurrent jurisdiction on the basis
that the property sought to be declared executable is situated within its
area of jurisdiction. The second arises only if the first is decided in the
appellant’s favour. This relates to whether in raising a special plea of lack
of jurisdiction initially in the Pretoria High Court and his failure
thereafter to object to the Durban High Court’s jurisdiction before the
pleadings had closed amounted to a waiver of his right to do so.
[8] I turn to deal with the first question. The authority of a high court
to decide any matter is derived from s 169 of the Constitution.2 The
Supreme Court Act 59 of 1959 regulates its jurisdiction.3 Section 19(1)(a)
of the Act confers on a high court jurisdiction ‘over all persons residing
or being in and in relation to all causes arising . . . within its area of
jurisdiction’. The phrase ‘causes arising,’ with which we are concerned
for present purposes, is sometimes mistakenly understood to mean
‘causes of action’. The phrase has been interpreted to refer to ‘legal
proceedings duly arising’ that is to say, proceedings in which the court
has jurisdiction under the common law.4 And while it is well established
that a court has jurisdiction over a matter where the cause of action arises
within its territorially demarcated area, the jurisdiction of a court is
determined with reference not only to the cause of action but also to all
connecting factors (rationes jurisdictionis) which give rise to jurisdiction
at common law.5 What has to be determined in this matter is whether the
location of the hypothecated property in Durban, within the territorial
jurisdiction of the Durban High Court, constitutes a jurisdictional
connecting factor giving rise to concurrent jurisdiction of the Durban
High Court.
[9] It has long been considered a sufficient basis for a court to exercise
jurisdiction over a matter if the nature of the relief claimed involves
2 Section 169 provides: ‘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 status similar to a High
Court; and
(b)
any other matter not assigned to another court by an Act of Parliament.’
3 Jurisdiction here means the power vested in a court by law to adjudicate upon, determine and dispose
of a matter (Ewing McDonald & Co Ltd v M & M Products Co 1991 (1) SA 252 (A) at 256G).
4Bisonboard Ltd v K Braun Woodworking Machinery (Pty) Ltd 1991 (1) SA 482 (A) at 486D; Ewing
McDonald (above) at 257F-G.
5Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd 2005 (6) SA 205 (SCA) at
211D-E.
immovable property situated within its area of jurisdiction, even where
the court has no power over the defendant or because the cause of action
does not arise in the area. This is because, as Price AJA observed in Sonia
(Pty) Ltd v Wheeler6:
‘The Court of the area in which the property is situate can certainly control the
transfer of, or any interference with, the property through the Registrar of Deeds of
that area, and by other means.’
This approach is based on the principle of effectiveness – the power of
the court, not only to grant the relief claimed, but also to effectively
enforce it directly within its area of jurisdiction.7 It was on this basis that
the court below assumed jurisdiction in the present matter.
[10] Many years ago, in Palm v Simpson8 it was held that even though
the defendant was not resident within the area over which the court
exercised jurisdiction and no property of his had been attached to found
jurisdiction for an action claiming from him the contract price of land he
had purchased, the fact that the land was situated in that area constituted a
sufficient basis for the court to assume jurisdiction over a claim for
rescission of the contract of sale. That decision was approved by this
court in Sonia v Wheeler, referred to above, on grounds of ‘principle,
convenience and common sense’.9 In so approving Price AJA observed
that:
‘Palm’s case recognises what is a patent fact that the Court of the situs is the best-
equipped Court to deal with matters relating to land situated within its territorial
jurisdiction.’
6 1958 (1) SA 555 (A) at 562A-B.
7 Estate Agents Board v Lek 1979 (3) SA 1048 (A) at 1063H.
8 (1848) 3 M 565.
9 1958 (1) SA 555 (A) at 562C-D.
[11] In Sonia v Wheeler the property in question was situated in East
London, within the area of the Eastern Districts Local Division (EDLD);
the contract for the sale of the property had been entered into in the
Orange Free State and the purchase price was payable in the Transvaal
where the defendant was resident. The plaintiff sought an order in the
EDLD
cancelling
the
contract
on
the
ground
of
fraudulent
misrepresentation and also for a refund of the purchase price. This was a
money claim, as in the instant case. The defendant was not susceptible to
the court’s jurisdiction on any of the usual grounds of jurisdiction for a
claim of this nature. Despite this, this court upheld the finding of the
lower court that the plaintiff was entitled to institute the action in the
EDLD solely on the basis that the property was situated there. It was
however contended by the defendant that even if the EDLD had
jurisdiction to order the cancellation of the contract, its jurisdiction did
not extend to the money claims for the refund of the purchase price. It
was argued in other words that if the money claim stood alone and there
was no claim for cancellation, the court would not have jurisdiction. In
rejecting this contention Price AJA said the following:
‘Assuming this to be so, assuming that the Eastern Districts Court could not entertain
a claim for a refund of the purchase price if that claim stood alone, it nevertheless
seems to me that every consideration of convenience and common sense indicates that
where such a money claim is as closely associated with a claim for cancellation of the
contract, as in this case, and is a consequential claim, following on the cancellation,
the same Court which has jurisdiction to decree cancellation should have jurisdiction
to hear the money claim for a refund of the purchase price, and to order costs.’10
10 1958 (1) SA 555 (A) at 562F-H.
[12] In relation to cases involving the transfer of immovable property it
is also a sufficient basis for jurisdiction if the property is situated within
the area over which a high court exercises jurisdiction. It is therefore not
necessary for a high court to have power over the defendant, or for the
cause of action to have arisen there for a court to entertain a claim for the
transfer of immovable property situated within the division.11 Such
jurisdiction is however not exclusive.12
[13] Thus, as the cases in the preceding paragraphs demonstrate,
provincial divisions have exercised jurisdiction in matters involving the
rescission or cancellation of an agreement,13 or the transfer of immovable
property where the property is situated within their area of jurisdiction,
even where none of the other traditional jurisdictional factors were
present. Their rationale for so doing is that they exercise effective control
over the property, that there is a close association between the property in
question and the cause of action and also on grounds of ‘convenience and
common sense’.14 And as was said in Cordiant Trading CC v Daimler
Chrysler Financial Services (Pty) Ltd,15 the main objective for the
assumption of jurisdiction in such cases is to avoid a proliferation of
proceedings.
[14] Recently in Geyser v Nedbank Ltd: In re Nedbank Ltd v Geyser,16
which appears to be the only reported case dealing with the issue we are
concerned with (whether a high court is competent to exercise jurisdiction
over a matter on the basis only that the hypothecated property in question
11 See David Pistorius Pollak on Jurisdiction 2 ed p 91.
12 Ward v Burgess & another 1976 (3) SA 104 (TK) at 107B-C; Hugo v Wessels 1987 (3) SA 837 (A)
at 857C-F.
13 On the distinction between rescission and cancellation, see RH Christie The Law of Contract In
South Africa 5 ed p 539.
14 See Sonia v Wheeler 1958 (1) SA 555 (A) at 562F-H.
15 2005 (6) SA 205 (SCA) at 211D-H.
16 2006 (5) SA 355 (W).
is situated within its area of jurisdiction) Van Oosten J found that it was.
He reasoned that:
‘. . . the property, quite apart from its executability, has another relevance for purposes
of founding jurisdiction. It undoubtedly played an integral if not vital part in the loan
transaction which . . . constituted the basis for the bank’s cause of action. It was
obviously on the strength of the security of a first mortgage bond that the loan was
granted to the applicant . . . It is accordingly my finding that the situs of the
hypothecated property constitutes a jurisdictional connecting factor giving rise to the
jurisdiction of this court.’17
I respectfully agree with and adopt his reasoning. It is apparent that there
is a close association not only between the hypothecated property and the
nature of the proceedings ie, for payment of money arising out of loan
agreement, but also between the nature of the consequential relief, for the
hypothecated property to be declared executable, and the cause of
action.18 The decision by the court below to assume jurisdiction over this
matter is therefore consistent with the approach taken in the cases referred
to above.
[15] There is another reason why I think it was competent for the court
below to have exercised jurisdiction over this matter. The facts show that
the matter commenced in the Pretoria High Court where the appellant
objected to the jurisdiction of that court. Appellant concedes that the
objection was ill-founded. It was however a consequence of this objection
that the respondent thereafter instituted proceedings in the court below
and only shortly before the trial was to commence, and pleadings had
closed, that the respondent again objected to its jurisdiction. Apart from
17 See Geyser v Nedbank 2006 (5) SA 355 (W) at para 11.
18 See Estate Agents Board v Lek 1979 (3) SA 1048 (A) at 1063F-G.
the fact that the appellant has an insurmountable hurdle to overcome
before he can escape the inference that by his conduct he had acquiesced
in the court’s jurisdiction,19 I think that every consideration of
convenience and common sense required the court below to assume
jurisdiction over the matter. This conclusion makes it unnecessary to deal
with the issue of the waiver any further.
[16] It follows that the appeal must fail. The following order is made:
The appeal is dismissed with costs.
______________
A CACHALIA
JUDGE OF APPEAL
CONCUR:
HARMS ADP
HEHER JA
SNYDERS AJA
THERON AJA
19 Purser v Sales; Purser & Another v Sales and Another 2001 (3) SA 445 (SCA) paras 15-18. | 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:
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.
Y. MOODLEY
V
NEDCOR BANK LTD
The Supreme Court of Appeal today dismissed with costs an appeal by Yagambaram Moodley
against a decision of the Durban High Court, dismissing his special plea that it (Durban High Court)
lacked jurisdiction to entertain Nedcor Bank’s action, claiming from him an amount of R365 291,06
and seeking an order that his property situated in La Merci, Durban be declared executable. The
bank instituted the action after Mr Moodley had defaulted in making his payments in terms of a
loan agreement.
The issues on appeal were whether the Pretoria High Court had exclusive jurisdiction over the
matter by virtue of the cause of action having arisen there, or whether the Durban High Court had
concurrent jurisdiction on the basis that the property sought to be declared executable was situated
within its area of jurisdiction. What the Supreme Court of Appeal was required to determine in this
matter was whether the location of the hypothecated property in Durban, within the territorial
jurisdiction of the Durban High Court, constituted a jurisdictional connecting factor giving rise to
concurrent jurisdiction of the Durban High Court.
In its conclusion, and in upholding the decision of the Durban High Court of assuming jurisdiction
over this matter, the Supreme Court of Appeal concluded that it was apparent that there was a close
association not only between the hypothecated property and the nature of the proceedings i.e., for
payment of money arising out of loan agreement, but also between the nature of the consequential
relief, for the hypothecated property to be declared executable, and the cause of action. The Court
went further and concluded that every consideration of convenience and common sense required the
court below to assume jurisdiction over the matter. |
4116 | non-electoral | 2023 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 454/2022
In the matter between:
ILSE BECKER
FIRST APPELLANT
EUGENE BECKER
SECOND APPELLANT
FUSION GUARANTEES (PTY) LTD
THIRD APPELLANT
and
THE FINANCIAL SERVICES
CONDUCT AUTHORITY
FIRST RESPONDENT
THE HONOURABLE MINISTER
ENOCH GODONGWANA IN HIS
CAPACITY AS THE MINISTER
OF FINANCE
SECOND RESPONDENT
THE NATIONAL CREDIT REGULATOR
THIRD RESPONDENT
THE PRUDENTIAL AUTHORITY
OF SOUTH AFRICA
FOURTH RESPONDENT
Neutral citation: Ilse Becker and Others v The Financial Services Conduct
Authority and Others (454/2022) [2023] ZASCA 149 (10
November 2023)
Coram:
PETSE DP and MOTHLE and MEYER JJA and SIWENDU and
UNTERHALTER AJJA
Heard:
15 September 2023
Delivered:
10 November 2023
Summary:
Constitutional law – financial services regulation – whether ss
154, 167 and 231 of the Financial Sector Regulation Act 9 of 2017 (the Act)
unconstitutional and invalid – failure to observe procedural fairness in deciding
whether a person has contravened a financial sector law – challenge to constitutional
validity in terms of s 33 of the Constitution – subsidiarity – application of s 3 of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA).
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Ncongwane AJ,
sitting as court of first instance):
The appeal is dismissed with costs, such costs to include the costs of two counsel,
where so employed.
JUDGMENT
Unterhalter AJA (Petse DP and Mothle and Meyer JJA and Siwendu AJA
concurring):
Introduction
[1] The first and second appellants, Ms Ilse Becker and Mr Eugene Becker
respectively, (the Beckers) are the directors of the third appellant (Fusion Guarantees
(Pty) Ltd (Fusion)). Fusion is a company, the business of which is to offer guarantees
and sureties. The first respondent is the Financial Services Conduct Authority (the
Authority). The Authority was established in terms of s 56 of the Financial Sector
Regulation Act 9 of 2017 (the Act). Among its functions, the Authority is charged
with the power to regulate and supervise the conduct of financial institutions in terms
of the Act.
[2] At the behest of the Authority an investigation was conducted, in terms of s 80
of the Financial Institutions Act 80 of 1998, into the affairs of Fusion. Mr Panday
rendered an inspection report, dated 16 July 2019. He concluded that Fusion was in
contravention of the Short-Term Insurance Act 53 of 1998. On 12 February 2020,
Mr Dikokwe of the Authority gave notice to Fusion and the Beckers of the
Authority’s intention to take regulatory action against them. The notice stated that,
based on the findings of the investigation, the Authority was of the prima facie view
that Fusion, through the agency of the Beckers, was in contravention of certain
financial sector laws. The Authority indicated that it intended to impose an
administrative penalty of R200 million on Fusion, and make a debarment order in
respect of the Beckers for a period of 15 years. The notice set out the factors that the
Authority took into consideration in determining the regulatory actions the Authority
intended to take. Fusion and the Beckers were afforded an opportunity to make
submissions on the investigation report, the proposed administrative penalty, and the
proposed debarment.
[3] Fusion and the Beckers took up this invitation, and made detailed
submissions. They also made application to the Gauteng Division of the High Court,
Pretoria (the high court) to declare ss 154, 167, 230 and 231 of the Act (collectively,
the impugned provisions) unconstitutional and invalid. They cited, among others,
the Authority and the Minister of Finance as respondents. Before the high court, the
challenge to s 230 was not persisted with. The high court dismissed the application.
With its leave, Fusion and the Beckers now appeal to this Court. The Authority and
the Minister of Finance oppose the appeal and seek its dismissal. While this litigation
has been engaged, the Authority has not taken a final decision to impose an
administrative penalty or make a debarment order.
The issues on appeal
[4] In oral argument before us, counsel for Fusion and the Beckers,
commendably, simplified their challenge on appeal. First, they no longer challenge
the impugned provisions on the basis that they infringe s 22 of the Constitution.
Second, they draw a distinction between the finding of the Authority that there has
been a contravention of a financial sector law and the appropriate sanctions that
should be imposed, upon such a finding having been made.
[5] Third, the challenge they make is directed, in the first place, to the scheme of
the Act in terms of which the Authority makes a finding of a contravention of a
financial sector law. Fusion and the Beckers contend that the Act does not permit
them a hearing in respect of this finding. That, they contend, is unfair and constitutes
an infringement of s 33 of the Constitution.
[6] Fourth, when the Authority comes to decide upon the appropriate sanctions
that should be imposed upon persons found to have contravened a financial sector
law, here a different kind of unfairness arises. The Authority is not an impartial and
independent tribunal, and hence the power of the Authority to impose an
administrative penalty and order disbarment offends s 34 of the Constitution.
[7] Fifth, if we do not find that the challenge, predicated upon s 33 of the
Constitution, is valid, then Fusion and the Beckers do not persist in their challenge
under s 34.
The fairness challenge
[8] Fusion and the Beckers challenge the constitutional validity of the powers
enjoyed by the Authority, in terms of the Act, to make a debarment order and impose
administrative penalties. Section 154 sets out the consultation requirements with
which the Authority must comply, before making a debarment order in respect of a
natural person. The Authority must give a draft of the debarment order to the person
affected; provide reasons and other relevant information about the proposed
debarment; and invite the person to make submissions ‘on the matter, and give the
person a reasonable period to do so’. Section 154(3) then provides as follows:
‘In deciding whether or not to make a debarment order in respect of a natural person, the
responsible authority must take into account at least –
(a) the submissions made by, or on behalf of, the person; and
(b) any advice from the other financial sector regulator.’
[9] Section 167(1) of the Act empowers the Authority to impose an administrative
penalty upon a person if they have contravened a financial sector law. Section 167(2)
sets out the matters that the Authority must, and those that they may, have regard to
in determining an appropriate administrative penalty for particular conduct. The
Authority must have regard to ‘any submissions by, or on behalf of, the person that
is relevant to the matter, including mitigating factors referred to in those
submissions’ (s 167(2)(a)(iii)).
[10] The constitutional challenge of Fusion and the Beckers, regarding the power
of the Authority to make a debarment order and impose an administrative penalty,
has undergone some refinement. Their challenge was ultimately cast in the following
way. Sections 154 and 167 afford a right to those who might be subject to sanction
to make submissions to the Authority, and the Authority is required to consider those
submissions before deciding whether or not to exercise its powers of sanction. But
this is inadequate protection. Section 33(1) of the Constitution provides that
everyone has the right to administrative action that is lawful, reasonable and
procedurally fair. While ss 154 and 167 provide for those at risk of sanction to make
submissions before the Authority determines whether to impose a sanction, there is
no like procedural fairness that is accorded to persons under the Act whose conduct
has been found by the Authority to have contravened a financial sector law. Such a
finding is the jurisdictional predicate for the exercise of powers by the Authority to
impose a sanction, whether by imposing an administrative penalty or making a
debarment order. Yet, so it was contended, the competence of the Authority to decide
whether a contravention of a financial sector law has taken place is unconstrained
by the obligation to invite submissions from the person who is alleged to have acted
in contravention of the law, and only then to determine whether there has been a
contravention, taking account of these submissions. This want of constraint upon the
exercise of the Authority’s power is an infringement of the rights of Fusion and the
Beckers to procedural fairness, recognised in s 33(1) of the Constitution.
[11] Counsel for the Minister of Finance submitted that the constitutional
challenge made by Fusion and the Beckers was not open to them because the
principle of constitutional subsidiarity provided a complete answer to their
challenge. The Promotion of Administrative Justice Act 3 of 2000 (PAJA) was
enacted to give effect to the rights protected in s 33 of the Constitution. Where a
statute confers power to take administrative action, such action is made subject to
the disciplines of PAJA, unless the statute excludes its application or is otherwise
inconsistent with PAJA. Absent such exclusion or inconsistency, a statute cannot be
directly challenged for its inconsistency with s 33 of the Constitution because
whatever administrative action the statute empowers, it is subject to the protections
of PAJA which, in turn, gives effect to the rights in s 33 of the Constitution.
[12] The principle of subsidiarity was central to the reasoning that led the
high court to dismiss the constitutional challenge. Before us, the application of the
principle of subsidiarity was debated, and, in particular, the holding of the
Constitutional Court in Zondi v Member of the Executive Council for Traditional
and Local Affairs & Others (Zondi).1 Zondi requires that before a statute can be
found to be inconsistent with s 33 of the Constitution, the statute must be read with
PAJA. Generally, PAJA will be of application to any administrative action that the
statute empowers, and hence, no s 33 inconsistency can arise, unless PAJA is itself
deficient in some way in giving effect to the rights in s 33.
[13] What Zondi requires is that we read the Act with PAJA. Fusion and the
Beckers contend that the Act excludes their right to procedural fairness when the
Authority determines whether they have contravened a financial sector law. Whether
that is the correct interpretation of the Act is a matter to which I will come. However,
that is the cause of action upon which they rely. If the Act is interpreted as Fusion
and the Beckers submit it should be, then the Act would be subject to a direct
challenge under s 33 because PAJA would have been found to be of no application
to the exercise of powers by the Authority in determining whether there had been a
contravention of a financial sector law. The principle of subsidiarity does not obviate
the need to consider the interpretation of the Act that Fusion and the Beckers contend
for. Rather, Zondi requires us to engage that interpretative question. And I turn to
this issue.
[14] Fusion and the Beckers recognise that the Act does provide them with a right
to make submissions. Section 154 requires the Authority, before making a
debarment order, to provide reasons for the proposed debarment. The Authority must
invite the person who may be debarred to make submissions ‘on the matter’, and
afford a reasonable time within which to do so. Plainly, the obligation to provide
reasons is intended to allow the person who may be subject to sanction to make
1 Zondi v Member of the Executive Council for Traditional and Local Affairs & Others [2004] ZACC 19; 2005 (3) SA
598 (CC); 2005 (4) BCLR 347 (CC) paras 99 and 103.
informed submissions. These submissions must be considered before the Authority
decides whether or not to make a debarment order.
[15] I do not understand Fusion and the Beckers to contest this understanding of
what s 154 requires of the Authority. Their contention is that these duties of fairness
are of application before the Authority decides whether or not to make a debarment
order. The Act does not extend these duties to the decision of the Authority as to
whether a person has contravened a financial sector law. Section 153(1)(a) provides
that the Authority may make a debarment order if the person concerned has
contravened a financial sector law. And so the finding of a contravention is a
jurisdictional predicate for the exercise by the Authority of its power to sanction by
recourse to the making of a debarment order. However, if the Authority is not
required to invite and consider submissions from the person who has been
investigated, as to whether they have contravened a financial sector law, before
deciding this issue, then the Act fails to respect the constitutional right to procedural
fairness, which s 33(1) of the Constitution entrenches.
[16] This legislative omission, it was submitted, gives rise to considerable risk for
the Beckers. Should the Authority make a debarment order, s 230 provides that
persons aggrieved by that decision may apply to the Financial Services Tribunal
(the Tribunal) for a reconsideration of the decision. However, the process to secure
a reconsideration takes time. In the interim, the debarment is enforced, with its
drastic consequences for the Beckers, both as to what they may not do and the public
opprobrium they will suffer. This is so because s 231 provides that neither an
application for a reconsideration of a decision, nor the proceedings that follow,
suspend the decision of the Authority, unless the Tribunal so orders. The Beckers
complain that the first stage in the process by which sanctions may be visited upon
them lacks procedural fairness. That renders invalid the competence of the Authority
to impose sanctions, as also the enforcement of these sanctions, pending their
reconsideration by the Tribunal. Put simply, if the exercise of competence by the
Authority requires no procedural fairness so as to decide whether a person has
contravened a financial sector law, then no decision as to sanctions predicated upon
a finding of contravention is valid, whatever adherence to procedural fairness the
Authority then demonstrates.
[17] The same challenge is directed at s 167 of the Act. The Authority may impose
an appropriate administrative penalty upon a person who has contravened a financial
sector law. As I have explained, s 167(2)(a)(iii) of the Act requires that in
determining an appropriate penalty, the Authority must have regard to any
submissions ‘relevant to the matter’, made by or on behalf of the person who might
be sanctioned. Fusion submitted that procedural fairness accorded to a person at the
stage of sanction cannot cure the absence of procedural fairness when the Authority
determines whether a contravention of a financial sector law has taken place. The
imposition of an administrative penalty is rendered invalid by the failure to observe
procedural fairness in determining that a contravention took place.
[18] The challenge that Fusion and the Beckers make rests on a single proposition:
that the Act does not require the Authority to invite a person to make submissions,
nor to consider their submissions, before it decides whether this person has
contravened a financial sector law. If the proposition is correct, this would constitute
an infringement of the right to procedural fairness, entrenched by s 33(1) of the
Constitution, and would render the power of the Authority to impose sanctions in
terms of ss 154 and 167 invalid, as also the interim imposition of the sanction
pending a reconsideration that s 231 enjoins. Implicit in this submission is the
following interpretation of the Act: the power of the Authority to decide whether a
person has contravened a financial sector law, though administrative action, is not
subject to obligations to observe procedural fairness imposed by s 3 of PAJA.
[19] But is the proposition correct? Section 154(1), as we have observed, requires
the Authority to invite submissions before making a debarment order. The Authority
must give the person affected the draft debarment order ‘along with reasons for and
other relevant information about the proposed debarment’. The reasons for, and
relevant information concerning, the proposed debarment order must necessarily
traverse why the order is required. As a matter of law, a debarment order can only
be required if there has been a contravention of a financial sector law. The reasons
must therefore engage why it is that the Authority considers there to be a basis to
conclude that such a contravention has taken place. The reasons are given to permit
a person against whom a debarment order may be made to offer informed
submissions. Section 154(1) refers to a proposed debarment. The Authority has not
made a decision to make a debarment order when it invites submissions. It may do
so, but only once it has invited submissions and considered them, before taking a
decision.
[20] Since a contravention of a financial sector law is the essential premise upon
which any sanction may be required, I interpret s 154(1) to mean that the
submissions that are invited, and must be considered, concern every matter relevant
to making a debarment order. The text of s 154(1) says so. It refers to submissions
‘on the matter’. No matter is more central to such a decision than the issue as to
whether a contravention of a financial sector law has taken place. It would also be a
perverse incongruity if s 154(1) required the Authority to provide reasons that
engage the issue of contravention, but exclude from submission, and hence
consideration, what might be said by a person as to why no contravention had taken
place or that the contravention is of a lesser kind or degree.
[21] I find that the correct interpretation of s 154(1) does not exclude from
submission or consideration the issue as to whether a person has contravened a
financial sector law. On the contrary, this lies at the very heart of the matter. It
follows that, properly understood, when the Authority comes to consider whether to
make a debarment order, it cannot have made a final decision as to whether there
was a contravention of a financial sector law. As occurred in this matter, the
investigation may have led the Authority to conclude that there is a prima facie
evidence of a contravention. Any decision on the issue, however, must await the
submissions of the person alleged to have contravened the financial sector law, and
the Authority’s consideration of those submissions.
[22] Once this is so, the Act permits no want of procedural fairness as to the making
of a debarment order. On the contrary, it requires that the Authority provide reasons
for its proposed order, and these reasons must traverse the issue of contravention.
Furthermore, it requires the Authority to invite submissions that engage this issue.
The constitutional challenge of the Beckers, who face a proposed debarment order,
cannot succeed. The challenge to s 231 of the Act was framed as an entailment of
the invalidity that was said to attach to the debarment order. It must therefore also
fail.
[23] For like reasons, the challenge of Fusion to s 167 must also fail. Although its
wording and structure differ somewhat from s 154, as we have observed, it requires
the authority to have regard to submissions ‘relevant to the matter’. Nothing is more
relevant to the matter than the issue as to whether a person has contravened a
financial sector law, the very predicate upon which any imposition of an
administrative penalty rests. It follows, then, here too, that the Authority can make
no final decision as to whether a contravention has taken place until it has considered
the submissions of the person alleged to have contravened a financial sector law.
Thus, for the reasons given, the Act permits of no want of procedural fairness in
conferring a power upon the Authority to impose an administrative penalty.
[24] Sections 154 and 167 cannot be interpreted to exclude submissions
concerning whether a person has contravened a financial sector law from the remit
of the submissions that the Authority must invite an affected person to make.
However, even if ss 154 and 167 could be read on the basis that they do not, in terms,
expressly require the Authority to invite such submissions (contrary to the
interpretation I consider to be correct), the interpretative outcome is no different.
Section 91 of the Act stipulates that PAJA applies to any administrative action taken
by the Authority. Whether the Authority’s decision as to whether a person has
contravened a financial sector law is a discrete action, as the Beckers and Fusion
contend, or whether it forms part of what the Authority determines when deciding
whether to impose a sanction, it is administrative action on the part of the Authority
to which PAJA applies. Hence, the duty of the Authority to observe procedural
fairness is inescapable and the Act, on this score, suffers no constitutional defect.
[25] As I understood the position of counsel for Fusion and the Beckers, if their
challenge on the grounds of procedural fairness, in terms of s 33(1) of the
Constitution, failed, then, they do not pursue their challenge to the Act based upon
the proposition that the Authority is not an independent tribunal or forum, and thus
its power to make a debarment order or impose an administrative fine offends against
the protections of s 34 of the Constitution. I have found that the procedural fairness
challenge cannot prevail, and hence, say nothing more of the challenge of Fusion
and the Beckers in terms of s 34.
Remedy
[26] For these reasons, the appeal of Fusion and the Beckers must be dismissed.
Although the appeal raises issues of some constitutional import, this litigation has
been pursued by Fusion and the Beckers to defend themselves against a regulatory
imposition. That is of course their right. But having not prevailed, in my judgment,
they should bear the costs of this appeal.
[27] In the result: the appeal is dismissed with costs, such costs to include the costs
of two counsel, where so employed.
__________________________
D N UNTERHALTER
ACTING JUDGE OF APPEAL
Appearances
For the appellants:
A R G Mundell SC (with D van Niekerk)
Instructed by:
Cowan-Harper-Madikizela Attorneys, Sandton
Bezuidenhouts Inc., Bloemfontein
For the first respondent:
A Cockrell SC
Instructed by:
Mothle Jooma Sabdia Inc., Pretoria
Matsepes Inc., Bloemfontein
For the second respondent:
L Gcabashe SC (with P Jara)
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:
10 November 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
Ilse Becker and Others v The Financial Services Conduct Authority and Others
(454/2022) [2023] ZASCA 149 (10 November 2023)
Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal in which ss 154, 167
and 231 of the Financial Sector Regulation Act 9 of 2017 ( the Act) were challenged on the basis that
these provisions infringed the appellants’ right to procedural fairness guaranteed in terms of s 33 of the
Constitution.
An investigation was conducted into the affairs of the appellants. The investigation concluded in a report
that the appellants had contravened the Short-Term Insurance Act 53 of 1998. The Financial Services
Conduct Authority (the Authority) gave notice to the appellants that it was prima facie of the view that
the appellants were in contravention of certain financial sector laws and that it proposed to impose an
administrative penalty of R200 million and make a debarment order against two of the appellants. The
Authority invited the appellants to make submissions on the investigative report and the proposed
administrative penalty and proposed debarment.
The appellants made comprehensive submissions, but also challenged the constitutional validity of the
powers enjoyed by the Authority, in terms of the Act, to make a debarment order and impose an
administrative penalty. Their challenge did not prevail in the high court.
In their appeal before the SCA, the appellants contended that while ss 154 and 167 afforded the
appellants a right to make submissions to the Authority concerning the sanctions that might be imposed
upon them, the Act did not provide the appellants with procedural fairness in respect of the Authority’s
finding that the appellants had contravened certain financial sector laws. And since this finding was a
necessary stage of decision-making by the Authority before it could decide upon any sanction, the Act
was constitutionally invalid.
The SCA dismissed this challenge. Upon a proper interpretation of ss154 and 167, the appellants
enjoyed the right to make submissions and have those submissions considered by the Authority both
as to the issue of the contravention of certain financial sector laws and any possible sanctions that
might follow. The Authority cannot make any final decision as to the contravention of certain financial
sector laws before inviting the appellants to make submissions on this issue and considering those
submissions. Sections 154 and 167, the SCA found, are not invalid for want of procedural fairness and
the appeal was accordingly dismissed.
~~~~ends~~~~ |
4078 | non-electoral | 2023 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 364/2022
In the matter between:
MUNICIPAL GRATUITY FUND
APPELLANT
and
THE PENSION FUNDS ADJUDICATOR
FIRST RESPONDENT
MUTSILA, TSHIFHIWA SHEMBRY
SECOND RESPONDENT
Neutral Citation: Municipal Gratuity Fund v The Pension Funds Adjudicator and
Another (Case no 364/2022) [2023] ZASCA 116 (31 July 2023)
Coram:
DAMBUZA ADP, MOCUMIE and MBATHA JJA and NHLANGULELA
and DAFFUE AJJA
Heard:
16 May 2023
Delivered:
This judgment was handed down electronically by circulation to the parties’
representative 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 31 July 2023.
Summary:
Pension Fund Act 24 of 1956 – whether the Pension Funds Adjudicator
had jurisdiction to consider a complaint by a claimant who lodged their complaint
directly with the Pension Funds Adjudicator – whether the audi alteram partem rule
was violated in that the Municipality Gratuity Fund was not provided an opportunity to
make representations to the Pension Funds Adjudicator.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: The Gauteng Division of the High Court, Pretoria (Baqwa and Janse
van Nieuwenhuizen JJ and Seboko AJ, sitting as a court of appeal):
The appeal is upheld, with each party to pay its own costs.
The order of the full court is set aside and replaced with the following:
‘(a) The appeal is upheld with each party paying its own costs;
(b) The order of the court a quo is set aside and replaced with the following:
(i) The determination of the Pension Funds Adjudicator dated 8 September 2014
is set aside.
(ii) Each party shall pay its own costs.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Daffue AJA (Dambuza ADP, Mocumie and Mbatha JJA and Nhlangulela AJA):
Introduction
[1] The ultimate question to be decided in this appeal is whether a determination
of the Pension Funds Adjudicator (the Adjudicator) in terms of which death benefits
due to the dependants of the late Mr TE Mutsila (the deceased) should be set aside.
During his lifetime, the deceased, an employee of the Ba-Phalaborwa Municipality,
was a member of the Municipal Gratuity Fund (the Fund), the appellant in this appeal.
The Fund was at the time administered by Sanlam Life Insurance Ltd. The deceased
passed away on 15 December 2012. Upon his death, a dispute arose concerning the
allocation of the death benefits to his dependents. The second respondent, Ms
Tshifhiwa Shembry Mutsila (Ms Mutsila), the deceased’s widow, was dissatisfied with
the approach adopted by the Fund in allocating the death benefits to certain
beneficiaries whom she considered not to qualify for the death benefits. She decided
as advised in a letter by the Fund to file a written complaint with the Adjudicator who
made a determination, inter alia, setting aside the Fund’s allocation of the death
benefits.
The common cause facts
[2] The deceased was a member of the Fund. At the time of his death, he was
married in community of property to Ms Mutsila. Five children were born out of this
marriage, of which three were still minors when their father died. Following the death
of the deceased, the total death benefits payable to his beneficiaries amounted to
R 1 614 434.96. Prior to his death, on 12 January 2009, he had nominated Ms Mutsila
and their five children as the beneficiaries of his death benefits in the Fund. It also
turned out that shortly before he died, on 1 October 2012, the deceased had taken
out a ‘Future Builder Family Funeral Plan’ (Funeral Plan) with Metropolitan Life.
[3] In terms of the Funeral Plan, the deceased arranged funeral benefits for
himself, his life partner Ms Masete and her three children. Also included in the Funeral
Plan were three of his own children with Ms Mutsila, his mother, Ms Elizabeth Mutsila
and Ms Betty M Masete, described in the Funeral Plan as his mother-in-law. Although
the Funeral Plan provides for funeral benefits in respect of the three Masete children,
only the youngest two are relevant to the present dispute.
[4] Ms Masete and Ms Mutsila both applied to the Fund for payment of the death
benefits to themselves as well as their children, i.e. Ms Mutsila’s five children and Ms
Masete’s two children. The Chief Executive Officer (CEO) of the Fund, Mr Jacobson,
conducted an investigation whereafter he presented a report to the Fund’s board of
trustees. He recommended that preference should be given to factual dependants and
that Ms Masete and her children were factually dependent upon the deceased in an
amount of R2 000 per month. He concluded that Ms Mutsila, who was employed as a
teacher, was financially independent.
[5] Following upon Mr Jacobson’s report, the Fund resolved, on 9 April 2014, after
‘careful consideration of the requirements of s 37C’ to distribute the death benefits. It
allocated 22.5% to Ms Mutsila and 27.5% to Ms Masete, whilst the children’s benefits
varied between 2.5% and 14% of the total benefits, depending on their respective
ages. On 11 April 2014, Ms Mutsila’s attorneys were informed of the Fund’s
determination. They were also advised that the Fund’s decision could be challenged
through the Adjudicator.
[6] On 14 May 2014, Ms Mutsila filed a complaint with the Adjudicator. She
attached to her complaint the notice of motion and founding affidavit in an application
brought by Mr Malema Joseph Mphafudi (Mr Mphafudi), the biological father of Ms
Masete’s two minor children, in the Limpopo Division of the High Court, Polokwane
(the custody application). In that application, Mr Mphafudi claimed the primary
residence of the two minor children, subject to Ms Masete’s reasonable contact and
that she be ordered to pay R50 per month per child. Ms Masete, who did not deny that
Mr Mphafudi was the biological father of her children, alleged in the custody
application that he had failed to make meaningful contributions towards the
maintenance of his two children and that he had not made any contribution since
December 2011/January 2012. At the hearing of this appeal, neither of the parties
were able to shed light as to the progress made in the custody application.
[7] On 15 May 2014, the Adjudicator informed the Fund in writing of the complaint.
The Fund responded on 30 May 2014, suggesting that the evidence in the custody
application might have a direct impact on the consideration of the complaint and the
distribution of the death benefits. It suggested that consideration of the complaint
should be held in abeyance until the conclusion of the custody application, and that
the Fund be allowed an opportunity to respond 30 days after the conclusion of that
application. Contrary to the Fund’s suggestion, the Adjudicator considered the
complaint and made a determination. The Adjudicator, inter alia, set aside the Fund’s
determination and ordered it to pay R300 000 to Ms Mutsila.
The Adjudicator’s determination
[8] The Adjudicator’s determination was couched as follows:
‘In the result, the order of this Tribunal is as follows: -
6.1.1 The decision of the board of the first respondent is hereby set aside; and
6.1.2 The first respondent is ordered to pay the amount of R 300 000 in advance to the
complainant for the repayment of her housing loan with ABSA Home Loan Division as
resolved on 9 April 2014, within two weeks from the date of this determination;
6.1.3 The board of the first respondent is directed to properly investigate and effect an
equitable distribution of the balance of the proceeds of the death benefit to all the deceased's
dependants within three weeks after a decision by the High Court, under case number
653/2014 has been handed down; and
6.1.4 The first respondent is ordered to provide this Tribunal and the complainant with its
report and also confirm the authenticity of the information and/or documents in its possession,
within two weeks after finalising its investigations in paragraph 6.1.3 above.’
The Fund did not resolve to pay R300 000 to Ms Mutsila to enable her to settle the
Absa home loan as incorrectly stipulated in paragraph 6.1.2 of the Adjudicator’s
determination. Therefore, the Adjudicator committed a factual misdirection in this
regard.
Litigation history
[9] The Adjudicator’s determination triggered the litigation that followed which
eventually ended up in this Court. On 24 October 2014, the Fund filed an application
out of the Gauteng Division of the High Court, Pretoria to set aside the determination
in terms of s 30P of the Pension Funds Act 24 of 1956 (the Act). The Fund was
unsuccessful in the high court (the court of first instance). The Fund’s application for
leave to appeal was dismissed, but it obtained leave from this Court to appeal to the
full court of that Division (the full court). It lost again, and as was the case in the court
of first instance, it was penalised with an attorney and client costs order.
[10] Now, nearly nine years after the Adjudicator’s determination, this Court is called
upon to adjudicate an appeal against the decision of the full court, special leave having
been granted by this Court. The Adjudicator is not participating in the appeal as was
the case in the courts below, but the appeal is opposed by Ms Mutsila.
The basis of the challenge to the Adjudicator’s award
[11] It is apposite to set out anteriorly the statutory basis upon which a party
aggrieved by a determination of the Adjudicator may approach a court for relief.
Section 30P of the Act, under the title ‘Access to court’, reads as follows:
‘(1)
Any party who feels aggrieved by a determination of the Adjudicator may, within six
weeks after the date of the determination, apply to the division of the High Court which has
jurisdiction, for relief, and shall at the same time give written notice of his or her intention so
to apply to the other parties to the complaint.
(2)
The division of the High Court contemplated in subsection (1) may consider the merits
of the complaint made to the Adjudicator under section 30A (3) and on which the Adjudicator's
determination was based, and may make any order it deems fit.
(3)
Subsection (2) shall not affect the court's power to decide that sufficient evidence has
been adduced on which a decision can be arrived at, and to order that no further evidence
shall be adduced.’ (My emphasis.)
[12] It is clear from the wording of ss 30P(2) that the application to the high court is
effectively a reconsideration of the complaint. This Court confirmed in Meyer v Iscor
Pension Fund,1 that the high court is not limited to a decision whether the Adjudicator’s
determination was right or wrong. It is also not confined to the evidence, or the grounds
upon which the Adjudicator’s determination was based, as the court can consider the
matter afresh and make any order it deems fit, subject thereto that ‘the High Court’s
jurisdiction is limited by ss 30P(2) to a consideration of “the merits of the complaint in
question”.’2
[13] The Fund raised two principal bases for its challenge: (a) the Adjudicator did
not have jurisdiction to determine Ms Mutsila’s complaint, and (b) the Fund had not
been afforded an opportunity to be heard before the Adjudicator decided the
complaint. Furthermore, the Fund also contended that the Adjudicator could not
consider the complaint, relying on a defence of lis pendens (pending action), insofar
as ss 30H(2) of the Act stipulates that:
‘The Adjudicator shall not investigate a complaint if, before lodging of the complaint,
proceedings have been instituted in any civil court in respect of a matter which would
constitute the subject matter of the investigation.’
[14] With regard to the first basis, the Fund asserted that Ms Mutsila should have
lodged her complaint with it in terms of ss 30A(1) of the Act prior to approaching the
Adjudicator. If the complaint had been lodged with it, it would have responded thereto
in accordance with ss 30A(2) and placed all relevant facts gathered from its extensive
investigation on record. It argued that this jurisdictional requirement had not been met.
Second, the Fund contended that when the Adjudicator informed it about the
1 Meyer v Iscor Pension Fund [2003] 1 All SA 40 (SCA); 2003 (2) SA 715 (SCA) para 8.
2 Ibid.
complaint, it was not granted an opportunity to deal with the merits of the complaint,
therefore the audi alteram partem principle was not complied with. For that reason,
the Fund took issue with the Adjudicator’s finding that it had failed to undertake a
proper investigation to determine the deceased member’s beneficiaries and
maintained that such finding was flawed.
Discussion
Did the Adjudicator have jurisdiction?
[15] The jurisdictional issue raised by the appellant is an afterthought and devoid of
any merit. I state so because s 30A of the Act which deals with ‘Submission and
consideration of complaints’ reads as follows:
‘(1)
Notwithstanding the rules of any fund, a complainant may lodge a written complaint with
a fund for consideration by the board of the fund.
(2)
A complaint so lodged shall be properly considered and replied to in writing by the fund
or the employer who participates in a fund within 30 days after the receipt thereof.
(3)
If the complainant is not satisfied with the reply contemplated in subsection (2), or if the
fund or the employer who participates in a fund fails to reply within 30 days after the receipt
of the complaint the complainant may lodge the complaint with the Adjudicator.
(4)
Subject to section 30I, the Adjudicator may on good cause shown by any affected party-
(a)
extend a period specified in subsection (2) or (3) before or after expiry of that period; or
(b)
condone non-compliance with any time limit specified in subsection (2) or (3).’
[16] In this case, Ms Mutsila had complained with the Fund about the proposed
distribution of the deceased’s death benefits. A round-table discussion to resolve the
impasse was held thereafter, but to no avail. It is evident that the draft distribution
proposal was discussed during the meeting in terms whereof Ms Mutsila was informed
that she would receive approximately R440 000. Her attorneys placed on record her
dissatisfaction with the Fund’s decision in their letter dated 11 March 2014 to which
the Fund responded the next day.
[17] Second, on 11 April 2014, the Fund advised Ms Mutsila’s attorneys in writing
and in clear and unambiguous language to refer her dispute to the Adjudicator, it being
‘a specialist court focussing on pension fund issues.’3 This demonstrates that the Fund
was satisfied that Ms Mutsila had complied with the requirement to submit her
complaint to it, and that it considered the complaint exhaustively. Third, the Fund
raised the jurisdictional issue for the first time and somewhat vaguely in its replying
affidavit, thus depriving the Adjudicator who did not oppose the relief sought, of the
opportunity to consider this version and to respond thereto. Fourth, Ms Mutsila had an
option under s 30A, bearing in mind that the legislature has changed the wording of
ss 30A(1) of the Act. Previously, the section stipulated that a complainant ‘shall’ lodge
a written complaint with a fund for consideration by its board before the matter may
be referred to the Adjudicator. This indicated a peremptory requirement. The
subsection was amended in 2007 to substitute the word ‘shall’ with ‘may’.4 Fifth, in my
view, the legislature did not intend to divest the Adjudicator of jurisdiction to deal with
a complaint where a determination has been made by a fund, especially in a case
such as this one where the highest decision-making body of the Fund – its board of
trustees – has made a determination after having received and considered a
complaint.
The Lis pendens challenge
[18] There was no pending litigation that prevented the Adjudicator from making a
determination. The lis pendens defence is unmeritorious. In casu, the issue was
whether Ms Masete and her two children were factually dependent upon the
deceased. Contrary to that dispute, in the custody application the issue between Ms
Masete and her husband, Mr Mphafudi, was about the primary residence and daily
care of their two children.
[19] In these proceedings Ms Masete asserted that the same two children, who
were legally dependent upon her husband for maintenance, were indeed factual
dependants of the deceased. The Fund accepted factual dependency, although under
the mistaken belief that the children were the deceased’s children. It is apparent from
the affidavits that Mr Mphafudi did not maintain his children, at least not since
3 In para 3 of the determination Ms Mutsila was informed that payment would be made by the Fund
‘unless proof of appeal to a higher authority such as the Pension Funds Adjudicator or otherwise has
been submitted to the Fund…’
4 Section 19(a) of the Pension Funds Amendment Act 11 of 2007.
December 2011/January 2012.5 He made two payments to Ms Masete at the end of
2014 that he referred to as maintenance payments and explained that he could not
make earlier payments as he was not aware of Ms Masete’s bank details.
[20] A careful perusal of the affidavits filed in these proceedings would have alerted
the Adjudicator, the court of first instance and the full court to the fact that Mr
Mphafudi’s version supported Ms Masete’s claim that she and her children were
dependent on the deceased for support, which he factually did. No contrary deduction
could be made. It is important to note, with reference to Ms Masete’s bank statements,
that at least four cash deposits were made during the period 3 May to 10 August 2012
which contained the first ten numbers of the deceased’s identity number, to wit 621208
5971 008. Over and above this, other cash deposits appear on the bank statements,
excluding the deposits pertaining to Ms Masete’s salary which are clearly identified as
such.
The audi alteram partem challenge
[21] The main object of the Adjudicator is to dispose of complaints lodged in terms
of ss 30A(3) of the Act ‘…in a procedurally fair, economical and expeditious manner.’6
In order to achieve the main object, ss 30E(1)(a) provides that:
‘…the Adjudicator -
5 The following statements are indicative of Mr Mphafudi’s apparent failure to properly care for his
children: ‘I wish to state that this (during the December 2011 school holiday) was the last time I stayed
with my children in our family home at Seshego. My children did not return to my place after this visit.’
(para 5.11 p 159); although Mr Mphafudi stated that he continued to support his children even when
they were not staying with him, he did not set out any facts in support hereof (para 5.14 p 160); clearly
at all relevant times since 2011 the marital life between Ms Masete and Mr Mphafudi were in a bad
state; Mr Mphafudi requested Ms Masete to bring the children back to him in January 2014, but she
refused as they have been taken care of by their grandmother, Ms Betty Masete (who is mentioned in
the funeral plan of the deceased) (para 5.15 p 161); finally and in response to Ms Masete’s answering
affidavit, Mr Mphafudi stated in reply that: ‘(i)n as far as maintaining my children is concerned I have
always been willing to maintain them but the respondent could not allow me to. I attach hereto a copy
of a deposit slip of an amount of R1 200 being maintenance money which I have paid into the
Respondent’s bank account which I found from her answering affidavit. She has continuously refused
to allow me to maintain these children and little did I know that she was eyeing the Mutsila money… I
wish to clearly state that I have always wanted to maintain my children and I will continue to maintain
them as long as I am allowed to do so by the respondent. (replying affidavit paras 8.2 & 8.3 pp 194 &
195). Ms Masete made it clear in her answering affidavit that Mr Mphafudi ‘has never contributed to the
maintenance of the children.’ She then attached a copy of her bank statement indicating that the
deceased had financially taken care of her and her children (para 8 p 178 read with the bank statements,
pp 183 – 185).
6 Section 30D of the Act.
(a) shall, subject to paragraph (b) [which is not applicable in this case], investigate any
complaint and may make the order which any court of law may make…’
Also, the Act states that ‘[t]he Adjudicator may follow any procedure which he or she
considers appropriate in conducting an investigation, including procedures in an
inquisitorial manner’.7 Section 30F provides for an opportunity to respond before any
determination is made concerning a fund or person and stipulates as follows:
‘When the Adjudicator intends to conduct an investigation into a complaint he or she shall
afford the fund or person against whom the allegations contained in the complaint are made,
the opportunity to comment on the allegations.’
[22] It is and was the Fund’s main concern that the Adjudicator failed to apply the
audi-principle in denying it an opportunity to make representations before it made its
determination. This ground of appeal requires some consideration. The Fund received
from the Adjudicator notification of Ms Mutsila’s complaint and responded that a final
determination should be held over until finalisation of the custody application between
Ms Masete and her husband. It reserved the right to respond at that stage. Contrary
to the Fund’s suggestion, the Adjudicator decided to consider the complaint and set
aside the Fund’s award and ordered it to pay an amount of R 300 000 in advance to
Ms Mutsila to enable her to settle the housing loan with Absa. It also ordered the Fund
‘to properly investigate and effect an equitable distribution of the balance of the
proceeds of the death benefit to all the deceased’s dependants within three weeks
after a decision by the High Court….’. In the circumstances the Fund was not allowed
an opportunity to respond fully as provided in s 30F before its award was set aside. I
agree with the sentiment that the audi-principle was not adhered to.
Should the Adjudicator’s award stand?
[23] The Fund never resolved to settle the Absa loan. It considered that in order to
consider such payment, it required more information in respect of the assets and
liabilities of the deceased’s estate which Ms Mutsila, as executrix, neglected to
provide. The Fund was of the view that if Ms Mutsila stood to inherit a substantial
portion of the deceased’s estate, that might have an effect on the total amount to be
7 Section 30J of the Act.
allocated to her. She might have been allocated a smaller amount if her dependency
was shown to be less than initially awarded.
[24] Before I deal with dependency and a pension fund’s duties and discretion in
respect of the distribution of death benefits, it is apposite to quote the definition of a
‘dependant’ in s1 of the Act which provides:
‘“dependant”, in relation to a member, means-
(a)
a person in respect of whom the member is legally liable for maintenance;
(b)
a person in respect of whom the member is not legally liable for maintenance, if such
person-
was, in the opinion of the board, upon the death of the member in fact dependent on the
member for maintenance;
(ii)
is the spouse of the member;
(iii)
is a child of the member, including a posthumous child, an adopted child and a child
born out of wedlock;
(c)
a person in respect of whom the member would have become legally liable for
maintenance, had the member not died.’ (My emphasis.)
[25] Subsection 37C(1)(a) stipulates how a member’s death benefits shall be
disposed of by a fund. It reads as follows:
‘(1)
Notwithstanding anything to the contrary contained in any law or in the rules of a
registered fund, any benefit (other than a benefit payable as a pension to the spouse or child
of the member in terms of the rules of a registered fund, which must be dealt with in terms of
such rules) payable by such a fund upon the death of a member, 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 form part of the assets in the estate of such a member, but shall be dealt with in the
following manner:
(a)
If the fund within twelve months of the death of the member becomes aware of or traces
a dependant or dependants of the member, the benefit shall be paid to such dependant or, as
may be deemed equitable by the fund, to one of such dependants or in proportions to some
of or all such dependants.’ (My emphasis.)
[26] The Fund made its finding based on legal and factual dependency as in April
2014, i.e. more than 12 months after the death of the deceased. It relied on the
definition of ‘dependant’ quoted above. In Fundsatwork Umbrella Pension Fund v
Guarnieri and Others,8 this Court held that the persons entitled to death benefits are
those who qualify once the fund had completed its enquiry into who the dependants
were. In this regard the following dictum is apposite:
‘The issue in this appeal arises from the fact that s 37C of the PFA removes the allocation of
pension benefits on the death of a pension-fund member from the unfettered choice of the
member, whether by will or by nomination. It reflects a legislative decision that funds becoming
available in that way should be available to be used for the benefit of the deceased's
dependants so that they are less likely to be a drain on the state's resources. This serves the
social purpose of providing some protection for dependants, without entirely overriding the
wishes of a deceased who has nominated beneficiaries or made a will.’9 (Footnotes omitted.)
The Court continued to make the following observations:10
‘Given all these considerations of language, purpose and practicality, in my view, the proper
construction of s 37C(1)(a) is that the time at which to determine who is a dependant for the
purpose of distributing a death benefit is when that determination is made, and furthermore,
the person concerned must still be a beneficiary at the time when the distribution is made.
That is the only way in which to ensure that the persons identified as dependants are those
whose interests the section seeks to protect.’ (Footnotes omitted.)
[27] The Fund’s version, as canvassed earlier in the judgment, was available to the
Adjudicator. If the Adjudicator needed documentary proof or any other information,
she could and should have requested that from either the Fund or Ms Masete,
especially insofar as the CEO of the Fund indicated that he was in possession of a
‘complete case file.’ She failed to do so, but rather decided to set aside the Fund’s
determination whilst awaiting the outcome of the custody application. This was
premature considering that the custody outcome was still not delivered.
[28] Both the court of first instance and the full court criticised the Fund for being
subjective and following a one-sided approach in determining who the beneficiaries of
the death benefits should be. The essential issue, to wit whether Ms Masete and her
two children were factually dependent upon the deceased, was never properly
challenged. Both courts failed to recognise this. In addition, they failed to consider the
8 Fundsatwork Umbrella Pension Fund v Guarnieri and Others [2019] ZASCA 78; [2019] ZASCA 78;
2019 (5) SA 68 (SCA).
9 Ibid para 5.
10 Ibid para 25.
narrow approach upon which the application and subsequent appeal was brought, i.e.
that the Adjudicator failed to apply the audi-principle.
[29] Close to a decade has lapsed and the battle over the custody of the children
has not come to an end. The awaited outcome on the custody application is still
pending. The parties hereto, and the beneficiaries, in particular, are entitled to finality
and will not achieve that if the Adjudicator’s determination is allowed to stand.
[30] If the appeal is allowed, this Court may consider this matter afresh, or decide
to refer it back to the Fund for reconsideration. The second option will not serve any
fair and equitable purpose, bearing in mind the time lapse, the possible unavailability
of witnesses and documentary proof, the fact that minor beneficiaries have become
adults in the meantime and again, insofar as the parties are entitled to finality. The
only equitable outcome is to accept that the Fund complied with its legislative mandate
and in its discretion made a correct distribution. I am satisfied that if the totality of the
evidence as summarised in the next paragraphs is considered, the Fund’s
determination should prevail.
[31] The Fund did not find that the deceased and Ms Masete were married in terms
of customary law. It only determined the issue of factual dependency. The Fund
correctly accepted that it was not bound by the deceased’s nomination of beneficiaries
in 2009 at which stage Ms Mutsila was still considered a beneficiary. Ms Mutsila and
the deceased earned about the same net salaries and on the version presented to the
Fund, she was not factually dependent upon the deceased as her net income met her
total expenses. She was a teacher at the time and would be entitled to a pension
benefit. Contrary to her favourable financial position, Ms Masete earned a meagre
salary and proved that the deceased factually maintained her and her children.
[32] The Fund was fully aware that the deceased’s immovable property was
mortgaged in favour of Absa and required more information from Ms Mutsila as the
executrix in the estate. It needed to know two things, i.e. whether the estate was not
perhaps insolvent which would mean that the payment to Absa might be to the
detriment of Ms Mutsila as a beneficiary, alternatively, if the estate had considerable
assets and Ms Mutsila as heir was about to inherit those, that might have an effect on
the amount to be distributed to her.
[33] The Funeral Plan issued by Metropolitan Life on 1 October 2012 did not include
Ms Mutsila, contrary to the deceased’s 2009 nomination of beneficiaries of his death
benefits. Instead of including Ms Mutsila as a beneficiary in the Funeral Plan, the
deceased included his life partner, Ms Masete and her two children, together with his
own three children, his mother and Ms Masete’s mother. The Funeral Plan is not proof
of factual dependency, but goes a long way to prove that the deceased regarded the
nominated beneficiaries as part of his family unit who were dependant on him.
[34] Ms Masete provided a version in the custody application which cannot be
regarded as far-fetched and false. Therein, she explained the strained relationship
between her and Mr Mphafudi, his assaults on her, that they did not stay together for
a number of years and that he had not contributed to the maintenance of the children.
After the deceased’s death, officials of the Fund visited Ms Masete and explained that
she and her children were beneficiaries of the deceased’s death benefits. The version
presented by Ms Masete in the custody application that she and her children had been
factually maintained by the deceased was corroborated by her bank statements. As
mentioned, the deceased’s identity number is 621208 5971 008. The first ten numbers
thereof appear on Ms Masete’s bank statements in some of the cases where deposits
had been effected. The mere fact that Ms Mutsila confirmed that the deceased stayed
with her at their Lulekani house and that she denied the deceased and Ms Masete’s
cohabitation is not sufficient to negate objective documentary evidence in the form of
Ms Masete’s bank statements and the Funeral Plan, indicating Ms Masete as the
deceased’s life partner and even providing cover for her mother (regarded by the
deceased as his mother-in-law).
Conclusion
[35] For all the reasons mentioned above, the appeal against the order of the full
court should be upheld. The order of the court of first instance should suffer the same
fate. Consequently, the Adjudicator’s determination should be set aside.
Costs
[36] A final aspect to be dealt with is the punitive costs orders granted in both the
court of first instance and the full court. The full court agreed with the reasoning of the
court of first instance pertaining to the award of costs on a punitive scale without
saying anything further in this regard, save to committing the same factual misdirection
in finding that the Fund proceeded to pay Ms Masete an amount of R 300 000 despite
the Adjudicator’s determination. It also incorrectly mentioned, earlier in the judgment,
that the Fund proceeded, after the Adjudicator’s determination, ‘to make a distribution
in November 2014 of 30% of the funds in terms of its unreliable and/or challenged
resolution, which distribution included a payment to Masete and her children….’ In this
regard the court of first instance commented as follows which the full court accepted
as correct:
‘The Applicant exhibited the same carelessness and defiance it did when it was dealing with
the complaint Mrs Mutsila registered with it prior to its decision.
Such improper distribution constitutes a maladministration of the fund causing prejudice to the
real beneficiaries. As a result an award of damages for maladministration causing prejudice
to the deceased beneficiaries (sic) to be borne by the Fund can be a cause to consider.’
This incorrect factual basis caused the court of first instance to make a punitive costs
order which was repeated by the full court. There was no justification for a punitive
costs order.
[37] The Fund is the successful party in the appeal and in principle is entitled to the
costs of the appeal as well as in the high court. However, this is an exceptional case
where the successful party should not be granted costs in its favour. The dispute might
have taken a totally different, much more inexpensive and less time-consuming path
if the Fund had taken a decision to deal with Ms Mutsila’s complaint to the Adjudicator
on the merits, instead of suggesting that the outcome of the custody application should
be awaited. Consequently, the appropriate order is that each party should pay their
own costs in respect of the appeal as well as the proceedings in the court of first
instance and the full court.
Order
[38] In the result, the following order is made:
The appeal is upheld, with each party to pay its own costs.
The order of the full court is set aside and replaced with the following:
‘(a) The appeal is upheld with each party paying its own costs;
(b) The order of the court a quo is set aside and replaced with the following:
(i) The determination of the Pension Funds Adjudicator dated 8 September 2014
is set aside.
(ii) Each party shall pay its own costs.’
__________________________
J P DAFFUE AJA
ACTING JUDGE OF APPEAL
Appearances
Counsel for appellant:
R Shepstone
Instructed by:
Michael Popper & Associates Inc, Johannesburg
Claude Reid Attorneys, Bloemfontein
Counsel for second respondent:
M Mojapeolo with F Thema and M Thulare
Instructed by:
P B N Mawila Attorneys Inc, Thohoyandou
Thebe 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 July 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
Municipal Gratuity Fund v The Pension Funds Adjudicator & Another (364/2022) [2023] ZASCA 116
(31 July 2023)
Today, the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against a
judgment of the full court of the Gauteng Division of the High Court, Pretoria (the full court).
The issue before the SCA was whether a determination by the Pension Funds Adjudicator (Adjudicator)
dated 8 September 2014 should be set aside. In terms thereof the Adjudicator inter alia set aside a
decision of the Municipal Gratuity Fund (the Fund) regarding the distribution of death benefits to certain
beneficiaries.
During his life time a municipal employee, Mr TE Mutsila (the deceased) was a member of the Fund.
Upon his death a dispute arose as to whom the death benefits should be awarded. On 9 April 2014 the
Fund resolved ‘after careful consideration of the requirements of s 37C’ of the Pension Funds Act 24 of
1956 to distribute the death benefits to the deceased’s widow, Ms TS Mutsila and their five children, as
well as the deceased’s life partner, Ms Masete and her two children.
Ms Mutsila, the second respondent in this appeal, filed a complaint with the Adjudicator, inter alia based
on allegations made in an application by Ms Masete’s customary law husband relating to the custody
of their two children. The Adjudicator informed the Fund of the complaint. The Fund did not deal with
any of Ms Mutsila’s averments, but suggested that the matter be kept in abeyance pending finalisation
of the custody application. The Adjudicator proceeded to set aside the Fund’s award without giving the
Fund an opportunity to comment on the allegations and ordered it to pay R300 000.00 to Ms Mutsila.
She also directed the Fund to ‘investigate and effect an equitable distribution of the balance of the
proceeds within three weeks’ after finalisation of the custody application. Notwithstanding the lapse of
nine years, the parties could not shed any light on the outcome of the custody application.
The Fund applied to the high court (the court of first instance) for setting aside of the Adjudicator’s
determination, relying mainly on the Adjudicator’s failure to apply the audi alteram partem principle as
recognised in s 30F of the Act. The application was dismissed with punitive costs. The appeal to the full
court suffered the same fate.
The SCA was satisfied that the Adjudicator failed to apply the audi alteram partem principle. Also, based
on the available facts and the Fund’s duties and discretion in disposing of a member’s death benefits,
the SCA held that the Fund’s determination of factual dependants was correct. Consequently, the
Adjudicator’s determination was set aside.
~~~~ends~~~~ |
2986 | non-electoral | 2015 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 20156/2014
In the matter between:
BOOST SPORTS AFRICA (PTY) LIMITED
APPELLANT
and
THE SOUTH AFRICA BREWERIES (PTY) LIMITED
RESPONDENT
Neutral citation:
Boost Sports Africa (Pty) Ltd v The South Africa Breweries (Pty) Ltd
(20156/2014) [2015] ZASCA 93 (1 June 2015)
Bench:
Ponnan, Mhlantla, Mbha JJA and Fourie and Gorven AJJA
Heard:
13 May 2015
Delivered:
1 June 2015
Summary: Whether absent a provision similar to the repealed s 13 of the Companies
Act 61 of 1973 an incola company can be compelled to furnish security for costs.
_____________________________________________________________________
ORDER
______________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Hassim AJ sitting as
court of first instance): reported sub nom Boost Sports Africa (Pty) Ltd v South African
Breweries Ltd 2014 (4) SA 343 (GP).
The appeal is dismissed with costs, including those consequent upon the employment
of two counsel.
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Ponnan and Mbha JJA (Mhlantla JA, Fourie and Gorven AJJA concurring):
[1] On 21 October 2011 the appellant, Boost Sports Africa (Pty) Limited (the
plaintiff), instituted action in the High Court of South Africa, Gauteng Division, Pretoria
against the respondent, the South Africa Breweries (Pty) Limited (the defendant). The
plaintiff‘s cause of action is based on an alleged breach of contract by the defendant. It
alleges that it disclosed a particular advertising concept referred to as the ‗fans
challenge concept‘ to the defendant under an agreed confidentiality regime between
them and that the defendant later used the concept to conduct an event called ‗be the
coach‘ in breach of that agreement. In its plea, the defendant raised a number of
defences, in particular the defendant denied that there was any confidentiality
agreement between the parties in relation to the concept and averred that the
information pertaining to the concept was already in the public domain when it was first
disclosed to the defendant.
[2] After the plaintiff had made available to the defendant its discovered documents,
the latter became concerned that the former would not be able to meet an adverse
costs order should it fail in the contemplated action. When the plaintiff refused to furnish
evidence of its ability to pay the defendant‘s costs in the event of its claim being
dismissed, the defendant launched an application against the plaintiff on 1 August 2013
for security for its costs. The founding affidavit filed in support of that application stated:
‗16.
The defendant, therefore, became concerned that, if the plaintiff‘s claim was dismissed
and an adverse costs order was granted against it, it would not be in a position to meet such an
order. For that reason, I was instructed to conduct investigations to determine whether or not
the plaintiff would be able to meet an adverse costs order against it. The investigations were
conducted by conducting various internet searches and also searches of public records. The
investigations revealed that:
16.1
the plaintiff‘s registered address recorded to be at 2 Scherwitz Road, Berea, East
London, South Africa is the address of its auditors, Marais & Smith Accountants. . . .
16.2
the plaintiff‘s principal place of business at 123 Western Avenue, Vincent, East London,
(as pleaded at paragraph 1 of its particulars of claim) is the address of Smale & Partners, a firm
of architects of which Jed Webber is a director. . . . Mr Webber is a director of the plaintiff as
well as a former director of Boost Sports International Limited, the plaintiff‘s apparent
predecessor-in-title in respect of the concept;
16.3
the document titled ―Deed of Cession‖, attached to the plaintiff‘s particulars of claim as
Annex ―A‖, records the plaintiff‘s registered address and principal place of business at 99
Clovelly Road, Greenside, Johannesburg. This is a residential address. . . .
16.4
the plaintiff does not have any immovable property registered in its name in any of the
Deed‘s Registries in South Africa. . . .
16.5
the plaintiff does not have a telephone number listed in the online company telephone
registry known as Brabys. . . .
16.6
the plaintiff does not have a telephone number listed in the yellow pages. A search was
conducted under the categories ―marketing consultants‖ and ―market research‖ for both
Gauteng and the Eastern Cape. . . .
16.7
the plaintiff does not have a telephone number listed in Telkom‘s directory enquiry
services. This information was gleaned from my telephone conversation with a Telkom directory
enquiry operator on 18 June 2013. During that telephone conversation, I asked the operator to
search for the telephone number of Boost Sports Africa (Pty) Limited. The operator was not able
to locate a telephone number for the plaintiff in South Africa;
16.8
the plaintiff does not operate a website advertising its business. . . . ; and
16.9
the plaintiff‘s parent company, Boost Sports International Limited, has been dissolved,
according to the United Kingdom‘s company register. . . .
17.
It therefore appears clear that the plaintiff is not trading currently and has not done so in
the past. It has no assets registered in its name. Furthermore, in an effort to avoid this
application, the defendant wrote to the plaintiff asking it to disclose its financial statements to the
defendant and to show that it has sufficient income or assets to cover any adverse costs order
against it. . . . The plaintiff refused to provide evidence of its ability to pay any such order in a
letter dated 11 July 2013 . . . The defendant, therefore, served a formal notice in terms of Rule
47(1) on the plaintiff. . . .
18.
The only inference one can draw from the evidence above and the plaintiff‘s refusal to
provide evidence of its ability to pay any adverse costs order against it is that the plaintiff does
not have any means with which to do so. If the plaintiff is to contend otherwise, it is required to
adduce evidence of its ability to pay any adverse costs order against it. Should the plaintiff now
adduce evidence of its ability to pay any adverse costs order against it, having been given an
opportunity to do so earlier, an adverse costs order will be sought against it in this application.‘
[3] The response to those allegations on behalf of the plaintiff was:
‗16.1
Save to repeat paragraph 14 above, I admit these allegations.
16.2
The plaintiff has four shareholders whose shareholding is as follows:
16.2.1 Jed Webber (Myself) – 45%;
16.2.2 Mkhuseli Mnguni – 25%;
16.2.3 Justin Price – 20%;
16.2.4 Andrew Stylianou – 10%.
16.3
I am an architect, Mr Mnguni is an entrepreneur, Mr Price is an estate agent and Mr
Stylianou is a legal adviser.
16.4
The plaintiff‘s shareholders are funding the plaintiff‘s costs. However, none of its
shareholders have sufficient assets to fund the plaintiff‘s costs and to put up the quantum of
security for costs demanded by the defendant.
16.5
This demand by the defendant will, effectively, destroy the plaintiff‘s ability to prosecute
its claim.
17.1
I admit that the plaintiff has never traded. I deny that it has no assets. The concept
constitutes a valuable asset. This much is clear from the manner in which the concept has been
exploited by the defendant.
17.2
It is extremely difficult to place a firm value on an intangible asset such as the concept.
However, if this Court is prima facie of the view that the concept constitutes confidential
information worthy of protection, then the concept must have significant commercial value given
that the defendant has exploited it so successfully.
17.3
Save as aforesaid I admit these allegations.
18.1
I repeat paragraph 17 above.
18.2
Save as aforesaid I deny these allegations.‘
[4] The defendant‘s application succeeded before Hassim AJ1 who, on 17 March
2014, issued the following order:
‗(i)
The plaintiff is ordered to furnish security for the defendant‘s legal costs in the action.
(ii)
The form, amount and manner of security to be provided by the plaintiff shall be
determined by the Registrar on application by the defendant to that office.
(iii)
In the event that the plaintiff fails to provide security as determined by the Registrar
within 20 days of the Registrar‘s order or determination, the action shall be stayed forthwith and
the defendant is granted leave to apply on the same papers, amplified as necessary, for the
dismissal of the action.
(iv)
The plaintiff is to pay the costs of the application, including the costs occasioned by the
employment of two counsel.‘
The appeal is with the leave of the learned Judge.
[5] The procedure whereby an application for security for costs is made is governed
by Uniform rule 47. It provides:
‗(1)
A party entitled and desiring to demand security for costs from another shall, as soon as
practicable after the commencement of proceedings, deliver a notice setting forth the grounds
upon which such security is claimed, and the amount demanded.
. . .
1 The judgment of Hassim AJ is reported sub nom Boost Sports Africa (Pty) Ltd v South African Breweries
Ltd 2014 (4) SA 343 (GP).
(4)
The court may, if security be not given within a reasonable time, dismiss any
proceedings instituted or strike out any pleadings filed by the party in default, or make such
other order as to it may seem meet.‘
The rule, which deals with the procedure to be followed, applies to all cases where
security is sought in the high court. It deals with procedure and not with substantive
law.2 For the substantive right, it is to the common law and the relevant statutory
provisions that one must look.3 The general rule of our law as laid down in Witham v
Venables (1828) 1 Menz 291 is that an incola plaintiff cannot be compelled to furnish
security for costs. As explained in Lumsden v Kaffrarian Bank (1884 – 1885) 3 S.C. 366
no inhabitant of the Colony can be compelled to give security for costs whether he be
rich or poor, solvent or insolvent, but a peregrinus may be called upon to do so, unless
he can prove that he is possessed of immovable property within the Colony of adequate
value (Lombard v Lombardy Hotel Co Ltd (In Liquidation) 1911 TPD 866).
[6] In the case of a company, until recently, there existed a statutory exception to the
general rule that an incola plaintiff cannot be compelled to furnish security.4 Our
company law derives from English law. Prior to Union each of the Provinces had its own
Act. The first general Act providing for incorporation of companies in South Africa was
the Cape Joint Stock Companies Limited Liability Act 23 of 1861, which was based on
English legislation. This Act served as the model for the Acts subsequently enacted in
Natal, the South African Republic and the Republic of the Orange Free State. Only in
1892 was a fully-fledged Companies Act (Act 25 of 1892) passed in the Cape. Section
128 of that Act provided:
‗Where a limited company is plaintiff in any action, suit, or other legal proceeding, any Judge
having jurisdiction in the matter may, if it appears by any credible testimony that there is reason
to believe that if the defendant be successful in his defence the assets of the company will be
insufficient to pay his costs, require sufficient security to be given for such costs, and may stay
all proceedings until security is given.‘
(See Brink v Liquidator United Farming Corporation of South Africa Ltd 1913 CPD 371).
2 D F Scott (EP) (Pty) Ltd v Golden Valley Supermarket 2002 (6) SA 297 (SCA) para 9.
3 ICC Car Importers (Pty) Ltd v A Hartrodt SA (Pty) Ltd 2004 (4) SA 607 (W) at 615 G.
4 Zietsman v Electronic Media Network Ltd & others 2008 (4) SA 1 (SCA) para 4.
[7] In the absence of such a provision in the Transvaal Act of 1909, the issue as to
whether or not that power existed at common law arose in two cases in that Province. In
the first, Liquidator, Salisbury Meat Market Ltd v Perelson 1924 WLD 104 at 106-7 De
Waal J stated:
‗Apart from the English authorities to which I have referred, I can find no principle of our law
upon which the application for security for costs can be supported. The general rule of our law is
that nobody but a peregrinus can be called upon under any circumstances to give security for
costs, and that the Court has no jurisdiction to make an ordinary litigant, or one who sues under
a power conferred upon him expressly by Act of Parliament, give security for costs.‘
And, in the second, Lombard v Lombardy Hotel Co Ltd (In Liquidation) 1911 TPD 866,
Bristowe J stated:
‗In England cases of this kind are provided for by section 278 of the Companies Consolidation
Act, 1908, which (following section 69 of the Companies Act, 1862), empowers the Court to
order security for costs in every case where a limited company is plaintiff and will be unable to
pay the costs of the defendant if the action fails. And it has been held that the fact that a
company is in liquidation is in itself sufficient ground for ordering security to be given (Pure Spirit
Company v Fowler, 25 Q.B.D. 235). In our own Statute (the Companies Act, 1909), although it
is taken almost verbatim from the English Act, this section is omitted. Why this should have
been done it is hard to say, for the power to order security for costs is a most reasonable one,
having regard to the enormous protection which shareholders of a company derive from the
principle of limited liability. But the omission is not a reason for straining the Common Law. On
the contrary, it rather indicates an intention on the part of the Legislature that litigants with joint
stock companies in this country shall not enjoy the protection which is afforded to them in
England.‘
On appeal from the judgment of Bristowe J to the full court, neither Wessels J, nor
Smith J, entered into the issue, both having concluded that the matter was not
appealable. De Villiers JP considered that the court could order security against an
incola company. He expressed himself thus (at 876):
‗Now it was admitted that under similar circumstances in England a company could be
compelled to give security for costs under sec. 278 of the Companies Cons. Act, 1908. In fact,
as Bristowe J, points out, it has been held in the Pure Spirit Co. v Fowler (25 Q.B.D. 235), that
the fact that a company is in liquidation is, in itself, sufficient ground for ordering security to be
given. But it was contended that this Court has no such power as the corresponding section was
left out in our Company‘s Act, 1909, which, it was urged, follows the English Act so closely. This
conclusion is, to my mind, unwarranted. The mere fact of the absence of a corresponding
section in our law does not justify such a conclusion. It may be that the Legislature considered
that the matter was covered by the principles of our Common Law, or it may even be a pure
oversight.‘
[8] After Union and before the issue could be settled by our courts, the first South
African Companies Act was enacted in 1926.5 It provided in s 216:
‗Where a limited company is plaintiff . . . in any legal proceedings, the Court having jurisdiction
in the matter may at any stage, if it appears by credible testimony that there is reason to believe
that the company . . . will be unable to pay the costs of the defendant . . . if successful in his
defence require sufficient security to be given for those costs and may stay all proceedings till
the security is given.‘
A similar provision was to be found in s 13 of the Companies Act 61 of 1973, which
read:
‗Where a company or other body corporate is plaintiff in any legal proceedings, the Court may at
any stage, if it appears by credible testimony that there is reason to believe that the company or
body corporate or if it is being wound up, the liquidator thereof, will be unable to pay the costs of
the defendant or respondent if successful in his defence, require sufficient security to be given
for those costs and may stay all proceedings till the security is given.‘
[9] Section 216 (and its successor, s 13, which mirrors provisions in certain other
Commonwealth jurisdictions),6 meant that the issue under the common law whether an
impecunious incola company can be required to give security for the costs of
proceedings instituted by it, was left unresolved. The object of s 13 was to protect
5 M S Blackman ‗Company Law‘ in Lawsa Vol 4(1) (first re-issue) para 5.
6 See eg s 726(1) of the United Kingdom Companies Act, which provides:
‗(1) Where in England and Wales a limited company is plaintiff in an action or other legal proceedings,
the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to
believe that the company will be unable to pay the defendant's costs if successful in his defence, require
sufficient security to be given for those costs, and may stay all proceedings until the security is given.‘
And s 1335 of the Australian Corporations Act 2001, which provides:
‗(1) Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in
the matter may, if it appears by credible testimony that there is reason to believe that the corporation will
be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient
security to be given for those costs and stay all proceedings until the security is given.
(2) The costs of any proceeding before a court under this Act are to be borne by such party to the
proceedings as the court, in its discretion, directs.‘
persons against liability for costs in regard to any action instituted by bankrupt
companies.7 Its main purpose was to ensure that companies, who were unlikely to be
able to pay costs and therefore not effectively at risk of an adverse costs order if
unsuccessful, did not institute litigation in circumstances where they had no prospects of
success thus causing their opponents unnecessary and irrecoverable expenses. As is
apparent from s 13, if a company ordered to provide security for costs was unable to do
so, it could have been prevented from proceeding with its action. The section, like its
predecessor s 216 of the 1926 Act, vested a court with a discretion to order a company
that had instituted action to furnish security for costs if there was reason to believe that
it would be unable to pay the costs of its opponent.
[10] The phrase 'if it appears that there is reason to believe' in s 13 placed a much
lighter burden of proof on an applicant for security.8 In terms of s 13, a two stage
enquiry was required. At the initial stage, and in order to discharge the onus, the
applicant for security had to adduce facts on which the court could conclude that there
was reason to believe that the plaintiff would be unable to satisfy an adverse costs
order. If the court could not come to such a conclusion that was the end of the matter
and the application was bound to be refused. However, if the court was satisfied that a
case had been made out, it had, at the second stage, to decide, in the exercise of its
discretion, whether or not to order the company to furnish security. (See MTN Service
Provider (Pty) Ltd v Afro Call (Pty) Ltd 2007 (6) SA 620 (SCA) at 622H.)
[11] Until Shepstone & Wylie and Others v Geyser NO 1998 (3) SA 1037 (SCA), the
approach adopted had been that although the court was not bound to order
security to be furnished, it should nevertheless do so unless special circumstances
exist. Hefer JA rejected that approach. He stated (at 1045I–1046A):
‗In my judgment, this is not how an application for security should be approached. Because a
Court should not fetter its own discretion in any manner and particularly not by adopting an
approach which brooks of no departure except in special circumstances, it must decide each
7 Hudson & Son v London Trading Company Ltd 1930 WLD 288 at 291; D R Harms Civil Procedure in the
Superior Courts (2014) para B47.16.
8 D R Harms op cit.
case upon a consideration of the relevant features, without adopting a predisposition either in
favour of or against granting security.‘
[12] The 1973 Companies Act has been repealed and replaced by the Companies Act
71 of 2008. Our most recent Companies Act, which ‗is a complete reinvention of our
corporate law‘,9 does not contain an equivalent provision to s 13. There have been
several decisions in which our high courts have recently had occasion to consider
whether, absent a counterpart to section 13 in our new Act, an incola company can be
ordered to furnish security for costs.10 Those decisions – or more accurately some –
have been discordant. Valuable as those decisions are, a discussion of each of them
would likely contribute to a judgment that is indigestible. We thus approach the problem
as if the matter is res nova. In doing so, we obviously draw on the benefits and insights
that a reading of those judgments has given.
[13] However, in the light of some of the views expressed in those decisions it may be
prudent to pass certain general observations. First, our courts now derive their power
from the Constitution itself,11 which in section 173 provides:
'The Constitutional Court, Supreme Court of Appeal and High Courts have the inherent power to
protect and regulate their own process, and to develop the common law, taking into account the
interests of justice.'
As it was put by the Constitutional Court in SABC Ltd v National Director of Public
Prosecutions and others:12
9 Per Brand JA in Newlands Surgical Clinic v Peninsula Eye Clinic [2015] ZASCA 25 (20 March 2015)
para 24.
10 Hiatas & Others v Port Wild Props 12 (Pty) Ltd 2011 (5) SA 562 (GSJ); Ngwenda Gold (Pty) Ltd &
Another v Precious Prospect Trading 80 (Pty) Ltd unreported case number 2011/31664 (GSJ); Genesis
on Fairmount Joint Venture v KNS Construction (Pty) Ltd & Others unreported judgment, 28 November
2012, case number 2012/36204, SGJ; Siemens Telecommunications (Pty) Ltd v Datagenics (Pty) Ltd
2013 (1) SA 65 (GNP); Hennie Lambrechts Architects v Bombenero Investments (Pty) Ltd 2013 (2) SA
477 (FB); Maigret (Pty) Ltd (in liquidation) v Command Holdings Ltd & Another 2013 (2) SA 481 (WCC)
Biochlor (Pty) Ltd v G E Betz South Africa (Pty) Ltd (A 710/2013) [2014] ZAGPPHC 1030 (12 December
2014). See also D E van Loggerenberg and J Malan 'Security for costs by local companies: Back to 1909
in the Transvaal, or not?' (2012) 75 THRHR 609; Van Loggerenberg & Farlam ‗Erasmus Superior Court
Practice‘ – Rule 47 Security for Costs.
11 Phillips and others v National Director of Public Prosecutions 2006 (1) SA 505 (CC) para 47.
12 SABC Ltd v NDPP 2007 (1) SA 523 (CC) para 35 and 36.
‗This is an important provision which recognises both the power of Courts to protect and
regulate their own process as well as their power to develop the common law. . . . The power
recognised in s 173 is a key tool for Courts to ensure their own independence and impartiality. It
recognises that Courts have the inherent power to regulate and protect their own process. A
primary purpose for the exercise of that power must be to ensure that proceedings before
Courts are fair. It is therefore fitting that the only qualification on the exercise of that power
contained in section 173 is that Courts in exercising this power must take into account the
interests of justice.'
That our courts were endowed with such power even in our pre-constitutional era is
evident from the following dictum of Corbett JA:
'There is no doubt the Supreme Court possesses an inherent reservoir of power to regulate its
procedures in the interests of the proper administration of justice ....'13
According to the Constitutional Court:14
‗The task of a . . . Court in determining its own proceedings is an important one. Its primary
constitutional responsibility is to ensure that the proceedings before it are fair and it must give
content to that obligation. This obligation has always been part of our law and is now
constitutionally enshrined as a fundamental right in s 35(3) of the Constitution. The task of
ensuring that the proceedings are fair will often require consideration of a range of principled
and practical factors, some of which may pull in different directions.‘
Second, it is a well-established principle of statutory construction that the legislature
must be taken to be aware of the nature and state of the law existing at the time when
legislation is passed.15 The omission of a similar provision to s 13 from the 2008 Act,
must therefore be taken (prima facie at least) to import a change of intention on the part
of the legislature. It must therefore follow that it is not open to a court to approach an
enquiry such as this as if the position is unaltered and that s 13 is still part of our law.
For, to do so may well result in a court impermissibly intruding into the domain of the
legislature. Third, it has been suggested that such a provision has been excluded
because its inclusion would limit the fundamental right of access to the courts as
enshrined in s 34 of the Constitution and would thereby be unconstitutional. But that
may be to ignore the fact that a court was vested with a discretion in terms s 13 and that
13 Universal City Studios Inc and others v Network Video (Pty) Ltd 1986 (2) SA 734 (A) at 754G.
14 SABC Ltd para 21.
15 Road Accident Fund v Monjane 2010 (3) SA 641 (SCA) para 12; Marine & Trade Insurance Co Ltd v
Workmen’s Compensation Commissioner 1972 (1) SA 535 (N) at 538D.
in exercising its discretion a court performs a balancing act. On the one hand it must
weigh the injustice to the plaintiff if prevented from pursuing a proper claim by an order
for security and against that it must weigh the injustice to the defendant if no security is
ordered and the plaintiff‘s claim fails and the defendant finds himself unable to recover
costs.16 Significantly, on that score, the European Court of Human Rights17 appears to
have inclined to the view that security for costs pursued a legitimate aim, namely to
protect a litigant from being faced with an irrecoverable bill for legal costs and since
regard was had to prospects of success the requirement could be said to have been
imposed in the interests of the fair administration of justice. It is also noteworthy that
back home, as long ago as Lombard it was stated by Bristowe J that the power to order
security for costs is a most reasonable one.18 Why the legislature saw fit to exclude it (or
a provision that mirrors it) is fortunately a debate that is not necessary for us to enter.
Fourth, s 39(2) of the Constitution makes plain that, when a court embarks upon a
course of developing the common law, it is obliged to ‗promote the spirit, purport and
objects of the Bill of Rights.‘ This ensures that the common law will evolve, within the
framework of the Constitution, consistently with the basic norms of the legal order that it
establishes. Faced with such a task, a court is obliged to undertake a two-stage enquiry.
It should ask itself whether, given the objectives of s 39(2), the existing common law
should be developed beyond existing precedent—if the answer to that question is in the
negative that should be the end of the enquiry. If not, the next enquiry should be how
the development should occur and which court should embark on that exercise.19 Fifth,
the omission of a provision akin to s 13 from the new Act is strange particularly since s 8
of the Close Corporations Act 69 of 1984, which has been interpreted in accordance
16 See Shepstone & Wylie at 1046A-C citing with approval the dictum of Peter Gibson LJ in Keary
Developments Ltd v Tarmac Construction Ltd [1995] 3 All ER 534 (CA) at 540a-b; see also Lappeman
Diamond Cutting Works v MIB Group (No 1) 1997 (4) SA 908 at 919G.
17 Tolstoy Miloslavsky v United Kingdom [1995] ECHR 18139/91.
18 More recently in Shepstone & Wylie (at 1046G–I), Hefer JA stated:
‗Let me say at the outset that the fact that an order of security will put an end to the litigation does not by
itself provide sufficient reason for refusing it. It is a possibility inherent in the very concept of a provision
like s 13 which comes into operation whenever it appears to the Court that the plaintiff or applicant will not
be able to pay the defendant or respondent‘s costs in the event of the latter being successful in his
defence. If there is no evidence either way, the mere possibility that the order will effectively terminate the
litigation can plainly not affect the Court‘s decision. It only becomes a factor once it is established as a
probability by the plaintiff or applicant. And, even if it is established, it remains no more than a factor to be
taken into account; by itself it does not provide sufficient reason for refusing an order.‘
19 City of Cape Town v SANRAL [2015] ZASCA 58 (30 March 2015) para 29.
with the principles that have evolved in relation to the corresponding provisions in the
previous Companies Act,20 has been retained. It follows that the principles pertaining to
the furnishing of security by a close corporation will henceforth differ from that
applicable to a company. Such incongruity as may arise from that dichotomy is no
invitation to a court to continue to approach an enquiry such as this in relation to a
company as if s 13 is still in force.
[14] The onus is on the party seeking security to persuade a court that security should
be ordered. As was the situation under s 13 in the past, a court in the exercise of its
discretion will have regard to: the nature of the claim; the financial position of the
company at the stage of the application for security; and its probable financial position
should it lose the action. The distinction to be drawn between the common law and that
which prevailed in terms of s 13 is described thus by Brand JA in MTN Service Provider
(Pty) Ltd v Afro Call (Pty) Ltd 2007 (6) SA 620 (SCA) paras 15–16:
‗Against an insolvent natural person, who is an incola, so it has been held, security will only be
granted if his or her action can be found to be reckless and vexatious (see Ecker v Dean 1938
AD 102 at 110). The reason for this limitation, so it was explained in Ecker (at 111), is that the
court‘s power to order security against an incola is derived from its inherent jurisdiction to
prevent abuse of its own process in certain circumstances. And this jurisdiction, said Solomon
JA in Western Assurance Co v Caldwell’s Trustee 1918 AD 262 at 274, ‗is a power which . . .
ought to be sparingly exercised and only in very exceptional circumstances. (See also eg
Ramsamy NO v Maarman NO 2002 (6) SA 159 (C) 173F–I). In the exercise of its discretion
under s 13 of the Companies Act, on the other hand, there is no reason why the court should
order security only in the exceptional case. On the contrary, as was stated in Shepstone & Wylie
v Geyser NO 1998 (3) SA 1037 (SCA) at 1045I–J, since the section presents the court with an
unfettered discretion, there is no reason to lean towards either granting or refusing a security
order.‘
[15] Accordingly, in terms of the common law mere inability by an incola to satisfy a
potential costs order is insufficient to justify an order for security, something more is
required (Ramsamy NO v Maarman NO 2002 (6) SA 159 (C) 172I-J). As Thring J put it
20 Henry v R E Design 1998 (2) SA 502 (CPD).
(Ramsamy NO at 172J-173A): ‗[w]hat this something is has been variously described in
a number of decisions. Thus in Ecker v Dean . . . it was said that the basis of granting
an order for security was that the action was ‗reckless and vexatious‘.‘ In Ecker v
Dean 1937 AD 254 at 259, Curlewis CJ stated:
‗In Western Assurance Co. v Caldwell’s Trustee (1918, A.D. 262) this Court laid down that a
Court of law had inherent jurisdiction to stop or prevent a vexatious action as being an abuse of
the process of the Court; one of the ways of doing so is by ordering the vexatious litigant to give
security for the costs of the other side, and I know of no reason why the Court below should not
have [exercised] such an inherent jurisdiction.‘
To once again borrow from De Villiers JP (Lombard at 877):
‗But, however, this may be the case of Mears v The Pretoria Estate and Market Co. is an
authority for the proposition that this Court has the power to settle a question of practice like the
present for itself. Innes, C.J., on page 956, is reported as follows: ―But after all, this is a question
of practice which this Court is justified in settling for itself; and I think that we should lay down
the rule that an insolvent ought to give security for costs in a case like the present.‖ And if that
be so, there can be no doubt as to what the practice should be. Where a company is in
liquidation it is sufficient ground for ordering security to be given; and when the company has
everything to gain and nothing to lose, as in the present case, it would be putting a premium
upon vexatious and speculative actions if such practice were not adopted.‘
[16] Absent s 13, there can no longer be any legitimate basis for differentiating
between an incola company and an incola natural person. And as our superior courts
have a residual discretion in a matter such as this arising from their inherent power to
regulate their own proceedings, it must follow that the former can at common law be
compelled to furnish security for costs. Accordingly, even though there may be poor
prospects of recovering costs, a court, in its discretion should only order the furnishing
of security for such costs by an incola company if it is satisfied that the contemplated
main action (or application) is vexatious or reckless or otherwise amounts to an abuse.
[17] According to Nicholas J in Fisheries Development Corp v Jorgensen 1979 (3) SA
1331 (W) at 1339E-F:
‗In its legal sense ―vexatious‖ means
―frivolous, improper: instituted without sufficient ground, to serve solely as an annoyance to the
defendant‖21 (Shorter Oxford English Dictionary). Vexatious proceedings would also no doubt
include proceedings which, although properly instituted, are continued with the sole purpose of
causing annoyance to the defendant; ―abuse‖ connotes a mis-use, an improper use, a use mala
fide, a use for an ulterior motive.‘
In African Farms & Townships v C.T. Municipality 1963 (2) SA 555 (A) at 565D-E,
Holmes JA observed:
‗An action is vexatious and an abuse of the process of Court inter alia if it is obviously
unsustainable. This must appear as a certainty, and not merely on a preponderance of
probability. Ravden v Beeten, 1935 C.P.D. 269 at p. 276; Burnham v Fakheer, 1938 N.P.D. 63.‘
[18] African Farms & Townships was concerned with an application to strike out a
claim. Since the common law is reluctant to limit access to court, an application for
security for costs would seem to require a less stringent test than one for the stay of
vexatious proceedings; the latter ends unsustainable litigation whereas the former
contemplates the continuance of the proceedings with the safeguard of security for
costs.22 Thus in Fitchet v Fitchet 1987 (1) SA 450 (ECD) at 454E-G, Olivier J pointed
out that:
‗It may well be that, in applications for security for costs, the test should be somewhat different.
Where, in an application for dismissal of an action, the Court without hearing evidence on the
merits will require moral certainty alone that the action is unsustainable, in an application for
security for costs the merits test should be somewhat less stringent, and other factors, which
are irrelevant in a dismissal application, should be taken into account. I am therefore in
respectful agreement with the statement of Klopper J in Davidson’s Bakery (Pty) Ltd v Burger
1961 (1) SA 589 (O) at 593E, viz:
―Myns insiens is die meriete van eiser se aksie nie altyd deurslaggewend nie, maar slegs ‗n
faktor wat in oorweging geneem moet word. Daar kan gevalle wees waar die Hof
sekuriteitstelling sal verleen al word dit slegs bevind dat die kanse van welslae op die aksie
alleen twyfelagtig is sonder dat dit gesê kan word dat dit geen vooruitsigte van sukses inhou
nie.‖‘
21 Bisset v Boland Bank Ltd 1991 (4) SA 603 at 608D-E.
22 D R Harms Civil Procedure in the Superior Courts – Uniform Rule 47 – Instances where security can be
demanded B-339.
[19] In Golden International Navigation SA v Zeba Maritime 2008 (3) SA 10 (CPD)
para 18, Griesel J posited that the ordinary yardstick – a preponderance of probability –
should find application in an enquiry such as the present. In Ravden v Beeten 1935
CPD 269 at 276, Sutton J cited with approval the following dictum of Fletcher Moulton J
(Goodson v Grierson 1908 1 KB 761 at 764): ‗In my opinion that is limited to the case
where on the face of the pleadings it is shown that the action cannot be maintained and
is frivolous and vexatious‘.23 It is not envisaged, it seems to us, that a detailed
investigation of the merits of the case should be undertaken. Nor, is it contemplated that
there should be a close investigation of the facts in issue in the action. As it was put by
Streicher JA in Zietsman v Electronic Media Network Ltd 2008 (4) SA 1 (SCA) para 21:
‗I am not suggesting that a court should in an application for security attempt to resolve the
dispute between the parties. Such a requirement would frustrate the purpose for which security
is sought. The extent to which it is practicable to make an assessment of a party‘s prospects of
success would depend on the nature of the dispute in each case.‘
[20] Against that backdrop we turn to a consideration of the claim sought to be
advanced by the plaintiff against the defendant. In its particulars of claim the plaintiff
alleges:
‗3.
During or about July and August 2006 the plaintiff, represented by Jed Webber
(―Webber‖) introduced the defendant, represented by Rob Fleming (―Fleming‖) to the plaintiff‘s
Fans’ Challenge Sport concept (―the concept‖).
. . .
8.
Annexure ―B‖ [a document that purported to introduce the concept] was provided to
Fleming during July 2006 and annexure ―C‖ [an executive summary] was provided to Ireland
during September 2006.
. . .
11.
The concept is unique and constitutes confidential information.
23 Under consideration there was Order 25, rule 4, which provided: ‗The Court or a Judge may order any
pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer, or in
any such case or in the case of the action or defence being shown by the pleadings to be frivolous or
vexatious the Court or a Judge may order the action to be stayed or dismissed, or judgment to be entered
according as may be just.‘
12.
The concept was disclosed to Fleming, Ireland and Minnaar in confidence and with the
intention that the plaintiff and the defendant would enter into a commercial relationship to utilise
the concept to their mutual financial benefit.
13.
Fleming, [. . .] orally accepted that the concept was disclosed to them in confidence,
constituted, confidential information and could not be used without the consent of the plaintiff.
14.
Fleming gave Webber an express undertaking that the defendant was a company with
high ethical standards and one that the plaintiff could trust. Webber accepted the undertaking
which, in the context of the disclosure of the concept, meant that:
14.1
the defendant agreed that the concept constituted confidential information; and
14.2
the defendant would not use the concept, directly or indirectly, without the consent of the
plaintiff.
15.
In the premises, the plaintiff and the defendant concluded an agreement on the terms
recorded in paragraphs 14.1 and 14.2 above (―the agreement‖).‘
[21] The plaintiff‘s pleaded case was thus that there was: (a) an oral acceptance on
behalf of the defendant that the concept was disclosed in confidence and constituted
confidential information (para 13); and, (b) a tacit undertaking that the concept
constituted confidential information (para 14). In both instances, so it is alleged, the
concept would not be used by the defendant without the consent of the plaintiff. Facially,
paragraphs 13 and 14 of the plaintiff‘s pleaded case appear incompatible. But assuming
in the plaintiff‘s favour that it is not or that in due course such incompatibility can be
overcome, the plaintiff alleges in paragraph 16 of its particulars of claim that ‗[t]he
defendant has breached the agreement in that . . . on or about 1 June 2011, unlawfully
using the concept without the consent of the plaintiff, it launched an event called “BE
THE COACH” under its Carling Black Label trade mark‘.
[22] The defendant‘s plea in answer to those allegations is:
‗3.1
The plaintiff, represented by Jed Webber (―Webber‖), and Rob Fleming (―Fleming‖), an
employee of the defendant, engaged in email correspondence during the course of July and
August 2006, a copy of which is attached marked ―P1‖.
3.2
During the course of that exchange, the plaintiff provided an ―executive summary‖
relating to the Fan’s Challenge Sport concept (the ―concept‖) to the defendant in the absence of
any undertaking by the defendant to maintain the alleged confidentiality of the concept. The
executive summary is an attachment to the email exchange attached as P1.‘
The exchange of emails relied on by the defendant makes interesting reading. On 12
July 2006 Jed Webber on behalf of the plaintiff wrote to Rob Fleming, the sponsorship
manager of the defendant:
‗Further to our conversation earlier today I have attached an NDA [non disclosure agreement]
for you to consider. It is a standard NDA to protect both parties which should enable us to enter
into candid discussion.
. . .
If the NDA is acceptable to you I will forward an executive summary highlighting the essence of
the Concept and I look forward to discussing the way forward. . . .‘
On 26 July Mr Fleming replied:
‗I am not happy to sign a cont[r]act that prevents me from making use of an activity that I might
have been exposed to/thought of etc etc. it is too restrictive.
SAB is a company with high ethical standards and one that you can trust.‘
Undaunted, on 28 July Mr Webber wrote:
‗. . . we fully understand SABMiller‘s position, but you need to appreciate our position too in that
we are discussing and divulging very sensitive Intellectual Property . . .
We are happy to send you a two page summary for you to consider before any form of NDA is
signed. We have utmost respect for SABMiller, your good standing as a company and global
brand, but feel that it is reasonable as well as good business practice to be able to expect at
least some sort of written undertaking that what we divulge and discuss remains highly
confidential, from the perspective of both parties.‘
On 31 July 2006 Mr Webber despatched the executive summary to Mr Fleming. After
receipt of the executive summary on 21 August 2006, Mr Fleming wrote:
‗Thanks for the mail. After reading your exec summary, I still don‘t believe there is a need to me
to sign confidentiality contracts. It looks like an interesting concept but I certainly don‘t want to
make any binding commitments right now.‘
What those emails reveal is that Mr Webber appears to have disclosed the executive
summary in the face of a refusal by Mr Fleming to sign a confidentiality undertaking.
[23] Further, in his answering affidavit in opposition to the application for security, Mr
Webber stated:
‗21.8 I was undeterred and determined to pitch the details of the concept to Mr Fleming. To
this end I arranged to have a telephone conversation with him. I called Mr Fleming on 24 August
2006.
21.10 Mr Fleming reiterated that the plaintiff could trust the defendant. I apologized and stated
that I was sure he understood that the plaintiff needed an assurance that the defendant would
not use the concept without the plaintiff‘s permission. Mr Fleming gave me his assurance that
the information that I was about to impart to him (the concept), would be received by him on a
strictly private and confidential basis and would not be used without the consent of the plaintiff.‘
But that, so contends the defendant, is not the case pleaded by the plaintiff in its
particulars of claim. The defendant asserts that if regard is had to the exchange of
emails, by 24 August 2006, the concept had already been disclosed by Mr Webber to
Mr Fleming. Accordingly, so the contention proceeds, the case asserted under oath in
this application is at odds with the plaintiff‘s pleaded case and, in addition, the plaintiff‘s
pleaded case is not supported by the emails. It is, inter alia, for these reasons that the
defendant denies the existence of the agreement as alleged by the plaintiff.
[24] Moreover, the defendant pleads24 that the information comprising the fans
challenge concept was disclosed in a patent application filed in terms of the Patent Co-
operation Treaty (PCT) and assigned patent number PCT/US01/25784 (the PCT
Patent). In dealing with this defence, Mr Webber stated in his answering affidavit: ‗I
deny the existence of the alleged patent or that it was public knowledge or public
property or that it was in the public domain‘. The priority date of the PCT patent is 28
August 2000. It bears an international publication date of 7 March 2002. According to
the defendant the concept was thus available internationally. Moreover, South Africa is
one of the National Designated States in the PCT patent. In terms of s 43B of the
Patents Act 57 of 1978, ‗an International Application designating the Republic shall be
24 In that regard the defendant‘s plea reads:
‗6.1
The defendant denies that Boost Sports International Limited was at any time the owner of the
rights in the concept.
6.2
The defendant pleads that the concept was in the public domain prior to the date on which the
executive summary relating to the concept was first provided to the defendant and was not therefore
proprietary to the plaintiff or its purported predecessors in title, or to any person at that date.
In support of the aforegoing, the defendant will rely on the disclosures in PCT patent application WO
02/19206 published in March 2002, a copy of which is attached marked ―P2‖.‘
deemed to be an application for a patent lodged at the patent office in terms of this Act.‘
It is therefore clear according to the defendant that the plaintiff‘s concept was neither
unique nor confidential as at the date on which the plaintiff alleges that the parties
entered into a confidentiality regime in respect of the concept.
[25] It remains to add that the plaintiff has dismally failed to show that an order
compelling it to furnish security will have the effect of it being forced to terminate its
action. The lack of candour by the plaintiff‘s shareholders, who are funding the plaintiff‘s
litigation but are unwilling to assist it in putting up security for the defendant‘s costs, is
telling. It is not in dispute that the plaintiff does not trade and that it has no assets.
Moreover, it will not be in a position to meet an adverse costs order should one
ultimately be granted against it. Of the plaintiff`s four shareholders, two are
professionals – one is an architect and the other a legal advisor. Of the remaining two,
one is an entrepreneur and the other an estate agent. They claim not to have the
resources to furnish any security (irrespective of the amount) for costs. The picture that
emerges is that although these shareholders are funding the litigation, they are doing so
in a manner that allows them to hide behind the corporate veil of the plaintiff. No
evidence has been adduced by them that there has been an attempt to raise funds to
put up security for the respondent‘s costs, but that they have been unable to do so. That
reticence to take the court into their confidence should inexorably lead to the inference
that the shareholders, who authorised the litigation on behalf of the plaintiff,
impecunious as it was, are shielding behind an empty shell in order to avoid liability for
costs.25
[26] In MTN Service Provider para 20, Brand JA pointed out that:
‗One of the very mischiefs s 13 is intended to curb, is that those who stand to benefit from
successful litigation by a plaintiff company will be prepared to finance the company‘s own
litigation, but will shield behind its corporate identity when it is ordered to pay the successful
defendant‘s costs. A plaintiff company that seeks to rely on the probability that a security order
will exclude it from the court, must therefore adduce evidence that it will be unable to furnish
25 Kini Bay Village Association v Nelson Mandela Metropolitan Municipality [2008] 4 All SA 50 (SCA) para
15.
security; not only from its own resources, but also from outside sources such as shareholders or
creditors (see eg Lappeman Diamond Cutting Works (Pty) Ltd v MIB Group (Pty) Ltd (No 1)
1997 (4) SA 908 (W) 920G-J; Keary Developments at 540f-j; Shepstone & Wylie at 1047A-B;
Giddey NO at paras 30, 33 and 34).‘
Notwithstanding the obsolescence of s 13, that mischief remains.
[27] In the language of Lombard (at 877), when a company has everything to gain
and nothing to lose, it would be putting a premium upon vexatious and speculative
actions if such practice (namely, compelling security) were not adopted. In Re Alluvial
Creek Ltd 1929 CPD 532 at 535, Gardiner J said in the context of a punitive costs order:
‗Now sometimes such an order is given because of something in the conduct of a party which
the Court considers should be punished, malice, misleading the Court and things like that, but I
think the order may also be granted without any reflection upon the party where the proceedings
are vexatious, and by vexatious I mean where they have the effect of being vexatious, although
the intent may not have been that they should be vexatious. There are people who enter into
litigation with the most upright purpose and a most firm belief in the justice of their cause, and
yet whose proceedings may be regarded as vexatious when they put the other side to
unnecessary trouble and expense which the other side ought not to bear.‘
[28] It follows, for the reasons given, that there is no warrant for interfering on appeal
with the discretion exercised by the high court (as to which see Giddey NO v JC
Barnard and Partners 2007 (5) SA 525 (CC)) in ordering the plaintiff to furnish security
for the costs of the proceedings instituted by it against the defendant.
[29] In the result the appeal must fail and it is dismissed with costs, including those
consequent upon the employment of two counsel.
_________________
V M Ponnan
Judge of Appeal
_________________
B H Mbha
Judge of Appeal
APPEARANCES:
For Appellant:
M Antonie SC
Instructed by:
Spoor & Fisher, Pretoria
Matsepe‘s Inc., Bloemfontein
For Respondent:
P Ginsburg SC (with him GD Marriott)
Instructed by:
Adams & Adams, Pretoria
Honey & Partners 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
1 June 2015
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
Boost Sports Africa (Pty) Ltd v The South Africa Breweries (Pty) Ltd (20156/2014)
[2015] ZASCA 93 (1 June 2015)
MEDIA STATEMENT
Today the Supreme Court of Appeal (SCA) dismissed a appeal by Boost Sports Africa (Pty) Ltd
(the plaintiff) and upheld an order of the Gauteng Division of the High Court, Pretoria, in terms of
which the plaintiff was required to furnish security for the legal costs of the South African Breweries
(Pty) Ltd (the defendant) in respect of an action instituted by the plaintiff against the defendant for
breach of contract.
The issue before the SCA was whether an incola company can be compelled to furnish security for
costs in light of the fact that the new Companies Act 71 of 2008 did not contain a similar provision to s
13 of the previous Companies Act 61 of 1973 that expressly catered for that.
The facts of the case are as follows. The plaintiff instituted an action in October 2011 against the
defendant for breach of contract, alleging that the defendant had breached a confidentiality
agreement and had used certain intellectual property belonging to the plaintiff when conducting an
advertising event called ‘be the coach’ under its Carling Black Label trademark. The defendant
opposed the action, and upon investigating the plaintiff discovered that it owned no immovable
property, owned no significant tangible assets, and was not actively trading. Flowing from this, the
defendant became concerned that the plaintiff would be unable to meet an adverse costs order
should the action be dismissed. Accordingly, the defendant instituted an application in the court a
quo, for an order that the plaintiff provide security for costs, which application was granted.
On appeal, the SCA held that although there was no corresponding provision to s 13 in the new
Companies Act a court did have the inherent power to regulate its own proceedings and that an
incola company, like an incola natural person, could accordingly be compelled to furnish security for
costs, but only if the court was satisfied that the contemplated main action (or application) is
vexatious or reckless or otherwise amounts to an abuse.
On the facts, the SCA found that the litigation was being funded by the shareholders of the plaintiff in
a manner that suggested that they were trying to hide behind the corporate veil of the plaintiff. They
were acting a manner where they would benefit fully if the litigation was successful, while attracting
no risk in the event of the action being unsuccessful action . Accordingly, the SCA upheld the court a
quo’s order that the plaintiff furnish security for costs.
-- ends --- |
2241 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 300/08
ST PAUL INSURANCE CO SA LIMITED
Appellant
and
EAGLE INK SYSTEM (CAPE) (PTY) LTD
Respondent
Neutral citation: St Paul Insurance Co SA Ltd v Eagle Ink System (Pty) Ltd
(300/08) [2009] ZASCA 53 (27 May 2009).
Coram: FARLAM, CLOETE, LEWIS, MHLANTLA JJA et TSHIQI AJA
Heard: 11 MAY 2009
Delivered:
27 MAY 2009
Summary:
Continuation of a trial when the judge has died; interpretation of
'contaminated' in a public liability insurance policy; effect of
exclusion in extension clause.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: the Cape High Court (Griesel J sitting as court of first
instance).
The appeal is upheld with costs, including the costs of two counsel.
The order of the Cape High Court is set aside and the following order
substituted:
'The plaintiff's claim is dismissed with costs, including the costs of the
proceedings before Knoll J and the costs of two counsel at both stages of the
proceedings.'
______________________________________________________________
JUDGMENT
______________________________________________________________
CLOETE JA (FARLAM, LEWIS, MHLANTLA JJA et TSHIQI AJA concurring):
[1] The appellant, St Paul Insurance Company SA Ltd, is, as its name
suggests, an insurance company and I shall refer to it as such. The
respondent, Eagle Ink System (Cape) (Pty) Ltd, to which I shall refer as Eagle
Ink, is a manufacturer, importer and distributor of printing inks and related
products. The insurance company issued a policy of insurance to Eagle Ink
which, as the plaintiff, sued the insurance company in the Cape High Court for
indemnity under the policy. Knoll J presided at the trial but died before she
could deliver judgment. By agreement between the parties a transcript of the
evidence together with the documentary exhibits were placed before Griesel J
who heard further argument. There is precedent for such a procedure, and it
is eminently sensible: Mhlanga v Mtenengari 1993 (4) SA 119 (ZS). Griesel J
found in favour of Eagle Ink but subsequently granted leave to appeal to this
court.
[2] I shall first deal briefly with the facts and thereafter with the relevant
terms of the insurance policy. One of Eagle Ink's customers to whom it
supplied ink was Nampak Products Ltd, which trades as Nampak Polyfoil
('Polyfoil'). Polyfoil concluded a contract with an American entity known as
Bunzl Distribution Southeast Inc ('Bunzl') for the supply of several million
plastic shopping bags destined for the supermarket chain WalMart in the
USA. It was a term of the contract between Bunzl and WalMart that the plastic
bags would be free of heavy metal, including lead. This requirement was
comunicated to Polyfoil and at the latter's request, Eagle Ink gave a written
assurance (which Polyfoil passed on to Bunzl) that 'all inks supplied for export
work are heavy metal free'.
[3] Due to the negligence of Mr Matthews, an employee of Eagle Ink who
worked at the Polyfoil plant, some of the ink supplied to Polyfoil contained
lead. What Matthews did was to take ink containing lead that had been
recovered from Polyfoil's printing presses after jobs for customers other than
Bunzl had been completed, and mix it with the lead free ink delivered to
Polyfoil's premises by Eagle Ink for the Bunzl contract. Matthews was
actuated by the best of intentions ─ he wanted to save Polyfoil money. The
consequence of his actions was that Bunzl rejected the bags manufactured by
Polyfoil because of the lead in the ink and claimed from the latter the return of
the purchase price it had paid, together with damages. Polyfoil in turn claimed
from Eagle Ink; and Eagle Ink claimed indemnity, up to the limit of the policy,
from the insurance company, which repudiated the claim.
[4] The insurance policy was a public liability (claims made) policy. It
comprised, in addition to a schedule and the definitions section, a section
which contained the operative clause; a section which contained exclusions
and another which contained conditions; and various extensions, including a
products liability extension. The operative clause read:
'The Company will indemnify the Insured against their legal liability to pay
compensation for claims first made against the Insured during the Period of
Insurance in respect of Injury and/or Damage arising out of the performance of the
Business within the Territorial Limits on or after the Retroactive Date stated in the
Schedule.'
'Damage' was defined as 'loss of or damage to tangible property' and the
'Business', according to the business description in the schedule, was that of
'Manufacturers, Importers & Distributors of Printing Inks and Related
Products'. Exclusions 7.5 and 10 read:
'The Company will not indemnify the Insured in respect of
. . .
7.
any liability caused by or arising from claims for
. . .
7.5
products sold or supplied by the Insured
. . .
10.
claims arising out of
10.1
liability directly or indirectly caused by seepage pollution or contamination
provided that this exclusion shall not apply where such seepage pollution or
contamination is caused by a sudden unintended and unexpected event
10.2
the cost of removing nullifying or cleaning up seeping polluting or
contaminating substances unless the seepage pollution or contamination is caused
by a sudden unintended and unexpected event'.
Product liability was therefore excluded by clause 7.5 of the exclusions in
absolute terms. But the products liability extension formed part of the policy. It
read:
'The following Extension is deemed to apply only if so stated in the Schedule and
unless specifically varied herein shall be subject to the terms exclusions and
conditions of this policy. . .
PRODUCTS LIABILITY EXTENSION
Notwithstanding anything to the contrary contained in exclusion 7.5 the Company will
indemnify the Insured in terms of this Policy anywhere in the Territorial Limits as
stated in the schedule and caused by products sold or supplied by the Insured
. . .
Exclusions
This extension does not cover liability:
. . .
iii)
arising from defective or faulty design formula plan or specification (unless
due to negligence in following same) treatment or advice by or on behalf of the
Insured
iv)
arising from inefficacy or failure to perform or conform to specification (unless
due to negligence in following same) or fulfil its intended function as specified or
guaranteed but this exclusion shall not apply to consequent injury or damage
. . .'.
[5] One of the defences raised by the insurance company was based on
exclusion 10.1, the insurance company contending that Polyfoil's claim
against Eagle Ink was one 'arising out of liability directly or indirectly caused
by . . . contamination' of the ink with lead. The Oxford English Dictionary (2
ed) gives 'contaminate' the meaning 'To render impure by . . . mixture; to . . .
pollute' and 'pollute', the meaning 'To make physically impure . . . To
contaminate (the environment, atmosphere etc) with harmful or objectionable
substances'. On these definitions, the ink supplied by Eagle Ink to Polyfoil
could undoubtedly be said to have been 'contaminated' with lead. Indeed,
Eagle Ink could hardly contend the contrary as the claim form prepared by Mr
Groenewald, its group financial director, said that the loss to Eagle Ink had
been caused by 'mixing of contaminated ink with heavy metal free ink for
export work'; and Eagle Ink's pleadings repeatedly used the word
'contaminate' and 'contamination' to describe the presence of lead.
[6] Eagle Ink's counsel nevertheless argued, and the court a quo upheld
the argument, that what exclusion 10.1 envisaged was contamination of
something else by the ink, not contamination of the ink itself. The court a quo
reached this conclusion by invoking the eiusdem generis rule in regard to the
phrase 'seepage pollution and contamination' in exclusion 10.1 and also by
having regard to exclusion 10.2 which, Eagle Ink's counsel argued, meant that
'a "mess" of some sort is envisaged, not a mere incorrect mixing of a formula'.
The court a quo accordingly concluded that the parties did not intend the word
'contamination' to be understood in the sense set out in the previous
paragraph above.
[7] I am unable to support this conclusion. Although 'pollution' and
'contamination' have similar meanings, 'seepage' does not. 'Seepage'
connotes a gradual leak. It may or may not produce pollution or
contamination. None of the three words necessarily denotes a mess. Nor
does exclusion 10.2: that clause excludes inter alia 'claims arising out of the
cost of removing . . . contaminating substances', which would cover the cost
of removing the lead from the ink, and the ink from Polyfoil's presses, both of
which could result in delay and a claim for damages. In my view there is no
warrant for confining exclusion 10.1 to claims arising out of contamination by,
and excluding contamination to, inks supplied to Polyfoil by Eagle Ink. The
exclusion covers both.
[8] The court a quo, again following the argument advanced by counsel for
Eagle Ink, found that exclusion 10.1 did not apply for another reason. The
court had regard in particular to exclusions (iii) and (iv) of the products liability
extension and reasoned as follows:
'On the evidence as a whole, there can be little doubt that the mixing of pigments
containing heavy metals with the plaintiff's carbon-based black ink was contrary to
the specification of heavy metal-free inks for the export market, and that the mixing
was an act of negligence on the part of Matthews in following such specification.
Similarly, the inefficacy or failure to conform to specification was due to the same
negligence. Finally, the damage did not cause the plaintiff damage to its property or
plant itself, but was clearly consequential damage as envisaged in the expression
"consequent injury or damage" in exclusion (iv).
The express inclusion within the products liability extension of liability arising
from defective specification or a failure to conform to specification where due to
negligence can only be taken to be a specific variation of other general terms and
exclusions where such might otherwise have been applicable, such as clause 10.1 of
the general exclusions.'
[9] Again, I am unable to support this conclusion. Ink which does not
conform to specification is not necessarily contaminated. Exclusions (iii) and
(iv) cover the former possibility and exclusion 10.1, the latter. Effect must be
given to all provisions of the policy particularly as the introductory words of the
products liability extension specifically provide that: 'The following Extension .
. . unless specifically varied herein shall be subject to the . . . exclusions . . . of
this policy'. Exclusion 10.1 is not 'specifically varied' by exclusions (iii) or (iv) ─
they deal with different situations; and the fact that Eagle Ink escapes the
provisions of exclusions (iii) and (iv) does not mean that exclusion 10.1 is
rendered inapplicable.
[10] I therefore conclude that the court a quo should have dismissed Eagle
Ink's claim as it arose out of liability directly or indirectly caused by
contamination as envisaged in exclusion 10.1 of the policy.
[11] The following order is made:
The appeal is upheld with costs, including the costs of two counsel.
The order of the Cape High Court is set aside and the following order
substituted:
'The plaintiff's claim is dismissed with costs, including the costs of the
proceedings before Knoll J and the costs of two counsel at both stages of the
proceedings.'
_______________
T D CLOETE
JUDGE OF APPEAL
Appearances:
Counsel for Appellant:
J C Butler SC
A J van Vuuren
Ms S van Vuuren
Instructed by
Everinghams Attorneys, Cape Town
Webbers Attorneys, Bloemfontein
Counsel for Respondent: R G Goodman SC
S Miller
Instructed by
Bernard Vukic Potash & Getz, Cape Town
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: 27 May 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
ST PAUL INSURANCE CO SA LTD v EAGLE INK SYSTEMS (CAPE) (PTY) LTD
The respondent, Eagle Ink, supplied ink to Nampak Polyfoil for printing on plastic bags
destined for WalMart in the USA. It was a term of the contract that the ink should be free
from heavy metals, including lead. An employee of Eagle Ink negligently mixed ink
containing lead with the lead-free ink supplied for the plastic bags, and the plastic bags were
rejected. Eagle Ink claimed against the appellant, St Paul Insurance Company, under the
insurance policy issued to it by the appellant. The claim succeeded in the Cape High Court.
But the Supreme Court of Appeal upheld the insurance company's appeal and found that the
ink was 'contaminated' as contemplated in a clause of the policy which excluded liability in
such an event.
--ends-- |
146 | non-electoral | 2017 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1082/2016
In the matter between:
PASSENGER RAIL AGENCY OF SOUTH AFRICA APPELLANT
and
MMAKGABO SIMON MOABELO
RESPONDENT
Neutral citation:
Passenger Rail Agency of South Africa v Moabelo (1082/2016)
[2017] ZASCA 144 (2 October 2017)
Coram:
Ponnan, Leach and Seriti JJA and Mokgohloa and Mbatha AJJA
Heard:
23 August 2017
Delivered:
2 October 2017
Summary:
Law of Delict – Damages – appellant falling off the train and
sustaining bodily injuries when jostled by fellow passengers – claim based on
negligent omission – negligence proved – dissent – appellant injured not by train
on which he had fallen off – no proof of patrimonial or legal causation of harm.
ORDER
On appeal from: Gauteng High Court, Johannesburg (Moshidi, Masipa and
Francis JJ sitting as court of appeal):
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
JUDGMENT
Mbatha AJA (Seriti JA and Mokgohloa AJA concurring):
[1] The respondent, Mmakgabo Simon Moabelo, a 37 year old man, sued
the appellant, the Passenger Rail Agency of South Africa (PRASA), in the
South Gauteng High Court (per Monama J) for damages arising out of an
incident in which the respondent was injured just outside Kaalfontein Station,
Gauteng, on 3 August 2009. The trial proceeded only on the issue of liability
(which the appellant denied), the parties having obtained a consent order
separating the issues of liability and quantum in terms of Rule 33(4) of the
Uniform Rules of Court. At the conclusion of the trial, the trial court found that
the appellant’s negligence was the cause of the respondent’s injuries and
subsequently liable for damages.
[2] The appeal against the whole judgment was heard by the full court, at
the South Gauteng High Court, with leave of the trial court. The full court
confirmed the order of the trial court and dismissed the appeal with costs.
[3] Following an application by the appellant, special leave was granted on
14 September 2016 to proceed with the appeal in this court. The issues
before this court are as follows:
(a) whether the trial court was correct in accepting the version given by the
respondent to the extent that it could be relied upon for purposes of deciding
whether the appellant had discharged the onus upon him that he was pushed
out of the train;
(b) whether the trial court was correct in rejecting the version put forward by
the train driver, Mr van der Mescht, that the respondent in fact ran in front of
the train that ran him over; and
(c) whether the finding by Monama J that the respondent’s version was
cogent, reliable, plausible and inherently probable and the rejection of the
evidence put forward by the appellant’s witnesses, was correct.
[4] The background facts according to the respondent, Mr Makgabo Simon
Moabelo (Moabelo), are that he was on a train that was en route from
Kempton Park Station to Tembisa Station. He boarded the train when it was
already dusk. He was a fare paying passenger who was in possession of a
weekly ticket.
[5] When he boarded the train he had to stand as the train was full to
capacity. He remained standing for the duration of the trip. On the way to
Kempton Park Station, the train stopped on Platform 3 in Kaalfontein Station
where more people boarded. The train was overcrowded as it left Kaalfontein
Station for Tembisa and Leralla Stations. As the train departed for Tembisa
Station, the pushing and jostling for door positioning began, as passengers
were preparing to alight at the next station. He remained standing in between
the doors, holding onto a pole. He did not push as he was in between the
doors. He was pushed in all directions by other commuters. When the train
changed lanes he was pushed more towards the side of the open coach door.
He tried to hold onto the pole but lost his balance and fell out of the moving
train. He recalls falling out and only regaining consciousness at the hospital.
The respondent’s evidence was that he could not recall the number of the
train he boarded at Kempton Park Station. He estimated the time he was
pushed out of the train to be towards 18h30. Mr Moabelo steadfastly stuck to
his version despite the lengthy cross-examination.
[6] He sustained severe tissue injuries, a bilateral amputation of both legs,
amputation of third and fourth digits of the left hand, fractured left humerus,
multilevel fractured cervical spine and a resultant brachial plexus injury.
[7] The version of the respondent was disputed in toto by PRASA. The
defence raised by the appellant was that the respondent ran/walked in front of
an oncoming train outside the confines of the station, when it was dangerous
or inopportune to do so. Respondent was a pedestrian.
[8] It is common cause that the respondent was hit by train number 1886
driven by Mr van der Mescht at about 19h13, that the trains had been running
late for the whole day on the route between Kempton Park and Leralla
stations.
[9] Mr Pelani Sam Baloyi (Baloyi), a security officer posted at Kaalfontein
Station on 3 August 2009 was called as a witness by the respondent. Baloyi
worked for Sinqobile Security Company. He related that he was on duty as
from 18h00 on 3 August 2009 and was posted with Ramalata. Their patrolling
post started from the beginning of Kaalfontein train station towards the
direction of Tembisa Station, covering an area of between 40 and 50 meters.
They were not in uniform that night as they operate undercover so as not to
be identified as security officers.
[10] They carried a radio, baton stick, firearm and a pocket book. The place
that they patrolled was well lit and visibility was good as it was a clear night.
The high water mark of Baloyi’s evidence is that ‘they would be able to see
that there walks a person’ but ‘not be in a clear picture to see who is that one
…’ He related that when they received a report about the person who fell off
the train, he recalled noticing two trains, one coming from Tembisa and
another one proceeding to Tembisa. This was between 19h00 and 20h00.
They found the injured respondent and made the necessary report.
[11] Though extensively cross-examined Baloyi was adamant that there
was no activity or movement in the vicinity of the area he patrolled. He
disputed the train driver’s version that he saw a figure running across the lines
from his right to the left and that that person came onto the line on which the
train was travelling. Baloyi’s evidence was that if there had been any
movement he would have seen it, as they could see both sides of the station
from where they sat. Furthermore, Baloyi testified that there was no way that
a person could have approached from the direction that the driver mentioned
as the place is fenced and there are industries behind the fence.
[12] On being questioned about the lines proceeding to Tembisa Station,
Baloyi’s evidence was that at times the trains switched lanes though he knew
the dedicated lines for trains to Tembisa.
[13] Mrs Moabela’s evidence related to her finding of her husband’s weekly
train ticket in his wallet and that the respondent had no reason to be suicidal.
The same sentiments were echoed by the respondent’s supervisor, Mr
Mathebula of Guardian Outsourcing Company. He testified that the
respondent was employed as a supervisor and confirmed that the latter’s
leave had been approved. The week he got injured was to be his last week at
work prior to going on leave.
[14] The driver of the train 1886, Mr van der Mescht (van der Mescht),
testified on behalf of the appellant. He had been a guard for 29 years and had
been a train driver for four years preceding the accident on 3 August 2009.
His evidence was that, on his return trip back from Leralla to Elandsfontein,
his train went past Tembisa Station before proceeding to Kaalfontein Station.
It was 41 minutes late. It left Leralla Station at 19h01 instead of 18h20 as on
that day the trains were running late.
[15] When he was proceeding to Leralla his train had been on the down
slow line, but on his return it was on the down main line. He went past point
135T, a crossover point, where the train crosses over the down slow line and
after going past all the crossover points he proceeded to join the main up line.
[16] He testified that as he was approaching Kaalfontein, a train went past
on the down slow line, proceeding to Tembisa Station. At the point when the
front of his train went past the back of the other train, he saw a movement
from the right hand side from underneath the bridge. He saw this movement
for the first time, just before the bridge. When he looked again he saw
someone running over the rails, who suddenly kneeled in front of the train and
the train ran him over. The movement he had seen was from the right hand
side. This person was standing underneath the bridge. When he saw this
movement he was about 20 to 25 meters from the crossover points.
[17] He was driving at 30km per hour when he saw the movement. After the
train hit the person, he applied the brakes, stopped and phoned operations in
Johannesburg. He made an entry in his daily journal that he ran over a person
at 19h13.
[18] The cross-examination of the driver revealed that a different version
was given on the plea being that ‘Plaintiff was injured after he walked or ran in
front of an incoming train outside the confines of the station’.
[19] It was also revealed during his cross-examination that when he passed
train 0547 on the down slow lane to Leralla, he saw a movement, ‘when I was
clearing train 0547’. He explained that the movement that he saw was from
the right to the left, moving towards his train. This person came from West to
East in a straight line, who then knelt in front of the train, between the lines
with his back towards his train ‘like he was going to start a race’.
[20] Having stopped the train he also phoned the guard Ms Beauty Masete
(Beauty), to check on the person that was hit by the train. Beauty reported
back to him that it looked like the person was dead. They were about 50 to 60
meters from Kaalfontein Station where the incident took place.
[21] It was pointed out to him under cross examination that he had reported
that he saw a movement, was not sure what it was and that when the train
came closer, he had seen someone kneeling on the rails and heard a loud
bang. This version was contrary to his evidence in chief that he had seen a
person from a distance running from underneath the bridge, crossing the rails
and kneeling in front of the train.
[22] The appellant had also called Ms Beauty Masete, who testified that her
duties are to see that the passengers are in and out of the coaches, close the
doors and blow the whistle to alert the driver that the doors are closed so that
he can drive off. She was asked by the respondent’s counsel about the
procedure in terms of PRASA’s procedure book as to what happens when
people hang outside the open doors of the train. Her response was that even
in that condition she would give the signal to the driver to drive off.
[23] Mr Kgare, the signal man, gave evidence as to the routes taken by
trains from Kempton Park to Leralla and Pretoria. His evidence was that in
general, trains proceeding to Tembisa Station from Kempton Park Station use
the down slow line or the down main line. Platform 3 serves the down main
line and Platform 4 serves the down slow line.
[24] What was significant about his evidence in chief was that where there
is another train on Platform 4, the train proceeding to Tembisa may be
diverted to Platform 3. At times a train could leave Kempton Park on the down
slow, but may even cross to the down main line before reaching Kaalfontein
Station. Therefore trains to Tembisa Station could be on either line. At times
the station gets so busy that he would be forced to switch the lines and
platforms particularly at peak hours between 15h00 to 19h00.
[25] This corroborated the respondent’s evidence in a material respect in
that though the train which he boarded in Kempton Park Station was on
Platform 4, at Kaalfontein Station it stopped on Platform 3. Platform 3 serves
the down main line which is next to the up main line. If the train that had
stopped on Platform 3 on the down main line proceeds to Tembisa Station, it
will crossover at certain points to proceed to Tembisa Station just beyond
Kaalfontein Station. However, this was not reflected on his train register of 3
August 2009. He also confirmed that no train went past between 18h20 and
18h30 that evening as estimated by the respondent. The evidence showed
that the only trains that went past Kaalfontein Station were trains no 1886 and
0547, respectively. Train no 0547 which went past the signal cabin at 19h13
was accepted by the respondent as the train from which he fell.
[26] Kgare was cross-examined about the entries in his register reflecting
the change in the lanes of certain trains, for example, train 1887 and 0667.
His answer was that the train could leave Kempton Park Station on the down
slow line, but could change lanes before reaching Kaalfontein Station. More
significantly, it was pointed out to him that there was no column on his control
book which is available to reflect that he switched the trains, when they were
late, to let the express to Pretoria pass through or to accommodate another
train at peak hours. This was raised as he had stated in his evidence in chief
that when a train is late on the down slow line, it could be directed to the down
main line, if there was a train on the down slow line. On the day in question,
van der Mescht’s evidence was that since the morning of the 3 August 2009
the trains were running late.
[27] The court below had found that Monama J’s approach was correct in
accepting that the versions of the respondent and the driver were mutually
destructive, and dealing with the matter as advocated in Stellenbosch
Farmer’s Winery Group Ltd & another v Martell et Cie & others.1 Monama J
found that the probabilities prevailed in favour of the respondent. The court
below found that there was no irregularity or misdirection on the findings of
the trial court.
[28] The respondent in his particulars of claim based his cause of action on
the appellant’s negligence in that the appellant ‘owed a duty of care to the
plaintiff to ensure that the doors of the train were closed before the train
started moving into/from/out of the station, and to ensure that passengers on
board the train would not fall or be ejected therefrom before allowing any train
to commence moving into/from/out of the station, and/or to take all reasonable
steps to ensure the safety of all passengers on the train at all reasonable
times (“the duty of care”).’
[29] The test for delictual liability is trite.2 Reverting to the facts of this case,
I accept that it has been proven that the respondent was on the train, which
was overcrowded and was in motion with open coach doors. And that the
respondent fell as a result of being pushed off by other passengers jostling for
positions near the door and sustained injuries as a result thereof. PRASA
should have foreseen that by leaving the doors of a moving train open, this
1 Stellenbosch Farmer’s Winery Group Ltd & another v Martell et Cie & others 2003 (1) SA 11
(SCA) at 14-15.
2 Kruger v Coetzee 1966 (2) SA 428 (A) at 430 E-F.
would pose potential danger to passengers, like the respondent, who may
accidentally be pushed off the train and sustain serious injuries. PRASA
should have ensured that the coach doors were closed whilst the train was in
motion.
[30] The onus to prove negligence rests on the plaintiff. The plaintiff is
required to prove that harm to others was reasonably foreseeable and that a
reasonable person would have taken steps to guard against such harm
occurring. The plaintiff must adduce evidence as to the reasonable steps that
ought to have been taken by the defendant to prevent or reduce the risk of
such harm.
[31] The Constitutional Court in Rail Commuters Action Group v Transnet
Ltd t/a Metrorail & others3 recognised that the rail commuter services carry a
positive obligation to implement reasonable measures to ensure the safety of
rail commuters who travel on the trains, and that such obligation should give
rise to delictual liability where there is a risk of harm to commuters resulting
from falling out of the crowded trains running with open doors, which is
foreseeable.
[32] The same court in Mashongwa v Passenger Rail of South Africa,4 in a
unanimous judgment, held that PRASA had been negligent because it did not
ensure that the doors of the train were closed when the train left the station as
3 Rail Commuters Action Group v Transnet Ltd t/a Metrorail & others 2005 (2) SA 359 (CC)
para 84:
‘In these circumstances, I conclude that Metrorail and the Commuter Corporation bear a
positive obligation arising from the provisions of the SATS Act read with the provisions of the
Constitution to ensure that reasonable measures are in place to provide for the security of rail
commuters when they provide rail commuter services under the SATS Act. It should be clear
from the duty thus formulated that it is a duty to ensure that reasonable measures are in
place. It does not matter who provides the measures as long as they are in place. The
responsibility for ensuring that measures are in place, regardless of who may be
implementing them, rests with Metrorail and the Commuter Corporation.’
4 Mashongwa v Passenger Rail of South Africa 2016 (3) SA 528 (CC) para 52:
‘It must be emphasised that harm was reasonably foreseeable and PRASA had an actionable
legal duty to keep the doors closed while the train was in motion. Not only has it expressly
imposed this duty on itself, its importance was also alluded to in Metrorail. It is also
commonsensical that keeping the doors of a moving train closed is an essential safety
procedure. Mr Mashongwa would probably not have sustained the injuries that culminated in
the amputation of his leg had PRASA ensured that the doors of the coach in which he was,
were closed while the train was in motion. It was thus negligent of PRASA not to observe a
basic safety-critical practice of keeping the coach doors closed while the train was in motion
and therefore reasonable to impose liability for damages on it, if other elements were proved.’
a result, Mashongwa was thrown out of the train by his assailants. This arose
after a contention by this court that the open coach doors while the train was
in motion did not dispose of the issue of causation as the appellants could
have forced open the coach doors to throw Mashongwa out of the train. The
Mashongwa matter centered around the issue whether PRASA’s conduct was
wrongful when physical harm befell passengers travelling on the trains with
the coach doors open.
[33] In Mashongwa it was found that PRASA’s wrongful conduct attracted
liability. The Constitutional Court held that public carriers like PRASA have
always been regarded as having a duty of care towards passengers to protect
them from physical harm whilst making use of their services.
[34] Furthermore, the court had to also consider whether a reasonable train
operator would have foreseen the risk of harm befalling its passengers arising
from such conduct and whether such operator would have taken the
necessary steps to guard against such harm occurring on its trains. The court
held that the breach of the public duty by PRASA should translate into a
private law breach in delict and that such breach would amount to
wrongfulness.
[35] On the question of the overcrowded trains with open doors at peak
hours, the court found that this posed real danger to passengers on board.
The harm was reasonably foreseeable, and PRASA had a legal duty to keep
the doors closed when the trains were in motion. This conduct attracts liability.
[36] In the current case, the question is whether the respondent discharged
the onus of proof. The aspect of time, as estimated by the respondent as to
when he boarded the train or when he was pushed and fell off, cannot be held
against him. It is in my view that the respondent established that it was
already dusk when he boarded the train in Kempton Park and that the incident
occurred within that period. He was not aware that the trains were running
late, his estimate of the times could also be related to that factor.
[37] The respondent did not take note of the train number that he boarded
in Kempton Park. When one looks at the objective facts of the case, it was
established that van der Mescht’s train crossed with train no 0547 proceeding
to Tembisa and Leralla Stations. The respondent was found in possession of
a valid weekly ticket which was produced to support that he had boarded the
train from Kempton Park Station. Mathebula’s evidence explained that after a
week of the incident the respondent, would have commenced his approved
leave of three weeks. In the light thereof, it is immaterial why he had not gone
to work on that day and why he had gone to Kempton Park Station as,
possession of a valid train ticket proved that he had boarded the train as a fee
paying passenger.
[38] The fact that he did not know the number of the train that he boarded,
the exact time of the incident and the number of the train that hit him, is
immaterial as long as he proved that he was on the train. It does not absolve
the appellant of its public law duty to have the doors closed at all material
times when the train is in motion. More so, the respondent was hit by a train
which had crossed with the train proceeding to Tembisa Station.
[39] The appellant’s witnesses including the train driver, the guard and the
signal man confirmed that the trains were running late on the day in question.
The guard, Beauty, confirmed that the train coach’s doors were not closed.
Taking all these factors together, one can only conclude that the respondent
fell off the train.
[40] The trial court had rejected the evidence of the train driver. It found that
it lacked credibility and was improbable and accepted the evidence of the
respondent and Baloyi. The train driver gave a completely different version
when he reported the incident, shortly after it had occurred. Whereas, a
different version was pleaded in the plea and he testified to a different version
in court. It is my view that the trial court correctly rejected the train driver’s
evidence as a fabrication.
[41] The respondent had specifically pleaded, amongst other acts of
negligence or omissions, that the appellant’s train driver was negligent in
setting the train in motion whilst the coach doors were opened. The
respondent had discharged the onus that the train doors remained open whilst
the train was in motion. This was also confirmed by the evidence of Beauty.
[42] The issue that needs to be considered is whether it could not have
been reasonably foreseeable that a train operating at peak hours, with open
doors in motion, would cause injury to the commuters. My view is that injury
was foreseeable and the train should not have been in motion with open
coach doors.
[43] On the issue of legal causation in Mashongwa, the court acknowledged
that ‘no legal system permits liability without bounds’. Proximity has to be
established, to establish a nexus between the incident and the harm caused.
The court in para 69 held as follows:
‘That the incident happened inside Prasa’s moving train whose doors were left open
reinforces the legal connection between Prasa’s failure to take preventative
measures and the amputation of Mr Mashongwa’s leg. Prasa’s failure to keep the
doors closed while the train was in motion is the kind of conduct that ought to attract
liability. This is so not only because of the constitutional rights at stake but also
because Prasa has imposed the duty to secure commuters on itself through its
operating procedures. More importantly, that preventative step could have been
carried out at no extra cost. It is inexcusable that its passenger had to lose his leg
owing to its failure to do the ordinary. This dereliction of duty certainly arouses the
moral indignation of society. And this negligent conduct is closely connected to the
harm suffered by Mr Mashongwa. It is thus reasonable, fair and just that liability be
imputed to Prasa.’
[44] The respondent in this matter was hit by another train as he fell off the
train to Tembisa Station. It is my view that even if he had hit a pole or rails,
the appellant should be held liable as the injury was foreseeable. I therefore
find that the trial court cannot be faulted in finding in favour of the appellant.
[45] Accordingly the following order is made:
The appeal is dismissed with costs, such costs to include the costs of two
counsel.
Y T MBATHA
ACTING JUDGE OF APPEAL
Ponnan JA (Leach JA concurring):
[46] I have had the benefit of reading the judgment of my colleague Mbatha
AJA, with which I regret I am unable to agree.
[47] This appeal is against a judgment upholding with costs, the claim of the
respondent, Mr Simon Moabelo, against the appellant, the Passenger Rail
Agency of South Africa (PRASA). Mr Moabelo’s claim against PRASA is one
in delict for physical injury suffered on 3 August 2009. The issues of liability
and quantum having been separated, the matter proceeded to trial in respect
of the former before Monama J in the South Gauteng High Court. Monama J
held PRASA liable to compensate Mr Moabelo ‘for all proven damages
suffered by him’. But, he did grant leave to PRASA to appeal to the full court.
The appeal to the full court (per Moshidi J, Masipa et Francis JJ concurring)
failed. The further appeal by PRASA is with the special leave of this court.
[48] The pleadings are a useful starting point. In the summons filed on
behalf of the respondent, it was alleged that:
‘5.
On or about the 3rd of August 2009 and at approximately 18h20, at or near
Kaalfontein Station, Tembisa, within the jurisdiction of the above Honourable Court,
plaintiff was on board a train for which he had a valid ticket. Whilst on board the train
with the carriage’s doors opened whilst the train was in motion, plaintiff was
forced/ejected/pushed/jostled out of the carriage by other passengers, as a result of
which plaintiff lost his balance and fell out of the carriage.
6.
The sole cause of plaintiff’s falling from the train, was the negligence of the
conductor, whose identity is to the plaintiff unknown, who was negligent in one or
more or all of the respects.
9.
As a result of the Plaintiff’s falling from the moving train and the negligence of
the defendant aforesaid, plaintiff sustained the following injuries.’
[49] The further particulars elaborated:
‘3.5.
The plaintiff records that he boarded a train from Kempton Park which was
going to Tembisa, when the train was moving out of Kaalfontein Station it was
overcrowded with its doors not closed and the passengers were pushing each other
as they were preparing to disembark the train at the next station. The plaintiff records
that he was pushed out of the train when it was changing lanes and he tried to hold
an iron rail which is in between the doors but he lost balance on his feet and could no
longer hold the iron rail and he fell. The plaintiff also records that before he fell he
was not close to the open doors.
3.6.
The plaintiff records that he was standing far away from the open doors.
3.7.
Plaintiff puts on record that the train was overcrowded and passengers were
pushing each other. Plaintiff also records that he was pushed whilst the train was
changing lanes and lost balance and tried to hold on the iron rail in between the
doors but also lost balance and fell.’
[50] The plea in response to those allegations was:
‘4.3.
The defendant pleads that the plaintiff was injured after the plaintiff walked or
ran in front of an oncoming train, outside the confines of a station, when it was
dangerous and inopportune to do so.
5.1.
The defendant denies each and every allegation contained in these
paragraphs, as if specifically traversed, and the plaintiff is put to the proof thereof.
5.2.
Alternative to 5.1 above, the defendant pleads that, in the event of the above
Honourable Court finding that the incident occurred in the manner as alleged, and
that the defendant was negligent in any manner as alleged, then the defendant
pleads that such negligence was not causally related to the incident and any injuries
sustained by the plaintiff.’
[51] The respondent testified that he awoke on the morning of 3 August
2009 feeling ill. As a result he did not go to work. He consumed medication
and went back to sleep. At about 3pm that afternoon, he made his way by
train from his home in Tembisa to Kempton Park. He alighted at the Kempton
Park station and made his way on foot to the Festival Shopping Mall. Having
withdrawn cash at an ATM machine and spent some time window shopping in
the mall, he decided to return home. In his evidence in chief he stated:
‘Now, do you know more or less what time it was when you decided to go home? ---
My estimation of the time says it could be 17:00 when I left the mall on my way home
now.
And where did you go to form the mall? --- I went to the station.
Which station? --- Kempton Park Station.
Why did you go to Kempton Park Station? --- Well, I was at the mall which is in
Kempton Park, so I went back to the station. Kempton Park train station.
To catch the train? --- Yes.
To go where? --- On my way to Tembisa.
. . .
Now it was August month. When you got onto the train was it light or was it already
dark? --- Slightly dark.’
[52] Although he was unable to identify the train, Mr Moabelo did say that
he boarded the first train on his arrival at the Kempton Park station. The train
was already full and picked up more passengers at the Van Riebeck,
Birchleigh and Kaalfontein stations. As the train left Kaalfontein station, so
stated Mr Moabelo:
‘There was some pushing your Lordship. Well, I was standing . . . [incomplete]. As I
was standing the people who were just in front of us they were pushing us.
Yes. --- That moment is when the train pulled off leaving the platform, that is when
the pushing started as the train was leaving the platform.
Yes. --- I have been pushed till such time when I noticed myself that I was now near
the doors. I had been pushed up to the doors.
Ja. --- I turned so that I could hold onto the aisle which is situated on the middle of
the coach.
Ja. --- Unfortunately they were powerful than myself then I fell, I had been pushed out
of the moving train.
Which way did you fall? --- Backward your Lordship on my back. I fell on my back.
And when that happened, was the train still at Kaalfontein station or had it left the
station? --- It has left the platform at Kaalfontein when it happened.’
That was his last recollection of the events of that day. He subsequently
regained consciousness in a ward at Tembisa Hospital, when he became
aware that his lower limbs had been amputated.
[53] As to how Mr Moabelo came to sustain his injuries, it is to the evidence
of Mr van der Mescht, a train driver in the employ of Metro Rail, that one must
look. He was driving train 1886 en route from Tembisa to Kaalfontein when,
so he testfied:
. . . ‘I saw a movement from the right hand side from underneath the bridge. When I
saw that movement it was just before the bridge. Then I saw the movement and
when I look again I saw somebody is running over the rails.
In which direction? --- In the direction of my train. When he was running over the rails
he suddenly kneeled in front of my train and then I ran him over.
. . .
You say you see the movement and then you see him run toward your train and you
see somebody kneeling before your train. When you saw that did you do anything? --
- When he kneels in front of my train it was a shock. It was a shock. After I hit him
then I applied the brakes and when the train stopped I phoned operating.
From where? --- From inside the cab.’
It is undisputed that this incident occurred at 7.13 pm.
[54] The trial court recorded:
‘There are two train stations between Kempton Park train station and Kaalfontein
train station. These are Van Riebeeck Park and Birchleigh. All these stations have
four platforms [platform 1 – 4]. There are four lines or lanes or tracks that pass at
these platforms.’
. . .
The down main line passes on platform three at each and every relevant station. Like
dsl it runs in the northern direction towards Tembisa and Pretoria. The tracks are
1.2m wide, the distrance between dsl and dml is some 2.9m, the distance between
the dml and uml is 2.82m and the distrance between dsl and uml is 6.92m.
. . .
Train No. 0547 was scheduled to depart at 18:52. It was 21 minutes late. It passed
the signal cabin at or just after 19:13 (i.e. at the same time as 18:86 passed the
signal cabin approaching Kaalfontein station from Leralla.
. . .
Mr Van der Mescht was the train driver of train number 1889. This train was coming
from Tembisa. He was travelling on the up main line. As it approached Kaalfontein he
had to cross train No.0547 which was on the down slow line . . .’
[55] The trial court reasoned:
‘The plaintiff bears the onus to proof his case. The first question which the court had
to determine was whether the plaintiff was on a train as he alleges or whether he was
a trespasser running across the train tracks at Kaalfontein station as alleged by Mr
van der Mescht.’
It approached that enquiry thus:
‘The versions of the plaintiff and Mr van der Mescht are important. To determine
whether the plaintiff was on a train or whether he was trespassing as stated above.
The two versions are mutually destructive. The court has developed a technique to
resolve the factual dispute where there are two irreconcilable versions. The
technique is formulated as follows: “To come to a conclusion on the disputed issue
the court must make a finding on (a) the credibility of various factual witnesses; their
reliability and (c) the probabilities . . . But when all factors are equipoised the
probabilities . . . But when all factors are equipoised the probabilities prevail.” In my
view the factors are equipoised save to state that the version of the train driver
cannot be relied upon. He testified that he saw a movement under the bridge. That
bridge is in the vicinity of the signal cabin as well as a place where he diverted his
train to up main line in order to give the train from Kaalfontein station to Tembisa a
space on the down slow lane. Consequently he could not have seen the events
properly. To suggest that the plaintiff wanted to commit suicide is absurd. He was
happily married, happily employed and he was indeed looking forward to a holiday.
These factors militate against any suggestion of suicide. He had a valid train ticket
and Mr Baloyi testified that the area where the accident occurred is sufficiently
secured. This strengthens my view that the plaintiff was indeed on the alleged train.
He was not trespassing. On these objective facts there are overwhelming
probabilities which favour the plaintiff, in this regard. Accordingly, I am not persuaded
that the plaintiff was trespassing as alleged. I find that the plaintiff was a passenger
with a valid train ticket travelling on a train to Tembisa township.’
[56] The trial court ultimately concluded:
‘In my view, the version by Mr van der Mescht stands to be rejected on account of
the evidence of Mr Baloyi. It is therefore reasonable to infer that the plaintiff was on
the train that passed the train driven by Mr van der Mescht. The plaintiff fell from the
train in and around the area of cross over by train 1886 to usl.’
[57] In the main, the full court endorsed the approach of the trial court. The
full court made two important observations, both of which find support in the
recorded evidence: first, ‘when [Mr Moabelo] boarded [the] train at about
18h00, it was already dusk’; and, second, ‘[Mr Moabelo] could not point out
the exact spot where he was pushed out of the moving train, and fell.’ Those
observations are destructive of the inference drawn by the trial court that Mr
Moabelo was a passenger on train 0547. If, indeed, Mr Moabelo left the
Festival Shopping Mall at approximately 5 pm and boarded the first train
heading to Tembisa, he could not have been a passenger on train 0547.
Although all the trains were running late, the evidence reveals that there were
in all some 17 trains that departed from Kempton Park to Tembisa between 5
and 7 pm that evening. According to the summons, Mr Moabelo sustained his
injuries at 6.20 pm when he fell out of a moving train. The only train that
passed that area at around 6.20 pm was a business express train to Pretoria
that did not stop at Kaalfontein Station. There is thus no support at all for Mr
Moabelo’s allegation that he sustained his injuries at 6.20 pm.
[58] I have great difficulty with the approach of both courts below that the
versions of Mr Moabelo and Mr van der Mescht were mutually destructive.
Even if Mr Moabelo’s evidence is to be accepted in its totality it does not
explain how he came to sustain his injuries. On the version of Mr Moabelo at
least one hour remains unaccounted for. Mr Moabelo’s account ends with him
being pushed off the train. Mr van der Mescht was the only eye witness to the
collision. There was simply nothing to gainsay his version. One therefore
cannot simply juxtapose the two versions and reject his version as the trial
court did. In any event, both courts appeared not to appreciate that the
rejection of Mr van der Mescht’s evidence meant that there was simply no
evidence as to how Mr Moabelo sustained his injuries. Rejecting Mr van der
Mescht’s version, in and of itself, carried the destruction of Mr Moabelo’s
case. Importantly, the trial court simply ignored Mr Moabelo’s evidence that: ‘I
was never hit by a train. What I know is that I fell out of the moving train. That
is what I know, Your Lordship I was not hit by a train, no’. It accordingly found
in his favour on a basis entirely different to that sought to be advanced by him.
[59] Mr Moabelo simply had no version or recollection as to how he got to
the up main line a little to the north of Kaalfontein Station, where the train
driven by Mr van der Mescht collided with him. The evidence of the signalman
in the employ of PRASA, Mr Kgare, supported by the train schedule for the
evening and the four-platform layout at Kaalfontein station, is that Mr
Moabelo, having fallen off a train travelling on the down slow line, would have
had to have landed 6.92 metres away on the up main line for Mr van der
Mescht’s train to have collided with him. Mr Moabelo was simply unable to
proffer an account as to how that could have occurred.
[60] Both courts below appear to have placed much store on the evidence
of Mr Baloyi for rejecting that of Mr van der Mescht. According to the trial
court, Mr Baloyi ‘vehemently denied that the plaintiff was running across the
train’s line and kneeled on the lane uml. He stated that he could have seen
him.’ But, Mr Baloyi did not have a version as to how the plaintiff could have
ended up in front of Mr van der Mescht’s train. Mr Baloyi did not see the
plaintiff fall from the train, run across the tracks or the train driven by Mr van
der Mescht collide with Mr Moabelo. His evidence was that when he walked
from Kaalfontein to a hut north of the signal cabin, he did not see anything.
His evidence in chief was to the effect that it was whilst he and his colleague
were getting ready to go on patrol, that they received a radio call instructing
them to go and look for an injured person. In any event Mr Baloyi’s
opportunity for observation was far from ideal. According to Mr Baloyi, he and
his partner commenced their shift at 6 pm. They left the platform at
Kaalfontein station at 6.05 pm and proceeded to their ‘post’, which was
located approximately 50 to 60 metres from the platform, where they placed
their personal belongings and got ready to patrol. Whilst at their post they
received a radio call instructing them to look for an injured person. They did
so and found Mr Moabelo. Mr Baloyi did not vehemently deny that Mr
Moabelo ran across the lines and knelt on the up main line. He merely
testified that he did not see Mr Moabelo. Mr van der Mescht testified that it
was dark and he had his headlights on at the time that he collided with Mr
Moabelo. Moreover, train 0547 would have obscured Mr Baloyi’s view. To the
extent that Mr Baloyi made reference to the fencing in the area of the signal
cabin, it is noteworthy that the plaintiff was hit by Mr van der Mescht’s train
under the overhead bridge which was some distance from the signal cabin.
There was no evidence about the state of fencing under the bridge.
[61] In a matter such as this we would do well to carefully distinguish
inference from conjecture or speculation. The trial court inferred that: first, Mr
Moabelo was on train 0547; and, second, he ‘fell from [that] train in and
around the area of cross over by train 1886 to usl’. I am far from persuaded
that each of those inferences are indeed the most readily apparent and
acceptable inference in the circumstances of this case.5 Moreover, with
respect to the trial court, it appears to have impermissibly reasoned by way of
an inference upon an inference. As I have already shown, Mr Moabelo was
neither able to identify train 0547 as the one on which he travelled, nor point
out where train 1886 collided with him. Even if it were permissible for the trial
5 AA Onderlinge Assuransie Bpk v De Beer 1982 (2) SA (A); see also Cooper and Another
NNO v Merchant Trade Finance Ltd 2000 (3) SA 1009 (SCA).
court to have drawn the first inference, the second, which lacked a proper
factual foundation and was clearly dependent upon the first, was
impermissible. What is more, in straining to find for Mr Moabelo, the trial court
appears to have reasoned backwards from effect to cause.
[62] It goes without saying that such sympathy as we may have for Mr
Moabelo should not impel us to a conclusion in his favour. We would do well
to remind ourselves, as Harms JA did in Telematrix (Pty) Ltd v Advertising
Standards Authority SA 2006 (1) SA 461 (SCA) par 12, that:
‘The first principle of the law of delict, which is so easily forgotten and hardly appears
in any local text on the subject, is, as the Dutch author Asser points out, that
everyone has to bear the loss he or she suffers. The Afrikaans aphorism is that
‘skade rus waar dit val’. Aquilian liability provides for an exception to the rule and, in
order to be liable for the loss of someone else, the act or omission of the defendant
must have been wrongful and negligent and have caused the loss. But the fact that
an act is negligent does not make it wrongful. To elevate negligence to the
determining factor confuses wrongfulness with negligence and leads to the
absorption of the English law tort of negligence into our law, thereby distorting it.’
[63] At the close of Mr Moabelo’s case, his counsel placed on record:
‘M’lord it can never be nor would it be the plaintiff’s case that Mr Van der Mescht was
responsible for the plaintiff’s injuries’. In that, counsel was undoubtedly correct, for it
was no part of Mr Moabelo’s pleaded case that Mr van der Mescht had in any respect
been negligent in colliding with him. Mr Moabelo’s case was confined to PRASA’s
negligent failure to ensure that the doors were closed whilst the train was in motion.
On that score the trial court held: ‘Accordingly I find that the plaintiff has proven
negligence on the part of the defendant’s servants.’ It then added: ‘It is trite law that
negligence is a question of fact and there is no such a thing as negligence in the air.’
[64] Insofar as that last proposition is concerned, the trial court was plainly
wrong. It is useful to revisit first principles in this regard. In Overseas Tankship
(U.K.) Ltd v Morts Dock and Engineering Co. Ltd [1961] 1 All ER 404 (PC)
(Wagon Mound No 1) at 415A Viscount Simonds explained:
‘But there can be no liability until the damage has been done. It is not the act but the
consequences on which tortious liability is founded. Just as (as it has been said) that
there is no such thing as negligence in the air, so there is no such thing as liability in
the air.’
In Premier of The Province of the Western Cape v Fair Cape Property
Developers (Pty) Ltd [2003] 2 All SA 465 (SCA), it was put thus:
‘Just as there cannot be negligence in the air,6 so too there cannot be wrongfulness
(the breach of a legal duty) in the air: “it is as well to remember that conduct which is
lawful to one person may be unlawful towards another” – per Harms JA in S M
Goldstein & Co (Pty) Ltd v Cathkin Park Hotel (Pty) Ltd.’
[65] The enquiry did not end, as the trial court appears to have thought, with
a finding that PRASA was negligent. It remained for the trial court to have
considered the element of causation. Causation involves two distinct
enquiries.7 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. The enquiry as to factual causation is
generally conducted by applying the so-called ‘but-for’ test. Lack of factual
causation is the end of the matter. No legal liability can follow. But, if factual
causation is established the second enquiry arises, namely whether the
wrongful act is linked sufficiently closely or directly to the loss for legal liability
to ensue or whether, as it is said, the loss is too remote.8 According to Brand
JA in ZA v Smith 2015(4) SA 574 (SCA) para 30): ‘The application of the “but-
for test” is not based on mathematics, pure science or philosophy. It is a
matter of common sense, based on the practical way in which the minds of
ordinary people work, against the background of every-day experiences.’
6 Per Lord Russell of Killowen in Bourhill v Young [1943] AC 92 (HL) (Sc) at 101--2.
7 Home Talk Developments (Pty) Ltd & others v Ekurhuleni Metropolitan Municipality [2017] 3
All SA 382 (SCA) para 45; In International Shipping Company (Pty) Ltd v Bentley [1989]
ZASCA 138; 1990 (1) SA 680 (A); [1990] 1 All SA 498 (A) para 64-66, Corbett CJ expressed
the position thus: ‘. . . in the law of delict causation involves two distinct enquiries. The first is
a factual one and relates to the question as to whether the defendant's wrongful act was a
cause of the plaintiff's loss. This has been referred to as "factual causation". The enquiry as to
factual causation is generally conducted by applying the so-called "but-for" test, which is
designed to determine whether a postulated cause can be identified as a causa sine qua non
of the loss in question. In order to apply this test one must make a hypothetical enquiry as to
what probably would have happened but for the wrongful conduct of the defendant. This
enquiry may involve the mental elimination of the wrongful conduct and the substitution of a
hypothetical course of lawful conduct and the posing of the question as to whether upon such
an hypothesis plaintiff's loss would have ensued or not. If it would in any event have ensued,
then the wrongful conduct was not a cause of the plaintiff's loss; aliter, if it would not so have
ensued. If the wrongful act is shown in this way not to be a causa sine qua non of the loss
suffered, then no legal liability can arise. On the other hand, demonstration that the wrongful
act was a causa sine qua non of the loss does not necessarily result in legal liability. The
second enquiry then arises, viz whether the wrongful act is linked sufficiently closely or
directly to the loss for legal liability to ensue or whether, as it is said, the loss is too remote.
This is basically a juridical problem in the solution of which considerations of policy may play
a part. This is sometimes called "legal causation".’
8 Minister of Police v Skosana 1977 (1) SA 31 (A) at 34E-G.
[66] To succeed in an action for damages, Mr Moabelo had to establish that
it was probable that the negligent conduct found by the trial court, namely
PRASA in allowing the train to travel with open doors, caused the harm. Mr
Maobelo simply did not know the source of the harm. Had he known the
source it is possible that he might have established a causal link between it
and the specific negligent conduct sought to be established. Regard being
had to the evidence of Mr van der Mescht, Mr Maobelo’s injuries were caused
not by him having fallen out of a train, but by another train driven by the
former colliding with him. Those two occurrences are not inextricably linked to
each other. From the bar in this court counsel for Mr Moabelo sought to meet
this difficulty with the argument that after having fallen from the train, Mr
Moabelo must have knocked his head become disorientated and,
consequently at some time later, wandered in front of Mr van der Mescht’s
train. However, there is simply no evidence to support that speculative
hypothesis. And, as I see it Mr Moabelo failed the test for factual causation. It
follows that on this ground as well, Mr Moabelo should have failed.
[67] But even if Mr Moabelo had succeeded in establishing factual
causation – which as I have demonstrated he had not – his claim should in
any event have failed at the legal causation stage. The issue of legal
causation or remoteness is determined by considerations of policy. It is a
measure of control. This is basically a juridical problem in which
considerations of legal policy may play a part. It serves as a ‘longstop’ where
right-minded people, including judges, will regard the imposition of liability in a
particular case as untenable, despite the presence of all the other elements of
delictual liability.9 Even if one accepts that: (i) Mr Moabelo was a passenger
on train 0547; (ii) PRASA was negligent in allowing that train to travel with
open doors; (iii) Mr Moabelo fell off that train as a consequence of PRASA’s
negligence; and (iv) factual casation has been established - the issue of
remoteness still looms large in this case. In reality, Mr Maobelo’s injuries and
consequent loss were not caused by those events. It was instead attributable
to something very different – train 1886, which was driven by Mr Van der
9 Fourway Haulage SA (Pty) Ltd v SA National Roads Agency Ltd 2009 (2) SA 150 (SCA);
mCubed International v Singer 2009 (4) SA 471 (SCA);
Mescht, colliding with him. And, as I have already pointed out, it was no part
of Mr Moabelo’s case that Mr van der Mescht was negligent in any respect or
that this occurrence is in any way causally connected to the earlier events.
[68] In my view, for the reasons given, PRASA’s appeal ought to succeed.
_________________
V M Ponnan
Judge of Appeal
APPEARANCES:
For the Appellants:
T J Bruinders SC
Instructed by:
Norton Rose Fulbright, Johannesburg
Webbers, Bloemfontein
For the Respondents:
M Chaitowitz SC (with him M Sibuyi)
Instructed by:
Mafori Lesufi Inc., Johannesburg
Morobane 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
02 October 2017
STATUS
Immediate
Passenger Rail Agency of South Africa v Moabelo (1082/2016) [2017] ZASCA ###
(02 October 2017)
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
and confirmed the decision of the order of the full court of the Gauteng Local
Division, Johannesburg.
The respondent had instituted action against the appellant claiming payment of
damages on the basis that he had been injured by the negligent conduct of the
appellant. The court a quo found in favour of the respondent on the merits. The
appellant then appealed against the decision of the court a quo and special leave was
then granted by the SCA.
The issue before the SCA was whether the court a quo erred in determining the merits
in favour of the respondent.
On 3 August 2009 the respondent sustained bodily injuries after falling off from a
moving train and was hit by an oncoming train owned and operated by the appellant.
The respondent then instituted action against the appellant claiming payment of
damages on the basis that the injuries sustained were as a result of the negligent
conduct of the appellant. The issue of the merits was separated from the determination
of quantum. The trial court proceeded to determine the issue of the merits. It found in
favour of the respondent. Dissatisfied with this order the appellant challenged the
decision of the trial court to the full court. The full court confirmed the order of the
trial court. With special leave of the SCA the appellant appealed the order of the full
court.
The SCA dismissed the appeal and confirmed the order of the full court.
~~ ends~~ |
1390 | non-electoral | 2010 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 530/09
In the matter between:
CADAC (PTY) LTD
Appellant
and
WEBER STEPHEN PRODUCTS COMPANY
First Respondent
GALACTEX OUTDOOR (PTY) LIMITED
Second Respondent
THE MINISTER OF SAFETY & SECURITY
Third Respondent
THE REGISTRAR OF TRADEMARKS
Fourth Respondent
Neutral citation: Cadac v Weber-Stephen (530/09) [2010] ZASCA 105 (16
September 2010)
Coram:
Harms DP, Nugent, Ponnan and Shongwe JJA and R Pillay AJA
Heard:
03 September 2010
Delivered:
16 September 2010
Summary:
Civil procedure – inquiry into damages – sought in motion proceedings
– Counterfeit Goods Act 37 of 1997 s 10(1) and 17(1) – Prescription Act 68 of 1969
s 15.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: South Gauteng High Court (Johannesburg) (Brett 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 replaced with an order in these
terms:
(a)
The interlocutory application is upheld with costs, including the costs of
two counsel.
(b)
The counter-application is dismissed with costs, including the costs of
two counsel.
(c)
The Registrar of the South Gauteng High Court is directed to fix a date
for an inquiry to be conducted by way of a High Court trial for the
purposes of:-
(i)
the determination of the amount of compensation to be
paid by the Respondents to the Applicant as contemplated in
section 10(1)(c) of the Counterfeit Goods Act 37 of 1997;
and
(ii)
the payment by the Respondents, jointly and severally, the one
paying the others to be absolved, to the Applicant of the amount
of compensation found to be due to the Applicant pursuant to
the determination, together with interest on such amount at the
prescribed rate of interest from the date of such determination
until the date of payment and the costs of the determination.
(d)
The Applicant shall within 20 (twenty) days of the date of this order
serve upon the Respondents and file a declaration particularizing the
damages allegedly suffered by it as a result of the seizure of its goods
under the search and seizure warrant issued on 10 December 2004.
(e)
The Respondents, if so advised, shall with 10 (ten) days of the service
of the Applicant’s declaration, file a plea thereto.
(f)
The Uniform Rules of Court relating to discovery, inspection and all
other matters of procedure shall apply to the determination.
(g)
The parties are authorised, on notice to the other parties and should it
be required by one or both of them, to make application to the South
Gauteng High Court to add to, or vary the above order so as to
facilitate the conducting of the determination and generally to make
application for further directions in regard thereto.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
HARMS DP (NUGENT, PONNAN and SHONGWE JJA and R PILLAY AJA
concurring)
INTRODUCTION
[1] The first respondent, Weber-Stephen Products Co, a US company, is the
registered owner of trademarks that relate to the shape and configuration of
barbeque kettle grills. Its sole distributor in South Africa is the second respondent,
Galactex Outdoor (Pty) Ltd. The appellant, Cadac (Pty) Ltd, also manufactures kettle
grills and had a kettle grill on the local market for some 18 months when it decided to
introduce another model during November 2004.1
[2] This gave rise to correspondence between the parties in which the
respondents (to whom I shall simply refer as Weber-Stephen) alleged trademark
infringement, something Cadac denied. Weber-Stephen then alleged that Cadac
was guilty of counterfeiting and threatened to lay a charge under the Counterfeit
Goods Act 37 of 1997. In spite of Cadac’s detailed refutation of the allegations the
respondents proceeded to lay a complaint without notice to Cadac in terms of s 3 of
the Act by means of an affidavit and without disclosing the fact that Cadac had
asked for notice and had provided it with a detailed defence.
[3] An inspector appointed under the Act, acting on the correctness of the
allegations in the affidavit, applied for a warrant from a magistrate in chambers
1 The third and fourth respondents were inappropriately cited for purposes of the appeal.
authorising him to seize Cadac’s kettle grills (s 6(1)). The warrant was executed
during the Christmas season and kettle grills in the possession of dealers were also
confiscated. Cadac alleges that it suffered some loss as a result.
[4] On 13 January 2005 Cadac applied on an urgent basis for a setting aside of
the warrant in the light of the underhand manner in which it had been obtained. It
also applied for a declaration that the goods seized were not counterfeit and for an
inquiry into damages and for costs.
[5] The application was heard by Schwartzman J on 25 February, and in a fully
reasoned judgment of 18 March he came to the conclusion that the warrant had
been obtained irregularly and he set it aside with costs and ordered the return of
Cadac’s goods.2 Weber-Stephen sought leave to appeal from the learned judge and
from this court but without success.
[6] Because of this finding the learned judge thought it unnecessary to express
any view about whether or not the Cadac product was counterfeit. This he did in
spite of the fact that
‘the striking feature about counterfeit cases is that they are legally very simple: they do not
involve serious disputes over the boundaries of the trademark owner’s rights. In mimicking
the goods and the trademarks, the conduct of counterfeiters clearly falls within the ambit of
conduct that a trademark owner is entitled to prevent.’3
Counterfeiting involves deliberate and fraudulent infringement of trademarks4 and
‘counterfeit cases involve an infringer attempting to reproduce – and substitute for –
the goods (not just the trademark) of the trademark owner.’5 That is why the Act is
concerned with trademark and copyright infringements that are criminal in nature.
The Act does not permit a rights holder to steal a march on an alleged infringer in
order to settle a bona fide dispute about the boundaries of rights. Those disputes
should be litigated under either the Trade Marks Act or the Copyright Act.6
2 The judgment has been reported: Cadac (Pty) Ltd v Weber-Stephen Products Co 2005 Burrell’s IP
439 (W).
3 Jason Bosland, Kimberlee Weatherall and Paul Jensen ‘Trademark and counterfeit litigation in
Australia’ at www.law.unimelb.edu.au/ipria/publications/workingpapers.html.
4 R v Johnstone [2003] UKHL 28.
5 Ibid.
6 Trademarks that relate to shape and configuration have their own peculiar problems: Die Bergkelder
Bpk v Vredendal Koöp Wynmakery 2006 (4) SA 275 (SCA) para 8.
[7] The prayer relating to an inquiry into damages flowed from the provisions of s
17(1) of the Act, which provides that any person suffering damage or loss caused by
the wrongful seizure, removal or detention of goods alleged to be counterfeit is
entitled to claim compensation from the complainant for that damage or loss. This
must be read with s 10(1)(c) which states, inter alia, that a court ‘in any civil or
criminal proceedings relating to counterfeit goods’ may order
‘that the complainant pays damages, in an amount determined by the court, to the person
from whom those goods were seized and pays that person’s costs.’
[8] The court postponed this prayer sine die. For reasons that are not now
germane Cadac did not take further formal steps in relation to the inquiry into
damages until three years and two days after the judgment of Schwartzman J when
it applied by means of an interlocutory application for directions for the conduct of
the inquiry, something not regulated by any court rule. The crux of Weber-Stephen’s
answer was a multi-faceted reliance on prescription (in some instances somewhat of
a misnomer) and a counter application for an order declaring that Cadac’s claim had
become prescribed. Not all were persisted in during the appeal.
[9] One of these arguments was based on the fact that Schwartzman J did not
deal with the question whether or not the goods were counterfeit. Weber-Stephen
argued in the court below that the provisions of s 10(1)(c) and s 17(1) in those
circumstances did not provide a cause of action for the recovery of damages. The
cause of action, according to the submission, was dependent on a finding that the
goods were not counterfeit. Brett AJ dismissed the argument and Weber-Stephen
did not attempt to revive it in this court. It does not appear from the papers that
Weber-Stephen has instituted any trademark infringement proceedings against
Cadac.
INQUIRY INTO DAMAGES: IS IT PERMITTED?
[10] The first issue to decide is whether the proceedings launched by Cadac for an
inquiry into damages is competent because, as was argued by Weber-Stephen, it is
not at all permissible to bring an illiquid claim by means of motion proceedings. This
much was said by Murray AJP in Room Hire.7 The main reason for the statement is
in general terms unobjectionable. It is that motion proceedings are not geared to
7 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T).
deal with factual disputes – they are principally for the resolution of legal issues8 –
and illiquid claims by their very nature involve the resolution of factual issues. The
related reason concerns the lack of pleadings.9 The other objection, namely that
motion proceedings give the applicant a procedural advantage because the
respondent is not entitled to rely on a bald denial as is possible in trial proceedings
and that it would be unfair to deprive the respondent of this advantage, no longer
holds water.10 Litigation is not a game.
[11] The fact of the matter is that Cadac does not seek to have its illiquid claim
decided by means of motion proceedings and that these objections have no bearing
on the matter. What it does seek are directions as how to proceed with the
quantification of its claim for damages to which it is entitled by virtue of the statute
and the findings by Schwartzman J.11 The irony of the objection is that if it had
proceeded by way of application for an interdict based on trademark infringement,
Weber-Stephen, if successful, would have been entitled to an order directing an
inquiry into damages and directions as to the procedures to be followed.12 But since
the proceedings by Cadac are not trademark infringement by a quirk of somewhat
ossified procedural law the same procedure is said not to be available.
[12] Courts have refused to make orders for an inquiry into damages because the
relief, which is found in English procedural law, is not dealt with in our court rules.13
But, as Nicholas J pointed out in Harvey Tiling,14 such orders have been granted
without objection in patent actions at a time when there was no available local rule.
And, as he showed, courts are able to craft an appropriate order for an inquiry into
damages without the need for a rule. One finds regularly that parties agree or courts
order that issues concerning liability are to be decided first and quantum thereafter.
But the present rigid system requires of a plaintiff to particularize its damages when
8 National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA) para 26.
9 Montres Rolex SA v Kleynhans 1985 (1) SA 55 (C) 70B.
10 Williams v Tunsdall 1949 (3) SA 835 (T) 839.
11 The notice of motion was for an order directing an inquiry into the damages due to Cadac, a
direction in relation to the procedure to be followed, an order that the respondents pay those
damages, and an order in relation to interest.
12 Trade Marks Act 194 of 1993 s 34(4).
13 Atlas Organic Fertilisers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1978 (4) SA 696 (T); Montres
Rolex SA v Kleynhans loc cit; Atlas Organic Fertilisers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1978
(4) SA 696 (T); Haggar Co v SA Tailorcraft (Pty) Ltd 1985 (4) SA 569 (T) 582A-C.
14 Harvey Tiling Co (Pty) Ltd v Rodomac (Pty) Ltd 1977 (1) SA 316 (T) 328-330.
instituting action, sometimes a costly exercise which may prove to have been
unnecessary.
[13] I cannot see any objection why, as a matter of principle and in a particular
case, a plaintiff who wishes to have the issue of liability decided before embarking
on quantification, may not claim a declaratory order to the effect that the defendant
is liable, and pray for an order that the quantification stand over for later
adjudication. It works in intellectual property cases albeit because of specific
legislation but in the light of a court’s inherent jurisdiction to regulate its own process
in the interests of justice – a power derived from common law and now entrenched
in the Constitution (s 173) – I can see no justification for refusing to extend the
practice to other cases. The plaintiff may run a risk if it decides to follow this route
because of the court’s discretion in relation to interest orders. It might find that
interest is only to run from the date when the debtor was able to assess the quantum
of the claim.15 Another risk is that a court may conclude that the issues of liability
and quantum are so interlinked that it is unable to decide the one without the other.
[14] Once the principle is accepted for trial actions there is no reason why it
cannot apply to application proceeding. In Modderklip,16 which was brought on
notice of motion, this court issued an order for the determination of the quantum of
damages based on the formulation used in Harvey Tiling. The order of the
Constitutional Court was in this regard identical.17 The fact that the order related to
‘constitutional’ damages does not affect the procedural principle.
[15] There is, without derogating from the foregoing, an additional reason why the
procedure is permissible in this case. Section 10 of the Act provides that an order for
damages may be ordered against a complainant ‘in any civil or criminal proceedings
relating to counterfeit goods’. Cadac’s application to set aside the warrant was such
a proceeding within the meaning of the section, which does not require separate
proceedings for the determination of quantum. In the absence of rules regulating
these quantification proceedings a court has to prescribe an appropriate procedure.
15 Prescribed Rate of Interest Act, 1975 s 4 read with s 2A(5).
16 Modderfontein Squatters, Greater Benoni City Council v Modderklip Boerdery (Pty) Ltd (Agri SA
and Legal Resources Centre, amici curiae) 2004 (6) SA 40 (SCA).
17 President of the RSA v Modderklip Boerdery (Pty) Ltd (Agri SA and others amici curiae) 2005 (5)
SA 3 (CC).
THE CAUSA OF CADAC’S CLAIM
[16] The issue relating to the nature of Cadac’s claim arises from Weber-
Stephen’s argument that at the time that the main application was launched the right
to damages had not yet accrued and that the proceedings for the recovery of
damages (albeit in the form of an inquiry into damages) were accordingly premature.
This argument was based on the supposition that the warrant was not void but
voidable and that a cause of action for wrongful attachment of goods could only
arise once the warrant has been set aside – until then it remains valid. As was said
by Trollip JA, until a warrant like the one in the instant case is set aside ‘it continues
to have the effect of justifying the proposed attachment [citations omitted] and,
without more, the appellant cannot obtain the interdict it seeks.’18
[17] The learned judge was concerned with an application for an interdict to
prevent the police from attaching certain gambling machines. The police in answer
relied on a warrant issued by a magistrate. The application, the judge said, could not
be regarded or treated as including a claim to have the warrant set aside because
there was not a timely attack on its validity (the attack, it would appear, came in the
replying affidavit). Without such a claim the interdict could not be granted. This
means that the interdict could have been granted if in the same proceedings the
there was a prayer, which was successful, for the setting aside of the warrant.
[18] The cause of action for an interdict and one for damages are the same. Only
the nature of the relief differs. And although there are statements in cases that
damages can only be sought after a warrant had been set aside, those statements
must be read in context. They dealt with the distinction between malicious
attachments and wrongful ones. Because a writ is a defence against a claim based
on the former the claim cannot succeed unless the writ is set aside.19 To anticipate
reliance on a writ by the defendant a plaintiff must include a claim for having it set
aside. Not one ever suggested that two proceedings, one for setting aside and the
next for damages, are required. The reason is apparent. The declaration of invalidity
operates retrospectively and not prospectively. This means that once a warrant is
18 Cresto Machines (Edms) Bpk v Die Afdeling Speuroffisier, SA Polisie, Noord-Transvaal 1972 (1)
SA 376 (A) 395H.
19 Hart v Cohen (1899) 16 SC 363 at 369; Cohen Lazar & Co v Gibbs 1922 TPD 142 at 147-148;
Begeman v Cohen 1927 TPD 674 at 676; Cole’s Estate v Oliver 1938 CPD 465 at 468.
set aside it is assumed that it never existed and everything done pursuant thereto
was consequently unlawful.
[19] I therefore conclude that the claim relating to damages in the application to
set aside the warrant was not premature. The notice of motion was a process
whereby proceedings were instituted as a step in the enforcement of a claim for
payment of a debt.20 This means that the running of prescription was interrupted in
terms of s 15(1) of the Prescription Act 68 of 1969.21
FAILURE TO PROSECUTE THE CLAIM FOR DAMAGES
[20] I have mentioned that Cadac had failed to further prosecute its damages
claim until it launched the present proceedings on 20 March 2008. Because of this
delay Weber-Stephen relied on s 15(2) of the Prescription Act which provides inter
alia that ‘the running of prescription shall not be deemed to have been interrupted, if
the creditor does not successfully prosecute his claim under the process in question
to final judgment.’ The argument was that since Cadac did not prosecute its claim to
a final judgment the claim became prescribed. For this proposition reliance was
placed on the judgment in Chauke.22
[21] The immediate problem with the argument is this: when did the claim
prescribe? Counsel suggested within three years from the judgment of Schwartzman
J, but there is no time limit stated in s 15(2) within which the claim must be
prosecuted with success. It could just as well have been three days, weeks or
months. In any event, Munnik CJ analyzed s 15(2) in Titus23 and came to the
conclusion that Chauke was incorrect. I can do no better than to rely on his
reasoning. He pointed out, with reference to Kuhn v Kerbel 1957 (3) SA 525 (A), a
case decided under the Prescription Act 18 of 1943, that the Act rendered a right
unenforceable after the lapse of a certain time, but did not purport to deal with the
time within which proceedings had to be concluded. Extinctive prescription, it held,
limits the time within which proceedings must be instituted but once instituted its
continuance is governed by the rules of court. The reason is that while the initiating
20 Cape Town Municipality v Allianz Insurance Co Ltd 1990 (1) SA 311 (C) 334G-J.
21 ‘The running of prescription shall, subject to the provisions of subsection (2), be interrupted by the
service on the debtor of any process whereby the creditor claims payment of the debt.’
22 Chauke v President Insurance Co Ltd 1978 (2) SA 947 (W).
23 Titus v Union & SWA Insurance Co Ltd 1980 (2) SA 701 (TkSC).
step (the issue of process) is within the power of the creditor the subsequent
conduct of the proceedings might not be.24
[22] Munnik CJ further held that the introduction of s 15(2) of the 1969 Act did not
affect this reasoning. He focussed on the word ‘successfully’ and held that only if a
creditor’s claim fails the provision comes into force. The practical effect of this is that,
should absolution be granted, the plaintiff cannot be said to have successfully
prosecuted the claim to final judgment. The same would apply, he said, if an
exception is taken and the plaintiff cannot amend but has to issue a fresh summons
(an unlikely event). Another example appears from a later case where a plaintiff
withdrew the action in one court in order to institute it in another: since the first
summons was not successfully prosecuted it could not interrupt prescription.25
[23] The learned judge concluded (at 704F-H):
‘It is not unreasonable to assume that what the legislator had in mind was the following: It is
necessary that there should be finality in litigation. The plaintiff is given a reasonable time
within which to institute his action, thereafter he is in the hands of the administration of the
Courts. Certain Rules are laid down, time is given in which certain procedures have to be
carried out in regard to the pleadings and there is a general provision in every Rule of Court
in terms whereof the Court can always extend the time and furthermore he has other factors
to contend with . . . which all make it impossible for him to have any direction over the length
or duration of the proceedings once he has instituted them.’
[24] This means that the failure to prosecute did not in the circumstances of this
case lead to the extinction of the claim by prescription. I do not thereby wish to
condone the lackadaisical manner in which Cadac dealt with the matter but, as
Munnik CJ said (at 705A-B), the debtor to a certain extent has a say in the running
of prescription by enforcing the rules of court. In this case Weber-Stephen could
have enrolled the case for dismissal of the postponed relief.
CONCLUSION
[25] This means that Weber-Stephen’s defences to the relief sought were without
merit. The parties are agreed that the following order should issue in that event and
it is ordered as follows:
24 Sieberhagen v Grunow 1957 (3) SA 485 (C).
25 Van der Merwe v Protea Insurance Co Ltd 1982 (1) SA 770 (E).
The appeal is upheld with costs, including the costs of two counsel.
The order of the court below is set aside and replaced with an order in these
terms:
(a)
The interlocutory application is upheld with costs, including the costs of
two counsel.
(b)
The counter-application is dismissed with costs, including the costs of
two counsel.
(c)
The Registrar of the South Gauteng High Court is directed to fix a date
for an inquiry to be conducted by way of a High Court trial for the
purposes of:-
(i)
the determination of the amount of compensation to be
paid by the Respondents to the Applicant as contemplated in
section 10(1)(c) of the Counterfeit Goods Act 37 of 1997;
and
(ii)
the payment by the Respondents, jointly and severally, the one
paying the others to be absolved, to the Applicant of the amount
of compensation found to be due to the Applicant pursuant to
the determination, together with interest on such amount at the
prescribed rate of interest from the date of such determination
until the date of payment and the costs of the determination.
(d)
The Applicant shall within 20 (twenty) days of the date of this order
serve upon the Respondents and file a declaration particularizing the
damages allegedly suffered by it as a result of the seizure of its goods
under the search and seizure warrant issued on 10 December 2004.
(e)
The Respondents, if so advised, shall with 10 (ten) days of the service
of the Applicant’s declaration, file a plea thereto.
(f)
The Uniform Rules of Court relating to discovery, inspection and all
other matters of procedure shall apply to the determination.
(g)
The parties are authorised, on notice to the other parties and should it
be required by one or both of them, to make application to the South
Gauteng High Court to add to, or vary the above order so as to
facilitate the conducting of the determination and generally to make
application for further directions in regard thereto.
______________________
L T C Harms
Deputy President
APPEARANCES
APPELLANTS:
A J Bester SC (with him N J Tee)
Instructed by D M Kisch Inc, C/o Blake Bester
Attorneys, Rosebank
Rossouws, Bloemfontein
RESPONDENTS:
G E Morley SC (with him A Annandale)
Instructed by Spoor & Fisher Attorneys, C/o
Routledge Modise Moss Morris, Johannesburg
Matsepes Inc, 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
15 September 2010
STATUS: Immediate
CADAC (PTY) LTD v WEBER STEPHEN PRODUCTS COMPANY &
OTHERS
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) upheld an appeal against an order of the South
Gauteng High Court (Johannesburg) and dismissed a counter-application.
The respondents accused the appellant of trademark infringement, which the
appellant denied. The respondents then alleged that the appellant was guilty of
counterfeiting and threatened to lay a charge under the Counterfeit Goods Act 37 of
1997 (The Act). In spite of the appellant’s refutation, the respondents proceeded to
lay a complaint, without notice to the appellant, in terms of s 3 of the Act which led to
a warrant being obtained and executed during the Christmas season, and goods
being seized from dealers, causing the appellant some loss as a result.
The appellant applied to the high court on an urgent basis for the setting aside of the
warrant. It also applied for a declaration that the goods seized were not counterfeit
and for an inquiry into damages and for costs.
The high court held that the warrant had been obtained irregularly and set it aside
with costs and ordered the return of the goods seized. The inquiry into damages
stemmed from the provisions of s 17(1) of the Act, which must be read with s
10(1)(c). The court postponed this prayer sine die.
The first issue for the SCA to decide was whether the proceedings launched by the
appellant for an inquiry into damages were competent, because, the respondents
argued, it is not at all permissible to bring an illiquid claim by means of motion
proceedings. The SCA held that the procedure was permissible as the appellant in
fact did not seek to have its illiquid claim decided by means of motion proceedings,
but merely sought directions as to how to proceed with the quantification of its claim
for damages. The SCA could not see any objection as to why a plaintiff who wishes
to have the issue of liability decided before embarking on quantification, may not
claim a declaratory order to the effect that the defendant is liable, and pray for an
order that the quantification stand over for later adjudication. Additionally s 10 of the
Act provides that an order for damages may be ordered against a complainant ‘in
any civil or criminal proceedings relating to counterfeit goods’. The appellant’s
application to set aside the warrant was such a proceeding within the meaning of the
section, which does not require separate proceedings for determination of quantum.
In the absence of rules regulating these quantification proceedings a court has to
prescribe an appropriate procedure.
The second issue before the court was whether the appellant’s claim was
premature, as the respondents submitted that at the time that the main application
was launched the right to damages had not yet accrued. The SCA held that the
appellant’s claim was not premature, as the notice of motion was a process whereby
proceedings were instituted as a step in the enforcement of a claim for payment of a
debt. This meant that the running of prescription was interrupted in terms of s 15(1)
of the Prescription Act 68 of 1969.
This led to the respondents raising a third issue, namely, that since the appellant did
not prosecute its claim to a final judgment the claim became prescribed, as in terms
of s 15(2) of the Prescription Act ‘the running of prescription shall not be deemed to
have been interrupted, if the creditor does not successfully prosecute his claim
under the process in question to final judgment’. The SCA held that the failure to
prosecute did not in the circumstances of this case lead to the extinction of the claim
by prescription and that the debtor, to a certain extent, has a say in the running of
prescription by enforcing the rules of the court.
---ends--- |
3668 | non-electoral | 2021 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 697/2020
In the matter between:
THE MEMBER OF THE EXECUTIVE
COUNCIL FOR HEALTH AND SOCIAL
DEVELOPMENT, GAUTENG PROVINCE
APPELLANT
and
MM on behalf of OM
RESPONDENT
Neutral citation: MEC for Health and Social Development, Gauteng v MM
on behalf of OM (Case no 697/2020) [2021] ZASCA 128
(30 September 2021)
Coram:
WALLIS, MBHA, MBATHA, GORVEN and HUGHES JJA
Heard:
16 August 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 09h45 on 30 September 2021.
Summary: Delict – medical negligence – damages – liability in respect of a
minor born with brain damage who now suffers from cerebral palsy – whether
hospital staff negligent – if so, whether such negligence caused the damage –
negligence and causation established – MEC liable.
_____________________________________________________________
ORDER
On appeal from: Gauteng Division of the High Court, Pretoria (Nair AJ
sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel,
wherever so employed.
JUDGMENT
Gorven JA (Wallis, Mbha, Mbatha and Hughes JJA concurring)
[1] On 7 December 2010, a baby boy (OM) was born to the respondent
(Ms M). This had been her first pregnancy. She had presented at the Laudium
clinic on 12 July that year when she was 18 weeks pregnant. There she was
diagnosed as being HIV positive and was prescribed anti-retroviral therapy.
At 02h30 on 7 December, her membranes ruptured and she began to
experience severe abdominal pain. At 06h00 she was admitted to the Laudium
clinic. At 19h25 she was transferred to Kalafong Hospital (the hospital), a
level two hospital at which some 500 to 600 babies are delivered each month.
At 20h15, the cervix of Ms M was 7 cm dilated. At 21h15, it was 9 cm dilated,
at which point it was directed that she be transferred to a delivery ward. OM
was born at 21h50. He suffered a hypoxic ischemic injury during the birth
process which resulted in cerebral palsy.
[2] Ms M launched an action in the Gauteng Division of the High Court,
Pretoria (the high court), against the appellant in this matter, the Member of
the Executive Council for Health and Social Development: Gauteng Province
(the MEC). She sued both in her personal capacity and as the mother and
guardian of OM. The hospital falls under the MEC who is responsible in law
for any injury caused by the negligence of staff employed there. In the action,
Ms M alleged that the hospital staff had been negligent during the birth of OM
and that this negligence caused the hypoxic ischemic injury and its sequelae.
As a result, she claimed damages on her own behalf and on behalf of OM.
[3] Nair AJ, in the high court, dealt initially with issues relating to the
liability of the MEC. Although the order was not specific, it is clear that the
question of negligence on the part of the staff and, if proved, whether that
negligence caused the injury to OM, was to be decided.1 The high court held
that the MEC was liable for the agreed or proved damages caused by the
injury. The MEC was granted leave to appeal on a narrow issue by the high
court. An application was then made to this Court, which granted leave to
appeal against the whole judgment.
[4] What emerged without challenge was that, on admission to the hospital,
Ms M was a high risk patient. The known reasons for this were twofold. By
then, the ruptured membranes had endured for a prolonged period and she was
HIV positive. The latter is a risk factor for hypoxia. It is common ground that
both of these signalled the need for careful monitoring, inter alia, by way of
1 This Court has repeatedly lamented the failure of trial courts to make orders specifying precisely which
issues are to be dealt with separately and initially. Regrettably, this is yet another instance of such failure.
See eg Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA) para 3 and ABSA Bank Ltd v Bernert 2011 (3)
SA 74 (SCA) para 21.
a cardiotocograph (CTG). This measures foetal heart patterns. If the foetus is
not supplied with sufficient oxygen, abnormal heart rates result. There are
various warning signs of impending foetal hypoxic distress. Where these are
present, the medical staff need to take action.
[5] It is also common ground that the critical period in this matter is the
time between approximately 20h30 and 21h34. It was agreed that the injury
probably occurred in the period between 21h34 and 21h50 when OM was
born. The trial revolved largely around the correct interpretation of the CTG
tracings during the critical period. For this, each party employed experts. The
experts differed on some of the interpretations. As a result, they also differed
on when any action on the part of the hospital staff was required and whether
any actions taken then would have prevented the injury to OM.
[6] As was the case in the high court, the issues before us are twofold. First,
whether Ms M proved that hospital staff were negligent. In this context, the
test has remained clear:
‘. . . [I]n deciding what is reasonable the Court will have regard to the general level of skill
and diligence possessed and exercised at the time by the members of the branch of the
profession to which the practitioner belongs.’2
Secondly, if so proved, whether that negligence caused or contributed to the
injury suffered by OM. Ms M bore the onus of proof on these issues. It bears
remembering that the required standard is proof on a balance of probabilities.
It is also worth noting that, in arriving at their opinions, medical experts
2 Van Wyk v Lewis 1924 AD 438 at 444.
frequently apply a scientific level of proof approaching certainty. Courts must
guard against adopting this standard.3
[7] All of the experts accepted that the pattern of injury on the Magnetic
Resonance Imaging (MRI) scans of OM indicated that the hypoxic ischemic
injury was of the acute profound type at full term. Professor van Toorn gave
uncontested evidence of the mechanism of damage in the case of an acute
profound hypoxic ischemic injury. The foetal brain obtains its oxygen from
the placenta. Where the supply of oxygen ceases, an insult to the central grey
matter of the brain takes place. Babies can withstand very short periods
without oxygen, called insults, by various mechanisms. But when the insults
are of a recurrent nature and are continuous, there is a compounding effect. It
is this which gives an indication that injury might result. At some stage
collapse occurs, causing damage to the central grey matter. This is termed an
injury. The key is to take the infant from this unfavourable environment of
frequent, persistent insults before the insults result in an injury. In this way,
3 See Maqubela v S [2017] ZASCA 137; 2017 (2) SACR 690 (SCA) para 5, where it was said:
‘In Michael & another v Linksfield Park Clinic (Pty) Ltd & another 2001 (3) SA 1188 (SCA) para 40, the
important distinction to be drawn between the scientific and judicial measures of proof when assessing expert
scientific evidence, was emphasised:
“Finally, it must be borne in mind that expert scientific witnesses do tend to assess likelihood in terms of
scientific certainty. Some of the witnesses in this case had to be diverted from doing so and were invited to
express the prospects of an event’s occurrence, as far as they possibly could, in terms of more practical
assistance to the forensic assessment of probability, for example, as a greater or lesser than fifty per cent
chance and so on. This essential difference between the scientific and the judicial measure of proof was aptly
highlighted by the House of Lords in the Scottish case of Dingley v The Chief Constable, Strathclyde
Police 200 SC (HL) 77 and the warning given at 89D - E that:
‘[O]ne cannot entirely discount the risk that by immersing himself in every detail and by looking deeply into
the minds of the experts, a Judge may be seduced into a position where he applies to the expert evidence the
standards which the expert himself will apply to the question whether a particular thesis has been proved or
disproved – instead of assessing, as a Judge must do, where the balance of probabilities lies on a review of
the whole of the evidence.’”
The scientific measure of proof is the ascertainment of scientific certainty, whereas the judicial measure of
proof is the assessment of probability.’
the infant can be salvaged. This requires monitoring which can indicate for
how long, and how frequently and seriously, insults are occurring.
[8] A joint minute of the two neuro-radiologists agreed that the injury was
of the acute profound type:
‘There are no MRI changes to suggest a partial prolonged hypoxic ischemic injury wherein
the watershed areas got damaged and this happens over a long time. In this case we only
have acute profound damage which usually happens in the 10-40 minutes before birth. The
radiologists agree that there was hypoxic ischemic injury that occurred to the brain of the
full term infant. According to the radiologists, more than one event took place in the
gestational period. The first insult was the infarct on the right temporal lobe followed by
the injury which occurred during the birth process being the hypoxic ischemic injury.’
[9] It is as well to deal at the outset with the first mentioned insult. The
infarct on the right temporal lobe, commonly called a stroke, probably took
place toward the end of the second trimester. None of the experts saw this
stroke as having caused the injury on which Ms M sued. Had the stroke caused
the damage, the MRI would have looked different.
[10] There were two main elements to the trial. The first related to the
interpretation of the CTG tracings. This fuelled the debate as to when any
interventions were appropriate and whether such interventions would
probably have prevented the injury. An additional, second, matter arose
during the trial concerning the histology of Ms M’s placenta. This had been
sent for analysis prior to the trial but further analysis was sought by the MEC
during the course of the trial by a different expert, Professor Colleen Wright.
[11] This second histological report concluded as follows:
‘Morphologic assessment of the placenta suggests chronic villitis of unknown etiology. . .
. . .
Adverse clinical pregnancy outcome corresponds with histologically defined VUE severity
(high-grade lesions).’
VUE refers to villitus of unknown etiology. This is associated with the
placenta having abnormal blood vessels. The joint minute of the experts
concluded:
‘As a consequence of the aforementioned, the placental pathology decreased the baby’s
ability to withstand the stress of labour.’
They agreed that this did not cause the injury sued on. It did mean that OM
was more vulnerable to being injured than would have been the case of a
foetus supplied with oxygen by a placenta without that pathology.
Dr Mogashoa, who first suspected placental pathology, supported this
conclusion. She agreed that the ‘final insult’, which gave rise to the cerebral
palsy, was hypoxic ischaemic in nature.
[12] Counsel submitted that the presence of VUE and the resultant greater
vulnerability of OM to stress in labour was unforeseeable. He was correct but
it was unclear where that took him. The issue was whether there was proper
monitoring of the CTG scans during labour. Assuming in his favour that VUE
was a factor in causing OM's fetal distress, that does not exonerate the nurses
for their failure to conduct the monitoring properly. It was not the cause of the
foetal distress that mattered but any failure to observe the signs of its presence
and take steps to alleviate the stress and accelerate his delivery. The presence
of VUE did not alter any of this. In general, in cases of personal injury, the
rule is that one takes one's victim as one finds them as illustrated by the so-
called 'eggshell' skull cases.4 The question was not whether there was a
predisposition to suffering injury, but whether, even in the absence of
knowledge of that predisposition, proper care in the circumstances known to
the nursing staff at the time would have avoided the consequences that
actually occurred.
[13] The question, then, is whether insults which indicated the need to
intervene would have been discernible by reasonable hospital staff during
Ms M’s labour. The answer to this question depends largely on the
interpretation of the CTG tracings during the critical period of 20h30 to
21h32. I say 21h32 because there was consensus that at that time the CTG
tracing was pathological. Urgent action was required.
[14] Various expert witnesses led evidence on the CTG tracings. Professor
Pattinson, the Clinical Head of the Department of Obstetrics and Gynaecology
at the hospital was called by the MEC. Ms M called three experts in this area.
Dr Langenegger, a specialist in Obstetrics and Gynaecology as well as a foetal
medicine specialist; Professor Anthony, associate professor of the Department
of Obstetrics and Gynaecology at the University of Cape Town and head of
the Groote Schuur Maternal and Foetal Medicine Unit; and Professor Smith,
a neonatologist and professor of neonatology attached to the University of
Stellenbosch. Apart from the evidence led in court by these witnesses, certain
matters were agreed between various experts.
4 Majiet v Santam Limited [1997] 4 All SA 555 (C) at 567 A-D.
[15] The nursing experts, neither of whom was called, agreed in their minute
that between 20h40 and 20h58 it was expected of the midwife to place Ms M
in the left lateral position, check that the CTG probes were making good
contact and administer oxygen. It is common cause that none of these steps
was taken. In addition, they agreed that: ‘Probable foetal distress was evident
from about 20:58.’
[16] Of some importance in this matter is the status of such joint minutes.
They recorded areas of agreement and disagreement of the expert witnesses
of the parties. A pre-trial meeting agreed that, where there was agreement
between two or more expert witnesses, that agreement was binding on the
parties. In that regard, this Court has held:
‘Where, as here, the court has directed experts to meet and file joint minutes, and where
the experts have done so, the joint minute will correctly be understood as limiting the issues
on which evidence is needed. If a litigant for any reason does not wish to be bound by the
limitation, fair warning must be given. In the absence of repudiation (ie fair warning), the
other litigant is entitled to run the case on the basis that the matters agreed between the
experts are not in issue.’5
It follows, as a necessary corollary, that where there is no agreement, the
minutes must be disregarded. If a party wishes to rely on what a witness
records in a minute where there is no agreement, evidence on that point is
necessary before it may be taken into account.
[17] It is as well to recap the approach to be taken to expert evidence. Such
testimony, in a medical matter, amounts to an opinion on how accepted
medical principles apply to the facts. It is admissible where the person
5 Bee v Road Accident Fund [2018] ZASCA 52; 2018 (4) SA 366 (SCA) para 66.
rendering the opinion is qualified to do so. The opinion must be properly
motivated so that the court can arrive at its own view on the issue. Where the
opinions of experts differ, the underlying reasoning of the various experts
must be weighed by the court so as to choose which, if any, of the opinions to
adopt and to what extent. The opinion of an expert does not bind a court. It
does no more than assist a court to itself arrive at an informed opinion in an
area where it has little or no knowledge due to the specialised field of
knowledge bearing on the issues. In this regard, in Coopers (South Africa)
(Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämpfung MBH,6 this
Court held:
‘[A]n expert’s opinion represents their reasoned conclusion based on certain facts or data,
which are either common cause, or established by their own evidence or that of some other
competent witness. Except possibly where it is not controverted, an expert’s bald statement
of their opinion is not of any real assistance. Proper evaluation of the opinion can only be
undertaken if the process of reasoning which led to the conclusion, including the premises
from which the reasoning proceeds, are disclosed by the expert.’7
With those factors in mind, the expert evidence must be evaluated.
[18] Dr Langenegger explained the basic approach to the monitoring
process. This aspect of his evidence was not challenged. The first thing to
focus on is the normal foetal heart rate. A normal foetal heart rate is between
110 and 160. The second aspect is baseline variability. The heart rate varies
and the average variation is known as a baseline variation. Where the heart
6 Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämpfung MBH 1976 (3) SA
352 (A) at 371F-G. See also Oppelt v Head: Health, Department of Health ProvincialAdministration:
Western Cape [2015] ZACC 33; 2015 (12) BCLR 1471 (CC); 2016 (1) SA 325 (CC) para 36, quoting with
approval Michael and Another v Linksfield Park Clinic (Pty) Ltd and Another (1) [2001] ZASCA 12; [2002]
1 All SA 384 (A) paras 34-40; PriceWaterhouseCoopers Inc and Others v National Potato Co-operative Ltd
and Another [2015] ZASCA 2; [2015] 2 All SA 403 (SCA) paras 97-99.
7 Modified to utilise inclusive language. See also AM and Another v MEC Health, Western Cape [2020]
ZASCA 89; 2021 (3) SA 337 (SCA) para 17.
rate deviates from the baseline variation this tends to show that the foetus has
initiated defence mechanisms arising from decreased levels of oxygen. The
blood supply is constricted to less important areas and centralised to the more
important organs such as the brain. If variability persists it can be a sign that
there is a problem. The third aspect is where there are decelerations, which
are reductions in the foetal heart rate of more than 15 beats per minute.
Delayed decelerations are probably indicative of hypoxia. With prolonged
rupture of the membranes, special care is required.
[19] Prof Pattinson testified that there are four stages of labour. This aspect
of his evidence was likewise uncontested. The first two have a bearing on this
matter. The first stage is divided into a latent phase, from cervical dilatation
zero to four centimetres, and an active phase, from four to ten centimetres,
which is full dilatation. The second stage is from full dilatation at
10 centimetres to complete delivery of the baby.
[20] In the expert’s summary of evidence to be given by Prof Pattinson, it
was indicated that he would say:
‘Between 20:40 to 21:00 the CTG was suspicious. She delivered at 21:50 after normal
second stage. A very short second stage trace shows a heart rate of around 140 with good
foetal heart variability and then a fall of the heart rate to about 70 beats per minute for 90
seconds.’
The summary concludes:
‘Prof Pattinson will state that he holds the view that the medical practitioners and nursing
personnel did what was expected of them and there were no breaches of protocol. Prof
Pattinson will in finality conclude that although the minor suffers from sequelae, this could
not have been prevented at the Kalafong Hospital.’
[21] It must be said that, as regards the interpretation of the CTG tracings,
and whether any action was indicated, Prof Pattinson was an outlier. Most of
the other expert witnesses testified that the CTG tracings between 20h40 and
21h00 demanded intervention by the nursing staff and, thereafter, the
attending doctor. Far from intervening and monitoring more closely, the CTG
was inexplicably disconnected at 21h05 and only reconnected at about 21h30.
The effect of all of this is that CTG tracings are only available between 20h30
and 21h05 and again briefly after 21h30. All the experts agreed that the tracing
at 21h32, shortly after reconnection, was pathological. Where they differed,
accordingly, was on the interpretation of the tracings between 20h30 and
21h05.
[22] Prof Pattinson said that the tracings were not entirely clear. With this,
other experts agreed, but testified that they were sufficiently clear for the
hospital personnel to detect a clear trend, which should have occasioned
concern and action. This was agreed to in the joint nursing minute.
Dr Langenegger and Prof Anthony were both called by Ms M. They provided
a minute, confirmed during their evidence, which stated:
‘(a)
At 20h28 the accelerative pattern changes to one in which decelerations develop at
20h28 and 20h33, 20h37 and 20h39;
(b)
At 20h43, the tracing shows a decline in the baseline from 145 beats per minute
which persists until a slow return to the baseline at shortly before 20h50. In that 7
minute period fetal heart rate tracing is evident intermittently with all values at least
10 beats per minute below the baseline. This period of tracing has the appearance
of a prolonged deceleration lasting for more than 5 minutes.
(c)
At 20h50, the tracing again descends to a nadir of about 60 beats per minute before
showing a slow recovery to the baseline at 20h52. Subsequently another 4 similar
episodes are identifiable up to 21h04 with the decelerations at 20h58 and 21h01
being late decelerations.
(d)
The tracing at 21h32 shows a 3 to 4 minute tracing characterised mainly by a single
large u-shaped deceleration with loss of variability in the deceleration.’
[23] Prof Pattinson agreed only with item (d) of this minute. His expert
summary, responding to this and confirmed by him in court, said:
‘I disagree with these statements. In my view what we see from 20h28 is a woman pushing
and in the second stage of labour. This is evidenced by:
1.
Rapid progression of the active phase of labour.
2.
Evidence of pushing in the middle line of the CTG.
3.
Evidence in the notes that the woman had the urge to push.
4.
Return to baseline 140 between the contractions and where there was contact.
The trace became suspicious with the slow return to baseline around 20h50.’
[24] He said that Ms M was pushing and that, as a result, ‘we could not get
a decent trace’. He also claimed that she was fully dilated or close to fully
dilated during that period, even though she was only 7 cm at 20h15 and only
9 cm at 21h15, the second of which falls outside the period concerned. He
contended that Ms M ‘was in the equivalent of second stage’. This is not
supported by his own evidence that the second stage is only reached when the
cervix is 10 cm dilated.
[25] His interpretation that the tracings showed that Ms M was pushing from
20h23 to 21h05 was strongly contested. Ms M testified that she was not doing
so. None of the contemporaneous notes recorded this. The only reference at
all relevant to pushing was a note at 21h15. This recorded only that Ms M had
the urge to bear down, not even that she was doing so. None of the personnel
who attended on Ms M testified.
[26] The other experts were adamant that the tracings did not show maternal
pushing. If Ms M had done so prior to the second stage being reached at 10 cm
dilatation, she would have been told not to do so. Prof Pattinson did say that
if the staff saw that Ms M was pushing, they should at the very least have
arranged for a vaginal examination. This was not done. He agreed that if it
was not the correct time to push the staff should have told her not to do so.
[27] He interpreted the notes to the effect that at 21h15 Dr Kayzer examined
Ms M, who was 9 cm dilated. Dr Kayzer did not testify. Prof Pattinson said
that Dr Kayzer noted of Ms M that: ‘She must go for delivery because she was
pushing, and that was quite correct.’ It was pointed out to Prof Pattinson that
the entry by Dr Kayzer recorded only that Ms M had reported ‘the urge to bear
down’. His response was that this meant that ‘she wants to push down and she
probably has been pushing down.’ He was then constrained to agree that
doctors are taught to record exactly what occurs. It was put to him that, if Ms
M had been pushing, this would have been noted. His response was to say that
there are a number of beds in the area and Dr Kayzer was probably in another
room. He was brought back to the entry and again said that his ‘interpretation
of her saying “reports the urge to bear down” is that she wants to push and
probably has been pushing.’ He finally and reluctantly accepted that this was
not what Dr Kayzer had written.
[28] He was then pressed on his having testified that, by 21h15, Ms M had
been pushing for 53 minutes. His evidence in court was that the CTG showed
that she first pushed at 20h23. However, in his response to the joint minute,
he said that the first push discernible from the CTG tracings was at 20h28. He
said in his response to the joint minute that this was shown on the middle line
of the tracing but his evidence in court was that it was shown in the contraction
line. What was put on his behalf to Dr Langenegger was that he would say
that once contractions begin, the tracing shows maternal movement but he
later testified that it was a mixture of maternal and foetal movement.
[29] There are other difficulties with his evidence. He was asked why the
CTG was disconnected at 21h05 and only reconnected at 21h32. Despite his
not having been present at the time, and only interpreting the hospital records,
he proffered that it takes time to be transferred to a labour ward. He said of
that time that, although there were ‘some suspicious aspects . . . there were
reassuring features of heart returning to baseline. So I do not think there was
urgency, an excessive urgency, except she was pushing in the second stage.
And it, the CTG has to be disconnected.’ As indicated above, Ms M was not
in the second stage, according to his own evidence. And the transfer
instruction was only given at 21h15, so this, too, was surmise on his part.
There was no factual underpinning for either of these aspects of his testimony.
[30] In evidence, he said that the tracing first became suspicious at 20h58.
After being taken through the tracing, he conceded that, also at that time, there
was ‘a single late deceleration’. He was confronted with his report, where he
had said that between ‘20:40 to 21:00 the CTG was suspicious’. He then
conceded in evidence that the report was correct and his earlier evidence that
the first suspicious trace was at 20h58 was incorrect. When confronted with
the fact that he differed from the MEC’s own nursing expert and all of Ms
M’s experts that there was probable foetal distress at 20h58, he said he
differed because he considered that all of the traces they referred to were
second stage traces, where Ms M was pushing. This aspect of his evidence has
already been dealt with.
[31] He, alone, testified that he did not accept that an acute profound
hypoxic ischemic injury led to the cerebral palsy. That is a position in conflict
with the other witnesses called by the MEC and the MEC’s concession in this
regard. The experts called by Ms M on this issue gave detailed, coherent, and
carefully reasoned evidence that led to their opinions, which accorded with all
of the known facts.
[32] For all of the reasons mentioned above, the evidence of Prof Pattinson
as to when the tracings became suspicious and when action should have been
taken must be rejected where it conflicts with that of the agreed nursing
minute and Ms M’s experts. All of these agreed that, at the very latest by
20h58, action would have been taken by nursing staff with the level of skills
and training functioning in a level two hospital. That action would have been
to call a doctor. The reasonable doctor in that context would have closely
monitored Ms M and, within ten minutes or so, have begun expedited
delivery, which could have been achieved in the fifteen or twenty minutes
after 20h15. None of these steps was taken. This leads to the conclusion that
Ms M proved, on a balance of probabilities, that the hospital personnel were
negligent.
[33] All of the expert witnesses agreed that the injury to OM did not occur
before 21h34. It took place between then and his delivery at 21h50.
Dr Mogashoa testified that once there is a sustained bradycardia, which is a
slowing of the foetal heart rate, one should deliver a baby within 10 to 17
minutes. That is the length of time that a baby can compensate for asphyxia.
[34] If the actions referred to above had been taken, accordingly, the damage
would in all probability have been avoided. This means that the damage to
OM probably occurred as a consequence of the negligence of the hospital
staff. As a result, Ms M proved on a balance of probabilities that the
negligence of the hospital employees caused or contributed to the injury and
sequelae to OM.
[35] All of this means that the finding of the high court that the MEC was
liable for the injury sustained by OM during his birth process cannot be
faulted. As a result, the appeal must be dismissed. It was conceded that, in
those circumstances, the costs of two counsel, where utilised, would be an
appropriate costs award. I agree.
[36] In the result, the following order issues:
The appeal is dismissed with costs, including the costs of two counsel,
wherever so employed.
____________________
T R GORVEN
JUDGE OF APPEAL
Appearances
For appellant:
S Joubert SC
Instructed by:
State Attorney, Pretoria
State Attorney, Bloemfontein.
For respondent:
J J Wessels SC (with him C Vallaro)
Instructed by:
Munro, Flowers and Vermaak, Johannesburg
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 2021
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.
Member of the Executive Council for Health and Social Development, Gauteng
v M M obo O M [2021] ZASCA 128
Today the Supreme Court of Appeal dismissed an appeal from the Gauteng Division
of the High Court, Pretoria (per Nair AJ). Ms M gave birth to OM on 7 December
2010. During the birth process, OM suffered a hypoxic ischemic injury which resulted
in cerebral palsy. As a consequence, Ms M sued the Member of the Executive
Council for Health and Social Development, Gauteng (the MEC) on her own behalf
and on behalf of OM. The MEC is legally liable for acts of employees at the Kalafong
hospital (the hospital), which is where OM was born. The issues were whether the
hospital staff had been negligent and, if so, whether that negligence caused the
injury and its sequelae to OM.
The high court held that Ms M had succeeded in proving both negligence and that it
had caused the injury to OM. The MEC appealed to the Supreme Court of Appeal.
The matter revolved principally around the interpretation of tracings made by a
cardiotocograph (CTG) during the critical period. A second issue arose during the
trial when it was established that the placenta of Ms M had villitus of unknown
etiology (VUE). This is associated with the placenta having abnormal blood vessels.
This meant that OM was more vulnerable to being injured than would have been the
case with a foetus supplied with oxygen by a placenta without that pathology. It was,
however, agreed by the expert witnesses that this did not cause the injury to OM. It
was not the cause of the foetal distress that mattered but any failure to observe the
signs of its presence and take steps to alleviate the stress and accelerate his
delivery.
The interpretation of the tracings was therefore the pivotal issue in the matter.
Various experts testified on how the CTG tracings should have been interpreted. In
addition, nursing experts prepared a joint minute. That joint minute and the evidence
of experts called by Ms M agreed that the tracings between 20h40 and 20h58
indicated foetal distress. Reasonable nursing staff would have called a doctor no
later than 20h58. A reasonable doctor would have observed closely and, within ten
minutes thereafter, have arranged for an expedited delivery. This could have taken
place within 15 to 20 minutes after 21h15 at the latest. Since it was agreed by all
that the injury occurred between 21h34 and 21h50, when OM was born, all damage
would probably have been avoided had those actions been taken. Since none of
those actions were taken, the hospital staff were negligent and that negligence gave
rise to the injury suffered by OM. The high court could thus not be faulted for having
reached that conclusion and the appeal was dismissed with costs of two counsel,
where so utilised. |
141 | non-electoral | 2017 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
CASE NO: 1066/2016
In the matter between:
VUYO MVOKO APPELLANT
and
THE SOUTH AFRICAN BROADCASTING CORPORATION SOC
LTD
RESPONDENT
Neutral Citation:
Mvoko v SABC (1066/2016) [2017] ZASCA 139(29 September
2017).
Coram:
Navsa ADP, Mathopo JA, Mokgohloa, Tsoka and Fourie AJJA
Heard:
11 September 2017
Delivered:
29 September 2017
Summary: Application for leave to appeal in terms of 17(2)(d) of the Superior
Courts Act 10 of 2013 granted – in relation to merits of the appeal – claim for specific
performance of a written agreement between independent contractor and the South
African Broadcasting Corporation (SABC) – SABC ordered to comply with written
agreement – SABC has to conduct itself within constitutional parameters and within
its statutory mandate – Broadcasting Act 4 of 1999.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: The Gauteng Local Division, Johannesburg (Van Oosten J sitting
as court of first instance).
The following order is made:
1. The application for leave to appeal is granted and the respondent is ordered to
pay the applicant’s costs.
2. The appeal is upheld with costs including the costs of two counsel.
3. The order of the court below is set aside and substituted as follows:
‘a. The respondent is directed to comply with the written agreement dated 4 April
2016, and to schedule the applicant, as in the past, to perform his services as set out
in annexure A to the agreement and to remunerate him accordingly in relation to the
remaining term of the agreement.
b. The respondent is ordered to pay the applicant’s costs including the costs
consequent upon the employment of two counsel.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
NAVSA ADP (Mathopo JA, Mokgohloa, Tsoka and Fourie AJJA concurring):
[1] The appellant, Mr Vuyo Mvoko, a journalist, applied to this court in terms of
s 17(2)(d) of the Superior Courts Act 10 of 2013 (the SC Act), for leave to appeal
against an order of the Gauteng Local Division, Johannesburg, which dismissed with
costs an application by him for specific performance of a written agreement
concluded with the respondent, the South African Broadcasting Corporation SOC
Limited (the SABC) - the state-owned national radio and television broadcaster
established in terms of the Broadcasting Act 4 of 1999 (the Act).
[2] The application for leave to appeal followed on a refusal by the court below to
grant such leave. This court referred the application for leave to appeal for oral
argument in terms of s 17(2)(d) of the SC Act and directed the parties to be ready, if
called upon to do so, to argue the merits of the appeal. We heard the application and
directed that the merits be argued as well. The history of the matter is set out in the
paragraphs that follow.
[3] The agreement underlying Mr Mvoko’s application in the court below made
provision for him to render professional television journalism services to the SABC.
His functions when scheduled, before a decision by the SABC to suspend his
services, included covering breaking news items and conducting specialist interviews
with, amongst others, Presidents and other heads of states. He also packaged news
stories which included researching, analysing and commentating on news items and
conducting interviews. Mr Mvoko was also responsible for anchoring, analysing and
commentating during live broadcasts. In addition he was responsible for covering
news in other countries. The agreement in question is dated 4 April 2016 and the
period for which it endures is 1 April 2016 to 31 March 2018. I shall in due course
deal with specific provisions of the agreement.
[4] From 2002 to 2006 Mr Mvoko was employed by the SABC as its Group
Political Editor. From 2011 until his application brought in the court below, he was an
independent contractor with the SABC in terms of written agreements including the
one which is at the centre of this appeal.
[5] At this stage it is necessary to set out the events leading up to the suspension
of Mr Mvoko’s services by the SABC. According to him the events which are set out
hereafter were a manifestation of manipulation by executives at the SABC to serve
narrow personal and political agendas and they demonstrate how, in breach of its
statutory and constitutional mandate, the SABC was stifling independent journalistic
thought and silencing critical voices. It was submitted before us that the actions
complained of were the very antithesis of a journalistic culture which enabled a free
flow of information independently conveyed to the public. Mr Mvoko’s case in the
court below, as will be more clearly demonstrated below, was that his services were
unlawfully terminated because he was seeking to hold the SABC to its constitutional
and statutory mandates. Put differently, his case was that he stood up to interference
in editorial decisions which impinged on journalistic independence.
[6] The first example provided by Mr Mvoko as an indication of SABC managerial
political interference with editorial decisions occurred during March 2016, shortly
after a television interview he had conducted with the former Public Protector, Ms
Thuli Madonsela, concerning racism in South Africa, was aired. The interview was
part of a programme called ‘On the Record’. It was the SABC’s custom to re-run the
programme by way of a broadcast the next day at 05h00. This did not occur. The
cancellation of the re-run was without any consultation or communication with Mr
Mvoko, who was the programme’s executive producer.
[7] Subsequently, Mr Mvoko was summoned to a meeting with two SABC
executives to whom he was accountable, namely Mr Nyana Molete and
Ms Nothando Maseko. The former informed him that management was intent on
cancelling ‘On the Record’ and was not willing to discuss the matter any further. On
a later date Mr Mvoko was told by Ms Maseko that the then group executive for
television news, Mr Jimi Matthews, was not pleased with the fact that Ms Madonsela
had been interviewed. Mr Mvoko notified viewers by way of his twitter account that
the program had been cancelled for reasons he was at that moment not willing to
disclose. His tweet apologised for the abrupt manner in which the program was
ended. Mr Molete was displeased with this notification and informed Mr Mvoko that
he was liable to be subjected to disciplinary action. However, Mr Mvoko was told that
if he signed a letter accepting that his tweet was inconsistent with the provisions of
the written agreement with the SABC, and if he acknowledged that the letter served
as a warning that a recurrence would lead to stringent action against him, no further
action would be taken against him. According to Mr Mvoko he reluctantly signed the
letter because, at that time, the agreement presently in issue was in the process of
being negotiated and he did not want to jeopardise the upcoming potential extension
of his contract.
[8] The second example of political interference in editorial decisions cited by
Mr Mvoko involved his television coverage of local government elections during
2016. Mr Mvoko described how, in his coverage of the launching of the manifesto of
the Democratic Alliance (DA), the official opposition in the National Parliament he
had mentioned that the DA believed the African National Congress (ANC), the ruling
party, was at its most vulnerable in certain metropolitan municipalities. Soon
thereafter the then acting political editor at the SABC, Ms Sophie Mokoena
approached him stating that Mr Motsoeneng, the Chief Operating Officer at the time,
objected to the fact that he had mentioned the ANC in relation to a DA rally. Mr
Mvoko was informed that ‘Mr Motsoeneng was watching and scrutinising “each and
every word”’ that he was uttering and that he should be careful on air.
[9] The third instance of political interference occurred during January 2016 when
Mr Mvoko interviewed the President of the Republic of South Africa and questioned
him about the dismissal of the former Minister of Finance, Mr Nhlanhla Nene. He did
this because, so he asserts, it was a burning public issue. The President replied to
the questions and the interview ended. Soon thereafter, Ms Maseko told Mr Mvoko
that she was under pressure not to air the interview, or to excise the part that related
to the dismissal of Mr Nene. Mr Mvoko responded by stating that other television
stations had conducted similar interviews without censorship.
[10] The fourth example provided by Mr Mvoko involved another interview by him
of the President, after the latter’s address on the State of the Nation. The interview
included questions concerning the Minister of Police in relation to Mr Robert McBride
and Mr Anwar Dramat, as well as questions concerning limitations on land ownership
by foreigners and whether that would have the effect of driving away potential
investors. Mr Mvoko was told later by Ms Maseko that those parts of the interview
relating to the land question and the Minister of Police had to be excised. Those
portions were subsequently not broadcast.
[11] Mr Mvoko was also aggrieved when the SABC adopted a policy in terms of
which footage of violent protests would not be shown on television, a decision which
resulted in the resignation of Mr Matthews. The SABC thereafter consented to an
order of the Gauteng Division, Pretoria, in terms of which it undertook not to enforce
the policy, pending ‘a full ventilation of the matter at a later stage’. Mr Mvoko took the
view that the adoption of the policy was a dramatic and heightened escalation of
political interference in editorial policy. I pause to record that the Independent
Communications Authority of South Africa later declared the policy unlawful.1
[12] As a result of the events set out in the preceding paragraphs, Mr Mvoko
decided it was time to take up the cudgels as a journalist, both in the interest of the
SABC and the public, and to offer his reflections in the media. On 6 July 2016 he
published an article in The Star, a newspaper with its principal circulation in
Johannesburg. It is that article which set off the events culminating in the litigation
leading to the present appeal. For that reason it is necessary to have regard to its
contents in some detail. The article was entitled ‘My hell at the SABC’ and it bore the
subtitle ‘In power mongers’ grip’. The first paragraph reads as follows:
‘The SABC has never been a paragon of a great anything. It has been a work-in-
progress, with degrees of success as generations of well-meaning South Africans
tackled the extraordinarily and complex task of undoing decades of apartheid misuse
of this national asset.’
It is necessary to record that the title of the article was provided by The Star itself.
[13] The article also referred to Mr Mvoko’s experience at the SABC concerning
the cancellation of ‘On the Record’, as noted above. He was critical of the SABC’s
Mr Motsoeneng and said the following concerning the organisation:
‘What cannot and should not be pawned, though, is the SABC. It’s too important an
institution for its integrity to be impugned, and for the intelligence of everyone associated
with it or the public that’s supposed to be benefiting from it to be undermined.’
[14] Mr Mvoko criticised the policy referred to above, namely, that violent images
would not be broadcast by the SABC. However, the part of the article that evoked
the most outrage on the part of the SABC, as was evident from the submissions
before us on its behalf, was the following:
‘We are saying there’s no point in doing the right thing by promoting women to leadership
positions – only to reduce them to policing duties, or walking around with their cellphones
glued to their ears as they take arbitrary instructions on who to put on air.’
This was construed by the SABC as a direct and vicious attack on Ms Maseko.
1 Established in terms of the provisions of the Independent Communications Authority of South Africa
Act 13 of 2000.
[15] Mr Mvoko was adamant that in writing the article he had the following
objectives: to offer his reflections on what was happening at the SABC in relation to
the erosion of editorial independence; to convey his own first-hand experience of that
erosion; to dispel myths about the goings-on at the SABC; and to remind the public
that there was still time to save the integrity of the SABC.
[16] On 7 July 2016, the day following the publication of the article, Ms Maseko
informed Mr Mvoko telephonically that he was required to collect a letter addressed
to him. Mr Molete handed him the letter and said: ‘Don’t crucify me. I just have to
give you this letter’. It is necessary to quote the relevant part of the letter:
‘It has come to management’s attention that you have allegedly been involved in acts of non-
compliance/contravention of your contract which conduct constitutes a material breach of the
agreement, relating to the following issues:
-
You have brought the name of the SABC into disrepute and also damaging the
image of the SABC with the comments/statements in the newspaper article of The Star
Newspaper dated 06 July 2016.
Management views your conduct in a very serious light and contemplates terminating the
agreement. However, you are requested to submit written representations as to why the
agreement should not be terminated and should you wish to do so, same have to be
submitted to writer hereof on or before close of business on Monday 11 July 2016 (16:00).
Furthermore, Management has resolved not to schedule you to render your services as the
Independent Contract until this matter is resolved.’
[17] Following on that letter Mr Mvoko’s legal representatives wrote to the SABC
demanding that he ‘be scheduled’ in terms of his written agreement with the SABC.
The SABC did not comply and Mr Mvoko then turned to the court below for relief.
The SABC, in resisting Mr Mvoko’s application contended, principally, that it was
misconceived in that the agreement on which he relied stipulated that it was the
SABC’s prerogative to engage Mr Mvoko’s services ‘as and when required’. The
SABC contended that the agreement itself recognised that Mr Mvoko had no right to
insist on being scheduled. Thus, so it was submitted, Mr Mvoko could not compel
specific performance. Before us the SABC persisted in that stance. As to the
suspension of his services, the SABC took the view that it was lawfully done since
the agreement provided that in performing his services he was prohibited from
engaging in any conduct, behaviour, utterances and the like that, in the reasonable
opinion of the SABC, had the effect of bringing the name of the organisation into
disrepute or impacting negatively on his relationship with colleagues and the SABC.
The publication of the article in The Star, in the view of the SABC, was a breach of
that contractual provision entitling the SABC to suspend his services.
[18] The SABC asserted that the scheduling of television programmes featuring Mr
Mvoko was within the control of Ms Maseko, who was the head of News Output, and
that Mr Mvoko is not the one who ultimately decides on whether a program is to be
aired. It was adamant that an independent contractor such as Mr Mvoko could not
dictate whether to feature television programmes. Moreover, it warned that if Mr
Mvoko were to be granted relief, the court ‘would in fact be prescribing to the
respondent what programmes should be featured on television, and who should
present them’. This warning to the court was dramatically presented as follows:
‘This Court would be dragged into the news room of the respondent.’
It was not for the court, so the SABC stated, to prescribe which means it should
employ in performing its functions.
[19] Furthermore, particularly in relation to Ms Maseko and Mr Molete, the SABC
submitted that the article destroyed the element of trust and good faith that was
necessary between them and Mr Mvoko. The depiction of Ms Maseko as a ‘useless
puppet’ was regarded as most offensive and it was contended that it would affect the
relationship of trust between her and Mr Mvoko. In dealing with the alleged attack on
Ms Maseko, counsel on behalf of Mr Mvoko submitted that the article should be
understood to reflect that he was concerned about black women being appointed to
executive positions merely as tokens subject to political control.
[20] It is especially disconcerting that the SABC deliberately chose not to respond
to Mr Mvoko’s detailed description of political interference in relation to editorial
comment and journalistic integrity. The following is what it restricted itself to:
‘These allegations, on the applicant’s case, are irrelevant to this application. I therefore do
not deal with them, and point out that that does not mean that the contentions made are
admitted. The contrary should be accepted. This urgent court is not the appropriate forum,
nor is it the appropriate time to engage in a debate as to the respondent’s editorial policies.’
This is an aspect to which I shall return in due course.
[21] The court below, in a brief judgment, considered the following clause of the
agreement to be pertinent:
‘Should either party terminate this agreement and the other dispute the terminating party’s
right to do so or in instances where the SABC conducts an investigation into irregularities
allegedly conducted by the independent contract, of the SABC shall have the right, pending
determination of the dispute or the outcome of the investigation, not to schedule the
independent contractor to render any services and may engage/use another service provider
to continue with the services.’ (Clause 13.2.)
The court considered that provision of the agreement alongside the very last
sentence of the letter by the SABC, referred to in para 16 above, which informed Mr
Mvoko that management had resolved not to schedule him ‘until the matter is
resolved’. In the court’s view Mr Mvoko’s suspension was temporary and not
permanent.
[22] As to Mr Mvoko’s constitutional challenge, which included his reliance on his
right to freedom of expression, the court below said the following:
‘The applicant’s Constitutional challenge flounders at the procedural level. The suspension
of the applicant’s services, as I have been at pains to observe, was temporary and not
permanent. The SABC’s letter, on which sole reliance is placed by the applicant, clearly
indicates, and, in specific terms, provides for an investigation into the appropriateness of the
STAR article. It would therefore be premature for this court to express any firm views let
alone decide on the Constitutionality of the views expressed in the STAR article in the face
of a final decision yet to be taken by the SABC whether or not to terminate the agreement at
the conclusion of its investigation. The same principles applicable to the requirement that
internal remedies ought to be exhausted prior to an approach to court, in my view, on a
parity of reasoning, with equal force apply here.’
The court went on to say:
‘Nothing of substance was advanced on behalf of the applicant that would entitle this court to
interfere with the SABC’s investigation prior to finally determining the fate of the agreement,
as set out in its letter.’
[23] Consequently, Mr Mvoko’s application was dismissed with costs including the
costs of two counsel, the taxation or payment of which was suspended, pending
finalisation of the SABC’s ‘determination of the dispute’. I proceed to consider
whether the approach of the court below was correct.
[24] In my view, one should start with a consideration of the relevant provisions of
the written agreement. The following all appear in the definition section of the
agreement:
(a) Clause 1.1.5 defines ‘independent contractor’ as:
‘[T]he Party whose name and details are reflected on page 1 and in the annexure attached
to this agreement and shall mean a natural and/or juristic person who is contracted by the
SABC to render specific services or to perform a particular task/specific programme etc in
return for an agreed contract fee . . . .’
(b) Clause 1.1.10 reads:
‘“Programme” shall mean, where applicable, the specific radio or television programme in
terms of which the Independent Contractor will be engaged to render services.’
(c) Clause 1.1.13 sets out the meaning of ‘services’ as:
‘[T]he specific services to be rendered or to perform a particular task/specific programme etc
that the Independent Contractor is engaged to provide to the SABC under and in terms of
this Agreement as depicted in the annexure(s) to this Agreement’.
[25] Annexure A of the agreement reads as follows:
‘ANNEXURE A
STATEMENT OF WORK
a) Services to be rendered:
o
Initiate and Cover News stories
o
Planning, Producing, as well as on air presentation for TV news
for specialist occasions such as National Days, eg June 16, Sona and
Elections
o
Packages for bulletins on some of the Major breaking stories
o
Drive the Editorial directions of such broadcast under guidance of
Head of TV News
o
Submit forward planning diaries for above programmes or
broadcasts
o
Use of official SABC Vehicles for coverage of news stories
o
Be available to travel for out of town and international broadcasts
o
S&T @ R319 per night will be paid by the SABC and Bed and
Breakfast only (Travel and accommodation daily per diem for services
rendered)
b) Contract fee to be paid
o
R5780.00
o
Per Shift
c) Performance Standards to be adhered to:
o
Form part of the Newsroom think tank by contributing to the
divisions overall editorial strategic direction
o
Avail yourself for live analysis
d) Division and cost centre:
o
TV NEWS
o
1479
e) Start date and End date of the Agreement:
o
01/04/2016
o
31/03/2018
f) Division specific requirements:
o
o
g) Possible misconduct as a basis to terminate the independent contractor’s agreement:
o
Bringing the SABC into disrepute;
o
Negligence in the execution of your duties;
o
Dishonesty;
o
Conflict of Interest;
o
Disruption of Relations;
o
Assault;
o
Reporting late for duty;
o
Not reporting for duty;
o
Committing a common/statutory law offence having an impact on
the contract and services rendered/to be rendered’
[26] Clause 2.5 provides:
‘The annexures to this Agreement form an integral part hereof and words and expressions
defined in this Agreement shall bear, unless the context otherwise requires the same
meanings in such annexures which do not themselves contain their own definitions.’
[27] Under the heading ‘Introduction’, clause 3.1 records the following:
‘The SABC wishes to engage the Independent Contractor to provide the Services on the
basis and due to the representation made by the Independent Contractor that the
Independent Contractor has the necessary ability, experience, resources and the capacity to
provide the Services.’
[28] Clause 5 sets out the obligations of the independent contractor. Clauses 5.1,
5.2 and 5.3 read as follows:
‘5.1 The Independent Contractor shall provide the Services strictly in accordance with the
Terms and Conditions contained in this Agreement and reflected in the Annexure.
5.2 The Services shall be performed in consultation, co-ordination and under the direction of
the Principal Client or his/her duly appointed nominee. It is understood that there will be no
supervision and control by the Principal Client during the course of delivery of the Services
by the Independent Contractor.
5.3 The Principal Client will provide a brief of the obligations to be performed, manage the
outcomes and provide adequate feedback on the outcome thereon.’
[29] Clause 5.4.3 prohibits the independent contractor from ‘conduct, behaviour,
utterances and the like that, in the reasonable opinion of the SABC, has the effect of
bringing the name of the SABC into disrepute or impacting negatively on the
relationship with colleagues and the Principal Client’. Significantly, in the agreement
in question, under a heading that states ‘for office use only’ the following appears:
‘Service to be Rendered: PLANNING & CONTRIBUTING EDITOR
Programme: NEWS
Nature of Contribution: PLANNING & CONTRIBUTING EDITOR
Method of Payment: MONTHLY IN ARREARS
Contract Period: 01/04/2016-31/03/2018’
[30] Clause 13.2 of the agreement provides:
‘Should either Party terminate this Agreement and the other dispute the terminating Party’s
right to do so or in instances where the SABC conducts an Investigation into irregularities
allegedly conducted by the independent contractor, the SABC shall have the right, pending
determination of the dispute or the outcomes of the Investigation, not to schedule the
Independent Contractor to render any Services and may engage/use another service
provider to continue with the Services.’ (My emphasis.)
[31] The clause on which particular reliance was placed by the SABC, is clause
3.4 which reads as follows:
‘The Independent Contractor will be engaged on an “as and when required” basis.’
[32] It should be borne in mind that it had been the practice, both in terms of the
present agreement and the one preceding it, for Mr Mvoko to be scheduled to
perform tasks in terms of annexure A. The scheduling appears to have been regular,
subject of course to necessary and lawful changes to programmes that fell within
management’s prerogative. The part of the agreement under the heading ‘for office
use only’ contemplates services to be regularly provided by Mr Mvoko as a planning
and contributing editor. The annexure, which the agreement specifically recognises
as an integral part thereof, clearly contemplates that Mr Mvoko would ‘form part of
the Newsroom think tank by contributing to the divisions overall editorial strategic
direction’. This is hardly a description that supports the SABC’s interpretation in
relation to the ‘as and when required’ clause. Clause 13.2, referred to in para 30
above, which gives the SABC the right ‘not to schedule’ the independent contractor,
pending a dispute in relation to the right to terminate the agreement, is in line with
that construction. One might rightly ask why one would need to terminate rather than
just not schedule an independent contractor’s services. It is the equivalent of ‘do not
call us, we will call you’, or, perhaps more accurately, ‘do not call us and we will not
call you’. All of this explains the practice in relation to the use by the SABC of Mr
Mvoko’s services, both in relation to the preceding and present agreement. The ‘as
and when required’ clause has to be read in the restricted manner referred to in the
second sentence of this paragraph. The principle of reading the clause within the
overall context and contemplating its purpose and business efficacy when applied to
the clause presently under consideration renders that result.2
[33] In light of the conclusion in the preceding paragraph there is no basis for the
warning sounded by the SABC to courts to avoid imposing themselves within the
SABC boardroom. If anything, for reasons that are set out hereunder, the SABC
should be careful not to be a law unto itself. It has to operate within its statutory
mandate and, like the rest of us, it has to conduct itself within constitutional
parameters.
2 See Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) para 26.
[34] The SABC’s reliance on clause 13.2 of the agreement read in conjunction with
clause 5.4.3 for its right to suspend Mr Mvoko is misplaced. Clause 13.2 requires an
investigation into irregularities on the part of the independent contractor pending the
conclusion of which the SABC is entitled to suspend. The difficulty regarding that
part of the SABC’s case is that its conduct, described in detail by Mr Mvoko and
which is unrefuted, is what brought it into disrepute. It behaved in a manner
reminiscent of an era which we all would much rather forget. It smacks of high-
handedness and of a lack of consideration of the SABC’s role as a national
broadcaster.
[35] In this respect, regard should firstly be had to the basic values and principles
governing public administration set out in s 195 of the Constitution which provides,
amongst others, that services must be provided impartially, fairly, equitably and
without bias, and that public administration must be accountable.3 In terms of
s 195(2) these principles apply to administration in every sphere of government,
organs of state and public enterprises. The South African Broadcasting System is
dealt with in the Act. The following appears at the commencement of Chapter II of
the Act:
‘This Chapter is of central significance to the Act, as it lays the basis that the South African
broadcasting system is owned and controlled by South Africans. The National Government,
acting through the Minister, is responsible for the achievement of this purpose and the
constitutional mandate of broadcasting policy development. Being empowered to act on
behalf of the nation, the Minister has the ultimate responsibility to fulfil certain obligations
relating to use, protection and access to broadcasting resources.’
Even more significantly, fundamental principles and interpretations are dealt with at
the commencement of the Act where the following appears:
‘This Chapter sets out the fundamental principles and objects of this Act. Freedom of
expression and the journalistic, creative and programming independence of the broadcasters
and independence of regulation are identified as guaranteed by the Constitution. These
principles recognise that the South African broadcasting system comprises public,
commercial and community elements which make use of the radio frequencies that are
3 Section 195(1)(d) and (f) of the Constitution.
public property and provides, through its programming, a public service necessary for the
maintenance of South African identity, universal access, equality, unity and diversity.’
[36] Section 3(5) of the Act provides, inter alia, that the programming provided by
the South African Broadcasting System must:
‘(a) be varied and comprehensive, providing a balance of information, education and
entertainment meeting the broadcasting needs of the entire South African population in
terms of age, race, gender, religion, interests and backgrounds;
(b) be varied and offer a range of South African content and analysis from a South African
perspective;
. . . .
(d) provide a reasonable, balanced opportunity for the public to receive a variety of points of
view on matters of public concern;
(e) provide a significant place for programmes produced by the independent production
sector.’
[37] The SABC is especially catered for in Chapter IV of the Act. Importantly,
s 6(4) which provides a charter for the SABC, reads as follows:
‘The Corporation must encourage the development of South African expression by providing,
in South African official languages, a wide range of programming that –
(a) reflects South African attitudes, opinions, ideas, values and artistic creativity;
(b) displays South African talent in education and entertainment programmes;
(c) offers a plurality of views and a variety of news, information and analysis from a South
African point of view;
(d) advances the national and public interest.’
Furthermore, s 6(8) provides:
‘The Corporation must develop a Code of Practice that ensures that the services and the
personnel comply with –
(a) the constitutional principle of equality;
(b) the equitable treatment of all segments of the south African population;
(c) the constitutional requirement of equitable treatment of all official languages;
(d) the rights of all South Africans to receive and impart information and ideas;
(e) the mandate to provide for a wide range of audience interests, beliefs and perspectives;
and
(f) a high standard of accuracy, fairness and impartiality in news and programmes that deal
with matters of public interest.’
[38] Section 10(1)(d) of the Act dictates that the public service provided by the
SABC must, inter alia, ‘provide significant news and public affairs programming
which meets the highest standards of journalism, as well as fair and unbiased
coverage, impartially, balance and independence from government, commercial and
other interests’.
[39] In South African Broadcasting Corporation Soc Ltd & others v Democratic
Alliance & others 2016 (2) SA 522 (SCA) (SABC v DA), this court said the following
in para 49 about the SABC:
‘It is important to emphasise that this case is about a public broadcaster that millions of
South Africans rely on for news and information about their country and the world at large,
and for as long as it remains dysfunctional, it will be unable to fulfil its statutory mandate.
The public interest should thus be its overarching theme and objective. Sadly, that has not
always been the case. Its Board has had to be dissolved more than once and its financial
position was once so parlous that a loan of R1 billion, which was guaranteed by the National
Treasury, had to be raised to rescue it.’
That case involved the legality of the appointment of Mr Motsoeneng who features in
the present case as well.
[40] The highest standards of journalism and of integrity in public administration
can rightly be expected of the SABC. The political interference complained of by Mr
Mvoko is, as already pointed out, uncontested. It is inexcusable and rather than
rendering Mr Mvoko liable to disciplinary action it calls for an enquiry into the conduct
of the SABC in its role as public broadcaster. The article in The Star was in the form
of a whistle blower exposing the ills at a national institution owned by all of us as
citizens. The criticism allegedly directed at Ms Maseko as a person who was being
politically manipulated by others and who responded to political instruction was
based on Mr Mvoko’s experiences at the SABC. His assertions in regard to
management at the SABC being politically controlled were not challenged. This
court, in SABC v DA described the SABC in much the same way as was done in the
introductory paragraph of the article in The Star.
[41] The long title of the Protected Disclosures Act 26 of 2000 (the PDA) reads as
follows:
‘To make provision for procedures in terms of which employees in both the private and the
public sector may disclose information regarding unlawful or irregular conduct by their
employers or other employees in the employ of their employers; to provide for the protection
of employees who make a disclosure which is protected in terms of this Act; and to provide
for matters connected therewith.’
Of course the PDA applies to employees and not independent contractors. However,
one might rightfully ask why an independent contractor whose professional
independence is threatened by irregular and unlawful conduct at a public
broadcaster and who has his own and the public’s interest at heart is precluded from
exposing irregular and unlawful conduct.
[42] A further problem for the SABC, insofar as the right to suspend is concerned,
is that a jurisdictional fact for its exercise is that an investigation has to be
conducted. The letter by the SABC suspending Mr Mvoko’s services, far from
contemplating an investigation, states a conclusion already reached by management
in relation to the alleged misconduct and then attempts to qualify it by requesting
written representations which is not of assistance to it in relation to the asserted right
to suspend. No indication is given of the form of the investigation and how the
question of the misconduct would ultimately be adjudicated.
[43] For all the aforesaid reasons it is clear that the court below erred in its
approach to the application by Mr Mvoko and that the appeal is liable to succeed.
The appropriate order is one that should not be beyond what is contemplated by the
agreement in question.
[44] 1. The application for leave to appeal is granted and the respondent is
ordered to pay the applicant’s costs.
2. The appeal is upheld with costs including the costs of two counsel.
3. The order of the court below is set aside and substituted as follows:
‘a. The respondent is directed to comply with the written agreement dated 4 April
2016, and to schedule the applicant, as in the past, to perform his services as set out
in annexure A to the agreement and to remunerate him accordingly in relation to the
remaining term of the agreement.
b. The respondent is ordered to pay the applicant’s costs including the costs
consequent upon the employment of two counsel.’
______________________
M S Navsa
Acting Deputy President
Appearances:
Counsel for Appellant:
L Sisilana (with him T Ngcukaitobi)
Instructed by:
Bowman Gilfillan Inc, Johannesburg
McIntyre & Van Der Post, Bloemfontein
Counsel for Respondent:
S Du Toit SC (with him S K Hassim SC and
S Kangangarara)
Instructed by:
Ncube Incorporated, Johannesburg
Phatshoane Henney 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
29 September 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.
Mvoko v SABC (1066/2016) [2017] ZASCA 139 (29 September 2017)
Today the Supreme Court of Appeal (SCA) granted Mr Vuyo Mvoko leave to appeal and went
on to uphold an appeal against an order of the Gauteng Local Division (High Court),
Johannesburg.
Mr Mvoko, a journalist, applied to the SCA in terms of s 17(2)(d) of the Superior Courts Act 10
of 2013 (the SC Act), for leave to appeal against an order of the High Court which dismissed
with costs an application by him for an order of specific performance of a written agreement
concluded with the respondent, the South African Broadcasting Corporation SOC Limited (the
SABC). The application for leave to appeal followed a refusal by the court below to grant such
leave. The SCA referred the application for leave to appeal for oral argument and directed the
parties to argue the merits of the appeal.
The issues on appeal arose within the context of the following facts: From 2002 to 2006 Mr
Mvoko was employed by the SABC as its Group Political Editor. From 2011 until his
application brought in the court below, he was an independent contractor with the SABC in
terms of written agreements, including the one which was at the centre of the appeal. On 7
July 2016, Mr Mvoko received notification that the SABC had suspended his services
because, so it was alleged, he had breached the agreement by bringing its name into
disrepute through his comments in a newspaper article entitled ‘My hell at the SABC’,
published in The Star Newspaper on 6 July 2016.
The true cause of Mr Mvoko’s suspension was a key point of contention between the parties.
On the one hand, the SABC viewed his publication in The Star newspaper as the primary
contravention of the contract, constituting a material breach of the agreement. On the other
hand, Mr Mvoko viewed it as the apex of a series of events indicating SABC managerial
political interference with editorial decisions, a stifling of independent journalistic thought, and
a breach of his right to freedom of expression. To Mr Mvoko, the publication of the newspaper
article did not constitute a breach of the agreement as he had sought thereby to hold the
SABC to its constitutional and statutory mandates, rather than bring its name into disrepute.
He thus argued that his services were unlawfully terminated and demanded to ‘be scheduled’
in accordance with the written agreement.
The SCA granted him leave to appeal and upheld his appeal. It set aside the order of the
court below and substituted it with an order in terms of which the SABC was ordered to
schedule his service for the remainder of the term of the agreement. The court held that the
SABC must conduct itself within constitutional parameters and its statutory mandate. It
reasoned that in terms of both the Constitution and the Act, the highest standards of
journalism and integrity in public administration can rightly be expected of the SABC. The
uncontested political interference complained of by Mr Mvoko was inexcusable, and rather
than rendering him liable to disciplinary action, it called for an enquiry into the conduct of the
SABC in its role as public broadcaster. Moreover, the court found that the jurisdictional facts
for the proper exercise of the right to suspend in terms of the contract were not present. |
1901 | non-electoral | 2011 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 682/10
In the matter between:
ELDACC (PTY) LTD
Appellant
and
BIDVEST PROPERTIES (PTY) LTD
Respondent
Neutral citation: Eldacc (Pty) Ltd v Bidvest Properties (Pty) Ltd (682/10)
[2011] ZASCA 144 (26 September 2011).
Coram:
CLOETE, VAN HEERDEN, CACHALIA and SERITI JJA
and PLASKET AJA
Heard:
12 SEPTEMBER 2011
Delivered:
26 SEPTEMBER 2011
Summary:
Contract: stipulatio alteri: legal relationship between
parties, discussed.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: South Gauteng High Court (Johannesburg) (Van der Linde
AJ sitting as court of first instance):
The appeal is dismissed with costs including the costs of two counsel.
______________________________________________________________
JUDGMENT
______________________________________________________________
CLOETE JA (VAN HEERDEN, CACHALIA and SERITI JJA and PLASKET
AJA concurring):
[1] The appellant, Eldacc (Pty) Ltd, entered into a written agreement of
lease in terms of which it let commercial property to Rennies Distribution
Services (Pty) Ltd for a period of ten years. Clause 35 of the agreement
contained an option to purchase the leased property. That clause began with
the heading: 'OPTION TO PURCHASE THE LEASED PREMISES'. It
comprised two parts. The first part, after the sub-heading 'OPTION', read as
follows:
'35.1.1 The LESSOR hereby irrevocably grants to the LESSEE or its nominee being
any subsidiary of the Bidvest Group Limited in existence as at the date of signature
hereof (hereinafter referred to as the LESSEE only for the purposes of this clause 35)
an option to purchase the PROPERTY from the LESSOR on the terms and
conditions contained in this clause. This clause constitutes a stipulatio alteri in favour
of the aforesaid nominee, the benefits of which the nominee may accept at any time,
subject to the provisions of clause 35.1.2 below.
35.1.2 If the LESSEE wishes to exercise the option, it shall do so by written notice to
that effect given to the LESSOR on or before 1 June 2007 at the LESSOR'S
ADDRESS. Should the LESSEE not exercise the option to purchase so afforded it on
or before 1 June 2007, then the option shall lapse.
35.1.3 In the event that LESSEE exercises the option, then the resulting sale will be
on the terms contained in this clause 35.'
There followed a number of clauses which set out these terms, under the sub-
heading 'SALE', which comprised the second part of the clause.
[2] Counsel for Eldacc accepted that the provisions of clause 35 quoted
above did indeed constitute a stipulatio alteri, and he cannot be fauIted for
doing so: Trever Investments (Pty) Ltd v Friedhelm Investments (Pty) Ltd
1982 (1) SA 7 (A) at 16D. In addition, it was common cause that Rennies
orally nominated the respondent, Bidvest Properties (Pty) Ltd (then known by
another name); that Bidvest was a subsidiary of the Bidvest Group Ltd and
was in existence at the date the lease agreement was signed; and that
Bidvest, within the time period laid down in clause 35.1.2, sent a letter signed
on its behalf to Eldacc exercising the option contained in clause 35.
[3] Eldacc purported to cancel the resulting agreement. Bidvest brought
motion proceedings in the South Gauteng High Court for specific performance
and ancillary relief. Van der Linde AJ granted the relief sought and refused
leave to appeal, which was subsequently granted by this court.
[4] The only argument persisted in on appeal by Eldacc was based on
clause 30 of the agreement between Eldacc and Rennies, which provided:
'No variation of the Agreement and of this clause 30 and no agreed cancellation of
the Agreement shall be of any force or effect unless reduced to writing and signed by
the authorized representatives of the Parties.'
Eldacc's argument was that its undertaking to Rennies comprised two parts:
(a)
an offer to sell the property on defined terms to Rennies or its nominee;
and
(b)
an agreement to keep the offer open for acceptance until the date
specified.
So far the argument is sound: this is the basis upon which Prof R G McKerron
explains the stipulatio alteri in his article 'The Juristic Nature of Contracts for
the Benefit of Third Persons' (1929) 46 SALJ 387.1 But the argument
continued that acceptance by Bidvest of the offer could not take place until it
1Prof McKerron's explanation has stood the test of time, as pointed out by Prof J C Sonnekus,
'Enkele opmerkings om die beding ten behoewe van 'n derde' 1999 TSAR 594 at 611 in fine.
had acquired Rennies' right to have the option kept open; the acquisition of
that right required it to be substituted for Rennies in clause 35 of the
agreement between Eldacc and Rennies; and as that substitution involved a
variation, it had to be in writing and signed by at least Eldacc and Rennies
because of the provisions of clause 30.
[5] The argument is unsound in law. Rennies had the right to compel
Eldacc to abide by its undertaking to keep the offer open in favour of its
nominee, both before and after the nomination: African Universal Stores Ltd v
Dean 1926 CPD 390 at 395. But the right that Bidvest had to accept the offer
was independent of such right. For that very reason, it was unnecessary for
Bidvest to acquire Rennies' right to protect the offer before Bidvest exercised
its right to accept the offer. Acquisition of the former was not a precondition for
the exercise of the latter.
[6] Eldacc's counsel repeatedly submitted that once the third party
(Bidvest) accepted the benefit (the offer to sell), the third party 'stepped into
the shoes' of the stipulator (Rennies) in the latter's agreement with the
promisor (Eldacc). This analysis is also unsound. There have been cases in
which this court has said that by accepting the promise made by the promisor,
the third party 'becomes a party to' the contract between the stipulator and the
promisor: McCullogh v Fernwood Estate Ltd 1920 AD 204 at 205-6
(summarising the effect of the decision in Tradesmen's Benefit Society v Du
Preez (1887) 5 SC 269); Joel Melamed & Hurwitz v Cleveland Estates (Pty)
Ltd; Joel Melamed & Hurwitz v Vorner Investments (Pty) Ltd 1984 (3) SA 155
(A) at 172E, 172I-in fine and 173B; Total South Africa (Pty) Ltd v Bekker NO
1992 (1) SA 617 (A) at 625F-G; Pieterse v Shrosbree NO & others; Shrosbree
NO v Love & others 2005 (1) SA 309 (SCA) para 9. But it has never been
suggested that the third party succeeds to the rights of the stipulator. On the
contrary, this court has made it clear repeatedly that the vinculum iuris or legal
bond created upon acceptance of the benefit by the third party, is between the
third party and the promisor.
[7] Innes CJ said in McCullogh at 206:
'The third person having once notified his acceptance and thus established a
vinculum juris between himself and the promisor would be liable to be sued, as well
as entitled to sue.'
[8] Schreiner JA said in Crookes NO & another v Watson & others 1956
(1) SA 277 (A) at 291B-F:
'[I]n the legal sense, which alone is here relevant, what is not very appropriately
styled a contract for the benefit of a third person is not simply a contract designed to
benefit a third person; it is a contract between two persons that is designed to enable
a third person to come in as a party to a contract with one of the other two2 (cf
Jankelow v Binder, Gering and Co 1927 TPD 364) . . . [T]he typical contract for the
benefit of a third person is one where A and B make a contract in order that C may
be enabled, by notifying A, to become a party to a contract between himself and A.
What contractual rights exist between A and B pending acceptance by C and how far
after such acceptance it is still possible for contractual relations between A and B to
persist are matters on which differences of opinion are possible; but broadly speaking
the idea of such transactions is that B drops out when C accepts and thenceforward
it is A and C who are bound to each other.'
(Although contained in a minority judgment, the passage quoted is not
inconsistent with the majority judgment; it has been generally accepted as a
correct statement of the law; and it has twice been approved by this court, in
the Joel Melamed & Hurwitz case at 172D-F and in the Total case at 625E-F.)
[9] Ponnan AJA said in the Pieterse case in paragraphs 9 and 10:
'9.
In such a case, the policy holder (the stipulans) contracts with the insurer (the
promittens) that an agreed offer would be made by the insurer to a third party (the
beneficiary) with the intention that, on acceptance of the offer by that beneficiary, a
contract will be established between the beneficiary and the insurer. What is required
is an intention on the part of the original contracting parties that the benefit, upon
acceptance by the beneficiary, would confer rights that are enforceable at the
instance of the beneficiary against the insurer, for that intention is at the "very heart
of the stipulatio alteri" (Ellison Kahn "Extension Clauses in Insurance Contracts"
(1952) 69 SALJ 53 at 56). Thus the beneficiary, by adopting the benefit, becomes a
2 See Mpakathi v Kghotso Development CC & others 2003 (3) SA 429 (W) paras 15 and 16.
The SCA on appeal made no finding on the conclusion reached by the court a quo applying
this dictum: 2005 (3) SA 343 (SCA) paras 6 and 7.
party to the contract (see Total South Africa (Pty) Ltd v Bekker NO 1992 (1) SA 617
(A) at 625D-G).
10.
On the death of the insured, provided that the nomination has not been
revoked during the insured's lifetime, any claim to the policy proceeds by the
beneficiary against the insurance company would be based on the contract of
insurance between the deceased and the insurance company. It is to the insurance
company and no one else that the beneficiary would have to look for payment.'
[10] In truth, there was no variation whatever of the agreement between
Eldacc and Rennies. What happened was exactly what was envisaged in
clause 35: Rennies nominated Bidvest, a subsidiary of the Bidvest Group Ltd
that was in existence as of the date of signature of the agreement; Bidvest
accepted the offer made by Eldacc; and there was a resulting sale by Eldacc
to Bidvest on the terms contained in clause 35.
[11] The appeal is dismissed with costs including the costs of two counsel.
_______________
T D CLOETE
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS:
R du Plessis SC (with him T Ohannessian)
Instructed by Pagel Schulenburg Inc, Bryanston
Symington & De Kok, Bloemfontein
RESPONDENTS:
M Kuper SC (with him W le Grange)
Instructed
by
Coetsee
Van
Rensburg
Inc,
Bryanston
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 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
ELDACC (PTY) LTD v BIDVEST PROPERTIES (PTY) LTD
1.
Eldacc (Pty) Ltd entered into a lease with Rennies Distribution Services (Pty) Ltd.
The lease contained a clause entitling Rennies or its nominee to purchase the leased property.
2.
Rennies nominated Bidvest Properties (Pty) Ltd, which exercised the option by
writing a letter to Eldacc. Eldacc argued that it was not competent for Bidvest to do so unless
it had taken over the rights of Rennies.
3.
The argument was rejected by the South Gauteng High Court and the judgment was
confirmed on appeal.
--ends-- |
553 | non-electoral | 2016 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 20816/2014
In the matter between:
ABRAHAM SNYERS
FIRST APPELLANT
KATRINA SNYERS
SECOND APPELLANT
and
MGRO PROPERTIES (PTY) LTD
FIRST RESPONDENT
MOUTON CITRUS (PTY) LTD
SECOND RESPONDENT
Neutral citation:
Snyers v Mgro Properties (Pty) Ltd (20816/2014) ZASCA 151
(30 September 2016)
Coram:
Mhlantla, Leach, Willis, Zondi and Mathopo JJA
Heard:
19 November 2015
Delivered:
30 September 2016
Summary:
Land – Extension of Security of Tenure Act 62 of 1997 (ESTA) – notice
given of eviction in terms of s 8 of ESTA not valid if given before CCMA makes
determination on labour dispute – failure to satisfy the requirements for a valid notice of
eviction in respect of an occupier previously employed by landowner – notice properly
given to spouse – right to family life in terms of s 6(2)(d) of ESTA prevents eviction of
one spouse while the other remains.
____________________________________________________________________
ORDER
____________________________________________________________________
On appeal from: Land Claims Court, Cape Town (Meer J sitting as court of first
instance):
1. The appeal is upheld with costs.
2. The order of the court a quo is set aside and is substituted with the following:
‗The application is dismissed with costs.‘
______________________________________________________________________
JUDGMENT
______________________________________________________________________
Mathopo JA (Mhlantla, Leach, Willis and Zondi JJA concurring):
[1] This appeal concerns the eviction, under the Extension of Security of Tenure Act
62 of 1997 (ESTA), of a farm worker and his family and whether the referral of a labour
dispute between the first appellant and the employer (first respondent) was still pending
when the employer issued and served a notice to vacate upon him in terms of s 8(3) of
ESTA. The Land Claims Court (Meer J) held that there was no proper dispute pending
before the Commission for Conciliation, Mediation and Arbitration (CCMA) and
dismissed the appellant‘s appeal. This appeal is with the leave of this court. At the
hearing of this matter counsel indicated to us that a similar matter likely to affect our
judgment, Klaase & another v Van der Merwe NO & others, was pending in the
Constitutional Court. Consequently we reserved judgment to await the outcome of that
matter. The Constitutional Court handed its judgment in Klaase1 on 14 July 2016 and
this judgment has been prepared with the benefit of its reasoning.
1 Klaase & another v Van der Merwe NO & others 2016 ZACC 17.
Background facts
[2] The facts giving rise to this appeal are as follows: During November 1981 the first
appellant, Mr Abraham Snyers (Snyers), commenced employment as a farm labourer at
Hexrivier Citrus for the previous owners of farm Houtkaprug, Citrusdal in the Western
Cape (the farm) which produces citrus fruits and tea. Snyers was subsequently
promoted to the position of senior foreman (‗senior spanleier‘) in terms of a written
contract which he entered into during February 1982. During 2000, he was transferred
to the farm where he acquired tenancy as a housing allowance stemming from his
employment. His contract of employment stipulated that his tenancy on the farm was
conditional to his continued employment and thus would terminate concurrently and
automatically with his employment. Snyers‘ wife, Mrs Katrina Snyers (the second
appellant) and their two children – one of whom is still in school – reside with him on the
farm through his tenancy.
[3] On 2 November 2010, Mgro Properties (Pty) Ltd and Mouton Citrus (Pty) Ltd, the
first and second respondents respectively, represented by Mr Johan Abraham Mouton
(Mouton), acquired ownership of the farm and concluded a new employment contract
with Snyers on 9 November 2010 in similar terms to those Snyers had concluded with
his previous employer. It was a term of their agreement that it would be terminated by
either party on four weeks‘ notice. Allied to this agreement was the housing agreement,
which was inextricably linked to the employment agreement in the sense that if the
employment contract terminates the housing agreement would likewise be terminated.
In that case Snyers and his family would be required to vacate the farm on two months‘
notice being given by the respondents (the owners).
[4] About a month later, on 17 December 2010, Snyers tendered his resignation to
the respondents in which he indicated that he would work until 17 January 2011. In it,
he cited inter alia: the respondents‘ management style and human relations on the farm
as his reasons for resigning. In essence the letter created the impression that Snyers
had felt in the circumstances of his work, that he could no longer contribute
meaningfully to his employment considering his many years of experience. The
respondents accepted his resignation.
[5] Four weeks later, on 13 January 2011, Snyers ceased working on the farm. On
the same day he referred a constructive dismissal dispute to the CCMA. The referral
form indicates that it was signed by Snyers at Citrusdal on 13 January 2011 and it
mentions that same date as the date upon which the dispute arose.2 However, quite
contrary to the aforementioned reasons given for his resignation, the nub of his referral
was that he had sought his pension proceeds in respect of his previous employment at
Hexrivier and he alleged that he had been induced by the respondents who had told him
that he could not access his pension proceeds unless he resigned. In the course of his
long service on the farm, beginning from Hexriver, Snyers had accrued a substantial
pension over the course of 29 years before the respondents became the owners of the
farm. His pension was carried over from his former employer. Rightly or wrongly he
entertained an apprehension that he might not get his pension moneys. In the referral
form to the CCMA, Snyers described the dispute as follows:
‗Ons het gewerk vir Hexrivier Sitrus. Plaas is oorgeneem deur Mouton Citrus. Ons moes ons
pensioenskema fondse ontvang het en was eerstens genome ons moet dit kry, maar is later
deur Mouton Citrus ingelig dat ons eers moet bedank voor ons ons geld kan kry.‘3
He went on as follows in relation to the internal grievance procedure he had taken
before making the referral to the CCMA:
‗Ek het eers met Hexrivier gepraat wat genoem het [dat] ons kan ons pensioenskema geld kry
omdat die twee polisse van mekaar verskil. Die eienaar Ouas Mouton het aan ons genoem dat
ons ons geld kan kry asook die kontak person van Verso. Ons is later deur Hennie die
personeel beampte asook die finansiele bestuurder meegedeel dat ons nie ons geld kon kry nie.
2 As shall be discussed more in detail later in the judgment, in terms of s 190(1) of the Labour Relations
Act 66 of 1995, the date of dismissal is the earlier of either the date on which the contract of employment
terminated (subsec (1)(a)); or the date on which the employee left the service of the employer (subsec
(1)(b)).
3 Loosely translated this stated: ‗We worked for Hexriver Citrus. The farm was taken over by Mouton
Citrus. We had to receive our pension scheme funds and were first told that we would receive them, but
later were informed by Mouton Citrus that we had to first resign before we could receive our money.‘ (My
translation)
Ek het hul vele male geraadpleeg en het hula an my genoem dat ek eers moet bedank voor ek
die voordeel van die polis kon kry.‘4
On any additional special features which the CCMA had to be made aware of, the
following was stated:
‗Ek het my pensioenskema geld nodig gehad. Die bestuurder en werkgewer het geweet dat ek
enigiets sou doen om net my geld in die hande te kon kry. Ek gereeld deur hul kantoor toe
geroep oor die aangeleentheid waar hul van my verwag het om te besluit. Hul motief was dus
van die begin af dat ek moet bedank om vir die pensioen te kon kwalifiseer dan sou hul nie
verder werk vir my meer het nie. Hul motief was dus om van my ontslae te raak en het hul
misbruik gemaak van die pensioenskema aangeleentheid.‘5
Finally, in relation to the outcome sought from the CCMA, the following was stated in
the referral form:
‗Mouton Citrus se personeel beampte en Henk du Plessis het my herhaalde kere kantoor toe
geroep en gevra of ek wil bedank. Ek wou nie bedank nie, maar wou net my pensioenskema
geld het. Ek het nie bedank om werk te verloor nie ek het bedank omdat ek aanhoudend hul
ingelig was dat ek moet besluit wat ek wil doen. Ek eis dus my werk terug.‘6
[6] On 7 March 2011 the respondents, purporting to act in terms of s 8(3) of ESTA,
served a notice on Snyers giving him a period of two months within which to vacate the
farm. Under ESTA, an owner‘s right to apply for eviction is dependent on a number of
4 Which may be translated thus: ‗I first spoke with Hexriver which mentioned that we could get our
pension scheme money because the two policies differed. The owner Ouas Mouton mentioned to us: that
we could get our money; as well as the contact person of Verso. We were later told by Hennie, the human
resources officer and financial manager, that we could not get our money. I have consulted them many
times and they called me in to inform me that I have to resign before I could get the pension proceeds.‘
(My translation.)
5 Which may be translated as follows: ‗I needed my pension scheme money. The employer knew that I
would do just about anything just so that I could get my money. I was often called to their office on the
matter where they expected me to decide. Their intention from the beginning was that I should resign in
order to qualify to have my pension and then they would no longer have me working for them anymore.
Their purpose was thus to get rid of me through their manipulation of the pension scheme issue.‘ (My
translation.)
6 Which may be translated: ‗Mouton Citrus human resources officer and Henk du Plessis called me
repeatedly to the office and asked if I would like to resign. I did not want to resign, but only wanted my
pension scheme money. I have not resigned to squander my job, I resigned because I was constantly
informed that I had to decide whether I wanted to do so. I therefore claim back my work.‘ (My translation.)
prerequisites, one of which is that the right of occupation should be validly terminated in
terms of s 8.7 Sections 8(2) and (3) of ESTA provide the following: 8
‗The right of residence of an occupier who is an employee and whose right of residence arises
solely from an employment agreement, may be terminated if the occupier resigns from
employment or is dismissed in accordance with the provisions of the Labour Relations Act [66 of
1996].
Any dispute over whether an occupier‘s employment has terminated as contemplated in
subsection (2), shall be dealt with in accordance with the provisions of the Labour Relations Act,
and the termination shall take effect when any dispute over the termination has been
determined in accordance with that Act.‘ (My emphasis.)
[7] The case made out in the CCMA referral form was thus that Snyers sought his
pension proceeds in respect of his previous employment at Hexrivier. He had initially
been advised that he would receive his pension proceeds in that regard, but he was
later informed by the respondents to first resign in order to receive his pension moneys.
The tenor of his referral suggests that the real reason for his resignation was that he
was told repeatedly by the respondents that this was the only way through which he
would access his pension.
[8] When the aforementioned notice to vacate was served on him as mentioned in
para 6 above, Snyers refused to vacate the premises contending that he was awaiting
the outcome of the dispute which he had referred to the CCMA.
7 Section 3(1) of ESTA provides that: ‗Consent to an occupier to reside on or use land shall only be
terminated in accordance with the provisions of section 8.‘ See also
8 Section 8 comprehensively sets out the requirements for termination of an occupier‘s right of residence.
In subsec (1) the following is inter alia provided: ‗[s]ubject to the provisions of this section, an occupier‘s
right of residence may be terminated on any lawful ground, provided that such termination is just and
equitable, having regard to all relevant factors and in particular to—
(a) the fairness of any agreement, provision in an agreement, or provision of law on which the owner or
person in charge relies;
(b) the conduct of the parties giving rise to the termination;
(c) the interests of the parties, including the comparative hardship to the owner or person in charge, the
occupier concerned, and any other occupier if the right of residence is or is not terminated;
(d) the existence of a reasonable expectation of the renewal of the agreement from which the right of
residence arises, after the effluxion of its time; and
(e) the fairness of the procedure followed by the owner or person in charge, including whether or not the
occupier had or should have been granted an effective opportunity to make representations before the
decision was made to terminate the right of residence.‘
[9] On 18 March 2011, when Snyers enquired from the CCMA about the progress of
his referral, he was informed that he had to apply for condonation as his referral had
been made out of time. However, in terms of the referral forms extensively quoted
above, Snyers had shown that the dispute had arisen on 13 January 2011, the same
day on which he had made the referral. This was thus the first time he had ever learned
of any delay in his referral. The relevant condonation application forms were then sent
to him and he was told to complete and send them back within two weeks. It is not clear
on what basis Snyers‘ referral was thought to have been out of time. Section
191(1)(b)(i) of the Labour Relations Act 66 of 1996 (LRA) provides that an aggrieved
employee should refer a dispute relating to unfair dismissal to the CCMA or bargaining
council having jurisdiction within 30 days;9 and s 190(1) of the LRA stipulates that the
date of dismissal is the earlier of either the date on which the contract of employment
terminated, or the date on which the employee left the service of the employer.10 It is
common cause, in this instance that without prejudging his labour dispute, Snyers‘
contract of employment was terminated on 17 January 2011 as a result of his
resignation letter. In consequence that he had time until 17 February 2011 within which
he could refer his dispute to the CCMA. Nevertheless, on the advice he had been given,
Snyers completed the condonation forms in which he stated that he only learnt upon
following up on his referral, that he had been 53 days late in making it. He further stated
in the condonation application that the reason for his unfair dismissal were his enquiries
relating to his pension. Quite clearly, given the fact that the referral was made on 13
January 2011, there was no need to file a condonation application. It would seem to me
9 Section 191(1) of the LRA provides in relevant part:
‗(a) If there is a dispute about the fairness of a dismissal . . . the dismissed employee . . . may refer the
dispute in writing to—
(i) a [bargaining] council, if the parties to the dispute fall within the registered scope of that council; or
(ii) the [CCMA], if no council has jurisdiction.
(b) A referral in terms of paragraph (a) must be made within—
(i) 30 days of the date of a dismissal or, if it is a later date, within 30 days of the employer making a final
decision to dismiss or uphold the dismissal‘.
10 Section 190 of the LRA provides:
‗Date of dismissal
(1) The date of dismissal is the earlier of-
(a) the date on which the contract of employment terminated; or
(b) the date on which the employee left the service of the employer.‘
that Snyers had no option but to accede to the advice given to him by the CCMA officer
concerned. As to why he was so advised, one can only speculate.
[10] The respondents, yet again, served a notice to vacate on Snyers during May
2011. He still persisted with his defence that the employer could not evict him while the
dispute before the CCMA was still pending. I shall revert to the validity of the notices to
vacate the premises later in the judgment.
Litigation background
[11] On 1 June 2011 the CCMA gave an order in respect of which it refused Snyers
condonation and ruled that it consequently lacked jurisdiction to entertain the dispute
which he had referred to it. Despite the order of the CCMA, Snyers persisted in his
refusal to vacate the farm and on 31 October 2011, the respondents further caused a
notice to vacate the farm to be served on Mrs Snyers. Although she had previously
been employed as a seasonal labourer on the farm during the period before the
respondents took ownership, she (together with their children) had been occupying the
farm through Snyers.11 The respondents thereafter proceeded with prescribed steps
including giving notice to the relevant local authority, the Cederberg Municipality,
Citrusdal, in terms of ESTA in order to evict Snyers and his family from the farm. The
respondents brought an eviction application in the Land Claims Court, Cape Town
which was served by the sheriff personally on both Snyers and Mrs Snyers on 31
January 2013.
[12] In the court a quo, the case advanced on behalf of Snyers was that he was
forced to resign under the pretext that he would receive his pension money. As a result
of that promise, so it was contended, he was constructively dismissed by the
respondents. Mouton, on behalf of the respondents, disputed Snyers‘ version. He stated
that it had been explained to Snyers that he would only be entitled to receive his
pension upon his death, resignation or dismissal. Mouton emphatically stated that
Snyers resigned of his own free will as was evidenced by the reasons Snyers had given
11 See para 22 below on Mrs Snyers‘ right to reside on the farm.
in his letter of resignation. But an examination of that letter indicates that the factors
alluded to by Snyers and its tone of exasperation12 were precursors leading up to
circumstances related to his allegations of constructive dismissal. Although nothing is
mentioned in his resignation letter itself about his being forced to resign, such
allegations were apparent in the CCMA referral and condonation application. The court
a quo (Meer J) accepted the version of Mouton on the probabilities and held that
because a dispute was referred to the CCMA late on 18 January 2011, there was no
dispute pending when the first notice to vacate and terminating the appellants‘ right of
residence was given on 7 March 2011. The LCC then held that both notices were, in
fact, valid.
[13] Before us, it was contended on behalf of the appellants that the Land Claims
Court (LCC) erred when it granted the order evicting Snyers because the notices to
vacate which had been served on him in terms of s 9(2)(b) of ESTA were invalid as they
preceded the termination of his right of residence in terms of s 8. The latter would only
take effect, so it was argued, when his labour dispute against the respondents was
determined by the CCMA on 1 June 2011. In support of his argument, counsel urged
upon us to accept that the referral was sent to the CCMA on 13 January 2011. Once
again, it was contended that the LCC erred when it held that the application was out of
time. We were urged to accept that, prior to determination of the condonation
application, any notice served during that period is defective and invalid and further that
no fault could be laid at the door of Snyers if the CCMA misplaced his original referral
form, which had been sent timeously to them.
[14] The nub of the appellant‘s case is that he was forced to resign under the pretext
that he would receive his pension money. As a result of that pressure or promise he
contends that he was constructively dismissed by the respondents and that as the
12 The resignation letter scribed in Afrikaans mentions the following as the reasons for Snyers‘
resignation: ‗Management style – I do not know with whom I work; Communication with people leaves
much to be desired; Unidirectional management – the team leader is not given an opportunity to select
and lead, he must just accept your unit and is treated like a mere worker on Mouton Citrus. New
employees are regarded as nothing by the management. There is no sense in submitting employees‘
ratio. There are just a lot of reasons, but in the circumstances I would just like to say that on Friday 17
December I am resigning. I shall thus work from 17 December 2010 to 17 January 2011.‘ (My translation.)
dispute was still pending before the CCMA, the respondents‘ notices of 7 March 2011
and May 2011 were invalid in terms of s 9(2)(b) of ESTA.
[15] The respondents contended that Snyers resigned of his own accord and disputed
the fact that he was forced to resign. The contention continued that the employer was
not aware nor advised of any pending dispute before the CCMA and thus that there had
been no dispute pending in terms of the LRA when the notices were served. This
submission found favour with the LCC, which held that it was incumbent upon Snyers to
make out a case that there was a dispute pending to bring s 8(3) into feature. The LCC
held that on the probabilities, Snyers had failed to discharge the onus that there was a
timeous referral of the dispute to the Labour Court.
The approach to ESTA
[16] As mentioned at the outset, we held back from delivering this judgment pending
Constitutional Court judgment in Klaase which is now to hand. At para 51 of that
judgment the Constitutional Court said the following on the interpretative approach to be
adopted in relation to ESTA:
‗As this Court said in Goedgelegen [2007 (6) SA 199; [2007] ZACC 12 (CC)], ESTA is ―remedial
legislation umbilically linked to the Constitution‖. It seeks to protect people, like Mrs Klaase,
whose tenure to land is insecure. In construing the provisions of ESTA a ―blinkered peering‖ at
the language in the legislation must be avoided. An approach that will ―afford [occupiers] the
fullest possible protection of their constitutional guarantees‖ must be adopted. This Court, in
Goedgelegen, per Moseneke DCJ, remarked:
―[W]e must seek to promote the spirit, purport and objects of the Bill of Rights. We must
prefer a generous construction over a merely textual or legalistic one in order to afford claimants
the fullest protection of their constitutional guarantees. In searching for the purpose, it is
legitimate to seek to identify the mischief to be remedied. In part, that is why it is helpful, where
appropriate, to pay due attention to the social and historical background of the legislation. We
must understand the provision within the context of the grid, if any, of related provisions and of
the statute as a whole, including its underlying values.‖‘ (Footnotes omitted.)
On this same score, in Molusi & others v Voges NO & others [2016] ZACC 6; 2016 (3)
SA 370 (CC), the Constitutional Court held the following (para 39):
‗The pre-reform-era land law reflected the common-law based view that existing land rights
should be entrenched and protected against unlawful intrusions. The land reform legislation –
ESTA in this case – changed that view. It highlights the reformist view that the common law
principles and practices of land law, that entrench unfair patterns of social domination and
marginalisation of vulnerable occupiers in eviction cases, need to change. ESTA requires that
the two opposing interests of the landowner and the occupier need to be taken into account
before an order for eviction is granted. On the one hand, there is the traditional real right
inherent in ownership reserving exclusive use and protection of property by the landowner. On
the other, there is the genuine despair of our people who are in dire need of accommodation.
Courts are obliged to balance these interests. A court making an order for eviction must ensure
that justice and equity prevail in relation to all concerned. It does so by having regard to the
considerations specified in section 8 read with section 9 as well as sections 10 and 11 which
make it clear that fairness plays an important role.‘ (My emphasis; footnote omitted.)
[17] In Molusi, the Constitutional Court when interpreting what is ‗just and equitable‘ in
terms of s 8 of ESTA held as follows in para 31:
‗The emphasis on the phrase ―just and equitable‖ in sections 8 and 11 of ESTA, to borrow the
words used by Sachs J in PE Municipality [v Various Occupiers [2004] ZACC 7; 2005 (1) SA
217 (CC)], ―underlines the central philosophical and strategic objective of [the Prevention of
Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE)]‖. The Court said
that the phrase makes it plain that the criteria to be applied are not purely of a technical kind
that flow ordinarily from the provisions of land law. It remarked:
―The emphasis on justice and equity underlines the central philosophical and strategic
objective of PIE. Rather than envisage the foundational values of the rule of law and the
achievement of equality as being distinct from and in tension with each other, PIE treats these
values as interactive, complementary and mutually reinforcing. . . .
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.‖
These remarks were made in a case relating to PIE but they are equally apposite in this case.‘
(Footnotes omitted.)
The validity of the notices to vacate
[18] In my view, when the respondents served the notice to vacate on Snyers, his
labour dispute in the CCMA had not yet been determined. That contravened the
provisions of s 8(3) requiring that where there is a labour dispute relating to the
termination of the occupier‘s right of residence, the termination only takes effect when
such dispute is determined in accordance with the LRA. In Karabo & others v Kok &
others 1998 (4) SA 1014 (LCC) para 14, the LCC, in a judgment by Gildenhuys J
(Moloto J concurring), correctly held that:
‗The right of residence of a person which arises solely from an employment agreement, may be
terminated if the person resigns from his or her employment or is dismissed in accordance with
the provisions of the Labour Relations Act. Any dispute over whether a person's employment
has been lawfully terminated must be dealt with in accordance with the provisions of the Labour
Relations Act, and the termination shall take effect only when that dispute has been determined
in accordance with that Act.‘ (Footnotes omitted.)
In para 15, the LCC went on to say:
‗In this case, there is a dispute over the validity of the termination of the employment of the
labourers, and this dispute is being dealt with under the provisions of the Labour Relations Act.
Because the dispute is still pending, the termination of the employment for purposes of the
Tenure Act [ESTA] has not yet taken effect.‘
And in para 22, the LCC held:
‗It was submitted on behalf of the [farm owners] that the phrase ―dispute over whether an
occupier‘s employment has been terminated as contemplated in [subsec] (2)‖ refers to a dispute
on whether a termination actually occurred, and not to a dispute over the lawfulness of the
termination. I do not agree with the submission. Subsection (3) refers back to [subsec]
(2), which provides that the right of residence of an occupier may be terminated if he or she
resigns or is dismissed in accordance with the provisions of the Labour Relations Act. The
termination of the occupier‘s employment as envisaged in [subsec] (3) must, under the
provisions of [subsec] (2), be in accordance with the provisions of the Labour Relations Act.
This means that the validity of the termination is at issue. It is so, as pointed out on behalf of the
[farm owners], that such an interpretation would oblige the owner of land to continue housing
dismissed employees while a dispute on the validity of the dismissal is pending. Such a dispute
may take months to resolve. The interpretation I have given to s[ubsec]s (2) and (3) is, in my
view, the only possible interpretation. I cannot deviate from it because the consequences are
alleged to be unfair. The fairness or otherwise of a legal provision is for Parliament to decide. I
should point out, however, that in suitable circumstances, the owner or person in charge may be
entitled to relief under s 15 of the Tenure Act.‘13
[19] Determination of the disputed labour matter is thus clearly a pre-condition for
terminating the occupier‘s right of residence under ESTA. Given the objects of ESTA
stated in the above dicta of the Constitutional Court, it necessarily follows where an
occupier‘s tenancy is subsidiary to his or her employment on a farm, that where a
dismissal is disputed, the dispute over its fairness must be finally determined before the
subsidiary tenancy is terminated. Accordingly, ESTA does not countenance notice given
in terms of s 8 while a labour dispute remains undetermined. The validity of the notice
so given is vitiated by the lack of determination of the labour matter. For these reasons,
and as s 9(2)(a) of ESTA makes the granting by a court of an eviction order subject to
the prior termination of the right of residence in terms of s 8,14 the notices given by the
respondents to Snyers were invalid and consequently vitiated the entire eviction
proceedings against him.
[20] As in the instant case, Klaase involved the eviction under ESTA of a farm
employee and his family from a farm where the employee had obtained tenancy on the
farm by virtue of his employment. The important difference between this case and
13 Section 15 of ESTA provides:
‗Urgent proceedings for eviction
(1) Notwithstanding any other provision of this Act, the owner or person in charge may make urgent
application for the removal of any occupier from land pending the outcome of proceedings for a final
order, and the court may grant an order for the removal of that occupier if it is satisfied that—
(a) there is a real and imminent danger of substantial injury or damage to any person or property if the
occupier is not forthwith removed from the land;
(b) there is no other effective remedy available;
(c) the likely hardship to the owner or any other affected person if an order for removal is not granted,
exceeds the likely hardship to the occupier against whom the order is sought, if an order for removal is
granted; and
(d) adequate arrangements have been made for the reinstatement of any person evicted if the final order
is not granted.
(2) The owner or person in charge shall beforehand give reasonable notice of any application in terms of
this section to the municipality in whose area of jurisdiction the land in question is situated, and to the
head of the relevant provincial office of the Department of Rural Development and Land Reform for his or
her information.‘
14 Section 9(2)(a) of ESTA provides that a ‗court may make an order for the eviction of an occupier if the
occupier‘s right of residence has been terminated in terms of section 8.‘
Klaase however – and on which the latter case turned – is that in Klaase the wife of the
farm employee had not been joined in the eviction proceedings and the court held that
further proceedings should be suspended, including the execution of the eviction order,
pending the determination of Mrs Klaase‘s rights in terms of ESTA; and that
proceedings in her case be consolidated with the eviction proceedings against her
husband.15
[21] The majority in Klaase (per Matojane AJ with whom Moseneke DCJ, Cameron,
Madlanga, Nkabinde JJ and Wallis AJ concurred) held inter alia that the spouse of the
farm labourer in similar circumstances to those of Mrs Snyers in this case had to be
joined in the proceedings because she had a ‗direct and substantial interest in the
litigation‘ in that she had continuously and openly lived on the farm for at least 30 years
with the farm owner‘s knowledge. The majority thus held that the LCC had failed to have
regard to the presumption in s 3(4) of ESTA, which applied in Mrs Klaase‘s favour (para
46);16 and that Mrs Klaase should have accordingly been joined in the eviction
proceedings against her husband (para 47). It was therefore held that she had made out
a case that she was an occupier in terms of ESTA and thus entitled to the protection
afforded by the Act (para 65). Consequently, the majority upheld Mrs Klaase‘s appeal.
However, it dismissed Mr Klaase‘s appeal and refused his application for the
suspension of the execution of the eviction order against him pending the determination
of Mrs Klaase‘s rights (para 68).
[22] The minority (per Zondo J with Mogoeng CJ and Van der Westhuizen J
concurring), on the other hand, held that in a situation where family members occupied
land ‗under‘ or ‗through‘ someone else; in event of the valid termination of the right of
the person under or through whom they occupy the land then the family members‘ right
to occupy also comes to an end (paras 84-86). For purposes of this judgment, both the
15 Klaase para 15.
16 Compare Zorgvliet Farm and Estate (Edms) Bpk v Alberts en ’n ander [2001] 1 All SA 62 (LCC) para
14, where Gildenhuys AJ had held: ‗Die tweede respondent woon in die huis uit hoofde van haar
familieverwantskap met die eerste respondent, en haar bewoningsreg hoef nie afsonderlik beëindig te
word nie.‘ Which essentially means that an occupier who lives together in a family relationship with a farm
labourer who has tenancy solely by virtue of employment on the farm need not have their right of
occupancy be terminated separately under s 8. This accords with the minority judgment in Klaase.
majority and minority judgments in Klaase acknowledge,17 as does ESTA (for example,
in the definition of ‗occupier‘ in s 1(1) and s 6(2) of ESTA),18 that there are two types of
occupiers: (a) occupiers whose tenancy arises solely from their employment; and (b)
those who have the ‗right in law‘ to reside on the land other than through employment.19
For those falling in the latter broad category, an occupier‘s right of occupation can be
self-standing and independent – arising from the presumptions created by s 3 in which
case the occupier would be presumed to have the consent of the owner and thus enjoy
the full breadth of ESTA‘s protection; Mrs Klaase was found by the majority in Klaase to
have fallen in this category.20 The occupier‘s right can also stem from someone else‘s
right of occupation which nevertheless falls short of the presumptions created in s 3.
Thus while full protection under ESTA would not extend to the secondary occupier
whose right stems from another person (the primary occupier), ESTA would afford full
protection to the primary occupier under or through whom the secondary occupier at
least procedurally would be afforded some protection.21
Mrs Snyers’ right to reside on the farm
[23] In relation to Mrs Snyers‘ situation it should be noted that the Constitutional Court
in Klaase referred with approval to its earlier decision in Hattingh & others v Juta [2013]
ZACC; 2013 (3) SA 275 (CC)22 in which it affirmed the right to family life under s 6(2)(d)
of ESTA and held it to be undesirable to separate families. On that basis alone despite
Mrs Snyers having been given proper notice terminating her right to occupy the farm in
terms of s 8, due to the irregular eviction proceedings brought against Snyers, if an
application for eviction were allowed against her, while it is refused against her
17 Paragraph 62-64 of the majority judgment and paras 84-87 in the minority judgment in Klaase.
18 Section 1(1) of ESTA defines an ‗occupier‘ as a person residing on land which belongs to another
person, with the latter person‘s ‗consent or another right in law to do so‘.
19 See the presumptions created by ESTA under s 3; compare with s 8(2). See also
Landbounavorsingsraad v Klaasen 2005 (3) SA 410 (LCC); and Venter NO v Claasen en andere
2001 (1) SA 720 (LCC) para 11.
20 Paragraphs 49-66. See also Conradie v Hanekom 1999 (4) SA 491 (LCC) para 20.
21 See s 12(1), (2) and (4) of ESTA and Ntai & others v Vereeniging Town Council & another 1953 (4) SA
579 (A) at 584-590. See the discussion of the meaning of ―consent‖ by Juanita M Pienaar & Koos Geyser
‗―Occupier‖ for purposes of the Extension of Security of Tenure Act: The plight of female spouses and
widows‘ (2010) 73 THRHR 248.
22 Paragraphs 62. See also para 121 of the minority judgment.
husband: the result would be to divide their family. In Hattingh, Zondo J held as follows
for the unanimous Court (paras 35 to 37):
‗it seems to me that the reference to ―family life‖ in section 6(2)(d) suggests that the purpose of
the conferment of this right on occupiers was to ensure that, despite living on other people‘s
land, persons falling within this vulnerable section of our society would be able to live a life that
is as close as possible to the kind of life that they would lead if they lived on their own land. This
means as normal a family life as possible, having regard to the landowner‘s rights. Most people
who fall into this section of our society are people who, under apartheid, were denied certain
rights by landowners including the right to live a normal family life with their family. In this
regard, I note that the preamble to ESTA does suggest that ESTA seeks to deal with a situation
that ―is in part the result of past discriminatory laws and practices‖. The object was to give this
section of our society human dignity which they were denied under apartheid.
Although I have said that the purpose of section 6(2)(d) was to ensure that, as far as
possible, an occupier could enjoy a life that is as much of family life as is possible, the extent of
that family life in any specific set of facts will depend upon striking a fair balance between
enabling the occupier to enjoy family life and enabling the owner of the land to also enjoy his
rights as owner of the land. In this regard I also note that the preamble to ESTA includes a
statement that it is desirable that ―the law should extend the rights of occupiers, while giving due
recognition to the rights, duties and legitimate interests of owners‖.
Living a family life may mean the occupier living with his or her spouse or partner only or
living with one or more of his or her children or with one or more members of his or her
extended family, depending upon what the result is when one balances the occupier‘s living with
any one or more of those persons with what the owner of the land is also entitled to. If, in a
particular case, the balancing produces a result that is unjust and inequitable to the owner of the
land, the occupier‘s right to family life may be appropriately limited. If, however, the occupier
were to live with his or her spouse or partner and with one, two or more of his children or other
members of the extended family and this would not result in any injustice or unfairness and
inequity to the owner of the land, the occupier would be entitled to live with those members of
his or her family. The purpose of section 6(2)(d) is to enable occupiers to live as full a family life
as possible including engaging in cultural activities or practices, as long as that does not offend
the equitable balance of the occupier’s rights with the rights of the landowner as required by
section 6(2)(d).‘ (My emphasis.)
In view of the authority of Hattingh, despite Mrs Snyers‘ notice of termination of her right
to reside on the farm having been validly given, it would infringe on Snyers‘ right to
family life and it would be undesirable to allow her eviction while Snyers remains on the
farm pending the determination of his labour dispute.
Order
[24] In the result, the following order is made:
1. The appeal is upheld with costs.
2. The order of the court a quo is set aside and is substituted with the following:
‗The application is dismissed with costs.‘
________________
R Mathopo
Judge of Appeal
APPEARANCES:
For Appellants:
P Hathorn SC
Instructed by:
J D van der Merwe Attorneys, Stellenbosch
Webbers, Bloemfontein
For Respondents:
D C Joubert SC
Instructed by:
Bresler & Partners, Citrusdal
Phatshoane Henney 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 September 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.
Snyers v Mgro Properties (Pty) Ltd (20816/2014) ZASCA 151 (30 September 2016)
The Supreme Court of Appeal (SCA) today handed down judgment in a matter concerning the
eviction, under the Extension of Security of Tenure Act 62 of 1997 (ESTA), of a farm worker and his
family and whether eviction notices were properly served on him while his labour dispute was still
pending in the CCMA.
The first appellant, Mr Abraham Snyers (Snyers), worked as a farm labourer on farm Houtkaprug,
Citrusdal in the Western Cape (the farm) which produces citrus fruits and tea. He had resided there
since February 1982 as part of his employment contract. He lived on the farm with the second
appellant, Mrs Snyers and their two children.
On 2 November 2010, the farm had new owners, Mgro Properties (Pty) Ltd and Mouton Citrus (Pty)
Ltd, the first and second respondents respectively. The new owners entered into a new employment
contract with Snyers on 9 November 2010 in similar terms to those which he had concluded with his
previous employer: namely, that his residence on the farm was linked to his continued employment,
and that in event of the termination of his employment contract, he and his family would be required
to vacate the farm on two months’ notice being given them by the respondents.
On 17 December 2010, Snyers resigned indicating that he would work until 17 January 2011. Four
weeks later, on 13 January 2011, Snyers stopped working on the farm and on that same day, he
referred a constructive dismissal dispute to the CCMA. Snyers’ case at the CCMA was that he was
forced to resign under the pretext that he would receive his pension money. On 7 March 2013, while
Snyers’ case was still pending at the CCMA, the respondents gave him written notice which gave him
a period of two months within which to vacate the farm. Snyers refused to vacate the farm saying that
he was awaiting the outcome of the dispute he had referred to the CCMA.
Land Claims Court (Meer J) (LCC) held that because the dispute referred to the CCMA by Snyers
had been late on 18 January 2011, that technically no dispute had been pending when the notice to
vacate the farm was given to him on 7 March. The LCC held therefore that the notice given to Snyers
was, in fact, valid.
The SCA found that when the respondents had served the notice to vacate on Snyers, his labour
dispute in the CCMA had not yet been determined and that that contravened the provisions of s 8(3)
of ESTA. Those provisions require that where there is a labour dispute relating to the termination of
the occupier’s right of residence, the termination only takes effect when such dispute is determined in
accordance with the LRA.
The SCA held that the determination of the disputed labour matter is clearly a pre-condition for
terminating a labour tenant’s right of residence under ESTA.
The SCA further held that given the objects of ESTA, where an occupier’s tenancy is subsidiary to his
or her employment on a farm, that where a dismissal must be finally determined before the subsidiary
tenancy can be terminated. The SCA accordingly found that the notices given by the respondents to
Snyers were invalid and consequently vitiated the entire eviction proceedings against him.
The SCA held in relation to Mrs Snyers that although she had been given proper notice to vacate the
farm, based on the undesirability to separate families and the right to family life protected in terms of s
6(2)(d) of ESTA due to the irregular eviction proceedings that were brought against Snyers, if an
application for eviction were allowed against her, while it is refused against her husband: the result
would be to divide their family.
Accordingly, the SCA upheld the appeal and substituted the order of the LCC with an order
dismissing the applications.
--- ends --- |
2914 | non-electoral | 2015 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 102/2014
Reportable
In the matter between:
EURO BLITZ 21 (PTY) LTD
First Appellant
IVO BRANCO
Second Appellant
and
SECENA AIRCRAFT INVESTMENTS CC
Respondent
Neutral citation:
Euro Blitz 21 v Secena Aircraft Investments CC (102/14)
[2015] ZASCA 21 (19 March 2015)
Coram:
Maya, Majiedt, Pillay and Mbha JJA and Mayat AJA
Heard:
23 February 2015
Delivered:
19 March 2015
Summary:
Interest –whether words 'calculated daily' in court order
implied compound or simple interest – compound interest claimable only in
defined circumstances.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from the South Gauteng High Court, Johannesburg (Kolbé AJ)
sitting as court of first instance):
1 The appeal is upheld with costs.
2 The order of the South Gauteng High Court, Johannesburg, is set aside and
replaced by the following order:
'(a) Having regard to the judgment of the additional Magistrate E de Klerk
dated 19 February 2009 under case number 2795/2006 in the Germiston
Magistrate's Court, it is declared that:
(i) Interest which accrues on the capital amount of R353 126.40 may
accumulate for the period from 24 March 2006 to 1 June 2012 and that the in
duplum rule is suspended for such period;
(ii) The in duplum rule shall apply to interest which accrues on the capital of
R353 126.40 and accrued interest thereon from 2 June 2012 to date of
payment;
(b) the respondents are to pay the applicant's costs of the application until
date of delivery of its answering affidavit, jointly and severally, the one paying
the other to be absolved;
(c) the remainder of the application is dismissed;
(d) the applicant is to pay the respondents' costs of the application incurred
after the delivery of its answering affidavit.'
______________________________________________________________
JUDGMENT
______________________________________________________________
Mbha JA (Maya, Majiedt and Pillay JJA and Mayat AJA concurring):
[1] This appeal concerns the proper interpretation and meaning of the
order given by the Magistrate's Court, Germiston (the trial court) dated 19
February 2009, in terms of which the appellants were ordered inter alia, to pay
the respondent '[i]nterest at prime plus 5% calculated daily with effect from
24/03/06 to date of payment.' The issue for determination is whether the
interest envisaged in the order was simple or compound interest. The South
Gauteng High Court, Johannesburg, (Kolbé AJ) held that the words
'calculated daily' in the order permitted no other interpretation but that interest
was to be compounded daily. This appeal is against that finding and is with
leave of the court a quo.
[2] The background facts to the dispute are largely common cause. The
respondent issued summons as plaintiff against the appellants as defendants
in the trial court, claiming payment of arrear rental plus interest and costs,
based on a written lease agreement entered into between the parties. The
prayer sought in the particulars of claim was specifically couched in the
following terms:
'1. Payment of the sum of R353 126.40.
2. Interest on the abovementioned amount at the rate of prime plus 5% (five per
centum) calculated daily per annum a tempora morae to date of final payment.
. . .'
[3] After hearing argument, the trial court was satisfied that the respondent
had proved on a balance of probabilities that the appellants had breached the
terms of the lease agreement. It accordingly granted judgment in favour of the
respondent in accordance with the prayer sought in its particulars of claim.
The question whether the interest payable on the capital amount constituted
compound interest was neither raised nor argued. The learned magistrate
merely based her order on the provision in clause 21.4 of the lease
agreement which states that:
'21.4 The Lessee consents and agrees to pay interest charges on all outstanding
amounts due to the Lessor arising from any matter whatsoever, calculated on a daily
basis, at a rate of prime plus 5%.'
[4] Subsequently, the respondent launched application proceedings in the
court a quo. It sought a declarator that the trial court's order in relation to the
interest payable, meant interest calculated at 5 per cent above the prime rate
of interest charged by Nedbank Limited from time to time from 24 March 2006
and that such interest shall be calculated daily and compounded daily from
the 24th March 2006 to date of payment.1 As alluded to earlier, the court a quo
granted the order sought holding that the words 'calculated daily' in the trial
court's magistrate's order meant that interest was to be compounded daily.
[5] The parties' respective contentions can be summarised as follows. The
appellants submitted that the word 'calculated' in the order must be ascribed
its ordinary grammatical meaning namely, to determine the interest for a
particular period mathematically, which in this case, is on a daily basis.
Furthermore, as there was no averment or evidence of an agreement that
interest shall be compounded, the order must accordingly be interpreted to
provide for simple interest only. The respondent contended on the other hand,
that if the intention was to calculate interest on the arrear amount outstanding
on a daily basis, then there was no need to include the words 'calculated daily'
in the order and that their inclusion can only mean that interest was to be
compounded on a daily basis.
[6] It is trite law that the rules applicable to the interpretation of documents
are applicable to the interpretation of a judgment or order of court. The test in
this regard is well established. If there is no uncertainty in the meaning of the
words the court's intention must be established primarily from the language of
the judgment or order as construed according to the usual, well-known rules
of interpretation of documents. If, however, uncertainty arises from the
judgment or order, regard may be had to extrinsic and the surrounding
circumstances relevant to the granting of such judgment or order such as the
evidence, both oral and documentary, that was adduced before the trial and
submissions made. Trollip JA described the test as follows in Firestone South
Africa (Pty) Ltd v Gentiruco A G:2
'First, some general observations about the relevant rules of interpreting a court's
judgment or order. The basic principles applicable to construing documents also
1 Prayer 1.4 of the Notice of Motion reads:
'1.4 Interest which accrues shall be interest at the rate referred to in 1.3 above calculated
daily and compounded daily from the 24th March 2006 to date of payment.'
2 Firestone South Africa (Pty) Ltd v Gentiruco A G 1977 (4) SA 298 (A) at 304D-H.
apply to the construction of a court's judgment or order: the court's intention is to be
ascertained primarily from the language of the judgment or order as construed
according to the usual, well-known rules. See Garlick v Smartt and Another, 1928
A.D. 82 at p. 87; West Rand Estates Ltd. v New Zealand Insurance Co. Ltd., 1926
A.D. 173 at p. 188. Thus, as in the case of a document, the judgment or order and
the court's reasons for giving it must be read as a whole in order to ascertain its
intention. If, on such a reading, the meaning of the judgment or order is clear and
unambiguous, no extrinsic fact or evidence is admissible to contradict, vary, qualify,
or supplement it. Indeed, it was common cause that in such a case not even the
court that gave the judgment or order can be asked to state what its subjective
intention was in giving it (cf. Postmasburg Motors (Edms.) Bpk. v Peens en Andere,
1970 (2) S.A. 35 (N.C.) at p. 39F-H). Of course, different considerations apply when,
not the construction, but the correction of a judgment or order is sought by way of an
appeal against it or otherwise – see infra. But if any uncertainty in meaning does
emerge, the extrinsic circumstances surrounding or leading up to the court's granting
the judgment or order may be investigated and regarded in order to clarify it; for
example, if the meaning of a judgment or order granted on an appeal is uncertain,
the judgment or order of the court a quo and its reasons therefor, can be used to
elucidate it. If, despite that, the uncertainty still persists, other relevant extrinsic facts
or evidence are admissible to resolve it. See Garlick's case, supra, 1928 A.D. at p.
87, read with Delmas Milling Co. Ltd. v Du Plessis, 1955 (3) S.A. 447 (A.D.) at pp.
454F-455A; Thomson v Belco (Pvt.) Ltd. and Another, 1960 (3) S.A. 809 (D).'3
[7] In my view and having regard to the above rule of interpretation, the
word 'calculated' in the trial court's order pertaining to interest, must be given
its grammatical and ordinary meaning, unless that would result in some
absurdity, repugnancy or inconsistency with the rest of the order. To
'calculate' means to '[e]stimate or determine by arithmetical or mathematical
reckoning; estimate or determine by practical judgement or on the basis of
experience'.4
3 Van Rensburg & another NNO v Naidoo & others NNO; Naidoo & others NNO v Van
Rensburg NO & others 2011 (4) SA 149 (SCA) para 42.
4 Shorter Oxford English Dictionary 6 ed vol 1 (2007).
[8] To 'capitalise' on the other hand means to 'convert into a capital sum'.5
Needless to say, the term capitalisation of interest is interchangeable with the
expression compounding of interest.6 Thus 'compound interest' is defined as
'reckoned on the principal together with the accumulated unpaid interest'.7
This must be contrasted with simple interest, which is reckoned or determined
on the principal or capital sum.
[9] As can clearly be seen, 'capitalised' and 'compound' on the one hand
bear a different meaning to the word 'calculated'. In terms of its definition,
capitalisation of interest, is no more than an accounting exercise which is
designed to simplify the calculation of compound interest, in respect of which
the interest's identity remains intact. In other words the concept is merely
concerned with what is to be done with the interest after it has been
calculated. Thus, it is quite possible that in certain circumstances
capitalisation might amount to a novation thereby converting the interest
element into capital.8 However 'calculated' only refers to the period or method
of calculating interest on the capital amount.9 The calculation will be in respect
of either simple or compound interest which may be done on an annual,
monthly or as in this case, on a daily basis. There is accordingly a clear
distinction between a method of calculation of interest on the one hand, and
the method of accounting for interest after its calculation on the other.
[10] Based on the aforegoing, it follows that the respondent's contention
that the words 'calculated daily' in the order envisaged that interest is to be
compounded daily, is legally untenable and cannot be sustained. In my view,
the fact that the respondent sought an order declaring that the interest must
be 'calculated daily and compounded daily' (emphasis added) is an implicit
concession on the respondent's part that these are two distinctly different
concepts which cannot have the same meaning.
5 Shorter Oxford English Dictionary (supra).
6 Commercial Bank of Zimbabwe Ltd v M M Builders & Suppliers (Pvt) Ltd and three similar
cases 1997 (2) SA 285 (ZH) at 308C.
7 Shorter Oxford English Dictionary (supra).
8 Pfeiffer v First National Bank of SA Ltd 1998 (3) SA 1018 (SCA) at 1032B.
9 Commercial Bank of Zimbabwe (supra) at 308F-310B.
[11] The legal principles governing the applicability of compound interest
also militate against the interpretation which the respondent seeks to have
attached to the clause in question, especially when it is compared against
simple interest. As a starting point, it is accepted generally that where in a
written agreement, compound interest is not expressly provided for, only
simple interest was due. In Mayfair South Townships (Pty) Ltd v Jhina,10
clause 3 of the agreement read:
'The balance from time to time owing by the purchaser to the seller in respect of the
purchase price shall bear interest at the rate of 9.75 per cent per annum, provided
that the seller in its discretion may at any time increase such rate to a rate not
exceeding the maximum rate which from time to time is charged by any building
society in respect of a loan secured by a first mortgage bond over land. Such interest
shall be calculated monthly in advance and the payment of interest shall be included
in the aforesaid monthly payments, which payments shall in the first instance be
allocated to the payment of interest and thereafter in deduction of the purchase price'
In deciding whether or not compound interest was intended, Flemming J held
that the clause as phrased, could not have provided for anything more than
simple interest.
[12] It is also trite law that compound interest is claimable only in certain
defined circumstances, namely, where parties agree to pay compound
interest;11 if the obligation to pay interest is alleged,12 and if it is established by
evidence that a universal custom of lessors charging compound interest on
arrear rentals is uniformly and universally observed throughout leasing
practices in South Africa.13 The respondent has failed to establish any of
these grounds. Further, at the trial the respondent never attempted to raise or
argue any of these points. Significantly, the appellants' version in this respect
was not disputed in the respondent's replying affidavit.
10 Mayfair South Townships (Pty) Ltd v Jhina,1980 (1) SA 869 (T).
11 Davehill (Pty) Ltd v Community Development Board 1988 (1) SA 290 (A) at 298H-J where
Smalberger JA said: '[c]ompound interest (interest on interest) may be expressly stipulated for
by agreement, is commonplace today in commercial and financial dealings and has been
sanctioned by our courts for many years'.
12 L T C Harms, Amler's Precedents of Pleadings, 7 ed at 240.
13 Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (in liquidation) 1998
(1) SA 811 (SCA) at 829F.
[13] As stated earlier, the order of the trial court was granted in accordance
with the respondent's prayer as set out in the particulars of claim and also in
accordance with clause 2.14 of the lease agreement. The words 'compounded
daily' do not appear in this clause nor in the trial court's order. In light of the
aforegoing, the court a quo erred in finding that the words 'calculated daily'
intended that interest was to be compounded daily. The separate issue
pertaining to the applicability of the in duplum rule was conceded in the court
a quo and for that reason was not considered in this court.
[14] In the circumstances I make the following order:
1 The appeal is upheld with costs.
2 The order of the South Gauteng High Court, Johannesburg, is set aside and
replaced by the following order:
'(a) Having regard to the judgment of the additional Magistrate E de Klerk
dated 19 February 2009 under case number 2795/2006 in the Germiston
Magistrate's Court, it is declared that:
(i) Interest which accrues on the capital amount of R353 126.40 may
accumulate for the period from 24 March 2006 to 1 June 2012 and that the in
duplum rule is suspended for such period;
(ii) The in duplum rule shall apply to interest which accrues on the capital of
R353 126.40 and accrued interest thereon from 2 June 2012 to date of
payment;
(b) the respondents are to pay the applicant's costs of the application until
date of delivery of its answering affidavit, jointly and severally, the one paying
the other to be absolved;
(c) the remainder of the application is dismissed;
(d) the applicant is to pay the respondents' costs of the application incurred
after the delivery of its answering affidavit.'
_____________________
B H MBHA
JUDGE OF APPEAL
APPEARANCES:
For appellant:
H P van Nieuwenhuizen (1st & 2nd)
Instructed by:
David Kotzen Attorneys, Edenvale
Lovius-Block Attorneys, Bloemfontein
For respondent:
G Kairinos SC
Instructed by:
Marais Stephens Attorneys, Sandton
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
19 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.
Euro Blitz 21 (Pty) Ltd & another v Secena Aircraft Investments CC (102/14) [2015]
ZASCA 21 (19 March 2015)
MEDIA STATEMENT
Today the Supreme Court of Appeal (SCA) upheld the appellants' appeal and set aside the order of
the South Gauteng High Court, Johannesburg.
The issue for determination was whether the interest envisaged in the order of the trial court
constituted simple or compound interest.
The respondent issued summons against the appellants in the trial court, claiming payment of arrear
rental plus interest and costs, based on a written lease agreement entered into between the parties.
After hearing argument, the trial court was satisfied that the respondent had proved on a balance of
probabilities that the appellants had breached the terms of the lease agreement. It accordingly
granted judgment in favour of the respondent and the appellants were ordered inter alia, to pay the
respondent interest at prime plus 5 per cent calculated daily with effect from 24 March 2006 to date of
payment. Subsequently the respondent launched application proceedings in the South Gauteng High
Court, Johannesburg, seeking a declarator that the trial court’s order in relation to interest payable
meant interest calculated at 5 per cent above the prime rate of interest and that such interest was to
be calculated daily and compounded daily. The high court held that the words 'calculated daily' in the
order permitted no other interpretation than that interest was to be compounded daily.
The appellants submitted that the word 'calculated' in the order must be ascribed its ordinary
grammatical meaning. Furthermore, as there was no averment or evidence of an agreement that
interest shall be compounded, the order must accordingly be interpreted to provide for simple interest
only. The respondent contended on the other hand, that if the intention was to calculate interest on
the arrear amount outstanding on a daily basis, then there was no need to include the words
'calculated daily' in the order and that their inclusion could only mean that interest was to be
compounded on a daily basis.
The SCA held that it was trite law that the rules applicable to the interpretation of documents were
applicable to the interpretation of a judgment or order of court. It noted that if there was no uncertainty
in the meaning of the words, the court's intention must be established primarily from the language of
the judgment or order as construed according to the usual, well-known rules of interpretation of
documents.
The SCA held, in addition, that having regard to the rules of interpretation, the word 'calculated' in
the trial court's order pertaining to interest, must be given its grammatical and ordinary meaning,
unless that would result in some absurdity, repugnancy or inconsistency with the rest of the order. It
therefore followed that the respondent's contention that the words 'calculated daily' in the order
envisaged that interest was to be compounded daily, was legally untenable and could not be
sustained.
The SCA noted further that it was also trite law that compound interest was claimable only in certain
defined circumstances, namely, where parties agreed to pay compound interest; if the obligation to
pay interest was alleged, and if it was established by evidence that a universal custom of lessors
charging compound interest on arrear rentals was uniformly and universally observed throughout
leasing practices in South Africa. In this regard, the court found that the respondent failed to establish
any of these grounds and at the trial the respondent never raised or argued any of these points.
--- ends --- |
178 | non-electoral | 2017 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 183/17
In the matter between:
MOHAMED’S LEISURE HOLDINGS (PTY) LTD
APPELLANT
and
SOUTHERN SUN HOTEL INTERESTS (PTY) LTD
RESPONDENT
Neutral Citation:
Mohamed’s Leisure Holdings (Pty) Ltd v Southern Sun
Hotel Interests (Pty) Ltd (183/17) [2017] ZASCA 176
(1 December 2017)
Coram:
Shongwe AP, Willis and Mathopo JJA and Meyer and
Ploos van Amstel AJJA
Heard:
21 November 2017
Delivered:
1 December 2017
Summary:
Contract law – cancellation clause not unfair or
unreasonable – doctrine of pacta sunt servanda to be enforced and applied –
impermissible to infuse principles of ubuntu and good faith in the
circumstances.
______________________________________________________________
ORDER
______________________________________________________________
On appeal from: Gauteng Local Division, Johannesburg (Van Oosten J,
sitting as court of first instance):
1 The appeal is upheld with costs, such costs to include the costs of two
counsel.
2 The order of the high court is set aside and substituted with the following:
„2.1 The respondent, together with all those persons who occupy the
property fully described as Remaining Extent of Erf 13164 Cape Town
(hereinafter referred to as „the Property‟) by virtue of the respondent's
occupation thereof are to vacate the property, on or before 31 March 2018.
2.2 Should the respondent or any persons occupying the property through
or under it fail to comply with the order granted in accordance with the
order in par 2.1 above, that the sheriff of the above Honourable Court or his
lawful deputy is authorised forthwith to evict the respondent and all
persons/entities occupying the property through/under it.‟
______________________________________________________________
JUDGMENT
______________________________________________________________
Mathopo JA (Shongwe AP, Willis JA and Meyer and Ploos van Amstel
AJJA concurring):
[1] This is an appeal against the judgment of the Gauteng Local Division of
the High Court, Johannesburg (Van Oosten J) (the high court). It arises from
an application in which the appellant, Mohamed‟s Leisure Holdings (Pty) Ltd,
the owner and lessor in terms of a written lease agreement (the agreement) of
immovable property known as Remaining Extent of Erf 13164, sought an
order for the eviction of the respondent, Southern Sun Hotel Interests (Pty)
Ltd. The eviction was sought on the basis that the respondent had breached
clause 20 of the agreement by failing to make payment of the rental on due
date. Although the high court accepted that the respondent had breached the
agreement, it declined to grant an order for eviction. It reasoned that the
implementation of the cancellation clause would be manifestly unreasonable,
unfair and offend public policy. In doing so it concluded that the common law
principle, pacta servanda sunt, should be developed by importing or infusing
the principles of ubuntu and fairness in the law of contract. The appeal against
its order is with the leave of the high court.
[2] I pause to state that the high court in arriving at its decision was aware
of the decision of this court in Venter v Venter 1949 (1) SA 768 (A), which
dealt with the principle of pacta sunt servanda. The high court held that the
judicial precedent set in Venter is no longer good law and cannot be applied in
the new Constitutional era. More about this aspect will follow later in the
judgment.
[3] At this stage it is necessary to set out in the paragraphs that follow the
relevant factual background underpinning the respondent‟s defence.
[4] The original lease agreement between the parties was concluded in
1982 between the parties‟ predecessors namely, Cape Town Holiday Inn (Pty)
Ltd, as the lessor and Rennies Hotel and Liquor Holdings Ltd, as the lessee.
The agreement was varied by the parties over the years. There were about
four subsequent written agreements entered into, varying the identities of the
parties, duration of the agreement and the amount of rental payable. On 18
July 1996 the appellant purchased the property and it became the registered
owner of the premises. On or about 1 November 2001, the appellant
concluded a written lease agreement with the respondent as the lessee in
respect of the property. The new period of the agreement commenced on 1
January 2002 until 31 December 2011, with an option to renew the agreement
for a further period of 10 years, 1 January 2012 to 31 December 2021, which
option had been exercised. The rental payable was in the amount of
R566 988.38 (inc VAT), being the rental payable during December 2011 and
subsequently escalated at the rate of 7% per annum, compounded, with effect
from 1 January 2012 and thereafter on 1 January of each successive year of
the new option period.
[5] It was a material term of the agreement that should the respondent fail
to pay the rental on due date, then the appellant would be entitled to cancel
the lease and retake possession of the property. It is common cause that the
respondent and its predecessors have been occupying the premises for
purposes of operating commercially as a hotel since 1982. This business has
been functioning for an uninterrupted period of approximately 35 years. The
respondent‟s hotel is operated and managed as part of eighteen Garden
Court branded hotels in what is known as „the hospitality industry‟ and it forms
part of the greater Tsogo Sun Hotel Group brand of hotels. The nature of the
business of the respondent is hotel accommodation across all market
segments, namely corporate, government, leisure, standard tour operators,
aircrew, conferencing and food and beverage services.
[6] Clause 4.5 of the agreement which deals with the respondent‟s
obligation to pay rent provides:
„4.5 The LESSEE shall make monthly provisional rent payments to the LESSOR by
not later than the seventh day of each month…‟
The appellant‟s right to terminate the agreement and take possession of the
property is set out in clause 20 of the agreement headed „Breach‟ and it
provides:
20.1
Should the LESSEE
20.1.1 fail to pay the rent on due date; or
20.1.2 contravene or permit the contravention of any one or more of the conditions of
this agreement and fail to remedy such breach within 30 (THIRTY) days after receipt
by it of notice in writing calling upon it to remedy such breach; or
20.1.3 allow a judgment against it to remain unsatisfied or unopposed for a period of
seven days:
Then the LESSOR shall be entitled to terminate this lease and to take possession of
the property.‟
[7] During the period of the lease the respondent maintained regular and
prompt payment of the rental in terms of the agreement. However, in June
2014 the respondent failed to make payment on the 7th, as stipulated in the
agreement. On 20 June 2014 when payment was not forthcoming, the
appellant wrote a letter to the respondent and afforded it a period of five days
within which to remedy the breach. In that letter the appellant pertinently
warned the respondent that should it fail to pay rent on due date in the future,
no notice to remedy the breach would be given and the agreement will be
cancelled forthwith and the respondent will be required to vacate the premises
with immediate effect. On 23 June 2014 the respondent‟s bankers, Nedbank,
admitted that it was at fault in not transmitting the payment to the appellant on
due date. The letter stated as follows:
„We wish to confirm that non-payment of the rental amount stated herein was caused
as a result of a change in Nedbank processes which impacted the payment run for
01 June 2014 and by no omission of the client.‟
[8] According to the respondent, as a result of this error, during the next
period of three months ie July to September 2014, it monitored its bank
statements by ensuring that future payments were debited from its account
promptly by the 7th of each month. During the month of October, the rental
was debited from the respondent‟s account on 6 October 2014. However, on
7 October 2014, through no fault of the respondent, Nedbank again omitted to
transfer the rental amount due to the appellant. The explanation given by
Nedbank was that the funds were credited into a wrong account instead of the
appellant‟s account. As a result of this breach, the appellant's attorneys
invoked the provisions of clause 20 of the agreement and addressed a notice
of cancellation of the lease agreement to the respondent on 20 October 2014
and afforded it until 31 October 2014 to vacate the premises. Once again, as
in the month of June, Nedbank accepted responsibility for the delay and
stated that due to a „processing error‟, it transferred the money from the
respondent's account, not to the appellant's account but to an incorrect bank
account. The rent was eventually paid on 21 October 2014. In an attempt to
demonstrate its bona fides the respondent transferred an amount of
R3 844.65 representing interest to the appellant's account. In response to the
cancellation of the lease and the threatened eviction, the respondent‟s
attorney informed the appellant's attorneys that cancellation of the lease was
unreasonable because the breach occurred as a result of its banker‟s error
and contended that the purported cancellation was contrary to the concepts of
ubuntu, good faith and reasonableness as enshrined in the Constitution.
[9] It is against this background that I now turn to construe the relevant
implications of clause 20 with a view to determine whether the respondent's
contention has merit or not. The high court correctly found that the appellant
was entitled in terms of clause 20 to cancel the agreement on the ground of
non-payment of the October rental on due date and that in itself triggered the
right to be restored into possession of the leased property. The high court
further found that no hardship is caused by the impugned clause and that the
respondent agreed to the specified time for the payment of monthly rentals,
which the respondent complied with easily. The high court characterised the
issue to be whether in the circumstances of this case, the implementation of
the cancellation clause contained in the agreement will be manifestly
unreasonable and offend against public policy.
[10] The parties were ad idem that this was a proper characterisation of the
issues. The appellant contended before the high court that, on a proper
construction of clause 20, once it is established that the lessee had committed
a material breach entitling it to cancel the agreement, the high court was
obliged to enforce the cancellation of the agreement and grant an order for
the eviction of the respondent from its premises.
[11] In this court, the case advanced for the appellant is that the respondent
committed a material breach of the agreement when it defaulted in paying
rental on due date and it was thus entitled to cancel the agreement, as set out
in clause 20. It was further emphasised that the appellant did not, after the
first breach in June, cancel the agreement. Furthermore the appellant
pertinently cautioned the respondent that a further breach would result in the
cancellation of the agreement. Counsel for the appellant also submitted that,
although the appellant was entitled to cancel the agreement forthwith when
the respondent defaulted in its payment, the appellant did not cancel nor
communicate its intention to cancel immediately. Instead it waited for a period
of 12 days to lapse before cancelling the agreement. It was submitted that if
courts were to embark on the course of action, claimed by the respondent, it
would be imposing its own sense of fairness and make contracts for the
parties.
[12] Counsel for the respondent contended that even though it accepts that
the payment was late, it disputed the appellant's entitlement to cancel the
agreement on the ground of non-payment of the October rental on due date
and seek an eviction order. The impugned clause, it was submitted, should be
interpreted to mean that parties to a contract ought to act in good faith. This
construction, according to the respondent, rendered the clause flexible to
accommodate the circumstances where a party is prevented by factors
beyond his control from complying with the requirements of the clause. First, it
was argued that its implementation is so manifestly unreasonable that it
offends public policy and secondly, the clause is unreasonable because it
insists on compliance with its provisions regardless of the circumstances
which prevented compliance thereof. It was urged upon us that public policy is
informed by the concept of good faith, ubuntu, fairness and simple justice
between individuals. The respondent contended that we are obliged, in
construing the impugned clause, to promote the spirit, purport and objects of
the Bill of Rights as contemplated in s 39(2) of the Constitution. In other words
we must interpret it through the prism of the Bill of Rights. In essence, the
case advanced for the respondent is that the principle of pacta sunt servanda
is not a sacred cow that should trump all other considerations.
[13] The main thrust of the respondent's argument is that having regard to
the duration of the lease, the circumstances leading to the alleged breach and
the timeous efforts by the respondent to purge the default, it cannot be said
that it adopted a supine attitude. It was argued that because the respondent
relied on Nedbank to transfer the rental amount to the appellant on due date,
it was impossible for the respondent to comply with the impugned clause
given the fact that it had no control over the Nedbank‟s internal system. It was
submitted that by reason of the fact that in the past three months preceding
the second breach, the respondent regularly monitored and checked its bank
statements to ensure that payments were made on time to avoid the breach
that occurred in June. Thus, it was contended, the implementation of the
impugned clause in the circumstances of this case is not only objectively
unreasonable but it is also unfair and contrary to public policy.
[14] The respondent relied essentially on the judgment of the Constitutional
Court in Barkhuizen v Napier1 where Ngcobo J writing for the majority, said
the following:
„The second question involves an inquiry into the circumstances that prevented
compliance with the clause. It was unreasonable to insist on compliance with the
clause or impossible for the person to comply with the time limitation clause.
Naturally, the onus is upon the party seeking to avoid the enforcement of the time
limitation clause. What this means in practical terms is that once it is accepted that
the clause does not violate public policy and non-compliance with it is established,
the claimant is required to show that, in the circumstances of the case there was a
good reason why there was a failure to comply.‟
[15] Barkhuizen shed light on the manner in which the question of
substantive fairness of a contract (or a contractual clause) is to be
approached in its application of the contractual doctrine of the public policy
test. The Constitutional Court introduced a second (subjective) stage to the
public policy test in terms of which a contract (or contractual clause) must not
only be objectively reasonable in order for it to be valid but its effect must also
be subjectively reasonable in the particular circumstances in order for it to be
enforceable. This approach facilitates a more purposive adjudication and a
substantively fair outcome for contracting parties.
[16] Reverting to the circumstances leading to the breach of the agreement
as well as Nedbank‟s admission that it was remiss, the argument for the
respondent was that on the authority of the quoted passage in Barkhuizen,
once it is established that there were circumstances which prevented
compliance with the contractual provisions, insisting on compliance thereof
would be unfair and unreasonable. The spirit of good faith, ubuntu and
1 Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC) at para 58.
fairness require that parties should take a step back, reconsider their position
and not snatch at a bargain at the slightest contravention.
[17] In support of its argument it called to aid the decision of the
Constitutional Court in Everfresh Market Virginia (Pty) Ltd v Shoprite
Checkers (Pty) Ltd [2011] ZACC 30; 2012 (1) SA 256 (CC), where Yacoob J
writing for the minority, said the following:
„Good faith is a matter of considerable importance in our contract law and the extent
to which our courts enforce the good faith requirement in contract law is a matter of
considerable public and constitutional importance. The question whether the spirit,
purport and objects of the Constitution require courts to encourage good faith in
contractual dealings and whether our Constitution insists that good faith requirements
are enforceable should be determined sooner rather than later. Many people enter
into contracts daily and every contract has the potential not to be performed in good
faith. The issue of good faith in contract touches the lives of many ordinary people in
our country.
The values embraced by an appropriate appreciation of ubuntu are also relevant in
the process of determining the spirit, purport and objects of the Constitution. The
development of our economy and contract law has thus far predominantly been
shaped by colonial legal tradition represented by English law, Roman law and
Roman Dutch law. The common law of contract regulates the environment within
which trade and commerce take place. Its development should take cognisance of
the values of the vast majority of people who are now able to take part without
hindrance in trade and commerce. And it may well be that the approach of the
majority of people in our country place a higher value on negotiating in good faith
than would otherwise have been the case. Contract law cannot confine itself to
colonial legal tradition alone.‟
[18] In contrast to the minority, the majority judgment of Moseneke DCJ
declined to deal with the issue of good faith because Everfresh failed to raise
this constitutional argument before the high court and this court. The majority
was rightly concerned that if the Constitutional Court were to grant leave, it
would be in the undesirable position of sitting as a court of first and last
instance. Moreover, it would not have had the benefit of the arguments before
the high court and in this court. Consequently it dismissed the application.
[19] Finally, it was submitted that the prejudice that the respondent will
suffer by the cancellation is far greater than that of the appellant. The upshot
of the respondent‟s argument is that the conduct of the appellant ignores the
reality that the respondent and its predecessors have been occupying the
premises since 1982 and the respondent employs 91 permanent employees,
plus casual staff. It also provides indirect employment to secondary staff and
service providers such as Bidvest and other companies. In essence, it was
contended that evicting the respondent would not only affect its reputation in
the hospitality industry, but it would also lead to job losses. Consequently, it
was submitted that the principle of pacta sunt servanda should be relaxed and
clause 20 should not be enforced.
[20] It was furthermore submitted that if the appellant was bona fide, it
would have notified the respondent of the breach and required the respondent
to rectify the non-payment within a short space of time (which the respondent
did in any event) instead of summarily cancelling the agreement. The
submission made is that the respondent would have made payment and the
implementation of clause 20 would have been ameliorated without any
hardship to the parties.
[21] What must be decided in this case is whether the implementation of
clause 20 is manifestly unreasonable or unfair to the extent that it is contrary
to public policy. To answer that question the enquiry must be directed at the
objective terms of the agreement, in the light of the relative situation of the
parties. This, without doubt, calls for a balancing and weighing-up of two
considerations, namely the principle of pacta sunt servanda and the
considerations of public policy, including of course constitutional imperatives.
[22] Before these arguments are considered, it is necessary to place the
issue in its proper perspective with regard to the legal principles governing
contractual obligations. This court in Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1
(AD) said:
„The power to declare contracts contrary to public policy should, however, be
exercised sparingly and only in the clearest of cases, lest uncertainty as to the
validity of contracts result from an arbitrary and indiscriminate use of the power. One
must be careful not to conclude that a contract is contrary to public policy merely
because its terms (or some of them) offend one‟s individual sense of propriety and
fairness.‟
[23] The privity and sanctity of contract entails that contractual obligations
must be honoured when the parties have entered into the contractual
agreement freely and voluntarily. The notion of the privity and sanctity of
contracts goes hand in hand with the freedom to contract. Taking into
considerations the requirements of a valid contract, freedom to contract
denotes that parties are free to enter into contracts and decide on the terms of
the contract. This court in Wells v South African Alumenite Company 1927 AD
69 at 73 held as follows:
„If there is one thing which, more than another, public policy requires, it is that men of
full age and competent understanding shall have the utmost liberty of contracting,
and that their contracts, when entered into freely and voluntarily, shall be held sacred
and enforced by the courts of justice.‟
[24] Parties enter into contractual agreements in order for a certain result to
materialise. The fact that parties enter into an agreement gives effect to their
constitutional right of freedom to contract, however, the carrying out of the
obligations in terms of that contractual agreement relates to the principle of
pacta sunt servanda. In Brisley v Drotsky [2002] ZASCA 35, 2002 (4) SA 1
(SCA) Cameron JA held that judges must exercise „perceptive restraint‟ lest
contract law becomes unacceptably uncertain. Cameron JA noted that the
judicial enforcement of terms, as agreed to, is underpinned by „weighty
considerations of commercial reliance and social certainty‟. In the majority
judgment in Barkhuizen, Ngcobo J endorsed Cameron JA‟s broader
conception of the law of contract as reflected in Brisley and affirmed that the
Constitution requires parties to honour contractual obligations that were freely
and voluntarily undertaken. The court further went on to say:
„While it is necessary to recognise the doctrine of pacta sunt servanda, courts should
be able to decline the enforcement of … a clause if it would result in unfairness or
would be unreasonable.‟
[25] In Bredenkamp & others v Standard Bank of South Africa Ltd, [2010]
ZASCA 75; 2010 (4) SA 468 (SCA) Harms DP interpreted Ngcobo J‟s
reference to public policy importing notions of „fairness, justice and
reasonableness‟ as not extending these notions beyond instances in which
public policy considerations found in the Constitution or elsewhere would be
implicated:
„This all means that, as I understand the judgment, if a contract is prima facie
contrary to constitutional values questions of enforcement would not arise. However,
enforcement of a prima facie innocent contract may implicate an identified
constitutional value. If the value is unjustifiably affected, the term will not be enforced.
An example would be where a lease provides for the right to sublease with the
consent of the landlord. Such a term is prima facie innocent. Should the landlord
attempt to use it to prevent the property being sublet in circumstances amounting to
discrimination under the equality clause, the term will not be enforced.‟
Harms DP went on to say:
„With all due respect, I do not believe that the judgment held or purported to
hold that the enforcement of a valid contractual term must be fair and
reasonable even if no public policy consideration found in the Constitution or
elsewhere is implicated. Had it been otherwise I do not believe that Ngcobo J
would have said this (para 57):
“Self-autonomy, or the ability to regulate one‟s own affairs, even to one‟s own
detriment, is the very essence of freedom and a vital part of dignity. The
extent to which the contract was freely and voluntarily concluded is clearly a
vital factor as it will determine the weight that should be afforded to the values
of freedom and dignity. The other consideration is that all persons have a right
to seek judicial redress.”‟
[26] Davis J made a similar point in Mozart Ice Cream Franchises (Pty) Ltd
v Davidoff & another [2008] ZAWCHC 118; 2009 (3) SA 78 (C) at 85A, when
he held that „[m]anifestly, without this principle, the law of contract would be
subject to gross uncertainty, judicial whim and an absence of integrity
between the contracting parties‟. And in the same vein Brand JA remarked in
Fourways Haulage SA (Pty) Ltd v SA National Roads Agency Ltd 2009 (2) SA
150 (SCA) at 158E-F that „[a] legal system in which the outcome of litigation
cannot be predicted with some measure of certainty would fail in its purpose‟.
[27] In Barkhuizen, Ngcobo J said:
„If it is found that the objective terms [of the contract] are not inconsistent with public
policy on their face, the further question will then arise which is whether the terms are
contrary to public policy in the light of the relative situation of the contracting
parties.‟2 He goes on to say that where the enforcement of a time-limitation
clause on the basis that non-compliance with it was caused by factors beyond
his or her control, it is inconceivable that a court would hold the claimant to
such a clause.3 Ngcobo J considered the principle of lex non cogit ad
impossibilia to be relevant in this regard.4
[28] The following facts are critically relevant in the present case in applying
the judgment of the Constitutional Court in Barkhuizen: (a) the terms of the
contract are not, on their face, inconsistent with public policy; (b) the relative
position of the parties was one of bargaining equality; the parties could have
negotiated a clause in terms of which the respondent was given notice to
remedy a breach before the contract was cancelled; and (c) the performance
on time was not impossible because the respondent could have diarised well
ahead of time to monitor this important monthly payment and it could have
effected other means of payment such as an electronic funds transfer. Against
this background, it cannot be against public policy to apply the principle of
pacta sunt servanda in this case.
[29] In this case there is no complaint that the impugned clause is
objectively unconscionable. No allegation is made that the lease agreement
was not concluded freely. There is also no evidence or contention advanced
2 Barkhuizen v Napier (supra) para 59.
3 Para 73.
4 Para 75.
by either of the parties that there was an unequal bargaining power between
them. On the contrary, there is ample evidence that the parties contracted
with each other on the same equal footing. In other words it cannot and
neither was the respondent's case that there was an injustice which may have
been caused by the inequality of bargaining power. Evidently the respondent
was at all material times aware or must have been aware of the implications
of the cancellation clause. When the respondent committed the first breach in
June 2014, its attention was drawn to the fact that in the event of a further
breach in the future, the appellant will invoke the provisions of clause 20 and
cancel the agreement and evict them from the premises. It is disingenuous on
the part of the respondent to now contend that by cancelling the agreement
and not affording them an opportunity to remedy the breach, the appellant
wanted to snatch at a bargain. The facts demonstrate that the appellant did
not cancel the agreement or communicate its intention to do so immediately
upon non-payment of the October rental. It waited for a period of 12 days to
lapse before it cancelled the agreement.
[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] Nedbank acted as the respondent's agent to implement the mandate
conferred upon it by transferring the money on due date to the appellant.
Before the appellant could cancel the lease, there was no obligation on its
part to either issue a demand/ultimatum requiring the respondent to make
payment. It was also not the appellant's duty to inform the respondent of its
default. I do not think that such a duty can be imposed on the appellant. 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 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] The result may well be unpalatable to the respondent. 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] In all the circumstances of this matter, it would be appropriate for the
court to include in its order a notice period of three months in which to vacate
the property. In order to avoid any confusion and taking into account the time
of year when this judgment will be handed down, it seems best to fix the date
upon which the respondent is to vacate the property as 31 March 2018.
[34] For these reasons it is ordered that:
1 The appeal is upheld with costs, such costs to include the costs of two
counsel.
2 The order of the high court is set aside and substituted with the following:
„2.1 The respondent, together with all those persons who occupy the
property fully described as Remaining Extent of Erf 13164 Cape Town
(hereinafter referred to as „the Property‟) by virtue of the respondent's
occupation thereof are to vacate the property, on or before 31 March 2018.
2.2 Should the respondent or any persons occupying the property through
or under it fail to comply with the order granted in accordance with the
order in par 2.1 above, that the sheriff of the above Honourable Court or his
lawful deputy is authorised forthwith to evict the respondent and all
persons/entities occupying the property through/under it.‟
________________________
R S Mathopo
Judge of Appeal
APPEARANCES:
For appellant:
N A Cassim SC
S Freese
Instructed by:
Dockrat Inc., Johannesburg
Honey Attorneys Inc., Bloemfontein
For respondent:
M C Erasmus SC
W T B Rigard
Instructed by:
Fourie van Pletzen Inc., Constantia Kloof
Symington & De Kok, Bloemfontein | SUPREME COURT OF APPEAL 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
Mohamed’s Leisure Holdings (Pty) Ltd v Southern Sun Hotel Interests (Pty) Ltd
(183/17) [2017] ZASCA 176
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.
Today, the Supreme Court of Appeal upheld an appeal brought by the appellant, Mohamed’s Leisure
Holdings (Pty) Ltd, against the judgment of the Gauteng Local Division, Johannesburg (Van Oosten J)
(court a quo). The issue at the centre of the appeal concerned the question whether the common law
maxim pacta sunt servanda should be developed to infuse the law of contract with the Constitutional
values of ubuntu, fairness and good faith.
The appeal stemmed from the following factual background. On or about 1 November 2001, the
appellant concluded a written lease agreement with the respondent, Southern Sun Hotel Interests
(Pty) Ltd, as the lessee in respect of immovable property known as Remaining Extent of Erf 13164. In
terms of the lease agreement, the respondent shall make monthly provisional rent payments to the
appellant by not later than the 7th day of each month. During the period of the lease, the respondent
maintained regular and prompt payment of the rental in terms of the agreement. However, in June
2014 the respondent failed to make payment on the 7th, as stipulated in the agreement. On 20 June
2014 when payment was not forthcoming, the appellant wrote a letter to the respondent and afforded
it a period of five days within which to remedy the breach. In that letter the appellant pertinently
warned the respondent that should it fail to pay rent on due date in the future, no notice to remedy the
breach would be given and the agreement will be cancelled forthwith and the respondent will be
required to vacate the premises with immediate effect. Thereafter, the breach was remedied by the
respondent.
During the month of October, the rental was debited from the respondent’s account on 6 October
2014. However, on 7 October 2014, the respondent’s bank omitted to transfer the rental amount due
to the appellant. As a result of this breach, the appellant's attorneys addressed a notice of
cancellation of the lease agreement to the respondent on 20 October 2014 and afforded it until 31
October 2014 to vacate the premises. As a result, the appellant approached the court a quo seeking
an eviction order on the basis that the respondent was in breach of the lease agreement by failing to
make rental payment on due date.
In the court a quo, it was held that the appellant was entitled to cancel the lease agreement on the
ground of non-payment of the October rental on due date and that in itself triggered the right to be
restored into possession of the leased property. However, it declined to grant an order for eviction. It
reasoned that the implementation of the cancellation clause would be manifestly unreasonable, unfair
and offend public policy. In doing so it concluded that the common law principle, pacta servanda sunt,
should be developed by importing or infusing the principles of ubuntu and fairness in the law of
contract.
On appeal, the SCA held that 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 therefore impermissible for the court
a quo 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. It further reasoned that 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.
As a result, the appeal was upheld with costs. |
131 | non-electoral | 2017 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1068/2016
In the matter between:
eTHEKWINI MUNICIPALITY
APPELLANT
and
MOUNTHAVEN (PTY) LTD
RESPONDENT
Neutral citation: eThekwini Municipality v Mounthaven (Pty) Ltd (1068/2016) [2017]
ZASCA 129 (29 September 2017)
Coram: Tshiqi, Seriti and Saldulker JJA and Gorven and Ploos van Amstel AJJA
Heard:
21 August 2017
Delivered: 29 September 2017
Summary: Claim for re-transfer of property – a debt as contemplated in Chapter III of
the Prescription Act – whether reversionary clause creates a limited real right or a
personal right – right not absolute but a relative one and only enforceable against a
class of individuals – prescription affects the contractual right to claim re-transfer –
claim prescribed.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: KwaZulu-Natal Local Division, Durban (Mbatha J sitting as a court
of first instance):
The appeal is dismissed with costs.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Tshiqi JA (Seriti and Saldulker JJA and Govern and Ploos van Amstel AJJA
concurring):
[1] The issue in this appeal is whether a claim for the re-transfer of property from
the respondent, Mounthaven (Pty) Ltd (Mounthaven) to the appellant, eThekwini
Municipality1 (the Municipality) constitutes a debt as contemplated in Chapter III of
the Prescription Act 68 of 1969 (the Prescription Act).
[2] On 24 May 1985 the Municipality sold vacant immovable property described
as Lot 2678 Verulam (Extension 25), situated at 6 Magpie Place Verulam, KwaZulu-
Natal measuring 771 square meters (the property), to Mounthaven at a public auction
for an amount of R60 000. The following special conditions were contained in the
Deed of Sale and were in due course incorporated in the Deed Of Transfer:
‘Subject to the following special conditions in favour of the Town Council of the Borough of
Verulam as Local Authority:
(1) The Purchaser shall erect, or cause to be erected on the property, buildings to the value
of not less than ONE HUNDRED THOUSAND RAND (R100 000, 00) and failing the erection
of buildings to that value within two (2) years from date of sale, then, for the purpose of
1 It is the successor-in-law to the town council of the Borough of Verulam.
levying the general rate and sewer rate payable to the Verulam Town Council by the
Purchaser or his successors in title, there shall be deemed to be buildings to such required
value on the property and all valuation and rating provisions of Section 157 of Ordinance 25
of 1974 or any amendment thereof shall apply to the property and be binding upon the
Purchaser or his successors in title.
(2) If at the expiry of a period of three (3) years from the date of sale the Purchaser has failed
to complete buildings to the value of not less than ONE HUNDRED THOUSAND RAND
(R100 000, 00) on the property, ownership of the property shall revert to the Seller which
shall be entitled to demand re-transfer thereof to it from the Purchaser who shall be obliged
to effect transfer thereof to the Seller against payment by the Seller to the Purchaser of all
payments made on account of the purchase price less any costs incurred by the Seller in
obtaining re-transfer of the property into its name, including costs as between attorney and
client, all costs of transfer, transfer duty, stamp duty and the like.
(3) The Seller shall have a pre-emptive right to re-purchase the property at the price paid by
the Purchaser, if the Purchaser desires to sell the property within five (5) years from the date
of sale, provided that this condition shall not apply where buildings to the value of not less
than ONE HUNDRED THOUSAND RAND (R100 000, 00) shall have been erected on the
Lot within three (3) years from the date of sale.’
[3] Mounthaven failed to develop the land within the stipulated period of three
years and it still remains undeveloped. It cites the unresolved dispute with the
Municipality concerning a 750mm diameter storm water pipe that runs under the
property as the reason preventing the effective development of the property. On 23
May 2012, the Municipality wrote a letter to Mounthaven in which it invoked the terms
of the conditions in Clause C.2 of the Deed of Transfer (the reversion clause) and
demanded re-transfer of the property. Mounthaven failed to comply with the demand
and on 19 February 2014 the Municipality launched an application invoking the
conditions and claiming re-transfer of the property. Mounthaven took the point that
that the claim to re-transfer constituted a “debt” as contemplated in Chapter III of the
Prescription Act and that it had prescribed. The Municipality submitted that the
Prescription Act was not applicable as the claim did not constitute a debt. The court
decided to consider a further ground of defense raised by the Municipality for the first
time in its heads of argument: that the claim was founded on the rei vindicatio, was
simply a mechanism to perfect the Municipality’s ownership of the property and that it
did not prescribe.
[4] The high court found that the claim constitutes a debt and concluded that it
had prescribed after a period of three years. Regarding whether the claim was a
vindication of a real right the high court held that ‘property can only be transferred by
registration thereof and does not occur automatically’. It then concluded that the
Municipality did not have an absolute real right to the property and that it lost its right
of action when it prescribed after three years.
[5] In this appeal the Municipality relies on four grounds for its contention that the
claim has not prescribed:
a) That its claim for re-transfer of the property is not a claim for payment of money,
goods or services, or an obligation to render something and thus does not constitute
a ‘debt’, as contemplated in Chapter III of the Prescription Act;
b) That the reversion clause constitutes a real right, and thus not a debt;
c) Alternatively, if the claim is a debt, it is secured by a mortgage bond and is not
extinguished by prescription for a period of thirty years;
d) Further alternatively, if the claim is a debt, then the respondent’s failure to develop
the property constitutes a continuing wrong.
[6] The Prescription Act does not define what a debt is. In Electricity Supply
Commission v Stewarts and Lloyds of SA (Pty) Ltd 1981 (3) SA 340 (A) at 344G-H
this court said:
‘[A] debt is –
“that which is owed or due; anything (as money, goods or services) which one person is
under obligation to pay or render to another.”
In a subsequent decision in Desai NO v Desai & others 1996 (1) SA)141 (A) at 146G-
H the court was called upon to decide whether an obligation to effect transfer of
individual shares in two immovable properties had prescribed. The application was
for an order directing the appellant, an executor in a deceased estate, to take all
steps to sign all the necessary documents. The court said:
‘For the reasons which follow I am of the opinion that the appellant's “debt”, ie the obligation
to procure registration of transfer in terms of clause 13(d), was indeed extinguished by
prescription.’
The court went further and said at 146H- 147A:
‘The term "debt" is not defined in the Act, but in the context of s 10(1) it has a wide and
general meaning, and includes an obligation to do something or refrain from doing something
. . . . It follows that the undertaking in clause 13(d) to procure registration of transfer was a
"debt" as envisaged in s 10(1).’
[7] Recently in Makate v Vodacom Ltd 2016 (4) SA 121 (CC) and Makate v
Vodacom (Pty) Ltd [2014] ZAGPJHC 135 Mr Makate, the plaintiff, a former employee
of Vodacom, instituted a high court action to enforce an agreement with Vodacom
which, according to his undisputed evidence, was that the parties would enter into
bona fide negotiations for determining reasonable compensation for the profitable
use of his idea in developing the ‘Please Call Me’ service. Vodacom raised two
special pleas, including a plea of prescription. The high court, whilst accepting that Mr
Makate had proved the compensation agreement between himself and Vodacom,
upheld the special pleas. Regarding prescription, the high court held that the word
‘debt’ had to be widely interpreted to include a claim that Vodacom comply with its
obligations under a contract and it dismissed his claim.
[8] The Constitutional Court said in paras 83-85:
‘For the conclusion that a debt contemplated in section 10(1) of the Prescription Act includes
a claim to negotiate terms of an agreement, the trial Court relied on Desai, a judgment of the
Appellate Division (now the Supreme Court of Appeal) and LTA Construction, a decision of
the Cape of Good Hope Division (now the Western Cape Division of the High Court) . . .
On this construction of Desai, every obligation, irrespective of whether it is positive or
negative, constitutes a debt as envisaged in section 10(1). This in turn meant that any claim
that required a party to do something or refrain from doing something, irrespective of the
nature of that something, amounted to a debt that prescribed in terms of section 10(1). Under
this interpretation, a claim for an interdict would amount to a debt. However, the Appellate
Division in Desai did not spell out anything in section 10(1) that demonstrated that “debt” was
used in that sense…
The absence of any explanation for so broad a construction of the word “debt” is
significant because it is inconsistent with earlier decisions of the same court that gave the
word a more circumscribed meaning . . .’
The Constitutional Court then referred to the meaning ascribed to the word ‘debt’ in
Escom and Desai and said the following in para 86:
‘It is unclear whether the court in Desai intended to extend the meaning of the word “debt”
beyond the meaning given to it in Escom. If it did, it does not appear that this followed either
from any submissions made to the court by the parties or any issue arising in the case. Nor,
if that was the intention, did the court give consideration to the constitutional imperatives in
regard to the interpretation of statutes in section 39(2) of the Constitution.’
It then concluded:
‘However, in present circumstances it is not necessary to determine the exact meaning of
“debt” as envisaged in section 10. This is because the claim we are concerned with falls
beyond the scope of the word as determined in cases like Escom which held that a debt is an
obligation to pay money, deliver goods, or render services. Here the applicant did not ask to
enforce any of these obligations. Instead, he requested an order forcing Vodacom to
commence negotiations with him for determining compensation for the profitable use of his
idea.
To the extent that Desai went beyond what was said in Escom it was decided in error.
There is nothing in Escom that remotely suggests that “debt” includes every obligation to do
something or refrain from doing something, apart from payment or delivery. It follows that the
trial court attached an incorrect meaning to the word “debt”. A debt contemplated in section
10 of the Prescription Act does not cover the present claim. Therefore, the section does not
apply to the present claim, which did not prescribe.’ (Paras 92 and 93).
[9] In a subsequent decision in Myathaza v Johannesburg Metropolitan Bus
Services (SOC) Limited t/a Metrobus & others 2017 (4) BCLR 473 (CC) the
Constitutional Court said:
‘Desai, on which the Labour Appeal Court relied for holding that “debt” means an obligation
to do something or refrain from doing something, was overruled by this court in Makate.’
[10] In this appeal the Municipality contends that the Constitutional Court in Makate
and in Myathaza effectively rejected what it submits was a wider meaning this court
ascribed to the word ‘debt’ in Desai. That the Constitutional Court endorsed the
narrower one in Escom, in terms of which debt is confined to an obligation ‘to pay
money or deliver goods or render services’. The Municipality submits therefore that
the right to demand re-transfer is not an obligation ‘to pay money, deliver goods, or
render services and [is] thus not a debt’.
[11] In reading the Constitutional Court decision in Makate one should not overlook
what the court did not say. It did not say that Desai was incorrect in its finding that a
claim for transfer is a debt. It simply said that Desai was decided in error ‘[t]o the
extent that [it] went beyond what was said in Escom’. Had the court wished to
overrule Desai in the manner contended for by the Municipality, it would have said so
explicitly. As the Constitutional Court said, it is inconceivable that every obligation to
do or refrain from doing something can be described as a debt. The example of an
interdict postulated by that court illustrates this absurdity.
[12] Earlier, the Constitutional Court in Road Accident Fund & another v Mdeyide
2011 (2) SA 26 para 11 expressed doubt on whether an obligation is indeed a debt in
terms of the Act. In Njongi v MEC, Department of Welfare, Eastern Cape 2008 (4) SA
237 (CC) it raised, but left open, the question whether a constitutional obligation
could be considered a debt. An interpretation that restricts the meaning of ‘debt’ to
‘delivery of goods’ confines it to the delivery of movables to the exclusion of all
immovable property. This would create a baseless distinction between movable
property and immovable property for the purposes of prescription. In cases where the
legislature has sought to make this distinction, ie in cases of prescription of debts by
mortgage bond, it has done so expressly. The dictum in Myathaza must thus be
understood in this context.
[13] This then leads me to whether the reversionary clause constitutes a limited
real right or a personal right. In Absa Bank Ltd v Keet 2015 (4) SA 474 SCA the court
explained the distinction between a real right and a personal right as follows in para
20:
‘[R]eal rights are primarily concerned with the relationship between a person and a thing and
personal rights are concerned with a relationship between two persons. The person who is
entitled to a real right over a thing can, by way of vindicatory action, claim that thing from any
individual who interferes with his right. Such a right is the right of ownership. If, however, the
right is not an absolute, but a relative right to a thing, so that it can only be enforced against a
determined individual or a class of individuals, then it is a personal right.’
[14] It then continued in paras 23-25:
‘The obligation which the law imposes on a debtor does not create a real right (jus in rem),
but gives rise to a personal right (jus in personam). In other words, an obligation does not
consist in causing something to become the creditor’s property, but in the fact that the debtor
may be compelled to give the creditor something or to do something for the creditor or to
make good something in favor of the creditor.
[I]n the case of extinctive prescription one is more specifically concerned with the
relationship between creditor and debtor and prescription serves in the first instance to
protect the debtor against claims that perhaps never came into existence or had already
been extinguished. The obligation is by its nature and substance a temporary relationship
that is destined to terminate through performance and moreover a relationship between
creditor and debtor in which third parties are only indirectly involved. A real right, by contrast,
is a relationship of a durable nature, that can be maintained against anyone and everyone,
and which can impede commerce if outsiders cannot with confidence rely on the appearance
thereof.
[I]n the case of acquisitive prescription one has to do with real rights. In the case of
extinctive prescription one has to do with the relationship between a creditor and a debtor.
The effect of extinctive prescription is that a right of action vested in the creditor, which is a
corollary of a “debt”, becomes extinguished simultaneously with that debt. In other words,
what the creditor loses as a result of operation of extinctive prescription is his right of action
against the debtor, which is a personal right. The creditor does not lose a right to a thing . . .’
(See also National Stadium South Africa (Pty) Ltd & others v Firstrand Bank Ltd 2011
(2) SA 157 SCA para 31).
[15] In this matter the right to claim re-transfer required Mounthaven to do
something in favour of the Municipality. The right is not absolute but a relative one
because it can only be enforced against a determined individual or a class of
individuals, ie Mounthaven or its successors in title, and not against the whole world.
One is concerned with the relationship between the two parties and their successors
in title and this is akin to a relationship between a creditor and a debtor. In the event
of prescription what is extinguished through the effluxion of time is the contractual
right to claim re-transfer against Mounthaven. It follows that the Municipality’s right of
action against Mounthaven is a personal right and not a limited real right.
[16] The two alternative grounds of appeal raised by the appellant have no merit.
The reversionary clause is not a security clause and is thus not a mortgage bond.
The other alternative contention that the failure to develop the property is a
continuing wrong and that it cannot prescribe suggests that every debt, as long as it
remains unpaid, would constitute a continuing wrong and would not be extinguished
by prescription. This cannot be so. For all these reasons it follows that the claim for
re-transfer constitutes a debt, and it prescribed after the effluxion of the three year
period. The appeal must thus fail.
[17] I make the following order:
The appeal is dismissed with costs.
___________________
Z L L Tshiqi
Judge of Appeal
APPEARANCES
For the Appellant:
G D Goddard SC with S Mahabeer
Instructed by:
Berkowitz Cohen Wartski, Durban
McIntyre & Van der Post Attorneys,
Bloemfontein
For the Respondent:
D D Naidoo
Instructed by:
Mervyn Gounden & Associates, Verulam
Webbers 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
29 September 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.
eThekwini Municipality v Mounthaven (Pty) Ltd (1068/2016) [2017] ZASCA 129 (29
September 2017)
Today the Supreme Court of Appeal (SCA) dismissed an appeal against the KwaZulu-Natal
Local Division, Durban (High Court).
The issue on appeal was whether a claim for the re-transfer of property from the respondent,
Mounthaven (Pty) Ltd (Mounthaven), to the appellant, eThekwini Municipality (the
Municipality) constituted a debt as contemplated in Chapter III of the Prescription Act 68 of
1969 (the Prescription Act).
The issue arose within the following context: On 24 May 1985 the Municipality sold vacant
immovable property described as Lot 2678 Verulam (Extension 25), measuring 771 square
meters (the property) to Mounthaven at a public auction for an amount of R60 000. One of the
conditions contained in the Deed of Transfer was that Mounthaven would erect buildings to
the value of not less than one hundred thousand rand (R100 000 00) within a period of three
(3) years from the date of sale. Mounthaven failed to develop the land within the stipulated
period and the property remains undeveloped.
On 23 May 2012, the Municipality wrote a letter to Mounthaven in which it invoked the terms
of the conditions in Clause C.2 of the Deed of Transfer (the reversion clause) and demanded
re-transfer of the property. Mounthaven failed to comply with the demand and on 19 February
2014 the Municipality launched an application invoking the conditions and claiming re-transfer
of the property. Mounthaven raised a special plea of prescription to the High Court.
At the High Court, the Municipality contended that the Prescription Act was not applicable as
the claim did not constitute a debt which is subject to extinctive prescription under the Act. It
further submitted that the claim was founded on rei vindicatio and was thus a mechanism to
its perfect ownership of the property. The High Court found that the claim constituted a debt
and concluded that it had prescribed after a period of three years. On the question whether
the claim was a vindication of a real right, the High Court held that property can only be
transferred by registration and that it does not occur automatically. It reached the conclusion
that the Municipality did not have an absolute real right to the property and that it lost its right
of action when it prescribed after three years.
On appeal to the SCA, the Municipality raised four contentions relating to prescription. First,
that its claim for re-transfer of the property is not a claim for payment of money, goods or
services, or an obligation to render something and thus does not constitute a ‘debt’, as
contemplated in Chapter III of the Act. Secondly, that the reversion clause constitutes a real
right, and is thus not a debt; thirdly and alternatively, if the claim is a debt, it is secured by a
mortgage bond and is not extinguished by prescription for a period of thirty years. Finally and
further alternatively, if the claim is a debt, then the respondent’s failure to develop the
property constitutes an on-going wrong.
In respect of the first contention, the SCA found that an interpretation that constricts the
meaning of ‘debt’ to ‘delivery of goods’ confines it to the delivery of movables to the exclusion
of all immovable property. This would create a baseless distinction between movable property
and immovable property for the purposes of prescription because in cases where the
legislature has sought to make this distinction it has done so expressly. It thus concluded that
a claim for re-transfer is a debt and it prescribed after the effluxion of the three year period.
Regarding the second contention, the SCA held that that the right of action against
Mounthaven is a personal right and not a limited real right and has consequently prescribed
through the effluxion of a period of three years. Finally, if held that the two alternative grounds
of appeal were without merit. |
1322 | non-electoral | 2010 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No 506/09
In the matter between:
KERSTON MOKGOAKAE MASEOLA
Appellant
and
THE STATE
Respondent
Neutral citation:
Maseola v The State (506/09) [2010] ZASCA 37 (30 March 2010)
Coram:
Navsa JA and Griesel and Saldulker AJJA
Heard:
16 March 2010
Delivered:
30 March 2010
Summary:
Sentence: Cumulative effect of sentences on several counts.
Unduly harsh and disproportionate – Effective sentence set
aside and substituted.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: North Gauteng High Court (Pretoria) (Els J sitting as a court of first
instance):
1.
The appeal against the sentences imposed by the court below is upheld to the
extent set out in para 2.
2.
The order of the trial court, is amended to read as follows:
‘The sentences I impose on accused 3 are the following:
Count 1, the murder charge, 25 years’ imprisonment.
Count 2, the second charge of murder, 25 years’ imprisonment.
Count 3, possession of the automatic firearm, 15 years’ imprisonment.
Count 4, dealing in the firearm, 7 years’ imprisonment.
Count 6, unlawful possession of a firearm - 6 years’ imprisonment
The sentence on count 1 is to run concurrently with the sentence on count 2. Ten
years of the sentence on count 3 is to run concurrently with the sentences imposed in
respect of counts 1 and 2. The sentences imposed in respect of counts 4 and 6 are to
run concurrently with the sentences imposed in respect of counts 1 and 2. The
accused is thus sentenced to an effective 30 years’ imprisonment.’
3.
The sentence is antedated in terms of s 282 of the Criminal Procedure Act 51
of 1977 to 8 August 2005.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
SALDULKER (NAVSA JA and GRIESEL AJA concurring)
[1] This is an appeal against sentence with the leave of this court. The appellant,
Kerston Mokgoakae Maseola, stood trial in the North Gauteng High Court (Pretoria)
(Els J) as accused 3 together with two co-accused, Tshuledi Blessing Moloi (accused
1) and David Serame Melato (accused 2) for the murder of two policemen, Inspector
Hechter and Mr Greyling, a police reservist. They were also charged with dealing in an
automatic firearm, the unlawful possession thereof and the unlawful possession of
ammunition. On 8 August 2005 the appellant was convicted together with his co-
accused, on all five counts.
[2] On the same date, the trial court sentenced the appellant to 25 years’
imprisonment on each of the murder charges, 18 years’ imprisonment in respect of the
unlawful possession of the automatic firearm, 6 years’ imprisonment on the unlawful
dealing in the firearm and 7 years’ imprisonment in respect of the unlawful possession
of ammunition. Els J ordered that the sentences imposed on the two murder counts be
served concurrently. Furthermore, he ordered that the 6 and 7 year sentences run
concurrently with the sentence of 18 years in respect of the unlawful possession of the
firearm. Thus the appellant was sentenced to an effective 43 years’ imprisonment.
[3] The appellant was a police informer. Regrettably, he turned rogue and himself
engaged in gun-running, an activity he was tasked to monitor and report on. The
automatic weapon he procured was used by accused 1 in a fierce shoot-out on 17
January 2004, with two policemen on the old Fochville Road, outside Sebokeng, who
had been informed of the latter’s intention to participate in an in-transit heist, and who
were requested to assist in his arrest.
[4] In the ensuing gun-battle, the two policemen died a gruesome death. They
were fired upon unremittingly with an automatic R4 rifle as they attempted to effect the
arrest. Inspector Hechter armed with a 9mm pistol, was no match for accused 1.
Seriously wounded, with parts of his face literally shot off, he collapsed and died at the
scene. Mr Greyling, accompanying Inspector Hechter, had not been armed. He died
at the scene seated in the police vehicle in which they had travelled.
[5] Although the appellant did not testify, it was put to state witnesses on his behalf
that he was innocent and that he had informed his handler about the acquisition by
accused 1 of the R4 automatic rifle. It is common cause that the appellant had
communicated this fact only after the shoot-out had already occurred. The appellant
was rightly convicted on all charges. The court below correctly held that the appellant
must have forseen that the R4 automatic rifle would be used by accused 1 in the
commission of offences, including murder.
[6] In sentencing the appellant on the murder counts, the court recorded that he
was being held liable on the basis of dolus eventualis, and that there were substantial
and compelling circumstances, justifying a departure from the prescribed minimum
sentence of life imprisonment. However, in respect of the possession of the R4
automatic rifle, the court found that there were no substantial and compelling factors
justifying such a departure, and sentenced the appellant to 18 years’ imprisonment,
which the court stated to be the minimum sentence.
[7] In terms of s 51(2) of the Criminal Law Amendment Act 105 of 1997, the
minimum prescribed period for sentences in respect of offences falling under the ambit
of Part II of Schedule 2 is as follows:
‘Nothwithstanding any other law but subject to subsections (3) and (6), a regional court or a
High court shall sentence a person who has been convicted of an offence referred to in-
(a) Part II of Schedule 2, in the case of-
(i) a first offender, to imprisonment for a period not less than 15 years;
(ii) a second offender of any such offence, to imprisonment for a period not less than 20
years; and
(iii) a third or subsequent offender of any such offence, to imprisonment for a period not
less than 25 years;’
The relevant portion of Part II of Schedule 2 reads as follows:
‘Any offence relating to-
(a) the dealing in or smuggling of ammunition, firearms, explosives or armament;
or
(b) the possession of an automatic or semi-automatic firearm, explosives or armament.’
Thus it is clear that the trial court erred in imposing the sentence of 18 years on the
appellant. The appellant was a first offender, whom the court intended to sentence to
the applicable minimum prescribed period. That period as is shown above is 15 years’
imprisonment.
[8] The appellant is 43 years old and married with four children. He had been a
member of the South African Police Services until his discharge on medical grounds.
Thereafter he started his own business, as a Funeral Undertaker and became
registered as a police informer. He was a first offender and had been incarcerated for
more than a year awaiting the finalisation of his trial. The trial court found that the only
mitigating factor in respect of his personal circumstances was his clean record.
[9] It is true that the trial court was dealing with a police informer who had
committed offences he was tasked to prevent. Unlawful firearms have become the
scourge of our society and sentences imposed should send out a clear message that
offences of the kind in question will be met with the full force of the law.
[10] It should also be borne in mind that in this matter, policemen were shot and
killed. This is an aggravating factor. The appellant knew when he was approached to
procure the firearm that fatal consequences might ensue.
[11] Counsel for the state was rightly constrained to concede that the effective
sentence was excessive. The cumulative effect of the sentences is so harsh and
disproportionate that this court is entitled to interfere and substitute its discretion for
that of the trial court.
[12] In S v Mhlakaza & another,1 there was an attack on a police office involving a
machine gun (and the shooting and wounding of members of the public). The two
appellants who had been convicted on charges of murder, attempted robbery,
possession of firearms, and possession of a machine gun were effectively sentenced
to 47 and 38 years’ imprisonment respectively. This court considered, whether in the
circumstances of the case, the cumulative effect of the sentences imposed was so
inappropriate that the court was permitted to substitute its discretion for that of the trial
court. This court determined that each appellant should be sentenced to an effective
38 years’ imprisonment, because both were equal partners in the same criminal
activity. The court stated as follows at (523g-j):
‘The several convictions resulted from more or less the same event. It is therefore appropriate
to assess what sentence I would have imposed for the murderous armed attack on a police
office involving a machine gun and the shooting and wounding of members of the public (cf S
v M 1994 (2) SACR 24 (A) 30h-31e; S v Coales 1995 (1) SACR 33 (A) 37a-b). I believe that a
sentence of life imprisonment would have been fully justified not only in relation to the
1 1997 (1) SACR 515 (SCA).
combined crimes, but also on the murder count alone (cf S v Tcoeib 1991 (2) SACR 627
(Nm); S v Mhlongo 1994 (1) SACR 584 (A) at 589-90). And, as was pointed out by Hefer JA in
S v Nkosi 1993 (1) SACR 709 (A) 717g-i, such a sentence is more realistic and subject to
more safeguards than extraordinarily long sentences of imprisonment. Determinate
sentences, in any event, run concurrently with a life term (s 32(2)(a)).’
And at 524e:
‘In any event, had I not considered a life sentence to be justified I would have regarded an
effective sentence of 47 years as exceeding acceptable limits.’
[13] In Mhlakaza this court sounded a note of caution at 518e-f:
‘The object of sentencing is not to satisfy public opinion but to serve the public interest . . . A
sentencing policy that caters predominantly or exclusively for public opinion is inherently flawed. It
remains the court’s duty to impose fearlessly an appropriate and fair sentence even if the sentence
does not satisfy the public.’
[14] For the reasons set out above the appeal against the sentences succeeds. In
my view, in the circumstances of this case, a sentence that strikes a proper balance is
an effective sentence of 30 years’ imprisonment constituted as set out in the ensuing
order:
[15] The following order is made:
1.
The appeal against the sentences imposed by the court below is upheld to the
extent set out in para 2.
2.
The order of the trial court is amended to read as follows:
‘The sentences I impose on accused 3 are the following:
Count 1, the murder charge, 25 years’ imprisonment.
Count 2, the second charge of murder, 25 years’ imprisonment.
Count 3, possession of the automatic firearm, 15 years’ imprisonment.
Count 4, dealing in the firearm, 7 years’ imprisonment.
Count 6, unlawful possession of a firearm - 6 years’ imprisonment
The sentence on count 1 is to run concurrently with the sentence on count 2. Ten
years of the sentence on count 3 is to run concurrently with the sentences imposed in
respect of counts 1 and 2. The sentences imposed in respect of counts 4 and 6 are to
run concurrently with the sentences imposed in respect of counts 1 and 2. The
accused is thus sentenced to an effective 30 years’ imprisonment.’
3.
The sentence is antedated in terms of s 282 of the Criminal Procedure Act 51
of 1977 to 8 August 2005.
________________________
H K Saldulker
Acting Judge of Appeal
APPEARANCES:
APPELLANT:
D de Kock
Instructed by: Zwelakhe Radebe Attorneys,
Booysens.
Matsepes Attorneys, Bloemfontein
RESPONDENT:
E Leonard SC
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
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL
From: The Registrar, Supreme Court of Appeal
Date: 30 MARCH 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
MASEOLA v THE STATE
The Supreme Court of Appeal (SCA) today upheld an appeal by the appellant, Mr
Kerston Mokgoake Maseola, against the sentence imposed on him by the North
Gauteng High Court (Pretoria) on two counts of murder, the unlawful possession of
an automatic firearm, the unlawful dealing in a firearm and the unlawful possession of
ammunition. The High Court sentenced the appellant to an effective 43 years’
imprisonment.
The prosecution arose out of an incident on 17 January 2004, at the old Fochville
Road, outside Sebokeng, in which two policemen were shot and killed by the co-
accused of the appellant, one Moloi. The murder weapon was an R4 automatic rifle,
which was supplied by the appellant, thus giving rise to his conviction as an
accomplice to murder. He was sentenced to 25 years’ imprisonment on each of the
murder charges, 18 years’ imprisonment in respect of the unlawful possession of the
automatic firearm, 6 years’ imprisonment on the unlawful dealing in the firearm and 7
years’ imprisonment in respect of the unlawful possession of ammunition. It was
ordered that the sentences be served concurrently so as to result in an effective
sentence of 43 years’ imprisonment. The sentence was antedated to 8 August 2005
in terms of the Criminal Procedure Act 51 of 1977.
On appeal, the SCA held that the cumulative effect of the sentences is so harsh and
disproportionate that it is entitled to substitute its discretion for that of the trial court.
Hence it upheld the appeal against sentences, holding that a sentence that strikes a
proper balance is an effective sentence of 30 years’ imprisonment.
---ends--- |
3228 | non-electoral | 2007 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case number : 677/06
Reportable
In the matter between :
MARK SCOTT-CROSSLEY
APPELLANT
and
THE STATE
RESPONDENT
CORAM :
MTHIYANE, CLOETE et PONNAN JJA
HEARD :
20 AUGUST 2007
DELIVERED :
28 SEPTEMBER 2007
Summary: Criminal appeals ─ reassessment of credibility of witnesses ─
corroboration ─ inference when version not put in cross-examination ─
accomplice evidence.
Neutral citation: This judgment may be referred to as Scott-Crossley v S
[2007] SCA 127 (RSA).
_________________________________________________________
THE COURT/
THE COURT:
[1] The appellant, Mr Mark Scott-Crossley, who was accused 3, and one of his
employees, Mr Simon Johan Mathebula, accused 2, were convicted by Maluleke J
and assessors in the High Court, Circuit Local Division for the Northern Circuit,
sitting at Phalaborwa. The appellant was sentenced to life imprisonment, after the
trial judge found that there were no substantial and compelling circumstances
justifying the imposition of a lesser sentence.1 In respect of accused 2 substantial
and compelling circumstances were found to be present and he was sentenced to 15
years imprisonment, three of which were suspended on certain conditions. Accused
1, Mr Richard Doctor Mathebula, also employed by the appellant at the time, took ill
during the trial and a separation of his trial was ordered at the State’s request. The
appeal, which is with the leave of this court, is against the appellant’s conviction.
There is no appeal by accused 2.
[2] The appellant’s conviction arose from an incident on the appellant’s farm on
31 January 2004. On the day in question Mr Nelson Oupa Chisale (‘the deceased’),
a former employee of the appellant, arrived on the farm to collect pots which he
claimed he had left behind when the appellant dismissed him from his employ in
November 2003. There is a dispute as to the time of the deceased’s arrival ─
accused 1 said he arrived at 09:00; Mr Forget Ndhlovu, the security guard on duty at
the entrance gate which leads to the appellant’s farm, said it was at 11:00. Nothing
turns on this discrepancy. Upon his arrival the deceased was confronted first by
accused 1 and shortly thereafter by accused 2. They disputed that he had left any
pots on the farm. Unimpressed by the deceased’s persistence they assaulted him
with pangas, apprehended him and tied him to a tree. Ms Thuli Siwela, employed by
the appellant at the farm as a domestic worker, witnessed part of the assault and the
tying up of the deceased from a distance.
[3] At about 13:00 the appellant arrived on the scene with his painting supervisor,
1 See s 51 of the Criminal Law Amendment Act 105 of 1997.
Mr Robert Mnisi, and found the deceased still tied up, injured and bleeding. He had
two wounds to his head and it must be accepted, for reasons which we shall give
later, that he also had an open wound at the base of his neck. The appellant asked
the deceased why he had come to the farm. Instead of rendering assistance, he, too,
became aggressive. According to the State witnesses he kicked the deceased once
or twice on the side of his face and then asked his son, Chezrea, to fetch his pellet
gun from the house. His son returned with the gun and he pointed it at the deceased.
Accused 1, accused 2 and Siwela then asked the appellant not to shoot. The
appellant denied that he had kicked, or pointed the gun, at the deceased. He said
that he had merely threatened the deceased that should he return, he would be
waiting for him with the gun.
[4] The appellant then left the scene with Chezrea. He dropped Mnisi off at the
gate and proceeded to Matumi Lodge where he had to attend a parents’ meeting at
14:00. Accused 1, accused 2 and Siwela remained on the farm. Before leaving the
farm the appellant told Siwela that she should also leave.
[5] It was common cause that the appellant, Chezrea and Mnisi returned to the
farm later that night. Whether Mnisi did so in the interim was in dispute.The
appellant’s version is the following. When he left the lodge he noted several missed
calls to his cell phone from Mnisi. He then put a call through to Mnisi and the latter,
who sounded rather agitated, reported that there had been a ‘f… up’ on the farm.
Mnisi did not elaborate as to what had happened. The appellant then hastily drove to
the farm and found Mnisi at the gate. He picked him up and they proceeded to where
he had last seen the deceased tied to a tree. But the deceased was no longer there.
The deceased had been removed to a shower room where he found him lying on the
floor. The appellant felt for a pulse; there was none. Turning to Mnisi, he asked:
‘What now?’ Mnisi then suggested that they dispose of the deceased’s body either
by throwing it over the cliffs at Lydenburg or into a lion enclosure at Mokwalo White
Lion Camp. Implying that there would be no evidence against them if the body was
not found, Mnisi declared: ‘No body, no murder’. Mnisi threatened that if the
appellant did not agree to the plan they, meaning accused 1, accused 2 and himself,
would implicate the appellant in the murder, and get the local community to turn
against him and his family. The appellant said that he felt compelled to agree to
Mnisi’s suggestion. He then transported the deceased’s body in his bakkie
accompanied by accused 1 and Mnisi and the three of them assisted one another in
throwing it to the lions. The appellant admitted that before this was done he had cut
the cord tying the deceased’s hands together and that thereafter the cord was
thrown under a bridge at Hoedspruit.
[6] The crucial issue in the appeal is whether the deceased was alive or not when
he was thrown into the lion camp. According to the appellant he returned to the farm
at 22:00 whereas the security guard said he arrived at 20:13. Again nothing turns on
this disparity. If the times given by the witness Ndhlovu are accepted (11:00 and
20:00) more than nine hours would have elapsed from the time the deceased was
injured up to the time he was taken to the lion camp. The appellant’s case is that the
deceased had already died before he arrived back at the farm later that night and
that the cause of death must have been the injuries inflicted by accused 1 and 2
earlier that morning. The onus was on the State to establish beyond reasonable
doubt that the deceased was still alive when he was thrown into the lion camp. If a
reasonable possibility exists that the appellant’s version is true he was entitled to be
acquitted on the charge of murder. The appellant argued that the State failed to
discharge this onus.
[7] The trial court found that there was ‘abundant direct credible evidence that the
deceased was alive when he was conveyed to and thrown to the lions’. On appeal
the State sought to support this conclusion by relying principally on the evidence of
Mnisi and to a lesser extent on the evidence of accused 2 as also accused 1’s
statement to the police. We shall deal first with the evidence of Mnisi. Mnisi was the
only witness called by the State regarding the events on the farm that fateful
evening. Consequently the cautionary rule relating to the evidence of single
witnesses applies to his evidence. Mnisi was also an accomplice who was warned in
terms of the provisions of s 204 of the Criminal Procedure Act. The cautionary rule
applying to accomplices was stated as follows by Holmes JA in S v Hlapezula &
Others:2
‘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.’
[8] What constitutes corroboration was set out in S v Gentle:3
‘It must be emphasised immediately that by corroboration is meant other evidence which supports the
evidence of the complainant, and which renders the evidence of the accused less probable, on the
issues in dispute4 (cf R v W 1949 (3) SA 772 (A) at 778-9).’
Although the corroborative evidence must come from a source independent of the
witness whose evidence is sought to be corroborated, the evidence of another
accomplice can provide such corroboration: S v Avon Bottle Store (Pty) Ltd;5 S v
Hlapezula.6
[9] The appellant argued that the trial court erred in its assessment of the
evidence of Mnisi. In support of this argument counsel for the appellant referred to a
2 1965 (4) SA 439 (A) at 440D-H.
3 2005 (1) SACR 420 (SCA) at 430j-431a. (See also S v Heslop 2007 (4) SA 38 (SCA), 2007 (1)
SACR 461 para 12.
4 Emphasis in the original judgment.
5 1963 (2) SA 389 (A) at 393H.
6 Above, n 2 at 440H-in fine.
series of alleged misdirections which would justify this court on appeal in intervening
and reassessing the credibility of Mnisi and the other witnesses. Counsel argued that
Mnisi and accused 2 contradicted themselves and each other and that these
contradictions were disregarded by the trial court. The further submission was that
the trial court incorrectly relied on the extra-curial statements of accused 1 and 2.
[10] It is settled law that in the absence of demonstrable and material misdirection
a trial court’s findings of fact are presumed to be correct and that they will only be
disregarded on appeal if the recorded evidence shows them to be clearly wrong.7
[11] It is against this background that the findings of the court below must be
considered. The court found Mnisi to be a ‘credible and truthful’ witness. The
importance of the ‘numerous discrepancies’ the court itself found in his evidence
seems however to have escaped the learned judge. They were simply dismissed as
‘minor and non-material matters’. Three are important.
[12] In his statement Mnisi said that the appellant pointed the pellet gun at him and
accused 1 when he told the two of them to untie the deceased and put the latter in
the bakkie. That of course is inconsistent with the appellant’s version that disposal of
the body was Mnisi’s idea. Mnisi made no mention of the pellet gun in his evidence
in chief. His explanation for this omission appears from the following passage in his
evidence under cross-examination:
‘No you never made mention of a rifle there at that time when you gave evidence when my learned
friend for the State asked you to explain what happened. --- Yes, I at that stage responded to
questions put to me by the advocate for the State. I only responded to the questions and stopped.’
The explanation does not bear scrutiny. The prosecutrix repeatedly attempted to
elicit the evidence, as appears from the following passages in the record:‘Did anything
happen from there? --- He [the appellant] then forced me and accused 1 to load him onto the vehicle.
Why are you saying he forced you? --- The way he spoke to us: “Load him onto the vehicle quickly”.
And where is the threat [in what he] said? ---The threat was that if we do not load him onto the
7 See eg S v Hadebe 1997 (2) SACR 641 (SCA) at 645e-f and S v Naidoo 2003 (1) SACR 347 (SCA)
para 26.
vehicle, he would injure us also. We then loaded him.
. . .
Yes, the words that were coming from Mr Scott-Crossley. --- He said: “Load this person onto the
vehicle. If you do not do that, I will also injure you”.
And did he indicate as to how he was going to hurt you? --- No, he did not.’
The significance of this contradiction is that Mnisi’s evidence that the appellant
threatened him is unreliable and in the absence of a threat, Mnisi would appear to
have been a willing participant ─ which supports the appellant’s version.
[13] More important was the contradiction in Mnisi’s evidence about whether the
deceased had been gagged. In his evidence in chief Mnisi said he did not see a
piece of cloth in the deceased’s mouth. This was in response to a leading question
by the prosecutrix. The relevant passage in the record reads:
‘Now there is evidence before this court to the effect that after he [the deceased] was loaded into the
bakkie, some cloth was put in his mouth. Did you see that or did you not see? --- No, I did not see
that.’
No such evidence had been led at that time. During cross-examination the witness
changed his version. The relevant portion of his evidence reads:
‘Did you actually see Accused 3 put the cloth into the mouth of Nelson [the deceased]? --- That is
true.’
The witness’ explanation for the contradiction which is demonstrably untrue was:
‘Before I respond to that pertaining to the cloth, another question was put and I responded to that.’
Ultimately the witness admitted that he had told a lie in his evidence in chief; but then
he immediately withdrew the admission. This appears from the following passage in
cross-examination:
‘Yes, what I am trying to find out: you told an untruth yesterday when you said you did not see any
cloth in this man’s mouth. --- Yes.
So you are saying you lied yesterday? --- No, I did not lie yesterday. I was telling what happened. He
put the cloth into the deceased’s mouth.’
In our view the contradiction just referred to is material. It bears directly on the
question whether the deceased was alive or not. To state the obvious: there is no
point in gagging a dead body. In addition Mnisi testified that when the deceased was
thrown into the lion enclosure he heard him scream: ‘Yoo’. In that regard he was a
single witness. The contradiction concerning the gag casts doubt on whether he
could have heard the scream and whether the deceased could have screamed at all
if he was gagged. All of this was glossed over by the trial court.
[14] The ‘evidence’ referred to by the prosecutrix in the leading question put to
Mnisi came from accused 1. It was he who said in a statement made to the police
that a cloth was put in the deceased’s mouth and the deceased was told not to
scream. The statement was admitted in evidence in terms of s 3 of the Law of
Evidence Amendment Act, 1988 and in the light of the judgment of this court in S v
Ndhlovu.8 For purposes of this judgment we will assume, without deciding, that the
statement was properly admitted in evidence. Notwithstanding its admission it
remained untested. Its contents should have been carefully scrutinised in the light of
the other evidence to eliminate prejudice to the appellant and the other accused. The
court found that Mnisi’s evidence was corroborated by accused 1 in respect of the
mouth gag. The difficulty with this conclusion is that Mnisi gave two conflicting
versions in this regard. The conclusion reached by the trial court is flawed.
[15] The third important contradiction in Mnisi’s evidence was this. In his cross-
examination he described in detail how the deceased was tied when he and the
appellant first arrived at the farm. He said ‘one arm was tied to a tree and the other
one was tied to an aloe tree’. He demonstrated that the deceased’s arms were
stretched out more or less horizontal with his shoulders. He said that the deceased’s
legs were also ‘tied like his arms. They were also stretched out’ ie (as he confirmed)
apart. He had already said in his evidence in chief that when he returned later that
night with the appellant the deceased ‘was still tied up the way in the same position
as before’. But when he was questioned by the court his version changed. (This is
now the second version of how the deceased was tied.) He said that when the
deceased was placed on the bakkie he was untied from the tree, but his legs and
feet remained tied together. That version is impossible if he had initially been tied
spreadeagled which was his original version. During further questioning by the court
his version as to the tying changed again (a third version). This time he said that
8 2002 (2) SACR 325 (SCA).
when the deceased was loaded onto the van the appellant retied his hands and feet
to ‘prevent him not to move or alight from the moving vehicle’. In response to further
questioning by counsel as to what he had said in his statement concerning the
alleged tying of the deceased by the appellant, he reverted to one of the versions he
had given in answer to questions by the court (the second version):
‘And it [the tying by the appellant] does not appear in your statement. --- The police official asked me
who took down the statement as to whether he was still tied when he was loaded onto the vehicle and
I said yes. That is why it appears on the statement.’
But that was not the version which appeared in the statement. In the statement he
said:
‘He told Doctor and myself that we must untie Nelson and put him in the bakkie. On [sic] that time he
was pointing that rifle at us. We untie him and we put him in the bakkie. He assisted us to put him in
the bakkie. He said we must get inside too. He drove until [sic] to the gate where he instructed the
security to open the gate.’
Counsel for the appellant then put what was probably the final nail in the coffin by
asking:
‘Yes, but you did not tell his lordship and learned assessors that accused 3 [the appellant] retied him
after he was put on the bakkie. --- Yes, I did not mention that yesterday.’
[16] As a basis for dismissing the contradictions in Mnisi’s evidence as ‘minor and
non-material’ the court relied on the judgment of this court in S v Mkohle.9 In that
case it was said10 that contradictions per se do not lead to the rejection of a witness’
evidence; they may be indicative of an error made by a witness and not every error
made by a witness affects his credibility; and in each case the trier of fact has to
make an evaluation taking into account such matters as the nature of the
contradictions, their number and importance and the bearing on other parts of the
evidence. But in that matter Nestadt JA was concerned with discrepancies between
evidence of several witnesses on minor issues. The point is illustrated in the
following passage in the judgment (at 98d-f):
‘It is true that Clifford and Gloria contradict each other. Whilst Clifford stated that after the shooting he
and Gloria walked away, Gloria’s evidence was that the two of them had run away. Clifford said that
9 1990 (1) SACR 95 (A) at 98f-g.
10 At 98f-g.
appellant held his gun in his left hand but Gloria said that it was in his right hand. Clifford and Gloria
testified that appellant struck Nomute because of the manner in which she had spoken to Clifford,
Nomute’s explanation was that appellant was angry because she was out so late (which version
corresponded with that of appellant). There was also conflicting evidence as to whether appellant was
carrying a rubber, or indeed any, baton.’
Nestadt JA said11 that in his view ‘no fault can be found with [the trial judge’s]
conclusion that what inconsistencies and differences there were, were “of a relatively
minor nature and the sort of thing to be expected from honest but imperfect
recollection, observation and reconstruction”.’ The same cannot be said of Mnisi’s
evidence. In our view Mkohle was misapplied by the trial court.
[17] The trial court erred in another important respect. It found Mnisi to be reliable
by reason of the fact that his evidence was consistent with the statement he made to
the police. The court’s reliance on Mnisi’s previous statement was clearly wrong. The
general rule is that a witness’ previous consistent statement has no probative value:
R v Manyana;12 R v M;13 R v Rose;14 S v Mkohle.15
[18] The trial court further found that:
‘It is strikingly significant that Mnisi is corroborated by accused 3 on his evidence that the deceased
was tied up when he was conveyed to Mokwalo White Lion camp and that accused 3 used his pocket
knife to cut wires with which the deceased was tied up before throwing him into the lion camp.’
The contradictions in Mnisi’s evidence in regard to how, when and by whom the
deceased came to be tied up, were ignored. Furthermore, the fact that the version of
an accused coincides with that of a State witness on a particular point does not
provide corroboration for the latter’s evidence; we have already referred to what was
said in S v Gentle in para 8 above. Matters which are common cause between the
State and the accused cannot provide corroboration for matters in dispute ─
otherwise for example the fact that an accused in a rape case confirmed that he had
had sexual intercourse with the complainant could be taken as corroboration of the
11 At 98g-h.
12 1931 AD 386.
13 1959 (1) SA 434 (A).
14 1937 AD 467.
15 Above, at 99d.
latter’s version that he had done so without consent, which is plainly absurd. It is
convenient to remark at this stage that cutting off of the wire binding the deceased’s
wrists at the lion camp by the appellant and the disposal thereof by accused 1 at the
appellant’s instance, does not by itself lead to an inference that the appellant killed
the deceased. It is equally consistent with an intention to cover up the crime: a dead
body with bound hands in a lion enclosure would inevitably excite suspicion.
[19] Notwithstanding all the contradictions to which we have referred Mnisi was
found to be a ‘credible and truthful’ witness. That conclusion was clearly wrong.
[20] The State on appeal also relied on the evidence of accused 2 on the question
of whether the deceased was alive or not when he was removed from the farm. The
simplistic argument advanced by the State was that Mnisi and accused 2
corroborated each other on the fact that the deceased was still alive when the
appellant returned to the farm on the night in question. But there are fundamental
differences between the evidence of accused 2 and that of Mnisi. We have already
referred to accused 2’s version that at some stage during the appellant’s absence
the deceased complained that he was feeling cold whereupon Mnisi and accused 1
untied him from the tree, carried him to the shower room and locked him in by tying
the door with an electric cord from the outside. Accused 2 also said that Mnisi
returned to the farm with the appellant at 20:30. He continued that when the shower
room door was opened by the appellant the deceased walked out whereupon
accused 1, Mnisi and the appellant tied him up. Accused 2 therefore corroborates
the version of the appellant to the extent that the deceased was in the shower room
when the appellant returned. But the version that the deceased walked out of the
shower room is difficult to accept in the light of the severe injuries that the deceased
had sustained. By then the deceased would have been bleeding for more than 9
hours (from 11:00 when he was assaulted with pangas by accused 1 and 2 until
20:30 when accused 2 says Mnisi and the appellant arrived). It is obvious why
accused 2 would say that the deceased had been alive when the appellant returned
with Mnisi: it was he and accused 1 who had severely assaulted the deceased and it
suited him to pass the blame for the deceased’s death to someone else. The court
reasoned as follows in respect of accused 2’s version:
‘Accused 2’s evidence is that the deceased was placed in a shower room, untied and locked up by
tying the door earlier that evening and that when accused 3 and Mnisi came back at about 20:30 the
deceased walked out of the shower room and was then tied up by accused 1, Robert Mnisi and
accused 3. Mnisi’s version is that the deceased was still tied up at the tree when he and accused 3
came back at 20:30. Accused 3’s version is that the deceased was lying dead in the shower room
when he returned with Robert Mnisi. On a consideration of all the evidence, the evidence which is
credible and reliable on this matter is that contained in paragraph 4 of the statement by accused 1
(exhibit “D” above). This is consistent with the credible evidence of Robert Mnisi.’
Mnisi’s evidence, as we have attempted to show in some detail, was anything but
credible. No satisfactory reason is given by the court as to why the statement of
accused 1 should be regarded as ‘credible and reliable’ ─ as we have pointed out
already, it was untested in cross-examination.
[21] Mnisi and accused 2 also differed as to what happened on the farm while the
appellant was at Matumi Lodge. According to Mnisi he only returned to the farm with
the appellant that evening after 20:00. Both accused 1 (in his statement) and
accused 2 said Mnisi had also been on the farm during the afternoon. Accused 2
said at a certain stage the deceased complained that he was feeling cold. Accused 1
and Mnisi then untied the deceased and carried him to the shower room. This
version was rejected by the court on the basis that it was not put to Mnisi and was
not mentioned by accused 2 in his evidence in chief. What is significant however is
that accused also said that Mnisi was on the farm during the appellant’s absence. If
this is true the question is: why was he there and why did he himself not mention it?
Accused 2 said he saw Mnisi changing positions in the yard trying to get a signal,
apparently in order to phone from his cell phone. At one stage he saw him climbing
on the roof. If this is true it tends to corroborate the appellant’s version ─ which Mnisi
denied ─ that before he returned to the farm he had received missed calls from
Mnisi. It is true that Mnisi’s return to the farm during the appellant’s absence only
came to light after Mnisi had given evidence. But there was no reason not to recall
him to clarify the issue.
[22] We turn to consider the appellant’s version. The court rejected it out of hand.
It was the appellant’s version, supported by a forensic pathologist, Dr L Wagner, that
the deceased had died from injuries inflicted by accused 1 and 2 before he returned
to the farm on the night in question. It is not necessary to deal with Dr Wagner’s
evidence. It is not readily apparent from the record as to why the appellant’s
evidence was rejected. The record does not show him to have been a poor witness.
He did not contradict himself and the trial court in its detailed judgment made no
reference to any contradictions or inconsistencies when evaluating his evidence. The
court did find it improbable that Mnisi would have threatened the appellant. We do
find this evidence somewhat improbable. But we cannot agree with the trial court’s
reasoning for rejecting the appellant’s version on this point. The court referred to the
appellant’s evidence that Mnisi had suggested that the body be thrown off the cliffs
at Lydenburg or into the enclosure at the lion camp, and continued:
‘Accused 3 states that he on his own, took the decision to take the body to Mokwalo White Lion camp.
His reason for this election was that it was much nearer to go to Mokwalo than to Lydenburg
particularly since there was a greater risk of meeting with a police road block if they went to
Lydenburg. This was an incredible piece of evidence in the light of the evidence by accused 3 that he
felt seriously threatened by Mnisi and acted under compulsion when he conveyed the dead body of
the deceased to Mokwalo. One would have expected that he would have chosen the route that would
increase the prospect of meeting up with the police to extricate him from the compulsion.’
But meeting up with the police was the last thing that the appellant would have
wanted, on his version. This would not have ‘extricated him from the compulsion’ ─ it
would have brought about the very consequence with which (according to him) Mnisi
had threatened him and which he wanted to avoid ─ namely, discovery of the body,
in which case Mnisi and the other two accused would have implicated him in the
murder and turned the community against him.
[23] The appellant must have appreciated that it would have fallen to him, not his
employees, to explain the presence of a dead body on his bakkie or, if it had not
been moved, on his farm. As a lay person, given his earlier inaction or, on the State’s
version, his assault on the deceased, and the deceased’s subsequent death on his
farm, he may well have felt at least morally blameworthy for, if not complicit in, the
deceased’s death. It must moreover be appreciated that the immediacy of the crisis
offered him little opportunity for pause and careful reflection. Against that backdrop
and from his perspective, it would hardly have seemed likely that any explanation
proffered by him would be acceptable. It is accordingly not difficult to understand him
being dragooned into disposing of the deceased’s body. Nevertheless, the version of
the appellant that it was Mnisi ─ who played no part in the initial assault on the
deceased ─ who threatened him, remains somewhat improbable.
[24] On the other hand the version of Mnisi that he was threatened and forced to
transport the body is unimpressive. We have already discussed the difficulties with
Mnisi’s evidence in regard to the presence or absence of the pellet gun, before the
deceased was conveyed from the farm. Nor did the trial court identify or list those
alleged threats ─ as it did with the other factors ─ as one of the facts found proved
against the appellant.
[25] The trial court said:
‘It is a known fact that in general the nature of the relationship between farm workers and farm
employees is characterised by docile submissiveness on the part of the servant and a domineering
and overbearing attitude on the part of the master. The court has had the opportunity to observe the
employees as they testified. We are satisfied that they are all typical farm workers.’
But accused 1 did not testify. In addition the evidence was that when the appellant
kicked the deceased and pointed a pellet gun at him after his arrival on the scene,
Mnisi, accused 1 and 2 and Siwela were anything but docile and submissive. They
took it upon themselves to remonstrate with the appellant. They told him not to shoot
and he stopped. It also appears that there was a close relationship between Mnisi
and the appellant. From the record, at any rate, he appears to have been the
appellant’s trusted lieutenant. They addressed each other by their first names: the
appellant called Mnisi ‘Rob’ and he called the appellant ‘Mark’. A further example of
their closeness is to be found in the evidence of accused 2 that during the fatal
evening Mnisi bought beers and invited the appellant to have one with him. The
above discussion illustrates the danger of stereotyping which may result in unfair and
unwarranted generalisations being made. Such generalisations are to be avoided in
judicial reasoning as they may result in a miscarriage of justice. The remarks made
by the court concerning the relationship between farmers and farm employees was
not justified in this case and is a further misdirection. This of course does not mean
that no farm workers are submissive to their employers. But the evidence in the
record does not establish that such was the case here.
[26] The court a quo held against the appellant the fact that his full version as to
everything that had transpired on the day in question was not put to certain State
witnesses. The court reasoned:
‘At the stage that the version of accused 3 was put to Mnisi for the first time as aforestated, the
following witnesses on the facts had already testified and were cross-examined: Forget Ndlovu,
Sergeant Ferreira, Zodwa Mathebula and Thuli Siwela. Accordingly the case or version of accused 3
was not put to these witnesses. The principle as stated in S v Van As 1991 (2) SACR 74 (W) is that
the failure of the accused to put his version or case to state witnesses will in an appropriate case
justify an adverse inference being drawn against such an accused when assessing or evaluating the
credibility of his version.’
But it is not necessary for an accused’s version to be put in all its detail to every
witness who takes the stand to give evidence for the State. The limits of the
obligation to put the defence version to State witnesses appear from the following
passage in Phipson, Evidence (7th ed p 460) quoted in R v M:16
‘As a rule a party should put to each of his opponent’s witnesses in turn so much of his own case as
concerns that particular witness,17 or in which he had a share. . . . If he asks no questions he will, in
England, though not perhaps in Ireland, generally be taken to accept the witness’s account. . . .
Moreover, where it is intended to suggest that the witness is not speaking the truth upon a particular
point, his attention must first be directed to the fact by cross-examination, so that he may have an
opportunity of explanation. . . . Failure to cross-examine, however, will not always amount to an
acceptance of the witness’s testimony, e.g. if the witness has had notice to the contrary beforehand,
or the story is itself of an incredible or romancing character. . . ‘.
It must also be emphasised that the failure to put a version, even where it should
have been put, does not necessarily warrant an inference that the accused’s version
is a recent fabrication. The words ‘in an appropriate case’ taken by the trial judge
16 1946 AD 1023 at 1028. See also Small v Smith 1954 (3) SA 434 (SWA) at 438E-G and S v Van As
1991 (2) SACR 74 (W) at 108c-h.
17 Emphasis supplied.
from S v Van As are important. As Davis AJA said of the passage in Phipson just
quoted:
‘These remarks are not intended to lay down any inflexible rules even in civil cases, and in a criminal
case still greater latitude should usually be allowed.’
The learned judge went on to say:18
‘That at that stage the girls should have been cross-examined I have no doubt; indeed, I have
difficulty in imagining why this was not done. Whatever the reason it was certainly unfortunate that he
[the attorney for the accused] did not do so. But in the circumstances of this case I am unable to draw
any inference adverse to the accused from his failure. When Lydia was recalled it must again be said
that he should have taken advantage of the opportunity to cross-examine; but then it is only fair to say
that the prosecutor, or at least the magistrate, should have put the story to her at that stage. And he
might well also have recalled the complainant; compare Rex v. Filanius (1916 T.P.D. 415 at p. 418),
per MASON, J. The learned Judge, who delivered the judgment of the Court a quo, gave a number of
points on which “severe criticism can be directed to the evidence of the appellant (the accused) and
his witness (Campher)”. The first is the failure to put the defence case to the two girls; this he
describes as “most significant”. But significant of what? Significant, as I would suggest under the
circumstances of this particular case, of nothing but an error of judgment on the part of the attorney.’
The adverse inference drawn by the court against the appellant for the failure to put
the full defence version to the witness Ndhlovu was not justified and a misdirection.
He was at no stage at the scene on the farm. The same applies to the evidence of
Siwela ─ she did not testify on the events which occurred on that fatal night as she
was not present, having left shortly after 13:00 ─ and to the other witnesses
mentioned in the judgment of the trial court, who were never at the farm on the day
in question.
[27] Given the nature and severity of the injuries sustained by the deceased in the
assault, and the period of time that elapsed between the infliction of those injuries
and the appellant’s return to the farm that night, the appellant’s version that the
deceased was already dead when he returned is in our view not improbable and
ought not to have been rejected by the court. Although the court mentioned the
injuries, it does not appear to have considered their significance in relation to the
question whether the deceased was still alive when the appellant returned. The court
18 At 1028-9.
accepted the word of accused 1 (in his statement) and 2 that the deceased was
bleeding ‘moderately’ earlier in the day after they had assaulted him. But they had
every reason to minimise the severity of the wounds they themselves had inflicted.
Siwela also said that the deceased was bleeding ‘moderately’ from the head injuries.
But she was viewing the whole scene from a distance. It is therefore Mnisi who
provides more reliable evidence as to the wound on the neck. Yet despite its general
acceptance of Mnisi’s evidence, the trial court did not accept what he said on that
point. Neither the spontaneous observation made by Mnisi in his evidence in chief,
confirmed in cross-examination, that blood oozed from the neck wound when the
deceased was breathing, which corroborated the appellant’s version on this point,
nor his evidence (also in chief) that when (according to him) the appellant pointed
the firearm at the deceased, the latter was unable to say anything because he was
injured, made any impression on the court. Nor was consideration given to the
evidence of accused 2 that at a certain point in time during the appellant’s absence
the deceased complained of feeling cold (on a hot summer’s day in Phalaborwa) and
accused 1 and Mnisi carried him to the shower room.
[28] At the end of the day what the trial court was faced with was a statement by
an accomplice, accused 1, which was untested in cross-examination and oral
evidence of two other accomplices, Mnisi and accused 2, who were demonstrably
unreliable and who contradicted each other in fundamental respects. On the other
hand there was the evidence of the appellant which was somewhat improbable as to
the alleged threat made by Mnisi but otherwise not susceptible to any legitimate
criticism. The improbability in the appellant’s evidence, such as it is, is not sufficient
to carry the day for the State. As Brand JA said in S v Shackell:19
‘It is a trite principle that in criminal proceedings the prosecution must prove its case beyond
reasonable doubt and that a mere preponderance of probabilities is not enough. Equally trite is the
observation that, in view of this standard of proof in a criminal case, a court does not have to be
convinced that every detail of an accused’s version is true. If the accused’s version is reasonably
possibly true in substance the court must decide the matter on the acceptance of that version. Of
course it is permissible to test the accused’s version against the inherent probabilities. But it cannot
19 2001 (4) SA 1 (SAC), 2001 (2) SACR 185, [2001] 4 All SA 279, para 30.
be rejected merely because it is improbable; it can only be rejected on the basis of inherent
probabilities if it can be said to be so improbable that it cannot reasonably possibly be true. On my
reading of the judgment of the Court a quo its reasoning lacks this final and crucial step.’
The conclusion is unavoidable that the appellant was wrongly convicted of murder.
[29] There can be no question however that the appellant participated in the
concealment of the crime of murder and thus made himself guilty of being an
accessory after the fact to that crime. He transported the body of the deceased in his
vehicle and assisted in disposing of it at the lion camp so as to enable accused 1
and 2 to evade the consequences of their crime. In the circumstances the appellant
should have been convicted of being an accessory after the fact to murder. This was
correctly conceded by counsel for the appellant during argument before us. Counsel
for the State asked for no conviction other than one of being an accessory after the
fact to murder to be substituted in the event that this court found that the murder
charge had not been proved.
[30] Before dealing with the question of sentence there is one matter on which we
unfortunately feel it is our duty to comment. During re-examination of the appellant
the trial judge referred to the following passage in the appellant’s affidavit in support
of his bail application:
‘I am advised by my attorney that all STR DNA results and comparisons between various individuals
and human remains discovered at the Mokwalo Nature Reserve [ie the lion camp] are negative.
Therefore the identity of the deceased could not be established through any DNA analysing system at
the forensic science laboratory of the South African Police. Due to the fact that the relevant
documentation from the Department of Home Affairs regarding the identity of the deceased is absent
from the police docket, and the fact that the DNA test results could not identify the deceased, the
identity of the deceased is not proven beyond reasonable doubt.’
The trial judge then questioned the appellant as follows:
‘And at the time we know that you took at least his body to Mokwalo Farm and threw it to the lions.
You knew it. --- Sir I knew that, but I was not going to do the State’s work for them.
And you said under oath that the identity of this person has not been proved. --- Sir, that was a signed
document I signed in the holding cell, I was not in the court when I signed that.
But you agree that this is terribly disingenuous, because you took the body there, you knew the body
was thrown to the lions, whether alive or dead, you knew it. --- The State had not proved that at that
stage.
It does not matter, you knew it. --- To me it matters sir.
You knew it. ---To me it mattered.
You knew it, you lied. --- I did not lie.’
The approach by the trial judge was unfortunate and misconceived. It was
unfortunate both because he descended into the arena and expressed a firm view as
to the appellant’s credibility whilst he was still testifying and that is plainly
undesirable.20 It was misconceived because the two pillars of our criminal justice
system are that an accused is presumed innocent until proven guilty and that the
onus is on the State to prove such guilt beyond a reasonable doubt. A corollary to
these principles is that an accused is entitled not to incriminate him/herself. The
attitude of the trial judge was contrary to these principles. As a matter of fact, at the
stage that the bail application was brought the State had failed to identify the body.
As a matter of law, the accused was not obliged to assist the State in doing so. The
comment by the trial judge that the accused had ‘lied’ was therefore without
foundation in fact or law.
[31] We turn to consider an appropriate sentence. We shall deal first with the
personal circumstances of the appellant. On 30 September 2005, the very morning
on which he was sentenced to life imprisonment by the trial court, the appellant who
was then 38 years old, re-married. Prior to his re-marriage, he had been the primary
caregiver of his two minor children from his previous marriage. Although his parents
divorced when he was approximately 18 years old, he had enjoyed a relatively
normal childhood. At the time of the commission of the offence, the appellant
employed approximately 100 people on his game farm and in his construction
business. He thus contributed significantly to the socio-economic infrastructure of his
local community. Despite work being scarce in the area and his having a captive
workforce, his employees were reportedly well-paid.
[32] There was some suggestion in the evidence that the crime was a racially
20 S v Radebe 1973 (1) SA 796 (A) at 812H; S v Rall 1982 (1) SA 828 (A) at 831 in fine-832H; S v
Matthys 1999 (1) SACR 117 (C) at 120i-121a.
motivated one. However, Dr M Tsele, a representative of the South African Council
of Churches who was called by the State in aggravation of sentence, conceded that
as the evidence unfolded he was persuaded that his initially held view that the crime
was racially motivated, was wrong. ‘What captivated the nation’, according to
Maluleke J ‘was the rather frightening idea of a human being fed to lions’ ─ as well it
should. But it was not proved that this happened. There is a vast difference between
throwing an injured man to the lions with the intention that they devour him whilst he
is still alive, and disposing of a dead body to conceal a murder that has already
taken place. One’s instinctive revulsion at the thought of a human being being fed to
lions must thus be tempered accordingly.
[33] The disposal of the deceased’s body in that fashion is not without significance
though, for it denied the deceased a dignified burial. Considering the importance that
is attached to a proper funeral in many of our communities and the psychological
need for closure, the emotional distress to the deceased’s family must have been
enormous. Violating a dead body is itself a crime because it ‘offends the public
sense of decency’.21 Although motivated by the desire to avoid detection, the
disposal of the deceased’s body by throwing it to the lions must undoubtedly rank as
an aggravating feature.
[34] The natural indignation that the community must feel at the appellant’s
conduct warrants appropriate recognition in the sentence. Nevertheless that can
hardly invite a sentence that is out of proportion to the nature and gravity of the
offence. Against the public interest must be weighed the unblemished record of the
appellant, who, at the time of the commission of the offence, was a useful member of
society upon whom some 100 people and their families were economically
dependant. To his credit, the appellant has expressed contrition and remorse.
[35] Plainly any sentence imposed must have deterrent and retributive force. But
of course one must not sacrifice an accused person on the altar of deterrence. Whilst
21 Milton South African Criminal Law and Procedure vol II p 283.
deterrence and retribution are legitimate elements of punishments, they are not the
only ones, or for that matter, even the over-riding ones. Against that must be
weighed the appellant’s prospects of reformation and rehabilitation, which appear to
be good. It is true that it is in the interests of justice that crime should be punished.
However, punishment that is excessive serves neither the interests of justice nor
those of society.
[36] Accused 2 who was party to a vicious attack upon the deceased with pangas
that ultimately led to the latter’s slow and obviously painful death, was sentenced to
an effective term of imprisonment of 12 years. Compared to accused 2 the
appellant’s conduct was less morally reprehensible by far. Moreover, the appellant
had spent 17 months in custody awaiting trial.
[37] The sentence imposed by this court can, in terms of s 282 of the Criminal
Procedure Act 51 of 1977, be backdated to the date on which sentence was imposed
by the trial court but it cannot be backdated to the date upon which the appellant was
arrested. Nevertheless the time spent in custody by the appellant awaiting trial can
and should be taken into account by this court in determining the duration of the
sentence.
[38] The conclusion to which we have come bearing all the above factors in mind
is that a proper sentence would be five years imprisonment backdated to 30
September 2005.
[39] In the result the following order is made:
1.
The appeal is allowed to the extent set out below.
2.
The appellant’s conviction for premeditated murder and the sentence of life
imprisonment are set aside.
3.
There is substituted a verdict of guilty of being an accessory after the fact to
murder.
4.
The sentence is altered to 5 (five) years imprisonment backdated to 30
September 2005.
______________
MTHIYANE JA
JUDGE OF APPEAL
_____________
CLOETE JA
JUDGE OF APPEAL
_____________
PONNAN JA
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 September 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
SCOTT-CROSSLEY v S [2007] SCA 127 (RSA).
1.
The SCA today unanimously upheld the appeal of Mr Scott-
Crossley against his conviction for murdering Mr Oupa Chisale whom he
admitted throwing into the lion enclosure at the Mokwalo game park. The
court found that the prosecution had not proved beyond a reasonable
doubt that the deceased was alive when this was done. As Scott-
Crossley had assisted in the disposal of the deceased’s body with the
intention of concealing the murder, perpetrated by at least one of his
employees, a conviction of being an accessory after the fact to murder
was substituted.
2.
The court remarked that there was a vast difference between
throwing an injured man to the lions with the intention that they devour
him whilst he is still alive, and disposing of a dead body to conceal a
murder that has already taken place. The sentence of life imprisonment
imposed for the murder was set aside and five years’ imprisonment
substituted for the lesser offence.
3.
The SCA found that the trial court had misdirected itself on the
facts and the law. In particular, the evidence led by the prosecution was
unreliable as the eyewitnesses were accomplices and they had
contradicted themselves and each other. In the opinion of the SCA the
panga wounds inflicted on the deceased by Scott-Crossley’s co-
accused, Mr Doctor Mathebula and Mr Simon Mathebula, earlier in the
day when he was not present, could reasonably have caused the
deceased’s death before he was transported to the lion park by Scott-
Crossley and one of his co-accused that night.
4.
Simon Mathebula, who was convicted of murder and sentenced to
an effective twelve years’ imprisonment, did not appeal against either his
conviction or sentence.
--ends-- |
2229 | non-electoral | 2009 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 221/08
NATIONAL TERTIARY RETIREMENT FUND
Appellant
and
REGISTRAR OF PENSION FUNDS
Respondent
Neutral citation:
National Tertiary Retirement Fund v Registrar Pension Funds
(221/08) [2009] ZASCA 41 (31 March 2009)
Coram:
HARMS DP, STREICHER, CLOETE, JAFTA JJA and BOSIELO
AJA
Heard:
9 MARCH 2009
Delivered:
31 MARCH 2009
Summary:
Pension Funds Act 24 of 1956 – amendment of rules – benefits
payable upon retirement reduced – reduction affecting benefits
payable upon cessation of membership prior to retirement –
amendment not inconsistent with s 37A and s 14A – no
discretion to refuse registration conferred on registrar by
s 12(1)(b).
_____________________________________________________________________
ORDER
_____________________________________________________________________
On appeal from: High Court, Pretoria (Rasefate AJ sitting as court of first
instance)
The following order is made:
The appeal is upheld with costs including the costs of two counsel.
The order by the court below is replaced with the following order:
‘(i)
The decision by the Board of Appeal is reviewed and set aside.
(ii)
The following order is substituted for the order by the Board of
Appeal:
“(a)
The appeal is upheld with costs including the costs of two
counsel.
(b)
The registrar is directed to register, in terms of s 12 of the
Pension Funds Act 24 of 1956, amendment number 31 to
the appellant’s rules.”
(iii) The costs of the application including the costs of two counsel are
to be paid by the registrar.’
_____________________________________________________________________
JUDGMENT
_____________________________________________________________________
STREICHER JA (HARMS DP, CLOETE, JAFTA JJA and BOSIELO AJA
concurring)
[1] The appellant is a pension fund which applied to the Registrar of
Pension Funds, the respondent, for the approval and registration of an
alteration to its rules. When such approval and registration was refused
the appellant appealed to the Board of Appeal established in terms of
s 26(1) of the Financial Services Board Act 97 of 1990 (‘the FSB Act’).
The Board of Appeal dismissed the appeal. The appellant thereupon
applied to the Pretoria High Court for an order reviewing and setting
aside the decision of the Board of Appeal and replacing it with an order
directing the respondent to register the alteration of the appellant’s rules.
The Pretoria High Court, per Rasefate AJ, dismissed the application. It is
against this dismissal of its application that the appellant, with the leave
of the court below, now appeals to this court.
[2] The appellant is registered as a pension fund in terms of s 4 of the
Pension Funds Act 24 of 1956 (‘the Act’). It was established with effect
from 1 December 1994. The employers participating in the appellant are
all higher educational institutions previously known as ‘Technikons’.
Members of the Associated Institutions Fund (‘AIPF’) and the Temporary
Employees Pension Fund (‘TEPF’) were given the option to join the
appellant with effect from its inception on 1 December 1994. In terms of
specific regulations under the Associated Institutions Pension Fund Act
41 of 1963 only the funding portion of the actuarial reserve values of the
members and pensioners of the AIPF and the TEPF who elected to join
the appellant, were transferred to the appellant. This resulted in these
members having only 60,8 cents in the Rand value of their actuarial
reserve transferred. Although only the funded portion of the actuarial
reserves were transferred the full value of the actuarial reserves were
taken as the opening balances of the AIPF and TEPF members in the
appellant. The deficit so created, referred to as the pure deficit, was
eliminated by the appellant in 2002.
[3] The pure deficit was not the only deficit which arose upon the
transfer of the AIPF and TEPF members. In terms of rule 4.1 of the
appellant’s rules a member who retires from service on his or her normal
retirement date must receive a pension vesting on the following day
secured by his or her member’s share at that date, less the amount of any
lump sum benefit paid in terms of rule 4.5. A member’s share consists,
among others, of an opening balance comprising the member’s nett
actuarial liability in the previous fund, the member’s and the employer’s
contributions in terms of the rules and investment earnings transferred
from the Reserve Account, less certain debits to that account, such as
attributable valuation losses and lump sum payments in terms of rule 4.5.
However, rule 4.6 provides certain guarantees to the members who
transferred from the AIPF and the TEPF. The relevant portion of the rule
reads as follows:
‘4.6(1) A Member, who was a Member of the Associated Institutions Pension
Fund, . . . shall be guaranteed the following minimum benefits when he or she retires
on his or her Normal Retirement Date, . . .
(a)
A Pension of 1/50th of the Member’s Average Final Salary per year of
Pensionable Service; and
(b)
A gratuity of 7,25% of the Member’s Average Final Salary per year of
Pensionable Service; provided that such gratuity shall never be greater than one-third
of the Member’s total benefit at retirement (or up to the whole thereof if allowed by
income tax legislation).
(2)
A Member, who was a Member of the Temporary Employees Pension Fund,
shall be guaranteed the following minimum benefits when he or she retires on his or
her Normal Retirement Date . . .:
A pension of 2,75% of the Member’s Average Final Salary per year of Pensionable
Service.’
[4] On 31 December 2003, the effective date of the appellant’s last
statutory actuarial valuation, 2 979 members who had transferred to the
appellant on 1 December 1994 from the AIPF and the TEPF qualified for
the guaranteed benefits. There is a substantial difference between the
value of the guaranteed benefits and the relevant members’ shares of the
appellant (‘the guaranteed benefit deficit’). The deficit was partly caused
by the investment performance of the Fund having been lower than
expected and salaries having been increased at rates higher than the
increase in the rate of inflation. Whether the appellant will in future have
sufficient assets to pay for these guarantees is dependent on investment
returns and salary increases.
[5] Yet a further deficit was created when the Act was amended by the
introduction of s 14A in terms of the Pension Funds Second Amendment
Act 39 of 2001 which came into effect on 7 December 2001. Whereas the
guaranteed benefits in terms of rule 4.6(1) and (2) apply upon retirement,
s 14A makes provision for minimum benefits to a member who ceases to
be a member prior to retirement. Subsection (1)(a) thereof provides:
‘Every registered fund shall provide the following minimum benefits:
(a)
The benefit paid to a member who ceases to be member of the fund prior to
retirement in circumstances other than liquidation of the fund shall not be less than the
minimum individual reserve; . . ..’
The minimum individual reserve of the AIPF and TEPF members is, in
terms of s 14B(2)(a), to be determined with reference to the guaranteed
benefit.
[6] At a meeting held in November 2002 between the appellant and the
committee of the employers participating in the appellant, being
Technikon principals, it was decided that every Technikon should take
financial responsibility for the portion of the guaranteed benefit deficit in
respect of the members of the appellant who were its employees. All the
technikon employers, except one, signed agreements with the appellant
giving effect to the decision. They agreed to make good the shortfall
between the guaranteed minimum retirement benefit and the normal
retirement benefit of any of their employees who qualified for the
guaranteed benefits as and when those employees retired. The exception
referred to was the Border Technikon which has only one employee who
qualifies for the guaranteed benefits.
[7] The new benefits in terms of s 14A became payable by the
appellant on early withdrawals as from 1 January 2005. As a result a
deficit of about R69 million arose in the appellant (‘the minimum benefit
deficit’). From discussions by the appellant with the participating
employers it became clear that they were not in a financial position to
fund the additional minimum benefit deficit.
[8] As a result of these deficits the appellant resolved to amend its
rules so as to provide that the ‘guaranteed benefits’ would remain payable
on the retirement of a member only if the employer of the member pays
the portion of the guaranteed benefit applicable to that member. The
amendment had the effect of reducing the benefits payable by the
appellant upon the retirement of a member and because the minimum
benefits upon early withdrawal are to be determined by reference to the
guaranteed benefits, those benefits were also reduced. According to the
appellant it is unable itself to meet the guaranteed benefits; the rules of
the appellant do not require the participating employers to fund the deficit
and the amendment is the result of the appellant having secured a
contractual commitment from the employers to fund the benefit as and
when affected members retire. The only alternatives would be, so the
appellant contends: (a) an amendment which deletes any entitlement
whatsoever to the guaranteed benefit; or (b) the liquidation of the Fund.
[9] The appellant thereupon submitted the resolution to the respondent
for approval and registration in terms of s 12 of the Act. The section
provides as follows:
‘12(1) A registered fund may, in the manner directed by its rules, alter or rescind any
rule or make any additional rule, but no such alteration, rescission or addition shall be
valid-
(a)
if it purports to effect any right of a creditor of the fund, other than a member
or shareholder thereof; or
(b)
unless it has been approved by the registrar and registered as provided in
subsection (4).
(2)
. . ..
(3)
If any such alteration, rescission or addition may affect the financial condition
of the fund, the principal officer shall also transmit to the registrar a certificate by the
valuator or, if no valuator has been employed, a statement by the fund, as to its
financial soundness, having regard to the rates of contributions by employers and, if
the fund is not in a sound financial condition, what arrangements will be made to
bring the fund in a sound financial condition.
(4)
If the registrar finds that any such alteration, rescission or addition is not
inconsistent with this Act, and is satisfied that it is financially sound, he shall register
the alteration, rescission or addition and return a copy of the resolution to the principal
officer with the date of registration endorsed thereon, and such alteration, rescission
or addition, as the case may be, shall take effect as from the date determined by the
fund concerned or, if no date has been so determined, as from the said date of
registration.’
[10] It is not in issue that the amendment was done in the manner
directed by the appellant’s rules. But the respondent refused to approve
the amendment for the following reasons:
(i)
The amendment would have the effect of reducing the minimum
benefits payable to those members who resign from the Fund.
(ii)
If the responsibility for the retirement benefit is passed on to the
employers, the members would be at the mercy of their employers and
would no longer have the protection of the respondent.
(iii)
Not all participating employers agreed to take on the additional
responsibility.
(iv)
The effect of the amendment had not been explained to members.
(v)
The respondent was not satisfied that the employers appreciated
that if the amendment were to be registered there would be a surplus at
the surplus apportionment date which would not be available to
employers but would have to be paid to former members.
(vi)
The respondent did not believe that the employers realised that
should the appellant be put into liquidation after 1 January 2005, then, in
terms of s 30(3) of the Act, they would be responsible for paying into the
appellant enough money to cover the minimum benefit forthwith.
[11] The appellant thereupon lodged an appeal against the respondent’s
decision with the Board of Appeal established in terms of s 26 of the FSB
Act. In terms of s 26(2), any person aggrieved by a decision by the
executive officer of the Financial Services Board, under a power
conferred or a duty imposed upon him by or under the FSB Act or any
other law, may appeal against such decision to the Board of Appeal. The
executive officer of the Financial Services Board is also the Registrar of
Pension Funds (the respondent)1. Accordingly any person aggrieved by a
decision of the respondent under a power conferred or a duty imposed
upon him by or under the Act, may appeal against such decision to the
Board of Appeal.
1 Section 3 of the Act.
[12] In a second statement the respondent elaborated on his reasons as
follows:
(i)
What the legislature had in mind is that a fund should be self-
contained and should be able to meet its obligations as and when they
arise, without having to rely on promises made by or contracts concluded
with third parties, such as employers, whose financial position is not
subject to scrutiny by the Registrar.
(ii)
The amendment effectively removes the existing guarantee to
members by the Fund and replaces it with a conditional guarantee,
conditional upon a payment by a third party to the Fund.
(iii)
Where a rule amendment erodes the right of a member to receive
such payment on retirement by making an existing unconditional
guarantee conditional upon payment by a third party who may or may not
be contractually obliged to make such payment to the Fund, this
amendment is inconsistent with the Pension Funds Act.
[13] The provisions of the Commissions Act 8 of 1947, particularly the
provisions relating to witnesses and their evidence, applied to the Board
of Appeal2 and it could, after the hearing of the appeal confirm, set aside
or vary the decision against which the appeal was brought, order that the
decision of the Board of Appeal be given effect to or refer the matter back
for consideration or reconsideration by the respondent in accordance with
such directions as the Board of Appeal laid down.3 The Board of Appeal
was therefore ‘not restricted at all by the [respondent’s] decision and
[had] the power to conduct a complete rehearing, reconsideration and
fresh determination of the entire matter that was before the [respondent],
with or without new evidence or information’.4
2 Section 26(7) of the FSB Act.
3 Section 26(10).
4 Nichol and Another v Registrar of Pension Funds and Others 2008 (1) SA 383 (SCA) at para 22.
[14] The Board of Appeal dismissed the appeal. It held that s 12 of the
Act conferred a wide and equitable discretion on the respondent to refuse
the registration of rule amendments. When deciding whether or not to
approve a rule amendment in terms of s 12(1)(b) the respondent must take
cognisance of the purpose of the Act namely to ensure that pension funds
are operated fairly, properly and successfully. It held furthermore that the
rule amendment is inconsistent with the Act and that the respondent was
for that reason entitled to refuse to approve and register it. The rule
amendment is inconsistent with the Act because it reduces the benefits
provided for, contrary to the provisions of s 37A and s 14A and takes
away from the Fund the responsibility to pay the guaranteed benefits.
Having so taken away the responsibility to pay the guaranteed benefits
the responsibility is transferred to the employers of the members, thereby
depriving the members of the protection of the respondent.
[15] An application by the appellant to the court below for an order
reviewing and setting aside the decision of the Board of Appeal was
dismissed. The court below held that the respondent exercises a discretion
in terms of s 12(4) when deciding whether or not to approve a rule
amendment. It has to make a value judgment as to whether the rule
amendment is not inconsistent with the Act. The respondent is also
‘enjoined to consider, evaluate and satisfy himself of the financial
soundness of the proposed rule amendment’.
[16] The court below correctly did not endorse the finding by the Board
of Appeal that s 12(1)(b), in requiring the approval of the respondent,
conferred a broad and equitable discretion on the respondent to refuse to
register a rule amendment. In terms of s 12(4) the respondent ‘shall’
register the alteration if he finds that it is not inconsistent with the Act
and if he is satisfied that it is financially sound. The respondent is thus
obliged, in these circumstances, to register the alteration. A finding on the
part of the respondent that an alteration is not inconsistent with the Act
and satisfaction on the part of the respondent that the alteration is
financially sound would therefore constitute his approval of the alteration.
I agree with the appellant that if the legislature intended to confer a broad
and equitable discretion on the respondent it would have made that
intention clear and would have given an indication as to the factors to be
taken into account in exercising that discretion, as was done in the case of
s 14(1)(c). The section deals with the amalgamation of a business carried
on by a registered fund with the business of another person and provides
that it shall have no effect unless ‘the registrar is satisfied that the scheme
. . . is reasonable and equitable and accords full recognition’ to a number
of factors mentioned in the section.
[17] It follows that what the respondent and, on appeal to it, the Board
of Appeal had to consider was whether it was satisfied that the
amendment was financially sound and whether it was not inconsistent
with the Act.
Financial soundness of the amendment
[18] The court below considered the rule amendment to be offensive to
the notion of financial soundness because it creates a surplus which
stands to be shared by past members who have no claim to the funds. It
said: ‘The expending of already contributed funds in this way through an
artificially created surplus, in the face of a deficit situation cannot, in my
view, clothe the rule amendment with financial soundness: These are
funds which would otherwise have been applied to the deficit. The
Registrar correctly refers to the scheme as creating financial soundness at
a cost, and it is a situation that does not accord with the dictionary
meaning of soundness . . ..’
[19] In terms of s 12(4) it is the respondent and on appeal, it is the
Board of Appeal, that has to be satisfied that the rule amendment is
financially sound. The respondent was satisfied that that was the case
although he thought that it had been achieved at a cost. That finding of
the respondent was not disturbed on appeal to the Board of Appeal and
could not be interfered with by the court below simply on the basis that it
is considered to be wrong on the facts.5 In any event the fact that the rule
amendment creates a surplus cannot render the rule amendment
financially unsound. Counsel for the respondent was specifically
instructed on appeal to accept that it was financially sound.
Inconsistency with the Act
[20] The Board of Appeal held that the requirement in s 12(4) that the
alteration of the rules should not be inconsistent with the Act meant that
the alteration should be in agreement with the whole Act ie ‘its object,
purpose and policy as gathered from a comparison of its several parts, as
well as from the history of the Act and from the circumstances applicable
to its subject matter to ensure that pension funds are operated fairly,
properly and successfully’. The alteration can only be inconsistent with
the Act if it conflicts with the terms of the Act. Naturally the terms of the
Act are to be properly interpreted and when that is done ‘a court is
entitled to have regard not only to the words used by the Legislature but
5 Section 6 of the Promotion of Administrative Justice Act 3 of 2000.
also to its object and policy’.6 The only sections of the Act which came
up for discussion in this regard were s 37A and s 14A.
[21] The Board of Appeal held that the rule amendment was
inconsistent with the Act because it reduces the benefits provided for in
the rules of the appellant contrary to the provisions of s 37A of the Act.
Section 37A(1) and (2) read as follows:
‘(1)
Save to the extent permitted by this Act . . . no benefit provided for in the rules
of a registered fund . . . 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 . . ..
(2)(a) If in terms of the rules of a fund the residue of a full benefit, after deduction of
any debt due by the person entitled to the benefit, represents the benefit due to that
person, such reduction shall for the purposes of subsection (1) be construed as a
reduction of the benefit.
(b)
The set-off of any debt against a benefit shall for the purposes of
subsection (1) be construed as a reduction of the benefit.’
[22] The court below did not agree with the Board of Appeal that the
rule amendment is inconsistent with the Act because it reduces the
benefits provided for in the rules of the appellant. Referring to the
provision in s 37A that no benefit provided for in the rules of a registered
fund shall be capable of being reduced, it held that such a reduction by
way of a rule amendment in terms of s 12(1) is excluded by the words
6 Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 558.
preceding the prohibition ‘save to the extent permitted by this Act’. The
court below also agreed with the submission advanced by the appellant
that the combination of ‘reduced’ with ‘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’
indicated that what the legislature had in mind was not a reduction
effected by a rule amendment, but a reduction in consequence of factors
external to the rules.
[23] Before us the respondent, correctly in my view, did not attack these
findings by the court below. Prior to the enactment of s 37A an
amendment of the rules with the approval of the registrar was permissible
and not qualified so as to exclude a reduction in benefits provided for in
the rules of the Fund. The legislature must have been aware of that
position when it qualified the provisions of s 37A with the words ‘save as
permitted by this Act’ and would have made it clear if it also wanted to
exclude a reduction of benefits provided for in the rules of a pension fund
by way of an alteration in terms of s 37A. Moreover, there may well be
circumstances where a reduction of benefits may be required in the
interests of all the members of a pension fund and it is highly unlikely
that the legislature could have intended to prohibit a rule amendment in
terms of s 12 in these circumstances.
[24] However, the court below proceeded to hold that it was difficult to
conceive how a rule amendment which had the effect of removing the
responsibility to pay a pension benefit from of the appellant and out of
the reaches of the Act, could still remain consistent with the Act. Having
found the rule amendment to be inconsistent with the Act the court below
held that the Board of Appeal had correctly dismissed the appeal against
the respondent’s refusal to register the rule amendment. As was submitted
by the respondent this finding of the court below is inconsistent with its
finding that rule 12 (1) permitted a reduction in benefits provided for by
way of a rule amendment. If a pension fund, consistent with the Act, can
amend its rules so as to diminish or delete benefits provided for by the
rules of the fund, it cannot be inconsistent with the Act to retain those
benefits but to make them conditional on funding from the employer.
[25] The respondent submitted that the Board of Appeal correctly held
that the rule amendment is inconsistent with the Act in that it also reduces
the benefit to which the members are entitled in terms of s 14A whereas
such a reduction is, according to the submission, not allowed by the
section. As stated above, the section provides that the benefit paid to a
member who ceases to be member of a registered fund prior to retirement,
in circumstances other than liquidation of the fund, shall not be less than
the minimum individual reserve. In terms of s 14A(2) the minimum
individual reserve shall, subject to certain qualifications, not be less than
the fair value equivalent of the present value of the member’s accrued
deferred pension ie the discounted value of the guaranteed pension. The
section does not provide that the guaranteed value as at date of retirement
may not be reduced. It simply provides that the discounted value of the
guaranteed pension is, subject to the qualifications mentioned, the
minimum benefit that may be provided to a member who ceases to be a
member prior to retirement. The rule amendment does not purport to
provide otherwise.
[26] The rule amendment is not inconsistent with any other provision of
the Act. It follows that the dismissal of the appeal against the
respondent’s refusal to register the rule amendment by the Board of
Appeal on the ground that it was inconsistent with the Act was materially
influenced by errors of law and must be reviewed and set aside in terms
of s 6(2)(d) of the Promotion of Administrative Justice Act 3 of 2000
(‘PAJA’). In terms of s 8(1)(c)(ii) of PAJA a court may in exceptional
circumstances substitute administrative action with the action that should
have been taken. This is such a case. Had the Board of Appeal not made
these errors of law it would have held that the rule amendment should
have been registered by the respondent. In the circumstances it would
serve no purpose to refer the matter back to the respondent as the
respondent urged us to do. Moreover, the rule amendment was submitted
to the respondent more than four years ago and the registration thereof
should not be delayed any further.
[27] In the result the following order is made:
The appeal is upheld with costs including the costs of two counsel.
The order by the court below is replaced with the following order:
‘(i)
The decision by the Board of Appeal is reviewed and set aside.
(ii)
The following order is substituted for the order by the Board of
Appeal:
“(a)
The appeal is upheld with costs including the costs of two
counsel.
(b)
The registrar is directed to register, in terms of s 12 of the
Pension Funds Act 24 of 1956, amendment number 31 to
the appellant’s rules.”
(iii)
The costs of the application including the costs of two counsel are
to be paid by the registrar.’
___________________
P E STREICHER
JUDGE OF APPEAL
APPEARANCES:
For appellant:
O L Rogers SC
A M Breitenbach
Instructed by:
Thyne Hunter Esterhuizen Inc, Johannesburg
McIntyre & Van der Post, Bloemfontein
For respondent:
I V Maleka SC
Ms S Yacoob
Instructed by:
Rooth Wessels Motla Conradie Inc, Brooklyn
Naudes 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:
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.
* * *
NATIONAL TERTIARY RETIREMENT FUND v REGISTRAR OF
PENSION FUNDS
The Supreme Court of Appeal today upheld an appeal against a judgment by the High
Court, Pretoria in terms of which the High Court dismissed an application for an order
reviewing and setting aside the dismissal, by a Board of Appeal, of an appeal against a
decision by the Registrar of Pension Funds.
The Registrar refused to register an amendment of the rules of the appellant, which
amendment reduced the benefits to which some of the members of the pension fund
were entitled. The Board of Appeal and the High Court held that the registrar was
entitled to refuse registration of the amendment.
The SCA held that in terms of s 12(4) of the Pension Funds Act the amendment, which
had been done as directed by the pension fund’s rules, had to be registered by the
registrar (i) because it was not inconsistent with the Pension Funds Act and (ii) because
the registrar was satisfied that it was financially sound. |
3920 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 33/2022
In the matter between:
NATIONAL COMMISSIONER OF
CORRECTIONAL SERVICES FIRST APPELLANT
JACOB GEDLEYIHLEKISA ZUMA
SECOND APPELLANT
and
DEMOCRATIC ALLIANCE
FIRST RESPONDENT
HELEN SUZMAN FOUNDATION
SECOND RESPONDENT
AFRIFORUM NPC
THIRD RESPONDENT
SECRETARY OF THE JUDICIAL
COMMISSION OF INQUIRY INTO
ALLEGATIONS OF STATE INCLUDING
ORGANS OF STATE FOURTH RESPONDENT
MINISTER OF JUSTICE AND
CORRECTIONAL SERVICES FIFTH RESPONDENT
MEDICAL PAROLE ADVISORY BOARD SIXTH RESPONDENT
SOUTH AFRICAN INSTITUTE OF
RACE RELATIONS AMICUS CURIAE
Neutral citation: National Commissioner of Correctional Services and Another
v Democratic Alliance and Others (with South African Institute of Race
Relations intervening as Amicus Curiae) (33/2022) [2022] ZASCA 159
(21 November 2022)
Bench:
DAMBUZA,
MAKGOKA,
PLASKET
and
MABINDLA-
BOQWANA JJA and GOOSEN AJA
Heard:
15 August 2022
Delivered: 21 November 2022
Summary: Correctional Services Act 111 of 1998 – medical parole – s 79(1) –
role of the Medical Parole Advisory Board (the Board) – powers of the National
Commissioner of Correctional Services (the Commissioner) – whether the
Commissioner entitled to release an inmate on parole despite the absence of a
positive recommendation of the Board.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Matojane J,
sitting as a court of first instance): judgment reported sub nom Democratic
Alliance v National Commissioner of Correctional Services and Others and Two
Similar Cases [2022] 2 All SA 134 (GP).1
1. Paragraphs 5 and 6 of the order of the high court are set aside.
2. Save for the above, the appeal is dismissed with costs.
3. The first and second appellants are ordered to pay the costs of the first, second
and third respondents, jointly and severally, the one paying the other to be
absolved.
4. The costs shall include the costs of two counsel where so employed.
________________________________________________________________
JUDGMENT
________________________________________________________________
Makgoka JA (Dambuza, Plasket and Mabindla-Boqwana JJA and Goosen
AJA concurring):
[1] On 29 June 2021, the second appellant, Mr J G Zuma (Mr Zuma), the
former President and Head of State of the Republic of South Africa, was
sentenced to 15 months’ imprisonment by the Constitutional Court for failing to
obey that court’s order to appear before a Judicial Commission of Inquiry2 (the
Commission of Inquiry). The circumstances which led to the sentence are fully
1 Democratic Alliance v National Commissioner of Correctional Services and Others; Helen Suzman Foundation
v National Commissioner of Correctional Services and Others; Afriforum NPC v National Commissioner of
Correctional Services and Others [2022] 2 All SA 134 (GP).
2 The Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector
including Organs of State.
set out in Judicial Commission of Inquiry into Allegations of State Capture v
Zuma.3
[2] Mr Zuma started serving his sentence on 8 July 2021. On 5 September
2021, the first appellant, the National Commissioner of Correctional Services (the
Commissioner), released him on medical parole. Shortly thereafter, the first
respondent, the Democratic Alliance, the second respondent, the Helen Suzman
Foundation, and the third respondent, Afriforum NPC (Afriforum), launched
separate applications in the Gauteng Division of the High Court, Pretoria (the
high court), challenging the Commissioner’s decision on various grounds in terms
of s 6 of the Promotion of Administrative Justice Act 3 of 2000 (the PAJA). Their
applications were consolidated and heard together by the high court.
The order of the high court
[3] On 15 December 2021, the high court reviewed the decision of the
Commissioner, set it aside, and substituted it with one rejecting Mr Zuma’s
application for medical parole. It consequently directed that Mr Zuma be returned
to the custody of the Department of Correctional Services (the Department) to
serve out the remainder of his sentence of imprisonment. The high court also
ordered that the time Mr Zuma was out of jail on medical parole should not be
considered for the fulfilment of the sentence of 15 months imposed by the
Constitutional Court. This order was sought by the Helen Suzman Foundation.
[4] In addition, the high court issued a declaratory order, at the instance of
Afriforum, that in terms of s 79(1)(a) of the Correctional Services Act 111 of
1998 (the Act), read with regulations 29A and 29B promulgated in terms thereof,
3 Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the
Public Sector including Organs of State v Zuma and Others [2021] ZACC 18; 2021 (9) BCLR 992 (CC); 2021
(5) SA 327 (CC) (Judicial Commission of Inquiry v Zuma).
the statutory body to recommend whether medical parole should be granted or
not is the Medical Parole Advisory Board (the Board). With the leave of the high
court, the Commissioner and Mr Zuma appeal against the whole order.
Factual background
[5] Mr Zuma was admitted to the Estcourt Correctional Centre in KwaZulu-
Natal on 8 July 2021 to commence serving his sentence of imprisonment. He was
immediately transferred to the hospital wing of the Estcourt Correctional Centre.
There, he was examined by Dr Q S M Mafa from the South African Military
Health Services (Military Health Services).4 Upon examination, Dr Mafa
compiled a report in which he recommended that Mr Zuma be moved to a
‘specialist medical high care unit’ for further assessment, and ‘to ensure his health
is not prejudiced during this period and that a further specialist medical
investigation [is] done to verify and rule out other challenges that could have been
missed during the examination’. He further alluded to the possible release of Mr
Zuma on medical parole.
[6] The following day, 9 July 2021, Brigadier General Dr M Z Mdutywa from
the Military Health Services requested the Head of the Estcourt Correctional
Centre to allow a paramedic to monitor Mr Zuma daily and alert the doctors and
specialists immediately of any changes, should there be any. He stated that the
reason for his request was that the Military Health Services has ‘the sole mandate
and responsibility of assuring and giving medical support and services’ to Mr
Zuma.
[7] On 28 July 2021, Dr Mafa made an application on behalf of Mr Zuma for
his release on medical parole, on the prescribed form. Section ‘C’ of the form
4 As former President and Head of State, Mr Zuma’s health services are provided by the South African Military
Health Services.
relates to whether an offender suffers from a terminal disease or condition. The
following explanatory note appears at the foot of the page:
‘A terminal disease or condition is a condition or illness which is irreversible with poor
prognosis and irremediable by available medical treatment but requires continuous palliative
care and will lead to imminent death within a reasonable time.’
Question 5(d) of section ‘C’ is as follows: ‘Is the offender suffering from a
terminal disease OR condition’ which is ‘chronic’, ‘progressive’, and ‘has
deteriorated permanently or reached [an] irreversible state?’. Dr Mafa answered
‘Yes’ to the first two questions. As to the third, he answered that the condition
had ‘deteriorated significantly’.
[8] On 29 July 2021, the Operational Manager at the Estcourt Correctional
Centre recommended to the Correctional Supervision and Parole Board that Mr
Zuma be released on medical parole, based on the following: (a) Dr Mafa’s report
that Mr Zuma has a number of comorbidities; (b) Mr Zuma needs tertiary health
care services that Correctional Services was not providing, and (c) that Mr
Zuma’s medical condition needed to be closely monitored by a specialist, and
‘should his condition complicate during the night, it will take time for him to
access relevant health services’.
[9] On 5 August 2021, Mr Zuma was transferred to a private hospital in
Pretoria at the request of his medical team for him to be treated in ‘a specialist
medical facility’ based on his ‘medical conditions’ and ‘a fear that his condition
[was] deteriorating’. In terms of regulation 29B(8) of the Correctional Services
Regulations (the regulations), the Board designated one of its own, Dr L J
Mphatswe, to examine Mr Zuma, which he did on 13 and 17 August 2021, at the
private hospital. Dr Mphatswe submitted a report to the Board on 23 August
2021, in which he recommended that Mr Zuma be released on medical parole
with immediate effect. In his report, Dr Mphatswe took into account that Mr
Zuma was 79 years of age, and generally, looked ‘unwell and lethargic’ with a
‘complex medical condition which predisposes him to unpredictable medical
fallouts or events of high-risk clinical picture’.
[10] He further noted:
‘The total outlook of his complex medical conditions and associated factors in an environment
limited to support his optimum care is of extreme concern. More worrisome is the
unpredictability of his plausible life-threatening cardiac and neurological events. The risk for
potential surgery has become in my assessment a personal one albeit a potentially development
of a malignant condition arising from a high-grade ileocecal and colon lesion exists. In the
main and primarily in summation of the total clinical assessment motivated by high-risk
factors. I wish to recommend that the applicant be released on Medical Parole with immediate
effect, because his clinical picture presents unpredictable health conditions constituting a
continuum of clinical conditions. Sufficient evidence has also arisen from the detailed clinical
reports submitted by the treating Specialists to support the above-stated recommendation.’
[11] The Board met on 26 and 28 August 2021 to consider Mr Zuma’s medical
parole application. On both occasions, it took the view that it did not have
sufficient information to reach a decision, and accordingly, requested further
medical reports from independent medical specialists who had treated Mr Zuma.
These were furnished by the Surgeon-General on 30 August 2021 on behalf of
the Military Health Services. In his cover letter accompanying the reports, the
Surgeon-General pointed out the following:
‘lt is the view of the Surgeon General that these reports taken individually may paint a picture
of a patient whose condition is under control, but all together reflect a precarious medical
situation, especially for the optimization of each one of them.
We will remember that the patient was fairly optimized prior to his incarceration, and it took
only four weeks for his condition to deteriorate such that his glucose, blood pressure and kidney
function went completely out of kilter. The Surgeon General believes that the patient will be
better managed and optimized under different circumstances than presently prevailing.’
[12] On 2 September 2021, the Board reconvened, and decided against
recommending medical parole for Mr Zuma. It stated the following reasons for
its decision:
‘From the information received, the applicant suffers from multiple comorbidities. His
treatment has been optimised, and all conditions have been brought under control. From the
available information in the reports, the conclusion reached by the MPAB is that the applicant
is stable and does not qualify for medical parole according to the Act. The MPAB is open to
consider[ing] other information, should it become available. The MPAB can only make its
recommendations based on the Act.’
The National Commissioner’s decision
[13] As mentioned already, the Commissioner released Mr Zuma on medical
parole on 5 September 2021 with immediate effect, three days after the Board had
made its decision not to recommend his release. In a lengthy statement, the
Commissioner explained the reasons for his decision. He correctly referred to the
legislative scheme of ss 75(7)(a), 79(1), and regulation 29A as the empowering
provisions in respect of medical parole. Although he had delegated his powers to
consider parole to Heads of Correctional Centres, he revoked that delegation in
respect of Mr Zuma, and had given an instruction that he should be consulted in
all decisions in respect of Mr Zuma. This was because of the public unrest and
destruction of property in July 2021 following Mr Zuma’s incarceration. He also
viewed Mr Zuma’s incarceration to have ‘occasioned a unique moment within
the history of Correctional Services, where a former Head of State of the Republic
of South Africa is incarcerated whilst still entitled to privileges as bestowed by
the Constitution’.
[14] He had accordingly been kept abreast of Mr Zuma’s reportedly
deteriorating health condition. On 4 September 2021, he met with the KwaZulu-
Natal Regional Commissioner and the Head of the Estcourt Correctional Centre,
at their request. They expressed concern to him about the Board’s decision not to
recommend the release of Mr Zuma on medical parole. The main concern for the
Head of the Estcourt Correctional Centre was that the centre did not have the
capacity to provide the type of tertiary health care required for Mr Zuma’s
medical conditions. As such, the centre could not risk Mr Zuma’s life, and he
shuddered at the consequences were Mr Zuma to die in the centre.
[15] After that meeting, the Commissioner requested that the relevant
documents be placed before him. The following documents were presented to
him: (a) three medical reports by the Military Health Services dated 8 July 2021,
28 July 2021 and 5 August 2021; (b) Dr Mphatswe’s report; and (c) the Board’s
decision of 2 September 2021. As to the latter, the Commissioner pointed out that
although the Board made the recommendation, he was ‘the authority to make the
decision’. The Commissioner stated that, in arriving at his decision, he considered
the following:
‘12.1 Mr Zuma is 79 years old and undeniably a frail old person.
12.2 That the various reports from the SAMHS all indicated that Mr Zuma has multiple
comorbidities which required him to secure specialised treatment outside the Department of
Correctional Services (DCS).
12.3 That Dr LJ Mphatswe (member of MPAB) in his report dated 23 August 2021
recommended that the applicant, Mr JG Zuma be released on medical parole because his
"clinical health present unpredictable health conditions" and that sufficient evidence has also
arisen from the detailed clinical reports submitted by the treating specialists to support the
above read recommendation.
12.4 The [Board] recommendation agreed that Mr Zuma suffers from multiple
comorbidities. The [Board] further stated that his treatment had been optimised and his
conditions have been brought under control because of the care that he is receiving from a
specialised hospital, therefore they did not recommend medical parole. It is the type of
specialised care that cannot be provided by the Department of Correctional Services in any of
its facilities.
12.5 As a result, there is no guarantee that when returned back to Estcourt Correctional
Centre Mr Zuma's “conditions” would remain under control. It is not disputed that DCS does
not have medical facilities that provide the same standard of care as that of a specialised
hospital or general hospital.
12.6 Mr Zuma's wife, Mrs Ngema, has undertaken to take care [of] him if released, as Mr
Zuma will be aided by SAMHS as a former Head of State, providing the necessary health care
and closely monitoring his condition.’
[16] It is this decision that is the subject of the appeal. Both the Commissioner
and Mr Zuma contend that the high court erred in setting it aside and in making
the order in the terms already set out. The Democratic Alliance, the Helen
Suzman Foundation and Afriforum support the judgment of the high court and its
order. The fourth to sixth respondents, respectively the Commission of Inquiry,
the Minister of Justice and Correctional Services and the Board, did not take part
in the appeal. The Commission of Inquiry filed a notice to abide by the decision
of this Court. The South African Institute of Race Relations was admitted as
amicus curiae (amicus) in this Court.
Amicus’ submissions
[17] The gravamen of the submissions is this. A person detained for contempt
of court is not a ‘sentenced offender’ within the contemplation of the Act, and
can therefore never be released by a person or body other than the court that
committed the person. Expressed differently, the parole provisions in the Act do
not apply to persons incarcerated for contempt of court, like in Mr Zuma’s case.
This is because the process of committing a person to prison for contempt of court
cannot be regarded as criminal proceedings and does not result in the person being
convicted of any offence.
[18] Therefore, submitted the amicus, the Commissioner enjoyed neither the
power nor competence to release Mr Zuma from custody ahead of the expiry of
his period of detention, and only the Constitutional Court has the power to order
such a release. Consequently, the Commissioner’s purported exercise of the
power to grant Mr Zuma medical parole was a nullity, and Mr Zuma must
accordingly be re-detained in custody until he has served the full term of his
sentence, or released earlier in terms of a court order.
[19] The starting point is s 1 of the Act, which defines a ‘sentenced offender’
simply as a ‘convicted person sentenced to incarceration or correctional
supervision’. It makes no distinction in respect of offenders based on the nature
of proceedings from which the sentence flows, nor whether the sentence is
coercive or punitive. Offenders sentenced for contempt of court are not excluded
from this definition. There is nothing in the text or context of the section that
suggests that the Legislature intended to make a distinction between offenders
based on the nature of proceedings that gave rise to the sentence. That should be
the end of the matter in respect of the amicus’ submissions.
[20] However, for the sake of completeness, I will consider the amicus’
submissions with reference to the order of the Constitutional Court. The
established test on the interpretation of court orders was summarised in
Eke v Parsons5 as follows:
‘. . . “The starting point is to determine the manifest purpose of the order. In interpreting a
judgment or order, the court’s intention is to be ascertained primarily from the language of the
judgment or order in accordance with the usual well-known rules relating to the interpretation
of documents. As in the case of a document, the judgment or order and the court’s reasons for
giving it must be read as a whole in order to ascertain its intention”.’(footnotes omitted.)
[21] To establish the ‘manifest purpose’ of the Constitutional Court’s order, one
has to consider what the court said when it imposed the sentence on Mr Zuma.
The Constitutional Court described the proceedings as neither purely civil nor
5 Eke v Parsons [2015] ZACC 30; 2015 (11) BCLR 1319 (CC); 2016 (3) SA 37 (CC) para 29.
criminal, but a unique amalgamation of the two (sui generis).6 The Constitutional
Court proceeded to distinguish between coercive and punitive orders.7 The court
pointed out that a coercive order allows the respondent to avoid imprisonment by
complying with the original order and desisting from the offensive conduct. As
regards a punitive order, ‘a sentence of imprisonment cannot be avoided by any
action on the part of the respondent to comply with the original order; the sentence
is unsuspended; it is related both to the seriousness of the default and the
contumacy of the respondent; and the order is influenced by the need to assert the
authority and dignity of the court, to set an example for others’.8
[22] The Constitutional Court then considered the appropriateness of each order
in the circumstances. It decided that a punitive order was the only appropriate
order, and explained:
‘A coercive order would be both futile and inappropriate in these circumstances. Coercive
committal, through a suspended sentence, uses the threat of imprisonment to compel
compliance. Yet, it is incontrovertible that Mr Zuma has no intention of attending the
Commission, having repeatedly reiterated that he would rather be committed to imprisonment
than co-operate with the Commission or comply with the order of this Court. Accordingly, a
suspended sentence, being a coercive order, would yield nothing. In CCT 295/20, this Court
was at pains to point out how Mr Zuma had been afforded, perhaps too generously at times,
ample opportunities to submit to the authority of the Commission. Notwithstanding that I
recognise the importance of the work of the Commission, being guided by what this Court said
in CCT 295/20, I do not think this Court should be so naïve as to hope for his compliance with
that order. Indeed, it defies logic to believe that a suspended sentence, which affords Mr Zuma
the option to attend, would have any effect other than to prolong his defiance and to signal
dangerously that impunity is to be enjoyed by those who defy court orders.’9 (footnote
omitted.)
6 Judicial Commission of Inquiry v Zuma para 21.
7 Ibid para 47.
8 Ibid.
9 Ibid para 48.
[23] These remarks unambiguously manifest the Constitutional Court’s clear
intent: to punish Mr Zuma for defying its earlier order and to have him serve a
prison sentence for that. This also takes care of the amicus’ submission that
persons convicted of contempt of court ‘carry the keys of their prison in their own
pockets’, in that they can reverse their contempt by complying with the order,
upon which they would be released. The amicus relied on the orbiter remarks in
De Lange v Smuts10 for that submission. That case concerned s 66(3) of the
Insolvency Act 24 of 1936, in terms of which a person summoned to be examined
at a meeting of creditors may be imprisoned if they, among other things, refuse
to answer questions at such a meeting. The presiding officer ‘may issue a warrant
committing the said person to prison’. The proviso to such imprisonment is that
the examinee ‘shall be detained until he has undertaken to do what is required of
him’. It is in that context that the court remarked that ‘[t]he examinees under
s 66(3) also “carry the keys of their prison in their own pockets”’, for the effect
of the concluding part of the subsection is that the detention of an examinee comes
to an end when the examinee “has undertaken to do what is required of him”’.11
[24] In the present case, the Constitutional Court had moved beyond the
coercion point. It was no longer interested in trying to coerce Mr Zuma to mend
his ways by appearing before the Commission. Therefore, Mr Zuma no longer
‘carried the keys of his prison in his own pocket’. The keys were undoubtedly
held by the Department. The Warrant of Committal issued by the Constitutional
Court could not have made it clearer. It commanded the Department ‘to receive’
Mr Zuma ‘into custody’ and ‘deal with him in accordance with the laws relating
to prisons’, as he had been ‘found guilty . . . of the crime of contempt of court’.
Indeed, Mr Zuma was dealt with as such. Like any other inmate, he was
‘processed’; orientated with regard to prison life; given prison clothes and
10 De Lange v Smuts N O and Others [1998] ZACC 6; 1998 (3) SA 785 (CC); 1998 (7) BCLR 779 (CC).
11 Ibid para 36.
sanitary material; and was expected to clean his cell and make his bed. Mr Zuma
was therefore ‘a sentenced offender’ and had to be incarcerated in terms of the
Act.
[25] As would be the case with any matter finalised before it, once it imposes a
sentence, a court ordinarily has no further role in how a sentenced person serves
his or her sentence. That is the responsibility of the Department. The
Constitutional Court was in no different position with regard to Mr Zuma.
Specifically, with regard to his release, the Constitutional Court consequently
retained no power to deal with the matter again.
[26] I accordingly conclude that a person convicted and sentenced for contempt
of court ordinarily falls to be dealt with in terms of the laws relating to prisons,
including the privilege to be released on parole if they so qualify. It is immaterial:
(a) that the proceedings which culminated in the sentence were criminal or civil,
and (b) whether the order for their imprisonment is coercive or punitive.
[27] In any event, in this case, the Constitutional Court order culminated from
sui generis proceedings, and it is indubitably punitive in nature, thus, making Mr
Zuma ‘a sentenced offender’ as envisaged in s 1 of the Act. It follows that there
is no merit in the amicus’ submissions. Mr Zuma was entitled to apply for his
release on medical parole, and the Commissioner was empowered to consider that
application, in terms of the relevant provisions of the Act, to which I turn.
The medical parole legislative scheme
[28] I commence with s 75(1) of the Act, which is titled ‘Powers, functions and
duties of Correctional Supervision and Parole Boards’. Section 75(1) gives the
Correctional Supervision and Parole Board the discretion to place under
correctional supervision or day parole, or grant parole or medical parole, to a
sentenced offender serving a sentence of incarceration for more than 24 months.
This it does upon consideration of a report on such a prisoner, submitted to it by
the Case Management Committee in terms of s 42 of the Act, and in the light of
any other information or argument submitted to it.
[29] The next relevant provision is s 75(7), which gives the Commissioner the
power, among other things, to release a sentenced offender serving a sentence of
incarceration for 24 months or less on medical parole. It reads as follows:
‘Despite subsections (1) to (6), the National Commissioner may—
(a)
place under correctional supervision or day parole, or grant parole or medical parole to
a sentenced offender serving a sentence of incarceration for 24 months or less and prescribe
conditions in terms of section 52; or
(b)
cancel correctional supervision or day parole or parole or medical parole and alter the
conditions for community corrections applicable to such person.’
[30] Section 79 specifically concerns the substantive and procedural
requirements for medical parole. The substantive requirements are set out in
subsection 1, which reads:
‘(1)
Any sentenced offender may be considered for placement on medical parole, by the
National Commissioner, the Correctional Supervision and Parole Board or the Minister, as the
case may be, if—
(a)
such offender is suffering from a terminal disease or condition or if such offender is
rendered physically incapacitated as a result of injury, disease or illness so as to severely limit
daily activity or inmate self-care;
(b)
the risk of re-offending is low; and
(c)
there are appropriate arrangements for the inmate’s supervision, care and treatment
within the community to which the inmate is to be released.’
[31] The procedural requirements are prescribed in s 79(2). Section 79(2)(a)
provides that an application for medical parole shall be lodged in the ‘prescribed
manner’, by either: (a) a medical practitioner; or (b) a sentenced offender in
person; or (c) a person acting on the offender’s behalf. In the latter two instances,
s 79(2)(b) requires the application to be supported by a written medical report
recommending placement on medical parole. The section precludes the relevant
authority (either the Commissioner, the Correctional Supervision and Parole
Board, or the Minister of Justice and Correctional Services (the Minister)) from
considering an application lodged by the offender in person or on his or her
behalf, if not accompanied by a written medical report.
[32] In terms of s 79(2)(c) the written medical report must include, amongst
others—
‘(i)
a complete medical diagnosis and prognosis of the terminal illness or physical
incapacity from which the sentenced offender suffers;
(ii)
a statement by the medical practitioner indicating whether the offender is so physically
incapacitated as to limit daily activity or inmate self-care; and
(iii)
reasons as to why the placement on medical parole should be considered.’
[33] Pursuant to s 79(3)(a), the Minister established a Medical Parole Advisory
Board (the Board). Its function is ‘to provide an independent medical report’ to
the Commissioner, the Correctional Supervision and Parole Board, or the
Minister, as the case may be, in addition to the medical report referred to in
subsection s 79(2)(c). The Board consists of ten members, all of whom are
medical doctors.
The regulations
[34] Section 79 must be read together with regulation 29A of the regulations.
Regulation 29A(2)-(4) complements the procedural requirements of s 79(2). In
terms of regulation 29A(2) an application for medical parole in terms s 79(2) of
the Act, shall be initiated by the completion of a prescribed application form.
When the Head of a Correctional Centre receives an application for medical
parole, he or she must refer the application to the correctional medical practitioner
who must make an evaluation of the application in accordance with the provisions
of s 79 and make a recommendation in this regard (regulation 29A(3). In terms
of regulation 29A(4) the recommendation must be submitted to the Board, which
must make a recommendation to the relevant decision-maker, the Commissioner
in this instance.
[35] The substantive requirements of s 79(1)(a) are given effect by regulation
29A(5)-(7). Regulation 29A(5) guides the Board on the procedure to be followed
in determining whether an inmate suffers from a terminal illness or physical
incapacity as required in s 79(1)(a). It must first determine whether an offender’s
stated medical condition is one of the non-infectious and infectious conditions set
out in regulation 29A(5). If it is not, the Board may, in terms of regulation 29A(6)
consider ‘any other condition’, ‘if it complies with the principles contained in
section 79’. Needless to say, in this exercise, the Board would be guided by
various medical reports serving before it.
[36] After undertaking the exercise set out in regulation 29A(5) (and possibly
in regulation 29A(6)), the Board is enjoined to make a recommendation in terms
of regulation 29A(7) on the appropriateness to grant medical parole. That
regulation reads:
‘The [Board] must make a recommendation to the National Commissioner . . . on the
appropriateness to grant medical parole in accordance with section 79(1)(a) of the Act. If the
recommendation of the [Board] is positive, then the National Commissioner . . . must consider
whether the conditions stipulated in section 79(1)(b) and (c) are present.’
Viewed in this light, regulation 29A(7) does no more than confirm the purpose of
s 79(1)(a). It does not in any manner ‘enlarge’ its meaning, as contended on behalf
of the Commissioner. It merely makes explicit what is implicit in s 79(1)(a).
[37] To summarise the above provisions, s 75(7) empowers the Commissioner
to release on medical parole an inmate serving a sentence of incarceration for 24
months or less. It must be read with s 79(1), which sets out three substantive
requirements
for
medical
parole,
namely:
(a)
terminal
disease
or
physically incapacity; (b) low risk of re-offending; and (c) appropriate
arrangements post-release. The second and third requirements involve typical
correctional
services
considerations
and,
therefore,
fall
within
the
Commissioner’s remit. The first requirement is a medical one, and the
Commissioner must be guided by the Board.
[38] Thus, the requirements set out in s 79(1) constitute jurisdictional facts that
must be met for medical parole to be granted. If any of them is not present, an
offender does not qualify for parole. These provisions apply to Mr Zuma (despite
his status as former President and Head of State) as they would to any other
inmate. That is the content and reach of the constitutional value and promise of
equality before the law.12
[39] Before I step off the legislative scheme, there are two related interpretative
aspects that need to be resolved. The first relates to the interrelation between
ss 75(7)(a) and 79, and in particular, whether s 75(7) creates an alternative
pathway to medical parole. The second is whether the Commissioner is entitled
to release an inmate on parole without the Board’s positive recommendation. I
consider these, in turn.
Whether s 75(7) creates an alternative pathway to medical parole
[40] It was common ground among the parties that ss 75(7) and 79(1) must be
read together. However, a submission was advanced on behalf of Mr Zuma that
12 Section 9(1) of the Constitution provides:
‘Everyone is equal before the law and has the right to equal protection and benefit of the law.’
s 75(7)(a) created an alternative ‘pathway’ to medical parole without the need to
comply with the substantive and procedural requirements of s 79. The contention
was that the general provisions of s 79 cannot limit the provisions of s 75(7) in
terms of which, the Commissioner is empowered to grant medical parole to an
inmate serving a sentence of incarceration for 24 months or less. As Mr Zuma’s
sentence fell into that category, the Commissioner was entitled to release him on
medical parole, and, in fact, granted him medical parole based on that provision.
[41] I disagree. The upshot of s 75(7)(a) is that inmates serving sentences of
incarceration for 24 months or less are excused from complying with s 75(1)-(6).
The latter subsections deal mainly with the medical parole of inmates serving
lengthy imprisonment terms, including life imprisonment. In respect of that
category of inmates, their applications have to go through a Case Management
Committee and the Correctional Supervision and Parole Board. Section 75(7)(a)
removes the involvement of these two bodies in respect of applications of inmates
serving sentences of incarceration for 24 months or less. Their applications are
considered directly by the Commissioner. But, in respect of both categories of
inmates, there must be compliance with the substantive and procedural
requirements of s 79.
[42] Read on its own, s 75(7) would give power to the Commissioner to release
on medical parole any offender serving a sentence of incarceration for 24 months
or less, without any explicit substantive or procedural constraints. On this
construction, an inmate would be entitled to be released on medical parole despite
not being terminally ill or physically incapacitated. The reading of s 75(7) as
being capable of an independent application from s 79 would result in an
absurdity, as it would allow an inmate to be released on ‘medical’ parole without
any ‘medical’ basis. An interpretation resulting in absurdity is to be avoided.13
For a sensible result, ss 75(7)(a) and 79 must be read together. As stated in this
Court more than a century ago in Chotabhai v Union Government,14 ‘every part
of a Statute should be so construed as to be consistent, so far as possible, with
every other part of that Statute’.15
Whether the Commissioner is entitled to release an inmate on parole without
the Board’s positive recommendation
[43] On behalf of the Commissioner, the following submissions were made.
Despite its importance, the recommendation of the Board is not binding on him,
as the Act confers a discretion on the Commissioner whether or not to release an
inmate on medical parole. If the Legislature intended the recommendation of the
Board to be binding, it would have made that clear in s 79. The Board’s
recommendation, according to the Commissioner, is merely one of the relevant
factors to be taken into account, including the inmate’s medical records and
reports.
[44] Section 79(1) should be construed using the conventional process of
statutory interpretation, which is now well-settled. The words in the section must
be given their ordinary grammatical meaning, unless doing so would result in an
absurdity. This is subject to three interrelated riders, namely that the provision:
(a) should be interpreted purposively; (b) be properly contextualized; and (c) must
be construed consistently with the Constitution.16 In line with Natal Joint
Municipal Pension Fund v Endumeni,17 regard must be had, among others, to the
13 Minister of Police and Others v Fidelity Security Services (Pty) Ltd [2022] ZACC 16; 2022 (2) SACR 519 (CC)
para 34.
14 Chotabhai v Union Government (Minister of Justice) and Registrar of Asiatics 1911 AD 13.
15 Ibid at 24.
16 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (8) BCLR 869; 2014 (4) SA 474 (CC) para
28.
17 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA) para 18.
apparent purpose to which s 79(1) was directed, and the material known to those
responsible for the enactment of the provision. It is also permissible to consider
the general factual background within which the current section was enacted.18
[45] As to the latter consideration, it is useful to have regard to the Correctional
Matters Amendment Act 5 of 2011, which brought about the amendment to s 79,
and which came into effect on 1 March 2012. It interposed the Board in a
professional and advisory role to the decision-maker, in this instance the
Commissioner. Prior thereto, the Commissioner was entitled to release an inmate
on medical parole based on the written evidence of the medical practitioner
treating such inmate that the latter was diagnosed as being in the final phase of
any terminal disease or condition.
[46] There was no Board, and the Commissioner thus had the sole power to
decide whether a medical condition was one that qualified in terms of the Act for
the granting of medical parole. This was open to abuse, as there was no provision
for an independent medical opinion to verify the diagnosis by the inmate’s
treating doctor. The Board was introduced in the 2012 amendment clearly to
remedy this concern. As mentioned already, the Board consists of ten members,
all of whom are registered medical doctors (regulation 29B(3). The Board is thus
a specialist body.
[47] The interposition of the Board in the medical parole process in terms of
s 79(1)(a) was thus for a good reason, namely, to allow for an independent and
expert determination as to the medical aspect of the process, ie a professional
judgment as to whether an inmate suffers from a terminal illness or physical
incapacity. Therefore, the Legislature evidently intended the Board’s advice,
18 Commissioner, South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020] ZASCA 16;
2020 (4) SA 428 (SCA) para 17.
opinion and recommendation to the Commissioner to be crucial to his or her
decision on whether to release an inmate on medical parole. Thus, given the
context referred to above, and its specialist and professional composition, the
Board’s recommendation holds sway.
[48] This must be so, as the recommendation by the Board is clearly to furnish
the Commissioner with a basis for his or her opinion as to whether an inmate has
a terminal illness or physical incapacity. The Commissioner cannot simply ignore
it because he or she holds a different view. This is because the Board is an expert
body on the ‘medical’ part of the medical parole process. Ordinarily, the
Commissioner does not have that expertise. It follows that the Commissioner’s
role is not to determine whether medical parole is medically appropriate. That
role is statutorily reserved for the Board.
[49] In my view, the Board’s recommendation is akin to that considered in
Walele v City of Cape Town.19 There, the relevant legislation20 required a Building
Control Officer to make recommendations to the City of Cape Town for approval
of, among others, building plans. Writing for the majority, Jafta AJ characterised
the nature of the recommendation as follows:
‘If the purpose of the recommendation is merely to inform the decision-maker of the Building
Control Officer’s attitude or view on the approval, as argued by the City’s counsel, it is difficult
to imagine why the recommendation is made a jurisdictional fact, when the decision-maker can
investigate on his or her own, matters relating to compliance with requirements and the
disqualifying factors. It is equally difficult to find the reason why the legislature would oblige
the decision-maker to consider the recommendation before forming an opinion as to whether
he or she was satisfied about a particular state of affairs, if the recommendation was not
intended to be the primary source of information leading to being satisfied. The facts of the
present case demonstrate that the Building Control Officer had information concerning the very
19 Walele v City of Cape Town and Others [2008] ZACC 11; 2008 (6) SA 129 (CC); 2008 (11) BCLR 1067 (CC)
(Walele).
20 National Building Regulations and Building Standards Act 103 of 1977.
issues which the decision-maker was required to consider, but this information was not placed
before the decision-maker. As a specialist, the Building Control Officer is best suited to advise
the decision-maker about disqualifying factors. . . .
The recommendation therefore is the proper means by which information on disqualifying
factors can be placed before the decision-maker.’21
[50] To my mind, the nature of the recommendation discussed above fits neatly
with the one envisaged to be made by the Board in terms of regulation 29A(7). It
must follow then that the Commissioner’s discretion to release an inmate on
medical parole is not triggered unless the Board makes a positive
recommendation on the appropriateness to grant medical parole, which is based
on a determination in terms of s 79(1)(a) as to the inmate’s terminal illness or
physical condition. In other words, it is only once the Board makes a positive
recommendation that the Commissioner may enquire whether the inmate meets
the requirements of s 79(1)(b) and (c). This is fortified by the wording of
regulation 29A(7):
‘. . . If the recommendation of the [Board] is positive, then the . . . Commissioner . . . must
consider whether the conditions stipulated in section 79(1)(b) and (c) are present.’ (Emphasis
added.)
[51] Furthermore, an interpretation that allows the Commissioner to grant
medical parole to an inmate without the recommendation of the Board to that
effect would give the Commissioner the same power he or she had prior to the
2012 amendment. This would undermine the very purpose for which the Board
was created, and would render the provisions of s 79(1)(a) nugatory. The upshot
of the above is that, once the Board has properly applied its mind and concluded
that an inmate does not suffer from a terminal illness or physical incapacity so as
21 Walele paras 70-71.
to severely limit daily activity or inmate self-care, the Commissioner is not
entitled to grant medical parole.
[52] Since the Board is made up of skilled experts, the Commissioner has no
discretion on the question of whether an inmate suffers from a terminal illness.
Effectively, therefore, the Board is the ultimate decision-maker on this aspect.
Thus, in the absence of a positive recommendation by the Board, the
Commissioner had no power to release Mr Zuma on medical parole. Flowing
from the interpretation of s 79(1)(a), it must be emphasised that it is not within
the Commissioner’s remit to go beyond the Board’s recommendation and analyse
the various medical reports himself or herself. That task would have been
undertaken by the Board, and it is not for the Commissioner to second-guess its
determination and recommendation.
[53] If the Board’s recommendation is negative, that is the end of the matter –
the Commissioner cannot lawfully grant medical parole. It is only in the event of
the Board’s positive recommendation that the Commissioner can consider
whether the requirements of s 79(1)(b) and (c) have been met, and if so, grant
medical parole. In the present case, there was no positive recommendation by the
Board.
The
Commissioner’s
decision
was
therefore
unlawful
and
unconstitutional. It was invalid, in terms of s 6(2)(b) of the PAJA, because a
mandatory and material condition prescribed by the empowering legislation was
not met.
[54] But even if the argument on behalf of the Commissioner was accepted that
he, as the ultimate decision-maker, is empowered to override the Board’s
decision, his decision does not pass muster. First, he took into account factors
which are totally irrelevant in the enquiry of whether Mr Zuma qualified for
medical parole. These are: (a) the fact that Mr Zuma is 79 years; (b) Mr Zuma’s
status as former Head of State; (c) the riots which occurred in parts of KwaZulu-
Natal and Gauteng in July 2021, allegedly as a result of Mr Zuma’s incarceration;
and (d) the fact that the Department of Correctional Services has no capacity to
give Mr Zuma specialised care that he requires.
[55] While these factors may well be taken into consideration in an application
for normal parole, they have no bearing at all in an application for medical parole.
To that extent, the Commissioner acted irrationally. What is more, there was no
mention of the requirement in s 79(1)(b), ie the risk of re-offending in his
decision. His decision was therefore also invalid in terms of s 6(2)(e)(iii) of the
PAJA – the taking into account of irrelevant considerations and the failure to
consider relevant ones.
[56] Thus, on any conceivable basis, the Commissioner’s decision was unlawful
and unconstitutional. The high court was correct to set it aside.
Remedy
[57] Having set aside the Commissioner’s decision, the high court substituted
its own decision for that of the Commissioner, ie it refused Mr Zuma’s application
for medical parole. In terms of s 8(c)(ii)(aa) of the PAJA, a court may substitute
its own decision for that of an administrator in ‘exceptional cases.’ The lodestar
in the enquiry whether there are exceptional circumstances, remains Trencon v
Industrial Development Corporation22 where the Constitutional Court identified
the following factors:
‘. . . The first is whether a court is in as good a position as the administrator to make the
decision. The second is whether the decision of an administrator is a foregone conclusion.
These two factors must be considered cumulatively. Thereafter, a court should still consider
other relevant factors. These may include delay, bias or the incompetence of an administrator.
22 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another [2015]
ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC).
The ultimate consideration is whether a substitution order is just and equitable. This will
involve a consideration of fairness to all implicated parties. It is prudent to emphasise that the
exceptional circumstances enquiry requires an examination of each matter on a case-by-case
basis that accounts for all relevant facts and circumstances.’23
[58] In the present case, in making the substitution order, the high court
reasoned that remission would not serve any purpose ‘as the Commissioner will
have no discretion to exercise.’ This conclusion is undoubtedly correct. As
explained already, without the Board’s positive recommendation, the
Commissioner has no discretion but to refuse medical parole. The Board has
decided that Mr Zuma does not qualify for medical parole. Viewed in this light,
the high court was in as good a position as the Commissioner to make a decision,
which is a foregone conclusion as the Board’s decision stands and remains
unchallenged.
[59] In addition, the high court made two declaratory orders which warrant
comment. In the first one, at para 5 of its order, the high court declared that the
time Mr Zuma was out on medical parole should not be considered for the
fulfilment of his sentence of 15 months imposed by the Constitutional Court. This
issue implicates the doctrine of separation of powers. Matters concerning how an
inmate serves his or her sentence; when and how he or she qualifies for and is to
be released on parole, quintessentially reside in the province of the executive –
the Department in this instance. Counsel for the Helen Suzman Foundation, at
whose instance the declaratory order was granted, fairly conceded that the order
was inappropriate. It should be set aside.
[60] The effect of the setting aside of this declarator is that once the order in this
appeal is handed down Mr Zuma’s position as it was prior to his release on
23 Ibid para 47.
medical parole will be reinstated. In other words, Mr Zuma, in law, has not
finished serving his sentence. He must return to the Escourt Correctional Centre
to do so. Whether the time spent by Mr Zuma on unlawfully granted medical
parole should be taken into account in determining the remaining period of his
incarceration, is not a matter for this Court to decide. It is a matter to be
considered by the Commissioner. If he is empowered by law to do so, the
Commissioner might take that period into account in determining any application
or grounds for release.
[61] Related to this, I feel constrained to express this Court’s disquiet about one
aspect. While this judgment was pending, we became aware that the Department
released a media statement to the effect that Mr Zuma had completed his sentence.
Such a pronouncement was premature given that the determination of the very
issue was still pending before this Court. A decision as to whether Mr Zuma’s
prison term had lawfully expired, could not be validly made until this Court had
determined the appeal by the Commissioner and Mr Zuma. This Court has now
determined that Mr Zuma’s release on medical parole was unlawful. The
Department’s statement was unfortunate, and potentially undermines the judicial
process, particularly since the Department is an appellant in this matter.
[62] In the second declaratory order, at para 6, the high court declared, at the
instance of Afriforum, that:
‘In terms of s 79(1)(a) read with regulations 29A, and 29B the [Board] is the statutory body to
recommend in respect of the appropriateness of medical parole to be granted or not in
accordance with section 79(1)(a) (the terminal condition and incapacity requirements).’
[63] The high court said that the declaration was pursuant to s 8(1)(d) and
section 8(2)(b) to (d) of the PAJA. With respect, it appears that the high court
misconstrued the remedial powers set out in s 8 of the PAJA. The section is titled
‘Remedies in proceedings for judicial review.’ Section 8(1)(d) provides that as
part of its power to grant a just and equitable order, a court may grant any order,
including ‘declaring the rights of the parties in respect of any further matter to
which the administrative action relates. Section 8(2)(b)-(d) provides:
‘The court or tribunal, in proceedings for judicial review in terms of section 6(3), may grant
any order that is just and equitable, including orders—
. . .
(b) declaring the rights of the parties in relation to the taking of the decision;
(c) directing any of the parties to do, or to refrain from doing, any act or thing the doing, or the
refraining from the doing, of which the court or tribunal considers necessary to do justice
between the parties; or
(d) as to costs.’
[64] The order granted by the high court was not one envisaged in either
ss 8(1)(d) or 8(2)(b) of the PAJA. It was not a declaration of rights, but a re-
statement of the law. The latter does not constitute a ‘remedy’ for any of the
parties. It is clear therefore that the declaratory order granted by the high court
does not fall within the purview of s 8 of the PAJA. It should not have been
granted. It was in any event not necessary as the correct legal position was
articulated in the body of the judgment.
Costs
[65] There remains the issue of costs. The limited interference with the order of
the high court is not sufficient to affect the general principle that costs should
follow the result. The respondents remain overwhelmingly successful. There
should not be any costs order consequent upon the participation of the amicus.
Order
[66] In the result I make the following order:
1. Paragraphs 5 and 6 of the order of the high court are set aside.
2. Save for the above, the appeal is dismissed with costs.
3. The first and second appellants are ordered to pay the costs of the first, second
and third respondents, jointly and severally, the one paying the other to be
absolved.
4. The costs shall include the costs of two counsel where so employed.
__________________
T MAKGOKA
JUDGE OF APPEAL
APPEARANCES:
For first appellant:
M S Mphahlele SC (with him E B Ndebele)
Instructed by:
State Attorney, Pretoria
State Attorney, Bloemfontein
For second appellant:
D C Mpofu SC (with him T Masuku SC, M Qofa,
B Buthelezi and N Xulu)
Instructed by:
Ntanga Nkuhlu Inc., Johannesburg
Peyper Lessing Attorneys Inc., Bloemfontein
For first respondent:
I Jamie SC (with him M Bishop and P Olivier)
Instructed by:
Minde Schapiro & Smith Inc., Cape Town
Symington De Kok Attorneys, Bloemfontein
For second respondent: M du Plessis SC (with him A Coutsoudis, J Mitchell,
J Thobela-Mkhulisi and C Kruyer)
Instructed by:
Webber Wentzel, Johannesburg
Honey Attorneys, Bloemfontein
For third respondent:
F J Labuschagne (with him A K Kekana)
Instructed by:
Hurter Spies Inc., Pretoria
Rossouws Attorneys, Bloemfontein
For amicus curiae: M Engelbrecht SC (with her C F Avidon)
Instructed by:
Cilliers & Gildenhuys Inc., Pretoria
Badenhorst 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: 21 October 2022
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.
National Commissioner of Correctional Services and Another v Democratic Alliance and Others (with
South African Institute of Race Relations intervening as Amicus Curiae) (33/2022) [2022] ZASCA
159 (21 November 2022)
Today, the Supreme Court of Appeal, per Makgoka JA (Dambuza, Plasket and Mabindla-Boqwana
JJA and Goosen AJA concurring) dismissed an appeal by the National Commissioner of Correctional
Services (the Commissioner) and Mr Jacob Gedleyihlekisa Zuma (Mr Zuma), against an order of the
Gauteng Division of the High Court, Pretoria (the high court) which held that Mr Zuma’s release on
medical parole by the Commissioner was unlawful and unconstitutional. Mr Zuma, the former
President and Head of State of the Republic of South Africa, was on 29 June 2021, sentenced to 15
months’ imprisonment by the Constitutional Court for failing to obey that Court’s order to appear
before the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in
the Public Sector including Organs of State. Mr Zuma commenced serving his sentence on 8 July
2021, and was released by the Commissioner on medical parole less than two months later, on 5
September 2021, despite the decision of the Medical Parole Advisory Board (the Board) that Mr Zuma
did not qualify to be released on medical parole.
Having set aside the decision of the Commissioner, the high court directed that Mr Zuma be returned
to the custody of the Department of Correctional Services (the Department) to serve out the remainder
of his sentence of imprisonment. The high court also ordered that the time Mr Zuma was out of jail on
medical parole should not be considered for the fulfilment of the sentence of 15 months imposed by the
Constitutional Court. In the Supreme Court of Appeal, the Commissioner and Mr Zuma’s appeal was
opposed by the victorious applicants in the high court, namely: the Democratic Alliance, the Helen
Suzman Foundation and Afriforum. The South African Institute of Race Relations was admitted as
amicus curiae (amicus) in the Supreme Court of Appeal.
The Supreme Court of Appeal (the Court) first considered the submission of the amicus curiae, the
South African Institute of Race Relations (the amicus) to the effect that a person committed to prison
for contempt of court such as Mr Zuma, was not a sentenced offender envisaged in Correctional Services
Act 111 of 1998 (the Act). Therefore, the amicus submitted, the Commissioner enjoyed neither the
power nor competence to release Mr Zuma from custody ahead of the expiry of his period of detention,
and that only the Constitutional Court, as the court which had committed him, could order his early
release. The Court did not accept this submission and held that the Act did not draw a distinction
between offenders based on the type of offence for which they were convicted. In any event, the Court
held, the Constitutional Court had made it plain in its judgment that its sentence on Mr Zuma was
punitive, as opposed to coercive. The Court thus concluded that Mr Zuma was entitled to apply for his
release on medical parole, and the Commissioner was empowered to consider that application in terms
of the relevant provisions of the Act.
After setting out the factual background which preceded Mr Zuma’s release on medical parole, the
Court turned to the interpretation of the medical parole legislative scheme comprising of ss 75(1) and
79 of the Act, and the regulatory framework set out in regulation 29A, and concluded as follows: s 75(7)
empowers the Commissioner to release on medical parole an inmate serving a sentence of incarceration
for 24 months or less. It must be read with s 79(1), which sets out three substantive requirements for
medical parole, namely: (a) terminal disease or physically incapacity; (b) low risk of re-offending; and
(c) appropriate arrangements post-release. The second and third requirements involve typical
correctional services considerations and, therefore, fall within the Commissioner’s remit. These three
requirements constitute jurisdictional facts that must be met for medical parole to be granted. If any of
them is not present, an inmate does not qualify for medical parole.
The first requirement is a medical one, and the Commissioner must be guided by the Board, which
comprises ten registered medical practitioners. The Board’s decision as to whether an inmate suffers
from a terminal illness or physical incapacity as required in s 79(1)(a), is informed by the procedure
laid down in regulation 29A(5). The Board must first determine whether an offender’s stated medical
condition is one of the non-infectious and infectious conditions listed in regulation 29A(5). If it is not,
the Board may, in terms of regulation 29A(6) consider ‘any other condition’, ‘if it complies with the
principles contained in section 79’.
After undertaking the exercise set out in regulation 29A(5) (and possibly in regulation 29A(6)), the
Board is enjoined to make a recommendation in terms of regulation 29A(7) on the appropriateness to
grant medical parole. That regulation provides that the Board must make a recommendation to the
Commissioner ‘on the appropriateness to grant medical parole in accordance with s 79(1)(a) of the Act.’
If the recommendation of the Board is positive, then the Commissioner must consider whether there is
low risk of re-offending; and whether there were appropriate arrangements post-release.
The Court emphasised that the Board was the effective decision-maker on the aspect whether an inmate
qualifies for medical parole and that the Commissioner had no residual powers to release an offender
on medical parole without a positive recommendation by the Board to that effect. The simple reason is
that the Board is a specialist, professional body, and the Commissioner is not.
Applying these legislative and regulatory provisions to the facts of the case, the Court concluded that
the Commissioner did not have the power to release Mr Zuma on medical parole without a positive
recommendation of the specialist medical panel (the Board). The Board had declined to make that
positive recommendation as it concluded that Mr Zuma did not, from a medical point of view, qualify
to be released on medical parole. In any event, the Commissioner’s decision was unlawful since he took
into account irrelevant factors into account when he decided to release Mr Zuma on medical parole, eg,
Mr Zuma’s age, the riots that occurred in parts of Gauteng and KwaZulu-Natal following Mr Zuma’s
incarceration and the fact that the Department of Correctional Services (the Department) did not have
the facilities to afford Mr Zuma the high care level he needed. These factors are not mentioned in s
79(1) of the Act, and by taking them into account, the Commissioner acted unlawfully. While those
factors could well be considered when an inmate applies for ordinary parole, they had no place in an
application for medical parole. The Court concluded that the high court was correct to set aside the
Commissioner’s decision to release Mr Zuma on medical parole.
Turning to the remedy, the Court considered the high court’s decision not to remit the matter to the
Commissioner, but make a substitution order. The Court concluded that since the Board had decided
that Mr Zuma did not qualify for medical parole, no purpose would be served to remit the matter to the
Commissioner, as the conclusion was a foregone one. The Court thus upheld the high court’s decision
in this regard.
However, the Court set aside two declaratory orders made by the high court. In the first one, at para 5
of its order, the high court declared that the time Mr Zuma was out on medical parole should not be
considered for the fulfilment of his sentence of 15 months imposed by the Constitutional Court. The
Court held that this issue implicated the doctrine of separation of powers, and should be left to the
Department.
The Court explained the effect of the setting aside of this declaratory order as follows: Once the order
in this appeal is handed down Mr Zuma’s position as it was prior to his release on medical parole will
be reinstated, as in law, Mr Zuma had not finished serving his sentence. He must return to the Escourt
Correctional Centre to do so. The Court pointed out that whether the time he spent on unlawfully granted
medical parole should be taken into account in determining the remaining period of his incarceration,
was not a matter for this Court to decide. It is a matter to be considered by the Commissioner. If he is
empowered by law to do so, the Commissioner might take that period into account in determining any
application or grounds for release.
Related to the above issue, the Court deprecated the conduct of the Department in that, while the Court’s
judgment was pending, the Department issued a statement to the effect that Mr Zuma had completed
his sentence. The Court pointed out that such a pronouncement was premature given that the
determination of the very issue was still pending before the Court. A decision as to whether Mr Zuma’s
prison term had lawfully expired, could not be validly made until this Court had determined the appeal.
The Court considered the Department’s statement as unfortunate, and potentially undermining the
judicial process, particularly since the Department was an appellant in this appeal.
In the second declaratory order, at para 6, the high court declared that in terms of s 79(1)(a) read with
regulations 29A, and 29B the Board is the statutory body to recommend whether medical parole ought
be granted or not. After analysing the provisions of ss 8(1)(d) and 8(2)(b) to (d) of the Promotion of
Administrative Justice Act 3 of 2000, on which the high premised its order, the Court concluded that
those sections did not empower the orders made by the high court. Thus, the high court had
misconstrued the remedial powers set out in s 8 of the PAJA, as those sections envisaged ‘declaration
of rights’ of any of the parties. The order of the high court did not declare rights of any of the parties,
but made a statement of law. It was in any event not necessary as the legal position was articulated in
the body of the judgment.
As a result, the two declaratory orders were set aside. Save for that, the Court dismissed the appeal of
the Commissioner and Mr Zuma with costs. The Commissioner and Mr Zuma were ordered to pay the
costs of the Democratic Alliance, the Helen Suzman Foundation and Afriforum, jointly and severally,
the one paying the other to be absolved. Those costs included the costs consequent upon employment
of two counsel where so employed. No costs order was made with regard to the costs of the amicus.
******* END****** |
1279 | non-electoral | 2008 | THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT
Case No: 517/2007
TRANSNET LIMITED t/a METRORAIL
1st Appellant
THE SOUTH AFRICAN RAIL COMMUTER
CORPORATION LIMITED
2nd Appellant
and
DAVID WITTER
Respondent
Neutral citation: Transnet Ltd v Witter (517/2007) [2008] ZASCA 95 (16
September 2008).
Coram:
HARMS ADP, BRAND, CLOETE, PONNAN JJA and LEACH AJA
Heard:
15 AUGUST 2008
Delivered:
16 SEPTEMBER 2008
Corrected:
Summary:
Delict: negligence of railway operator; passenger boarding
moving train with open door. Contributory negligence:
Apportionment of Damages Act 34 of 1956; approach of a court of
appeal to an apportionment made by a trial court. Costs: Expert
witnesses: when preparation (qualifying) fees of an expert, and
allowances prescribed under s 42 Supreme Court Act 59 of 1959
(and s 51 bis of the Magistrates' Courts Act 32 of 1944), should be
allowed on taxation; order declaring a witness a necessary
witness, discussed.
_______________________________________________________________
ORDER
_______________________________________________________________
On appeal from: High Court, Cape Town (Veldhuizen J sitting as court of first
instance).
The following order is made:
1.
The order of the court a quo declaring Messrs Myatt and Taute
necessary witnesses is deleted and that part of the order is amended to read:
'The preparation fees of Messrs Myatt and Taute shall be allowed on taxation'.
2.
Save as set out in 1, the appeal is dismissed.
3.
The appellants are ordered, jointly and severally, to pay the respondent's
costs of appeal, including the costs of two counsel.
_______________________________________________________________
JUDGMENT
_______________________________________________________________
CLOETE JA (HARMS ADP, BRAND, PONNAN JJA and LEACH AJA
concurring):
[1] At approximately 06:40 on 7 February 2002 the plaintiff attempted to
board a commuter train at the Witteboom railway station in the Western Cape.
The train had just started to move slowly when the plaintiff emerged onto the
platform. Although the other doors were closed, the doors of the carriage where
the plaintiff attempted to board were open. The plaintiff took three quick steps
across the platform and grasped the pillar in the middle of the open doors, lost
his footing and fell between the platform and the train. The wheels of the train
severed his right foot above the ankle.
[2] Transnet Limited (trading as Metrorail) operated the train, the railway
station and the platform on behalf of the South African Rail Commuter
Corporation Limited. The latter owned, controlled and regulated the train. The
plaintiff sued them both as, respectively, the first and second defendants, for
damages in delict. The court a quo (Veldhuizen J) was asked to determine the
question of liability first. The learned judge found that the guard on the train was
negligent in failing to ensure that the doors of the carriage where the plaintiff
attempted to board were closed before signalling to the driver that the train
could depart from the station, for which negligence the defendants were
vicariously liable; and in the alternative, that the defendants were themselves
negligent in failing to put the necessary procedures in place to prevent this
happening. The trial court also found that the plaintiff had been negligent ─
indeed, contributory negligence had (correctly) been conceded ─ and ordered
that his damages be reduced by 50 per cent. Finally, the trial court declared the
two experts that had been called on behalf of the plaintiff necessary witnesses
and ordered that their qualifying fees should be allowed on taxation.
[3] This court granted the defendants leave to appeal. It would be
convenient to continue to refer to the parties as they were in the court a quo.
[4] There are three issues on appeal. The defendants contend:
(a)
that neither they nor the guard were negligent as all reasonable steps
had been taken to prevent the occurrence of injuries to persons in the position
of the plaintiff;
(b)
that the apportionment of damages made by the court a quo was not just
and equitable; and
(c)
that the costs order in respect of the plaintiff's expert witnesses should
not have been made.
I shall deal with each issue in turn.
Negligence
[5] The test for negligence was formulated in Kruger v Coetzee as follows:1
'For the purposes 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.'
The first two requirements contained in para (a) were ─ correctly ─ not placed
in issue by the defendants. All of the experts were agreed. Mr Myatt, an
1 1966 (2) SA 428 (A) at 430E-G.
electrical engineer and specialist in train door control systems, who testified on
behalf of the plaintiff, expressed the view that it was a basic fundamental
requirement for the safe operation of a passenger train in any country that a
train should not depart with a door open. Mr Taute, a mechanical engineer and
retired General Manager (Operations and Technical) of the second defendant,
who had gained experience over many years on inter alia the safe running of
trains and commuter safety and who was also called as an expert on behalf of
the plaintiff, said:
'As an operator you must have clear guidelines and proper staff to make sure that you
safely convey your passengers. One of the prime issues, prime things to do is to make
sure that the doors are closed. In other words you must lay down proper procedures,
have staff to do it . . . I'll never accept the fact that you can, accept running a train with
doors open, I can't accept that that is an acceptable situation to operate a suburban
service on.'
The evidence of the defendants' expert, Mr Carver, a mechanical engineer
previously employed by the second defendant, was that a responsible train
operator should do 'everything in his power' to prevent trains departing with
doors open.
[6] So far as the requirement contained in para (b) of Kruger v Coetzee is
concerned, it was the defendants' case that they had indeed taken all
reasonable steps to guard against the possibility that commuter trains, and in
particular, the train which the plaintiff attempted to board, would depart with
doors open. The submissions made by the defendants' counsel on appeal in
this regard are conveniently tabulated in the heads of argument as follows:
'We submit that the Appellants did exercise reasonable care in carrying out their duties
by reason of the following:
1.
The regular maintenance that was undertaken on the train set;
2.
The checking of the doors at the commencement of shift and the unlikelihood of
a defect occurring in the day subsequent thereto;
3.
The employment of the guard;
4.
The guard ensuring that the platform was clear prior to the door close button
having been pressed;
5.
The guard generally observing (in the course of his duties) whether the doors
were closing properly;
6.
The present and ongoing replacement of the 5M coaches with 10M coaches;
7.
The impossibility of having the guard ensure that all the doors are closed prior
to departure of the train in that it would add at least a further 15 minutes to the
train schedules, thereby resulting in fewer trains and greater overcrowding,
posing an even greater risk to passengers;
8.
The impossibility of employing further personnel given that all trains do not have
a second compartment within which such a person may be located. He/she
would accordingly have to sit in the driver's compartment and the time-
consuming process described above would have to be followed at every station,
thereby also resulting in further delays and fewer trains running.'
[7] Regular maintenance and checking of doors at the commencement of
each shift would lessen, but not obviate, the possibility of a malfunction. As Mr
Taute said (and his view accords with common sense):
'You see with mechanical equipment you can never expect or accept that things are
going to work, something could happen, something could happen between Retreat
[where the guard and driver had checked the operation of the doors at the beginning of
the shift] and [the Witteboom] station which causes the door not to work, with very fatal
results to passengers, so that is why you can't assume, you can never assume that if a
thing is working now it will still be working within 24 hours or whatever, or ten hours or
two hours, whatever.'
[8] The duties of the guard, set out in para 12001.2 of the General Operating
Instructions of the first defendant, were the subject matter of much debate. The
paragraph reads:
'12001.2
Operation of sliding doors on arrival at and before starting from
stations or other stopping places.
12001.2.1
Immediately after stopping at a station or halt where the train is required
to stop for commuters, the metro guard must release the sliding doors
on the platform side so that they can be opened manually.
12001.2.2
When the train is ready to depart and after the metro guard has
announced it orally, he must blow his whistle as warning that the sliding
doors are going to be closed. Thereafter he must press the "Door-
CLOSING" button and give the right-away bell signal to the train driver.
12001.2.3
While performing their duties, metro guards must observe whether or
not sliding doors are closing properly. If any sliding doors are not
operating correctly the instructions in subclause 12001.4 must be
complied with. They must also warn commuters against the undesirable
practice of keeping sliding doors open when the train is about to depart
or en route.'
The plaintiff contended that the Instructions imposed a duty on the guard to
observe whether the sliding doors were closing properly after he had pressed
the door-closing button and before he gave the right-away bell signal to the
driver. The defendants contended that the guard was only obliged to look at the
sides of the train from time to time whilst it was running between stations to see
whether doors were closed. For the purposes of liability in this case, it matters
not which interpretation is correct. Either the Instructions imposed a duty on the
guard to ensure that the train doors were closed before he gave the signal to
the driver to proceed, or they did not. If the Instructions did impose such a duty,
it was (correctly) conceded on behalf of the defendants that the guard was
negligent in not carrying it out and it was not disputed that the defendants would
be vicariously liable for that negligence. If the Instructions did not impose such a
duty, the defendants were themselves negligent in not issuing such an
instruction for the reasons which follow.
[9] It was the guard's own evidence that after the train stopped at a station,
he would get out of his cab at the back of the train, step about two metres away
from the train and wait for persons to embark and disembark. The fact that the
guard ensures that the platform is clear prior to pressing the door-close button
does not cater for the eventuality of a passenger suddenly emerging onto the
platform intent on boarding the train and attempting to do so when he or she
sees a door open ─ which is precisely what the plaintiff did in this case. The
guard readily conceded that if he had been instructed to ensure that the doors
were closed, it would have been a simple matter for him to have moved away
from his cab to do just that. And had he seen that a door was malfunctioning, it
was his obligation in terms of the Instructions to inform the driver and isolate the
door ─ as he said he would have done on the day in question had he noticed
that the doors through which the plaintiff attempted to board the train were
open.
[10] There would, of course, be a slight delay if the guard were to inspect the
doors each time a train was about to leave a station. Mr Taute agreed with
counsel for the defendants that the delay would be of the order of 40 seconds,
and as there were 18 stations on the route, a total delay of 15 minutes would
have resulted. That is hardly significant. Nor would such a delay have led to
congestion or less trains, as suggested in argument, because if each conductor
of each train inspected the doors at each station the interval between the trains
and the number of trains would remain the same; and the timetable shows that
the trains left more than 15 minutes apart even at peak times.
[11] The fact that the defendants were (and probably still are) replacing the
old 5M coaches with new 10M coaches does not assist their case. If anything,
greater precautions should have been taken to guard against malfunctioning
doors on the older coaches.
Contributory negligence
[12] I therefore consider that causative negligence was established and I turn
to consider the second issue on appeal, namely, the apportionment made by
the court a quo in respect of the plaintiff's contributory negligence. Section
1(1)(a) of the Apportionment of Damages Act2 enjoins a court to reduce
damages suffered by a claimant 'to such extent as the court may deem just and
equitable' having regard to the degree to which the claimant was also at fault. In
South British Insurance Co Ltd v Smit3 Ogilvie Thompson JA said:
'From the very nature of the enquiry, apportionment of damages imports a considerable
measure of individual judgment: the assessment of "the degree in which the claimant
2 34 of 1956.
3 1962 (3) SA 826 (A) at 837F-838A.
was at fault in relation to the damage" is necessarily a matter upon which opinions may
vary. In the words of LORD WRIGHT in British Fame (Owners) v MacGregor (Owners),
1943 (1) A.E.R. 33 at p. 35 (a maritime case; but the principle appears to be equally
followed in England in relation to the Contributory Negligence Act):
"It is a question of the degree of fault, depending on a trained and expert judgment
considering all the circumstances, and it is different in essence from a mere finding of
fact in the ordinary sense. It is a question, not of principle, but of proportion, of balance
and relative emphasis, and of weighing different considerations. It involves an
individual choice or discretion, as to which there may well be difference of opinion by
different minds."
Were this Court readily to interfere with a trial Court's apportionment of damages,
dissatisfied litigants would be encouraged to appeal in well nigh every case. Where,
therefore, the trial Court has correctly found the facts and has made no error in
principle, this Court . . . will not lightly disturb the apportionment decided upon by the
trial Court.'
The section requires the court of first instance to exercise a narrow discretion.4
Accordingly, an appeal court will not decide the question afresh; it will interfere
with the exercise of the discretion exercised by the trial court only where it is
shown that:
'. . . the lower court had not exercised its discretion judicially, or that it had been
influenced by wrong principles or a misdirection on the facts, or that it had reached 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.'5
An appeal court is therefore entitled to interfere (as it can in respect of
sentences imposed in criminal matters ─ another example of the exercise of a
narrow discretion) where its assessment differs so markedly from that of the
4 Media Workers Association of South Africa v Press Corporation of South Africa Ltd ('Perskor')
1992 (4) SA 791 (A) at 800C-G; Wijker v Wijker 1993 (4) SA 720 (A) at 727J-728B; Ganes v
Telecom Namibia Ltd 2004 (3) SA 615 (SCA) para 21; Naylor v Jansen 2007 (1) SA 16 (SCA)
para 21; Giddey NO v J C Barnard and Partners 2007 (5) SA 525 (CC) para 19 at 534A-B and n
17.
5 National Coalition for Gay and Lesbian Equality v Minister of Home Affairs 2000 (2) SA 1 (CC)
para 11. See also Benson v SA Mutual Life Assurance Society 1986 (1) SA 776 (A) at 781I-
782B and cases there cited; Giddey NO v J C Barnard and Partners above n 4 para 19; Naylor
v Jansen above, n 4; Malan v The Law Society of the Northern Provinces [2008] ZASCA 90
para 13.
court a quo as to warrant interference: Shield Insurance Co Ltd v Theron NO6
[13] The defendants' counsel submitted that the apportionment of 50 per cent
was not fair and reasonable, particularly because the plaintiff boarded a moving
train and the defendants had adopted measures aimed at preventing trains from
departing with open doors. But I cannot fault the determination by the court a
quo. It did not misdirect itself and its assessment does not warrant interference
particularly in view of the following remarks made by this court in Transnet Ltd
t/a Metro Rail v Tshabalala:7
'A reasonable man in the position of the defendant would not have allowed the train to
operate with the doors of the coaches open as he would have foreseen that to leave
the doors of the railway coaches open would constitute an invitation to prospective
passengers to board the train while moving and that it would be dangerous for them to
do so. Similarly, a reasonable man in the position of a prospective passenger would
have foreseen the danger of boarding a train after it had started to move and would
have refrained from doing so. Both the defendant and the plaintiff were therefore
negligent. Had the plaintiff been sober and had he attempted to board the train shortly
after it started moving the degree to which he was at fault may well have been the
same as that of the defendant. That is however not what happened. The plaintiff was at
least somewhat intoxicated at the time and he tried to board the train after it had moved
a considerable distance and had probably gathered some speed. The court a quo
summarised the evidence of Emmanuel, whose evidence it accepted, as follows:
"The train started to leave the station. When the plaintiff realised that the train was
leaving he started to run after it. He was running in the direction of the first class
coaches. He ran past the coach in which he had been travelling and two further third
class coaches. The next coach was a first class coach. Mr Emmanuel could see that
the plaintiff was not going to make it. He was staggering as he ran. Eventually he
managed to reach the first class coach. He grabbed onto the rail in the middle of the
entrance to the coach and ran for approximately three metres alongside the train whilst
holding onto the rail. Then he lost his footing and disappeared from sight."
In the light of this evidence the conduct of the plaintiff deviated from the norm, being
that of a reasonable man, to a substantially greater degree than that of the defendant.
6 1973 (3) SA 515 (A) at 518B-D.
7 [2006] 2 All SA 583 (SCA) para 9.
In the circumstances it would, in my view, be equitable to reduce the damages suffered
by the plaintiff by two thirds.' (Emphasis supplied.)
The appeal on this ground must therefore also fail.
Costs of expert witnesses
[14] The final question to be determined is the correctness of the order made
by the trial court in relation to the two experts that testified on behalf of the
plaintiff. It was submitted that neither could be regarded as a necessary
witness, in view of the following passage in the judgment of the court a quo:
'Both the plaintiff and the defendants presented a great deal of expert testimony. In my
opinion these experts do not contribute to a resolution of this matter.'
It was therefore submitted that the court a quo should not have declared the
plaintiff's two experts necessary witnesses, nor allowed their qualifying fees.
[15] There appears to be some confusion underlying the order made by the
court a quo and counsel's submission. An expert witness's qualifying fees (now
more appropriately termed 'preparation fees' in the Uniform Rules) will only be
allowed on taxation if authorised by the court or with the consent of all
interested parties. The proviso to item 5 of section D of the schedule to Uniform
Rule 70 makes this clear:
'Provided that the preparation fees of a witness shall not be allowed without an order of
the court or the consent of all interested parties.'
This proviso takes qualifying fees out of the concluding part of rule 70(3) (Köhne
v Union and National Insurance Co Ltd)8 which sets out the general duties of
the taxing master as follows:
'With a view to affording the party who has been awarded an order for costs a full
indemnity for all costs reasonably incurred by him in relation to his claim or defence
and to ensure that all such costs shall be borne by the party against whom such order
has been awarded, the taxing master shall, on every taxation, allow all such costs,
charges and expenses as appear to him to have been necessary or proper for the
attainment of justice or for defending the rights of any party, but save as against the
8 1968 (2) SA 499 (N) at 504E-F.
party who incurred the same, no costs shall be allowed which appear to the taxing
master to have been incurred or increased through over-caution, negligence or
mistake, or by payment of a special fee to an advocate, or special charges and
expenses to witnesses or to other persons or by other unusual expenses.'
[16] The allowances paid to witnesses and which are prescribed pursuant to
s 42 of the Supreme Court Act9 may be claimed on taxation in respect of any
witness, lay or expert. The current tariff, published this year,10 repealed the long
outdated tariff which had been in force for 16 years.11 The tariff provides for a
subsistence allowance, transport and travelling expenses, and an allowance up
to a maximum of R1 500 for income lost in consequence of attendance at a civil
case; and it no longer distinguishes between expert and other witnesses.
[17] No special charges or expenses paid to witnesses can be taxed because
of the latter part of Uniform Rule 70(3), quoted above. Indeed, an agreement by
a party to remunerate a witness for testifying in his cause (as opposed to an
undertaking to pay to a witness the statutory allowances) is against public
morals and unenforceable: Van Aswegen v Lombard.12 This applies also to an
expert witness (although an expert witness can charge for preparation); as
Innes CJ (Wessels and Curlewis JJ concurring) said in Marais v Pilkington:13
'The provisions of the Roman-Dutch law with regard to the obligation of all persons to
give evidence who are able to do so were very strict; and the law went far in compelling
evidence and in discountenancing any special payment in connection therewith. It is a
fundamental rule that a person who is in a position to aid the administration of justice
by giving evidence as to facts within his knowledge is bound to appear in court and do
so. And there is a scale of remuneration fixed in all such cases. Now, though an expert
witness differs from an ordinary witness in this respect, that he is a volunteer and must
qualify himself by ascertaining the facts upon which he then proceeds to bring his
opinion to bear, yet when he has once done so I cannot see any real distinction
9 59 of 1959; the corresponding section in the Magistrates' Courts Act 32 of 1944, is s 51 bis.
10 Under GN R394 in Government Gazette 30953 of 11 April 2008.
11 GN R2597 in Government Gazette 13604 of 1 November 1991.
12 1965 (3) SA 613 (A) and cased there quoted.
13 1905 TS 650 at 651-2 quoted with approval by this court in Van Aswegen v Lombard, above,
n 12, at 618D-G.
between his position and that of a man who happens to have seen certain things take
place and has to depose regarding the particulars of what he saw. A man who has
gone out of his way to qualify himself, who has put himself in possession of the facts,
and has formed his opinion as an expert, is, it seems to me, as much bound to impart
his opinion to the Court as an ordinary man is to state what he knows about facts in
dispute.'
Therefore although an expert is free to stipulate for whatever rate he considers
appropriate for preparation, those fees cannot include remuneration for time
spent in the witness box: Pakes v Moseley.14
[18] If the court allows the preparation fees of an expert, it does not follow
that the allowances prescribed under the Supreme Court Act should also be
claimable on taxation ─ for example, if the issue on which the expert was to
testify fell away after the preparation fees were incurred and his attendance at
court became unnecessary, any allowances subsequently paid for this purpose
might not be claimable on taxation. Whether preparation fees or allowances
should be claimable on taxation depends on whether they were reasonably
necessary and that question is to be answered not with the benefit of hindsight,
but when the fees or expenses were incurred: Stauffer Chemical Co v Safsan
Marketing and Distribution Co (Pty) Ltd.15 If, therefore, it appears to the court (in
the case of preparation fees of an expert) or the taxing master (in the case of
the statutory allowances) that it was reasonable for the legal representatives of
the successful party to incur such expenses when they did so, the expenses
should be allowed. The consequence is that qualifying fees16 and witness
allowances17 may be allowed on taxation, even though the witness concerned
did not, in the event, testify.
[19] Although allowances claimed in respect of any witness may only be
14 1909 TS 166, approved by this court in Van Aswegen v Lombard above, n 12 at 619A-E; and
see the remarks of Mason J in Kemp v Power reported sv Power v Kemp 1911 AD 419 at 428,
also quoted with approval in Van Aswegen v Lombard, at 619G.
15 1987 (2) SA 331 (A) at 354I-355H.
16 Stauffer Chemical Co v Safsan Marketing and Distribution Co (Pty) Ltd above, n 15, loc cit.
17 Cf Stanley Motors Ltd v Administrator, Natal 1959 (1) SA 624 (D) at 629C-G.
claimed if they were reasonably incurred, and although preparation fees in the
case of an expert have to be allowed by order of court or by consent, a
declaration by a court that a witness (whether lay or expert) was a necessary
witness is not required before the allowances prescribed by the Supreme Court
Act can be awarded on taxation. The same applies to a litigant witness because
the statutory basis for a declaration in such a case has fallen away: the Uniform
Rules contain no such requirement; rule 33(15) of the magistrates' court rules of
court, which originally required such a declaration, was deleted in 1977;18 and
pre-Union legislation,19 which also required such a declaration, has been
repealed.20 In all cases therefore a declaration that a witness was a necessary
witness is not necessary so a court should not usurp the function of the taxing
master by making one, and the taxing master is not entitled to require one (as
we were informed is the practice in the Cape High Court). It is of course open to
a court to give any indication to the taxing master it considers may be useful.
[20] I return to the facts. The two experts called on behalf of the plaintiff gave
evidence which was of an expert nature. The defendants' counsel submitted
that some of the evidence of Mr Taute did not fall into that category; but it is for
the taxing master to decide what part of the fees payable to this witness were
spent on preparing him to express the opinions which he did, and are therefore
allowable on taxation. Mr Myatt's evidence was necessary in particular to rebut
assertions made by the defendants' expert, Mr Carver. The fact that the trial
court found itself able to determine the issues without the aid of expert
evidence, does not derogate from the fact that preparation fees were
reasonably incurred to enable them to give expert evidence on the issues that
were before the court.
[21] The only success which will be achieved by the defendants on appeal is
the deletion of the declaratory order that the plaintiff's expert witnesses were
18 By GN R2221 in Government Gazette 5790 of 28 October 1977.
19 Section 8 of Act 4 of 1861 (C); s 49 of Proclamation 16 of 1902 (T); s 60 of Ordinance 11 of
1902 (O).
20 By the Pre-Union Statute Law Revision Act 36 of 1976.
necessary witnesses. That minor success should make no difference to the
amount allowed on taxation and it accordingly does not justify any costs order in
their favour.
[22] The following order is made:
1.
The order of the court a quo declaring Messrs Myatt and Taute
necessary witnesses is deleted and that part of the order is amended to read:
'The preparation fees of Messrs Myatt and Taute shall be allowed on taxation'.
2.
Save as set out in 1, the appeal is dismissed.
3.
The appellants are ordered, jointly and severally, to pay the respondent's
costs of appeal, including the costs of two counsel.
_______________
T D CLOETE
JUDGE OF APPEAL
Appearances:
Counsel for Appellant: N M Arendse SC
Ms K Pillay
Instructed by:
Godwin Bossr, Cape Town
Correspondent:
Lovius-Block Attorneys, Bloemfontein
Counsel for Respondent: R D McClarty SC
J H Roux SC
Instructed by:
Heyns & Partners Inc, Cape Town
Correspondent:
Honey 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:
16 September 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
TRANSNET LTD t/a METRORAIL v D WITTER
On 7 February 2002 Mr Witter's right foot was severed by a Metrorail
train at the Witteboom station, Western Cape. He had been attempting
to board the train through a door which had not closed before the train
started moving. The SCA held that either the guard had been negligent
because he had not checked whether the doors were closed, or
Metrorail was negligent in not instructing him to do so. Mr Witter's
damages were reduced by 50 per cent because he had also been
negligent in attempting to board a moving train.
--ends-- |
1799 | non-electoral | 2011 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No 570/2009
In the matter between:
THE MINISTER OF SAFETY AND SECURITY
Appellant
and
PAUL JOHANNES VENTER
First Respondent
CHRISTA VAN WYNGAARDT
Second Respondent
CHRISTA VAN WYNGAARDT NO
Third Respondent
Neutral citation: Minister of Safety and Security v Venter (570/09) [2011]
ZASCA 42 (29 March 2011)
Coram:
Mpati P, Cachalia and Majiedt JJA
Heard:
23 February 2011
Delivered:
29 March 2011
Summary: Delict ─ action for damages ─ failure of police to inform
complainants of the provisions in the Domestic Violence Act ─
constituting negligence which caused complainants harm when
they suffered an unlawful attack on them ─ complainants found to
be contributorily negligent.
ORDER
______________________________________________________________
On appeal from: North Gauteng High Court, Pretoria (Mynhardt J sitting as
court of first instance).
(1)
The appeal is dismissed except to the extent indicated in this order.
(2)
The appellant is to pay the costs of the appeal including the costs of
two counsel.
(3)
The order of the court below is set aside and is replaced by the
following:
'(a) It is declared that the defendant is liable to pay to the first and
second plaintiffs 75 per cent of such damages as they are able to prove or as
may be agreed upon.
(b) The defendant is ordered to pay the first and second plaintiffs'
costs, including the costs consequent upon the employment of two counsel.
(c) The third plaintiff's claim is dismissed with costs.'
______________________________________________________________
JUDGMENT
MAJIEDT JA (MPATI P, CACHALIA JA concur):
[1] This is an appeal against a judgment of Mynhardt J in the North
Gauteng High Court holding the Minister of Safety and Security liable for
damages suffered by the respondents because of the negligent failure by
members of the South African Police Service (SAPS) to perform their
statutory duties under the Domestic Violence Act 116 of 1998 (the Act). The
appeal is with the leave of the court below.
[2] The incident giving rise to the cause of action occurred on 21 October
2002, when Mr Cornelius Whitey van Wyngaardt (Whitey) raped his erstwhile
wife, Ms Christa van Wyngaardt, the second respondent, (Christa) and then
shot and injured Mr Paul Johannes Venter, the first respondent (Venter).
Whitey was later arrested by the SAPS. He committed suicide whilst in police
custody.
[3] The events preceding the incident are largely common cause. The
second respondent was married to Whitey. Two children were born of their
marriage. The first respondent and his wife were friends and frequent visitors
to the Van Wyngaardt home. Both marriages ended and after Venter’s wife
left him, Christa moved into Venter’s home with her children.
[4] Whitey initially had no difficulty with this arrangement; in fact he
encouraged it. There was no suggestion at the time of any romantic
connection between Christa and Venter. However, the nature of their
relationship changed and became more intimate after she moved in with him.
This caused Whitey to become jealous. Later his behaviour became
compulsive. He made incessant telephone calls, sent abusive text messages
to her and threatened to set their house on fire and kill them.
[5] As a result of Whitey's increasingly erratic and threatening behaviour
Venter approached the Brakpan police station during June 2002 to seek
advice on how he could deter Whitey from coming to his house. They told him
that they could only act if Whitey physically tried to enter the house.
[6] At about the same time Venter, accompanied by Christa, also
approached the Brakpan Magistrate’s Court to find out how he could obtain an
interdict to prevent Whitey from entering his property. He was informed that
he had to obtain a case number from the police before he could take the
matter further. The respondents did not, however, pursue this course. As will
become apparent later in this judgment, the appellant contends that even had
the SAPS advised the respondents of their remedies under the Act they would
probably not have pursued any of these remedies – just as they had not done
with the interdict.
[7] On 27 July 2002 Whitey arrived at the respondents’ house. Venter
telephoned the police for assistance. They arrived promptly. However, Whitey
persuaded them that he had merely come to fetch his children, which he was
entitled to do in terms of the divorce decree that granted him access to them.
In these circumstances the police were constrained to permit him to take the
children with him. This distressed the respondents. They felt that Whitey had
manipulated the situation to his advantage.
[8] Whitey's conduct became even more threatening after this incident
prompting Venter to approach the Brakpan police again on 20 August 2002.
This time he had prepared a statement in Afrikaans with details of Whitey’s
threatening behaviour against Christa, the children and him personally. The
statement contained a paragraph which, translated loosely, said that he did
not wish the police to conduct any investigation against Whitey, but to prevent
him from entering their property. However, the police officer who was on duty
told him that the police could not assist him, and nothing came of this
complaint.
[9] Whitey’s conduct continued unabated. On 11 October 2002 he
collected the children from the respondents' house and, shortly afterwards, he
telephoned Christa. This time he threatened to kill the children and himself
should she go to the police. He wanted her to return to him.
[10] In response to this threat the respondents hurried to the police for
assistance. They reported to an Inspector de Koker who was sceptical that
they had a case. He initially would not take a statement from them and
relented only after Venter telephoned his attorney who spoke to De Koker and
tried to persuade him to act on the complaint. This intervention, and that of a
Captain Abrahams, caused De Koker to open a case docket. De Koker,
however, remained reticent and only took down a brief unattested statement
from Christa.
[11] It appears from the evidence that, pursuant to the complaint, Christa
had a telephonic conversation with a Sergeant Naude the following day and
requested the latter not to contact Whitey on his telephone because the
children were still with him. The following day, on 13 October, Whitey allowed
the respondents to collect the children. They did so and later informed Naude
that the children were home. In the days immediately following this incident
nothing came of their complaint, despite Christa’s request in her statement
that the matter be investigated.
[12] This brings me to the events of 21 October 2001. Whitey arrived at the
repondents’ house unexpectedly. He had telephoned Christa the previous day
and requested that they meet, but no date was set for this meeting. Christa
was alone at home with their four year old child. She was hesitant to let him in
but decided to open the door for him because she realised that he would have
seen his daughter through the open windows and curtains. He entered and
said ominously that it was 'elimination day'. She asked what he meant. He
replied that she would soon find out. He told her to accompany him to his car.
She did. He then took out a crossbow and a set of handcuffs from the boot.
He told her that he was going to kill Venter with the crossbow when he
returned and that he would use the handcuffs to handcuff her to the bed.
[13] They entered the house and he proceeded to use the crossbow to
shoot at and damage several items in the house. While doing this he told her
to go to the bedroom and undress. He threatened to cause even further
damage if she did not obey. She complied. He followed her and began
scratching around one of her wardrobes. He found Venter’s firearm which is
usually hidden in a safe but had been kept in the bedroom so that Christa
could protect herself from her erstwhile husband. The discovery of the firearm
seemed to spur on the intruder. He then raped her.
[14] Some time later they collected the other child from school on Whitey’s
insistence. They took both children to Christa’s sister’s home. Whitey did not
want the children to be at home when Venter returned from work.
[15] They returned to the respondents’ home and waited for Venter to
return. According to Venter, he had received a telephone call from Christa’s
mother earlier. She told him that she had phoned Christa and feared that
something was wrong. He also tried to telephone Christa but there was no
response. He then decided to go home to investigate. He arrived home at
about 15h00 and saw Whitey’s car parked outside. This heightened his
anxiety. He walked to the front door and tried to open it, but was not able to
because it was locked. He then walked to one of the side windows where he
saw Christa. She began screaming while trying to warn him to run away.
[16] Fearing that both children were inside with Christa and Whitey he
instinctively tried to gain entry through the front door by force. Whitey fired a
shot through the door. The bullet struck him on his arm. He then tried to flee
but Whitey pursued him by car and fired more shots at him. Fortunately he
found a place to hide. The police arrived shortly afterwards and arrested
Whitey. Two days later he apparently committed suicide in the police cells.
[17] The respondents sued the Minister of Safety and Security for damages
based on the failure of the police to perform their legal duty to assist the
respondents to take steps to protect themselves under the Act. The appellant
does not dispute that the Act imposes a legal duty to take steps to protect the
respondents in the circumstances of this case. Nor does he dispute that the
police were negligent in failing to assist the respondents in accordance with
the Act’s provisions. It is however contended that the respondents failed to
prove that such negligence caused their damages, because they would
probably not have taken steps to protect themselves even if the police had
assisted them or, at the very least, that their own negligence contributed to
what happened.
[18] It is important to understand the ambit of the legal duty that the police
owed to the respondents. The Act and the National Instructions on Domestic
Violence1 (the Instructions) require the police to advise persons of their rights
and to assist them in asserting these rights, where necessary.
1 Issued by the National Commissioner of SAPS and published in GG 20778 30 December
1999.
[19] The Act contains a panoply of rights and remedies available to victims
of domestic violence that is derived from the constitutional duty imposed on
the State by s 12(1) of the Constitution to protect the right of everyone to be
free from private or domestic violence.2 The preamble to the Act declares that
its objective is to 'afford the victims of domestic violence the maximum
protection from domestic abuse that the law can provide' (italics added). To
this end Parliament introduced measures to ensure that the relevant organs of
State (including the SAPS) give full effect to the provisions of the Act.
[20] Section 2 imposes a duty to assist and inform complainants of their
rights under the Act. It reads as follows:
'2.
Duty to assist and inform complainant of rights – Any member of the South African
Police Service must, at the scene of an incident of domestic violence or as soon thereafter as
is reasonably possible, or when the incident of domestic violence is reported─
(a)
render such assistance to the complainant as may be required in the circumstances,
including assisting or making arrangements for the complainant to find a suitable shelter and
to obtain medical treatment;
(b)
if it is reasonably possible to do so, hand a notice containing information as
prescribed to the complainant in the official language of the complainant's choice; and
(c)
if it is reasonably possible to do so, explain to the complainant the content of such
notice in the prescribed manner, including the remedies at his or her disposal in terms of this
Act and the right to lodge a criminal complaint, if applicable.'
[21] Section 7 sets out the procedure for obtaining a protection order and
the wide-ranging powers that a court has to issue one. Of relevance to this
case is the power to restrain a respondent from entering a complainant's
place of residence,3 or prohibit any emotional, verbal and psychological
abuse, intimidation, harassment and stalking.4 A court may also refuse a
respondent contact with a child or permit it subject to suitable conditions.5
2 S v Baloyi (Minister of Justice & another intervening) 2000 (2) SA 425 (CC), 2000 (1) SACR
81; 2000 (1) BCLR 86 para 11. See also: Van Eeden v Minister of Safety & Security
(Women's Legal Centre Trust as amicus curiae) 2003 (1) SA 389 (SCA); [2002] 4 All SA 346
para 13.
3 Section 7(1)(e).
4 Section 7(6).
5 Section 7(1)(a).
[22] A breach of a protection order is an offence, which carries a penalty of
a fine or period of imprisonment for a period not exceeding five years or both
such fine and imprisonment.6 Where threats of death or injury have been
made and where a respondent's state of mind or mental condition warrants it,
a court must order seizure of any arm or dangerous weapon in the possession
of or under the control of a respondent.7
[23] The Instructions provide guidelines to members of the SAPS on how to
respond to complaints. Paragraph 3(5) requires station commissioners to
ensure that copies of the Act, the Regulations, the Instructions, station orders
issued by the station commissioner8 and a list of relevant role players9 are
available at all times at a police station. Paragraph 3(6) requires a station
commissioner to issue orders to members on how to assist complainants to
access services provided by these role players or any other aspect
concerning domestic violence.
[24] On receipt of a domestic violence complaint wide-ranging duties are
imposed on both the station commander10 and the member receiving the
complaint.11 These include the duty to investigate a complaint and to collate
all information in connection with it.12 Paragraph 7 sets out the various duties
imposed on members. There is also a duty to render general assistance to a
complainant. Specific assistance that must be provided includes, inter alia, the
responsibility imposed on a member to open a docket and to register it for
investigation where a complaint is made and, where no complaint is made, to
assist a complainant to make such a complaint. This assistance must be
recorded in the occurrence book and in the member's pocketbook. A Notice,
attached as Form 1 to the Regulations, must be handed to a complainant in
the language of his or her choice.13 That Notice details a complainant's right
6 Section 17.
7 Sections 9(1)(a) and (b).
8 Para 36(6).
9 As set out in para 3(1).
10 Para 4.
11 Para 5.
12 Para 5(2)(d).
13 Para 10.
to lay a charge or to apply for a protection order or to do both. The
complainant must be informed that it is not necessary to lay a charge before
applying for a protection order. The difference between the remedies must be
explained. A charge is aimed at securing a conviction of an accused whereas
the purpose of a protection order is to prevent future misconduct.
[25] The respondents contend that had they been aware of and understood
their rights under the Act – in particular their right to apply for a protection
order – they would have taken the appropriate steps to protect themselves.
As I have mentioned earlier the appellant’s response is that they have not
established that they would have. This is the nub of the dispute.
[26] In support of its contention the appellant points to the respondents’
failure to pursue their remedy to obtain a common law interdict against Whitey
in the magistrate's court. It will be recalled that Venter was advised that he
needed to obtain a case number before he could get the interdict. But he and
Christa did not do anything further. In this regard what also counts against
them is that in their further particulars they denied that they had approached
any court to obtain a common law interdict and had to recant during cross-
examination. They were subjected to extensive cross-examination on this
issue. One of the reasons that they did not pursue the common law remedy
was because they were afraid that this could ‘push him over the edge’ as
Christa put it. Another reason advanced was that their subsequent visits to the
police – particularly their encounter with De Koker – led them to believe that it
was futile to try to do anything about Whitey’s conduct. They were however
driven to concede that they could have applied for an interdict. To this I should
add that Venter had previously relied on the services of an attorney when he
had problems in trying to convince De Koker to act on his complaint. If he had
consulted his attorney he may well have been advised that he could obtain a
protection order under the Act. A common law interdict would conceivably
have afforded them some relief, namely to prohibit Whitey from access to their
property. A protection order would, as set out above, have afforded them
more wide ranging relief.
[27] It is abundantly evident that the Act and Instructions afford
complainants wide ranging remedies and impose extensive duties on SAPS
members to assist complainants in accessing these remedies. The Act and its
predecessor, the Prevention of Family Violence Act,14 were specifically
enacted to deal effectively with family violence, since the criminal justice
system was palpably unable to do so.15 This legislation is similar to that in
other parts of the world.16 The extensive protection available under the Act
would be meaningless if those responsible for enforcing it, namely SAPS
members, fail to render the assistance required of them under the Act and the
Instructions. The legislature clearly identified the need for a bold, new strategy
to meet the rampant threat of ever increasing incidences of domestic violence.
Its efforts would come to nought if the police, as first point of contact in giving
effect to these rights and remedies, remain distant and aloof to them, as the
facts of this case appear to suggest.
[28] This court has in a long line of cases laid down the test for causation in
delict, which consists of two legs, namely factual and legal causation.17
Factual causation is to be determined by application of the 'but for' test. The
evidential hurdle to be crossed by a plaintiff is not required to be established
with certainty ─ a plaintiff need only establish that the wrongful conduct was
probably a cause of the loss. This, said Nugent JA in Minister of Safety and
Security v Van Duivenboden, 'calls for a sensible retrospective analysis of,
what would probably have occurred, based upon the evidence and what can
be expected to occur in the ordinary course of human affairs rather than an
exercise in metaphysics'.18
[29] In the high court the learned judge found that the evidence had
established that the police’s failure to advise the respondents of their
14 133 of 1993.
15 Omar v Government of the Republic of South Africa & others (Commission for Gender
Equality, Amicus Curiae) 2006 (2) SA 289 (CC) para 14.
16 See, for instance, the Domestic Violence Act of 1995 of New Zealand; the Family Law Act,
1996 of the UK; the Domestic Violence Act of 1996 of Ireland and the Domestic Violence
Protection Act of 2000 of Ontario.
17 See, for example, Minister of Police v Skosana 1977 (1) SA 31 (A) at 34, International
Shipping Company (Pty) Ltd v Bentley 1990 (1) SA 680 (A) at 700E-701F; Minister of Safety
& Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 22.
18 Para 24.
remedies under the Act was the critical cause for why they had not pursued
this course. He reasoned thus:
‘Ek is daarvan oortuig op die getuienis dat die gebrek aan inligting ‘n wesenlike,
indien nie ‘n deurslaggewende, rol gespeel het in die besluit om nie hierdie
aangeleentheid verder te voer nie. Ek het pertinent verwys na die wye bevoegdhede
wat die Wet verleen aan ‘n hof om ‘n gesinsinterdik te verleen en wat die inhoud
daarvan kan wees. Veral na die gebeure van 11 Oktober 2002, meen ek dat op die
waarskynlikhede, as die eisers geweet het dat Whitey se regte miskien ingekort kan
word, wat kontak met die kinders betref, dat dit vir hulle moontlik ‘n uitkoms ook sou
kon daargestel het en dat hulle dan positiewe optrede sou geneem het in ‘n poging
om daardie hulpmiddel te bekom.
Ek meen dat op die getuienis en die waarskynlikhede, die feit dat hulle nie daardie
inligting gehad het nie, ‘n belangrike, indien nie deurslaggewende, rol gespeel het dat
hulle dit nie weer verder self opgevolg het nie.
Mnr Van der Merwe se betoog was dat vir die redes deur hulle aangevoer hulle
besluit het om nie daardie hulpmiddel te probeer bekom nie. Met verwysing na die
onvoorspelbaarheid van Whitey se optrede het hy aangevoer dat niks eintlik daarom
draai dat die polisie nooit die eisers ingelig het van wat tot hulle beskikking is
ingevolge die Wet op Gesinsgeweld nie.
Ek stem nie daarmee saam nie. ‘n Mens hoef slegs die Wet te lees, en die nasionale
instruksies, om te sien dat daar ‘n hele infrastruktuur volgens die bedoeling van die
wetgewer daargestel moes word om mense soos veral die tweede eiseres in die
onderhawige geval, by te staan in omstandighede soos waarin sy haar bevind het.
Die vrees wat hulle gehad het, of die gedagte wat hulle gehad het dat Whitey dalk
oor die afgrond gestoot kon gewees het, kon bes moontlik besweer gewees het
indien daar kontak was tussen die eisers en professionele persone wat berading aan
hulle kon verskaf en leiding aan hulle kon verskaf.
Die feit dat dit nie gedoen is nie, is na my oordeel feitlik alleenstaande daarvoor
verantwoordelik en dien as regverdiging dat bevind behoort te word op die feite van
die onderhawige saak dat die nalate van die Polisiediens onregmatig was.’
[30] In my view, the learned judge's reasoning cannot be faulted. It follows
that the respondents established factual causation. Concerning legal
causation the appellant did not advance any grounds to suggest that there
were any policy considerations that stood in the way of a finding against the
appellant. Our courts have in the recent past consistently held the police liable
for failure to perform their statutory duty to protect citizens resulting in harm
being suffered through such failure.19 Legal causation was clearly established
in this case.
[31] What remains is the question whether the respondents were
contributorily negligent. The appellant’s main contention is that they were
negligent in two main respects. First, by failing to obtain the common law
interdict. Second, that Venter acted unreasonably by leaving his firearm in the
wardrobe instead of in a locked safe and also by attempting to gain entry to
the house when contacting the police would have been the more prudent
course of action. In Christa’s case it is contended that she was additionally
negligent in permitting Whitey to enter the house. The second ground can be
disposed of immediately. I do not think it was unreasonable for Venter to have
left his firearm in the bedroom for Christa’s protection, or to have attempted to
gain entry to the house when he perceived that Christa and, possibly the
children, who he thought were at home, were in danger. Christa explained
that she let Whitey into the house because she believed that it would
antagonise him if she did not. Her conduct in this regard was in my view not
unreasonable.
[32] Before considering whether they were negligent in failing to obtain the
common law interdict it is well to remind oneself of two well-known important
considerations in assessing contributory negligence. The first is that
reasonable conduct cannot be judged with the benefit of hindsight and one
must guard against the drawing of conclusions from ex post facto
knowledge.20 Secondly, care must be taken not to conflate separate elements
of a delictual action such as causation and negligence. I say this because,
having found earlier that the police's failure to inform Venter and Christa of
their rights and remedies under the Act constituted a delictual omission which
was causally linked to the harm they suffered, it does not follow that the
respondents' failure to obtain a common law interdict cannot in law constitute
19 Carmichele v Minister of Safety Security & another 2004 (3) SA 305 (SCA); Minister of
Safety & Security v Luiters 2006 (4) SA 160 (SCA), 2007 (2) SA 106 (CC).
20 Sea Harvest Corporation (Pty) Ltd & another v Duncan Dock Cold Storage (Pty) Ltd &
another 2000 (1) SA 827 (SCA), [2000] 1 All SA 128 para 27.
a degree of negligence on their part. There are no degrees of causation in our
law, but there are degrees of negligence.
[33] After careful consideration I have come to the conclusion that the
respondents were negligent in failing to obtain the interdict and that this
contributed to the harm. Venter, an ex-policeman, was on his own version
knowledgeable about this type of remedy, albeit only in broad detail. He
explained to Christa its existence and how it operates. They approached the
Brakpan Magistrate's Court and sought to obtain an interdict. They were told
they need a case number. They conceded in cross-examination that they
were able to obtain one by laying a criminal charge of trespassing or
intimidation against the deceased. Moreover, they had access to a case
number on the case docket opened on 11 October 2002. A common law
interdict may well have stopped Whitey from embarking on his destructive
course of action.
[34] In determining which party should bear what portion of the damages,
their respective degrees of negligence must be compared. This is determined
by their respective deviation from the norm of the reasonable person
expressed as a percentage. It is plain that the negligence of the appellant is
far greater than that of the respondents. The SAPS had clear guidelines in the
Act and the Instructions which they failed to adhere to. Over and above this
they have a constitutional duty to protect citizens.21 The respondents' degree
of culpability is much less ─ I would put it at 25 per cent, which would be fair
and equitable in the circumstances. The repeated rebuffs, inaction and
slothfulness to do what the Constitution, the Act and the Instructions
unequivocally demand of SAPS members warrants a far larger apportionment
of blame.
[35] A finding of an apportionment of 25 per cent against the respondents
requires next an evaluation of the degree of negligence on the part of the
appellant. It does not follow automatically that the percentage is 75 per cent
21 Minister of Safety & Security v Van Duivenboden para 22.
─ a determination of the degree of deviation of the appellant's omission from
the reasonable man standard is required.22 In my assessment the appellant's
degree of fault is indeed three times that of the respondents, ie 75 per cent.
[36] The last aspect for consideration on the merits is the claim on behalf of
the dependants, the two minor children, brought by Christa in her
representative capacity as the third plaintiff. In the particulars of claim it was
alleged that Whitey had traumatised the little girl (without specifying any detail
of such traumatisation) and it was alleged further that Venter arrived home
while the deceased was still detaining Christa and the little girl. These
allegations were denied in the plea. No mention at all was made of any
trauma suffered by the boy. Christa's evidence was that the girl was present
when Whitey fetched the crossbow from his car. She testified further that at
some stage Whitey handed the handcuffs to the girl to play with in the lounge
which she did. There was no evidence that the girl was present when Whitey
damaged items in the house with the crossbow. The evidence is clear that the
girl was not present in the bedroom when her mother was raped. The
evidence further indicated that the boy was at school during these events. He
was later fetched from school by Whitey and Christa and he and his sister
were dropped off at their aunt's house in Germiston. There is thus no
evidence of any trauma suffered by the children. The court below did not deal
with this aspect al all. When questioned on this, counsel for the respondents
submitted that this was a matter to be left for the trial court when the matter is
remitted on the issue of the quantum of damages. I disagree. Christa sought
a declarator against the defendant holding him liable for the trauma suffered
by her children. In the absence of any evidence proving that such trauma was
in fact suffered, her action in her representative capacity should therefore
have been dismissed with costs.
22 Jones v Santam Bpk 1965 (2) SA 542 (A) at 555.
[37] The following order is made:
(1)
The appeal is dismissed except to the extent indicated in this order.
(2)
The appellant is to pay the costs of the appeal including the costs of
two counsel.
(3)
The order of the court below is set aside and is replaced by the
following:
'(a) It is declared that the defendant is liable to pay to the first and
second plaintiffs 75 per cent of such damages as they are able to prove or as
may be agreed upon.
(b) The defendant is ordered to pay the first and second plaintiffs'
costs, including the costs consequent upon the employment of two counsel.
(c) The third plaintiff's claim is dismissed with costs.'
___________
S A MAJIEDT
JUDGE OF APPEAL
APPEARANCES:
For Appellant
:
M P Van Der Merwe
Instructed by
:
The State Attorney, Pretoria
The State Attorney, Bloemfontein
For Respondent
:
J G Cilliers SC
M van Rooyen
Instructed by
:
P G de Jager Attorney, Pretoria
Van Deventer & Thoabala Inc, 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
29 March 2011
STATUS: Immediate
THE MINISTER OF SAFETY AND SECURITY/ VENTER AND VAN
WYNGAARDT
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.
The Supreme Court of Appeal today dismissed an appeal by the
Minister of Safety and Security against a judgment of the North Gauteng High
Court, Pretoria, holding the Minister liable for damages suffered by the
respondents for the police's failure to inform the respondents of their rights
and remedies under the Domestic Violence Act, 116 of 1998.
2.
The appeal was successful to a limited extent in that the SCA found
that the respondents were contributorily negligent through their failure to
obtain a common law interdict when it was possible to do so.
3.
The respondents had been the victims of an unlawful attack by the
second respondent's ex-husband. Repeated attempts by the respondents
prior to the attack to obtain assistance from the police against the attacker's
threats and harassment, came to nothing. It was conceded by the Minister
that the police had acted negligently. The SCA held that the police's omission,
viz by not advising the respondents of the rights and remedies available under
the Domestic Violence Act, caused the respondents harm. The court
emphasized the importance of victims of domestic violence being afforded
advice by the police on their rights and remedies under the said Act.
4.
The court determined the parties' respective negligence at 75 per cent
for the Minister and 25 per cent for the respondents. The Minister was
consequently ordered to pay 75 per cent of the respondents' damages as
agreed or proven at a trial. The SCA upheld the appeal as far as the claim of
the third respondent as representative of her minor children was concerned.
The court found that there was no evidence supporting that claim, which
ought to have been dismissed by the trial court. The Minister was ordered to
pay the respondents' costs of appeal including the costs of two counsel.
---Ends--- |
510 | non-electoral | 2016 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 131/2015
In the matter between:
THE SA HACKNEY PONY BREEDERS’ SOCIETY FIRST APPELLANT
THE SA STUD BOOK AND ANIMAL SECOND APPELLANT
IMPROVEMENT ASSOCIATION
and
ADAM MAJIET
RESPONDENT
Neutral citation: The SA Hackney Pony Breeders’ Society v Majiet (131/2015)
[2016] ZASCA 108 (31 August 2016)
Coram:
Cachalia, Seriti and Mocumie JJA and Fourie and Potterill AJJA
Heard:
15 August 2016
Delivered:
31 August 2016
Summary: Review: Whether cross-breed of hackney horse and hackney pony
eligible for registration as hackney pony: Interpretation of breeders‟ society‟s
constitution and by-laws: Application of Animal Improvement Act 62 of 1988.
___________________________________________________________________
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town (Cossie AJ
sitting as court of first instance):
(i)
The appeal in the review is upheld with costs including the costs of two
counsel;
(ii)
The appeal against the costs order in the interdict application is dismissed
with costs;
(iii)
The costs order against the second appellant is set aside;
(iv)
The order of the court a quo is set aside and the following order is substituted
in its place:
„(a)
The application is dismissed with costs, including the costs of two
counsel;
(b)
the costs in the interdict application are to be paid by the first
respondent.‟
___________________________________________________________________
JUDGMENT
Cachalia JA (Seriti and Mocumie JJA and Fourie and Potterill AJJA
concurring)
[1] This is an appeal against an order of the Western Cape High Court, Cape
Town (Cossie AJ), reviewing and setting aside a decision by the second respondent,
the SA Stud Book and Animal Improvement Association (the Association), to
deregister an equine named „Fire High Explosive‟ (FHE) and four of its progeny. The
decision was made upon a recommendation of the SA Hackney Pony Breeders‟
Society (the Society), which is a member of the Association. Mr Adam Majiet is the
owner of the equines, a member of the Society and the respondent in these
proceedings. He successfully instituted the review proceedings in the court a quo
after FHE was deregistered. He now opposes the appeal.
[2] The Society recommended FHE‟s deregistration after DNA results indicated
that only one, not both, of its parents was a hackney pony. The other was a hackney
horse, which is a different breed. This means, according to the Society, that FHE and
its progeny are cross-breeds. The equine is therefore ineligible for registration as a
hackney pony in terms of the Society‟s constitution and its by-laws, which require
both parents of an equine to be hackney ponies. The Association accepts this
requirement,
hence its decision
to
deregister FHE
upon the
Society‟s
recommendation.
[3] The Association, however, abides the decision of the court because it has no
knowledge of the facts that gave rise to FHE‟s deregistration. But it makes clear in its
answering affidavit that if the Society is correct in its assertion that the registration
certificate wrongly states FHE‟s parentage, it is enjoined to remove the equines
registered as hackney ponies in the stud book, which the Association keeps in its
custody. It adopted this stance in the court a quo and has maintained it since.
[4] Mr Majiet disputes the Society‟s contention that its constitution and by-laws
require hackney ponies to be descendant of two registered hackney ponies. He
contends that they only require the equine to have the phenotypical characteristics,
ie, the appearance, of a hackney pony for registration, which FHE has. The
genotypical characteristics determined from DNA testing do not supersede its
phenotypical characteristics. Moreover, he argues, the Society has not established a
particular DNA gene profile for a hackney pony and therefore cannot deny
registration on this ground. Finally, he contends that the DNA report that was used to
deregister FHE was obtained improperly and that its contents are unreliable.
[5] I turn to the facts. FHE was born on 8 March 2005 and bred by the past
President of the Society, Mr Dawood Davids. He sold FHE to Mr Majiet, apparently
assuring him at the time that the animal was a hackney pony. The date of the sale is
unclear, but nothing turns on this.
[6] The registration certificate issued on 19 May 2010 from information Mr Davids
provided to the Association indicates that FHS was registered as a hackney pony.
The certificate records the equine‟s sire as Retcharnis Modernaire and its dam as
Fire Carnation. It is common ground that both these animals are hackney ponies. A
DNA number for FHE also appears on the document.
[7] In response to a query from one of the Society‟s members, Mr George Bell,
regarding FHE‟s parentage and at his instance, an independent testing agency,
Unistel Medical Laboratories (Pty) Ltd (Unistel) carried out DNA tests on FHE in
2011. It found that there was a perfect match between a hackney horse stallion,
(which is not a hackney pony) named Retcharnis Field’s Pride, and Fire Carnation as
the biological parents of FHE. On the basis of this report, therefore, the Society
concluded that FHE‟s registration certificate had incorrectly recorded Retcharnis
Modernaire – a hackney pony – as the sire whereas in truth the sire was Retcharnis
Field’s Pride, a hackney horse.
[8] A meeting of the Society‟s executive committee was held on 3 October 2011
to discuss the issue. Mr Sayed Davids, Mr Dawood Davids‟ successor and the
current President of the Society, Mr Bell and Mr Dawood Davids were present. It
bears mentioning at this stage that the two Davids and Mr Majiet are all related to
each other.
[9] Mr Sayed Davids is the deponent of the Society‟s answering affidavit, and it is
therefore on his factual averments that the case is to be decided. He explains what
transpired at this meeting: Mr Bell handed a copy of a DNA parentage certificate of
FHE to Mr Dawood Davids indicating that Retcharnis Modernaire was not the sire.
Mr Dawood Davids, he explains further, looked at the document for what felt like an
inordinate amount of time during which there was a hushed silence. And then,
without looking up he said: „If this is so, then this horse needs to be scrapped.‟
[10] The meeting then decided that three members of the executive committee,
including Mr Sayed Davids himself, would establish from Unistel whether the DNA
parentage certificate was reliable. Mr Sayed Davids says that Mr Dawood Davids
looked uncomfortable and left abruptly at the end of the meeting with the certificate
in hand.
[11] The three members proceeded to Unistel and met with Dr Oosthuizen, who
had done the DNA testing. He explained to them how the testing had been done.
They left the meeting „completely satisfied‟ that the results were in order. On
4 October 2011 Dr Oosthuizen confirmed his findings regarding FHE‟s parentage in
a written note, which indicated a perfect match of Retcharnis Field’s Pride, the
hackney horse, and Fire Carnation as FHE‟s biological parents.
[12] Having satisfied themselves that Dr Oosthuizen‟s findings were reliable, the
committee called Mr Dawood Davids to a Special Council Meeting on 22 October
2011 to explain the discrepancy between these findings and FHE‟s parentage, as
appears from the certificate. Mr Dawood Davids did not question the findings.
Instead, he sought to exonerate himself by explaining that he had not deliberately
falsified the records. His brother had worked with the equines and he (Mr Dawood
Davids) had personally observed him mating the two ponies. He therefore believed
that FHE‟s certificate had correctly stated the equine‟s parentage. But, he explained
further, what may have happened was that the stallion – Retcharnis Field’s Pride –
had broken into Fire Carnation’s pen and sired FHE without his knowledge. The
meeting accepted the explanation and acquitted him of any deliberate wrongdoing.
[13] On 17 December 2011 the Society held another meeting at which Mr Dawood
Davids, who was still the President, presided. The issue relating the equine‟s
parentage arose again. There is a dispute between the parties as to whether this
was a properly constituted Annual General Meeting (AGM). It appears that members
who were present were asked to vote on a proposal by Mr Dawood Davids for FHE
to be allowed to remain registered as a SA Hackney Pony. The proposal was carried
by a majority of two-thirds of the members present.
[14] A few days later Mr Sayed Davids delivered a letter to Mr Dawood Davids
complaining that the meeting had been improperly convened and conducted, and
requested him to reconvene another AGM. The letter also invited Mr Dawood Davids
to agree to the appointment of an independent person to chair an enquiry into the
„parentage dispute‟ of FHE. The letter went on to urge Mr Dawood Davids to deal
with these matters before 6 January 2012 failing which the matter would be referred
to the Registrar of Animal Improvement under the Animal Improvement Act 62 of
1998 (the Act) to consider taking appropriate steps to deal with the issues referred to
in the letter.
[15] Mr Dawood Davids did not react to the letter. On 25 January 2012 a petition
signed by all the other members of the executive committee, and also more than two
thirds of the breeders, informing him that they intended passing a vote of no-
confidence in him as President at the following meeting, was delivered to him. In
response Mr Dawood Davids resigned as President of the Society. His resignation
was formally accepted on 28 February 2012 and Mr Sayed Davids was later
appointed as President in his place. At the same time the Registrar directed that the
relevant certificates and documents relating to FHE and its foals be forwarded to the
Stud Book Office for cancellation.
[16] On 8 May 2012 the Society notified Mr Majiet of its intention to request the
Association to cancel the registration certificate issued to FHE and its progeny on the
following grounds:
(a)
the parentage details given for FHE before registration were incorrect, as the
DNA certificate confirmed;
(b)
the parentage information revealed that FHE is in fact a cross-bred foal of a
hackney horse and a hackney pony and not of two hackney ponies as Mr Dawood
Davids had represented; and
(c)
being a cross-breed, FHE did not comply with the requirements for the
registration of hackney ponies.
[17] Mr Majiet was afforded the opportunity to make representations to the Society
in accordance with its constitution before a final decision regarding FHE‟s
deregistration was made. On 7 June 2012 he submitted detailed representations to
the Society on why his equine should not be deregistered.
[18] In summary he explained that when he purchased FHE from Mr Dawood
Davids the latter assured him of FHE‟s pedigree, and that he was unaware of any
problems with its parentage. He also questioned the reliability of the DNA report and
the process by which it had been obtained. Importantly, he argued that the mating of
a hackney horse with a hackney pony „should not automatically result in the
ineligibility of its offspring as hackney ponies and automatic deregistration of such
foals and any future offspring generations‟. This is because, he asserted, the real
test was whether the equine in question bore the phenotypical characteristics of a
hackney pony, which FHE did. The DNA results were therefore of secondary
importance.
[19] Three days after he had submitted his representations to the Society, he was
informed that its executive committee had decided that FHE and its foals were „to be
scrapped‟ under the relevant provisions of the Society‟s constitution. On 10 July
2012 the Society cancelled the registration of FHE and its foals as hackney ponies.
And, acting on the Society‟s request, the Association followed suit by also
deregistering the equines.
[20] On 24 December 2012, Mr Majiet instituted review proceedings in the court a
quo to set aside the decision to deregister his equines. On 14 January 2013, the
Society suspended him pending the outcome of the review application. He was
ordered to attend an executive committee meeting of the Society the following day,
when his suspension was confirmed.
[21] On 11 March 2013 Mr Majiet instituted an urgent application to interdict the
Society from giving effect to the suspension. The application was settled with the
suspension being lifted and costs were left over to be argued in the review. As I
indicated earlier Cossie AJ upheld the review. She also ordered the Society and the
Association to pay the costs of both the review and interdict applications.
Grounds of Review
[22] Mr Majiet, represented by senior counsel, advances three grounds upon
which he contends that the decision to deregister FHE was unlawful. First, the
relevant provisions of the Society‟s constitution and its by-laws do not require a
hackney pony to be descendant of two fully registered hackney ponies; he submits
that a foal of a registered hackney pony and a hackney horse that meets the
phenotypical characteristics (the appearance) of a hackney pony is eligible for
registration; secondly, the DNA report that established that one of the parents of
FHE – Retcharnis Field’s Pride – was a hackney horse and not a hackney pony, was
not reliable and therefore did not provide a proper basis for FHE‟s deregistration; and
thirdly, the deregistration of FHE was not effected fairly. Before I consider each of
these grounds it is necessary to set out the legal framework.
The Legal Framework
[23] The legal framework within which the Society is required to function, and to
which its members are bound, is to be found in the Act, the Society‟s constitution and
its bye-laws. If the Society acted outside of these parameters in causing FHE‟s
deregistration, it would have done so unlawfully and any decision made pursuant
thereto would be reviewable and fall to be set aside.
[24] The Act provides for the „breeding, identification and utilisation of genetically
superior animals to improve the production and performance of animals‟. And
s 11(1)(c) provides as follows:
„11 Animal breeders' society
(1)
A group of persons may be registered as an animal breeders' society if-
. . .
(c)
the constitution of such group of persons specifically provides-
(i)
for the promoting, breeding, recording or registration, genetic improvement
and use of a kind of animal or an animal of a specified breed of such kind of
animal;
(ii)
for the determination and the application of breed standards, and for the
recommendation, in its sole discretion, to a registering authority of the recording or
the registration of an animal or of a specified breed bred or imported into the
Republic;
. . . .‟
[25] The Association‟s answering affidavit, deposed to by its general manager,
Mr van Rooyen, in summary, explains its role and function in the Act as follows: First,
it acts as the official registering authority of most animal breeders‟ societies in South
Africa; secondly, it is the custodian of the stud books of the breeders‟ societies for
whom the Association acts as registering authority. Stud books contain information
about the breeder and every animal he or she has bred and submitted for recording.
The information includes the name, identification, date of birth and parentage of the
animal. Thirdly, it issues official registration certificates in relation to all animals
registered in these stud books in terms of the constitutions of the relevant breeders‟
societies, as proof of the pedigree of each animal.
[26] Mr van Rooyen explains further that it is imperative for stud books to contain
accurate information on each animal so that the objectives of the Act mentioned
above are achieved. The Association, as the registering authority, is dependent on
the receipt of this information from breeders‟ societies and their members. And to
this end the societies must have proper procedures in their constitutions and bye-
laws to ensure that the parentage details of animals provided by their members are
correct so that they may be so recorded in the stud book.
[27] Mr van Rooyen emphasises that the onus for providing accurate information is
thus the sole responsibility of the breeder who must ensure that the pedigree,
breeding particulars and permanent identification marks of animals described in their
birth notifications are correct and that all the requirements of the constitution relating
to birth notifications, have been complied with. Mr Majiet did not contest any of these
assertions, in my view correctly so.
[28] The regulations made under the Act also bear some importance in this case.1
Table 7(b) of the regulations categorises the „locally adapted and regularly
introduced breeds‟ for cattle, goats, horses, sheep and pigs. In the list of breeds for
horses, hackney horses and hackney ponies are specified as different breeds. It
1 Regulations, GN R1682, GG 25732, 21 November 2003, as amended by inter alia GN R935,
GG 32601, 2 October 2009.
follows that if a hackney horse mates with a hackney pony their offspring would be a
cross-breed, which according to the Society, precludes its registration as a hackney
pony.
[29] This brings me to the Society‟s constitution. The objects and powers of the
Society as set out in the relevant parts of clause 2 include the following:
„2.1
to encourage the breeding and genetic improvement of SA Hackney Ponies in the
Area;
2.2
to preserve the pure breed of the SA Hackney Ponies in the Area and to promote
through all possible and available means interest in the breed;
2.3
to accumulate, preserve and develop the SA Hackney Ponies through proper
selection in accordance with the acceptable description of a SA Hackney Pony and to
eliminate cross-breeding;
2.4
to draft and maintain a „Standard of Excellence‟ for the breed, based on visual
inspection for genetic defects and conformity as it relates to functional efficacy.
2.5
to compile accurate records of studbooks and particulars of horses and to preserve
and maintain the records of all SA Hackney Ponies that the Society has registered
with the Association.‟2 (My translation)
[30] By-law 1, which is critical to the resolution of the present dispute, says the
following regarding the importance of the Association‟s stud book:
2 „2.1
Om die teelt en genetiese verbetering van S A Hackney-ponies in die Gebied aan te moedig;
2.2
om die rasegtheid van SA Hackney-ponies in die Gebied te bewaar en om deur alle moontlike
en beskikbare middele belangstelling in die ras te bevorder;
2.3
om die versameling, bewaring en ontwikkeling van SA Hackney-ponies deur goeie seleksie
ingevolge die aanvaarde beskrywing van „n SA Hackney-ponie aan te moedig en om
vermenging met ander rasse uit te skakel;
2.4
om „n „Standaard van Voortreflikheid‟ vir die ras, gebaseer op visuele inspeksie vir genetiese
afwykings en bouvorm in soverre dit verwant is aan funksionele doeltreffendheid, op te stel en
te handhaaf;
2.5
om noukeurige verslae van die stambome en besonderhede van perde saam te stel, te
bewaar en in stand te hou van alle SA Hackney-ponies wat deur die Genootskap by die
Vereniging in die Kuddeboek geregistreer is.‟
„1.
The Society shall take care that the Association keeps a record of all registered SA
Hackney Ponies. The stud book will be known as the South African Hackney Pony Studbook
and will consist of a Fully Registered Section. All progeny of fully registered horses of the
breed are eligible for registration in this Section if the progeny meet the minimum breed
standards and all the other requirements for registration.‟3 (My translation)
[31] It is appropriate at this stage to deal with Mr Majiet‟s first ground of review
which is that it was not necessary for FHE to be descendant of two fully registered
hackney ponies and that it was eligible for registration as a hackney pony by virtue of
its appearance. He contends that the wording of this by-law supports his
interpretation. In particular, he submits that the word „all‟ („alle‟) at the
commencement of the second sentence suggests that all horses are eligible for
registration if the minimum breed standards are met, especially because the
constitution and the by-laws do not set such standards. In addition the use of the
word „horse‟ instead of pony also suggests that it is sufficient for a foal to be
registered if one its parents is a hackney horse. Had the by-law aimed to limit
registration only to the descendants of two fully registered hackney ponies, the
contention continues, it would have used the word „only‟ („slegs‟) instead of „all‟.
Moreover clause 2.4 of the constitution provides that the „standard of excellence‟ for
the breed is based on a visual inspection for genetic defects, which means that it is
sufficient for the equine to have the appearance of a hackney pony in the absence of
any other breed standards.
[32] There is no merit in this submission: First, the by-law, which concerns the stud
book, must be read as a whole without excising the second sentence, as Mr Majiet
seeks to do. It concerns only the registration of hackney ponies – not hackney
horses – in a fully registered section. The second sentence makes it equally clear
that the progeny of fully registered hackney ponies may be registered in the stud
book. The use of the word „all‟ instead of the word „only‟ is in my view of no
significance, and does not expand the category of breed eligible for registration
3 „1. Die Genootskap sal toesien dat die Vereniging rekord hou van alle geregistreerde SA Hackney-
ponies en dat die Kuddeboek, wat bekend sal staan as die Suid-Afrikaanse Hackney-
poniekuddeboek, uit „n Volgeregistreerde Afdeling sal bestaan. Alle afstammelinge van
Volgeregistreerde perde van die ras kom in aanmerking vir registrasie in hierdie Afdeling indien hulle
voldoen aan die minimum rasstandaarde en aan al die ander vereistes ten opsigte van registrasie.‟
beyond hackney ponies. The word „horse‟ in the second sentence, read with the
definition of „horse‟ in s 1 of the constitution,4 also makes clear that this refers to a
hackney pony „registered in the stud book or eligible therefor.‟
[33] Secondly, in seeking to persuade us that the constitution only requires the
equine to meet the phenotypical requirement for hackney ponies, Mr Majiet again
seeks to excise clause 2.4 of the constitution and read it in isolation by ignoring the
other clauses quoted above. Clauses 2.1 to 2.3 show conclusively that they are
concerned with the „breeding and genetic improvement of hackney ponies‟, their
preservation as a „pure breed‟ and to eliminate „cross breeding‟. And clause 2.5
deals with the maintenance of accurate records of hackney ponies in stud books.
Read together with these clauses it is clear that the „visual inspection‟ for genetic
defects referred to in clause 2.4 is only one consideration among others in
preserving the „pure breed‟ and eliminating the „cross-breed‟. And as Table 7(b) of
the regulations also makes clear hackney ponies and hackney horses are different
breeds. So mating between them will give rise to foals that are cross-bred and
undermine the Society‟s constitutional objectives and s 11 of the Act, which are
aimed at eliminating this phenomenon.
[34] The third reason why this submission must fail appears from Mr van Rooyen‟s
affidavit: He says that the breeder of a hackney pony is obliged to notify the Society
of the birth of the equine. The notification must be accompanied by a mating
certificate confirming the date or dates of the mating of the sire and dam. In the case
of multiple sire mating (where one dam could have been covered by more than one
stallion as appears to have happened in this case) the notification of birth must be
accompanied by verification of parentage through DNA results. This is not disputed.
[35] If Mr Majiet is correct that all that is required for an equine to be eligible for
registration is to have the appearance, colours and temperament of a hackney pony
– in other words look like a hackney pony – this would mean that it would not be
4 The definition reads as follows: „“horse”, a SA Hackney Pony registered in the Studbook or eligible
therefor and the words “animal/animals”, “stallion/stallions”, “mare/mares”, “foal/foals” shall have the
same meaning.‟ (My translation)
necessary for a breeder to notify the Society of the birth and parentage of the
equine, because a newly born foal would evidently not demonstrate any of the
characteristics of a hackney pony at birth. All the breeder would have to do is to wait
until the equine grows into adulthood and only then to register it if it exhibits the
characteristics of a hackney pony. This would be completely at odds with what I have
stated in the previous paragraph relating to the breeder‟s obligation to notify the
Society of the birth of the equine. Counsel for Mr Majiet was unable to provide a
coherent response for this difficulty during the hearing.
[36] I turn to Mr Majiet‟s second complaint, which is that the DNA report that
established that one of the parents of FHE – Retcharnis Field’s Pride – was a
hackney horse and not a hackney pony, was not reliable and therefore did not
provide a proper basis for FHE‟s deregistration. It appears from Mr van Rooyen‟s
affidavit that DNA testing to confirm the parentage of particular animals is used
frequently because of its reliability. In the Western Cape, Unistel does the testing.
The Society‟s constitution and its by-laws make specific provision for DNA testing.
By-law 2 deals with confirmation of parentage of hackney ponies:
„11.1
The Society reserves the right to at any time require a DNA test or any other proven
scientific method of proof of parentage in order to determine the parentage of a registered
horse or a horse eligible for registration:
(a)
as a routine procedure from time to time as determined by the Association;
(b)
in any matter where there is doubt;
(c)
. . .
11.2
When a DNA test is done in terms of by-law 11(1)(a) the breeder shall be held
responsible for all the costs of a second and further parentage control tests.
11.3
The costs of a DNA test done in terms of by-law 11(1)(b) shall be borne by the
breeder or the Society as determined by the Board.
11.4
For the purposes of the parentage control of all breeding stallions DNA testing is
peremptory notwithstanding anything contained above.‟5 (My translation)
[37] It is apparent from the factual background set out earlier that when confronted
with the DNA certificate Mr Dawood Davids did not contest its correctness. He
maintained that he believed that FHE‟s parentage was correctly stated but conceded
that what may have happened was that the stallion – Retcharnis Field’s Pride – had
broken into Fire Carnation’s pen and sired FHE without his knowledge. As a result
he innocently conveyed incorrect information to the Society regarding FHE‟s
parentage. Later on Mr Sayed Davids and two other members of the Society‟s
executive committee visited Unistel to satisfy themselves that the findings were
reliable. Dr Oosthuizen, who prepared the DNA report, stated its reliability to be in
the order of 99.994 per cent.
[38] In his reply Mr Majiet filed an affidavit from Dr Cindy Harper, who is a Director
of a genetics laboratory. She explained that best practice regarding DNA testing
must be managed according to what she referred to as the „chain of custody
principle‟ from the time the animal is tested until the evidence bag reaches the
laboratory. She does not however dispute Dr Oosthuizen‟s finding. In the
circumstances, and applying the rule regarding evidence in application proceedings,
this matter must be decided on the basis of the undisputed facts in the answering
affidavits. In any event Mr van Rooyen emphasises that the onus for providing
5 „11.1 Ten einde die ouerskap van „n geregistreerde perd of „n perd geskik vir registrasie te bepaal
behou die Genootskap die reg om te eniger tyd „n DNS-toets of enige ander beproefde
wetenskaplike metode van bevestiging van ouerskap te vereis-
(a)
as „n roetine prosedure soos van tyd tot tyd deur die Vereniging bepaal;
(b)
in enige geval van twyfel en
(c)
van alle vullens waarvan geboorte kennisgewings na 30 April 2005 ingedien is.
11.2
In die geval van die DNS-toets waarna in Verordening 11.1(a) verwys word sal die teler vir
alle koste van alle ouerskapkontroletoetse van die tweede toets af, verantwoordelik wees.
11.3
In die geval van die DNS-toets waarna in Verordening 11.1(b) verwys word sal die teler of die
Genootskap, soos deur die Raad bepaal vir die koste van die DNS-toetse verantwoordelik
wees.
11.4
Die tipering vir die doel van ouerskapkontrole van alle teelhingste is verpligtend ongeag
bostaande.‟
accurate information on the equine is the sole responsibility of the breeder. This is
consistent with s 11.1(b) of by-law 2.
[39] So to the extent that there is any doubt regarding the reliability of
Dr Oosthuizen‟s DNA report, which I cannot see, the onus was first on Mr Dawood
Davids and thereafter on Mr Majiet to prove that the information given by Mr Dawood
Davids to the Society regarding FHE‟s parentage was correct. Mr Davids did not
dispute the DNA report when he was confronted with it or any time thereafter.
Mr Majiet could have proved that FHE was not a cross-breed at the time he made
representations to the Society or in the founding papers in the review application, if
he had wished to. He did not. In fact his principal argument in this case is that FHE
qualifies for registration as a hackney pony despite the fact that it is a cross-breed.
So his complaint regarding cancellation of FHE‟s deregistration under by-law 216 is
entirely without any foundation.
[40] I turn to Mr Majiet‟s final submission: that FHE‟s deregistration was not
effected fairly. In the hearing before us the court invited counsel, who appeared on
behalf of Mr Majiet, to point out where this case was made out in the founding
papers; he was unable to do so. Mr Dawood Davids was confronted with the DNA
report and was not able to challenge it. Mr Majiet was afforded an opportunity to
make representations before a final decision on the deregistration was taken. He
submitted a lengthy document that the Society considered before taking the final
decision to deregister FHE. Counsel for Mr Majiet was therefore constrained to
accept that he was given a proper hearing before the decision was taken.
6 By-law 21 deals with cancellation of registration. It provides:
„21.1
The Board may request the Secretary to apply to the Association for the cancellation of the
registration of a SA Hackney Pony that was-
(a)
wrongly registered;
(b)
registered due to false or fraudulent information supplied by the owner
(c)
registered after the owner failed to comply with any by-law that had to be satisfied ensuring
flawless registration.
21.2
The Secretary must give 30 days‟ written notice to an owner of any cancellation of a
registration certificate at the owner‟s last known address.‟ (My translation)
[41] What remained was an argument that the DNA report was not obtained
through a fair process. There is no factual basis for this contention. It was accepted
before us that Mr George Bell, one of the Society‟s members, procured the DNA
report from Unistel, apparently because he was unhappy that FHE‟s impressive
appearance seemed to give it an unfair advantage over other hackney ponies in
competitions. That report was handed to the Society, which then acted on it, as it
was obliged to. The Society did not procure the DNA report in an underhand or
improper manner. There is therefore no substance in this complaint either.
[42] One must feel some sympathy for Mr Majiet who purchased an animal from
Mr Dawood Davids on his assurance that it was a hackney pony. What is more,
Mr Davids gave him the documentary proof, which later turned out to be incorrect.
So to the extent that Mr Majiet has a legitimate complaint and possibly a cause of
action against anyone, it is against Mr Davids, and not the Society. For these
reasons, the review must fail.
[43] I turn to the question of costs. As the Society has been successful in the
appeal against the order of the court a quo regarding the review it is entitled to its
costs. The parties also accept that the court a quo erred in granting a costs order
against the Association, despite it not having opposed the review. That part of the
order must also be set aside.
[44] The Society also appeals against the costs order in the interdict that was
settled on the basis that Mr Majiet‟s suspension as a member was lifted with the
question of costs to be decided with the review. The Society maintains that each
party should pay its own costs in the interdict because Mr Majiet had acted
unreasonably in not agreeing to mediate the dispute. It is, however, the Society, not
Mr Majiet, that acted unreasonably by suspending him after he had launched review
proceedings, only to capitulate later by lifting his suspension. Mr Majiet is therefore
entitled to the costs incurred in the interdict, but not to the costs of two counsel.
[45] In the result the following order is made:
(i)
The appeal in the review is upheld with costs including the costs of two
counsel;
(ii)
The appeal against the costs order in the interdict application is dismissed
with costs;
(iii)
The costs order against the second appellant is set aside;
(iv)
The order of the court a quo is set aside and the following order is substituted
in its place:
„(a)
The application is dismissed with costs, including the costs of two
counsel;
(b)
the costs in the interdict application are to be paid by the first
respondent.‟
_______________
A Cachalia
Judge of Appeal
APPEARANCES
For Appellants:
A J Nelson SC (and J L van Dorsten)
Instructed by:
JLU van der Hoven c/o Van der Spuy & Partners, Cape Town
Phatshoane Henney Attorneys, Bloemfontein
For Respondent:
M A Albertus SC (and V L A de la Hunt)
Instructed by:
J Ramages Attorneys c/o Ashersons Attorneys, Cape Town
Honey 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:
31 August 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.
THE SA HACKNEY PONY BREEDERS’ SOCIETY & ANOTHER
v
ADAM MAJIET
The Supreme Court of Appeal (the SCA) today upheld an appeal by the South
African Hackney Pony Breeders’ Society (the Society) against a judgment of the
Western Cape High Court, which found that there was no requirement in the
Society’s constitution and by-laws for a hackney pony to be descendant of two fully
registered hackney ponies to be eligible for registration as a hackney pony. The
SCA held that the Society’s constitution and by-laws indeed require this.
The facts showed that the previous president of the Society, Mr Dawood Davids,
had sold an equine to a relative of his, Mr Majiet, assuring him at the time that it
was a hackney pony, with the name Fire Highly Explosive (FHE). He gave
Mr Majiet a registration certificate indicating that FHE was descendant of two
hackney ponies, whose names also appeared on the certificate. It subsequently
appeared, after DNA tests had been carried out, that the FHE was a cross-breed
and had been sired by a hackney horse and not a hackney pony. When the Society
discovered this it had the pony deregistered. Mr Majiet was aggrieved and
challenged the decision in the high court.
The SCA held that Mr Majiet’s real complaint was against Mr Davids who had sold
FHE to him, not against the Society. The Society’s constitution showed
conclusively that its objects were to promote the ‘breeding and genetic
improvement of hackney ponies’ and to eliminate ‘cross breeding’. And having
discovered that FHE was a cross-breed through the DNA tests it was entitled to
deregister the animal. |
2689 | non-electoral | 2012 | -
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
NOT REPORTABLE
Case No: 115/2011
In the matter between:
GUTSCHE FAMILY INVESTMENTS (PTY) LTD
First Appellant
WENDY HEATHER LYNCH NO
Second Appellant
BERNARD JOHN LYNCH NO
Third Appellant
PATRICK JOHN VERNON WILSON NO
Fourth Appellant
v
METTLE EQUITY GROUP (PTY) LTD
First Respondent
MICHAEL DAVID KUPER NO
Second Respondent
ARNOLD SUBEL NO
Third Respondent
ANDRE ROBERT GAUTSCHI NO
Fourth Respondent
ARBITRATION FOUNDATION OF
SOUTH AFRICA
Fifth Respondent
Neutral citation:
Gutsche Family Investments v Mettle Equity Group (115/2011)
[2012] ZASCA 4 (8 March 2011).
Coram:
Brand, Nugent, Mhlantla JJA and Boruchowitz et Petse
AJJA
Heard:
24 February 2012
Delivered:
8 March 2012
Summary:
Review of award by arbitration appeal tribunal in terms of
s 33(1)(a) and (b) of the Arbitration Act 42 of 1965 – no
‘misconduct’ on part of tribunal as contemplated in s 33(1)(a) –
not established that the tribunal committed any ‘gross
irregularity’ or ‘exceeded its powers’ in terms of s 33(1)(b).
________________________________________________________________
ORDER
On appeal from:
South Gauteng High Court, Johannesburg.
(Lamont J sitting as court of first instance):
The appeal is dismissed with costs on the attorney and own client scale and
including the costs of two counsel.
________________________________________________________________
JUDGMENT
________________________________________________________________
BRAND JA (NUGENT, MHLANTLA JJA AND BORUCHOWITZ et PETSE AJJA:
[1] This is an appeal against the dismissal of a review application by Lamont J
in the South Gauteng High Court, Johannesburg. The application was brought by
the appellants in terms of s 33(1) of the Arbitration Act 42 of 1965. It was aimed at
an award in favour of the first respondent, Mettle Equity Group (Pty) Ltd (Mettle) by
the second, third and fourth respondents, sitting as an arbitral appeal tribunal (the
tribunal). The appeal to this court is with the leave of the court a quo. Both the
application in the court a quo and the appeal to this court were opposed by Mettle
only.
[2] The issues that arose for determination will be best understood against the
background that follows. The first appellant is a company, Gutsche Family
Investments (Pty) Ltd, while the other appellants are cited as the trustees of the
Lynch Trust. I propose to refer to the company and the trust as the appellants.
During April 2003, the appellants sold the total shareholding in a company, Formex
Industries (Pty) Ltd, which they then held, to Mettle Operations Ltd for a price of
R24 million. In terms of the deed of sale R18 million of the purchase price was
payable against delivery of certain specified documents and the balance of R6
million by no later than 31 March 2004. Subsequently, Mettle Operations Ltd ceded
and assigned its rights and obligations in terms of the sale to Mettle.
[3] At the time of the transaction Formex mainly manufactured body parts for
the automotive industry. Mettle took the view that it was not possible to do a
technical due diligence and in its stead sought a number of warranties from the
appellants. In the event, the deed of sale included no less than 73 separate
warranties in favour of Mettle. In terms of clause 8.5 of the deed the appellants
jointly and severally indemnified Mettle against any loss or damage which it ‘may
sustain or incur from the breach of any one or more of the warranties’. These
warranties were destined to take centre stage in the dispute that subsequently
arose between the parties.
[4] In due course, Mettle paid the initial amount of R18 million in accordance
with the deed of sale. But on 31 March 2004 when the R6 million became due and
payable, it paid an amount of R1 483 270.11 only. In a letter of that date, which
accompanied the payment, Mettle claimed to set off the balance of R4 803 558.89
on the basis that this amount represented the loss it had suffered through the
appellants’ breach of several warranties. That triggered a dispute between the
parties. The deed of sale provided for the referral of the dispute to arbitration in
accordance with the rules of the Arbitration Foundation of South Africa (the fifth
respondent herein) and by an arbitrator appointed by the Foundation. The parties
also agreed to incorporate an appeal provision in the event that either of them was
dissatisfied with the arbitrator’s award.
[5] In their statement of claim the appellants essentially claimed the outstanding
balance of the purchase price as due and payable in terms of the agreement of
sale. In answer, Mettle filed both a statement of defence and a claim in
reconvention. In its statement of defence it did not deny that the part of the
purchase price claimed by the appellants remained unpaid. It pleaded, however,
that it had suffered a loss through the appellants’ breach of warranties which
exceeded the amount claimed by the appellants and that their claim had thus been
extinguished by set-off. It therefore prayed that the appellants’ claim ‘be dismissed
with costs, alternatively that an award is stayed pending the determination of
[Mettle’s] claim in reconvention’. The claim in reconvention relied on the same
breach of warranties by the appellants as a result of which Mettle allegedly
suffered a loss. Apart from interest and costs of suit, Mettle therefore claimed the
amount of its alleged loss.
[6] Central to the appellants’ answer to both the defence of set-off and the
claim in reconvention raised by Mettle, stood their reliance on clause 22 of the
deed of sale. It provided:
‘Breach
If either the Sellers or the Purchasers (hereinafter in this clause 22 “the Defaulting Party”)
shall be in breach of any one or more of their obligations in terms of this Agreement
including a Warranty referred to in clauses 8 and 9 and shall fail to remedy such breach
within 30 (thirty) days of receipt of written notice from the other Party (hereinafter in this
clause 22 “the Aggrieved Party”), the Aggrieved Party shall have the right to seek specific
performance of all the Defaulting Party’s obligations then due, or the right to cancel this
Agreement and to seek restitution, in either instance without prejudice to the right of the
Aggrieved Party to claim such damages as it may have suffered by reason of such failure
and further without prejudice to the right of the Aggrieved Party to seek an appropriate
order in terms of the provisions of Rule 22 (4) of the Rules of the High Court of South
Africa.’
[7] Relying on the provisions of clause 22 the appellants took exception to
Mettle’s claims on the basis that they were premature in that Mettle had failed to
give them notice to remedy their alleged breaches of warranty within 30 days. The
arbitrator dismissed the exception. His reasons, in broad outline, were that he
agreed with the appellants that in terms of clause 22, notice to remedy their
alleged breaches of warranty within 30 days was an essential prerequisite to
Mettle’s claim. He held, however, that at the exception stage Mettle’s letter of 31
March 2004 – which accompanied payment of the reduced amount – should be
accepted as proper notice in terms of clause 22. The appellants successfully
appealed this dismissal of their exception to a single appeal arbitrator. Mettle
thereupon applied to the South Gauteng High Court for the setting aside of the
appeal arbitrator’s decision, essentially on the basis that the dismissal of the
exception was not appealable since it did not constitute a final award. The
application succeeded in the High Court. The appellants in turn appealed against
that decision to this court which dismissed the appeal in a judgment since reported
as Gutsche Family Investments (Pty) Ltd v Mettle Equity Group (Pty) Ltd 2007 (5)
SA 491 (SCA).
[8] Four years after its initial start, the matter therefore returned to the arbitrator
for the hearing of oral evidence on the merits. Consistent with his earlier ruling that
Mettle’s letter of 31 March 2004 constituted the requisite notice in terms of clause
22, the arbitrator held at the outset that Mettle was debarred from relying on two of
its claims that were not mentioned in that letter at all. In consequence Mettle was
precluded from leading any evidence in support of these claims. For present
purposes I need say no more about these two claims than that they were
formulated in paragraphs 3.7 and 3.8 of Mettle’s statement of defence under the
headings ‘tool rework’ and ‘obsolete stock’, respectively.
[9] At the end of the hearing the arbitrator again considered the appellants’
reliance on clause 22. At that stage he confirmed that, on his interpretation of the
clause, it imposed a duty upon Mettle to notify the appellants in writing of any
breaches of the agreement and to afford them the opportunity to remedy such
breach within 30 days. Only if the appellants then failed to remedy the breach
would a claim lie against them. In addition, it is clear from the arbitrator’s reasoning
that, in his view, it mattered not whether the claim was for cancellation, specific
performance or damages. Whatever the claim, so he concluded, clause 22
imposed prior notice as an absolute prerequisite for any claim based on breach of
warranty.
[10] The next step for the arbitrator was to reconsider whether, in the light of all
the evidence he had heard since the exception, Mettle had indeed given the
required notice. After consideration he concluded that it had not. In consequence
he held that none of Mettle’s claims could therefore succeed; neither by way of a
defence reliant on set-off, nor by way of a counterclaim. In consequence he made
an award in favour of the appellants for the full outstanding balance of the
purchase price together with capitalised interest – which at that stage amounted to
R8 434 579.17 – as well as further interest on that amount, from date of his award
and costs.
[11] Despite this decision, the arbitrator acceded to a request by Mettle that he
should deal with the merits of its claims. By then it was virtually common cause
that the appellants had breached some of the warranties and that Mettle had
established losses in the amount of R1 047 150.50 as a result of those breaches.
The arbitrator further held that, apart from these, Mettle had proved additional
losses in an amount of R1 852 975 as a result of other breaches of warranty that
were denied by the appellants. The residual claims by Mettle, which pertained to
so-called press control panels, he found not to have been established.
[12] It is against that award that Mettle noted an appeal to the tribunal. Since
part of the notice of appeal found its way into the tribunal’s award, which is
challenged in these proceedings, I recite that part verbatim. It reads:
‘. . . [Mettle] hereby notes an appeal against those portions of the arbitrator’s decision
dated 28 May 2008 in which he held that:
1.
[Mettle] was obliged to give notice to [the appellants] in terms of clause 22 of the
sale agreement in order to found its defence of set off and its counter-claim against [the
appellants];
2.
insofar as [Mettle] was obliged to give notice to [the appellants] in terms of clause
22 of the sale agreement, it did not give such notice in respect of any of its claims;
3.
insofar as [Mettle] was obliged to give notice to [the appellants] in terms of clause
22 of the sale agreement, [the appellants] did not waive their right to be given notice in
respect of all its claims;
4.
[Mettle] did not prove its claim in relation to the press control panels;
5.
[Mettle] was not entitled to proceed with its claims as set out in paragraphs 3.7 and
3.8 of the statement of defence;
as well as the order of costs.’
[13] The appellants, in turn, filed a conditional cross-appeal. In broad outline
they contended that if the appeal were to succeed on any aspect, the arbitrator had
erred in the findings on the merits that he made in favour of Mettle. Eventually, the
tribunal split two to one on the interpretation of clause 22. The minority agreed with
the arbitrator’s interpretation. The majority, on the other hand, found that his
interpretation was erroneous. On a proper interpretation of the clause, so the
majority held, the notice requirement only pertained to claims for specific
performance and cancellation. It required no notice if the aggrieved party claimed
damages. Since Mettle’s claim was essentially one for damages resulting from the
appellants’ breach of warranties, so the majority held, its claim was not precluded
by lack of notice.
[14] In addition, the tribunal unanimously held that the arbitrator had erred in his
determination of the losses that Mettle had established. According to the findings
of the tribunal Mettle had succeeded in establishing losses of R3 974 750.42. As to
Mettle’s claim in paragraphs 3.7 and 3.8 of its statement of defence for ‘tool
rework’ and ‘obsolete stock’ the majority held that the arbitrator had erred in
preventing Mettle from leading evidence in support of these claims on the basis
that they were barred by lack of notice under clause 22. In consequence they
decided that these two claims should be remitted to the arbitrator for adjudication.
In this light the majority of the tribunal upheld the appeal against the arbitrator’s
award with costs.
[15] Since a proper understanding of the appellants’ challenge against the
majority award requires reference to its exact terms, a rather lengthy quotation of
those terms seems unavoidable. They read:
‘In view of our findings, [Mettle’s] appeal is to be upheld and [the appellants’] cross-appeal
fails. We accordingly make the following award:
(a)
[Mettle’s] appeal is upheld in respect of those portions of the Arbitrator’s decision
dated 28 May 2008 as are identified in paragraphs 1, 2, 4 and 5 of the appellant’s notice of
appeal . . . (subject to a reduction in the claim relating to control panels by an amount of
R130 202.82). The final amount for which [the appellants] are liable to [Mettle] is to be
calculated after the determination of [Mettle’s] claim referred to in (d) below;
(b)
[the appellants] are to pay the costs of [Mettle’s] appeal, including the costs
consequent upon the employment of two counsel;
(c)
[the appellants’] cross-appeal is dismissed with costs, including the costs
consequent upon the employment of two counsel;
(d)
[Mettle’s] claim as set out in paragraphs 3.7 and 3.8 of its statement of defence in
respect of tool rework and obsolete stock is remitted to the Arbitrator for adjudication.
(e)
The Arbitrator’s cost award is set aside and the question of costs, other than those
which have been determined in this appeal, is remitted to the Arbitrator for a decision once
all issues have been determined by him.’
[16] As I have indicated by way of introduction, the appellants’ challenge against
that award rests on the provisions of s 33(1) of the Arbitration Act 42 of 1965. That
section provides:
‘(1)
Where–
(a)
any member of an arbitration tribunal has misconducted himself in relation to his
duties as arbitrator . . . ; or
(b)
an arbitration tribunal has committed any gross irregularity in the conduct of the
arbitration proceedings or has exceeded its powers; or
(c)
an award has been improperly obtained,
the court may, on the application of any party to the reference . . . make an order setting
the award aside.’
[17] In its application papers the appellants relied on both sections 33(1)(a) and
33(1)(b). But the reliance on s 33(1)(a) appears to have been jettisoned at an
earlier stage and I believe rightly so. The ‘misconduct’ contemplated in s 33(1)(a)
has been held to denote some element of moral turpitude or male fides on the part
of the arbitrator (see eg Dickenson & Brown v Fisher’s Executors 1915 AD 166 at
176; Bester v Easigas (Pty) Ltd 1993 (1) SA 30 (C) at 36-37; Amalgamated
Clothing & Textile Workers’ Union of South Africa v Veldspun (Pty) Ltd 1994 (1) SA
162 (A) at 169C-D). A mere mistake cannot be said to constitute ‘misconduct’.
Since there was never any suggestion of male fides or moral turpitude on the part
of the tribunal, any reliance on s 33(1)(a) was doomed to fail.
[18] What therefore remained was the appellants’ challenge on the basis of
s 33(1)(b), that the majority of the tribunal not only exceeded its powers, but also
committed a gross irregularity in the conduct of the proceedings. Both these
concepts recently enjoyed full consideration and discussion by this court (see eg
Telcordia Technologies Inc v Telkom SA Ltd 2007 (3) SA 266 (SCA) paras 52 et
seq; Hos & Med Medical Aid Scheme v Thebe Ya Bophelo Healthcare Marketing &
Consulting (Pty) Ltd 2008 (2) SA 608 (SCA) paras 28 et seq; Road Accident Fund
v Cloete NO 2010 (6) SA 120 (SCA) para 36). As I see it, further elaboration can
therefore serve no useful purpose. Suffice it therefore to distil the following three
principles from these decisions that are relevant for present purposes.
(a)
Errors of law or fact committed by an arbitrator do not in themselves
constitute grounds for review by a court under s 33(1)(b). Whether or not we agree
with the conclusions arrived at by the majority of the tribunal on the various
disputes between the parties, is therefore of no consequence.
(b)
In order to justify a review on the basis of ‘gross irregularity’ the irregularity
contended for must have been of such a serious nature that it resulted in the
aggrieved party not having his or her case fully and fairly determined.
(c)
Arbitrators, including arbitral appeal tribunals, are bound by the pleadings.
The only difference between the two in this regard, as I see it, is that on appeal the
pleadings also include notices of appeal and cross-appeal. Unlike a court,
arbitrators therefore have no inherent power to determine issues or to grant relief
outside the pleadings. Arbitrators who stray beyond the pleadings therefore exceed
their powers as contemplated by s 33(1)(b).
[19] Departing from these principles, the appellants’ objections against the
challenged award were essentially twofold. Firstly, that the tribunal exceeded its
powers by ignoring the dispute on the pleadings and the relief claimed in the notice
of appeal. Secondly, that this resulted in an award which entirely negated their
main claim against Mettle and thus deprived them of the opportunity to enforce that
claim.
[20] In developing these objections, the appellants pointed out that their claim in
convention, for the balance of the purchase price of the shares, was never
disputed by Mettle, neither in its pleadings nor in its notice of appeal. The relief
sought in the latter was that the arbitrator’s award be set aside and substituted with
an award upholding the plea of set-off and awarding the appellants the difference
between some R8 million (representing the outstanding balance of the purchase
price together with the capitalised interest) and some R4 million (representing the
sum total of the losses it claimed). In the alternative the notice of appeal sought an
award upholding both the appellants’ claim and Mettle’s counterclaim with the
implied corollary that set-off be applied thereafter.
[21] But, so the appellants’ argument continued, the tribunal ignored the relief
claimed in the notice of appeal and chose rather to uphold the grounds of appeal in
paragraphs 1, 2, 3 and 5 of that notice. Without any reference to their claim in
convention, the award then provides that the final amount for which the appellants
are liable to Mettle is to be calculated after determination of the outstanding claims
in paragraphs 3.7 and 3.8 of Mettle’s statement of defence. Since the arbitrator is
functus officio, save to the extent he has been empowered by the terms of the
appeal award, so the appellants’ argument concluded, they have been deprived of
their claim in convention in its entirety. All that the arbitrator is allowed to do in
terms of the tribunal’s award, so the appellants contended, is to determine the
amount for which they are liable to Mettle without any regard to the main claim
which by all accounts exceeded Mettle’s counterclaim by a substantial margin.
[22] It should be apparent that the appellants’ objection is exclusively based on
their interpretation of the majority award. But I do not agree with that interpretation.
That, in my view, renders the objection inherently flawed. As the appellants
correctly pointed out, it is clear from the notice of appeal that the appellants’ claim
in convention was never in dispute. The arbitrator awarded the full amount of that
claim to the appellants. In the notice of appeal Mettle sought the setting aside of
that award for one reason only, namely that it took no account of the counterclaim.
The main claim was therefore never challenged before the tribunal.
[23] As to Mettle’s counterclaim, it is further pointed out by the appellants, again
correctly, that even before the commencement of the proceedings before the
tribunal, it was clear that Mettle’s reliance on set-off could not succeed. Its claims
were patently not liquidated. Before the tribunal both parties therefore approached
the matter on the basis that all outstanding issues presented for determination
related to Mettle’s counterclaim and that any award in its favour on the
counterclaim would lead to a deduction of the amount awarded from the
appellants’ undisputed main claim. The tribunal simply adopted the same
approach.
[24] Following that approach, the tribunal first decided that the arbitrator was
wrong in excluding Mettle’s counterclaim in its entirety on the basis of clause 22 of
the deed of sale. It then proceeded to deal with the counterclaim on its merits. It
did so with reference to the issues raised in both the notice of appeal and the
conditional cross-appeal. It decided those of the issues thus raised that were
capable of determination on the available evidence and remitted the outstanding
two claims to the arbitrator for his adjudication. In conclusion the tribunal held that
the amount for which the appellants would be liable to Mettle could only be
calculated after determination of the outstanding two claims. Although the tribunal
did not expressly say so, its reference to ‘the amount for which the appellants are
liable to Mettle’ can only refer to the counterclaim. That is the only claim the
tribunal was asked to determine. Thus understood the award does not affect the
arbitrator’s award under the main claim at all. What remains to be done after final
determination of the counterclaim is for the amount so determined to be deducted
from the amount previously awarded by the arbitrator under the main claim.
[25] Once the award is understood in its proper context, the conclusion is
inevitable that the tribunal did not fail to decide an issue that was before it and that
it granted the very relief sought from it on appeal. What becomes equally apparent
is that the appellants’ fears of being deprived of their claim against Mettle were
completely unwarranted. It follows that the court a quo was correct in its finding
that the tribunal committed no gross irregularity nor had it exceeded its powers as
contemplated in s 33(1)(b).
[26] Mettle asked for attorney and own client costs, both in the court a quo and
on appeal. It relies on a provision to that effect in the share sale agreement.
According to established authority, a court will give effect to an agreement relating
to costs, unless good grounds exist for following a different route (see eg
Intercontinental Exports (Pty ) Ltd v Fowles 1999 (2) SA 1045 (SCA) para 26).
Since it is common cause between the parties that no such grounds exist in this
case, the court a quo rightly awarded costs in favour of Mettle on the agreed scale.
As I see it, this court should follow the same course with regard to the costs on
appeal.
[27] In the result the appeal is dismissed with costs on the attorney and own
client scale and including the costs of two counsel.
______________________
F D J BRAND
JUDGE OF APPEAL
APPEARANCES:
APPELLANTS:
R G Buchanan SC
E A S Ford SC
INSTRUCTED BY:
Rushmere Noah Inc,
Port Elizabeth
CORRESPONDENTS:
Webbers Attorneys
Bloemfontein
RESPONDENTS:
S A Cilliers SC
M A Wesley
INSTRUCTED BY:
Prinsloo Tindle & Andropoulos Inc
Johannesburg
CORRESPONDENTS:
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:
8 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.
GUTSCHE FAMILY INVESTMENTS v METTLE EQUITY GROUP
The Supreme Court of Appeal (SCA) today dismissed an appeal by the Gutsche Family
Investments (Pty) Ltd and the trustees of the Lynch Trust (the appellants) against an order
of the South Gauteng High Court, Johannesburg dismissing their application for review of
an award by the arbitration appeal tribunal in favour of Mettle Equity Group (Pty) Ltd
against them.
The appellants had referred a dispute between them and Mettle to arbitration. The dispute
concerned the payment by Mettle to the appellants of the outstanding balance of the
purchase price for the total shareholding in a company which the appellants had sold to
Mettle. Mettle had paid a lesser amount than that which was due in terms of the sale
agreement. In a letter accompanying the payment Mettle claimed to set off the remaining
amount on the basis that that amount represented the loss it had suffered through the
appellants’ breach of several warranties in the agreement. In terms of a clause in the
agreement the appellants jointly and severally indemnified Mettle against any loss or
damage which it might sustain or incur from the breach of any one or more of the
warranties. Mettle filed a counterclaim. The arbitrator made an award in favour of the
appellants for the full outstanding balance of the purchase price together with capitalised
interest, and dismissed Mettle’s counterclaim on the basis that it had not notified the
appellants of any breaches of the agreement and had not afforded them the opportunity to
remedy such breach within 30 days as required by the share sale agreement. Mettle
appealed to the tribunal.
The tribunal, by a majority, upheld Mettle’s appeal. It held that Mettle’s claim was not
precluded by lack of notice. It upheld part of Mettle’s claim and remitted the rest to the
arbitrator for adjudication after hearing further evidence. The appellants then applied to the
high court in terms of section 33(1) of the Arbitration Act 42 of 1965 to have the tribunal’s
decision reviewed and set aside, which application the high court dismissed with costs on
the attorney and own client scale.
Before the SCA the appellants argued that the tribunal had exceeded its powers by ignoring
the dispute on the pleadings and the relief claimed in the notice of appeal, and that this
resulted in an award which entirely negated their main claim against Mettle and thus
deprived them of the opportunity to enforce that claim. In rejecting these arguments, the
SCA held that the tribunal had decided all the issues presented to it and that it had granted
the very relief sought from it on appeal. It further held that the appellants’ fears of being
deprived of their claim against Mettle were completely unwarranted. In arriving at this
conclusion the SCA pointed out that the appellants’ main claim was never challenged
before the tribunal and that Mettle’s counterclaim was the only claim the tribunal was asked
to determine. |
3737 | non-electoral | 2022 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Non-reportable
Case No: 1107/2020
In the matter between:
AZWIFANELI GEORGE MPHANAMA
APPELLANT
and
THE STATE
RESPONDENT
Neutral citation:
Mphanama v The State (1107/2020) [2022] ZASCA 11 (24
January 2022)
Coram:
Zondi and Hughes JJA and Weiner, Unterhalter and Molefe AJJA
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 11h00 on 24 January 2022.
Summary:
Criminal law – fraud – submission by appellant, a magistrate, of
false claims in terms of motor vehicle benefit scheme – prima
facie evidence– approach of court discussed – appellant
choosing not to testify – court finding that he had a case to
answer. Defeating/obstructing the course of justice – reducing
traffic fine before trial after prosecutor refused to do so – not
proven beyond a reasonable doubt.
ORDER
On appeal from: Full Court of Limpopo Division of the High Court, Polokwane
(Semenya J, Makgoba JP and Kaganyago J concurring):
The appeal against the convictions on counts 15 – 18 is dismissed.
The appeal against the conviction on count 21 is upheld and the conviction is
set aside.
JUDGMENT
Weiner AJ (Zondi, Hughes JJA, Molefe and Unterhalter AJJA concurring)
Introduction
[1] The appellant, Azwifaneli Mphanama, was charged with three other accused,
being Arnold Tshililo Mabirimisa (Mr Mabirimisa), Makhubu Harriet Phiri (Ms Phiri) and
Mabirimisa Bus Service (Pty) Ltd (MBS). The appellant was accused 1, Mr Mabirimisa
was accused 2, Ms Phiri was accused 3, and MBS was accused 4.
[2] They were charged with 21 counts in respect of the offences of corruption in
contravention of s 8 of the Prevention and Combating of Corrupt Activities Act 12 of
2004 (counts 1-8); fraud (counts 9-18); money laundering in contravention of s 4 of the
Prevention of Organised Crime Act 121 of 1999 (counts 19-20), and defeating the
ends of justice (count 21).
[3] The trial took place in the Limpopo Division of the High Court, Thohoyandou
(the trial court) in February 2016. The appellant was granted a discharge in terms of
s 174 of the Criminal Procedure Act 51 of 1977 (the CPA) in respect of all charges,
save for counts 15-18 and count 21. He was convicted on counts 15-18 and sentenced
to 18 months’ imprisonment, suspended for three years on condition that he:
‘1)
. . . repays the amount of R3 638.95 to the Registrar of [the] court on or before
7 September 2017; and
2)
. . . is not convicted of an offence of which dishonesty is an element and in respect of
which the [appellant] is sentenced to imprisonment without the option of a fine.’
On count 21, the appellant was convicted and fined R12 000 or six months’
imprisonment, which fine was to be paid in four instalments of R3 000 each.
[4] An appeal to the Full Court of the Limpopo Division of the High Court was
dismissed on 6 May 2020. Special leave to appeal to this Court was granted on
25 August 2020.
The indictment
[5] On counts 9-18, it was alleged that the appellant, in the period from May 2008
to March 2009 (the period), in the Regional Division of Limpopo, ‘in his capacity as the
Head of Office at Dzanani Magistrates’ Court, unlawfully and falsely, and with the
intention to defraud, gave out and pretended to the Department of Justice and
Constitutional Development and/or the Department of Justice and Correctional
Services’ (the Department) that:
(a)
When undertaking official trips during the period appellant utilised a Toyota
RAV4 1800cc petrol multi-purpose vehicle, a RAV4 (the RAV 4); and/or
(b)
He was entitled to be compensated by the Department in terms of General
minute 19 of 2008 for official trips undertaken during the period in terms of the
prescribed tariffs for the RAV4; and/or
(c)
The claims submitted by the appellant for the kilometres driven were supposed
to be calculated in terms of the prescribed tariffs for the RAV4; and
(d)
When making the representations, the appellant knew that:
(i)
The vehicle which he used to undertake the official trips during the period
was a Cadillac 200cc petrol sedan (the Cadillac) and not the RAV4 and
he was not entitled to submit claims on the tariff applicable to the RAV4,
as he did not utilise that vehicle for undertaking official trips;
(ii)
The amounts that he was entitled to claim and receive from the
Department as compensation for the official trips undertaken during the
period were supposed to have been calculated in terms of the tariffs
prescribed for the Cadillac.
(e)
As a result of the aforesaid misrepresentations, which the Department
accepted, it processed the claims and paid the appellant in terms of the tariff
applicable to the RAV4, instead of processing the claims in terms of the tariffs
prescribed for the Cadillac. This was to the prejudice of the Department in that
the difference between the amount claimed and received, and the amount
which should have been claimed and paid out was R10 353.09.
[6] In respect of count 21 – defeating or obstructing the course of justice – the
appellant was indicted on the following facts. During or about May 2009, the appellant,
in his capacity as a magistrate, unlawfully and with the intent to defeat or obstruct the
course of justice, reduced a fine of R1 000 to an amount of R700 in respect of a written
notice issued by a traffic official to one Herman Mudau. Mr Mudau had approached
the office of the prosecutor with an application for a reduction of the amount of the fine,
and the application was rejected by the prosecutor.
Admissions made in terms of s 220 of the CPA
[7] The admissions made by the appellant which are relevant to this appeal include
the following:
‘1.6
By virtue of his position as Head of the Office, [the appellant] was in terms of the motor
vehicle financing benefit for magistrates entitled to be reimbursed for kilometres
travelled [on official business];
1.7
General minute 19 of 2008 . . . makes provision for the amounts that Magistrates can
claim in respect of kilometres travelled;
1.8
The General minute further prescribes tariffs for different categories of vehicles in
terms of which the amount to be claimed as compensation for official trips undertaken
by the Magistrates are determined;
1.9
A Magistrate who qualifies for the travelling allowance is obliged to submit particulars
of the vehicle he/she intends to utilise for official trips to the Department;
1.10
A Magistrate cannot without the authority of the Department utilise a vehicle other than
the one in respect of which the particulars were submitted to the Department when
undertaking an official trip.’
Evidence of the State
Magistrate Nditsheni Baldwin Makamela
[8] Mr Makamela was employed by the Department as a magistrate. He was the
Acting Head of Office at the Magistrate’s Court at Dzanani, to which position he was
appointed in March 2015. Prior to his appointment, the Head of Office was the
appellant.
[9] Mr Makamela testified that, prior to April 2008, the appellant had driven a RAV4
for all his official duties. However, in approximately late April or early May 2008, the
appellant informed him that he had bought the Cadillac vehicle. Mr Makamela and Mr
Nduambi, a messenger, went outside to see the Cadillac. From late April 2008, the
appellant only drove the Cadillac. The appellant informed Mr Makamela that he had
sold the RAV4 to Ms Phiri. After that date, Mr Makamela never saw the appellant
driving the RAV4 again – it was no longer in his possession; it was in the possession
of Ms Phiri.
[10] Mr Makamela was questioned by the appellant’s counsel as to whether or not
the sub-regional head at Thohoyandou, Magistrate Mudau1, would have approved
claims from the appellant if he did not see the appellant drive the vehicle in respect of
which the claim was made. Mr Makamela responded that Magistrate Mudau was not
present, and did not see the vehicle that the appellant was driving, as the appellant
would travel from Dzanani, where he was based, to Louis Trichardt,2 where he was
assisting Magistrate Molokomme, who was new. On each occasion, the appellant was
seen driving the Cadillac. Magistrate Mudau remained in Thohoyandou.
[11] Mr Makamela stated that the claim forms are certified by the claimant. The
appellant would not take the motor vehicle to Magistrate Mudau. The messenger of
the court would take the forms to Magistrate Mudau for approval. He would certify
them without inspecting the actual vehicle which was used. There is a declaration
attached to the claim forms which would be signed by the claimant and an element of
honesty was expected from a claimant.
Magistrate Bernard Jacques Stapelberg
[12] Mr Stapelberg was a magistrate with the Judicial Quality Assurance Office,
situated at the Magistrates Commission in Pretoria. Part of the functions of his office
1 Referred to with his title, to distinguish him from Mr Herman Mudau.
2 In 2003, the Minister of Arts and Culture approved the change of name from ‘Louis Trichardt’
to ‘Makhado’.
was to deal with the conduct of magistrates. He was appointed to investigate various
complaints lodged against the appellant.
[13] Mr Stapelberg disputed that, in order to submit a claim for travel expenses, the
particulars of that motor vehicle have to be registered with the Department. He stated
that one could use any vehicle, as long as the correct claim was made. He further
stated that there would be nothing irregular in interchanging motor vehicles, as long
as the kilometres claimed and the tariff used belonged to the vehicle being used.
Mr Stapelberg referred to the claim forms submitted, which showed that the appellant
would often travel to Louis Trichardt. This evidence was confirmed by both Mr
Makamela and Mr Molokomme.
[14] Mr Stapleberg handed in a letter which the appellant had written on 19 October
2009 (the October letter) in response to the complaints made against him. This letter
refers to complaints made by ‘an anonymous concerned citizen’ as well the minute of
the Chief Magistrate dated 15 October 2009. In dealing with the complaints, the
appellant stated the following in regard to the utilisation of a vehicle and the claims
made:
‘I find it very strange for a magistrate who to date does not understand how the motor financing
scheme works. I suggest he reads the guidelines on the manual for a better understanding.
During the period under review, I owned a RAV4 1.8 and a black Cadillac 2 litre engine, of
which I had submitted registration certificate for a RAV4 to the Sub-Regional Head for official
use. I used to interchange the two motor vehicle, although the two motor vehicles differed in
their engine capacity, I never took a chance of claiming with the 2 litre engine, as I know I
would be defrauding the state neither would the Sub-Regional Head approve my claims. The
sub-regional head approved my genuine claims as he knew the vehicle which I had submitted
its certificate. The months September, October, November, the RAV4 was still my property.’
The reference to the magistrate who does not understand how the scheme works, is
a reference to Mr Makamela.
Magistrate Luxon Ramavhale
[15] Mr Ramavhale was appointed as the acting sub-cluster head at Thohoyandou,
under Magistrate Mudau, who was the cluster-head. He testified that magistrates
participating in the vehicle scheme had to indicate which motor vehicle they would be
using by forwarding a certificate to the sub-cluster office, indicating which motor
vehicle they would be using. The registration certificate was required in terms of the
circular to prevent fraudulent claims. In order to use another motor vehicle, an
application was to be made by the magistrate, attaching the licence, and this
application would go to the office of the sub-cluster head, who would forward it to the
office of the Chief Magistrate.
[16] It was permissible to use two motor vehicles, as long as the registration
particulars were forwarded to the office of the sub-cluster head. Mr Ramavhale also
testified that the Head of the Magistrates Office would sign the trip authorisations and
would approve these authorisations for the subordinates. All heads of office would
submit the trip authorisations to the sub-cluster head for approval of their trips. These
authorisations were submitted through the messenger of the court, and not in person.
[17] According to Mr Ramavhale, it was not possible to verify whether the particular
magistrate had indeed undertaken the trip, or which vehicle they had used. They would
rely on their honesty. He was unaware as to whether Magistrate Mudau, who was the
sub-cluster head, followed the rules meticulously in regard to whether both motor
vehicles must be registered. He could only give evidence as to what the procedure
should have been, not what procedure was followed by Magistrate Mudau.
Magistrate Kwena Moses Molokomme
[18] Mr Molokomme also testified in regard to the manner in which the magistrates’
motor vehicle finance scheme operated. His evidence corroborated that of Mr
Makamela and Mr Ramavhale, but was, in certain respects, different to that of
Mr Stapelberg – but not in any material respect as to whether or not the correct claims
were made. This issue did not form part of the appellant’s defence. The admissions
made by the appellant in terms of s 220 of the CPA were the ones taken into account
in this regard. It was common cause that a magistrate is required to submit claims for
compensation only on the tariff of the vehicle actually used. No claims were made in
respect of the Cadillac.
[19] Mr Molokomme confirmed the version of Mr Makamela, in that he testified that
during October 2008, after Mr Molokomme’s appointment in the Makhado Court,
where the appellant was the Acting Head, the appellant assisted him in looking for
accommodation. He followed the appellant in his own vehicle, whilst the appellant
drove the Cadillac. The appellant would often come from Dzanani to assist him in
Makhado and he was always driving the Cadillac.
The appellant’s version
[20] Various aspects of the appellant’s version were put to Mr Makamela, Mr
Stapelberg, Mr Ramavhale and Mr Molokomme. The appellant’s version (which was
not confirmed under oath, nor tested in cross examination, thus having no evidentiary
value as the appellant chose not to testify) was, in summary, the following:
(a) The appellant test drove the Cadillac from April to May 2008.
(b) He would drive the RAV4 and the Cadillac, but he only claimed for when he drove
the RAV4, as it was the vehicle registered with the Department.
(c) He sold the RAV4 to Ms Phiri in September 2008. There was an agreement
between Ms Phiri and the appellant that the appellant could continue using the RAV4,
even after he had sold it to her.
(d) Magistrate Mudau would not have certified the appellant’s claims in respect of the
claims for May to December 2008, unless he was satisfied that the appellant was
driving the RAV4.
(e) He borrowed the RAV4 from Ms Phiri for the period of January 2009 to March 2009.
(f) He did not change the particulars of the vehicle registered for official trips with the
Department because he borrowed the RAV4 from Ms Phiri for all official trips.
The trial court
[21] The trial court found that paragraph 5 of the October letter contained an
admission by the appellant that he owned both vehicles and used them
‘interchangeably’, even though they had different engine capacities. The appellant
stated that he owned the RAV4 until November 2008, but he was also the owner of
the Cadillac before that time. The RAV4 was registered with the Department for official
trips however, he only claimed on the tariff of the RAV4 as the Cadillac was not
registered. As a result, claiming on the Cadillac tariff would be fraudulent and would
not be approved. The trial court found that the appellant ‘laboured . . . under the
apprehension. . . ’ that he could use the Cadillac, but should only claim on the tariff
applicable to the RAV4, as it was the official registered vehicle. This explanation, the
trial court found, is ‘a far cry from the defence put up by the [appellant]’. There is no
reference in the letter to his version that he borrowed the RAV4 from Ms Phiri, either
from the period May 2008 to March 2009, or at all.
[22] The version of the appellant which was put to the witnesses was that he could
use either vehicle, but could only make a claim when he drove the RAV4, because
that was the one that was registered with the Department. It was argued that there
was no proof before the trial court that he used the Cadillac for official trips. He was
test-driving the vehicle during April and May 2008. What was not put to the witnesses
was what the situation with the Cadillac was for the balance of 2008, as according to
the state witnesses, the appellant continued to drive the Cadillac until March 2009.
[23] The trial court, in dealing with counts 9-14, found that:
‘However accepting that each of the counts 9 to 18 is a compensation claim of various trips
undertaken, the sum of which were, on the accused’s version, undertaken with the Cadillac
and some with the RAV4, it is impossible on the evidence presented, or the evidence of the
witness who testified . . . to determine on which occasion he used the Cadillac and on which
occasion, the RAV4. I am not prepared to convict the accused on speculation.’
[24] In regard to counts 15-18, dealing with the claims from December 2008 until
March 2009, the trial court found that the appellant claimed as if he used the RAV4
when he was no longer the owner or in possession of it, as it was by then owned by,
and in the possession of, Ms Phiri. The version that he borrowed the vehicle from Ms
Phiri over this period was, according to the trial court, an afterthought and did not
amount to evidence.
[25] The appellant, in the appeal before the full court, criticised this approach. He
submitted that the reasoning applicable to counts 9-14 should have applied equally to
counts 15-18, as it was mere speculation by the State that he only used the Cadillac
for that period. However, the trial court’s reasoning cannot be faulted, based upon the
State’s evidence and the appellant’s own version. From September 2008, or at the
latest December 2008, he was no longer in possession of the RAV4. More critically,
he failed to mention in the October letter that he used to borrow the RAV4 on each
and every occasion that he went on an official trip during this period.
[26] For the reasons set out above, the trial court was not prepared to convict the
appellant on speculation in respect of the period from May 2008 to November 2008.
However, it did find that from December 2008 until March 2009, the appellant was no
longer the owner of the RAV4, and that he had given no explanation for using the
RAV4. Therefore, he was convicted on the counts relevant to those months.
The full court
[27] The full court, in dismissing the appeal, agreed with the conclusion reached by
the trial court. It held that the appellant did not dispute, either by way of cross-
examination, or evidence under oath, the version of Mr Makamela and the other State
witnesses that: he was driving the Cadillac at all material times; that he had sold the
RAV4 to Ms Phiri; and that he was no longer in possession thereof during the period
referred to in counts 15-18. The version put to Mr Makamela and Mr Molokomme that
the appellant had borrowed the RAV4 from Ms Phiri and used it in each and every
instance that he was on an official trip, because he had not submitted particulars of
the Cadillac to the sub-regional head, was not repeated under oath – despite the fact
that this version was denied by the State witnesses. Both witnesses confirmed that
during that period, he was seen only driving the Cadillac.
[28] The version that the appellant used the vehicle that he borrowed from Ms Phiri
is not evidence. As stated above, he chose not to give evidence, and thus his version
has no evidentiary value. He neither confirmed it under oath nor offered himself for
cross-examination on the version put to the State’s witnesses. None of the State
witnesses conceded that his version was correct. In addition, Ms Phiri could have been
called to confirm his version, but she was not. Therefore, the claims during the period
from December 2008 until March 2009 remain unexplained. It is also common cause
that the appellant made no attempt to substitute the Cadillac for the RAV4 as his official
vehicle after he sold the RAV4.
[29] The trial court and the full court therefore found that the State had proved,
beyond a reasonable doubt, that the appellant was guilty of submitting false claims for
the period of December 2008 to March 2009, and that he was guilty of counts 15-18.
Legal Principles
[30] It is trite that the State bears the onus of proving the guilt of an accused beyond
a reasonable doubt.3 However, the State does not need to prove the guilt beyond any
shadow of a doubt. In S v Phallo,4 this Court analysed the position as follows:
‘On the basis of this evidence it was argued that the State had at best, proved its case on a
balance of probabilities but not beyond reasonable doubt. Where does one draw a line
between proof beyond reasonable doubt and proof on a balance of probabilities? In our law,
the classic decision is that of Malan JA in R v Mlambo 1957 (4) SA 727 (A). The learned judge
deals, at 737 F - H, with an argument (popular at the Bar then) that proof beyond reasonable
doubt requires the prosecution to eliminate every hypothesis which is inconsistent with the
accused’s guilt or which, as it is also expressed, is consistent with his innocence. Malan JA
rejected this approach, preferring to adhere to the approach which “. . . at one time found
almost universal favour and which has served the purpose so successfully for generations” (at
738 A). This approach was then formulated by the learned judge as follows (at 738 A - B):
“In my opinion, there is no obligation upon the Crown to close every avenue of escape which
may be said to be open to an accused. It is sufficient for the Crown to produce evidence by
means of which such a high degree of probability is raised 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 charged. He must, in other words, be morally certain of
the guilt of the accused.
An accused’s claim to the benefit of a doubt when it may be said to exist must not be derived
from speculation but must rest upon a reasonable and solid foundation created either by
positive evidence or gathered from reasonable inferences which are not in conflict with, or
outweighed by, the proved facts of the case.”
. . .
The approach of our law as represented by R v Mlambo, supra, corresponds with that of the
English courts. In Miller v Minister of Pensions [1947] 2 All ER 372 (King’s Bench) it was said
at 373 H by Denning J:
“. . . the evidence must reach the same degree of cogency as is required in a criminal case
before an accused person is found guilty. That degree is well settled. It need not reach
certainty, but it must carry a high degree of probability. Proof beyond reasonable doubt does
not mean proof beyond the shadow of a doubt. The law would fail to protect the community if
it admitted fanciful possibilities to deflect the cause of justice.
3 S v Mia and Another [2008] ZASCA 117; 2009 (1) SACR 330 (SCA); [2009] 1 All SA 447 (SCA).
4 S v Phallo and Others [1999] ZASCA 84 paras 10-11.
If the evidence is so strong against a man as to leave only a remote possibility in his favour,
which can be dismissed with the sentence ‘of course it’s possible but not in the least probable’,
the case is proved beyond reasonable doubt, but nothing short of that will suffice.”’’
[31] In respect of all the counts upon which the appellant was convicted, both the
trial court and the full court concluded that the version of the appellant was improbable.
The full court found that the trial court had correctly held that there was a prima facie
case that called for an answer from the appellant at the close of the State’s case.
[32] In S v Boesak,5 Langa DP, writing for the Constitutional Court held:
‘The right to remain silent has application at different stages of a criminal prosecution. An
arrested person is entitled to remain silent and may not be compelled to make any confession
or admission that could be used in evidence against that person. It arises again at the trial
stage when an accused has the right to be presumed innocent, to remain silent, and not to
testify during the proceedings. The fact that an accused person is under no obligation to testify
does not mean that there are no consequences attaching to a decision to remain silent during
the trial. If there is evidence calling for an answer, and an accused person chooses to remain
silent in the face of such evidence, a court may well be entitled to conclude that the evidence
is sufficient in the absence of an explanation to prove the guilt of the accused. Whether such
a conclusion is justified will depend on the weight of the evidence. What is stated above is
consistent with the remarks of Madala J, writing for the Court, in Osman and Another v
Attorney-General, Transvaal [1998 (2) SACR 493 (CC)], when he said the following:
“Our legal system is an adversarial one. Once the prosecution has produced evidence
sufficient to establish a prima facie case, an accused who fails to produce evidence to rebut
that case is at risk. The failure to testify does not relieve the prosecution of its duty to prove
guilt beyond reasonable doubt. An accused, however, always runs the risk that, absent any
rebuttal, the prosecution's case may be sufficient to prove the elements of the offence. The
fact that an accused has to make such an election is not a breach of the right to silence. If the
right to silence were to be so interpreted, it would destroy the fundamental nature of our
adversarial system of criminal justice.”.’
[33] The appellant’s reliance on cases such as R v Blom and S v Reddy was
misplaced.6 These cases dealt with convictions based on circumstantial evidence. The
5 S v Boesak 2001 (1) SA 912 (CC) para 24.
6 R v Blom 1939 AD 188; S v Reddy and Others 1996 (2) SACR 1 (A).
present case is based on direct evidence – the submission of invoices based upon the
usage of the RAV4 and the testimony of the State witnesses.
[34] The State submitted that it had produced sufficient evidence to demonstrate
that the appellant, in submitting the claims for the RAV4 from December 2008 to March
2009, whilst he knowingly used the Cadillac, amounted to fraud. The version that
appellant had borrowed the RAV4 from Ms Phiri and used it in each and every instance
that he was on an official trip, was not repeated under oath – despite the fact that it
was denied by the State witnesses, and was contrary to the version put up in the
October letter.
[35] In Ndwambi v The State,7 Navsa ADP referred to R v Dyonta,8 where the
accused were convicted of fraud, in that they falsely pretended to a Mr Potgieter that
certain stones were diamonds in order to induce the buyer to pay a certain price for
the stones. The accused had been arrested immediately after they had handed the
stones to Mr Potgieter who, although he had pretended to be buying, had no intention
of buying them. Navsa DJP, citing Dyonta, stated as follows:9
‘Wessels CJ, in delivering the unanimous judgment of the court, reaffirmed the law as laid
down in two previous judgments of this court, thus (at 57):
“If the misrepresentation is one which in the ordinary course is capable of deceiving a person,
and thus enabling the accused to achieve his object, the fact that the person to whom the
representation is made has knowledge or a special state of mind which effectually protects
him from all danger of prejudice does not entitle the accused to say that the false
representation was not calculated to prejudice.”
And, in answering the point of law in favour of the State, he concluded as follows (at 57):
“The law looks at the matter from the point of view of the deceiver. If he intended to deceive,
it is immaterial whether the person to be deceived is actually deceived or whether his prejudice
is only potential.”’
[36] The trial court gave the appellant the benefit of the doubt in acquitting him on
counts 9-14, but found, in respect of counts 15-18, that the appellant had claimed for
official trips using the particulars of the RAV4 while the vehicle was no longer in his
7 Ndwambi v S [2015] ZASCA 59; 2016 (2) SACR 195 (SCA).
8 R v Dyonta and Another 1935 AD 52.
9 Fn 7 above para 20.
possession. From the October letter, it is clear that the appellant admitted that he was
using the two vehicles interchangeably; but the State showed, through its witnesses,
that this was not possible after November 2008 as, from that date, the sale of the
RAV4 to Ms Phiri was complete – as was the sale of the Cadillac to the appellant. It is
also noteworthy that the appellant’s counsel put to Mr Makamela that the RAV4 vehicle
was sold to Ms Phiri in September 2008. As found by the trial court, ‘[n]o explanation
is provided in the letter that he borrowed the RAV4 vehicle from accused 3 for the
period December 2008 to March 2009’.
[37] It is clear that both the trial court and the full court applied the principles
crystallised in S v Van der Meyden10 in analysing the evidence adduced by the State,
which the appellant chose not to rebut, as well as the October letter which formed the
basis of the exculpatory evidence in favour of the appellant in relation to counts 9-14.
In analysing the evidence as such, the trial court and full court correctly found that the
benefit of the doubt only related to counts 9-14 and that, in terms of the principles
applicable to fraud, potential prejudice is sufficient to satisfy the requirements of the
offence of fraud. Whether the defrauded party would ultimately have suffered the
prejudice anyway, is irrelevant.11 In any event, there is actual prejudice: the appellant
was compensated on a scale to which he had no entitlement, thereby adversely
affecting the Department financially.
[38] The State accordingly contended that the act on the part of the appellant, in
submitting the claims for official trips utilising the particulars of the RAV4 whilst he
knew that the vehicle that he utilised for the trips was the Cadillac, amounted to an act
of fraud. The prejudice suffered by the Department was that, during the period
December 2008 to March 2009, it overpaid the appellant an amount of around
R3 768.25.
[39] The State’s evidence was that the appellant had sold the RAV4, and that he
owned, and was observed using, the Cadillac exclusively since at least November
2008. The key question is whether that amounts to prima facie poof of the fraud. If so
(and I agree that it does), then in exercising his right to silence, the prima facie case
10 S v Van der Meyden 1999 (2) SACR 447 (W).
11 See S v Kruger 1961 (4) SA 816 (A); Ndwambi (fn 6 above).
was not challenged, leading to his conviction. That he put a version that he borrowed
the RAV4 from time to time, after November 2008, is not evidence and was not
conceded by the State’s witnesses. Hence, the appellant was at risk of conviction,
absent his taking the stand. Thus, the appellant’s submissions that the State had failed
to produce evidence which proved that his conduct was actually and/or potentially
detrimental to the administration of justice, does not amount to a defence at all.
Count 21
[40] On the count of defeating or obstructing the course of justice, it was common
cause that the appellant had reduced the fine of Mr Mudau from R1 000 to R700, prior
to the matter being heard in court, and after the prosecutor had refused to reduce this
fine.
[41] The appellant submitted that the State had failed to produce evidence that
proved that the appellant’s conduct was actually, or potentially, detrimental to the
administration of justice. The full court referred to CR Snyman’s Criminal Law where
the elements of the offence of defeating or obstructing the course of justice are: ‘(a)
conduct (b) which amounts to defeating or obstructing (c) the course or administration
of justice and which takes place (d) unlawfully and (e) intentionally’.12
[42] The evidence on this count was tendered by Mr Mudau, who was issued with a
written notice to appear in court for committing a traffic offence. He was fined R1 000.
He took the notice to the prosecutor to request a reduction. The prosecutor refused to
reduce the amount and wrote the words ‘rejected’ across the notice. His official stamp
was placed on the notice. Mr Mudau, who was an employee of MBS (which was a co-
accused in the trial) then took the written notice to the appellant, who reduced the fine
to R700.
[43] The full court found that it could be assumed that the appellant, as a senior
magistrate and the judicial head of the Magistrate’s Court of Dzanani, was aware of
the procedure laid down in s 56 of the CPA, read with ss 57, 57A and s 55 of thereof.13
12 CR Snyman Criminal Law 6 ed (2014) at 237. There is now a newer edition, but the definition remains
the same – see CR Snyman Criminal Law 7ed (2021) at 292.
13 The legislation has subsequently been amended, but in view of the decision to which I have come, it
is not necessary to analyse the relevant provisions of the section or the amendment.
[44] In terms of s 57(6), no provision of s 57 is to be construed as preventing the
public prosecutor from reducing an admission of guilt fine on good cause shown in
writing. Section 57(8) of the CPA, provides that when an admission of guilt fine is paid
at a police station or a local authority in terms of subsection (3), the summons or written
notice is surrendered under subsection (5) and thereafter it is forwarded to the clerk
of the magistrates court, which has such jurisdiction, and the clerk shall thereafter
enter the essential particulars of such summons or written notice in the criminal record
book for admissions of guilt, whereupon the accused concerned shall – subject to the
provisions of subsection (9) – be deemed to have been convicted and sentenced by
the court in respect of the offence in question.
[45] Section 57(9) provides that the judicial officer presiding at the court shall
examine the documents, and if it appears to him or her that a conviction or sentence
under subsection (8) is not in accordance with justice or, except as provided in
subsection (6), may set aside the conviction and sentence and direct that the accused
be prosecuted in the ordinary course.
[46] The full court found that it follows from the provisions of s 57(6) and (9) of the
CPA, that a magistrate has no powers to reduce a traffic fine as the appellant did in
this case. These powers rest only with the prosecutor. The magistrate can only act in
terms of s 57(9). Thus, the full court found that the trial court’s findings that the conduct
of the appellant was irregular could not be faulted.
[47] The appellant submitted that there was no evidence led in the trial court to
prove, or even conclusively infer, that the appellant’s conduct in reducing the traffic
fine amount was intended to defeat the ends of justice at all. It was further contended
that the ends of justice were served in that the State was still paid R700, and Mr Mudau
was convicted on the admission of guilt. Furthermore, it was contended that there was
no evidence led by the State indicating that the appellant’s conduct in reducing the
traffic fine upon request, was unlawful, and therefore it cannot be said that the crime
of defeating or obstructing the ends of justice was committed.
[48] The appellant’s conduct was ultra vires. The recourse which should have been
taken, the appellant submitted, was a review in terms of Rule 53 of the Uniform Rules
of Court, instead of a criminal prosecution. The appellant thus submitted that the lower
courts erroneously ‘. . . conflated inferred ethical blameworthiness and probable
questionable conduct with the sterner test of criminal blameworthiness’.
[49] According to Mr Makamela, pre-2008, when an admission of guilt was paid by
the person who had been issued a traffic fine, the person would either pay it at the
magistrate’s court or at a police station. Then, the original of the summons and/or
written notice would be sent to the relevant magistrate’s court. Makamela stated that
at a time after 2008, due to the conflicts between the departments, traffic officers would
keep the written notice and the person charged would pay them; but they would only
bring them to court on the appearance date, or on the date reflected in the notice. After
the payment, the clerk of the criminal court would bring the written notice to a
magistrate, who confirms and signs the written notice. However, after some time in
2008, Makamela stated, one cannot take the ticket from the traffic department to a
magistrate to reduce it before the court date, as that is the job of the prosecutors.
[50] Evidence was given by the State witnesses in regard to a meeting held in
respect of which the question was whether a magistrate would be allowed to reduce a
notice in regard to a traffic offence before an appearance in court. At the meeting, it
was resolved that only the prosecutor could do this.
[51] The minutes of this meeting, which appears to have taken place in June or July
2009, were compiled by Mr Makamela who took them to the appellant. At the meeting,
the appellant stated that in terms of s 342A of the CPA he was entitled to reduce the
fine before it was brought to court. In the meeting. Mr Makamela ascertained that the
appellant had already reduced Mr Mudau’s ticket before he was scheduled to appear
in court.
[52] In my view, the evidence regarding the meeting and the decisions taken
thereafter created some confusion. The submissions of the appellant that he was
entitled to do what he did; casts doubt upon the element of intent to defeat the ends
of justice. Thus, on this count, I would uphold the appeal and set aside the conviction.
Conclusion
[53] In failing to testify, the appellant did not answer the prima facie case against
him, and he ran the risk of that proof becoming conclusive proof, as there was nothing
to gainsay the version of the State.14 The evidence produced by the State proved,
beyond reasonable doubt, that fraud was committed and that the appellant was
correctly convicted on counts 15-18. However, the charge of defeating or obstructing
the course of justice in respect of count 21 was not proved beyond a reasonable doubt
and should be set aside.
[54] In the result, the following order is made:
The appeal against the convictions on counts 15-18 is dismissed.
The appeal against the conviction on count 21 is upheld and the conviction is
set aside.
______________________
S E WEINER
ACTING JUDGE OF APPEAL
14 S v Chabalala 2003 (1) SACR 134 (SCA).
Appearances:
For the appellant:
M S Monene
Instructed by:
T N Ramashia Attorneys, Thohoyandou
Molefe Thoabala Attorneys, Bloemfontein
For the respondent:
N F Doubada
Instructed by:
National Director of Public Prosecutions,
Polokwane; National 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:
24 JANUARY 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
Mphanama v The State (1107/2020) [2022] ZASCA 11 (24 January 2022)
Today the Supreme Court of Appeal (SCA) handed down judgment upholding in part, and dismissing
in part, the appeal against a decision of the Full Court of the Limpopo Division of the High Court,
Polokwane (the full court).
The issues before the SCA were whether the State had produced sufficient evidence to prove beyond
a reasonable doubt that the appellant’s conduct amounted to fraud and defeating or obstructing the
course of justice.
The appellant was charged with three other accused. The appellant was accused 1. They were charged
with 21 counts but the appeal related only to the convictions of fraud on counts 15-18 and defeating the
ends of justice on count 21. They were discharged on all the remaining counts.
In respect of count 15-18, the State alleged that the appellant submitted claims for official trips utilising
the particulars of a Toyota RAV4 (the RAV4) vehicle, whilst he knew that the vehicle that he utilised for
the trips was a Cadillac 200cc petrol sedan (the Cadillac), which was subject to a lower tariff. This the
State alleged amounted to fraud. The prejudice suffered by the Department of Justice and Constitutional
Development and/or the Department of Justice and Correctional Services’ (the Department) was that,
during the period December 2008 to March 2009, it overpaid the appellant an amount of around
R3 768.25.
The State’s evidence was that the appellant had sold the RAV4, and that he owned, and was observed
using, the Cadillac exclusively since at least November 2008. The key question was whether that
amounted to prima facie poof of fraud. Several of the State witnesses gave evidence on this issue.
The appellant’s counsel put a version to the state witnesses, that the appellant, despite disposing of the
RAV4 borrowed the RAV4 from time to time, after November 2008, to undertake all his official trips. The
State witnesses disputed this version. The appellant chose not to give evidence to rebut the prima facie
case. The appellant submitted that the State had failed to produce sufficient evidence to show that he
had acted fraudulently, which conduct was actually and/or potentially detrimental to the administration
of justice
The SCA found that the State had made out a prima facie case of fraud against the appellant. The SCA
held that as a result of the appellant’s failure to testify, his version did not amount to evidence. Hence,
the appellant was at risk of conviction, absent his taking the stand. The SCA therefore dismissed the
appeal against the convictions on counts 15-18.
In respect of count 21 – defeating or obstructing the course of justice – the appellant was indicted on
the following facts. During or about May 2009, the appellant, in his capacity as a magistrate, unlawfully
and with the intent to defeat or obstruct the course of justice, reduced a traffic fine of R1 000 to an
amount of R700. The traffic offender had approached the office of the prosecutor with an application
for a reduction of the amount of the fine, and the application was rejected by the prosecutor.
Evidence was given by the State witnesses in regard to a meeting held in respect of which the question
was whether a magistrate was authorised to reduce a fine in regard to a traffic offence before an
appearance in court. At the meeting, it was resolved that only the prosecutor could do this.
The SCA was of the view that the evidence regarding the meeting and the decisions taken thereafter
created some confusion. The submissions of the appellant that he was entitled to do what he did; casts
doubt upon the element of intent to defeat the ends of justice. Thus, on this count, the SCA upheld the
appeal and set aside the conviction.
~~~~ends~~~~ |
4024 | non-electoral | 2023 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1150/2021
In the matter between:
THE COMMISSIONER FOR THE SOUTH
AFRICAN REVENUE SERVICE
APPELLANT
and
LITHA MVELISO NYHONYHA
1ST RESPONDENT
MAGDELINE SEKGOPI NYHONYHA N O
2ND RESPONDENT
MAGANDHERAN PILLAY
3RD RESPONDENT
MAGANDHERAN PILLAY N O
4TH RESPONDENT
INDHERAN PILLAY N O
5TH RESPONDENT
CORAL LAGOON INVESTMENTS 194 (PTY) LTD
6TH RESPONDENT
ASH BROOK INVESTMENTS 15 (PTY) LTD
7TH RESPONDENT
K2019495062 (SOUTH AFRICA) (PTY) LTD
8TH RESPONDENT
REGIMENTS FUND MANAGERS (PTY) LTD
9TH RESPONDENT
MARCYTOUCH (PTY) LTD
10TH RESPONDENT
ERGOLD PROPERTIES NO 8 CC
11TH RESPONDENT
WILLEM JACOBUS VENTER N O
12TH RESPONDENT
KAGISO SURPRISE DINAKA N O
13TH RESPONDENT
ERIC ANTONY WOOD N O
14TH RESPONDENT
TRUSTEGIC (PTY) LTD N O
15TH RESPONDENT
NEDBANK LIMITED
16TH RESPONDENT
CAPITAL 48 (PTY) LTD
17TH RESPONDENT
PROGRACE INVESTMENTS CC
18TH RESPONDENT
TRANSNET SOC LTD
19TH RESPONDENT
VANTAGE MEZZANINE FUND II
20TH RESPONDENT
FINASCEND (PTY) LTD
21ST RESPONDENT
GDM SOLUTIONS (PTY) LTD
22ND RESPONDENT
SETH CONSULTING T/A THUNI SYSTEMS (PTY) LTD
23RD RESPONDENT
CYBER SLEUTH FORENSICS
24TH RESPONDENT
CMS RM PARTNERS INC
25TH RESPONDENT
REGIMENTS TELECOMMUNICATIONS (PTY) LTD
26TH RESPONDENT
OMNIMETA
27TH RESPONDENT
PETASCAN INVESTMENT HOLDINGS (PTY) LTD
28TH RESPONDENT
DUALITY SYSTEMS (PTY) LTD
29TH RESPONDENT
MAJESTIC SILVER TRADING 157 (PTY) LTD
30TH RESPONDENT
REGIMENTS SHARED SERVICES 191 (PTY) LTD
31ST RESPONDENT
Neutral citation:
The Commissioner for the South African Revenue Service v
Nyhonyha and Others (1150/2021) [2023] ZASCA 69 (18 May
2023)
Coram:
PONNAN ADP, VAN DER MERWE, WEINER AND MOLEFE JJA AND
UNTERHALTER AJA
Heard:
8 March 2023
Delivered:
18 May 2023
Summary:
Company law – setting aside of winding-up under s 354 of Companies
Act 61 of 1973 – test is whether facts demonstrate that continuation of winding-up
unnecessary or undesirable – not exercise of true discretion – commercial insolvency
– no basis for setting aside winding-up.
ORDER
On appeal from: Gauteng Division of the High Court, Johannesburg (Vally J, sitting
as court of first instance):
The appeal is upheld.
Paragraphs 1 to 6 and 8 of the order of the court a quo dated 22 February 2021
are set aside and replaced with the following:
‘Prayer 2 of the notice of motion is dismissed with costs, including the costs of
two counsel and the costs reserved on 11 November 2020’.
The first to 11th respondents are directed to jointly and severally pay the
appellant’s costs of the appeal, including the costs of two counsel.
The costs incurred by the 12th and 13th respondents in respect of the appeal,
including the costs of their application for leave to adduce further evidence on
appeal and the costs of two counsel, are costs in the liquidation of Regiments
Capital (Pty) Ltd.
JUDGMENT
Van der Merwe JA (Ponnan ADP, Weiner and Molefe JJA and Unterhalter AJA
concurring):
[1] This is an appeal by the Commissioner for the South African Revenue Service
(SARS) against an order setting aside the winding-up of Regiments Capital (Pty) Ltd
(Regiments). The order was made by Vally J in the Gauteng Division of the High Court,
Johannesburg, on the application of the first to 11th respondents (the respondents).
They are parties that have an interest in Regiments and oppose the appeal. The 12th
and 13th respondents (the liquidators) are the joint liquidators of Regiments. Their
participation in the appeal is aimed at showing that the winding-up of Regiments
should not have been set aside. None of the other respondents participate in the
appeal. However, by agreement the National Director of Public Prosecutions (the
NDPP) was joined as a party to the appeal. The NDPPs interest is limited to the
eventuality of the appeal failing. The appeal is with the leave of this court.
[2] SARS and the liquidators separately launched voluminous applications for
leave to adduce further evidence on appeal. The applications relate to evidence that
existed at the time of the hearing in the court a quo, as well as to subsequent events.
It is trite that leave to adduce further evidence on appeal should be granted only in
exceptional circumstances. It was accepted that if the appeal were to succeed on the
evidence that was before the court a quo, it would be unnecessary to consider these
applications. That is the question that I now turn to.
[3] The appeal raises two main issues. The first is whether the setting aside of a
winding-up under s 354 of the Companies Act 61 of 1973 constitutes the exercise of
a discretion in the strict sense (true discretion). The second issue is whether
Regiments was commercially solvent at the time of the hearing in the court a quo.
These issues must be determined against the following background.
Background
[4] On 18 November 2019, the NDPP obtained a provisional restraint order (the
restraint order) under the Prevention of Organised Crime Act 121 of 1998 which
related, inter alia, to the assets of Regiments. This halted Regiments’ participation in
an ‘unbundling’ transaction in respect of shares in Capitec Bank Holdings Limited
(Capitec) held by the sixth respondent. On 16 September 2020, Regiments was placed
in final winding-up at the instance of an unpaid creditor.
[5] On 26 October 2020, the restraint order was discharged. This prompted the
application of the respondents in the court a quo. The urgent application was brought
in two parts. The first part was essentially for an order staying the winding-up of
Regiments and authorising the execution of the unbundling transaction. The aim of the
first part of the application was to realise funds for the benefit of Regiments. The
second part of the application, as I have said, was for an order setting aside the
winding-up of Regiments.
[6] The application came before Vally J, together with an application by SARS for
leave to intervene. The court granted the first part of the application. It issued a rule
nisi returnable on 26 January 2021. The order authorised the implementation of the
unbundling transaction under the supervision of an independent attorney. It also
provided for the funds so generated for Regiments to be paid into an interest-bearing
trust account under the control of that attorney. The attorney was directed to submit,
prior to the return date, a report ‘concerning all aspects of the implementation of the
unbundling transaction in accordance with this order’. The court also granted leave to
SARS to intervene in the application. Costs of the first part of the application were
reserved.
[7] In a woefully inadequate report dated 12 January 2021, the appointed attorney
(Mr Brett Derwent Tate) stated that he had received the amount of R36 348 950 as
the proceeds of the unbundling transaction in trust for Regiments. He added that he
understood from the respondents’ attorneys that Regiments held 252 370 Capitec
shares. On the other hand, in a supplementary affidavit dated 18 January 2021, SARS
gave a full exposition of the grounds for its opposition to the setting aside of the
winding-up of Regiments.
[8] SARS stated that it was in the process of conducting an audit in respect of the
liability of Regiments for income tax for the 2014 to 2019 income tax periods, as well
as its liability for Value Added Tax (VAT) in respect of the 2013/03 to 2016/02 VAT
periods. Its findings in respect of the 2014 to 2016 income tax periods and the VAT
periods, were in the process of being finally approved. The audit indicated an income
tax liability for the 2014 to 2016 income tax periods of R217 578 411,92 and liability
for VAT in the amount of R61 765 421,56. This total amount of R279 343 833,48 did
not include understatement penalties, statutory penalties or interest. In addition, the
audit in respect of the 2017 to 2019 income tax periods had not been completed. All
of this meant that assessments in the amount of R279 343 833 (cents omitted) would
be issued soon and that this amount was a conservative estimation of Regiments’
liability towards SARS.
[9] On the return date, only SARS opposed the setting aside of the winding-up of
Regiments. It accepted that Regiments had cash on hand in the amount of
R36 348 950 and that it held Capitec shares worth R350 million. It was also prepared
to accept that the amount of R4,5 million was due to Regiments by Nedbank Limited
and that therefore, its total liquid and realisable assets amounted to R390 848 950.
However, SARS did not accept the assertions of the respondents that Regiments’
84,36 per cent interest in Kgoro Consortium (Pty) Ltd (Kgoro) had a value of R513
million or that its 100 per cent interest in Little River Trading 191 (Pty) Ltd (Little River)
was worth R32 million.
[10] It was common cause or not disputed that Regiments owed unrelated creditors
(referred to in the papers as Table A creditors) the amount of R278 011 795 and that
R113 920 106 was due to related creditors (referred to as Table B creditors). Vally J
recorded that the Table B creditors had given the undertaking that they would not seek
payment of the debts owed to them until the Table A creditors were paid in full. The
court a quo accepted the evidence contained in SARS’ supplementary affidavit. It thus
proceeded on the basis that Regiments owed SARS R279 343 833. Because the
relevant assessments had not been issued, however, this debt was not yet due and
payable. On this basis, Regiments’ total liabilities (Table A creditors, Table B creditors
and SARS) amounted to R671 275 734.
[11] Vally J accepted that the respective values of Regiments’ interests in Kgoro
and Little River were R513 million and R32 million. On the basis of this finding,
Regiments’ total assets (R545 million together with the liquid assets of R390 848 950)
would amount to R935 848 950. That would exceed its total liabilities by
R264 573 216. Vally J continued:
‘More importantly the papers show on a balance of probabilities that Regiments is – in the
words of Mr Pillay – “asset rich but cash poor”. It is, in other words, only commercially
insolvent.’
[12] The court proceeded to say:
‘It cannot be gainsaid that if all the creditors, including SARS – although it is only a contingent
one at this stage – can be paid then there is no advantage to keeping the hand of the law on
the estate of Regiments. However, sight cannot be lost of the fact that SARS would be a
preferrent creditor if the winding-up order is not set aside. The object of an insolvency order is
to ensure “a due distribution of assets among creditors in the order of their preference”. As
such the creditors listed in Table A would have to await full payment to SARS before they
received any payments from the estate if the winding-up order is not set aside. Losing this
protection is SARS’ greatest concern. But the protection can be catered for in the order that
follows from this judgment. In such a case the removal of the hand of the law on the estate
would, I hold, result in the integrity of the law being kept intact. The law is only concerned with
doing justice by the parties and in serving the public interests. In casu this would be achieved
if, once the winding-up order is set aside, there are sufficient assets to pay all the creditors,
including a contingent one such as SARS. It also does not go unnoticed that the concern of
SARS of losing the protection afforded it by insolvency law can be attended to by itself taking
proactive action through the rights accorded to it by ss 94(1) and 163 of the Tax Administration
Act (TAA). It is still in the process of issuing its assessments for the tax liability on Regiments.
It should be placed on terms to issue this assessment speedily, and then be given a short
period of time to take the rights accorded to it by ss 94(1) and 163 of the TAA. In addition, if
Regiments is interdicted from dissipating any of its interests in Kgoro and Little River until the
debt of SARS has been liquidated then SARS’ concern would be addressed. This, of course,
means that Regiments cannot utilise the assets in Kgoro and Little River to liquidate the debts
listed in Table A. As for the creditors listed in Table B they should not be allowed to make any
claim until SARS and those creditors listed in Table A are paid in full.’
[13] Vally J issued the following order:
‘1.
The winding-up of Regiments Capital (Pty) Ltd (Regiments) is hereby set aside.
2.
The 21st respondent (SARS) must within 15 calendar days of this order issue its
assessments of the tax liabilities of Regiments.
3.
Regiments must only commence paying the entities referred to in Table A in [8] of this
judgment after the expiry of the 30 days from the date of this order.
4.
Regiments must not pay any of the entities referred to in Table B in [8] of this judgment
until all creditors listed in Table A and SARS, should it become one, have been paid in
full.
5.
The value of Regiments’ interests in Kgoro Consortium (Pty) Ltd and Little River
Trading 191 (Pty) Ltd must not be dissipated in any way whatsoever until Regiments
has settled any claim SARS makes in terms of para 2 of this order or until this court
amends this paragraph of the order.
6.
Any applicant or respondent seeking an amendment of para 5 of this order may do so
within thirty days of this order.
7.
Regiments is to pay:
7.1
the taxed costs of the first and second respondents (including the costs of this
application) in the administration of Regiments;
and
7.2
the costs of Vantage in the application under Case Number 2019/8365.
8.
Save for the contents of para 7 of this order each party is to pay its own costs.’
[14] To complete the picture, I have to mention that after the issuance of the order
of Vally J, the full court upheld the NDPPs appeal against the discharge of the restraint
order. The order of the full court included the following provision:
‘The restraint proceedings instituted against the fourth defendant, Regiments Capital, are
suspended, and the application for a restraint order against the fourth defendant is postponed
sine die, with costs to be in the cause.’
This formed the background to the contentions of the NDPP aimed at preventing a
lacuna should the appeal be dismissed.
Analysis
[15] By virtue of Item 9 of Schedule 5 to the Companies Act 71 of 2008, s 354 of the
repealed Companies Act 61 of 1973 remains in force until a date to be determined.
Section 354 provides:
‘354. Court may stay or set aside winding-up.
(1) The Court may at any time after the commencement of a winding-up, on the application of
any liquidator, creditor or member, and on proof to the satisfaction of the Court that all
proceedings in relation to the winding-up ought to be stayed or set aside, make an order
staying or setting aside the proceedings or for the continuance of any voluntary winding-up on
such terms and conditions as the Court may deem fit.
(2) The Court may, as to all matters relating to a winding-up, have regard to the wishes of the
creditors or members as proved to it by any sufficient evidence.’
True discretion?
[16] The respondents submitted that the decision of the court a quo under s 354
constituted the exercise of a true discretion. Their argument was that none of the
limited grounds for interference on appeal with the exercise of a true discretion were
shown. Accordingly, so they contended, the appeal had to fail.
[17] It is trite that the scope for interference on appeal with the exercise of a true
discretion is limited. The question is not whether the appeal court would have reached
the same conclusion, but whether the discretion was exercised properly. For present
purposes it suffices to say that interference would be called for if the exercise of the
discretion was based on a misdirection of fact or a wrong principle of law. See Ex parte
Neethling and Others 1951 (4) SA 331 AD at 335E and Trencon Construction (Pty)
Ltd v Industrial Development Corporation of South Africa Ltd and Another 2015 (5) SA
245 (CC) (Trencon) para 88.
[18] A true discretion is one which provides a court with a range of permissible
options. Well-known examples are costs orders and awards of damages. See Media
Workers Association of South Africa and Others v Press Corporation of South Africa
Ltd 1992 (4) SA 791 (A) (Perskor) at 800E and Trencon paras 84-85. This was
articulated as follows in Florence v Government of the Republic of South Africa 2014
(6) SA 456 (CC) para 113:
‘Where a court is granted wide decision-making powers with a number of options or variables,
an appellate court may not interfere unless it is clear that the choice the court has preferred is
at odds with the law. If the impugned decision lies within a range of permissible decisions, an
appeal court may not interfere only because it favours a different option within the range.’
[19] It is clear that the expression ‘wide decision-making powers’ in this passage
refers to the multitude of permissible options that characterise a true discretion. This
must not be confused with a wide or loose discretion which means ‘no more than that
the Court is entitled to have regard to a number of disparate and incommensurable
features in coming to a decision’. See Knox D’Arcy Ltd and Others v Jamieson and
Others 1996 (4) SA 348 AD at 361I, quoted with approval in Trencon para 86.
[20] A power to determine whether the (proven) facts demonstrate a legal
requirement or conclusion, is not a true discretion. EM Grosskopf JA lucidly explained
this in Perskor at 800F:
‘I do not think the power to determine that certain facts constitute an unfair labour practice is
discretionary in that sense. Such a determination is a judgment made by a Court in the light
of all relevant considerations. It does not involve a choice between permissible alternatives.
In respect of such a judgment a Court of appeal may, in principle, well come to a different
conclusion from that reached by the Court a quo on the merits of the matter.’
See also Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein
(Kyalami) (Pty) Ltd and Others 2013 (4) SA 539 SCA paras 20-21.
[21] In Ward and Another v Smit and Others: In re Gurr v Zambia Airways
Corporation Ltd 1998 (3) SA 175 (SCA) at 180H, this court said that the language of s
354 ‘is wide enough to afford the Court a discretion to set aside a winding-up order
both on the basis that it ought not to have been granted at all and on the basis that it
falls to be set aside by reason of subsequent events’. The court proceeded (at 180I-
181D) to state stringent requirements for an order on the former basis. Although the
court referred to a discretion and discretionary power in this regard, it did not consider
whether it was a true discretion or not.
[22] I agree with the authors of Henochsberg on the Companies Act 61 of 1973 5
ed at 748 that where, as is the case here, the setting aside of a winding-up is sought
on the basis of subsequent events, the test is whether the facts show that the
continuance of the winding-up would be unnecessary or undesirable. In Ex parte Strip
Mining (Pty) Ltd: In re Natal Coal Exploration Co Ltd (In liquidation) (Kangra Group
(Pty) Ltd and Another intervening) 1999 (1) SA 1086 (SCA) at 1091I, this court stated
that the expression ‘proof to the satisfaction of the Court’ refers to ‘the normal standard
of proof of the facts which are to lead the Court to hold that the winding-up “ought” to
be set aside’. Thus, the test for setting aside a winding-up under s 354 on the basis of
subsequent events, is whether the applicant has proved facts that show that it is
unnecessary or undesirable for the winding-up to continue. This does not involve a
choice between permissible alternatives. The test is either satisfied or it is not.
[23] It follows that the decision of the court a quo did not constitute the exercise of
a true discretion. It also follows that the statement in Klass v Contract Interiors CC (In
liquidation) and Others 2010 (5) SA 40 (W) para 65 that ‘the court’s discretion is
practically unlimited’, is wrong. The tabulation of applicable principles in the same
paragraph of Klass, should also be read subject to this judgment.
Misdirection
[24] Nevertheless it has to be said that the court a quo misdirected itself on the facts
and the law. Its decision was based on incorrect facts and wrong principles of law. I
deal firstly with the factual errors.
[25] The respondents did not deal with the value of Regiments’ shares in Kgoro and
Little River in their affidavits. Their submissions that these shares were worth R513
million and R32 million respectively, were solely based on the reports that I shall
identify shortly. Kgoro holds all the shares in Cedar Park Properties 39 (Pty) Ltd (Cedar
Park). Cedar Park and Little River own immovable properties. These properties were
subject to the restraint order. The curator bonis (the curator), who had been appointed
in terms of the restraint order, obtained valuation reports in respect of the properties
of Cedar Park and Little River. These reports were not confirmed under oath. They did
not qualify the valuer as an expert with regard to the valuation of these commercial
properties. In each case, they simply stated an open market value and forced sale
value without any reasoning. It is trite that the admissibility of an opinion as evidence
in a court of law depends on whether it is expressed by an expert in the field. The
acceptability or weight of an expert’s opinion in turn depends on whether it is based
on established facts and cogent reasoning. The valuation reports might have served
the purpose for which they had been obtained by the curator, but in the court a quo
they were inadmissible and in any event carried no evidential weight.
[26] The figures of R513 million and R32 million emanated from a report of the
curator to the court in the restraint matter dated 4 June 2020. An annexure to the report
indicated that the net asset value of Cedar Park was approximately R513 million and
that of Little River approximately R32 million. The calculation of these amounts
departed from the open market values stated in the aforesaid valuation reports.
Without any explanation or motivation, however, the report itself reflected these
amounts as the respective values of the assets of Kgoro and Little River. The report
did not refer to or place any value on the shares in Kgoro, Cedar Park or Little River.
[27] The valuation of shares in a private company on the open market is a matter of
some complexity and would mostly be determined on the basis of expert evidence.
This curator’s report did not constitute evidence of the value of Regiments’ shares in
Kgoro (84,36 per cent) or Little River. In the result, the court a quo materially erred on
the facts by placing a total value of R545 million on these shares. It therefore also
erred in determining the matter on the factual basis that Regiments was factually
solvent. As the respondents did not prove that these shares had a market value,
Regiments’ liabilities (R671 275 734) far exceeded the value of its assets
(R390 848 950).
[28] The court a quo did not mention or apply the test that I have set out. It did not
consider whether the facts demonstrated that the continuation of the winding-up of
Regiments was unnecessary or undesirable. Instead, it effectively ordered an
alternative, court-designed winding-up. Moreover, it did so on the back of a finding that
Regiments was unable to pay its debts, which was the touchstone for its liquidation in
the first place. In the process it also arrogated to itself the power to regulate statutory
functions and powers determined by Chapter 8 of the Tax Administration Act 28 of
2011, by directing SARS to issue tax assessments within a fixed period of time. Vally
J took a course wholly impermissible in law.
Commercial solvency?
[29] I now turn to the contention that Regiments was commercially solvent when the
matter came before the court a quo. As I have demonstrated, Regiments was factually
insolvent. It was undisputed that it did not trade and that there was no prospect that it
might do so in future. Should the appeal be dismissed, Regiments would be wound up
under the dispensation created by the order of the court a quo. In these circumstances,
I fail to see how a finding that Regiments was commercially solvent at the time, could
have justified the order of the court a quo. I nevertheless proceed to consider this
issue.
[30] In Namex (Edms) Bpk v Kommissaris van Binnelandse Inkomste 1994 (2) SA
265 (AD) at 289E-G, this court held that liability for tax comes into existence at the
latest at the end of a tax year, even though an assessment has not been issued. The
issue of an assessment is a prerequisite for the enforcement of the tax liability, but not
for its existence. Thus, an unassessed tax liability is not a contingent debt, that is, a
debt which may or may not arise on the fulfilment of a condition. The respondents did
not challenge this decision or its applicability. Their argument was solely that because
Regiments had sufficient liquid assets to pay the Table A creditors and the debt owed
to SARS was not yet payable, Regiments had to be regarded as commercially solvent.
[31] The judgment of this court in Murray and Others NNO v African Global Holdings
(Pty) Ltd and Others 2020 (2) SA 93 (SCA) para 31 is destructive of this argument:
‘The argument about timing misconceived the nature of commercial insolvency. It is not
something to be measured at a single point in time by asking whether all debts that are due
up to that day have been or are going to be paid. The test is whether the company “is able to
meet its current liabilities, including contingent and prospective liabilities as they come due”
. . . .Determining commercial insolvency requires an examination of the financial position of
the company at present and in the immediate future to determine whether it will be able in the
ordinary course to pay its debts, existing as well as contingent and prospective, and continue
trading.’
[32] Thus, the debt owed to SARS had to be factored into the equation. On the
evidence, tax assessments in the minimum amount of R279 343 833 would be issued
in the immediate future. In the event, Regiments would be unable to settle the claims
of all its current creditors, that is the Table A creditors and SARS. Therefore Regiments
was commercially insolvent.
Conclusion
[33] In conclusion, on the evidence before the court a quo, Regiments was both
factually and commercially insolvent. On these facts there was no basis for finding that
the continuation of its winding-up was unnecessary or undesirable. It follows that the
appeal must succeed and that it is unnecessary to consider the applications for leave
to adduce further evidence on appeal.
[34] Costs of the application in the court a quo, including the costs reserved in
respect of the first part of the application and of the appeal, should be paid by the
respondents jointly and severally. That should include the costs of two counsel. As it
was unnecessary to consider the merits of the applications to adduce further evidence
on appeal, it would be fair and just that each party bears its own costs in respect of
these applications. The court a quo directed that the costs of the liquidators be costs
in the liquidation and that was not challenged on appeal. In my view, the same should
apply to the costs incurred by the liquidators in respect of the appeal, including the
costs of their application for leave to adduce further evidence on appeal and of two
counsel. There should be no order as to the costs of the NDPP.
[35] One matter remains. This court called on Mr Vincent Maleka SC and Smit
Sewgoolam Inc to make submissions as to whether their conduct in representing the
first to ninth respondents in this matter, warranted a referral to the Legal Practice
Council. We considered the affidavits filed in this regard, as well as the oral
submissions of counsel on behalf of Mr Maleka and Smit Sewgoolam Inc. It suffices
to say that the information at our disposal does not warrant a referral of the conduct of
Mr Maleka or Smit Sewgoolam Inc.
[36] The following order is issued:
The appeal is upheld.
Paragraphs 1 to 6 and 8 of the order of the court a quo dated 22 February 2021
are set aside and replaced with the following:
‘Prayer 2 of the notice of motion is dismissed with costs, including the costs of
two counsel and the costs reserved on 11 November 2020’.
The first to 11th respondents are directed to jointly and severally pay the
appellant’s costs of the appeal, including the costs of two counsel.
The costs incurred by the 12th and 13th respondents in respect of the appeal,
including the costs of their application for leave to adduce further evidence on
appeal and the costs of two counsel, are costs in the liquidation of Regiments
Capital (Pty) Ltd.
________________________
C H G VAN DER MERWE
JUDGE OF APPEAL
Appearances
For appellant:
A J Lamplough SC and N Komar
Instructed by:
Savage, Jooste & Adams Inc, Pretoria
AP Pretorius, Bloemfontein
For 1st – 9th respondents:
D J Smit SC and T Scott
Instructed by:
Smit Sewgoolam Inc, Johannesburg
Peyper Attorneys, Bloemfontein
For 10th respondent:
A R Coetzee
Instructed by:
Moroka Attorneys, Bloemfontein
For 11th respondent:
A E Bham SC and M Salukazana
Instructed by:
A B Scarrott Attorneys, Sandton
Moroka Attorneys, Bloemfontein
For 12th – 13th respondent:
D M Leathern SC and J Verwey
Instructed by:
Tintingers Inc, Pretoria
Cooper & Associates, Bloemfontein
For the National Director of Public
Prosecutions
N Ferreira
Instructed by:
The State Attorney, Bloemfontein
For Mr Maleka SC and Smit
Sewgoolam Inc
T Ngcukaitobi SC with L Sisilana
Instructed by:
Smit Sewgoolam Inc, Johannesburg
Peyper 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:
18 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
The Commissioner for the South African Revenue Service v Nyhonyha and Others
(1150/2021) [2023] ZASCA 69 (18 May 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 court a quo).
The issues before the SCA were whether the setting aside of a winding-up under s 354 of the
Companies Act 61 of 1973 constitutes the exercise of a discretion in the strict sense (true
discretion); and whether Regiments was commercially solvent at the time of the hearing in the
court a quo.
This was an appeal by the Commissioner for the South African Revenue Service (SARS)
against an order setting aside the winding-up of Regiments Capital (Pty) Ltd (Regiments).On
18 November 2019, the National Director of Public Prosecutions (the NDPP) obtained a
provisional restraint order (the restraint order) under the Prevention of Organised Crime Act
121 of 1998 which related, inter alia, to the assets of Regiments. This halted Regiments’
participation in an ‘unbundling’ transaction in respect of shares in Capitec Bank Holdings
Limited (Capitec) held by the sixth respondent. On 16 September 2020, Regiments was placed
in final winding-up at the instance of an unpaid creditor.
On 26 October 2020, the restraint order was discharged. This cued the application of the
respondents in the court a quo. The urgent application was brought in two parts. The first part
was essentially for an order staying the winding-up of Regiments and authorising the execution
of the unbundling transaction. The aim of the first part of the application was to realise funds
for Regiments. The second part of the application was for an order setting aside the winding-
up of Regiments.
The application came before Vally J, together with an application by SARS for leave to
intervene. The court granted the first part of the application. The order authorised the
implementation of the unbundling transaction under the supervision of an independent
attorney. It issued a rule nisi returnable on 26 January 2021. In respect of the second part of
the application, Vally J accepted that Regiments’ total assets exceeded its total liabilities. Vally
J found that Regiments was ‘asset rich but cash poor’ and ordered the setting aside of
Regiments’ winding-up.
On the question of whether the court a quo exercised a true discretion, the SCA held that a
true discretion is one that provides a court with a range of permissible options. It held that the
test for setting aside a winding-up under s 354 on the basis of subsequent events, is whether
the applicant has proved facts that show that it is unnecessary or undesirable for the winding-
up to continue. This does not involve a choice between permissible alternatives. The test is
satisfied or it is not. Therefore, it followed that the decision of the court a quo did not constitute
the exercise of a true discretion.
On Regiments’ solvency, the SCA held that on the evidence before the court a quo, Regiments
was both factually and commercially insolvent. On these facts there was no basis for finding
that the continuation of its winding-up was unnecessary or undesirable.
~~~~ends~~~~ |
4193 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1334/2022 In the matter between: CENTAUR MINING SOUTH AFRICA (PTY) LTD APPELLANT and CLOETE MURRAY N O FIRST RESPONDENT SIVALUTCHMEE MOODLIAR N O SECOND RESPONDENT NDUMISO SENZOSENKOSI SIBIYA N O THIRD RESPONDENT [In their capacities as the duly appointed joint provisional liquidators of Trillian Management Consulting (Pty) Ltd] TRILLIAN CAPITAL PARTNERS (PTY) LTD FOURTH RESPONDENT TRILLIAN SECURITIES (PTY) LTD FIFTH RESPONDENT TRILLIAN NOMINEES (PTY) LTD SIXTH RESPONDENT TRILLIAN SHARED SERVICES (PTY) LTD SEVENTH RESPONDENT TRILLIAN PROPERTY (PTY) LTD EIGHTH RESPONDENT TRILLIAN FINANCIAL ADVISORY (PTY) LTD NINTH RESPONDENT ZARA W (PTY) LTD TENTH RESPONDENT MASTER OF THE HIGH COURT, PRETORIA ELEVENTH RESPONDENT COMPANIES AND INTELLECTUAL PROPERTY COMMISSION TWELFTH RESPONDENT Neutral citation: Centaur Mining South Africa (Pty) Ltd v Cloete Murray N O and Others (Case no 1334/2022) [2024] ZASCA 34 (28 March 2024)
2 Coram: PONNAN, SCHIPPERS, MEYER AND MATOJANE JJA AND COPPIN AJA Heard: 12 March 2024 Delivered: 28 March 2024 Summary: Rescission in terms of rule 42(1)(a) of the Uniform Rules of Court of default judgment granted under s 20(9) of the Companies Act 71 of 2008 – no proper case made out.
3 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Wepener J, sitting as court of first instance): The appeal is dismissed with costs, including those of two counsel.
JUDGMENT Meyer JA (Ponnan, Schippers and Matojane JJA and Coppin AJA concurring): [1] The appellant, Centaur Mining South Africa (Pty) Ltd (CMSA), appeals against a judgment of the Gauteng Division of the High Court, Johannesburg, per Wepener J (the high court), dismissing an application for the setting aside or rescission of a judgment under s 354 of the Companies Act 61 of 1973 (the 1973 Companies Act), alternatively r 42(1)(a) of the Uniform Rules of Court or the common law (the rescission application).
The appeal is with leave of the high court.
[2] The Trillian group of companies include the first to tenth respondents: Trillian Capital Partners (Pty) Ltd (TCP), Trillian Management Consulting Pty Ltd (TMC), Trillian Securities (Pty) Ltd (TS), Trillian Property (Pty) Ltd (TP), Trillian Nominees (Pty) Ltd (TN), Trillian Financial Advisory (Pty) Ltd (TFA), and Trillian Shared Services (Pty) Ltd (TSS).
TCP owns 100 per cent of the shareholding in TCP, TMC, TS, TP, TN, TFA, and TSS.
Zara W (Pty) Ltd (Zara) owns 100 per cent of the shareholding in TCP.
The Trillian group of companies was established pursuant to a failed bid by the Gupta family (associated with the so-called state government officials and entities) in 2014 to acquire the Regiments group of companies.1 Mr Eric Anthony Wood (Mr Wood) was the former chief executive officer of Regiments (Pty) Ltd (Regiments).
It was a ‘fund manager’ and ‘strategy advisor’ specializing in public sector infrastructure programs 1 The Regiments group of companies are made up of Regiments (Pty) Ltd, Regiments Fund Managers (Pty) Ltd, Regiments Securities (Pty) Ltd, Little River Trading 191 (Pty) Ltd, Ashbrook 15 (Pty) Ltd (with a 59.82% ownership share therein), Coral Lagoon (Pty) Ltd (a wholly owned subsidiary of Asbrooke 15 (Pty) Ltd), Kgoro Consortium (Pty) Ltd and Cedar Park Properties 39 (Pty) Ltd.
4 and projects, supposedly rendering services to state owned entities (SOE’s), such as Transnet SOC Ltd (Transnet) and Eskom SOC Ltd (Eskom).
Mr Wood was the sole director of TMC prior to its liquidation and also the controlling mind of TMC and certain other entities within the Trillian group of companies.
TCP and TMC are financial advisory companies, who conducted similar business to Regiments.
[3] During January 2020 the South African Revenue Services (SARS) formed the view that Mr Wood was treating the Trillian group of companies under his control as a mere extension of himself.
He was at all relevant times responsible for the financial affairs of the companies but either failed to submit tax returns when due, or submitted returns that contained incorrect declarations.
It appeared to SARS that the preferred modus operandi of Mr Wood was to funnel funds through the various Trillian companies, thereby creating many layers between the original source of income and the final destination of the funds.
Mr Wood, according to SARS’s investigation, would receive SOE funds in the hands of a Trillian company and the funds would subsequently be channeled to various other entities through the creation of what appears to have been fictitious invoices purportedly issued by another Trillian company which to all intents and purposes was not trading or conducting any form of business.
The fictitious invoices were intended to fraudulently misrepresent a legitimate causa to extract funds out of a Trillian company and ultimately to funnel the funds into the hands of the ultimate beneficiaries.
[4] Following an investigation, SARS issued letters of audit findings to TMC.
The letters of audit findings were based on a comparative analysis of source documents submitted to SARS by TMC, as well as its bank statements, VAT schedules, invoices, draft annual financial statements, trial balances, general ledgers and other financial documentation of certain Trillian companies.
SARS determined that: (a) TMC received approximately R595 million on 28 February 2007 from Eskom, which it failed to declare for tax purposes; (b) The funds so received by TMC from Eskom were distributed to companies which were reasonably expected not to have been legitimate businesses; (c) TMC received interest from the Bank of Baroda which it unlawfully failed to declare for tax purposes; (d) TMC was indebted to SARS, at that stage, in an amount of R460 970 690.87.
5 [5] In light of the seriousness of the allegations levelled against Mr Wood and some of the Trillian companies under his control, SARS brought a preservation application as contemplated by s 163 of the Tax Administration Act 28 of 2011.
The application was successful, and Mr Cloete Murray (Mr Murray) was appointed as the curator in terms of the order.
[6] In that capacity, Mr Murray instructed a chartered accountant and forensic auditor, Mr Stephen Robinson (Mr Robinson), to investigate the affairs of TMC and TCP.
He issued Mr Murray with his first report on 23 February 2020.
Therein, he concluded that TMC received an amount of R595,2 million from Eskom.
It almost immediately dispersed that amount to other Trillian associated or connected companies, some of whom carried on no form of legitimate enterprise.
TMC was not managed as a self-standing enterprise, but as part of the greater Trillian group of companies.
[7] In the light of those findings, Mr Murray instructed Mr Robinson to also investigate the affairs of certain other Trillian companies and to furnish a report of his findings.
Mr Robinson issued his second report on 8 July 2020.
The findings made by Mr Robinson were inter alia based on a thorough and comparative analysis of particularly, but not exclusively, the bank account statements of TMC, TP, TCP, TA, and numerous other entities involved in the perpetration of a massive fraud on the State.
No bank accounts existed for some of the Trillian companies.
Mr Robinson found that more than R 834 million was paid to the Trillion companies: R595,2 million was paid by Eskom to TMC, R147,1 million by Regiments to TMA and R76,4 million by Transnet to TC.
It was subsequently ascertained that R 5.7 million was also paid to a Trillian company by SA Express.
These monies, in turn, were transferred between the accounts of the various Trillian companies, one company transferring funds to another.
[8] Mr Robinson stated that ‘the affairs of Trillian Management Consulting Pty Ltd and the other Trillian companies are intermingled to the extent that it is not possible to properly investigate the dealings and affairs of Management in the absence of the other Trillian companies’.
The business of the Trillian companies, according to him,
6 was indistinguishable and they were being managed as one economic entity.
Mr Robinson also dealt with the massive fraud that had been perpetrated and the corrupt activities in which the Trillian companies were participants.
The monies flowed to TMC and the other Trillian companies in circumstances where they did not render any legitimate services to either Eskom, Transnet, SA Express, Regiments, or the other entities that paid monies into their bank accounts.
Mr Robinson’s findings evince in no uncertain terms that TMC and the other Trillian companies were not only incorporated or used in a manner that constitutes an unconscionable abuse of the juristic personality, but also that the companies conducted business in a fraudulent manner and for a fraudulent purpose.
[9] On 18 June 2019, the Gauteng Division of the High Court of South Africa, Pretoria (the high court, Pretoria) inter alia granted judgment against TMC and TCP to repay to Eskom the sum of R595 228 913.29 plus interest and costs.
TMC applied for leave to appeal against the judgment.
On 2 October 2019 its application for leave to appeal was dismissed.
[10] The judgment debt remained unpaid.
On 17 January 2020, Eskom issued a liquidation application in the high court, Pretoria.
In its founding affidavit Eskom specifically dealt with Mr Wood’s answering affidavit in opposition to the s 18 application.
Therein, Mr Wood confirmed that at that point in time further litigation had been instituted against the Trillian group of companies by: (a) Transnet against TAM and others for payment of R93 480 000; (b) Transnet against TFA, TCA and others for payment of R11,4 million; (c) Transnet against TCP, TFA and others for payment of R41 040 000; and (d) Transnet Second Defined Benefit Fund against TCP, TFA, TAM, TMC and Mr Wood for payment of inter alia R179 543 257.21.
Transnet established that TMC was factually and commercially insolvent.
On 9 March 2020, it was finally wound up by order of that court.
The Master of the High Court appointed Mr Murray, Ms Sivalutchmee Moodliar and Mr Ndumiso Sibiya as the joint provisional liquidators of TMC (the liquidators).
[11] On 25 September 2020, the liquidators initiated motion proceedings in the high court against TCP, TS, TN, TSS, TP, and TFA as the first to sixth respondents (the subject companies).
Zara was cited as the seventh respondent, but no relief was
7 sought against it.
The eighth respondent was the Master of the High Court, Pretoria (the Master), and the ninth respondent, the Companies and Intellectual Property Commission (the CIPC)’.
The liquidators sought relief in terms of s 20(9) of the Companies Act 71 of 2008 (the Companies Act) (the s 20(9) application).
[12] Section 20(9) reads: ‘If, on application by an interested person or in any proceedings in which a company is involved, a court finds that the incorporation of the company, any use of the company, or any act by or on behalf of the company, constitutes an unconscionable abuse of the juristic personality of the company as a separate entity, the court may- (a) declare that the company is to be deemed not to be a juristic person in respect of any right, obligation, or liability of the company or of a shareholder of the company or, in the case of a non-profit company, a member of the company, or of another person specified in the declaration; and (b) make any further order that the court considers appropriate to give effect to a declaration contemplated in paragraph (a).’ [13] Our common law recognises ‘piercing’ or ‘lifting’ the corporate veil.
In Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd and Others,2 Smalberger JA, said this: ‘Recently this was confirmed in The Shipping Corporation of India Ltd v Evdomon Corporation and Another 1994 (1) SA 550 (A) where Corbett CJ expressed himself as follows at 566C-F: “It seems to me that, generally, it is of cardinal importance to keep distinct the property rights of a company and those of its shareholders, even where the latter is a single entity, and that the only permissible deviation from this rule known to our law occurs in those (in practice) rare cases where the circumstances justify "piercing" or "lifting" the corporate veil.
And in this regard it should not make any difference whether the shares be held by a holding company or by a Government.
I do not find it necessary to consider, or attempt to define, the circumstances under which the Court will pierce the corporate veil.
Suffice it to say that they would generally have to include an element of fraud or other improper conduct in the establishment or use of the company or the conduct of its affairs.
In this connection the words "device", "stratagem", "cloak" and "sham" have been used.
.
.
.” 2 Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd and Others [1995] ZASCA 53; [1995] 2 All SA 543 (A); 1995 (4) SA 790 (A) at 803E-804J.
8 Two matters arising from the quoted passage merit further comment.
First, reference is made to “those (in practice) rare cases where the circumstances justify "piercing" or "lifting" the corporate veil”.
It is undoubtedly a salutary principle that our Courts should not lightly disregard a company's separate personality, but should strive to give effect to and uphold it.
To do otherwise would negate or undermine the policy and principles that underpin the concept of separate corporate personality and the legal consequences that attach to it.
But where fraud, dishonesty or other improper conduct (and I confine myself to such situations) is found to be present, other considerations will come into play.
The need to preserve the separate corporate identity would in such circumstances have to be balanced against policy considerations which arise in favour of piercing the corporate veil (cf Domanski 'Piercing the Corporate Veil - A New Direction' (1986) 103 SALJ 224).
And a court would then be entitled to look to substance rather than form in order to arrive at the true facts, and if there has been a misuse of corporate personality, to disregard it and attribute liability where it should rightly lie.
Each case would obviously have to be considered on its own merits.
The second is the reference to the inclusion of “an element of fraud or other improper conduct in the establishment or use of the company or the conduct of its affairs”.
(My emphasis.)
It is not necessary that a company should have been conceived and founded in deceit, and never have been intended to function genuinely as a company, before its corporate personality can be disregarded (as appears in some respects to have been the view of the trial Judge - see the judgment at 821G-J).
As Gower (op cit) states (at 133): “It also seems clear that a company can be a facade even though it was not originally incorporated with any deceptive intention; what counts is whether it is being used as a facade at the time of the relevant transactions.” Thus if a company, otherwise legitimately established and operated, is misused in a particular instance to perpetrate a fraud, or for a dishonest or improper purpose, there is no reason in principle or logic why its separate personality cannot be disregarded in relation to the transaction in question (in order to fix the individual or individuals responsible with personal liability) while giving full effect to it in other respects.
In other words, there is no reason why what amounts to a piercing of the veil pro hac vice should not be permitted.’ [14] Section 20(9) has introduced a statutory basis for piercing or lifting the corporate veil.
In City Capital SA Property Holdings Limited v Chavonnes Badenhorst St Clair Cooper NO and Others,3 this Court stated: 3 City Capital SA Property Holdings Limited v Chavonnes Badenhorst St Clair Cooper NO and Others [2017] ZASCA 177; 2018 (4) SA 71 (SCA) paras 28-30.
9 ‘Section 20(9) of the 2008 Act provides a statutory basis for piercing the corporate veil.
On its plain wording, s 20(9) permits a court to disregard the separate juristic personality of the company where its incorporation, use or an act performed by or on its behalf 'constitutes an unconscionable abuse of the juristic personality of the company as a separate entity'.
The term 'unconscionable abuse' is not defined in the 2008 Act and must therefore be given its ordinary meaning.
The meaning of 'unconscionable' in the Oxford English Dictionary includes, 'Showing no regard for conscience .
.
.
unreasonably excessive .
.
.
egregious, blatant .
.
.
unscrupulous.'
It is in my view undesirable to attempt to lay down any definition of 'unconscionable abuse' [Leslie Brown The New Shorter Oxford Dictionary on Historical Principles (3 ed 1993) vol 2 p 1466].
It suffices to say that the unconscionable abuse of the juristic personality of a company within the meaning of s 20(9) of the 2008 Act includes the use of, or an act by, a company to commit fraud; or for a dishonest or improper purpose; or where the company is used as a device or facade to conceal the true facts [804C-D].
Thus, where the controllers of various companies within a group use those companies for a dishonest or improper purpose, and in that process treat the group in a way that draws no distinction between the separate juristic personality of the members of the group, as happened in this case, this would constitute an unconscionable abuse of the juristic personalities of the constituent members, justifying an order in terms of s 20(9) of the 2008 Act [Ex parte Gore and Others NNO 2013 (3) SA 382 (WCC) para 33.
This is not new.
In Ritz Hotel [Ritz Hotel Ltd v Charles of the Ritz Ltd and Another 1988 (3) SA 290 (A) at 315F] this court referred to English authority in which Lord Denning MR observed that, as regards piercing the corporate veil, there was a general tendency to ignore the separate legal entities of various companies within a group and to look instead at the economic entity of the whole group, especially where a parent company owns and controls the subsidiaries [DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852 (CA) at 860B ([1976] All ER 462 at 467b-c].’ [15] Section 20(9) did not abolish or replace the common law.
It supplements the common law and does not establish a defined set of circumstances in which a court may disregard the separate legal personality of a company.4 4 Ex parte Gore NO and Others NNO [2013] ZAWCHC 21; [2013] 2 All SA 437 (WCC) para 34.
10 [16] None of the respondents opposed the s 20(9) application.
On 20 October 2020, the high court (Keightley J) issued the following order prayed for in the notice of motion (the s 20(9) interim order): ‘1.
The applicants’ non-compliance with the rules of court concerning forms, service and time periods otherwise applicable is condoned, such rules are dispensed with and the application is heard and adjudicated upon as an urgent application in terms of uniform rule 6(12); 2.
It is hereby declared that a rule nisi in the following terms are granted (“the provisional order”): a. Trillian Capital Partners (Pty) Ltd [Reg No: 2015/111759/07], Trillian Securities (Pty) Ltd [Reg No: 2015/152852], Trillian Nominees (Pty) Ltd [Reg No: 2017/036662/07], Trillian Shared Services (Pty) Ltd [Reg No: 2015/111747/07], Trillian Property (Pty) Ltd [Reg No: 2016/046295/07] and Trillian Financial Advisory (Pty) Ltd [Reg No: 2014/122082/07] (“the subject companies”): i. are deemed not to be separate juristic persons in respect of any right, obligation or liability of those companies or of a shareholder of the subject companies; ii.
are collapsed into Trillian Management Consulting (Pty) Ltd (“TMC”) and the subject companies and TMC henceforth exist as a single entity by ignoring their separate legal existence as contemplated by section 20(9) read with section 22 of the Companies Act, 71 of 2008 (“the 2008 Act”); and iii.
the effective date of the commencement of the subject companies’ liquidation proceedings is the date upon which TMC was placed in liquidation; b.
The Companies and Intellectual Property Commission (“CIPC”) and the Master of the High Court, Pretoria are directed to amend their records to reflect the consolidation of the subject companies, their composite winding up proceedings and such further consequences as they deem fit and/or necessary, in accordance with the orders granted pursuant to this application.
c. The costs of this application are costs in the consolidated winding-up of TMC and the subject companies.
2.
Any order granted pursuant to this application shall forthwith be published in the Government Gazette and two newspapers published in the Gauteng Province.
3.
Any party with an interest in this application and the provisional order are called upon to show cause on a date to be allocated by the registrar of this court, which shall be a date after days from the publication of any order granted pursuant to this application, as to why the provisional order should not be made final.
11 4.
The costs consequent upon this application, up to the date of confirmation or discharge of the provisional order, are reserved pending the final determination of this application, save in the event that this application becomes opposed, in which event the applicants will request that any such opposing party be ordered to pay the costs of this application on the scale as between attorney and client.’ [17] The s 20(9) interim order was duly published in the Government Gazette and two local newspapers.
Confirmation of the provisional order was not opposed by any of the subject companies, Zara, or anyone else.
On 20 January 2021, the high court (Vuma AJ) granted an order confirming the rule nisi (the s 20(9) final order).
[18] On 4 February 2021, the liquidators instituted an action against CMSA on the grounds that an aggregate amount of R210 298 901 repaid by TSS to CMSA pursuant to a loan agreement concluded between the two entities, an aggregate amount of R69 956 099 repaid by TFA to CMSA pursuant to a loan agreement concluded between the two entities, and the amount of R160 246 000 repaid by TMC to CMSA pursuant to the loan agreements, constitute voidable dispositions as contemplated in ss 21, 29 or 31 of the Insolvency Act 24 of 1936, and for such payments to be set aside and repaid to the liquidators for the benefit of the creditors of the Trillian companies in liquidation.
[19] This prompted CMSA to launch an application in the high court, on 5 August 2021.
It sought an order that the s 20(9) order ‘be rescinded and set aside’ under s 354 of the 1973 Companies Act,5 r 42(1)(a) of the Uniform Rules of Court or the common law (the rescission application).
CMSA did not take issue with any of the factual averments set out in the liquidators’ founding affidavit in their s 20(9) application.
The case sought to be made out is simply that it was erroneous and incompetent for the high court to grant the relief set out in paragraphs 2.a.ii.
and 2.a.iii.
5 Section 354 reads: ‘354.
Court may stay or set aside winding-up.
(1) The Court may at any time after the commencement of a winding-up, on the application of any liquidator, creditor or member, and on proof to the satisfaction of the Court that all proceedings in relation to the winding-up ought to be stayed or set aside, make an order staying or setting aside the proceedings or for the continuance of any voluntary winding-up on such terms and conditions as the Court may deem fit.
(2) The Court may, as to all matters relating to a winding-up, have regard to the wishes of the creditors or members as proved to it by any sufficient evidence.’
12 of the s 20(9) order, collapsing the subject companies into TMC (in liquidation) and to place them under a composite winding-up with TMC.
The rescission application was opposed by the liquidators.
[20] On 12 September 2022, the high court delivered its judgment.
It dismissed the rescission application with costs, including those of two counsel.
It held that no case was made out for any relief under s 354 of the 1973 Companies Act or under the common law.
It further held that ‘[t]he case for CMSA does not fall within the category of cases that qualify for rescission based on an erroneous order under Rule 42(1)(a)’.
It nevertheless undertook an interpretive analysis of s 20(9) of the Companies Act and concluded ‘that the provisions of s 20(9) are wide and would not only permit of such an order but the circumstances of this matter call for such an order’.
In this regard, it further stated: ‘It would be untenable that a main fraudster can be liquidated and that when the co-conspirators are discovered and found to be holding the assets and being solvent, that the court would not exercise the powers in terms of s 20(9), as it happened in this matter.’ [21] I agree with the high court that no case was made out for any relief under s 354 of the 1973 Companies Act or under the common law.
CMSA’s founding affidavit advanced no case for the setting aside of the s 20(9) final order under s 354 or for rescinding that order in terms of the common law.
Its case, to the extent that there was one, rested squarely on r 42(1)(a) of the Uniform Rules of Court.
Rule 42(1)(a) provides: ‘The court may, in addition to any other powers it may have, mero motu or upon the application of any party affected, rescind or vary – (a) an order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby.’ [22] In Lodhi 2 Properties Investments CC and Another v Bondev Development (Pty) Ltd,6 Streicher JA held ‘[t]hat where notice of proceedings to a party is required and judgment is granted against such party in his absence without notice of the 6 Lodhi 2 Properties Investments CC and Another v Bondev Development (Pty) Ltd [2007] ZASCA 85; 2007 (6) SA 87 (SCA).
13 proceedings having been given to him such judgment is granted erroneously’.7 ‘However, a judgment to which a party is procedurally entitled cannot be considered to have been granted erroneously by reason of facts of which the Judge who granted the judgment, as he was entitled to do, was unaware’.8 Streicher JA further held: ‘Similarly, in a case where a plaintiff is procedurally entitled to judgment in the absence of the defendant the judgment if granted cannot be said to have been erroneously granted in the light of a subsequently disclosed defence.
A Court which grants a judgment by default like the judgments we are presently concerned with, does not grant the judgment on the basis that the defendant does not have a defence: it grants the judgment on the basis that the defendant has been notified of the plaintiff’s claim as required by the Rules, that the defendant, not having given notice of an intention to defend, is not defending the matter and that the plaintiff is in terms of the Rules entitled to the order sought.
The existence or non-existence of a defence on the merits is an irrelevant consideration and, if subsequently disclosed, cannot transform a validly obtained judgment into an erroneous judgment.’ [23] The liquidators were in terms of the Uniform Rules of Court entitled to approach the high court for the interim s 20(9) order and the s 20(9) final order.
CMSA’s subsequently disclosed defence (should there be one) based on its interpretation of s 20(9) of the Companies Act, cannot transform the validly obtained judgments into erroneous judgments.
In truth, the rescission application is nothing else but a disguised appeal.
However, CMSA does not have a right of appeal against the s 20(9) final order.
Wepener J, who dismissed the rescission application, undertook a comprehensive interpretative analysis of s 20(9).
As an appeal does not avail CMSA, the correctness of that interpretation is not before us.
[24] Importantly, Zara and none of the subject companies have ever attempted to assail the s 20(9) final order.
It is doubtful that any of them would have been able to successfully invoke r 42(1)(a) – much less CMSA.
Moreover, the composite winding-up order was granted more than three years ago.
An enquiry in terms of s 417 of the 1973 Companies Act was convened by the high court for the purposes of investigating the affairs of the Trillian group of companies, and retired Judge C Pretorius was appointed to act as Commissioner to preside over the enquiry.
The enquiry is not yet 7 Ibid para 24.
8 Ibid para 25.
14 concluded and has already run over several weeks with the testimony of numerous witnesses received.
The documentary evidence forming part of the record runs into several thousands of pages.
The total cost incurred thus far exceeds R4 million.
It can safely be accepted that the composite winding-up is presently at an advanced stage.
The liquidators and creditors of the subject companies have an interest in finality.
[25] In Express Model Trading 289 CC v Dolphin Ridge Body Corporate9 where the winding-up had also progressed apace, Ponnan JA observed in the context of a condonation and reinstatement of an appeal application, that it may indeed prove impossible to turn back the clock and that it may thus be arguable that the appeal has become academic, but he considered it unnecessary ‘to go that far’.
The progress of the winding-up, however, is in my view a weighty consideration within the context of the exercise of a court’s discretion whether to grant rescission of a judgment under r 42(1)(a) of the Uniform Rules of Court.10 [26] In the result the appeal is dismissed with costs, including those of two counsel.
________________________ P.A.
MEYER JUDGE OF APPEAL 9 Express Model Trading 289 CC v Dolphin Ridge Body Corporate [2014] ZASCA 17; [2014] 2 All SA 513 (SCA); 2015 (6) 224 (SCA) para 18.
10 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) BLCR 1263 (CC) para 53.
15 Appearances For appellant: G Wickens SC with J Brewer Instructed by: Mervyn Taback Inc, Johannesburg Webbers, Bloemfontein For first to ninth respondent: B H Swart SC with P W T Lourens Instructed by: MacRobert Attorneys, Pretoria Lovius Block, 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 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 Centaur Mining South Africa (Pty) Ltd v Cloete Murray N O and Others (Case no 1334/2022) [2024] ZASCA 34 (28 March 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with costs, including the costs of two counsel an appeal against the decision of the Gauteng Division of the High Court of South Africa, Johannesburg (the high court).
The appellant, Centaur Mining South Africa (Pty) Ltd (CMSA), appealed against a judgment of the Gauteng Division of the High Court, Johannesburg, per Wepener J (the high court), dismissing an application for the setting aside or rescission of a judgment under s 354 of the Companies Act 61 of 1973 (the 1973 Companies Act), alternatively r 42(1)(a) of the Uniform Rules of Court or the common law (the rescission application).
The appeal was with leave of the high court.
The background facts were as follows: The Trillian group of companies included the first to tenth respondents: Trillian Capital Partners (Pty) Ltd (TCP), Trillian Management Consulting Pty Ltd (TMC), Trillian Securities (Pty) Ltd (TS), Trillian Property (Pty) Ltd (TP), Trillian Nominees (Pty) Ltd (TN), Trillian Financial Advisory (Pty) Ltd (TFA), and Trillian Shared Services (Pty) Ltd (TSS).
TCP owned 100 per cent of the shareholding in TCP, TMC, TS, TP, TN, TFA, and TSS.
Zara W (Pty) Ltd (Zara) owned 100 per cent of the shareholding in TCP.
The Trillian group of companies was established pursuant to a failed bid by the Gupta family (associated with the so-called state government officials and entities) in 2014 to acquire the Regiments group of companies.
Mr Eric Anthony Wood (Mr Wood) was the former chief executive officer of Regiments (Pty) Ltd (Regiments).
It was a ‘fund manager’ and ‘strategy advisor’ specializing in public sector infrastructure programs and projects, supposedly rendering services to state owned entities (SOE’s), such as Transnet SOC Ltd (Transnet) and Eskom SOC Ltd (Eskom).
Mr Wood was the sole director of TMC prior to its liquidation and also the controlling mind of TMC and certain other entities within the Trillian group of companies.
TCP and TMC were financial advisory companies, who conducted similar business to Regiments.
During January 2020 the South African Revenue Services (SARS) formed the view that Mr Wood was treating the Trillian group of companies under his control as a mere extension of himself.
He was at all relevant times responsible for the financial affairs of the companies but either failed to submit tax returns when due, or submitted returns that contained incorrect declarations.
Mr Wood, according to SARS’s investigation, received SOE funds in the hands of a Trillian company and the funds would subsequently be channelled to various other entities through the creation of what appears to have been fictitious invoices purportedly issued by another Trillian company which to all intents and purposes was not trading or conducting any form of business.
The fictitious invoices were intended to fraudulently misrepresent a legitimate causa to extract funds out of a Trillian company and ultimately to funnel the funds into the hands of the ultimate beneficiaries.
Following an investigation, SARS issued letters of audit findings to TMC.
In summary, the letters of audit findings were based on a comparative analysis of source documents submitted to SARS by TMC, as well as its bank statements, VAT schedules, invoices, draft annual financial statements, trial balances, general ledgers and other financial documentation of certain Trillian companies.
2 In light of the seriousness of the allegations levelled against Mr Wood and some of the Trillian companies under his control, SARS brought a preservation application as contemplated by s 163 of the Tax Administration Act 28 of 2011.
The application was successful, and Mr Cloete Murray (Mr Murray) was appointed as the curator in terms of the order.
In that capacity, Mr Murray instructed a chartered accountant and forensic auditor, Mr Stephen Robinson (Mr Robinson), to investigate the affairs of TMC and TCP.
Mr Robinson issued out two reports (23 February 2020 report and 8 July 2020 report) where it was discovered that large sums of monies where fraudulently transferred from one Trillian Group company to the next.
Mr Robinson’s findings evinced in no uncertain terms that TMC and the other Trillian companies were not only incorporated or used in a manner that constitutes an unconscionable abuse of the juristic personality, but also that the companies conducted business in a fraudulent manner and for a fraudulent purpose.
On 18 June 2019, the Gauteng Division of the High Court of South Africa, Pretoria (the high court, Pretoria) inter alia granted judgment against TMC and TCP to repay to Eskom the sum R595 228 913.29 plus interest and costs.
The judgment debt remained unpaid.
As a result, on 17 January 2020, Eskom issued a liquidation application in the high court, Pretoria.
On 9 March 2020, it was finally wound up by order of that court.
The Master of the High Court appointed Mr Murray, Ms Sivalutchmee Moodliar and Mr Ndumiso Sibiya as the joint provisional liquidators of TMC (the liquidators).
On 25 September 2020, the liquidators initiated motion proceedings in the high court against the Trillian Group Companies seeking relief in terms of s 20(9) of the Companies Act 71 of 2008 (the Companies Act) for a declaration that the Trillian Group of companies was not a juristic person and have its corporate veil lifted, which would allow the court to disregard the separate legal personality of the company.
An interim order was granted in the high court and on 20 January 2021, the high court confirmed the final order.
Then on 4 February 2021, the liquidators instituted an action against CMSA on the grounds that an aggregate amount of R210 298 901 repaid by TSS to CMSA pursuant to a loan agreement concluded between the two entities, an aggregate amount of R69 956 099 repaid by TFA to CMSA pursuant to a loan agreement concluded between the two entities, and the amount of R160 246 000 repaid by TMC to CMSA pursuant to the loan agreements, constituted voidable dispositions as contemplated in ss 21, 29 or 31 of the Insolvency Act 24 of 1936, and for such payments to be set aside and repaid to the liquidators for the benefit of the creditors of the Trillian group of companies in liquidation.
This prompted CMSA to launch an application in the high court, on 5 August 2021, seeking an order that the s 20(9) order ‘be rescinded and set aside’ under s 354 of the 1973 Companies Act, r 42(1)(a) of the Uniform Rules of Court or the common law (the rescission application).
CMSA contended that it was erroneous and incompetent for the high court to grant the relief set out in its order, collapsing the subject companies into TMC (in liquidation) and to have placed them under a composite winding-up with TMC.
On 12 September 2022, the high court delivered its judgment.
It dismissed the rescission application with costs, including those of two counsel.
It held that no case was made out for any relief under s 354 of the 1973 Companies Act or under the common law.
It further held that the case for CMSA did not fall within the category of cases that qualify for rescission based on an erroneous order under rule 42(1)(a).
It nevertheless undertook an interpretive analysis of s 20(9) of the Companies Act and concluded that the provisions of s 20(9) were wide and would not only have permitted of such an order but the circumstances of this matter call for such an order.
In this regard, it further stated: ‘It would be untenable that a main fraudster can be liquidated and that when the co-conspirators were discovered and found to be holding the assets and being solvent, that the court would not have exercised the powers in terms of s 20(9), as it happened in this matter.’ In its findings, the SCA concurred with the high court’s findings that no case was made out for any relief in terms of s 354 of the 1973 Companies Act or under the common law.
It held that CMSA’s founding affidavit advanced no case for the setting aside of the s 20(9) final order under s 354 or for rescinding that order in terms of the common law.
Its case, to the extent that there was one, rested squarely on r 42(1)(a) of the Uniform Rules of Court, which states that the court may rescind or vary an order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby.
The SCA further held that the liquidators were in terms of the Uniform Rules of Court entitled to approach the high court for the interim s 20(9) order and the s 20(9) final order.
CMSA’s subsequently disclosed defence (should there be one) based on its interpretation of s 20(9) of the Companies Act, could not transform the validly obtained judgments into erroneous judgments.
In truth, the rescission application was nothing else but a disguised appeal.
However, CMSA did not have a right of appeal against the s 20(9) final order.
The Court also held that it was doubtful that any of the respondents, CMSA included, would have been able to successfully invoke r 42(1)(a).
Moreover, held the Court, the composite
3 winding-up order was granted more than three years ago and the liquidators and creditors of the subject companies had an interest in its finality.
In conclusion, the SCA also held that the progress of the winding-up was a weighty consideration within the context of the exercise of a court’s discretion whether to grant rescission of a judgment under r 42(1)(a) of the Uniform Rules of Court.
As a result the appeal was dismissed with costs, including those of two counsel.
~~~~ends~~~~ |
4191 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 186/2023 In the matter between: WALTER ELEAZAR CYRIL FIRST APPELLANT LETISHA CYRIL SECOND APPELLANT and THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE RESPONDENT Neutral citation: Cyril and Another v The Commissioner for the South African Revenue Service (Case no 186/2023) [2024] ZASCA 32 (28 March 2024) Coram: GORVEN and KGOELE JJA and COPPIN, SMITH and KEIGHTLEY AJJA Heard: 13 March 2024 Delivered: 28 March 2024 Summary: Practice – Appealability – application to review ruling on admissibility in criminal trial while trial still pending – leave given to complainant to intervene in review application – test for appealability – no final and definitive effect on review
2 application – does not dispose of any portion of relief in review application – courts opposed to piecemeal adjudication – interests of justice not supporting appealability – no jurisdiction to entertain appeal – not appealable.
3 __________________________________________________________________ ORDER ______________________________________________________________________________On appeal from: Gauteng Division of the High Court, Johannesburg (Mahalelo J, sitting as court of first instance): The appeal is struck from the roll with costs, such costs to include the costs of the application for leave to appeal, all of which will include those consequent on the employment of two counsel.
__________________________________________________________________ JUDGMENT __________________________________________________________________ Gorven JA (Kgoele JA and Coppin, Smith and Keightley AJJA concurring) [1] This appeal arises from an application to intervene in an application to review and set aside the decision of a magistrate to admit certain evidence in a criminal trial.
The review application was brought by Mr Walter Cyril and Ms Letisha Cyril, the appellants (the Cyrils).
The Commissioner for the South African Revenue Service, the respondent (SARS) is the complainant in the criminal trial.
The Cyrils are charged with 41 counts of fraud and 41 counts of contravening s 18A(9) read with s 80(1)(o) of the Customs and Excise Act 9 of 1964 (the CEA) for allegedly diverting cigarettes without paying duties or VAT, 41 counts of contravening s 84(1) of the CEA for allegedly making false declarations and 41 counts of contravening s 83(a) read with s 47A of the CEA for allegedly unlawfully causing goods not entered for home consumption to be removed and/or dealt with without the payment of duty and VAT.
4 [2] In Gaertner and Others v Minister of Finance and Others,1 the Constitutional Court upheld the finding of the Western Cape High Court, Cape Town that sections 4(4)(a)(i)-(ii), 4(4)(b), 4(5) and 4(6) of the CEA are inconsistent with the Constitution.
It suspended the declaration of invalidity to afford Parliament the opportunity of amending the CEA in a manner which achieved constitutional conformity.
Paragraph 2 of the order of the Constitutional Court read that ‘The declaration of invalidity is not retrospective’.
That conclusion was motivated along the following lines: ‘It is clear that an order of full retrospective effect would render unlawful all searches under section 4(4) from when the Constitution came into force.
In the present circumstances, this approach would be inconsistent with our jurisprudence.’2 and ‘The declaration of invalidity should be suspended as, without the suspension, SARS will not be able to conduct even regulatory searches and a lacuna will be created.
A suspension coupled with an interim reading-in will afford Parliament an opportunity to craft an appropriate legislative solution to remedy the constitutional defect, while – in the interim – ensuring that SARS can properly carry out its duties in terms of the Customs and Excise Act.
Leaving SARS without the necessary power to ensure compliance with the Act would simply not be in the public interest.’3 [3] Before the Constitutional Court handed down the judgment in Gaertner, SARS had inspected the bonded warehouse of Tish Maritime CC, a close corporation under the control of the Cyrils.
That search brought to light the contested evidence.
It is common ground that it was conducted pursuant to the sections of the CEA which were subsequently declared unconstitutional.
This gave rise to the challenge to its admissibility at the trial.
The chief contention of the Cyrils was that 1 Gaertner and Others v Minister of Finance and Others [2013] ZACC 38; 2014 (1) SA 442 (CC); 2014 (1) BCLR 38 (CC) para 74 (Gaertner).
2 Gaertner para 76.
3 Gaertner para 78.
5 the search, and others like it conducted prior to the Constitutional Court judgment in Gaertner, was struck by the order of invalidity.
They argued that Gaertner invalidated inspections conducted by SARS in terms of s 4(4) of the CEA in ‘all matters that had not yet been finalised prior to the declaration of invalidity’.
The magistrate, after holding a trial within a trial, ruled the evidence admissible.
[4] After the evidence had been ruled admissible, and while the criminal trial was pending, the Cyrils applied to the Gauteng Division of the High Court, Johannesburg (the high court) to review and set aside that ruling.
This prompted SARS to seek leave to intervene in the review application as the third respondent (the intervention application).
It also sought to lead additional evidence in the review application.
SARS submitted that it had a direct and substantial interest in the outcome of the review application.
It argued that this was all the more so since the Cyrils sought to render unlawful all searches in that category, and not only the search of their premises.
The intervention application was dealt with separately and Mahalelo J granted SARS leave to intervene.
This appeal is against that order and is before us with the leave of the high court.
[5] Two factors must be present in order to confer jurisdiction on this court to entertain an appeal.
The first of these is that leave to appeal must have been granted.
Of this, Brand JA said: ‘Leave to appeal therefore constitutes what has become known, particularly in administrative-law parlance, as a jurisdictional fact.
Without the required leave, this court simply has no jurisdiction to entertain the dispute.’4 4 Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd [2015] ZASCA 25; 2015 (4) SA 34 (SCA); [2015] 2 All SA 322 para 13.
6 Section 17(1) of the Superior Courts Act 10 of 2013 (the Act) sets out the grounds on which leave to appeal can be granted: ‘(1) Leave to appeal may only be given where the judge or judges concerned are of the opinion that— (a) (i) the appeal would have a reasonable prospect of success; or (ii) there is some other compelling reason why the appeal should be heard, including conflicting judgments on the matter under consideration; (b) the decision sought on appeal does not fall within the ambit of section 16(2)(a); and (c) where the decision sought to be appealed does not dispose of all the issues in the case, the appeal would lead to a just and prompt resolution of the real issues between the parties.’ This jurisdictional fact is present because leave to appeal was granted.
However, the grant of leave to appeal is not decisive as to the appealability of the order.
A second jurisdictional fact must be present.
[6] The second jurisdictional fact is that the order constitutes a ‘decision’ as envisaged in s 16(1)(a) of the Act.
There is no distinction between ‘a “decision” of the high court “on appeal to it” in terms of s 16(1)(b) of the Act, or a “judgment or order” of the high court “given on appeal to it” in terms of ss 20(1) and 20(4) of the [Supreme Court] Act’.5 Until fairly recently, the accepted approach to appealability was governed by Zweni v Minister of Law and Order.6 In International Trade Administration Commission v SCAW South Africa (Pty) Ltd, this approach was summarised as follows: 5 S v Van Wyk and Another [2014] ZASCA 152; 2015 (1) SACR 584 (SCA) para 20, fn 6.
The reference is to the now repealed Supreme Court Act 59 of 1959.
See also Nova Property Group Holdings Ltd and Others v Cobbett and Another [2016] ZASCA 63; 2016 (4) SA 317 (SCA); [2016] 3 All SA 32 paras 8–9.
6 Zweni v Minister of Law and Order [1992] ZASCA 197; 1993 (1) SA 523 (A) at 532J–533A (Zweni).
7 ‘ .
.
.
the decision must be final in effect and not open to alteration by the court of first instance; it must be definitive of the rights of the parties; and lastly, it must have the effect of disposing of at least a substantial portion of the relief claimed in the main proceedings.’7 [7] Since then, there have been significant developments in our law on this point.
It is now accepted that the Zweni requirements are not ‘cast in stone’8 and a matter may be appealable if ‘the interests of justice require it to be regarded as an appealable decision’.9 This has been affirmed by the Constitutional Court in United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others.10 The Constitutional Court made it clear that the interests of justice approach is not limited to the Constitutional Court but applies equally to this court.
In Government of the Republic of South Africa and Others v Von Abo, this court summarised the present approach to appealability of orders in our law: ‘It is fair to say that there is no checklist of requirements.
Several considerations need to be weighed up, including whether the relief granted was final in its effect, definitive of the rights of the parties, disposed of a substantial portion of the relief claimed, aspects of convenience, the time at which the issue is considered, delay, expedience, prejudice, the avoidance of piecemeal appeals and the attainment of justice.’11 [8] It is common ground that the order on the intervention application is interlocutory to the review application.
The fact that it is interlocutory is not decisive as to appealability as was explained in Lebashe: 7 International Trade Administration Commission v SCAW South Africa (Pty) Ltd [2010] ZACC 6; 2012 (4) SA 618 (CC); 2010 (5) BCLR 457 para 49.
8 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service [1996] ZASCA 2; 1996 (3) SA 1 (A) at 10E–G.
9 Road Accident Fund v Taylor and other matters [2023] ZASCA 64; 2023 (5) SA 147 (SCA) (Taylor) para 26.
See also Philani-Ma-Afrika and Others v Mailula and Others [2009] ZASCA 115; 2010 (2) SA 573 (SCA) para 5.
10 United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others [2022] ZACC 34; 2023 (1) SA 353 (CC); 2022 (12) BCLR 1521 (CC) (Lebashe) para 45.
11 Government of the Republic of South Africa v Von Abo [2011] ZASCA 65; 2011 (5) SA 262 (SCA) para 17.
8 ‘In deciding whether an order is appealable, not only the form of the order must be considered, but also, and predominantly, its effect.
Thus, an order which appears in form to be purely interlocutory will be appealable if its effect is such that it is final and definitive of any issue or portion thereof in the main action.
By the same token, an order which might appear, according to its form, to be finally definitive in the above sense may, nevertheless, be purely interlocutory in effect.’12 It is significant that it must be ‘final and definitive of any issue .
.
.
in the main action’ and dispose of ‘a substantial portion of the relief claimed’.
The main action for present purposes is the review application.
[9] With those contours sketched, it is necessary to evaluate the present matter.
Beginning with the Zweni trilogy, the order is final in effect in that it is not susceptible to reconsideration by the court of first instance which granted it.
However, it does not dispose of any portion of the relief claimed in the review application.
It is likewise not definitive of the rights of the parties in the review application or, for that matter, the criminal trial.
Two out of the three criteria set out in Zweni are thus not met.
As I discuss in more detail later, these two unmet criteria are of particular significance in the context of this case.
[10] A further factor to consider is the caution which our courts have voiced against engaging in piecemeal litigation.
Both this court and the Constitutional Court have held that this should not be encouraged.13 Since the judges hearing any appeal from the criminal trial are entitled to decide questions of admissibility of evidence, the review application itself amounts to piecemeal litigation.
That piecemeal litigation 12 Lebashe para 41.
13 Consolidated News Agencies (Pty) Ltd (in liquidation) v Mobile Telephone Networks (Pty) Ltd and Another [2009] ZASCA 130; 2010 (3) SA 382 (SCA); [2010] 2 All SA 9 (SCA) para 89.
Ascendis Animal Health (Pty) Ltd v Merck Sharp Dohme Corporation and Others [2019] ZACC 41; 2020 (1) SA 327; 2020 (1) BCLR 1 (CC) para 108.
9 is further exacerbated by the Cyrils seeking to appeal the order granting SARS leave to intervene in the review application.
[11] This, then, leaves for consideration whether the interests of justice require the order in the intervention application to be dealt with as an appealable decision.
The Cyrils mounted an attack on two fronts in this regard.
In the first place, they relied on a dictum in the matter of Nedbank Limited and Another v Survé and Others where it was said: ‘In a matter where no case was made out for an interim interdict and the order accordingly ought never to have been granted in the first place, along with other relevant considerations, interests of justice might well render an interim interdict appealable despite the Zweni requirements not having been met.
An analysis of the second issue in this appeal, namely, whether the respondents made out a prima facie case for the interim interdict granted, demonstrates that this appeal is one of those exceptional cases.’14 That reliance is misplaced.
The interests of justice aspect was addressed as follows in Survé: ‘The equality court found, albeit on a prima facie basis, that Nedbank’s decision to close the respondents’ accounts was based on unfair racial discrimination.
This is a serious charge.
Racism is a scourge which has infected the fabric of our national life for well over three hundred years.
The Equality Act was specifically devised, in part, to address and eliminate this scourge.
Any order under this section of the Equality Act requires a finding that the entity against which the order is granted has unfairly discriminated on the ground of race.
A finding of that nature has obvious serious reputational repercussions, particularly considering Nedbank’s standing as one of the major banks in South Africa.
Where a case is properly made out for an order having this effect, a party cannot be heard to complain.
However, where, as in this case, the order ought never to have been made, justice requires that the impugned decision is rendered appealable and rectified.’15 14 Nedbank Limited and Another v Survé and Others [2023] ZASCA 178; [2024] 1 All SA 615 (SCA) para 18 (Survé).
15 Survé para 30.
10 This followed the approach of the Constitutional Court in Lebashe that the interests of justice dictated that an interim interdict should be appealable where the fundamental right to freedom of speech was infringed by the order.16 The Constitutional Court went on to endorse the approach of this court that an order would be appealable ‘where a litigant may suffer prejudice or even injustice if an order or judgment is left to stand’.17 [12] The present matter differs fundamentally from those matters.
In each of them, an order had been granted against the person seeking to appeal.
No order has been granted against the Cyrils.
Not only that, but in the other matters, the order in question prejudiced the party against whom it had been granted.
That is also not the case with the Cyrils.
The order giving leave to SARS to intervene in the review application does not by any stretch of the imagination equate to such a situation.
SARS will have a say in the review but this does not affect the rights of the Cyrils to prosecute the review.
As indicated, even if the review application is dismissed, in the event that the Cyrils are convicted, it is open to them to argue on appeal that the evidence was wrongly admitted and should be excluded from consideration.
It is a factor to consider as to appealability that, ‘[there] may yet be another appeal on the issues that have still to be determined’.18 Apart from their submission that it affects their right to a fair trial, which will be addressed below, the Cyrils did not point to any form of prejudice or impact on any of their fundamental rights resulting from the impugned order.
16 Lebashe para 45.
17 Lebashe para 46 referring to the matter of Health Professions Council of South Africa and Another v Emergency Medical Supplies and Training CC t/a EMS [2010] ZASCA 65; 2010 (6) SA 469 (SCA) para 25.
18 Health Professions Council of South Africa and Another v Emergency Medical Supplies and Training CC t/a EMS 2010 (6) SA 469 (SCA) para 21.
11 [13] The Cyrils contended that, as with Survé, the order in the intervention application ought never to have been granted.
This renders the matter appealable, they submitted.
Apart from the distinctions mentioned above, the thrust of the argument of the Cyrils was not that SARS does not have a direct and substantial interest in the outcome of the review application.
It clearly does have such an interest.
The submission of the Cyrils was that in a criminal trial, the Director of Public Prosecutions (DPP) alone has standing to protect that interest.
Since SARS does not have standing to prosecute the Cyrils, it has no standing to intervene in what, the Cyrils submitted, was effectively part of the criminal trial.
[14] In support of this submission, the Cyrils relied on Wickham v Magistrate, Stellenbosch and Others.19 In that matter, the driver of a motor vehicle was charged with culpable homicide for the death of the son of Mr Wickham and another.
The son was a passenger in a motor vehicle driven by the accused.
Mr Wickham obtained an expert report on her driving and submitted it to the prosecution.
He engaged extensively with the prosecution on the matter.
The Director of Public Prosecutions (DPP) met with his attorney.
Mr Wickham thereafter made written representations to the DPP.
He and his attorney met with the DPP.
The DPP indicated that she was concerned that, without the plea and sentencing agreement, the State might not obtain a conviction.
Mr Wickham disagreed and motivated, with reference to the expert report, why he believed a conviction could be obtained.
Despite these efforts, the DPP entered into a plea and sentence agreement with the driver.
Mr Wickham requested an opportunity to address the court.
The DPP said that he could prepare and hand in an affidavit addressing his concerns but subsequently informed him that this could not be done since it did not qualify as a victim impact statement.
The 19 Wickham v Magistrate, Stellenbosch and Others [2016] ZACC 36; 2017 (1) BCLR 121 (CC); 2017 (1) SACR 209 (CC).
12 magistrate refused to accept the affidavit since, he ruled, Mr Wickham did not have standing.
The plea and sentencing agreement was accepted by the magistrate in terms of s 105A(7)(b)(i)(bb) of the Criminal Procedure Act 51 of 1977 and the driver was convicted of two counts of culpable homicide.
The magistrate imposed the agreed sentence of a fine of R10 000 or 12 months’ imprisonment suspended for 3 years, and a further 18 months of correctional supervision.
Mr Wickham applied to the high court for the plea and sentencing agreement to be set aside and for the matter to be remitted to the Magistrates’ Court for the driver to be tried afresh.
The Constitutional Court agreed with the high court that Mr Wickham lacked locus standi to apply to have the plea and sentence agreement and consequent convictions and sentence set aside.
[15] One cannot by any stretch of the imagination equate the position of SARS in the review application with that of the father of a victim of culpable homicide approaching a court to set aside a criminal court conviction and sentence.
The order joining SARS in the review application does not equate to it participating in the criminal trial or seeking to set aside the outcome of the trial.
[16] The second ground of attack is that the order affects the fair trial rights of the Cyrils.
In this, they call in aid the following passage in The State v Van der Walt: ‘Both parties accept that the regional magistrate pronounced on the admissibility of exhibits after the applicant had closed his case.
This was when she handed down judgment on the question of guilt.
Undeniably, a timeous ruling on the admissibility of evidence is crucial.
It sheds light on what evidence a court may take into consideration and may even give an indication as to how much weight may be accorded to it.
This enables an accused to make an informed decision on whether to close her or his case without adducing evidence, or, where she or he does testify or adduce evidence, to adduce further evidence to controvert specific aspects of evidentiary material.
Without
13 a timeous ruling on all evidence that bears relevance to the verdict, an accused may be caught unawares at a stage when she or he can no longer do anything.’20 In seeking to rely on this dictum, the heads of argument delivered on behalf of the Cyrils made the following bald submission: ‘The outcome of the review proceedings will determine the choices the [Cyrils] make as accused persons in their criminal trial.
And because the outcome of the review implicates the [Cyrils’] criminal trial, SARS’ intervention implicates the [Cyrils’] constitutional rights to a fair trial.’ This submission was neither pressed nor elaborated on in argument before us.
It need hardly be said that a ruling on evidence given after the conclusion of a trial adversely affects the fair trial rights of an accused person.
In the present matter, however, nothing done in the review application would affect the rights of the Cyrils to make informed decisions as to the conduct of their defence.
The review application would have an additional party.
That party would not be able to unfairly influence the outcome of the review application or, more importantly, the criminal trial.
The ruling of the magistrate on admissibility will either be found to pass muster or not.
The leave given to SARS to intervene in the review in no way undermines the right of the Cyrils to a fair trial.
[17] In the view I take of the matter, the order in the intervention application does not meet the appealability criteria arising from Zweni developed over the years as set out above.
There is no warrant for finding that the interests of justice require the impugned order to be dealt with as an appealable decision.
That being the case, the second jurisdictional fact is absent.
This court, accordingly, has no jurisdiction to entertain the appeal.
As such, it must be struck from the roll.
20 S v Van Der Walt [2020] ZACC 19; 2020 (2) SACR 371 (CC) para 25.
14 [18] Regarding costs, they should follow the result.
Both parties utilised the services of two counsel.
This was appropriate in the circumstances and the costs of two counsel should be allowed.
The order granting leave to appeal directed that the costs of the application for leave to appeal were to form costs in the appeal.
Since the appeal will not be heard, it is appropriate that those costs be made part of the striking of the appeal from the roll.
[19] In the result, the following order issues: The appeal is struck from the roll with costs, such costs to include the costs of the application for leave to appeal, all of which will include those consequent on the employment of two counsel.
____________________ T R GORVEN JUDGE OF APPEAL
15 Appearances For the appellant: A Katz SC with K Perumalsamy Instructed by: M Attorneys Incorporated, Sandton Symington De Kok Incorporated, Bloemfontein For the respondents: G Marcus SC with M Mbikiwa Instructed by: VDT Attorneys, Pretoria Phatshoane Henny 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: 28 March 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 Walter Eleazar Cyril and Another v The Commissioner for the South African Revenue Service (Case no 186/2023) [2024] ZASCA 32 (28 March 2024) Today the Supreme Court of Appeal struck from the roll an appeal with costs of two counsel.
The two appellants are accused of conduct which allegedly contravened various sections of the Customs and Excise Act 9 of 1964 (the CEA).
In Gaertner and Others v Minister of Finance and Others [2013] ZACC 38, the Constitutional Court found that sections 4(4)(a)(i)-(ii), 4(4)(b), 4(5) and 4(6) of the CEA are inconsistent with the Constitution.
It suspended the declaration of invalidity to afford Parliament the opportunity of amending the CEA.
Paragraph 2 of the order of the Constitutional Court read that ‘The declaration of invalidity is not retrospective.’ Prior to that judgment, the Commissioner for the South African Revenue Service (SARS) had conducted an inspection of premises of a company associated with the appellants.
In the prosecution, the Director of Public Prosecutions sought to introduce into evidence the results of that search.
This was challenged and, after a trial within a trial was conducted, the magistrate ruled the evidence admissible.
The appellants argued that Gaertner invalidated inspections conducted by SARS in terms of s 4(4) of the CEA in ‘all matters that had not yet
2 been finalised prior to the declaration of invalidity’.
The appellants applied to the Gauteng Division of the High Court, Johannesburg to review and set aside that ruling.
SARS sought leave to intervene in the review application, which leave was granted by Mahalelo J.
The high court granted the appellants leave to appeal.
The Supreme Court of Appeal rehearsed the test for the appealability of judgments, including that of the interests of justice.
It held that the appellants had not satisfied two out of the three criteria in the early judgment of Zweni v Minister of Law and Order [1992] ZASCA 197.
It held, further, that the interests of justice militated against the judgment being appealable and that a piecemeal approach to litigation (also evidenced by the review application being brought when the criminal trial remained pending) was undesirable.
As a result, the appeal was struck from the roll. |
4321 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 386/2023 In the matter between: LUNESH SINGH APPELLANT and THE BODY CORPORATE OF ST TROPEZ RESPONDENT Neutral citation: Singh v The Body Corporate of St Tropez (Case no 386/2023) [2024] ZASCA 142 (21 October 2024) Coram: PONNAN, MOKGOHLOA and KEIGHTLEY JJA and HENDRICKS and NAIDOO AJJA Heard: 4 September 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email; publication on the Supreme Court of Appeal website and released to SAFLII.
The time and date for hand-down is deemed to be 11h00 on the 21 October 2024.
Summary: Provisional order of sequestration – conflict of interest on part of judicial officer raised ex post facto as ground of appeal – Judicial Conduct Committee upholding complaint and finding judicial officer ought mero motu to have recused herself – appeal upheld – provisional sequestration order set aside – application remitted to high court.
2 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Mokose J, sitting as court of first instance): 1 The appeal is upheld.
2 The order of the high court dated 22 November 2021 provisionally sequestrating the estate of the appellant, Mr Lunesh Singh, is set aside.
3 The application for the sequestration of the estate of the appellant, Mr Lunesh Singh, is remitted to the high court for consideration by a differently constituted court.
4 The costs of the appeal are reserved for determination by the high court.
JUDGMENT Keightley JA (Ponnan and Mokgohloa JJA and Hendricks and Naidoo AJJA concurring) [1] On 22 November 2021, Mokose J in the Gauteng Division of the High Court, Pretoria (the high court) granted an order, on the application of the respondent, the Body Corporate of St Tropez (the body corporate), provisionally sequestrating the estate of the appellant, Lunesh Singh (Mr Singh).
[2] The question in the appeal, with leave of this Court, is whether, on the facts, Mokose J was disqualified from presiding in the matter, because of a conflict of interest, and if so, whether she should mero motu have recused herself.
In that event, the provisional order that issued must, without more, be set aside.
[3] The body corporate applied for Mr Singh’s sequestration in the high court.
As the owner of four units in the St Tropez sectional title scheme, Mr Singh was liable to pay levies to the body corporate.
As a result of his persistent failure to pay levies, the
3 body corporate had obtained several judgments against him in the magistrates’ courts.
It averred that all attempts at execution to satisfy the judgment debts had resulted in nulla bona returns.
Based on these alleged acts of insolvency, and on the additional averment that Mr Singh was factually insolvent, the body corporate instituted the sequestration application.
[4] Although Mr Singh entered an appearance to oppose the sequestration application, he failed to file an answering affidavit timeously.
Consequently, the application was enrolled on the unopposed motion court roll for hearing on 22 November 2021.
On 29 October 2021, Mr Singh filed a notice (the rule 30 notice) in terms of rule 30 and/or 30A of the Uniform Rules of Court (the rules).
The rule 30 notice was signed by Mr Singh personally.
It listed fourteen complaints, ranging from an alleged failure to comply with rule 6(5), to a complaint about the body corporate’s lawyer’s alleged lack of experience.
The body corporate did not respond to the rule 30 notice.
On 18 November 2021, Mr Singh instituted an application in terms of rule 30 to set aside the sequestration application as an irregular step.
The body corporate opposed the application and filed an answering affidavit in which, among other things, it averred that the rule 30 notice, and hence Mr Singh’s application, did not comply with the rules.
[5] This was how matters stood when the sequestration application was enrolled for hearing before Mokose J on 22 November 2021 on the unopposed motion court roll.
Mr Singh appeared in person at the hearing.
Although there is no judgment recording what transpired in the hearing, it appears to be common cause that Mr Singh made submissions in an effort to persuade the court that the matter should not proceed on an unopposed basis.
Unpersuaded, Mokose J granted the provisional sequestration order on the strength of the unopposed averments in the body corporate’s founding affidavit.
[6] The averments in the founding affidavit relevant to this appeal are those dealing with Mr Singh’s assets and the alleged advantage to creditors in the event of his estate being sequestrated.
The body corporate averred that Mr Singh owned a total of eight immovable properties.
The details of these properties were not contained in the founding affidavit.
However, reference was made to valuation reports, which were
4 annexed, for each of the eight properties.
One of the annexures was a valuation report in respect of Unit 17 in a sectional title scheme registered as Upper Houghton 169 (the Upper Houghton property).
The valuation report reflected that the full name of the owner of the property was ‘Rajamooni Lunesh’, with identity number 7604085134080.
This is Mr Singh’s identity number.
[7] The founding affidavit listed eight judgments against Mr Singh, identified in an attached TransUnion Consumer Profile, totalling some R3,9 million.
Reference was also made to the amounts owing to the bondholders in respect of his eight immovable properties, totalling R2,2 million.
As proof of the outstanding bonds, printouts from the office of the Registrar of Deeds were annexed to the founding affidavit.
Included in them was the deeds record relating to the Upper Houghton property, reflecting once more that the owner of the property was Rajamooni Lunesh.
Ownership was registered in 2005, with an endorsement in favour of Standard Bank of South Africa Ltd for R112 000.
[8] The body corporate averred in the founding affidavit that the sequestration of his estate would be to the advantage of Mr Singh’s creditors in that, given the value of his immovable properties, the sale would generate sufficient proceeds to pay the administration and sequestration costs, as well as his creditors, a not insignificant percentage in the Rand.
In addition, Mr Singh had received substantial rental income from letting out his properties for many years and a trustee would be able to investigate the whereabouts of, and recover, the rental proceeds.
It was further averred that as Mr Singh had other creditors whom he was unable to pay, the concursus creditorum established on sequestration would be to their common advantage.
[9] Based on these and the remaining averments in the founding papers, the high court was satisfied that the body corporate had met the requirements for the grant of a provisional order of sequestration.
On 10 December 2021, Mr Singh filed an application for leave to appeal against the order.
He listed several grounds of appeal.
This Court is only concerned with one, this being an averment, for the first time, that Mokose J had failed to disclose that she had a conflict of interest in the matter and to recuse herself from the application for his sequestration.
The application for leave to
5 appeal was heard by Mokose J on 4 October 2022 and dismissed.
Again, there is no judgment setting out the reasons for refusing the application.
[10] The facts giving rise to the conflict of interest alleged by Mr Singh are largely common cause.
The first key fact is his ownership of the Upper Houghton property, albeit that that property is registered to him under a different name.
The second key fact is that the Serai Family Trust (the Trust) is the owner of two other units in the same Upper Houghton sectional title scheme.
Critically, Mokose J is a trustee of the Trust.
Moreover, between 2008 and 2016, Mokose J was the Chairperson of the Upper Houghton Body Corporate.
In her role as Chairperson, Mokose J, deposed to a replying affidavit in high court proceedings in 2016 in which the Upper Houghton Body Corporate instituted an application against Mr Singh.
In those proceedings he was cited by the name Rajamooni Lunesh.
[11] The final key fact is that after the hearing of the sequestration application Mr Singh lodged a complaint against Mokose J under s 14(3) of the Judicial Services Act 9 of 1994 (the JSC Act).
The basis of the complaint was the same conflict of interest allegation relied on by Mr Singh in this appeal.
In terms of s 17(1)(b) of the JSC Act, Victor J was designated to inquire into the merits of the complaint and to make an appropriate order.
Shortly before the appeal was heard and, after this Court had made inquiries with the Judicial Conduct Committee, a copy of the report by Victor J (the JCC report) was made available to the Court and to the parties.
It records a finding that Mr Singh’s complaint was well-founded and that a reprimand of Mokose J by the Chair of the Judicial Conduct Committee is justified.
[12] The question for decision in this appeal is whether, on these facts, Mokose J ought mero motu to have recused herself.
The duty to recuse in a case where a judicial officer has a conflict of interest falls within the realm of the constitutional imperative to avoid a reasonable apprehension of bias in the dispensing of justice.
A reasonable apprehension of bias may arise when the judicial officer has some attachment to the case which suggests that she has an interest in the outcome of the litigation.1 This will 1 Bernert v Absa Bank Ltd [2010] ZACC 28; 2011 (4) BCLR 329 (CC); 2011 (3) SA 92 (CC) (Benert) para 45.
6 depend on the particular facts of the case, and the nature and extent of the interest.2 If an interest is established on the facts, the test is whether, in the mind of a reasonable litigant in possession of all the relevant facts, the judicial officer might not bring an impartial and unprejudiced mind to bear on the resolution of the dispute before the court.3 [13] Mokose J did not have an obvious, personal, and direct interest in the case before her or in either of the litigants.
She had no link with the body corporate that applied for Mr Singh’s sequestration.
In the Upper Houghton litigation against Mr Singh, she had signed the replying affidavit in her representative capacity as the chairperson of that body corporate.
[14] That said, a notable feature of this case is the nature of the relief sought in the application that served before her.
The body corporate applied for Mr Singh’s sequestration, which required Mokose J to consider whether this would be to the advantage of creditors.
Mokose J is a trustee of the Trust that, like Mr Singh, owns property in the Upper Houghton sectional title scheme.
The Trust is a member of the Upper Houghton body corporate, an entity that previously litigated against Mr Singh.
On these facts, the Upper Houghton body corporate potentially falls into the class of creditors that could possibly benefit from Mr Singh’s sequestration.
Consequently, and considered objectively, it might be said that Mokose J had an interest, albeit not a direct or personal interest, in the outcome of the sequestration application.
[15] Unfortunately, one of the difficulties of this case, is that the alleged conflict of interest and recusal application were not dealt with when the matter first came before Mokose J.
We also do not have Mokose J’s reasons for refusing leave to appeal when the alleged conflict of interest was raised before her for the first time.
However, it is significant that the JCC upheld Mr Singh’s complaint.
It found that: ‘The entire conspectus of facts which served before Judge Mokose at the provisional sequestration hearing should have raised an alarm for Judge Mokose when reading the 2 Benert fn 1 above para 57.
3 Benert fn 1 above para 29, citing President of the Republic of South Africa and Others v South African Rugby Football Union and Others [1999] ZACC 9; 1999 (4) SA 147 (CC); 1999 (7) BCLR 725 (CC) paras 36-39 (SARFU II).
7 papers and in the court hearing itself.
Albeit it that Mr Singh did not seek her recusal at the hearing, she should mero motu have recused herself.’ [16] It must be emphasised that the correctness of the findings in the JCC report is not an issue that is before this Court.
Those findings, which I understand have not been challenged to date, remain valid until set aside by a court.
4 As the Constitutional Court put it in MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd, ‘official conduct that is vulnerable to challenge may have legal consequences and may not be ignored until properly set aside’.5 In other words, this Court must accept that the statutory body constitutionally responsible for dealing with complaints about judicial officers has found that Mokose J should have recused herself.
We cannot simply ignore this finding.
Moreover, to do so would be to undermine the constitutional imperative of ensuring that public confidence in our judicial system is maintained.
[17] The JCC report, taken together with the other considerations alluded to, is sufficient, in my view, to tip the scales in favour of a finding that Mokose J ought not to have heard the application.
When all of the facts are viewed cumulatively it must be concluded that the reasonable person, with knowledge of them would reasonably apprehend that Mokose J might not have approached the sequestration application with an open mind.
A case for her recusal is properly established.
[18] This conclusion serves to advance public confidence in the judicial system.
At the same time, it does not result in undue prejudice to the body corporate.
This is an important consideration because the body corporate bears no responsibility for the events that led to the appeal.
Where it is found that a judicial officer ought to have recused herself, the proceedings before her must be regarded as a nullity.6 Consequently, the order granted by Mokose J provisionally sequestrating Mr Singh’s estate falls to be set aside.
It follows that the application by the body corporate for the sequestration of his estate must be remitted for consideration afresh by a different judge.
4 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 (SCA).
5 MEC for Health, Eastern Cape v Kirland Investments (Pty) Ltd [2014] ZACC 6; 2014 (5) BCLR 547 (CC); 2014 (3) SA 481 (CC) para 103.
6 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 (3) SA 1 (A) 9B-G.
8 [19] As far as the issue of costs is concerned, Mr Singh has represented himself in the proceedings to date.
His success on appeal was not based on the substantive merits of the sequestration order.
The sequestration application is pending and is yet to be adjudicated afresh on its merits.
In any event, the costs, such as they are, will in all likelihood be costs in the sequestration.
That being so, it would be best for the costs of the appeal to be reserved for determination by the high court.
[20] I make the following order: 1 The appeal is upheld.
2 The order of the high court dated 22 November 2021 provisionally sequestrating the estate of the appellant, Mr Lunesh Singh, is set aside.
3 The application for the sequestration of the estate of the appellant, Mr Lunesh Singh, is remitted to the high court for consideration by a differently constituted court.
4 The costs of the appeal are reserved for determination by the high court.
________________________ R M KEIGHTLEY JUDGE OF APPEAL
9 Appearances For appellant: Appellant representing himself Instructed by: No attorneys appointed For respondent: J Vorster SC with N G Louw Instructed by: Beyers Incorporated Attorneys, Pretoria Phatshoane Henney 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: 21 October 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 Singh v The Body Corporate of St Tropez (Case no 386/2023) [2024] ZASCA 142 (21 October 2024) Today the Supreme Court of Appeal (SCA) handed down judgment against an order granted by the Gauteng Division of the High Court, Pretoria (the high court), wherein it upheld the appeal and remitting the application for the sequestration of the estate of the appellant to a differently constituted court.
The costs of the appeal were reserved for determination by the high court This appeal concerned Mr. Lunesh Singh (the appellant), who owns four units in the St Tropez sectional title scheme.
Due to his failure to pay levies owed to the Body Corporate of St Tropez (the respondent), several judgments were obtained against him in magistrates’ courts, leading the body corporate to seek his sequestration.
The body corporate alleged that the appellant was factually insolvent and that sequestrating his estate would be beneficial to creditors.
In November 2021, Mokose J of the high court provisionally sequestrated the appellant’s estate based on the body corporate’s application.
The appellant opposed this application but failed to submit his answering affidavit on time.
He subsequently filed a rule 30 notice in terms of the Uniform Rules of Court, listing complaints, and later an application to set aside the sequestration application, which was dismissed.
The matter proceeded on an unopposed basis, and the provisional sequestration order was granted.
The primary issue on appeal was the failure of Mokose J to recuse herself due to a conflict of interest, which the appellant raised after the provisional order was granted.
The conflict arose from the fact that Mokose J was a trustee of the Serai Family Trust (the Trust), which owned units in the same Upper Houghton sectional title scheme as Mr. Singh.
The Upper Houghton Body Corporate had previously litigated against the appellant while Mokose J served as its chairperson.
This connection, the appellant argued, should have disqualified her from presiding over his case.
2 The appellant lodged a complaint with the Judicial Conduct Committee (JCC), which upheld his complaint, finding that Mokose J should have recused herself.
The JCC stated that she had an indirect interest in the case, given her association with the Upper Houghton Body Corporate and the potential advantage the Trust might gain from the appellant’s sequestration.
The SCA held that the duty to recuse is constitutionally mandated in cases where a reasonable apprehension of bias might arise.
A judicial officer must recuse themselves when their connection to the matter might suggest an interest in the outcome.
The SCA further held that while Mokose J did not have a direct personal interest, her position as a trustee and former chairperson of the Upper Houghton Body Corporate, a potential creditor in the appellant’s sequestration, constituted an indirect interest.
The SCA found that a reasonable person in possession of all the facts could reasonably apprehend bias.
The SCA concluded that the judicial process must maintain public confidence, and upholding the JCC’s findings advanced this objective.
The Court stressed that the sequestration application could be reheard by a different judge, ensuring no prejudice to the respondent body corporate.
As a result, the SCA upheld the appeal and set aside the provisional sequestration order.
The matter was remitted to the high court to be reheard by a differently constituted bench.
The Court reserved the costs of the appeal for determination by the high court.
~~~~ends~~~~ |
4252 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case No: 642/2022 In the matter between: SNOWY OWL PROPERTIES 284 (PTY) LTD FIRST APPELLANT ANTON LOUW SECOND APPELLANT MICHAEL KIRKINNIS THIRD APPELLANT DEREK WOODHOUSE FOURTH APPELLANT TARA GETTY FIFTH APPELLANT ZUKA PROPERTIES (PTY) LTD SIXTH APPELLANT MUN-YA WANA CONSERVANCY SEVENTH APPELLANT SIMON NAYLOR EIGHTH APPELLANT and MZIKI SHARE BLOCK LIMITED RESPONDENT Neutral citation: Snowy Owl Properties 284 (Pty) Ltd and Others v Mziki Share Block Limited (642/2022) [2024] ZASCA 79 (27 May 2024) Coram: PONNAN, MOTHLE, WEINER AND GOOSEN JJA AND COPPIN AJA Heard: 2 May 2024 Delivered: 27 May 2024
2 Summary: Interdict – infringement of rights conferred by servitude - appeal against a final order – defences raised against grant of the interdict determined in separate proceedings concerning enforceability of arbitration award – finalisation of appeal process in those proceedings dispositive of defences to interdict – persistence in meritless appeal warranting punitive costs order.
________________________________________________________________ ORDER ________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Chili J, sitting as court of first instance): The appeal is dismissed with costs on the scale as between attorney and client.
_______________________________________________________________ JUDGMENT _______________________________________________________________ Goosen JA (Ponnan and Mothle and Weiner JJA and Coppin AJA concurring): [1] Snowy Owl Properties 284 (Pty) Ltd (Snowy Owl) is the owner of two large farms situated in northern KwaZulu-Natal (the Snowy Owl properties).
Mziki Share Block Limited (Mziki) is a share block company which owns land (the Mziki properties) adjacent to the Snowy Owl properties.
Snowy Owl and Mziki entered into an agreement to establish a functionally integrated private game reserve on their properties.
The operation of the private game reserve was approved, subject to the registration of a servitude over the Snowy Owl properties in favour of the Mziki properties.
During 1990, a notarial agreement of servitude was registered over the properties, permitting the parties access to a network of roads on the properties, for the purpose of game viewing.
3 Background [2] The relationship between Snowy Owl and Mziki has, despite their common interest in the operation of a private game reserve, been bedevilled by conflict.
The terms of the agreement of servitude have been the subject of disputes which have been referred to arbitration.1 2016 and 2019 arbitration awards [3] Trouble first arose when Snowy Owl proposed the development of tourist guest lodges on its property.
Mziki objected on the basis that the development of the lodges would interfere with its servitudinal rights of traverse.
An arbitrator found that the property could only be used for game viewing, but that Snowy Owl was entitled to develop game lodges on its property.
An arbitration appeal panel overturned the award in respect of the development of game lodges on the property.2 A further dispute concerning the conduct of Mziki guests and their use of game hides on the Snowy Owl properties was also referred to private arbitration.
It was resolved in July 2019.
The 2020 arbitration award [4] In July 2017, Snowy Owl commenced digging up roads in the plains area of its properties using a bulldozer.
Branches and piles of gravel were dumped on the road surfaces to prevent vehicle access.
Notices were issued to Mziki and other parties who exercise rights of traverse, advising that certain roads would be closed for maintenance purposes and others permanently closed for ecological reasons.
The dispute went to arbitration.
Mziki filed its statement of claim in February 2018.
It claimed that the destruction and closure of the roads infringed its servitudinal rights and called for the rehabilitation and re-opening of roads that 1 A history of the disputes is set out in the arbitration award of Advocate Dodson SC, handed down on 2 April 2020.
See also the judgment of this Court in Snowy Owl Properties 284 (Pty) Ltd v Mziki Share Block Limited [2023] ZASCA 2 paras 1 and 4.
2 The appeal panel delivered its award in August 2016.
4 had been closed.
Snowy Owl pleaded that it was obliged to close certain roads to prevent ecological damage, and to give effect to an environmental management plan prepared to secure declaration of the reserve as a protected area.3 In respect of other roads, it stated that temporary closure was necessary for maintenance work.
The arbitration commenced before Advocate Dodson SC in October 2019 and was concluded in March 2020.
[5] On 2 April 2020, Dodson SC issued an award (the 2020 award).
He found that the closure of the roads was in breach of Mziki’s servitudinal rights and directed that Snowy Owl rehabilitate the roads, including what were described as ‘the River roads', and restore access to Mziki within specified time periods.
These were subject to termination of the ‘national lockdown’, proclaimed under the National Disaster Management Act 57 of 2002 to combat the COVID-19 pandemic, which imposed restrictions on specified activities, including game farming activities.
The award application [6] Snowy Owl did not re-open the roads as required by the 2020 award.
On 15 July 2020, Mziki launched an application before the KwaZulu-Natal Division of the High Court (the high court), in terms of s 31(1) of the Arbitration Act 42 of 1965, to make the 2020 award an order of court (the award application).
Snowy Owl opposed the application on the basis that the 2020 award was vague, could not be made an order of court, and that it required Snowy Owl to undertake actions which are unlawful in terms of prevailing environmental legislation.
The application was enrolled for hearing on 4 December 2020.
3 The Snowy Owl properties form part of a larger conservancy, the Mun-Ya-Wana Conservancy.
Snowy Owl and the Conservancy were seeking to have the area declared as a ‘protected area’ in terms of the National Environmental Management: Protected Areas Act 57 of 2003 (NEMPAA) It was declared a protected area in September 2019.
5 [7] On 18 February 2021, Radebe J granted the application, making the 2020 award an order of court.
Snowy Owl was granted leave to appeal to this Court by Radebe J on 27 July 2021.
[8] On 19 January 2023, this Court dismissed the appeal against Radebe J’s order.4 On 23 February 2023, Snowy Owl applied to the Constitutional Court for leave to appeal against the order of this Court.
The Constitutional Court refused the application for leave to appeal on 28 September 2023, thereby bringing to finality the challenge to the enforceability of the 2020 award.
The interdict application [9] During October 2020, after Mziki had commenced the award application, Snowy Owl started digging up sections of River Road and placed rubble and other material across the road surface to block access to the roads.
On 15 October 2020, Mziki launched an application to interdict Snowy Owl from destroying the roads and to compel the restoration of access (the interdict application).
It based its application on the binding effect of the 2020 award and its praedial servitudinal rights.
Snowy Owl was cited as the first respondent.
The second to fourth respondents were directors of Snowy Owl who, together with the fifth respondent, a businessman with a financial interest in Snowy Owl, were alleged to have been responsible for directing the activities of Snowy Owl.
They opposed the interdict application.
I shall refer to them collectively as Snowy Owl.
The other parties were cited because of a possible interest in the matter.5 4 Snowy Owl Properties 284 (Pty) Ltd v Mziki Share Block Limited [2023] ZASCA 2 (Snowy Owl).
5 The sixth respondent was Zuka Properties (Pty) Ltd, an owner of adjacent property.
The seventh respondent was the Mun-Ya-Wana Conservancy, an entity established as a nature reserve in terms NEMPAA.
The eighth respondent was a person employed as the Conservancy Warden by the Mun-Ya-Wana Conservancy.
No relief was sought against these respondents.
6 [10] Seegobin J heard the application for interim relief on 20 October 2020.
The parties agreed to an order in the form of a rule nisi operating as an interim interdict pending the return date of the interdict application.
The return date was set for 4 December 2020, which was the date that the award application was to be heard.
Both applications came before Radebe J.
Counsel, who then appeared for Snowy Owl, informed Radebe J that the award application should be adjudicated first since the outcome might have a bearing on the outcome of the interdict application.6 The interdict application was therefore held in abeyance and the return date of the rule nisi was extended.
[11] Chili J heard the interdict application on 26 February 2021.
He was provided with a copy of the judgment of Radebe J, which had been delivered on 18 February 2021.
On 19 October 2021, Chili J confirmed the rule nisi issued by Seegobin J.
He refused leave to appeal against his judgment.
This Court granted leave to appeal to it on 27 June 2022.
The appeal against Radebe J’s order had not yet been heard.7 The confirmation of the rule nisi [12] Snowy Owl admitted that it had destroyed sections of River Road and that it had blocked access to other roads in conflict with the terms of the 2020 award.
It did not deny that its conduct was in breach of the agreement of servitude.
Its defence was that it was not obliged to comply with the 2020 award because it required performance of acts which were contrary to environmental legislation.
It also relied on an environmental management plan which had been approved for the Mun-Ya-Wana Conservancy, which incorporated the Snowy Owl properties 6 Before this Court counsel for Snowy Owl took issue with the characterisation of the former counsel’s submissions as constituting a concession that the outcome of the award application was dispositive of the defence in the interdict application.
7 The appeal against Radebe J’s order was heard on 22 September 2022.
7 (the MMP)8.
The MMP allowed the Conservancy Warden (the eighth appellant) in conjunction with the owner of the land (Snowy Owl) to close roads for ecological reasons.
Snowy Owl therefore opposed the interdict application on the same basis advanced in the arbitration proceedings and before Radebe J.
[13] Before Chili J, counsel for Snowy Owl submitted that the interdict application should be adjourned pending an appeal against the order of Radebe J. Chili J rejected the submission.
He held as follows: ‘In its defence, the first respondent sought to suggest that there was no obligation on it to comply with the terms of the arbitration award given the fact that doing so would amount to performing acts sanctioned by law.
… That is not what I am seized with in the present application.
As already pointed out, the question whether an award should be made an order of court has already been decided and is the subject of an appeal.
[Counsel] submitted that the appropriate order would be to adjourn the matter, reserve costs and extend the rule pending the decision on appeal.
I do not agree.
The issue before me is very simple.
All that the first respondent (in conjunction with the second to fifth respondents) is required to do, is to undo the damage done to the roads after the grant of the award.
It was sufficiently established that the applicant has a clear right, ex facie the award and the servitude itself, for the reinstatement and re-opening of the roads which are the subject of the servitude.’ [14] Regarding Snowy Owl’s reliance upon the approved MMP, Chili J found that it had already been approved when the arbitration occurred.
He found that Snowy Owl could not rely on the alleged approval of the MMP to justify the closure of the roads because a mandatory requirement of consultation with all interested parties, provided in s 39(3) of NEMPAA, had not been met.
Mziki had not been consulted on the MMP.
Chili J concluded that no justification existed 8 The environmental management plan was styled the Mun-Ya-Wana Management Plan, hence MMP.
8 for the infringement of Mziki’s servitudinal rights and that it was therefore entitled to confirmation of the rule nisi.
9 The appeal [15] Prior to the hearing in this Court, a directive was issued requiring Snowy Owl to indicate whether it was persisting in this appeal, considering the final determination of the challenge to the enforceability of the arbitration award.
Supplementary heads of argument were filed in which Snowy Owl confirmed its persistence with the appeal.
[16] It is apposite to highlight the findings of this Court when it dismissed the appeal against Radebe J’s order.
In dealing with the argument that the award required the performance of illegal or unlawful acts, this Court said: ‘Firstly, to debate what an [Environmental Assessment Practitioner] may or may not recommend if the appellant applies for authorisation is both irrelevant and unhelpful.
But more importantly, the appellant’s contentions must be rejected for the simple reason that the justification for the closure of the roads concerned was raised before the arbitrator and he rejected it after considering the factual and expert evidence presented to him.
The arbitrator found that there were no legislative reasons for the closure nor was there provision in the servitude agreement that mandated the closure of any of the existing roads.
The evidence in the affidavit of the [Environmental Assessment Practitioner] seems to be another version of the 9 The rule nisi granted by Seegobin J called upon the first to fifth appellants (then cited as respondents) to show cause why the following order should not be granted: ‘1.1 The first to fifth respondents are interdicted from doing anything or instructing anyone to prevent the applicant and its members from gaining access to any of the roads, including the roads known as River Road, River Loop and River Link, situated on the properties ….
[to] exercise their rights in terms of the servitude over the said properties.
1.2 The first to fifth respondents are interdicted from closing or instructing anyone to close, any of the roads referred to in paragraph 1.1 above, in addition to said River Road and River Link.
1.3 The first to fifth respondents are interdicted from damaging or instructing anyone to damage, the surfaces of any of the roads referred to in paragraph 1.1 above.
1.4 The first to fifth respondents are interdicted from taking any further steps or instructing anyone to take any further steps to make the said River Road and River Link less passable for vehicles.’ Paragraph 1.5 required Snowy Owl and the cited respondents to restore and repair River Road and River Link and to remove any obstacles placed on the said roads.
Paragraph 1.1 to 1.4 operated as an interim interdict pending finalisation of the application.
9 evidence already presented by the witnesses for the appellant, including, an environmental expert, Mr Neary, before the arbitrator.
This is not an appeal against the factual finding of the arbitrator.
It is therefore not permissible, nor appropriate for the appellant to engage in a factual debate on matters already considered in the arbitration proceedings and decided by the arbitrator.’10 [17] Turning to Snowy Owl’s reliance upon the MMP to justify the closure of the River roads, this Court held: This argument is once more raised before us but in a reformulated manner.
As an example, and to lay this argument to rest, the Mun-Ya-Wana Conservancy was declared a Protected Area on 5 September 2019 in terms of s 23 of NEMPAA.
The arbitration hearing took place on 15 March 2020 and the MMP was approved on 5 March 2020.
The latter date pre-dates the hearing of the arbitration and the resultant award which was made on 2 April 2020.
Therefore, the conclusion I reached regarding the MMP in the previous paragraphs equally applies here.
Much reliance was also placed on the Mun-Ya-Wana Conservancy or its Warden, but we are also not told what its/his attitude is to the debates raised by the appellant including the authorisations bemoaned about.
Another important consideration to make in this regard is that the respondent is not a member of the Mun-Ya-Wana Conservancy.
The respondent was never consulted before the MMP, heavily relied upon by the appellant, was prepared and allegedly approved as required by s 39(1) of NEMPAA.
This section is peremptory and provides that when a management plan for a protected area is being prepared, all the affected parties who have an interest must be consulted.’11 [18] This finding accords with that of Chili J on the same issue.
The only legal justification which would permit Snowy Owl to close roads in breach of the servitude rights, has therefore been decisively dismissed by this Court.
[19] Snowy Owl persisted with the appeal as it took the view that a live controversy remained.
Counsel submitted that: 10 Snowy Owl fn 4 above, para 19.
11 Ibid para 29.
10 (a) Since Chili J had impermissibly decided an issue which had already been decided (by Radebe J) contrary to the doctrine of res judicata, his order could not stand.
(b) Chili J granted final relief whereas only interim relief was warranted, given the appeal against Radebe J’s order.
(c) There is no need for the order granted by Chili J seeing that Radebe J’s order, which is now final, provides adequate protection for the rights of Mziki.
(d) Radebe J’s order can be enforced by contempt of court proceedings in the event of a breach.
[20] No sensible basis for persistence with this appeal is discernible from the argument.
Reliance upon the doctrine of res judicata is entirely misplaced.
Mziki based its claim for an interdict on the further breach of the servitude and the binding effect of the arbitration award.
The breach was admitted.
Mziki wanted to restrain further breaches and to secure re-opening of the closed roads.
Its cause of action was not the same as the cause of action advanced to have the arbitration award made an order of court.
There, Mziki relied on the Arbitration Act.
Snowy Owl, however, defended the interdict application on the same basis it resisted the application before Radebe J.
That defence did not meet the assertion of Mziki’s servitude rights.
[21] Mziki did not ask Chili J to decide issues that had already been decided.
It required Chili J to determine whether there was a fresh or ongoing breach of its servitude rights by the closure of roads which occurred after the 2020 award was delivered.
The argument that Chili J ought not to have granted final relief because of the pending appeal in which Snowy Owl’s defences remained live, loses sight of the basis of the claim for an interdict.
Snowy Owl’s defences did not engage that claim.
There was therefore no reason not to confirm the rule nisi and grant final relief.
11 [22] Snowy Owl did not challenge the terms of the order granted by Seegobin J.
This is hardly surprising since it was an agreed order.
Yet, as the argument progressed, counsel suggested that Seegobin J’s order was overbroad because of its prohibition against closure of ‘any roads’.
It was submitted that Mziki had not made out a case for such relief.
The argument was without substance.
The agreement of servitude confers upon Mziki a right of traverse using all existing roads on the Snowy Owl properties.
Snowy Owl consented to the interim order.
It admitted that its conduct breached the servitude.
Counsel nevertheless argued that this Court should set aside Chili J’s order and replace it with an order dismissing the application.
When asked to point out a legal or factual basis upon which this Court could do so, none was suggested.
The only basis suggested was that the order was now no longer required because Radebe J’s order secured adequate protection for Mziki.
Yet, on this argument, since Mziki would be entitled to obtain the relief provided by Chili J’s order, there is no basis to set it aside.
[23] The suggestion that Mziki ought rather to have enforced its rights through contempt proceedings is also entirely misplaced.
The fact that a party may pursue contempt proceedings to enforce an order against a recalcitrant party, does not preclude an interdict to restrain an ongoing infringement of a right.
Counsel could not point to authority to the contrary, and I know of none.
In any event, when the interim interdict was granted by Seegobin J on 20 October 2020, there was no court order which could be enforced by contempt proceedings.
The award application was argued on 4 December 2020 and the order was issued on 18 February 2021.
Thereafter, Radebe J’s order was the subject of an appeal.
It was not enforceable until the matter was put to rest by the Constitutional Court.
12 [24] A final aspect concerns the alleged misjoinder of the directors or employees of Snowy Owl (i.e.
the second to fifth appellants).
Misjoinder was not raised as a plea on the papers and did not feature as an issue before Chili J.
It was raised for the first time on appeal.
It was submitted that since it was a purely legal question, it was permissible to do so.
[25] Joinder as a matter of necessity and as a matter of convenience are distinct.12 In the case of the former, a failure to join precludes determination of the suit until joinder has occurred.
A court may act mero motu to protect the interests of a necessary party.13 In the case of the latter, the party joined is not a necessary party but may be joined on the basis that the relief may prejudicially affect its rights.
A party may also be joined based on convenience, as in this instance, as a co-respondent against whom relief is sought.
This does not give rise to misjoinder.14 The second to fifth appellants were joined on the basis that they, as the controlling minds of Snowy Owl or as its agents, were responsible for the infringing conduct.
Relief was sought against them upon that basis.
An appeal is ordinarily not the time to raise an argument of misjoinder for the first time.15 The second to fifth appellants did not object to their joinder.
They consented to the order granted by Seegobin J, and they opposed the confirmation of the rule nisi before Chili J.
[26] It follows that the appeal must be dismissed.
What remains is the costs.
The ordinary rule is that the costs follow the result.
The question, however, is whether a punitive costs order is warranted.
In my view it is, for the following reasons.
12 Judicial Services Commission and Another v Cape Bar Council and Another [2012] ZASCA 115; 2013 (1) SA 170 (SCA) para 12.
13 Mtjhabeng Local Municipality v Eskom Holdings Ltd [2017] ZACC 35; 2018 (1) SA 9 (CC) para 91.
14 Rosebank Mall (Pty) Ltd and Another v Cradock Heights (Pty) Ltd 2004 (2) SA 353 (W) para 11.
15 City of Johannesburg v Changing Tides (Pty) Ltd and 97 Others (The Socio-Economic Rights Institute of South Africa intervening as amicus curiae) [2012] ZASCA 116; 2012 (6) SA 294 (SCA) para 36.
13 [27] Chili J’s judgment makes it plain that he was dealing with an admitted breach of the terms of the 2020 award and the servitude, for which no justification was offered other than a legal contention which had already been decided.
He decided the matter upon the basis that Mziki was entitled to protection of its rights of servitude which had been further breached and that it required the re-opening of roads which had been closed after the 2020 award was delivered.
[28] Persistence in a meritless appeal despite being alerted to the insurmountable difficulties it faced, was plainly ill-advised.
Courts do not decide academic issues nor resolve questions which can have no practical legal effect.
This Court’s personnel and resources are limited.
Enrolment of an appeal necessarily precludes the hearing of another appeal by the allocated judges on the same day.
Other litigants must therefore wait until their appeal can be heard.
Thus, the enrolment of an appeal in which the substantive legal issues have already been resolved between the parties, causes prejudice not just to the other party in the appeal but also to the efficient administration of justice.
In the circumstances and particularly in view of the query by this court, a punitive costs order is justified and indeed warranted.
[29] Accordingly, the appeal is dismissed with costs on the scale as between attorney and client.
_________________ G GOOSEN JUDGE OF APPEAL
14 Appearances For the appellants: R S Shepstone Instructed by: Errol Goss Attorneys, Johannesburg Eugene Attorneys, Bloemfontein For the respondent: G Cooper Instructed by: Cliffe Dekker Hofmeyr Incorporated, Cape Town 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: 27 May 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 Snowy Owl Properties 284 (Pty) Ltd and Others v Mziki Share Block (Pty) Ltd (642/2022) [2024] ZASCA 79 (27 May 2024) The Supreme Court of Appeal (SCA) today dismissed an appeal against an order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (per Chili J) (the high court), which granted a final interdict prohibiting the breach of rights of servitude.
The appeal, with the leave of the SCA, arose from a long-standing conflictual relationship between neighbouring owners of property.
Snowy Owl Properties 284 (Pty) Ltd (Snowy Owl) and Mziki Share Block (Pty) Ltd (Mziki), own large adjacent tracks of land in northern KwaZulu-Natal.
Their predecessors had, by agreement, established a private game reserve spanning their respective properties.
A notarial agreement of servitude was registered over Snowy Owl’s properties, conferring on the members of Mziki a right to traverse and access all existing roads on the Snowy Owl properties for the purposes of game viewing.
In July 2017, Snowy Owl dug up certain roads on its property and caused them to be blocked.
Mziki was denied use of the roads to obtain access to part of Snowy Owl’s properties.
Snowy Owl asserted that it was acting to prevent ecological damage and that the closure was necessary.
It also claimed that closure was required for maintenance.
The dispute was referred to arbitration.
In April 2020, an arbitration award was issued.
The arbitrator found that the destruction and closure of roads was in breach of Mziki’s rights of servitude and that the closure was not required in order to comply with environmental legislation.
The arbitrator ordered that the roads be re-opened and rehabilitated.
Snowy Owl did not comply with the award.
This prompted Mziki to bring an application before the high court to make the award an order of court (the award application).
Snowy Owl opposed the application.
It did so on the basis that the award could not be carried into effect because it required Snowy Owl to undertake actions which were in breach of environmental legislation.
It took the view that the closure of roads was authorised by an environmental management plan.
In October 2020, prior to the award application being heard, Snowy Owl commenced digging another portion of road.
Mziki launched an urgent application to prohibit Snowy Owl from further breaching its rights of servitude and to restore access to those roads.
An interim order was granted, by agreement between Snowy Owl and Mziki, on 22 October 2020.
The return date was set for 4 December 2020, when the award application was to be heard.
On 4 December 2020, Radebe J heard the award application.
The interdict application was postponed to allow the award application to be decided.
2 On 18 February 2021, the arbitration award was made an order of court.
On 26 February 2021, the interdict application was heard by Chili J.
A final order was granted on 19 October 2021.
Snowy Owl appealed against the order of Radebe J to the SCA.
The SCA dismissed the appeal on 19 January 2023.
On 28 September 2023, the Constitutional Court refused Snowy Owl leave to appeal against the SCA order.
Following Chili J’s granting of a final interdict (on 19 October 2021), Snowy Owl was granted leave to appeal it.
The SCA granted leave before the appeal against Radebe J’s order was heard.
Prior to the hearing of the appeal against Chili J’s interdict order was heard, Snowy Owl was requested to explain its reason for persisting with the appeal given the final determination of the substantive issues concerning Mziki’s servitude rights.
At the hearing it was submitted that the appeal was warranted, because Chili J was not entitled to grant final relief because of the pending appeal at that stage.
The SCA rejected the argument.
It found that the basis for the interdict was an admitted breach of Mziki’s servitude rights.
Despite raising similar same defences as had been raised in the award application, those defences did not answer the claim for an interdict to prevent further ongoing breaches of the servitude rights.
Chili J had not decided any questions which had been subject to an appeal.
The SCA therefore found that Chili J had correctly granted the final interdict.
It held that since the SCA, with endorsement from the Constitutional Court, had finally decided Snowy Owl’s other defences, it had pursued a meritless appeal.
The SCA therefore dismissed the appeal with costs on the scale between attorney and client.
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4318 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 894/2023 In the matter between: SESHIN NARAIDU APPELLANT and THE STATE RESPONDENT Neutral citation: Naraidu v The State (894/2023) [2024] ZASCA 139 (16 October 2024) Coram: MOKGOHLOA, SMITH and UNTERHALTER JJA and MJALI and DIPPENAAR AJJA Heard: 16 August 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII.
The date and time for hand-down of the judgment is deemed to be 11h00 on 16 October 2024.
Summary: Criminal law – Tax practitioner – claim for a refund under the Value-Added Tax Act 89 of 1991 (the VAT Act) – fraud – intent to defraud – knowledge of the fictious claim – statutory charges under s 59(1) of the VAT Act and s 269(6) of the Tax Administration Act 28 of 2011 – validity of the statutory charges.
2 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Mabesele and Kumalo JJ sitting as court of appeal): 1 The appeal is upheld.
2 The order of the high court is set aside, and replaced with the following order: ‘(a) The appeal is upheld.
(b) The conviction of Mr Naraidu and sentence imposed upon him by the Regional Court, Gauteng under case no 41/337/14 is set aside, and it is ordered that Mr Naraidu is acquitted of all the charges brought against him.’ JUDGMENT Unterhalter JA (Mokgohloa and Smith JJA and Mjali and Dippenaar AJJA concurring): [1] The appellant, Mr Naraidu, a tax practitioner, was, together with two other accused, charged with three counts of fraud, and three alternative charges under the Value-Added Tax Act 89 of 1991 (the VAT Act) read with s 269(9) of the Tax Administration Act 28 of 2011 (the TAA).
The charges, in essence, alleged that Serghony’s Shoes Fashion CC (SSF and the first accused), together with its sole member, Mr Mbom (the second accused) and Mr Naraidu (the third accused) unlawfully, and with intent to defraud, misrepresented to the South African Revenue Service (SARS) that SSF had incurred expenses and was entitled to refunds under the VAT Act, knowing that SSF was not entitled to any such refunds and that the information submitted to SARS was false.
This caused prejudice, actual or potential, to SARS.
3 [2] The trial proceeded in the Regional Court, Gauteng (the regional court).
Mr Mbom and Mr Naraidu were convicted on the three counts of fraud.
Mr Mbom did not return to court for sentencing, and has not been arrested.
Mr Naraidu was sentenced to six years of imprisonment without an option of a fine.
Mr Naraidu appealed to the high court in respect of his conviction.
The high court (per Mabesele et Kumalo JJ) dismissed the appeal.
It found that the regional court had correctly found that Mr Naraidu was aware that the documents submitted to SARS supporting the claim for the VAT refund were false.
With special leave, Mr Naraidu appeals to this Court.
[3] A number of issues are not contested in this appeal.
First, there was clear evidence that the documents submitted to SARS to support the claim of SSF for a VAT refund were false, and the claim constituted a misrepresentation.
The investigation undertaken by SARS, the evidence of which was led at trial, revealed that the invoices that were submitted to SARS in support of the claim for the VAT refund were fictitious.
The refund sought was substantial, amounting to R2 748 037.51.
[4] Second, it is a plain that filings were made by SSF on 14 September 2013, and again on 25 September 2013, on the e-filing system used by SARS, for a VAT refund.
These were rejected.
Mr Naraidu, on 28 October 2013, wrote an email to SARS, on behalf of SSF, as a tax practitioner, to query the delay in payment of the refund.
The relevant portion of the email reads as follows: ‘Documents were submitted in the branch office.
Which is thus being lost.
I had to resubmit the documents again.
Every time I call I get told it is in the process.
But no one at SARS can tell me where in the process it is exactly.’ On 27 November 2013, Mr Naraidu again wrote to SARS on behalf of SSF:
4 ‘I want to query on the delay for the VAT refund for period 2013/07 and 2013/09.
Are there supporting documents that’s required?
Does the bank detail need to be updated?
I have followed up at the call centre and sent a PCC request, with still no success.
Please assist, client is frustrated.
I don’t know what excuse to give the client anymore.’ On 3 December 2013, Mr Naraidu wrote once more to SARS on behalf of SSF, as follows: ‘I want to query on the delay for the VAT refund for the periods 2013/07 and 2013/09.
Supporting documents have being submitted, bank detail are correct and valid?
I have followed up at the call centre and sent a PCC request, with still no success.
According to the SARS e-filing the audits for both periods have been finalised as per the refund dashboard.
Please assist, client is frustrated.
I don’t know what excuse to give the client anymore.’ [5] The regional magistrate found that Mr Naraidu acted with Mr Mbom in ‘a premeditated plan to defraud SARS’.
The high court agreed.
It reasoned that the enquiries directed by Mr Naraidu to SARS concerning the VAT refund due to SSF meant that he had ‘insight of the fraudulent supporting documents’.
Both courts thus rejected the version advanced by Mr Naraidu, at trial, that he was merely making enquiries of SARS on behalf of SSF.
[6] The evidence led at the trial showed that Mr Mbom, the sole member of SSF, had registered SSF as a VAT vendor, and Mr Mbom was registered to use the e-filing system of SARS on behalf of SSF.
The bank account of SSF reflected no business transactions, yet SSF was seeking a sizeable VAT refund.
The findings of the regional court that Mr Mbom was guilty of fraud are incontestable.
Mr Mbom’s flight from a final reckoning before the regional court suggests that he shared this view.
The issue for us is whether the state discharged its onus of proof to show that Mr Naraidu was complicit in Mr Mbom’s fraudulent scheme to use SSF to make fraudulent claims upon SARS for a VAT refund.
5 [7] Both the high court and the regional court placed much emphasis upon the emails that Mr Naraidu sent to SARS.
I have set out the relevant content of these emails.
They convey two matters of importance.
First, that Mr Naraidu had resubmitted the documents to SARS supporting the claim by SSF for a VAT refund, and hence had sight of these documents.
Second, that, in order to do so, Mr Naraidu must have had access to the SARS e-filing system, since he records that he resubmitted the documents.
The SARS’ witnesses called by the State could not say who had lodged the claim on the e-filing system, but, Mr Naraidu’s emails indicate that he had access to the system and had, at the very least, resubmitted the documents.
[8] Mr Naraidu’s evidence at his trial was as follows.
He had worked for SARS.
In October 2013, he was a financial adviser for Liberty Life, an insurance and financial services company.
A client had given Mr Naraidu a referral list to call persons there listed to try to sell Liberty policies.
On the list was a person described by Mr Naraidu as the owner of SSF.
This person was described by Mr Naraidu in the vaguest of terms as a ‘white guy’, and not Mr Mbom.
I shall call this person ‘the presumed owner’.
They met, Mr Naraidu testified, at the Dross restaurant in Midrand in October 2013.
The presumed owner showed Mr Naraidu his driver’s licence and the registration papers of SSF.
The presumed owner then sought the assistance of Mr Naraidu, as a tax practitioner, to pursue a VAT refund claim, on behalf of SSF, with SARS.
Mr Naraidu agreed to do so.
Of the emails that he then wrote to SARS, Mr Naraidu had this to say: ‘I have just said that I had no knowledge of what was happening.
I was enquiring and hoping the client once it was resolved would sign a policy .
.
.
that is how I ran my Liberty business.’ Mr Naraidu’s version was thus that he wrote the emails to prompt SARS to pay the VAT refund, but that he had no knowledge of the basis upon which the claim was
6 made.
His incentive was to assist the presumed owner in order to sell him a Liberty policy.
[9] There is a great deal that is unsatisfactory about Mr Naraidu’s evidence.
How he came to be retained; that he was, on his own version, willing to engage SARS on behalf of a client he knew next to nothing about; that he took an instruction without any proper mandate; and then pursue a claim in ignorance of the claim that was being made – all of this suggests a reckless disregard for his duties as a tax practitioner.
But that is not the charge he was facing.
The question is whether he made himself party to the fraud that Mr Mbom perpetrated upon SARS.
And the primary evidence relied upon by the State to make that case were the emails sent to SARS by Mr Naraidu on behalf of SSF.
[10] What then do the emails establish?
As I have explained, they convey that Mr Naraidu had the documents used in support of the claim of SSF for a VAT refund, and that he had resubmitted these documents to SARS.
Mr Naraidu denied that he did so.
The SARS witnesses were unable to say who had accessed the e-filing system to make the claims on behalf of SSF.
But, even if Mr Naraidu must be held to what he wrote in the emails, it does not follow that because he resubmitted the documents in support of the claim, he had any knowledge that these documents were fictitious invoices and that the claim was fraudulent.
There was no direct evidence of this.
It was the investigations undertaken by SARS that uncovered the fraud.
This was done by verifying whether there were true sales that the invoices purported to record.
There were not.
But there was no evidence that Mr Naraidu knew this to be so.
It cannot be inferred that.
because he submitted the documents on behalf of SSF, he thereby represented that they recorded transactions that supported the VAT refund, knowing that they were fictious.
Once that is so, the State failed to prove beyond reasonable doubt that Mr Naraidu had the intent to defraud SARS.
7 [11] That Mr Naraidu acted recklessly is plainly the case.
He lent his efforts to secure the payment of a fraudulent claim.
But absent proof beyond reasonable doubt that he knew the claim to be fraudulent, he cannot be said to have made himself party to the fraud.
There is an absence of proof that Mr Naraidu had the intention required to be guilty of fraud.
His conviction on the charges of common law fraud is thus unsafe, and must be set aside.
[12] Little attention was given by counsel to the alternative statutory charges.
The charge sheet described these as contravening s 59(1)(d) read with ss 1, 20, 23, 28 of the VAT Act, as amended, read with s 269(6) of the TAA.
These charges entail some complexity because s 59 of the VAT Act was repealed by s 271 of the TAA.
However, s 269(6) of the TAA permits of the prosecution of statutory offences, repealed by this enactment, if they were committed before the commencement of the TAA.
The TAA commenced on 1 October 2012.
The statutory offences with which Mr Naraidu was charged are alleged to have occurred in 2013 and 2014.
It is thus doubtful that these statutory charges are valid in law.
But as these matters did not arise for decision in the regional court or in the high court, and were not dealt with before us, it suffices to observe that the statutory charges brought against Mr Naraidu all allege an intent, on his part, to secure a refund to which SFF was not entitled.
For the reasons given, while Mr Naraidu sought to secure a refund for SFF, the State did not discharge its onus to prove that he intended to do so knowing that SFF was not entitled to the refund.
Mr Naraidu thus cannot be convicted on the alternative statutory charges.
[13] In the result, the conviction of Mr Naraidu cannot stand.
His appeal is upheld, the order of the high court must be set aside, and Mr Naraidu is acquitted of the charges against him.
8 [14] 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 order: ‘(a) The appeal is upheld.
(b) The conviction of Mr Naraidu, and sentence imposed upon him, by the Regional Court, Gauteng under case no 41/337/14 is set aside, and it is ordered that Mr Naraidu is acquitted of all the charges brought against him.’ __________________________ D N UNTERHALTER JUDGE OF APPEAL
9 Appearances For the appellant: Adv M Witz Riaan Louw Attorneys, Kempton Park Michael Du Plessis Attorneys, Bloemfontein For the respondent: Adv L Jobo Instructed by: Director of Public Prosecutions, Johannesburg 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: 16 October 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 Seshin Naraidu v The State (894/2023) [2024] ZASCA 139 (16 October 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal from the Gauteng Division of the High Court, Johannesburg (the high court).
The appellant, Mr Naraidu, a tax practitioner, was, together with two other accused, charged with three counts of fraud, and three alternative charges under the Value-Added Tax Act 89 of 1991 (the VAT Act) read with s 269(9) of the Tax Administration Act 28 of 2011 (the TAA).
The charges, in essence, alleged that Serghony’s Shoes Fashion CC (SSF and the first accused), together with its sole member, Mr Mbom (the second accused) and Mr Naraidu (the third accused) unlawfully, and with intent to defraud, misrepresented to the South African Revenue Service (SARS) that SSF was entitled to refunds under the VAT Act, knowing that SSF was not so entitled and that the information submitted to SARS was false.
In the Regional Court, Gauteng (the regional court), Mr Mbom and Mr Naraidu were found guilty on the three counts of fraud, with Mr Naraidu being sentenced to six years of imprisonment, without the option of a fine.
After appealing to the high court in terms of his conviction, the high court dismissed Mr Naraidu’s appeal, holding that the regional court had correctly found that Mr Naraidu was aware that the documents submitted to SARS supporting the claim for the VAT refund were false.
The issue before the SCA was whether Mr Naraidu was complicit in Mr Mbom’s fraudulent scheme to use SSF to make fraudulent claims upon SARS for a VAT refund.
In coming to its conclusion, the SCA pointed out that, upon scrutinising the emails that Mr Naraidu sent to SARS, two matters were clear.
First, that Mr Naraidu had resubmitted the documents to SARS supporting the claim by SSF for a VAT refund, and, hence, had sight of these documents.
Second, that, in order to do so, Mr Naraidu must have had access to the SARS e-filing system, since he recorded that he had resubmitted the documents.
The SCA went on to state that, even though there was a great deal that was unsatisfactory about Mr Naraidu’s evidence, indicating a reckless disregard for his duties as a tax practitioner, the question of whether he made himself party to the fraud that Mr Mbom perpetrated upon SARS had to be answered in the negative because there was an absence of proof ,beyond reasonable doubt , that he knew the claim made upon SARS to be fraudulent.
In the result, his conviction on the charges of common law fraud was thus unsafe and fell to be set aside.
2 With regards to the alternative statutory charges, the SCA held that these charges entailed some complexity because s 59 of the VAT Act was repealed by s 271 of the TAA and it was doubtful that these statutory charges are valid in law because the TAA commenced on 1 October 2012 and the statutory offences with which Mr Naraidu was charged are alleged to have occurred in 2013 and 2014.
In any event, the SCA, held that while Mr Naraidu sought to secure a refund for SFF, the State did not discharge its onus to prove that he intended to do so knowing that SFF was not entitled to the refund and thus, could not be convicted on the alternative statutory charges.
In the result, the appeal succeeded; the orders of the high court and the regional court were set aside; and Mr Naraidu was acquitted of the charges against him.
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4236 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 81/2023 In the matter between: JAN GYSBERT MARITZ APPELLANT and THE STATE RESPONDENT Neutral citation: Maritz v The State (81/2023) [2024] ZASCA 72 (8 May 2024) Coram: MOKGOHLOA, MABINDLA-BOQWANA and MOLEFE JJA Heard: 26 February 2024 Delivered: 8 May 2024 Summary: Recusal application – refusal by a judge to recuse herself before sentencing in a criminal trial – onus rests on the appellant to discharge, on objective facts, that the judge displayed reasonable apprehension of bias against him.
2 ORDER On appeal from: Free State Division of the High Court, Bloemfontein (Naidoo J, sitting as court of first instance): The appeal is dismissed.
JUDGMENT Molefe JA (Mokgohloa and Mabindla-Boqwana JJA concurring): [1] This appeal is against the judgment of the Free State Division of the High Court, Bloemfontein (the high court), where the presiding judge in that matter (Naidoo J) refused to recuse herself from the pending criminal trial.
The appeal is with the leave of this Court.
[2] The facts in this case are largely common cause and can be briefly stated.
The appellant, Mr Jan Gysbert Maritz, a practising attorney, was charged with 18 counts of sexual assault and statutory rape.
On 17 May 2021, the trial commenced in the high court.
The appellant was represented by two senior counsel and he pleaded not guilty to all charges.
On 21 May 2021, whilst the first state witness was testifying, the appellant advised the court that he wished to change his plea of not guilty to a guilty plea, and made numerous admissions in terms of section 220 of the Criminal Procedure Act 51 of 1977 (the Act) which were accepted by the respondent.
Based on these admissions the appellant was convicted on counts 1 to 16 after the respondent stopped prosecution in respect of counts 17 and 18.
3 [3] He was convicted on his guilty plea and released on bail with certain conditions, pending sentencing proceedings which were to be held from 14 to 17 September 2021.
The respondent applied for variation of the appellant’s bail conditions, and the matter was set down for hearing on 4 June 2021.
Due to a bereavement in her family, Naidoo J was not available to hear the application, and Daniso J adjudicated the variation of the bail conditions application.
[4] A week before the commencement of the scheduled sentencing proceedings, the appellant’s legal representatives indicated to Naidoo J that they would be terminating their services due to ethical reasons and that the appellant would apply for the withdrawal of the s 220 admissions.
Naidoo J informed them that she was functus officio as she had already convicted the appellant.
[5] On 14 September 2021, counsel for the appellant at the time, formally withdrew their services along with the then instructing attorneys.
Subsequently, new legal representatives placed themselves on record.
The newly appointed counsel for the appellant was not ready to proceed with sentencing on that day.
The parties were afforded an opportunity to argue whether the appellant’s bail should be revoked.
Ultimately, Naidoo J revoked the bail and remanded the appellant in custody.
She refused the appellant’s application for leave to appeal the revocation of bail.
Leave to appeal was granted by this Court to the full court of the Free State Division of the High Court, Bloemfontein (the full court).
On 5 November 2021, the full court reinstated the appellant’s bail and he was released from prison.
[6] On 29 November 2021, the appellant brought an application for the recusal of Naidoo J on the basis that she was biased and that he had a reasonable apprehension that he will not be accorded a fair trial.
The appellant’s recusal
4 application was based on the following allegations and complaints against Naidoo J: (a) The judge irrationally and unilaterally revoked his bail; (b) The judge is a Gender Based Violence Activist (GBV Activist); (c) The judge requested a victim impact report before the revocation of the appellant’s bail; and (d) Prior to the hearing of the variation of the appellant’s bail conditions, the judge spoke to her colleague, Daniso J about the case.
The high court dismissed the application for recusal.
Dissatisfied with the high court order, the appellant petitioned this Court and leave to appeal was granted to this Court on 8 June 2022.
[7] A litigant who finds it necessary to apply for the recusal of a judicial officer has an unenviable task and the propriety of his motive should not be lightly questioned.1 His or her application must be dealt with in accordance with the prevailing legal principles.
The legal principles [8] The law relating to recusal has become settled.
The right to a fair trial is entrenched in our Constitution.
Section 35(3) of the Constitution deals with criminal proceedings and provides that ‘[e]very accused person has a right to a fair trial’.
Section 34, which addresses the right of access to courts in the general sense, states as follows: ‘Everyone has a right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum.’ 1 S v Bam 1972 (4) SA 41 (E) at 43H-44A.
5 [9] Section 165(2) of the Constitution, dealing with the judicial authority re-iterates the courts’ independence and requires courts to apply the law ‘impartially and without fear, favour and prejudice’, and the oath of office prescribed by Schedule 2 of the Constitution requires each judge to swear that he or she ‘will uphold and protect the Constitution.
.
.
and will administer justice to all persons alike without fear, favour or prejudice, in accordance with the Constitution and the law’.
[10] Judicial officers are required to perform their adjudicative functions independently and impartially, without bias or prejudice in favour of any party.2 The concept of impartiality of the judiciary refers to the state of mind or attitude of judicial officers in relation to the issues and parties in a particular case, and to the fact that the courts must apply the law ‘without fear or prejudice’.
An important consequence of impartiality is that a judicial officer must recuse himself or herself if there is a reasonable apprehension that he or she is biased.
[11] In President of the Republic of South Africa and Others v South African Rugby Football Union and Others - Judgment on recusal application (SARFU), the Constitutional Court held that the test for bias was whether ‘a reasonable, objective and informed person would, on the correct facts, reasonably apprehend that the judicial officer has not brought or will not bring an impartial mind to bear on the adjudication of the case.
.
.’.3 Although it is the apprehension of bias and not actual bias which is prohibited, the test for bias is difficult to satisfy.
This is because, first, the starting point is that judicial officers are presumed to be impartial, and, second, judicial officers are human.
It is appropriate for 2 Van Rooyen and Others v The State and Others (General Council of the Bar of South Africa Intervening) [2002] ZACC 8; 2002 (5) SA 246 (CC); 2002 (8) BCLR 810 para 31.
3 President of the Republic of South Africa and Others v South African Rugby Football Union and Others - Judgment on recusal application [1999] ZACC 9; 1999 (4) SA 147; 1999 (7) BCLR 725 para 48.
6 judicial officers to bring their own life experiences into the judicial process.4 The SARFU judgment reaffirmed that we must assume the independence and impartiality of judicial officers based on the recognition of their legal training and experience.
[12] Crucially, the following was said about the test in SARFU: ‘The reasonableness of the apprehension must be assessed in the light of the oath of office taken by the Judges to administer justice without fear or favour, and their ability to carry out that oath by reason of their training and experience.
It must be assumed that they can disabuse their minds of any irrelevant personal beliefs or predispositions.
They must take into account the fact that they have a duty to sit in any case in which they are not obliged to recuse themselves.’5 [13] The Constitutional Court, in South Africa Human Rights Commission obo South Africa Jewish Board of Deputies v Masuku and Another, held that: ‘The impartiality and independence of Judicial Officers are essential requirements of a constitutional democracy and are core components of a constitutional right of access to courts.
It is these requirements that constitute the source of public trust in the Judiciary and in the administration of justice in general.
And because impartiality of Judicial Officers and the impartial adjudication of disputes of law constitutes the bedrock upon which the rule of law exists, there must, in any sound legal system, exist a general presumption of impartiality on the part of the Judicial Officers.’6 Revocation of bail [14] The appellant based his case for the apprehension of bias on the cumulative effect of the grounds for recusal, and I set out below the details of these allegations.
It is common cause that on 14 September 2021, the appellant’s newly appointed legal representatives requested the postponement of the 4 Ibid para 40-44.
5 Ibid para 48.
6 South African Human Rights Commission obo South African Jewish Board of Deputies v Masuku and Another [2022] ZACC 5: 2022 (7) BCLR (CC); 2022 (7) BCLR 850 (CC) (Masuku)para 56.
7 sentencing proceedings until 29 November 2021.
The high court granted the postponement and allowed the parties to argue the revocation of appellant’s bail.
After both parties’ argument, the high court revoked the appellant’s bail on 15 September 2021.
Counsel for the appellant submitted that the high court unilaterally and irrationally revoked the appellant’s bail and dismissed the application for leave to appeal the revocation.
Special leave was granted by this Court to the full court which reinstated appellant’s bail on 5 November 2021.
[15] The appellant’s counsel further submitted that no provision or authority is contained in s 58 of the Act allowing a judicial officer to unilaterally revoke bail.
He, therefore, argued that this is an objective indication that Naidoo J is biased towards the appellant and he would not be afforded a fair hearing in the pending criminal trial.
[16] If a litigant is for some sound reason, not satisfied with a judicial officer’s judgment or decision, the aggrieved litigant has a right to approach a higher court for the appeal or review of the judgment (as the case may be) to adjudicate on its correctness.
The reason why we have the appeal court system is inter alia, a recognition of the fact that judges may sometimes err in the exercise of their discretion or misapply the law in the process of adjudicating.
Naidoo J may have wrongly revoked the appellant’s bail.
Her mistake in the application of the law, or on the facts did not by itself mean she was biased.
The relevant connection must call into question her ability to apply her mind in an impartial manner to the case before her.7 The appellant alleged that the judge mentioned in chambers that she would revoke his bail.
This allegation is not supported by any of the affidavits filed by those who were present in chambers on that day, including by 7 See Ex Parte Goosen and Others [2019] ZAGPJHC 154; [2019] 3 ALL SA 161; 2020 (1) SA 569 (GJ) para 13 which cited the authority of the Constitutional Court in Bernert v Absa Bank Ltd [2010] ZACC 28; 2011 (4) BCLR 329 (CC); 2011 (3) SA 92 (CC) para 31-33.
8 his erstwhile counsel.
The allegation of bias must therefore be rejected as being without any merit and not capable of grounding a reasonable apprehension of bias.
Gender based violence activist [17] As regards this issue, the appellant alleged that Naidoo J is a GBV Activist because he had been informed by his erstwhile legal team that Naidoo J had a ‘teddy bear’ on her couch in her chambers which represented her support as a GBV Activist.
Further that he was told by his attorney that his wife had indicated over the phone to someone that the state prosecutor said that the judge is a GBV Activist and ‘will put the appellant away for a long time’.
[18] Counsel for the appellant submitted that the presence of the ‘teddy bear’ in Naidoo J’s chambers is relevant to the reasonable perception that she is biased, as an independent and impartial judge does not need to be reminded of the gender-based violence campaign.
He argued that it is indicative of a reasonable apprehension of bias in relation to the appellant and the charges faced by him.
Counsel correctly did not press the issue of the telephone conversation allegedly overhead by the appellant’s wife as that constituted inadmissible hearsay evidence.
[19] Naidoo J explained the presence of the ‘teddy bear’ in her office in the following manner.
Since 2005, she has been a member of the South African Chapter of the International Association of Women Judges (SCA-IAWJ), an organisation which gets involved in the 16 days of activism against gender-based violence against women and children.
In 2005, she participated in talks regarding the protection afforded to abused persons.
The ‘teddy bear’ was given to her as a token of appreciation.
9 [20] A reasonable apprehension of bias cannot merely be based upon the association of the judge with SAC-IAWJ, without more.
It has been stated that a judge’s holding of particular views on social matters is not an indication that she will necessarily be biased in respect of certain matters, nor does it naturally follow that, where a judge is known to hold certain views, she will not be capable of applying her mind to a particular matter.8 This ground of recusal must similarly be rejected as being without merit.
Request for a victim impact report [21] The appellant’s other ground for the apprehension and perception of bias was that Naidoo J requested her stand-in registrar, Mr Bantam, to obtain a victim impact and/or pre-sentence report from his then counsel ‘as she wants to read it before sentencing starts on 14 September 2021’.
In support of this allegation the appellant relies on his erstwhile counsel’s affidavit that in September 2021, he received a telephone call from Mr Bantam ‘looking for a report on the Maritz matter.’ Mr Bantam ‘could not exactly tell me what report/s he was looking for.’ [22] Counsel for the appellant submitted that Naidoo J incorrectly stated that she did not make such a request.
It was argued that there was no basis for the appellant’s erstwhile counsel to have fabricated that he received a telephone call from Mr Bantam.
[23] Mr Bantam denied that he received an instruction from Naidoo J to request a report.
He stated that the only time he spoke to the appellant’s erstwhile counsel on the phone was when counsel wanted to see the judge to withdraw from the matter.
8 Masuku para 66.
10 [24] The high court dismissed this ground for recusal on the basis that pre-sentence and/or victim impact reports are usually requested by the prosecutor and that it would have been absurd for the judge to have requested the reports from the appellant’s legal representative.
Furthermore, on 7 September 2021, the judge’s registrar informed her that the appellant’s new legal team would not be ready to proceed at the sentencing proceedings scheduled for 14 September 2021.
The issue of the reports, therefore, would have been irrelevant to the proceedings on that day.
[25] While the appellant’s erstwhile counsel stated that he was phoned by the judge’s stand-in registrar, he also stated that the registrar could not tell him what report he was exactly looking for.
Counsel was the one who advised the registrar about one report not being finalised and about the victim’s report being with new attorneys.
Counsel also stated that he was confused about the call as he was no longer in the matter.
[26] Much was made of a second affidavit in which Mr Bantam stated that the only time he spoke to counsel was as stated above but then also stating that he could not recall the content of a conversation relating to an outgoing telephone call, when confronted with a phone log.
[27] The inferences sought to be drawn by the appellant on these affidavits are unjustifiable.
His erstwhile counsel had informed the judge of his withdrawal.
So, it would make no sense for the judge to ask her registrar to call him for any documentation.
Secondly, at no point did counsel state that the registrar specifically asked for a victim impact report.
He was the one who deduced it as the report that was probably being requested.
Thirdly, the judge was informed that the appellant’s new legal team would not be ready to proceed with the sentencing proceedings on the date scheduled, therefore, the issue of a report
11 being sought to be read before that day, would be illogical.
This ground for recusal is unfounded and was properly rejected by the high court.
Contact between Naidoo J and Daniso J [28] I now turn to the complaint that Naidoo J telephonically spoke to a colleague Daniso J to inform her of the background to the case on 4 June 2021, the morning before Daniso J heard the application for the variation of the appellant’s bail conditions.
Counsel for the appellant submitted that there was no reason or justification for Naidoo J to call Daniso J.
According to him, this was indicative of the judge’s display of a personal and direct interest in the appellant’s trial, and therefore gave rise to a reasonable apprehension of bias.
[29] In her judgment, Naidoo J set out the circumstances surrounding that telephone call.
She stated that she had to travel to KwaZulu-Natal to attend a funeral, of a family member and could not hear the variation application which was brought by the respondent.
The application was then re-allocated to Daniso J. Naidoo J was asked by her Judge President to telephone Daniso J on the morning of 4 June 2021, and put her up to speed with the matter.
As courtesy, Naidoo J had an opportunity to speak to Daniso J to thank her for hearing the application.
During the telephonic conversation, Daniso J wanted to know about the matter and she explained briefly that she had set bail pending sentence and that the application was for variation of the bail conditions.
She indicated to her that she had no further information about what sort of variation was sought by the respondent.
[30] The circumstances surrounding the contact between the two judges is in no way a display of personal interest in the appellant’s trial, as suggested by the appellant.
It is common cause that the order for the variation of the bail condition
12 before Daniso J was by agreement between the appellant and the prosecution and was not influenced by Naidoo J.
This ground of recusal must also fail.
[31] There is a presumption that judges are individuals of careful conscience and intellectual discipline, capable of applying their minds to multiplicity of cases which will come before them, without importing their own views or attempting to achieve ends justified in feebleness by their own personal opinions.9 Accordingly, the presumption in favour of impartiality must always be taken into account when conducting the enquiry into whether a reasonable apprehension of bias exists.10 [32] It is incumbent on the appellant to show on the correct facts that there was reasonable apprehension that the judge will not bring an impartial mind to bear in the matter.
The appellant failed to do so.
[33] At face value, the sheer number of complaints may seem to raise an eyebrow.
However, before any cumulative effect of the grounds is considered, individual scrutiny of each must be undertaken.
There is no basis to argue that a reasonable apprehension of bias, from an informed person’s perspective has been shown on any of these grounds.
The test for reasonable apprehension has not been satisfied.
Curiously, the appellant asked for the matter to begin afresh should he succeed on appeal, despite his complaints having arisen at the sentencing stage and after he had been convicted following his plea of guilty.
This against the backdrop of his alleged intention to change his plea.
In light of what has been found above, an inference that the complaints against the judge were contrived so as to result in a trial de novo is irresistible.
As demonstrated above, there is no need to set aside the proceedings currently pending in the high 9 Masuku para 58.
10 Ibid para 62.
13 court and thus the question of a trial de novo does not arise.
In the circumstances, the interference with the decision of the high court is unwarranted.
Accordingly, the appeal must fail.
[34] In the result, the following order is made: The appeal is dismissed.
________________________ D S MOLEFE JUDGE OF APPEAL
14 Appearances For the appellant: A J Joubert SC Instructed by BDK Attorneys, Johannesburg Symington & De Kok Attorneys, Bloemfontein For the respondent: J W Roothman Instructed by: The 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: 8 May 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 Maritz v The State (81/2023) [2024] ZASCA 72 (8 May 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal.
The appeal emanated from the Free State Division of the High Court, Bloemfontein (the high court) where the presiding judge in that matter (Naidoo J) refused to recuse herself from the pending criminal trial.
The appellant, Mr Jan Gysbert Maritz, a practising attorney, was charged with 18 counts of sexual assault and statutory rape.
On 17 May 2021, the trial commenced in the high court.
The appellant was represented by two senior counsel and pleaded not guilty to all charges.
On 21 May 2021, whilst the first state witness was testifying, the appellant advised the high court that he wished to change his plea of not guilty to a guilty plea, and made numerous admissions in terms of s 220 of the Criminal Procedure Act 51 of 1977 (the Act) which were accepted by the respondent.
Based on these admissions, the appellant was convicted on counts 1 to 16 after the respondent stopped prosecution in respect of counts 17 and 18.
He was convicted on his guilty plea and released on bail with certain conditions, pending sentencing proceedings which were to be held from 14 to 17 September 2021.
The respondent applied for variation of the appellant’s bail conditions, and the matter was set down for hearing on 4 June 2021.
Due to a bereavement in her family, Naidoo J was not available to hear the application, and Daniso J adjudicated the variation of the bail conditions application.
A week before the commencement of the scheduled sentencing proceedings, the appellant’s legal representatives indicated to Naidoo J that they would be terminating their services due to ethical reasons and that the appellant would apply for the withdrawal of the s 220 admissions.
Naidoo J informed them that she was functus officio as she had already convicted the appellant.
On 14 September 2021, counsel for the appellant at the time, formally withdrew their services along with the then instructing attorneys.
Subsequently, new legal representatives placed themselves on record and indicated that they were not ready to proceed with sentencing on that day.
The parties were then afforded an opportunity to argue whether the appellant’s bail should be revoked.
Ultimately, Naidoo J revoked the bail and remanded the appellant in custody.
She refused the appellant’s application for leave to appeal the revocation of bail.
Leave to appeal was granted by this Court to the full court of the Free State Division of the High Court, Bloemfontein (the full court).
On 5 November 2021, the full court reinstated the appellant’s bail and he was released from prison.
2 On 29 November 2021, the appellant brought an application for the recusal of Naidoo J on the basis that she was biased and that he had a reasonable apprehension that he will not be accorded a fair trial.
He based his application against Naidoo J on the following: (a) the judge irrationally and unilaterally revoked his bail; (b) the judge is a Gender Based Violence Activist (GBV Activist); (c) the judge requested a victim impact report before the revocation of the appellant’s bail; and (d) prior to the hearing of the variation of the appellant’s bail conditions, the judge spoke to her colleague, Daniso J about the case.
The high court dismissed the application for recusal.
Dissatisfied with the high court order, the appellant petitioned the SCA and leave to appeal was granted.
In addressing the appellant’s contentions as listed above, the SCA reasoned as follows: (a) With regards to the revocation of bail, the SCA held that the allegation by the appellant that Naidoo J mentioned that she would revoke his bail while they were in chambers was not supported by any of the affidavits filed by those who were present in chambers on that day, including by his erstwhile counsel.
In the result, the SCA, on this point, concluded that this allegation must therefore be rejected as being without any merit and not capable of grounding a reasonable apprehension of bias; (b) On the point of being a GBV Activist, the SCA reasoned that a judge’s holding of particular views on social matters was not an indication that that judge will necessarily be biased in respect of certain matters, nor does it naturally follow that, where a judge was known to hold certain views, she will not be capable of applying her mind to a particular matter.
The SCA similarly rejected this ground for recusal as being without merit; (c) On the ground of the request for a victim report, the SCA held that the high court was correct in rejecting it because, as a matter of fact, it would make no sense for the judge to ask her registrar to call the appellant for any documentation.
Secondly, at no point did counsel state that the registrar specifically asked for a victim impact report, and, lastly, the judge was informed that the appellant’s new legal team would not be ready to proceed with the sentencing proceedings on the date scheduled, therefore, the issue of a report being sought to be read before that day, would be illogical; (d) On the last ground of recusal which related to contact between Naidoo J and Daniso J, the SCA reasoned that the circumstances surrounding the contact between the two judges was in no way a display of personal interest in the appellant’s trial, as was suggested by the appellant.
It was common cause that the order for the variation of the bail condition before Daniso J was by agreement between the appellant and the prosecution and was not influenced by Naidoo J.
In conclusion, the SCA held that it was incumbent on the appellant to show, on the correct facts, that there was reasonable apprehension that the judge will not bring an impartial mind to bear in the matter and that the appellant failed to do so.
In the result, the SCA dismissed the appeal.
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4276 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 471/2023 In the matter between: TRUSTCO GROUP HOLDINGS LIMITED APPELLANT and FINANCIAL SERVICES TRIBUNAL FIRST RESPONDENT JSE LIMITED SECOND RESPONDENT Neutral citation: Trustco Group Holdings Limited v Financial Services Tribunal and Another (471/2023) [2024] ZASCA 100 (19 June 2024) Coram: DAMBUZA, SCHIPPERS and WEINER JJA, SMITH and MBHELE AJJA Heard: 14 May 2024 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 of the judgment is deemed to be 11h00 on 19 June 2024.
Summary: Statutory interpretation – Financial Markets Act 19 of 2012 (Financial Markets Act) – powers of Johannesburg Stock Exchange – has wide powers in terms of its Listing Requirements and Financial Markets Act to direct restatement of financial statements – appointment of a panel of Financial Services Tribunal in terms of s 224 of the Financial Sector Regulation Act 9 of 2017 – does not require a person with experience or expert knowledge of financial services or the financial system.
2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Potterill J, sitting as court of first instance): The appeal is dismissed with costs on the attorney and client scale, including the costs of two counsel, where so employed.
___________________________________________________________________ JUDGMENT ___________________________________________________________________ Smith AJA (Dambuza, Schippers and Weiner JJA and Mbhele AJ concurring): Introduction [1] This appeal concerns: (a) the power of the second respondent, the Johannesburg Stock Exchange (the JSE), to direct listed entities to restate financial statements; and (b) whether a panel of the Financial Services Tribunal (the Tribunal) to hear an application for the reconsideration of a decision in terms of s 230 of the Financial Sector Regulation Act 9 of 2017 (the FSR Act), was properly constituted.
The appeal is with the leave of this Court.
[2] The JSE is a securities exchange, licensed in terms of the Financial Markets Act 19 of 2012 (the Financial Markets Act).
The appellant, Trustco Group Holdings Limited (Trustco), is listed on the JSE and the Namibian Stock Exchange.
The first respondent is the Tribunal, established in terms of s 219 of the FSR Act.
Apart from filing reasons in terms of rule 53 of the Uniform Rules of Court, the Tribunal did not participate in the proceedings before the Gauteng Division of the High Court, Pretoria (the high court), nor in this Court.
[3] On 22 November 2020, the JSE directed Trustco to restate its financial statements for the year ending 31 March 2019 to correct certain entries relating to loans by its Chief Executive Officer and major shareholder, Dr Quinton van Rooyen,
3 and reclassification of immovable properties from inventory to investment property.1 The JSE also directed Trustco to reverse the profits declared in pursuance of those transactions.
[4] After the JSE dismissed Trustco’s objection filed in terms of its Listings Requirements, on 10 February 2021, Trustco filed an application with the Tribunal for the reconsideration of the JSE’s decision in terms of s 230 of the FSR Act.
The Tribunal dismissed that application on 22 November 2021.
[5] On 31 January 2022, Trustco launched an application in the high court seeking to review and set aside the Tribunal’s determination, inter alia, on the grounds that the JSE lacks the power to direct listed companies to restate their financial statements and that a panel of the Tribunal had not been properly constituted in terms of s 224 of the FSR Act.
The high court (Potterill J) dismissed the application with costs.
The facts [6] The following material facts are common cause.
Between 2015 and 2018, Dr Van Rooyen advanced to Huso Investments (Pty) Limited (Huso) and other subsidiaries of Trustco loans amounting to approximately N$ 546 million.
Huso was a related company in which Dr Van Rooyen owned all the shares.
In 2018, Trustco acquired all Huso’s issued shares.
[7] The loans were initially reflected in Huso’s financial statements as equity, in other words, they were reflected as investments by Dr Van Rooyen.
However, by the time Trustco had acquired Huso’s shares, the loan amount had been reclassified as a liability, namely a debt owed to Dr Van Rooyen.
[8] The sale of shares agreement in respect of Trustco’s purchase of Dr Van Rooyen’s shares in Huso included an ‘earn-out’ mechanism in terms of which the former would be allocated shares in Trustco if it met certain profit thresholds.
A few weeks after the conclusion of the sale of shares agreement, Dr Van Rooyen ‘forgave’ 1 Inventory property is an asset held for sale in the ordinary course of business.
Investment property (land or buildings) is held to earn rental or for capital appreciation.
Property can only be reclassified for accounting purposes if there is a change in use.
4 the loans, resulting in a N$ 546 million profit in Trustco and triggering the ‘earn-out’ mechanism, which allowed Dr Van Rooyen to acquire the Trustco shares.
[9] In October 2018, Dr Van Rooyen advanced a second loan of N$ 1 billion to Trustco, which he also ‘forgave’ during 2019.
That amount was then also reflected in Trustco’s financial statements as profit, again allowing Dr Van Rooyen to acquire more shares in terms of the contractual ‘earn-out’ mechanism.
[10] The next entry in Trustco’s financial statements with which the JSE took issue, was the reclassification of properties owned by Trustco in Elisenheim, Windhoek, Namibia, from inventory to investment property.
Trustco explained that the reclassification was done because a decline in demand meant that it did not anticipate selling the properties in the foreseeable future.
It thereafter revalued the properties and, as a result, reported a profit of N$ 693 million.
[11] On 5 December 2019, the JSE advised Trustco that its financial statements had been selected for review under its ‘pro-active review process’, in terms of which listed companies’ financial statements are reviewed at least once every five years.
The JSE referred three issues to its Financial Reporting Investigation Panel (FRIP).2 Two related to entries in respect of the loans by Dr Van Rooyen, and the other to the entries reflecting the reclassification of the immovable properties from inventory to investment property.
[12] On the FRIP’s advice, the JSE informed Trustco, on 16 October 2020, that the entries did not comply with the International Financial Reporting Standards (the IFRS).3 2 The FRIP is an advisory panel of financial reporting experts whose function is to investigate and advise the JSE on alleged cases of non-compliance with financial reporting standards in annual and interim reports and any other company publications.
It is established in terms of para 8.65 of the JSE Listing Requirements.
3 The IFRS are a set of accounting rules for the financial statements of public companies that are intended to make them consistent, transparent, and easily comparable.
They are issued by the International Accounting Standards Board and are intended to foster greater corporate transparency regardless of the company or the country.
5 [13] Trustco objected to that decision in terms of clause 1.4 of the JSE Listings Requirements.
On 11 November 2020, the JSE dismissed the objection and directed Trustco to restate its annual financial statements for the year ending 31 March 2019 to correctly reflect the nature of the transactions.
[14] Trustco’s reconsideration application was heard by a panel appointed and chaired by the Tribunal’s chairperson, retired Judge Harms.
A practising advocate and an attorney served with Judge Harms on the panel.
Both parties submitted opinions by their respective accounting experts.
Trustco relied on a report filed by an accountant, Mr Tapiwa Njikizana, and the JSE relied on the FRIP report and the opinion of Professor Maroun, a chartered accountant.
[15] As mentioned earlier, the Tribunal dismissed Trustco’s application for the reconsideration of the JSE’s decision on 22 November 2021.
Trustco launched its review application challenging the Tribunal’s decision in February 2022.
[16] In February 2023, Trustco agreed to restate its financial statements and undertook to: (a) arrange for the shares issued to Dr Van Rooyen to be returned to Trustco; (b) reinstate the loans waived by the former; and (c) reverse the profits declared pursuant to the waiver of the loans.
It is common cause, however, that it did so without prejudice to its rights and solely to ensure the lifting of the suspension of the trading of its shares on the JSE.
The issue of mootness accordingly does not arise.
Proceedings in the high court [17] In the high court, Trustco challenged the Tribunal’s decision on three main grounds, namely: (a) On a proper interpretation of ss 220(2), 224(2) and 225(2)(a) of the FSR Act, the Tribunal panel was improperly constituted; (b) The JSE does not have the power to direct listed companies to restate their financial statements; and (c) The Tribunal accorded undue deference to the views of the JSE and its expert witness.
6 [18] Regarding (a), Trustco argued that the panel constituted to decide the reconsideration application violated the provisions of the FSR Act because it comprised only lawyers who lacked the necessary financial expertise and experience.
The decision to constitute the panel was therefore irrational and unreasonable, and rendered the procedure adopted by the Tribunal unfair.
[19] As regards (b), Trustco argued that the JSE does not have the power under para 8.65 of its Listings Requirements to direct companies to restate their financial statements.
That provision, according to Trustco, envisages a more drastic procedure, namely the ‘reissue’ of financial statements.
Restatements, on the other hand, are voluntary acts which may be undertaken by listed entities under para 3.14 of the Listing Requirements.
In the event, publication on the JSE’s real time Stock Exchange News Service would have more effectively informed the public that the JSE had taken issue with Trustco’s financial statements, so Trustco argued.
[20] Trustco’s contentions in respect of the undue deference review ground were based mainly on the Tribunal’s statement in the reasons it provided under rule 53 that ‘[a]lthough the Tribunal is an “expert” tribunal, it is obviously less qualified than the JSE to make multi-faceted and polycentric decisions.
.
.’ This statement, Trustco contended, was a critical concession by the Tribunal that, because the panel comprised only persons with legal expertise, it lacked the expertise properly to adjudicate issues involving complicated financial and accounting principles.
[21] The JSE took issue with those contentions and argued that Trustco’s failure to challenge the decision of the Tribunal chairman, Judge Harms, to appoint the panel was fatal to its application.
That decision, the JSE contended, constituted administrative action as defined in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and it thus remained valid and effectual until set aside by a competent court.4 Not having challenged the decision to appoint the panel, Trustco was precluded from arguing that because the panel was not properly constituted, its process was procedurally unfair or unreasonable.
4 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] ZASCA 48; [2004] 3 All SA 1 (SCA); 2004 (6) SA 222 (SCA) para 26; MEC for Health, Eastern Cape v Kirland Investments (Pty) Ltd [2014] ZACC 6; 2014 (5) BCLR 547 (CC); 2014 (3) SA 481 (CC).
7 [22] As to the restatement issue, the JSE argued that para 8.65 of the Listing Requirements grants it wide permissive powers ‘in its sole discretion’ to instruct a listed entity to publish or reissue any information it deems appropriate.
In addition, in terms of the Financial Markets Act, the JSE is obliged to supervise compliance with its Listings Requirements,5 and grants it wide permissive powers to impose sanctions and to do ‘all other things that are necessary for, incidental or conducive to the proper operation of an exchange and that are not inconsistent with this Act’.6 Relying on the judgment in Huge Group Ltd v Executive Officer: Financial Services Board,7 the JSE contended that the power in terms of para 8.65 of the Listing Requirements to instruct companies to reissue or publish any information that the JSE deems appropriate, contextually and purposely interpreted, includes the power to direct restatement of financial statements.
[23] In respect of the undue deference argument, the JSE contended that the Tribunal properly evaluated and analysed the expert evidence submitted by the parties and gave comprehensive reasons for preferring the testimony of the JSE’s experts.
The Tribunal’s decision was thus underpinned by an objective consideration of the evidence.
[24] The high court found that since Trustco did not assail Justice Harms’ decision to appoint the panel, the court could not find ‘that the constitution of the Panel by retired Judge Harms was procedurally unfair or that the constitution of the Panel was a decision of the Panel and is reviewable’.
The high court found, furthermore, that on a reasonable construction of ss 220, 224 and 225 of the FSR Act, it is not a legal requirement that a panel constituted in terms of s 224 should include a person with financial experience and expertise.
The court observed that, even though the contended requirement of having financial expertise on the panel is not unreasonable, ‘a Panel consisting of lawyers is eminently suited to adjudicate a reconsideration in evaluating facts and evidence’.
5 Section 10(2).
6 Section 10(2)(m).
7 Huge Group Limited v JSE Limited and Another 15380/2015 GLD (21 July 2017), para 55 where the court held that the JSE’s power under Listing Requirement 8.65 to direct companies to reissue financial statements does not ‘exclude from the ambit of that provision an instruction to restate annual financial statements’.
8 [25] Regarding the restatement issue, the high court upheld the JSE’s contention that para 8.65 of the Listing Requirements, properly interpreted, includes the power to direct listed entities to restate their financial statements.
The court was of the view that without that power, ‘the JSE has in fact no teeth to correct the position to protect the public with the financial statements setting out the full picture’.
[26] The high court also made short shrift of the undue deference argument, finding that ‘the Panel did not just sit back and defer to the JSE’.
It was also satisfied that the Tribunal had properly analysed the experts’ views.
The contentions on appeal [27] In its written argument, Trustco persisted only with two appeal grounds, namely that: (a) the FSR Act, properly interpreted, requires that in cases involving only accounting issues, the panel must include persons with financial expertise and experience; and (b) para 8.65 of the Listing Requirements does not empower the JSE to issue directives for listed companies to restate financial statements.
The JSE is consequently only empowered to direct a ‘re-issue’ of financial statements, which is a more invasive procedure that requires of the JSE to take other ancillary steps.
[28] However, in oral argument before us, Trustco all but abandoned those points.
It instead resuscitated the undue deference argument and, in addition, raised a new argument, namely that in appointing the panel in terms of s 224 of the FSR Act, Judge Harms had a discretion to include a person with financial expertise.
According to Trustco, Judge Harms, on his own admission, failed to exercise that discretion thereby rendering the appointment of the panel fundamentally flawed.
[29] Because Trustco did not unequivocally abandon the arguments relating to the composition of the panel and the power of the JSE to direct restatements of financial statements, I am constrained to deal with them before I consider the new arguments advanced on appeal.
9 Discussion [30] First, regarding the composition of the panel, s 220 of the FSR Act provides that the Tribunal members must include, ‘at least two persons who are retired judges, or are persons who have suitable expertise and experience in law’ and, ‘at least two other persons with experience or expert knowledge of financial products, financial services, financial instruments, market infrastructures or the financial system’.
In terms of s 224(4),8 panels must consist of ‘a person to preside over the panel, who must be a person referred to in s 220(2)(a)9 or 225(2)(a)(i)’,10 namely a retired judge or person with legal experience or expertise, and ‘two or more persons who are Tribunal members or persons on the panel list’.
[31] These sections do not contain any express or implied requirement for a panel constituted under s 220 to include a person with knowledge of accounting practices or international financial reporting standards.
The interpretation contended for by Trustco simply does not find any support in the express and unequivocal language of these provisions.
[32] Second, the argument that the JSE does not have the power to direct listed entities to restate financial statements is, in my view, equally unsustainable.
It was thus no surprise that it was not pursued in oral argument before us.
Counsel for the JSE correctly submitted that para 8.65 of the Listing Requirements confers on the JSE wide permissive powers to instruct listed entities, in its sole discretion, to ‘publish or reissue any information it deems appropriate’.
These wide powers are underpinned by ss 10(2)(m) and 11(1)(g)(v) of the Financial Markets Act which, respectively, empowers the JSE to do ‘all other things that are necessary for, or incidental or 8 Section 224(2) reads as follows: ‘(2) The panel constituted to consider an application for the reconsideration of a decision is the decision-making body of the Tribunal, and the panel exercises any of the powers of the Tribunal relating to the reconsideration of the decision.’ 9 Section 220(2) reads as follows: ‘(2) The Tribunal members must include— (a) at least two persons who are retired judges, or are persons with suitable expertise and experience in law; and (b) at least two other persons with experience or expert knowledge of financial products, financial services, financial instruments, market infrastructures or the financial system.’ 10 Section 225 provides that: ‘(1) The Minister must establish and maintain a list of persons who are willing to serve as members of panels of the Tribunal.
(2) The persons included in the panel list must— (a) have relevant experience in or expert knowledge— (i) of law; or (ii) of financial products, financial services, financial instruments, market infrastructures or the financial system; and (b) be a fit and proper person to be included in the panel list.’
10 conducive to the proper operation of an exchange and that are not inconsistent with this Act’ and empowers the JSE to impose any penalty that is ‘appropriate in the circumstances’.
[33] Construed in terms of established canons of interpretation, that is, regard being had to the text, context and purpose of the JSE Listing Requirements, this construction also makes business sense.11 It is manifestly essential that investors on the JSE are able to rely on accurate financial statements that comply with international accounting standards.
It is also self-evident that a market cannot properly operate without them.
It is the JSE’s statutory obligation, in terms of its Listing Requirements under the Financial Markets Act, to hold listed entities to this imperative.
And, where financial statements do not accurately reflect the nature of financial transactions in accordance with international accounting standards, the JSE must be entitled to direct restatement of the financial statements to ensure that the full and correct position is stated.
Both these grounds of review can therefore not succeed.
[34] I now consider the new submissions advanced in oral argument before us.
The argument that Judge Harms failed to exercise his discretion to appoint a person with financial expertise as a member of the panel, is premised on the following statements contained in his ‘REASONS IN TERMS OF UNIFORM RULE 52(1)(b)’.
He said the following in respect of his decision to appoint the panel: (a) ‘I consider the general nature of the case (e.g., is it about the Pension Funds Adjudicator, the FAIS Ombud, a debarment, an administrative penalty, emanates from a body such as the JSE, etc.
), ask about the size of the record (in this matter eventually [it] was extensive), the workload of panellists and their availability and the equal spread of the workload.
I have regard to potentiality of conflict, representativity, seniority and general experience as well as the duty to induct younger (new) members into potentially challenging cases.
I am conscious of the judicial anathema to choosing horses for courses.’ (b) ‘I did not receive or read the record before settling the panel and only read it in preparation for the hearing after receiving the heads of argument.
I knew, from experience, that matters relating to the JSE before the (former) Financial Services Appeal Board and this Tribunal can 11 University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (6) SA 1 (CC); 2021 (8) BCLR 807 (CC); Natal Pension Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA); [2012] 2 All SA 262 (SCA).
11 be difficult and because of the many kinds of decisions the JSE may make are of different kinds.
(I was also the chairman of the former JSE Appeal Board until my appointment as a judge in 1986.
)’; and (c) ‘Past JSE matters raised no accounting issues, and I was unaware that there were issues, that according to the applicant, could only be decided by someone with the “necessary and statutory required knowledge and expertise of the application of International Financial Reporting Standards (“IFRS”) to be so appointed for the matter under consideration”, which, by definition, excludes all the potential chairs.’ [35] Counsel for Trustco submitted that these statements indicate that Judge Harms, on his own admission, was unaware of the nature and complexity of the issues that the Tribunal would be required to consider before appointing the panel.
He was consequently oblivious of the need to appoint someone with the requisite financial expertise and experience.
His failure to exercise his discretion in respect of that issue not only taints the appointment of the panel but also renders the entire process pursuant thereto procedurally unfair and reviewable, so the argument went.
[36] In my view, there are several insurmountable difficulties with this argument.
The first problem relates to the timing and the manner in which the point was raised.
It is common cause that this review ground was not raised in the high court, neither was it raised in Trustco’s written argument on appeal to this Court.
As mentioned earlier, it was raised for the first time during oral argument before us.
This has important consequences for the context in which Judge Harms’ reasons should be construed.
When he prepared those reasons, Judge Harms was obviously unaware of the allegation that he did not exercise a discretion and consequently did not address that issue at all.
He explained that ‘[t]hese “reasons” are submitted because of the applicant’s displeasure with the record of the proceedings’.
Having failed to challenge Judge Harms’ decision to appoint the panel and to draw his attention to the allegation that he failed to exercise a discretion, it can hardly lie in Trustco’s mouth to construe the reasons he provided for a different purpose in support of this new review ground.
[37] Moreover, the manner in which the point was raised creates a more fundamental problem for Trustco.
The decision to constitute a panel of the Tribunal
12 in terms of s 224(1) of the FSR Act is a self-standing administrative act.
In taking this decision, Judge Harms was exercising a public power which – at least according to Trustco – adversely affected its rights and accordingly had ‘a direct, external effect’.12 In terms of the legal principle enunciated in Oudekraal Estates (Pty) Ltd v City of Cape Town and Others13 and MEC for Health, Eastern Cape v Kirland Investments,14 that administrative decision remained valid and effectual until set aside by a competent court.
[38] Trustco’s answer to this assertion was that as dominus litis, it was entitled to challenge either (a) the decision of the Tribunal chairman to constitute the panel; or (b) the decision of the Tribunal, on the basis that the process was procedurally and substantively irrational because the panel had been improperly constituted and lacked the necessary expertise.
It had chosen the latter option and was accordingly not required to amend its notice of motion to assail the decision of the Tribunal chairman.
[39] In my view, this argument does not bear scrutiny.
It is a direct attack on Judge Harms’ decision to constitute the panel in the manner that he did.
This was not an issue to which the respondents were required to address their minds.
Had the challenge been raised in the founding papers, the Judge would have been able to answer it.
A party is required to make out its case in the founding affidavit;15 even less is it permitted to mount a challenge to a decision in heads of argument.
The new challenge advanced during oral argument, namely that Judge Harms failed to exercise a discretion in terms of s 224 of the FSR Act when appointing the panel, is ‘a full-frontal attack’ on an administrative act, which could only be undone by virtue of judicial review in terms of PAJA.
In my view, Trustco’s failure to adopt that course is fatal to its case.
[40] In any event, the statements cited by Trustco in support of its submission that Judge Harms failed to exercise a discretion were quoted selectively and out of 12 Section 1 of PAJA.
13 Oudekraal fn 4.
14 Kirland fn 4.
15 Director of Hospital Services v Mistry (272/77) [1978] ZASCA 126 (9 November 1978).
13 context.
The Judge explained the procedure he followed in appointing the panel and stated that he accepted ‘that the Minister appointed all by following the statutory prescripts and that all members of the Tribunal and on the panel list are equal and independent and competent to decide any of the many and varied issues under the many Acts listed in Schedule 1 of the Act that fall under the jurisdiction of the Tribunal’.
He explained furthermore that ‘[t]he composition of a panel is a matter that is settled after a request from the Secretary of the Tribunal, considering the statutory requirement, before a hearing date is determined.
She proposes a panel, and we then discuss it before I make my decision.’ (Emphasis added.)
[41] Those reasons, having been provided in the absence of a specific allegation regarding the exercise of a discretion by Judge Harms, establish that he considered the panel proposed by the Secretary and that he exercised a discretion in deciding on the panel members, having regard to ‘the general nature of the case’.
This review ground is therefore also unsustainable and falls to be dismissed on any of the foregoing bases.
[42] Regarding the undue deference review ground, Trustco submitted that the Tribunal’s reasoning shows that the panel members were under the erroneous impression that they were required to defer to the JSE’s views.
Because they lacked the necessary financial expertise to understand and objectively analyse the merits and demerits of the financial experts’ opinions, they impermissibly abdicated their statutory responsibility to render a decision based on their own assessment of the evidence.
In support of this assertion Trustco pointed to the following aspects of the Tribunal decision: (a) The Tribunal acknowledges that it is not an ‘expert tribunal’ and that it is obviously less qualified than the JSE to make ‘multi-faceted and polycentric decisions’; (b) The Tribunal was under the erroneous impression that the Administrative Law principle of ‘deference’ was applicable and that they were therefore constrained to show respect to the JSE’s decision.16 That rule is peculiar to judicial reviews,17 and 16 Staufen Investments (Pty) Ltd v The Minister of Public Works, Eskom Holdings SOC Ltd & Registrar of Deeds, Cape Town [2020] ZASCA 18; [2020] 2 All SA 738 (SCA); 2020 (4) SA 78 (SCA).
17 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others [2004] ZACC 15; 2004 (4) SA 490 (CC) paras 46-48.
14 was not relevant to an application for the reconsideration of the JSE’s decision in terms of s 230 of the FSR Act; and (c) While dealing with the opinion of Trustco’s expert, Mr Njikizana, in a perfunctory manner, the Tribunal accorded disproportionate deference to the JSE’s views and quoted extensively from its submissions.
The panel members accepted the JSE’s views indiscriminately and therefore failed to decide the disputed issues based on their own objective assessment of the evidence.
[43] In my view, this criticism is unjustified and is belied by the Tribunal’s extensive analysis of Mr Njikizana’s opinion, the JSE’s submissions and the reasons it gave for preferring the opinion of the JSE’s expert, Prof Maroun.
The Tribunal explained that Mr Njikizana was not ‘entirely objective’ and that his report contained ‘a mix of allegation of fact, interpretation and adjudication and therefore transgresses the limits of “expert evidence”’.
The Tribunal then proceeded to juxtapose Mr Njikizana’s opinion with that of the JSE, Prof Maroun and the FRIP.
And, cautioning that ‘[n]umbers do not count, reasons do’, the Tribunal then considered Mr Njikizana’s conclusion that ‘form trumps substance’, and his opinion in respect of the presumption regarding fair representation of financial transactions.
The Tribunal provided extensive reasons for its finding that the presumption did not avail Trustco and why it preferred the JSE’s approach, which emphasises substance over form.
[44] The criticism that the Tribunal did not give due consideration to Mr Njikizana’s opinion is also demonstrably unfounded.
The Tribunal analysed his submissions and, thereafter, dealt with the JSE’s views.
It again considered Trustco’s submission that the JSE’s stance overrode the requirements of the IRFS.
The Tribunal then carefully weighed up the conflicting opinions and gave comprehensive reasons why it preferred the JSE’s views.
I need not concern myself with the soundness of the Tribunal’s reasoning since it is the propriety of the process that resulted in its decision and not the correctness of its findings that must be considered in review proceedings.
I am therefore of the view that this review ground must also fail.
Consequently, the appeal falls to be dismissed.
15 Costs [45] Counsel for the JSE asked the Court to award costs on a punitive scale to show its disapproval of the unacceptable manner in which Trustco conducted the litigation.
I agree.
Trustco has vacillated regarding its review grounds throughout the proceedings both in the high court and in this Court and, in the end, it presented oral argument in respect of issues not foreshadowed in the pleadings or its heads of argument.
The JSE has been put out of pocket because it was compelled to incur unnecessary costs to defend litigation that had no reasonable prospects of succeeding.
It is thus only fair that the JSE should be indemnified in respect of those unnecessary expenses through a punitive costs order.
Order [46] In the result I make the following order: The appeal is dismissed with costs on the attorney and client scale, including the costs of two counsel, where so employed.
________________________ J E SMITH ACTING JUDGE OF APPEAL
16 Appearances For the appellant: W Trengrove SC with S Scott Instructed by Norton Rose Fulbright South Africa Inc., Johannesburg Webbers, Bloemfontein For the second respondent: I Green SC with M Kruger Instructed by: Webber Wentzel, Johannesburg Honey Attorneys, Bloemfontein.
IAS 40nvestment Pr operty appli es to the accounting for proper ty (land and/or buildi ngs) hel d to ear n r entals or for capital appreci ation ( or both).
Investment pr operties are i nitiall y measured at cost and, wi th some exceptions.
may be subsequentl y measured using a cost model or fair value model, with changes in the fair val ue under the fair value model being recognised i n pr ofit or l oss.
IAS 40 was r eissued i n D ecember 2003 and applies to annual periods beginning on or after 1 Januar y 2005. | 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 June 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 Trustco Group Holdings Limited v Financial Services Tribunal and Another (471/2023) [2024] ZASCA 100 (19 June 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal against the order of the Gauteng Division of the High Court, Pretoria (the high court), with costs on the attorney and client scale, including the costs of two counsel, where so employed.
The appellant is Trustco Group Holdings Limited (Trustco), a company listed on the second respondent, the Johannesburg Stock Exchange (the JSE), and the Namibian Stock Exchange.
The first respondent is the Financial Services Tribunal (the Tribunal), established in terms of s 219 of the Financial Sector Regulation Act 9 of 2017 (the FSR Act).
The Tribunal did not participate in the proceedings before the high court nor in the appeal before the SCA.
The appeal related to a directive issued by the JSE, which compelled Trustco to restate their financial statements in respect of certain transactions; and the composition of the Tribunal panel established in terms of s 224 of the FSR Act.
The Tribunal had dismissed Trustco’s application for reconsideration of the JSE’s decision on 22 November 2022 and Trustco thereafter filed an application in the high court, seeking to review the Tribunal’s decision.
It did so on three grounds, namely that: (a) on a proper interpretation of ss 220(2), 224(2) and 225(2)(a) of the FSR Act, the Tribunal panel was improperly constituted; (b) the JSE does not have the power to direct listed companies to restate their financial statements; and (c) the Tribunal accorded undue deference to the views of the JSE’s and its expert witness.
The high court delivered its judgment on 7 November 2022, dismissing the application with costs.
Trustco appealed that decision with the leave of the SCA.
2 Between 2015 and 2018, Trustco’s Chief Executive Officer and majority shareholder, Dr Quinton van Rooyen, advanced to Huso Investments Pty Limited (Huso) and other subsidiaries loans amounting to approximately N$ 546 million.
In 2018, Trustco acquired all Huso’s issued shares.
The loans were initially reflected in Huso’s financial statements as equity, however, by the time Trustco had acquired Huso’s shares, the loan amount had been reclassified as a liability, namely a debt owed to Dr van Rooyen.
The sale of shares agreement in respect of Trustco’s purchase of Dr van Rooyen’s shares in Huso included an ‘earn-out’ mechanism in terms of which the latter would be allocated shares in Trustco if it meets certain profit thresholds.
A few weeks after the conclusion of the sale of shares agreement, Dr van Rooyen ‘forgave’ the loans, resulting in a N$ 546 million profit in Trustco and triggering the ‘earn-out’ mechanism, which allowed Dr van Rooyen to acquire the Trustco shares.
In October 2018, Dr van Rooyen advanced a second loan of N$ 1 billion to Trustco, which he also ‘forgave’ during 2019.
That amount was then also reflected in Trustco’s financial statements as profits, again allowing Dr van Rooyen to acquire more shares in terms of the contractual ‘earn-out’ mechanism The other entry which the JSE took issue with was the reclassification of properties owned by Trustco in Elisenheim, Windhoek, Namibia, from inventory to investment property.
Trustco explained that the reclassification was done because a decline in demand meant that it did not anticipate selling the properties in the foreseeable future.
It thereafter revalued the properties and, as result, reported a profit of N$ 693 million.
On 5 December 2019, the JSE advised Trustco that its financial statements had been selected for review under its ‘pro-active review process’ and subsequently referred three issues to its Financial Reporting Investigation Panel (the FRIP).
Two related to entries in respect of the loans by Dr van Rooyen, and the other to the entries reflecting the reclassification of the immovable properties from inventory to investments properties.
On the FRIP’s advice, the JSE informed Trustco, on 16 October 2020, that the entries did not comply with the prescripts of the International Financial Reporting Standards (the IFRS).
Trustco objected to that decision in terms of clause 1.4 of the JSE Listings Requirements.
On 11 November 2020, the JSE dismissed the objection and directed Trustco to restate its annual financial statements for the year ending 31 March 2019 to correctly reflect the nature of the transactions.
Trustco’s reconsideration application was heard by a panel appointed and chaired by the Tribunal chairman, retired Judge Harms.
In addition to the latter, the panel also comprised a practicing advocate and attorney.
The Tribunal dismissed Trustco’s application for the reconsideration of the JSE’s decision on 22 November 2021.
Trustco then launched its review application challenging the Tribunal’s decision in February 2022.
3 The issues before the SCA thus related to: (a) the power of the JSE to direct listed entities to restate financial statements; and (b) the legal principles governing the appointment of Tribunal panels to hear applications for the reconsideration of the JSE’s decisions in terms of s 230 of the FSR Act.
The SCA found that the relevant sections of the FSR Act, in relation to the composition of a panel, do not contain any express or implied requirement for a panel constituted under s 220 of the FSR Act to include a person with knowledge of accounting practises or international financial reporting standards, as was contended for by Trustco.
The SCA, on this issue, held that the construction contended for by Trustco simply does not find any support in the express and unequivocal language of those sections.
With regards to the issue of the JSE’s powers to direct listed entities to restate financial statements, the SCA held the view that paragraph 8.65 of the JSE Listing Requirements grants wide permissive powers to the JSE to instruct listed entities, in its sole discretion, to ‘publish or reissue any information it deems appropriate’.
The SCA reasoned that these wide powers are underpinned by ss 10(2)(m) and 11(1)(g)(v) of the Financial Markets Act, which, respectively, empower the JSE to do ‘all other things that are necessary for, or incidental or conducive to the proper operation of an exchange and that are not inconsistent with this Act’ and to impose any penalty that is ‘appropriate in the circumstances’.
In the circumstances, the SCA concluded that both grounds (a) and (b) of the review application can therefore not succeed.
In addressing the new arguments advanced in oral arguments before the SCA, namely, that in appointing the Tribunal panel Judge Harms failed to exercise the discretion vested in him in terms of s224 of the FSR Act, and that the Tribunal accorded undue deference to the JSE’s views, the SCA held that this review ground was not raised in the high court, neither was it raised in Trustco’s written argument on appeal to the SCA.
The SCA reasoned that Trustco’s failure to challenge Judge Harms’ decision to appoint the panel and to draw his attention to the allegation that he failed to exercise a discretion, precluded Trustco from construing the reasons he provided for a different purpose in support of this newly contrived review ground.
Lastly, regarding the undue deference review ground, the SCA found that this criticism was unsustainable and unfounded and was belied by the Tribunal’s extensive analysis of the opinion submitted by Trustco’s expert and the reason it gave for preferring the opinion of the JSE’s expert.
In the result, the SCA made an order dismissing the appeal with costs on attorney and client scale, including the costs of two counsel, where so employed.
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4312 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 36/2023 In the matter between: THE PRUDENTIAL AUTHORITY APPELLANT And MKHULULI NOBLE DLAMINI FIRST RESPONDENT NOSIPHO PRUDENCE DLAMINI SECOND RESPONDENT Neutral citation: The Prudential Authority v Dlamini and Another (36/2023) [2024] ZASCA 133 (02 October 2024) Coram: ZONDI, MBATHA and KGOELE JJA and SEEGOBIN and KEIGHTLEY AJJA Heard: 5 March 2024 Delivered: 02 October 2024 Summary: Provisional sequestration order sought on the grounds of s 83 and s 84 of the Banks Act 94 of 1990 – prima facie proof of non-compliance with the Prudential Authority’s directive issued under s 83 sufficient to found sequestration application – the fact that reliance was also placed on s 84 to establish insolvency of the respondents is of no moment as long it is shown on either ground that sequestration will be to the advantage of creditors – appeal against refusal to grant provisional sequestration upheld.
2 ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Ploos van Amstel J, sitting as court of first instance): 1 The appeal succeeds with costs.
2 The order of the high court is set aside and replaced with the following order: ‘(a) The joint estate of the first respondent, Mkhululi Noble Dlamini (Identity Number: 760719 5375 089) and the second respondent, Nosipho Prudence Dlamini (Identity Number: 750925 1152 081) be and is hereby placed under provisional sequestration in the hands of the Master of the Kwa-Zulu Natal Division of the High Court, Pietermaritzburg (‘the Master').
(b) The Master is directed to appoint the person nominated by the applicant to act as provisional trustee of the respondents’ joint estate, in accordance with the provisions of s 84(1A)(b) of the Banks Act 94 of 1990.
(c) A rule nisi is issued calling upon all persons with a legitimate interest to advance reasons, if any, on a date to be determined by the court, why the estate of the respondents should not be placed under final sequestration in the hands of the Master.
(d) The costs of the application are to be costs in the administration of the insolvent estate.’ ______________________________________________________________________ JUDGMENT ______________________________________________________________________Zondi JA (Seegobin and Keightley AJJA concurring): [1] This is an appeal against the judgment and order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court) in which it dismissed the appellant’s application for the provisional sequestration of the joint estate of the first and second respondents in terms of ss 83(3)(b) and 84(1A)(c) of the Banks Act 94 of 1990 (the Banks Act).
The first respondent is Mr Mkhululi Dlamini and Mrs Nosipho Dlamini is the second respondent (the Dlaminis).
They are married to each other in community of property.
The appellant is the Prudential Authority (the Authority).
It fulfils the role of the Registrar of
3 Banks and has the powers and obligations to act in accordance with the provisions of the Banks Act.
[2] The application for the sequestration of the Dlaminis was founded on two grounds.
The first was that they had committed an act of insolvency by failing to comply with a directive issued by the Authority in terms of s 83(1) of the Banks Act directing them to repay money they had obtained by carrying on the business of a bank in contravention of that Act.
The second was that, in terms of s 84(1A)(a), the Dlaminis were factually insolvent.
The high court dismissed the application on the basis that the Authority had failed to show that the Dlaminis were prima facie insolvent and relied further upon the exercise of its discretion.
The appeal is before this Court with the leave of the high court.
[3] The issues therefore are, first, whether ss 83 and 84 of the Banks Act require proof of factual insolvency for the sequestration of a person under those sections, or whether mere proof of non-compliance with a directive issued under s 83 is a sufficient ground for sequestration.
Secondly, whether this Court may interfere with the high court’s discretion to refuse the application.
The facts within which these issues must be determined are largely not in dispute and are straightforward.
[4] Before setting out the facts that gave rise to this appeal, it is necessary to set out the statutory framework against which this matter must be considered.
What gave rise to the application for the sequestration of the Dlaminis were two events.
The first was a finding by the Governor of the Reserve Bank, in terms of s 12 of the South African Reserve Bank Act 90 of 1989 (SARB Act), that the Dlaminis were conducting the business of a bank without being registered or authorised to do so.
The second was the issuance of a directive by the Authority in terms of s 83 of the Banks Act.
[5] Section 12(1) of the SARB Act provides that if the Governor or a Deputy Governor of the Reserve Bank has reason to suspect that anybody not registered as a bank or as a mutual bank, is carrying on the business of a bank or a mutual bank, he or she may direct the Authority to appoint an inspector to cause the affairs or any part of the affairs of such party to be inspected (s 12 directive).
The purpose of the inspection is to establish
4 whether the business of a bank or mutual bank, as the case may be, is being carried on by that party.1 [6] If, as a result of such inspection, the Authority is satisfied that any person obtained money by carrying on the business of a bank without being registered as a bank or without being authorized to carry on the business of a bank, the Authority may, in terms of s 83(1), in writing, direct that person to repay all money he or she so obtained (repayment directive).2 The repayment directive requires the person to repay, subject to the provisions of s 84 and in accordance with such requirements, and within such period as may be specified in the directive, all monies obtained by that person, including any interest.
[7] In terms of s 84(1) of the Banks Act, simultaneously with the issuing of the directive, or as soon thereafter as may be practicable, the Authority must appoint a repayment administrator (the administrator) to manage and control the repayment of money in 1 Section 12(1) of the SARB Act provides as follows: ‘If the Governor or a Deputy Governor has reason to suspect that any person, partnership, close corporation, company or other juristic person who or which is not registered in terms of the Banks Act, 1990 (Act No.
94 of 1990), as a bank or in terms of the Mutual Banks Act, 1993 (Act No.
124 of 1993), as a mutual bank, is carrying on the business of a bank or a mutual bank, he or she may direct the Registrar of Banks referred to in section 4 of the Banks Act, 1990, to cause the affairs or any part of the affairs of such person, partnership, close corporation, company or other juristic person to be inspected by an inspector appointed under section 11 (1), in order to establish whether or not the business of a bank or mutual bank, as the case may be, is being carried on by that person, partnership, close corporation, company or other juristic person.’ 2 Section 83(1) and(3) of the Banks Act provides as follows: ‘(1) If as a result of an inspection conducted under section 12 of the South African Reserve Bank Act, 1989 (Act No.
90 of 1989), the Authority 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 section 18A (1), to carry on the business of a bank, the Authority 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.
… (3) Any person who refuses or fails to comply with a direction under subsection (1)— (a) shall be guilty of an offence; and (b) shall for the purposes of any law relating to the winding-up of juristic persons or to the sequestration of insolvent estates, be deemed not to be able to pay the debts owed by such person or to have committed an act of insolvency, as the case may be, and the Authority shall, notwithstanding anything to the contrary contained in any law, be competent to apply for the winding-up of such a juristic person or for the sequestration of the estate of such a person, as the case may be, to any court having jurisdiction.’
5 compliance with the directive by the person subject thereto3.
On appointment, the administrator must recover and take possession of all the assets of the person subject to the relevant directive;4 and all actions, legal proceedings, the execution of all writs, summonses and other legal processes against that person stayed and may not be instituted or proceeded with without the leave of the court.5 The administrator must, at the request of the Authority, report to the Authority regarding the solvency of a person subject to the directive and, if he or she finds that the person concerned is insolvent, he or she must comment on whether that person is technically or legally insolvent.6 [8] It is clear from what I have set out in the preceding paragraphs that one of the objectives of s 84 is to regulate repayment of the money the administrator receives from the person, pursuant to the directive issued under s 83.
In particular s 84(1A) regulates two functions in the management and control, by the repayment administrator, of repayment of money obtained in contravention of the Banks Act.
Firstly, in terms of s 84(1A)(a), the administrator must report to the Authority whether the person who is subject to the directive is in his or her opinion solvent or not.
If the repayment administrator finds that the person subject to the directive is insolvent, the administrator must comment on whether such person is technically or legally insolvent.
Secondly, s 84(1A)(b)(i) obliges the administrator to recover and take possession of all assets of the person subject to the direction.
[9] Significantly, ss 83 and 84 include two express provisions conferring on the Authority the competence to apply for the sequestration of a person who is subject to a repayment directive.
First, s 83(3)(b) provides that a person who fails to comply with a 3 Section 84 of the Banks Act states as follows: ‘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 Authority 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 Authority 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 Authority has no objection.’ 4 Section 84(1A)(b)(i).
5 Section 84(1A)(b)(ii).
6 Section 84(1A)(a).
6 repayment directive ‘shall for the purposes of any law relating to the winding-up of juristic persons or to the sequestration of insolvent estates, be deemed not to be able to pay the debts owed by such person or to have committed an act of insolvency, as the case may be, and the Authority shall, notwithstanding anything to the contrary contained in any law, be competent to apply for … (his or her) sequestration.’ Second, under s 84, if the report filed by the administrator concludes that the person concerned is insolvent, the Authority may, notwithstanding anything contrary contained in any law relating to liquidation or insolvency, apply to a competent court for the sequestration of the person concerned.7 As I discuss later, the Authority relied on both these provisions in the high court.
[10] It is trite that, in the ordinary course, sequestration proceedings are not to be used to enforce payment of a debt that is disputed on bona fide and reasonable grounds.8 If the claim is disputed on bona fide and reasonable grounds, an order ought not to be granted.
Such an application may amount to an abuse of the process of court.9 Where, however, the respondent’s indebtedness has, prima facie, been established, the onus is on the respondent to show that this indebtedness is indeed disputed on bona fide and reasonable grounds.10 Notwithstanding that the creditor is able to establish all the elements of the case for sequestration, the court still has a discretion as to whether or not to grant the provisional sequestration order.11 [11] With this background, I now turn to consider the facts.
It is common cause that the Dlaminis participated in the Travel Ventures International scheme (TVI scheme) in 2009.
They claim that the TVI scheme was represented to them as a legitimate business opportunity from which they could derive an extra income.
The business of TVI was modelled on a scheme which marketed the sale of travel vouchers which purportedly provided the recipient with significant discounts for international travel and 7 Section 84(1A)(c).
8 Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T) at 348B; Kalil v Decotex (Pty) Ltd and Another [1987] ZASCA 156; [1988] 2 All SA 159 (A); 1988 (1) SA 943 (A) (Kalil) at 945E-F. 9 Exploitatie- en Beleggingsmaatschappij Argonauten 11BV and Another v Honig [2011] ZASCA 182; 2012 (1) SA 247 (SCA); [2012] 2 All SA 22 (SCA) para 11.
10 Op cit Kalil at 980C.
11 Section 10 of the Insolvency Act 24 of 1936.
7 accommodation.
The Dlaminis opened various bank accounts into which they deposited money they received from the investors.
The same bank accounts were used to make payments to the investors.
[12] Following the s 12 directive by the Governor, and the subsequent inspection of the Dlaminis’ affairs, they were found to have obtained money by conducting the business of a bank without being registered as a bank and without being authorized to do so.
The TVI scheme was held by this Court, in Kruger v Joint Trustees of the Insolvent Estate of Paulos Bhekinkosi Zulu and Another,12 to have amounted to the unlawful carrying on of the business of a bank and a pyramid scheme in contravention of the Banks Act.
It is therefore common cause that the Dlaminis received monies unlawfully under the SARB Act.
They claim to have stopped participating in the scheme in 2010, but this claim is not borne out by the bank statements.
They indicate that in 2013 they still received payments of various amounts from the investors.
[13] The Authority, acting as Registrar of Banks, appointed Mr. J G Kruger as the repayment administrator (the administrator) on 6 March 2015.
On 14 March 2016, the Authority served on Mr Dlamini a copy of the appointment letter, together with the repayment directive, also dated 6 March 2015.
The latter informed Mr Dlamini that the repayment process would be controlled by the administrator and warned him of the consequences of failure to comply with the repayment directive.
In turn, on 14 March 2016, the administrator served on the Dlaminis the appointment letter, together with a letter referring to the repayment directive issued on 6 March 2015 and confirming his appointment as an administrator.
In the letter, the administrator advised the Dlaminis that the inspection that had been conducted revealed that the true amount of money unlawfully obtained by them was R2 827 450.
They were directed to pay this amount into the trust account of Bowman Gilfilian Incorporated, alternatively, to make a repayment plan.
They 12 Kruger v Joint Trustees of the Insolvent Estate of Paulos Bhekinkosi Zulu and Another [2016] ZASCA 163; [2017] 1 All SA 1 (SCA) para 2.
8 were advised that they had a right to review or appeal against the directive under s 9(1)13 of the Banks Act within 30 days after the directive.
The amount was expressed to be subject to further investigation and variation.
The administrators demanded that the Dlaminis repay this amount within ten days, with interest at 9 per cent, per annum from date of the directive.
The directive further informed the Dlaminis that a worksheet containing comprehensive calculation of the amount was available on request.
[14] The Dlaminis neither submitted the repayment directive for review in terms of s 9(2)14 of the Banks Act, nor repaid the amount demanded from them.
Therefore, the directive and the amount payable, became unassailable.15 Additionally, by virtue of s 83(3)(b), they were deemed to have committed an act of insolvency.
In consequence, the Authority became entitled to make application for the sequestration of their joint estate.
[15] As already stated, the Authority sought the provisional sequestration order on two grounds.
First, on the ground of the deemed act of insolvency in terms of s 83(3)(b).
The second was in terms of s 84(1A)(c) of the Banks Act, on the ground that the repayment administrator concluded that the Dlaminis are insolvent.
In this regard, the Authority relied on the draft solvency report issued by the administrator on its behalf in terms of s 84(1A)(a) of the Banks Act, which established their indebtedness to the Authority in the amount of R2 827 450 plus interest at the rate of 9 per cent, per annum from the date of the directive.
[16] The Dlaminis opposed the application on the ground that the Authority lacked locus standi to bring the sequestration proceedings.
They disputed the amount claimed by the Authority.
They averred that the amount sought to be repaid was an estimate and that the 13 Section 9 of the Banks Act 90 of 1994 as it stood on 6 March 2015, when the repayment directive was served on the Dlaminis.
Section 9 has since been repealed with effect from 28 September 2018, published under GN 1019 of 28 September 2018 (GG 41947 of 28 September 2018).
14 Ibid.
15 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] ZASCA 48; [2004] 3 All SA 1 (SCA); 2004 (6) SA 222 (SCA) paras 35-36; Merafong City Local Municipality v AngloGold Ashanti Limited [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017 (2) 211(CC) paras 41-44.
9 true amount owing was yet to be established in parallel litigation in the Gauteng Division of the High Court, Pretoria.
In that litigation, the Dlaminis and other plaintiffs seek an order declaring that, with reference to ss 83 and 84 of the Banks Act, only such amounts that were paid into the respective accounts of the plaintiffs arising from the TVI scheme and which were not paid over to other participants in the scheme and which truly remained under his/her control for his/her benefit and utilisation, constitute monies that stand to be repaid.
[17] The Dlaminis also took issue with the distinction drawn in draft solvency report between ‘confirmed investors, probable investors’ deposits and possible investor deposits’.
They argued that the Authority was only entitled to claim the ‘true amount unlawfully obtained’ which according to them was R151 000.
They contended that, at best for the Authority, it was entitled to claim the ‘possible investor deposits’ as well as the sum of R381 700.
They denied that the sum of R2 413 360, constituting ‘possible investor deposits’, met the threshold of establishing a claim on a balance of probabilities and was the ‘true amount unlawfully obtained’.
[18] The Dlaminis denied further that the sum of R2 946 050, as claimed by the Authority, represented the ‘true amount unlawfully obtained’ by them as contemplated in s 84(a)(i) of the Banks Act.
They alleged that some of the amounts reflected in their bank accounts as TVI payments were monies which they had received through some of their businesses but that, in order to improve their credit profile, they had reflected them as TVI receipts.
The Dlaminis stated ‘[they] did not know that at the time that receival of any money in such circumstances [was] unlawful’.
They claimed that payments they received from the participants or investors for the purchase of the travel vouchers were immediately or soon thereafter, paid over to further investors in purchasing so called ‘vouchers’.
[19] The Dlaminis contended that the maximum amount they had received through the TVI scheme was R408 000 and that they had stopped participating in the scheme 2010.
It appears, however, from the repayment administrator’s interim report that the Dlaminis received payments into their bank accounts up until 2013.
10 [20] The Dlaminis denied further that they were factually insolvent or that their liabilities exceeded their assets by the amount contended for by the Authority.
They disputed the value placed by the Authority on their residence.
According to them, based on the sworn valuation report, the value of the property is R2.9 million and the outstanding amount on the bond is R488 654.87.
The Dlaminis listed the assets which they stated they owned including pension fund and retirement annuities.
They maintained that the value of these assets was over R2.3 million.
[21] The high court dismissed the sequestration application on the grounds that the Authority had failed to establish that the Dlaminis are prima facie insolvent and further, that the Authority had unreasonably delayed in bringing the application.
According to the high court, the draft solvency report, on which the Authority relied, contained several shortcomings, which in its view, rendered it unreliable to support the application for the sequestration of the Dlaminis’ joint estate.
The high court’s criticism of the draft solvency report was based on the following grounds: ‘(a) It is headed “Draft Solvency Report”; (b) It states that Kruger did not warrant the information relating to the respondents’ assets and liabilities to be an accurate and exhaustive depiction of their financial position; (c) It does not identify a single investor, and does not say that their identities can be established; (d) Para 5.4.1 reads as follows: “Funds that were received in the account to the value of R2 700 or multiples thereof and/or where the transaction description positively identifies same as TVI related and where we were able to trace the investor/s, obtain affidavits and match their stated invested amount/s disclosed in the affidavit to bank statements in the name of the institution and/or related entities, were categorised as “confirmed investors.” The only “confirmed investor deposit” in the report is an amount of R151 000.
This is not a multiple of R2 700, nor was the investor traced or an affidavit obtained.
Para 5.4.1 is plainly the product of a so-called “cut and paste” exercise; (e) The report concludes that the “confirmed investor deposit” amounted to R151 000, the “probable investor deposits” R381 700 and “possible investor deposits” R2 413 350.
Deposits are categorised as “possible investor deposits” where the “transactional description appeared to indicate that it was a TVI investor deposit and/or there was a strong reason to believe that the
11 deposit was related to TVI”.
The reasons for categorising particular deposits as possible investor deposits are not stated in the report.
Nor does it appear from the worksheet that was provided to the respondents; (f) The definition of insolvency in paras 10.2.1.1, 10.2.2.4, and 10.2.2.5 does not apply to natural persons, and appears to be another example of “cut and paste”.
“Commercial insolvency” exists when a company is unable to pay its debts as described in section 345 of the Companies Act 61 of 1973.
Actual insolvency is not a requirement, and even a wealthy company may be wound-up if it is in terms of section 345 deemed to be unable to pay its debts.
In the case of a natural person, section 9(3) of the Insolvency Act 24 of 1936 provides that an act of insolvency or actual insolvency is required; (g) The value assigned to the respondents’ residence in the report is R1 850 000, which Kruger says is an estimate obtained from a “Windeed Automated Valuation Report”.
There is no explanation as to what this report is, who prepared it, when it was prepared and on what basis the valuation was done.
I have not even been able to find the conclusion reached in the report; (h) The conclusion in para 10.6.2 that the respondents do not have sufficient capital to repay their “quantifiable liabilities” to the investors and are therefore deemed to be “cash flow” or “legally” insolvent, is an inappropriate reference to commercial insolvency; (i) The report does not conclude that the respondents are factually insolvent.’ [22] Based on what it found to be shortcomings, the high court held that it was not satisfied that the Authority was authorized by s 84(1A)(c) to apply for the sequestration of the Dlaminis’ joint estate.
The high court reasoned that the Authority could only have done so if the report concluded that they were actually insolvent, which it did not.
The high court proceeded to consider whether the documents relied upon by the Authority established actual insolvency.
It rejected as unreliable the figures the Authority used to determine the insolvency of the Dlaminis.
The high court reasoned that in the case of a natural person, s 9(3) of the Insolvency Act 24 of 1936 (the Insolvency Act), an act of insolvency or actual insolvency is required.
[23] It was submitted on behalf of the Authority that the high court erred in dismissing the application for the provisional sequestration of the Dlaminis on the basis that the Authority failed to establish that the Dlaminis were prima facie insolvent.
This was not the only basis of its application.
The Authority based its application both on s 83(3)(b) and
12 s 84(1A)(c) of the Banks Act and, so it contended, either of the two sections was sufficient to found a case for the sequestration of the Dlaminis’ joint estate.
It was argued on behalf of the Authority that, in the light of the deeming provision in s 83 (3)(b), it was not necessary for it to establish, in addition, that the Dlaminis were insolvent.
[24] On the other hand, counsel for the Dlaminis submitted that it was not enough to rely on a ‘deemed commission of act of insolvency’.
The administrator’s report prepared in terms of s 84 had to find that the Dlaminis were factually insolvent.
This was so, proceeded the argument, because the Banks Act, envisages as a first step an inspection by the Authority to establish whether a contravention of the Act has occurred.
It is only after the issue of a repayment directive that s 84 comes into play.
This happens when the administrator is appointed to investigate, among other things, what the true amount is that was unlawfully obtained.
It was accordingly submitted that the act of issuing a repayment directive and the failure to comply with it by a person subject to it, do not, without more, establish a sufficient basis for bringing sequestration proceedings.
This could happen only after the administrator has established what the true amount is that was unlawfully obtained and, in addition, that the person subject to the repayment directive is actually insolvent.
[25] The high court erred in dismissing the application.
It is common cause that the Authority’s application was founded on ss 83 and 84 of the Banks Act.
The Dlaminis failed to repay the amount within the period stipulated in the repayment directive.
They also did not challenge the directive by way of review despite being entitled to do so.
Therefore, the Dlaminis were, in terms of s 83, deemed to have committed an act of insolvency.
[26] An act of insolvency is a statutory concept which obviates the necessity of proving actual insolvency.16 A debtor’s estate may be sequestrated even though he or she is technically solvent.17 However, it was submitted on behalf of the Dlaminis that the Banks Act provides differently.
This is because s 83(1) expressly states that repayment under a repayment directive is ‘subject to the provisions of s 84’.
As already noted, s 84(1A)(c) 16 De Villiers NO v Maursen Properties (Pty) Ltd 1983 (4) SA 670 (T); [1983] 4 All SA 517 (T) at 676D-E. 17 D P Du Plessis Prokureurs v Van Aarde 1999 (4) SA 1333 (T) at 1335F.
13 permits the Authority to apply for a person’s sequestration if the administrator finds that he or she is insolvent.
The argument proceeded that the two sections must be read together, such that the deemed act of insolvency on its own is insufficient.
In addition, it was argued, the Authority must show actual insolvency to establish a lawful ground for sequestration.
In bolstering the argument, it was pointed out that sequestration should be ordered only as a last resort.
[27] I am not persuaded by the Dlaminis’ interpretation of these sections.
Whilst it is correct that there is a reference in s 83 to s 84, on the plain wording of the sections the entirety of s 83 is not made subject to s 84.
Significantly, s 83(3)(b) is not made subject to s 84.
This on its own discounts the correctness of the Dlaminis’ interpretation.
The cross-reference to s 84 is in s 83(1) alone, the relevant portion reading ‘.
.
.
the Authority may in writing direct that person to repay, subject to the provisions of s 84 and in accordance with such requirements and within such period as may be specified in the direction, all money so obtained.
.
.
’ (Emphasis added.)
[28] Section 84 is headed ‘Management and control of repayment of money unlawfully obtained’.
It permits the administrator to control and manage the assets and funds of the person subject to a repayment directive with the objective of ensuring that the repayment is made.
The purpose of s 84 is simply to provide a practical mechanism for securing and managing the repayment of the amount identified in the repayment directive.
It outlines the powers and obligations of the administrator and his or her relationship with the Authority.
Properly interpreted, the cross-reference in s 83(1) to s 84 means no more than that the repayment of the amount identified in the repayment directive is governed by the scheme outlined in s 84.
It cannot be interpreted to limit the Authority’s power to seek sequestration under the deemed act of insolvency provision in s 83(3)(b) by making it necessary, in addition, to establish that the affected person is insolvent.
This does not accord with the plain wording and purpose of the sections.
[29] There is also no public policy reason for reading the sections so as to limit the power of the Authority to seek sequestration as contended for by the Dlaminis.
On the
14 contrary, the whole purpose of the provisions is to ensure that people who have contravened the Act should be held accountable to repay the monies unlawfully obtained.
Public policy requires that the Authority ought to be properly empowered to secure this objective, not hamstrung by having to establish two bases for sequestration, as suggested by the Dlaminis.
[30] For these reasons, I do not accept the correctness of the Dlaminis’ interpretation of s 83.
The Authority did not have to rely on the s 84 report to establish a case based on s 83.
Section 83(3)(b) is a self-contained provision that allows the Authority to bring the sequestration application in an instance where a person, who is subject to a directive, has failed to repay the amount unlawfully obtained and does not challenge the directive.
The Dlaminis were, by virtue of their failure to comply with the directive, deemed to have committed an act of insolvency.
This is a separate ground upon which a sequestration order may be granted, and the Authority was entitled to proceed on that ground alone, without, in addition, having to establish actual insolvency under s 84.
[31] Of course, the Authority may, on the other hand, or in addition, seek to rely on s 84(1A)(c) of the Banks Act as a ground for sequestration on the basis that the person subject to the directive is insolvent.
It is apparent from s 84 that a finding of insolvency in the administrator’s report is a prerequisite before the Authority can bring the sequestration application under s 84.
However, the court faced with the sequestration application would, in addition, have regard to all evidence relevant to the status of the estate before granting or refusing a sequestration order based on s 84(3)(b).
[32] The next question is whether the word ‘insolvent’ appearing in s 84(1A)(c) of the Banks Act includes both factual and technical insolvency.
It was submitted on behalf of the Authority that the ordinary, grammatical meaning of the word ‘insolvent’ is not limited to a factual determination.
It was argued that, in the context of sequestration, the word is used to describe either factual or commercial insolvency and that either, if established, will suffice to establish a prima facie case of insolvency.
15 [33] I disagree.
In terms of s 9(1) of the Insolvency Act sequestration of the debtor’s estate may be brought either on the basis that he or she is factually insolvent or has committed an act of insolvency.
Proof of commercial insolvency will be sufficient in the case of winding-up of a company, but it will not be sufficient for the purpose of obtaining a sequestration order.18 In the case of a natural person, the respondent’s liabilities must actually exceed the value of his or her assets.19 Actual insolvency may be proved by the applicant by setting out the respondent’s liabilities and assets valued on oath at their market value,20 or by setting out such facts from which the inference can be drawn that the respondent’s liabilities exceed his or her assets.21 [34] The draft insolvency report on which the Authority relied concluded that the joint estate of the Dlaminis was insolvent.
That conclusion was based on the findings of the administrator that the likely net value of the assets he had secured was R2 296 865 with the outstanding capital liability payable to the investors of R2 946 050, leaving a shortfall of R649 185.
Based on these figures, the administrator formed the opinion that the Dlaminis did not have sufficient capital to repay the investors and that they were deemed to be ‘cash flow’ or ‘legally’ insolvent’.
The high court interpreted the administrator’s conclusion to mean that the Dlaminis are commercially insolvent rather than actually insolvent.
According to the high court, this conclusion did not mean that their liabilities exceeded their assets fairly valued.
In terms of s 84(1A)(c), reasoned the high court, the Authority could only apply for the sequestration of the Dlaminis’ joint estate if the report concluded that that they were actually insolvent.
[35] As I have already noted, the high court erred in approaching the matter on the basis that, despite the deemed act of insolvency under s 83(3)(b) the Authority in addition, had to establish insolvency under s 84(1A)(c).
For this reason, the question of whether the administrator had concluded that the Dlaminis were commercially, as opposed to 18 P M Meskin Insolvency Law and its Operation in Winding-Up Service Issue 60 at 2-20 para 2.1.3.
19 Ohlsens Cape Breweries Ltd v Totten 1911 TPD 48 at 50.
20 Investec Bank Ltd v Lambrechts NO and Others [2014] ZAWCHC 175; 2019 (5) SA 179 (WCC) para 30.
21 ABSA Bank Ltd v Rhebokskloof (Pty) Ltd and Others 1993 (4) SA 436 (C); [1993] 2 All SA 534 (C) at 443E-F.
16 actually, insolvent was irrelevant to the underlying issue of whether the Authority’s application was well-founded.
Section 83(3)(b) provided a lawful basis for the application.
However, the question of whether the Dlaminis’ estate is insolvent is not entirely irrelevant.
It is relevant to the exercise of the court’s discretion to grant or refuse the application.
[36] The high court misdirected itself in exercising its discretion against the granting of the sequestration order.
In terms of s 10 of the Insolvency Act, if the court that hears an application for the sequestration of a debtor’s estate is of the opinion that prima facie the applicant has established against the debtor a liquidated claim for not less than R100; the debtor has committed an act of insolvency; or is insolvent; and there is reason to believe that it will be to the advantage of creditors of the debtor if his estate is sequestrated, it may grant a provisional sequestration order.
In the context of this matter, as the Dlaminis had opposed the application, the Authority had to establish a case for sequestration on a balance of probabilities.22 In Kalil,23 although the court was concerned with the application for provisional liquidation under the 1973 Companies Act, what it said regarding the procedure to follow in assessing whether the evidence adduced constitutes a prima facie case applies in relation to provisional orders for sequestration.
The court stated that: ‘The determination of the question as to whether the evidence adduced by the party bearing the onus constitutes a prima facie case is thus undertaken purely on a consideration of that evidence and without regard to any evidence which may be, or may have been, adduced in rebuttal.’24 [37] According to the court in Kalil, the procedure is somewhat different where the application for provisional liquidation is opposed, and real and fundamental factual issues arise on the affidavits.
In such a case, the concept of the applicant, upon whom the onus lies, having to establish a prima facie case for the liquidation of the company seems wholly appropriate.25 22 Provincial Building Society of South Africa v Du Bois 1966 (3) SA 76 (W); [1966] 1 All SA 98 (W) at 78B-E. 23 Op cit fn 8.
24 Ibid at 976G-H. 25 Ibid at 976H.
17 [38] In this case, the evidence established that the Dlaminis obtained money through their participation in the TVI scheme which entailed carrying on the business of a bank without being authorized to do so.
The amount which they were directed to repay was disclosed in the directive that was issued and they failed to repay it as directed.
In terms of s 83, they were deemed to have committed an act of insolvency.
In terms of s 84(1A)(f), the Authority is regarded as a creditor and he or she has the same rights of a creditor in terms of the law relating to liquidation and insolvency.
Whilst it is correct that the list containing the amounts collected by the Dlaminis does not specify the creditors, in my view, the lack of such information is not fatal to the Authority’s case because, as already stated, the Authority is regarded as a creditor, and it must collect all money unlawfully obtained and distribute same to the investors once their identity is established.
[39] It is also important to bear in mind that the capital amount specified in the directive does not include the interest which they are obliged to pay under s 83(1).
According to the Authority, when the interest is calculated, it increases the amount due under the repayment directive to over R4 million.
This means that even if the Dlaminis’ valuation of their immovable property as being worth R2.9 million is relied upon, the amount due under the repayment order far exceeds the value of their assets.
[40] I am also satisfied that from the evidence adduced by the Authority that there is reason to believe that it will be to the advantage of creditors if the Dlaminis’ joint estate is sequestrated.
The Authority does not have to furnish positive proof that sequestration will be to the advantage of creditors.
All that it is required to show, is that there is a reason to believe that sequestration will be to the advantage of creditors.26 According to the administrator, the value of the Dlaminis’ joint estate is approximately R2.3 million and their liabilities are about R2.95 million leaving the difference of approximately R650 000.
It is clear from these facts that there is a reasonable prospect that some pecuniary benefit will result to creditors.
In the circumstances, the requirements for the provisional 26 AMOD v Khan 1947 (2) SA 432 (N); [1947] 1 All SA 138 (N) at 437.
18 sequestration of the joint estate of the Dlaminis were met and the high court therefore erred in dismissing it.
[41] As regards the high court’s refusal to grant a sequestration order on the ground of the Authority’s unreasonable delay in bringing the application, in my view, the high court misdirected itself.
The delay was not attributable to the Authority.
The high court ignored the period of delay that occurred when the parties attempted to settle the matter and its failure to consider this relevant fact constituted a material misdirection.
It cannot be said that it exercised its discretion judiciously.
This Court, because of the material misdirection committed by the high court, is entitled to interfere with exercise of the discretion by the high court.27 [42] In conclusion, on the facts, I am satisfied that the Authority should have been granted the provisional sequestration order.
It discharged the onus on a balance of probabilities that the amount which the Dlaminis unlawfully obtained by conducting a business of a bank in contravention of the Banks Act; the Authority directed them to repay the amount; the Dlaminis failed to repay the amount.
As a result of their failure, s 83 of the Banks Act deemed them to have committed an act of insolvency which entitled the Authority to apply for the sequestration of their joint estate.
There is a reason to believe that their sequestration will be to the advantage of creditors.
[43] In the result I make the following order: 1 The appeal succeeds with costs.
2 The order of the high court is set aside and replaced with the following order: 1 The appeal succeeds with costs.
2 The order of the high court is set aside and replaced with the following order: ‘(a) The joint estate of the first respondent, Mkhululi Noble Dlamini (Identity Number: 760719 5375 089) and the second respondent, Nosipho Prudence Dlamini (Identity Number: 27 National Coalition for Gay and Lesbian Equality and Others v Ministers of Home Affairs and Others [1999] ZACC 17; 2000 (2) SA 1 (CC); 2000 (1) BCLR 39 para 11.
19 750925 1152 081) be and is hereby placed under provisional sequestration in the hands of the Master of the Kwa-Zulu Natal Division of the High Court, Pietermaritzburg (‘the Master').
(b) The Master is directed to appoint the person nominated by the applicant to act as provisional trustee of the respondents’ joint estate, in accordance with the provisions of s 84(1A)(b) of the Banks Act 94 of 1990.
(c) A rule nisi is issued calling upon all persons with a legitimate interest to advance reasons, if any, on a date to be determined by the court, why the estate of the respondents should not be placed under final sequestration in the hands of the Master.
(d) The costs of the application are to be costs in the administration of the insolvent estate.’ ____________________ DH ZONDI JUDGE OF APPEAL Mbatha and Kgoele JJA (dissenting) [44] We have had the benefit of reading the majority judgment of our colleague, Zondi JA, who concluded that the appeal should succeed.
With respect, we hold a different view.
Our view is that the judgment of the high court is sound and the appeal should be dismissed with costs.
[45] First, we highlight that we agree with the factual background espoused by the majority judgment, and the need to repeat same falls away.
Second, we emphasise that it was not an issue before the high court that the Dlaminis obtained money by carrying on a business of a bank without being authorised or registered to do so, and, that the Authority had directed them to pay back the money in terms of s 83(1) of the Banks Act, but they failed to do so.
They accepted that, as a result, they were deemed to have committed an act of insolvency.
The application for the provisional sequestration was resisted only on the basis that they were not insolvent.
Lastly, as a result of the fact that a provisional order was sought, it was also common cause that the onus rested on the
20 Authority to, at least, establish a prima facie case against the Dlaminis and the high court was alive to that.
[46] The application for the provisional sequestration of the Dlaminis was not premised on the basis that they had failed to satisfy a judgment debt or committed an act of insolvency as per s 8(b) and (g) of the Insolvency Act 24 of 1936 (Insolvency Act).28 The basis of the alleged insolvency emanates from the directive issued by the Authority in terms of s 83.
As correctly stated by the majority judgment, the Authority relied on two grounds namely: failure to comply with the directive in terms of s 83(3)(b) and factual insolvency in terms of s 84(1A)(c) of the Banks Act.
[47] We define the issues slightly differently from those outlined by the majority judgment.
The first issue is whether, in light of the deeming provision in s 83(3)(b), there is any need to establish that the Dlaminis are insolvent.
If the answer to this question is in the affirmative, it is the end of the matter and the second issue does not arise.
In our view, the second issue arises because, as it will be seen later, the stance taken by the majority judgment appears to us, with respect, not to be correct.
The second issue is whether the Authority made a prima facie case for the provisional sequestration of the Dlaminis.
The third is whether this Court may interfere with the discretion exercised by the high court in refusing to grant the provisional order.
[48] The answer to these issues requires a consideration of the provisions and the interpretation of s 12 of the SARB Act and ss 82 to 84 of the Banks Act.
The Insolvency Act also plays a role in aiding the interpretation of these sections.
28 The Insolvency Act 24 of 1936 ‘…(b) if a Court has given judgment against him and he fails, upon the demand of the officer whose duty it is to execute that judgment, to satisfy it or to indicate to that officer disposable property sufficient to satisfy it, or if it appears from the return made by that officer that he has not found sufficient disposable property to satisfy the judgment; … (g) if he gives notice in writing to anyone of his creditors that he is unable to pay any of his debts;’
21 [49] Section 82(1) of the Banks Act 94 of 1990, correctly interpreted, is limited to the establishment of the question whether a person carries on the business of a bank in contravention of the provisions of the Banks Act.
The heading to s 82(1) expressly refers to the exacting of information by the Authority.
This is the first step when regard is had to s 12 of the SARB Act, as referred to in s 83 of the Banks Act.
Section 12(1) of the SARB Act provides as follows: ‘If the Governor or a Deputy Governor has reason to suspect that any person, partnership, close corporation, company or other juristic person who or which is not registered in terms of the Banks Act, 1990 (Act No.
94 of 1990), as a bank or in terms of the Mutual Banks Act, 1993 (Act No.
124 of 1993), as a mutual bank, is carrying on the business of a bank or a mutual bank, he or she may direct the Registrar of Banks referred to in section 4 of the Banks Act, 1990, to cause the affairs or any part of the affairs of such person, partnership, close corporation, company or other juristic person to be inspected by an inspector appointed under section 11 (1), in order to establish whether or not the business of a bank or mutual bank, as the case may be, is being carried on by that person, partnership, close corporation, company or other juristic person.’ [50] Section 83 of the Banks Act deals with the mandate of the Authority to direct the said person to pay.
Thus, the reference to ‘inspection’ as mentioned in s 83(1) requires the Authority to establish whether the business of a bank was carried on unlawfully or not, and if so, to direct the said person to pay.
It does not involve a full-scale investigation as to the exact amount that is actually owed to the investors.
This is the task of the repayment administrator in terms of s 84.
It is important to note that s 83(1) makes specific reference to an inspection conducted under s 12 of the SARB Act.
Notably, s 83(3)(a) and (b) deals with what happens to a person who fails to comply with the direction of the Authority.
We will deal with s 83(3)(b) later as it is key to the interpretation we prefer.
[51] The relevancy of s 84(1) is that it specifically deals with the appointment of the repayment administrator to manage and control the repayment of the money so unlawfully obtained.
He must, after completing his investigation, compile a report determining the solvency of the person concerned in terms of s 84(1A)(a), read with s 84(4)(a)(i) and (ii) of the Banks Act.
This requires extensive investigation to, amongst others, determine the true amount of money unlawfully obtained, and the identities of all persons from whom
22 such money was so unlawfully obtained.
It is in terms of s 84(1A)(c) that if the report by the repayment administrator concludes that the person subject to the directive is insolvent, the Authority may apply for a sequestration order in terms of the Insolvency Act.
The purpose of the appointment of the repayment administrator under s 84(1), is simply to control and manage all the repayment of the money of a person who complies with the direction of the notice.
Section 84(1A)(c), in our view, is distinguishable from s 83(3)(b).
The difference follows hereunder.
[52] It is crucial to indicate that the deeming provision is found in s 83(3)(b) and not 84(1A)(c) of the Banks Act.
For a better understanding of the import of these two sections and their differences, they are respectively quoted hereunder: ‘83.
Repayment of money unlawfully obtained.
.
.
.
(3) Any person who refuses or fails to comply with a direction under subsection (1)– (a) shall be guilty of an offence; and (b) shall for the purposes or any law relating to the winding-up of juristic persons or to the sequestration of insolvent estates, be deemed not to be able to pay the debts owed by such person or to have committed an act of insolvency, as the case may be, and the Authority shall, notwithstanding anything to the contrary contained in any law, be competent to apply for the winding-up of such a juristic person or for the sequestration of the estate of such a person, as the case may be, to any court having jurisdiction.’ (Emphasis added.)
‘84.
Management and control of repayment of money unlawfully obtained.
.
.
.
(1A)(c) If the report referred to in paragraph (a) concludes that the person subject to the directive is insolvent, the Authority may, notwithstanding anything contrary contained in any law relating to liquidation or insolvency apply to a competent court for the winding-up in terms the Companies Act or the sequestration in terms of the Insolvency Act, 1936 (Act No.
24 of 1936), as the case may be, of the person subject to the directive, and the Authority shall have the right to oppose any such application made by any other person.’ (Emphasis added.)
23 [53] In Smit v Minister of Justice29 the following was said: ‘It is an established principle of our law that “the same words in the same statute bear the same meaning”.
This principle applies with greater force where the words appear in the same sentence.
Where the same word is repeated in different parts of a statute, the presumption is that it bears the same meaning throughout the statute, unless there is a clear indication that it is used in a different sense.’ [Footnotes omitted].
[54] Applying the above-mentioned authority including the trite principles of interpretation as espoused in Natal Joint Municipal Pension Fund v Endumeni Municipality,30 it is clear that s 83(3)(b) refers to the failure to adhere to the notice of the repayment of the money which is deemed to be an act of insolvency.
However, it does not end there.
It also states that, if there is such a failure, ‘the [Registrar] shall.
.
.be competent to apply’.
This clause in our view means that the deeming provision in this section only gives the Registrar/Authority the locus standi to apply for the sequestration or liquidation of a person.
This is so because the Registrar/Authority is not a creditor to the respondent – that is why the word ‘shall be competent to apply’ was used.
(Emphasis added.)
[55] We further highlight the contrasts between these provisions.
The heading to s 83 refers to the repayment of the money and the heading to s 84 refers to the management and control of the repayment of the said money.
Of significance is that s 84 specifically refers to the ‘report’ that needs to be compiled by the repayment administrator as envisaged in s 84(1A)(a) as to whether the person is technically or legally insolvent.
It is clear that the phrase ‘be competent to apply’ was deliberately omitted by the legislature in s 84(1A)(c).
Although the word ‘competent’ is used, it is used in a different context.
It specifically provides that, the Registrar ‘may’ apply to a competent court.
This simply means that the Authority may approach a court clothed with the jurisdiction to bring an application once it has established a prima facie case.
A prima facie case is established 29 Smit v Minister of Justice and Correctional Services and Others [2020] ZACC 29; 2021 (3) BCLR 219 (CC); 2021 (1) SACR 482 (CC) para 63.
30 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA).
24 in terms of the report compiled by the repayment administrator.
This is what is normally referred to as a cause of action which is different from standing or locus standi (Emphasis added.)
[56] Therefore, as correctly found by the high court, if the deeming provision in s 83(3)(b) was meant to be sufficient by the legislator for the purposes of declaring an estate of such a person insolvent in terms of the Banks Act, there would have been no need for determination of solvency or otherwise of the person concerned.
Section 84(1A)(c) would have been superfluous.
Hence, the section provides under what circumstances the Authority may apply for the sequestration or liquidation of a person concerned in s 84(1A)(c).
It provides that the Authority may do so only if the report establishes that the respondents are insolvent.
It is on those bases, that with respect, we do not agree with the interpretation of the majority judgment, as the requirements to declare a person insolvent were not met.
[57] Contextually, the reasonable interpretation that needs to be attributed to this, is that the issuing of a s 83(1) directive and its non-compliance is not a stand-alone ground for the Authority to sequestrate or liquidate the concerned persons.
The Banks Act envisages that, only after a thorough investigation by the appointed payment administrator and finalisation of the report, which establishes the true amount owing, it is only then that the Authority may apply for the sequestration of a person.
The report and finding by the repayment administrator are, in fact, a prerequisite for the utilisation of the deeming provision in s 83 to bring an application for a sequestration.
Section 84(4) requires the repayment administrator to, amongst others, conduct such further investigation, establish the true amount and the identities of all persons from whom such money was unlawfully obtained.
Its provisions are peremptory as it uses the word ‘shall’ in the provision.
[58] The second reason why the deeming provision cannot be a stand-alone ground to sufficiently establish the solvency of the Dlaminis is that deeming provisions are normally regarded as a conclusion of the law.
An analogy can be drawn with the deeming
25 provisions found in s 69(1) of the Close Corporations Act 69 of 1984.
In Ter Beek v United Resources CC and Another,31 the following was said: ‘.
.
.
the [deeming] provisions of s 69(1) of Act 69 of 1984 [a case dealing with the liquidation of a close corporation] are merely supplementary (i.e.
extending what the subject-matter includes) and prima facie (i.e.
rebuttable).
Accordingly, [the] first respondent [was] not precluded from assailing the “conclusion of law” which results from a failure to appropriately respond to a statutory demand in terms of s 69(1)(c) of Act 69 of 1984.’32 The same can be said about the failure to respond to the direction under s 83(1) of the Banks Act.
[59] This brings us to the question, whether the Authority established on a prima facie basis, that the Dlaminis were technically or legally insolvent.
In considering the Insolvency Act, we need to take into account the following trite principles: (a) in the case of a natural person, s 9(3) provides that an act of insolvency or actual insolvency is required; (b) the claim must be liquidated, and not be less than R100; (c) there should be an advantage to creditors; (d) commercial insolvency exists when a company is unable to pay its debt – it needs to be distinguished from actual insolvency; and (e) the test for insolvency in our law is whether the liabilities of a debtor fairly valued exceed his liabilities.
An inability to pay one’s debts is not necessarily an indicator of insolvency, it only casts something in the nature of an evidentiary burden on the debtor to rebut it.
[60] In addition, we highlight that the difference between actual and commercial insolvency is that actual insolvency is where a debtor’s liabilities exceed his assets, whereas commercial insolvency is where a debtor is unable to pay his debts (for example, due to a temporary cash-flow problem), but his assets do indeed exceed his liabilities.
The fact that someone is unable to pay his debts or that his assets exceed his liability may mean that he is factually insolvent, but that does not mean that he is insolvent for legal purposes.
An applicant must establish a prima facie case in order to obtain a provisional sequestration order by satisfying the following requirements: the claim, 31 Ter Beek v United Resources CC and Another 1997 (3) SA 315 (C).
32 Ibid at 331E-G.
26 insolvency or act of insolvency, and advantage to creditors.
Since sequestration proceedings have an impact on the status of a person, the creditor has to establish a prima facie case by setting out the claim with sufficient particularity.
[61] The sum total of the above considerations is that a repayment administrator, Mr Kruger, was appointed in terms of s 84(1) to: (a) manage and control the repayment of money in compliance with the directions; (b) report to the Authority whether the person subject to the direction is insolvent; and, if so (c) comment on whether such person is technically or legally insolvent (s 84(1A)(a)); and (d) conduct further investigation into the affairs of the person subjected to the direction in order to establish the true amount of money unlawfully obtained by that person (s 84(4)(a)(i); the identities of all persons from whom such money was so unlawfully obtained, where such money is kept, and any other fact which needs to be established in order to facilitate the repayment of such money in terms of the relevant direction (s 84(4)(ii)-(iv)).
[62] In applying the provisions of the Insolvency Act, though it had been established that the Dlaminis conducted the ‘business of a bank’, it is common cause that the claim did not arise from a liquidated sum of money.
The amount claimed against the Dlaminis is required to be quantified by the repayment administrator.
The ‘Draft Solvency Report’ shows that he failed to do that.
Nowhere does the Authority or the repayment administrator contend that he had established the true amount owed by them.
This was necessary as the Authority is not a creditor per se.
Furthermore, the amount claimed is disputed by the Dlaminis.
[63] Contrary to the provisions of ss 8(b) and (g) of the Insolvency Act, the repayment administrator has to establish if a person subject to the s 81 directive is solvent and if not, establish whether he/she is technically or legally insolvent.
The purpose of the exercise is for the recovery of the funds deposited by the innocent victims of the unlawful enterprise conducted by the operators of the scheme.
Consequently, in this case an investigation
27 has to be conducted to establish the true amount of money unlawfully obtained by the Dlaminis.
This is done to facilitate the repayment of such funds to the victims of the unlawful enterprise.
As a result, the repayment administrator bears the onus to prove that he established the true amount owed, the identity of the creditors and that it would be to the advantage of the victims of the unlawful enterprise.
[64] The finding by the majority in this judgment that the Dlaminis were prima facie insolvent is with respect misplaced.
In dealing with the question of whether their insolvency was prima facie established by the repayment administrator, the majority concluded that they did not have sufficient capital to repay the quantifiable liabilities.
The conclusion was based on the opinion found in the report of the payment administrator that the Dlaminis were deemed to have a cash flow problem or were legally insolvent.
This was the wrong conclusion from the onset, as it was premised on the principles relevant to commercial insolvency as it will become clearer hereunder.
The payment administrator had to establish if the Dlaminis were insolvent or not.
We find that, in coming to the conclusion that they were insolvent, the repayment administrator made several misdirections.
[65] First, the repayment administrator misconstrued the principles applicable to the sequestration of a natural person with those applicable to a juristic person.
The high court correctly pointed out what is required to be proved in the sequestration of a natural person by referring to the Meskin Insolvency Law,33 where the learned author states that: ‘Otherwise than in the case of winding-up of a company, proof of only “commercial insolvency”, ie., inability to pay debts, the payment of which currently is due or overdue, is not sufficient, per se, for the purpose of obtaining a sequestration order.
But evidence of “commercial insolvency” may enable the Court to conclude that the debtor’s liabilities in fact exceed the value of his assets.’ [66] Secondly, the evidence showed that the repayment administrator relied on a Windeed report to ascertain the value of the Dlaminis’ property.
The said valuation fell short of the fundamental requirements of a valuation.
There was no proper valuation of 33 Op cit fn 18 above.
28 the property by a qualified valuator.
The Windeed report, furnished by the repayment administrator had a lot of shortcomings.
It made no provision for the market value of the property and lacked a proper analysis of the condition of the property.
We point out that in Ex Parte Ogunlaja and Others,34 the court emphasised that the evidence of a valuation is expert evidence and must comply with strict requirements to be acceptable.
It expressed its views as follows: ‘A valuator’s services are required in matters of this nature in order to provide independent expert advice to the court of the probable price that an immovable or movable asset forming part of an insolvent estate will realise when offered for sale during the liquidation process undertaken by the trustee who is appointed by the Master once the surrender has been accepted.’ [67] Similarly, in Nel v Lubbe,35 the court, in commenting on the nature of the valuation report held that: ‘Normally the opinion of a witness is not receivable in evidence.
But the opinion of an expert witness is admissible whenever, by virtue of the special skill and knowledge he possesses in his particular sphere of activity, he is better qualified to draw inferences from the proved facts than the Judge himself.
A Court will look to the guidance of an expert when it is satisfied that it is incapable of forming an opinion without it.
But the Court is not a rubber stamp for acceptance of the expert's opinion.
Testimony must be placed before the Court of the facts relied upon by the expert for his opinion as well as the reasons upon which it is based.
The Court will not blindly accept the assertion of the expert without full explanation.
If it does so its function will have been usurped.
.
.
.
Not a single reason is set out in the valuation as to why the sum of R290 000 is the value.
In fact, the document is a bald assertion of value.
The procedure adopted, in my opinion, is hopelessly inadequate.
The proper approach is for the expert to furnish in evidence the detailed facts upon which the opinion is based and the reasons for forming the opinion expressed.
Upon hearing the evidence, the Court will come to its own conclusion, no doubt guided by the evidence.’ [68] Thirdly, one cannot simply ignore the glaring discrepancy between the valuation report provided by the Dlaminis and the Windeed report provided by the repayment 34 Ex Parte Ogunlaja and Others [2011] JOL 27029 (GNP) para 14.
35 Nel v Lubbe 1999 (3) SA 109 (W) at 111D-112B.
29 administrator.
The valuation report furnished by the Dlaminis reflects that there is equity in the property, irrespective of the fact that there is an outstanding amount of the bond.
The repayment administrator failed to counter the aforementioned facts which appeared in their expert valuation report.
They also put up proof of the valuation of their movable assets, a retirement annuity of about R 1 million and a pension fund worth almost R 1 million, which interestingly did not form part of the repayment administrator’s determination of their solvency.
In our view, the repayment administrator failed to provide evidence challenging the evidence presented by them, that they are not insolvent.
The Windeed valuation report provided by the repayment administrator failed to meet the jurisdictional requirements of a valid valuation.
Consequently, the repayment administrator failed to prove that the Dlaminis’ liabilities exceeded their assets and were therefore insolvent.
[69] As previously stated, two distinct processes are envisaged by the provisions of s 83 read with s 84 of the Banks Act.
In this case, the repayment administrator was directed to proceed in terms of s 84.
The s 84 report requires the repayment administrator to establish the true amount of money unlawfully obtained by the person contemplated in s 83(1), as well as the identities of the person who deposited funds into their accounts.
The process followed by the repayment administrator in the investigation and drawing of the report fails to satisfy the requirements of s 84 because the draft report did not specify the identities of the persons who deposited the funds into the Dlaminis’ account.
The amount in s 84 is qualified by the word ‘true’ amount.
However, the draft report compiled by the repayment administrator, categorically states that he did not warrant the information relating to assets and liabilities to an exhaustive and accurate assessment of the Dlaminis’ financial position.
A sequestration order has a great impact on the status of a person, hence the requirements in s 84 that the repayment administrator has to conduct an investigation into the affairs of a person subject to a directive.
If no exhaustive and accurate assessment is done, there is even a greater risk of sequestrating persons who are not insolvent.
30 [70] The purpose of the s 84 directive is not punitive but aims to restore the status quo.
It requires that the people who suffered loss be reimbursed.
It does not require the automatic sequestration of a guilty party merely on the basis that he conducted an unlawful enterprise.
The investigation and determination, as required in terms of s 84, appears not to have been properly done by the repayment administrator.
The high court carefully highlighted all the discrepancies relating to the report.
We point out some of the flaws in the report.
In paragraph 5.4.1 of the report, the repayment administrator refers to deposits in the sum of R2 700 or multiples thereof.
However, the only confirmed investor deposit totals the amount of R151 000.00 and not multiples of R2 700.
This is contrary to the requirements of s 84 which requires the repayment administrator to establish the true amount paid to the Dlaminis.
This also violates the principle espoused above that the amount claimed should be set out with sufficient particularity.
[71] It is also significant to point out that the second process was not complied with, as no investors were traced by the repayment administrator.
This is confirmed by the fact that no affidavits were obtained from the investors.
He only refers to a probable investor deposit of R381 700 and a possible investor deposit of R2 413 350.
This does not establish who are the investors as required in s 84, as it is speculative.
The jurisdictional requirements of s 84 have not been complied with.
A higher level of investigation and accuracy is envisaged by the section.
Advantage to creditors, and in the context of this case and the purpose of the Banks Act, the repayment to creditors, is key to establishing a prima facie proof of declaring an estate of a natural person to be sequestrated, if indeed he is insolvent.
This requirement, on its own, demonstrates that the repayment administrator failed to make out a prima facie case for the sequestration of the Dlaminis.
[72] We agree with the conclusion reached by the high court that the assertion by the Authority that ‘the debate about the quantum of indebtedness is irrelevant as a creditor has only to demonstrate an indebtedness of at least R100’ misses the point.
The high court was correct to conclude that a creditor in terms of the Insolvency law has to demonstrate an indebtedness of at least R100 in order to establish locus standi, it does not establish a prima facie case.
In our view, the quantum is therefore relevant, because
31 the repayment administrator has to demonstrate that the Dlaminis are insolvent.
Section 84 expressly requires the determination of solvency or insolvency of the person under the direction.
In the event that the repayment administrator finds that the person is insolvent, they are required to establish the nature thereof, the true amount owed and the actual value of assets.
[73] The view of the majority judgment is that the failure by the Dlaminis to make payment of the amount directed by the administrator without first reviewing that directive, brought into operation the deeming provision in s 83(3)(b).
In our view, the only decision that was subject to review, as correctly found by the high court, is the decision of the Registrar that they had unlawfully carried on the business of a bank and they had to repay the funds so obtained, which they did not challenge.
Section 936 is specific in that respect as it provides as follows: ‘9.
Appeal against decisions of Registrar (1) Any person aggrieved by a decision taken by the Registrar under a provision of this Act may within the prescribed period and in the manner and upon payment of the prescribed fees apply for a review established by subsection (2).
.
.
.
(2A) In any review under subsection (1), the board of review is, subject to the provisions of subsection 8, confined to establishing whether or not in the taking of the relevant decision, the Registrar exercised his or her discretion properly and in good faith.’ In fact, the person under the direction is empowered by s 84(1A) to oppose the application for a sequestration or liquidation.
The section does not refer to any review as stated in the majority judgment.
[74] The Dlaminis correctly challenged the finding on insolvency, based on the quantum of the debt as well as the value of their assets.
The repayment order by the Registrar, in terms of s 83(1), is subject to the provisions of s 84.
We conclude, as already indicated above, that the deeming provision does not preclude a person subject to a directive to challenge the finding of insolvency.
In this case, reliance was placed on the report made 36 Op cit fn 13.
32 by the repayment administrator that they were insolvent, which is disputed by the Dlaminis.
A report which is incomplete and inaccurate goes against the spirit of the purpose of s 84, read with s 83(1), being to facilitate the repayment of creditors of the funds that were illegally obtained from the investors.
[75] The s 84 exercise brings into play all the requirements for the sequestration of a person.
The Authority failed to show that it would be to the advantage of creditors if the Dlaminis were sequestrated.
The report has also not identified a single creditor.
[76] It is important that we should distinguish between the role of the repayment administrator and that of the trustee of the insolvent estate.
A repayment administrator has to investigate, bring her or his own mind to bear on the information before him or her to justify the solvency of the parties, report on their findings, quantify the amount owed, and identify the victims of the unlawful enterprise.
If the repayment administrator has not found that the parties are insolvent, that is not the end of the matter.
The Authority can demand payment from the Dlaminis and/or attach their assets for sale in execution to facilitate payment to the victims of the unlawful enterprise.
The repayment administrator cannot rely on the appointment of the trustee to carry out further investigations, as this is a pre-requisite in terms of s 84.
[77] The aforementioned findings are supported by the Treasury notes appearing in the draft of ‘The Banks Amendment Bill, 2006: Summary of Amendments to Bank Act, 1990, July 2006,37 on sections 81-84-Control of certain Activities of Unregistered person.’ It states as follows: ‘30.1 One of the main problems and frustrations in enforcing sections 81 to 84 of the Act is the fact that once inspectors have been appointed to investigate a person operating an illegal scheme, it invariably happens that such a person is liquidated or sequestrated.
Such a liquidation or sequestration negates the work done by the inspectors and the higher fees charged by the 37 The draft Banks Amendment Bill, 2006: Summary of Amendments to Bank Act, 1990, July 2006.
The Draft Bill was promulgated as the Banks Amended Bill Act 12 of 2007 which came into operation on 1 January 2008.
However, the amendment bill only amended s 84 by the insertion of s 84 (1A).
33 appointed liquidator/trustee of the insolvent estate are to the detriment of depositors in such a scheme.
.
.
.
30.4 It is also proposed that a duly appointed fund manager should report to the Registrar on the solvency of the person operating the illegal scheme.
When the person is found not to be insolvent, the manager may repay depositors as provided for in section 84 of the Act.
When a person is found to be insolvent, the Registrar may apply for the liquidation of the person and will be able to recommend the liquidator to be appointed as well as agree to the liquidator’s fee structure in this regard.’ (Emphasis added.)
[78] The aforementioned views expressed in the Treasury documents resonate with our view that it was not the intention of the drafters of the Banks Act to automatically liquidate or sequestrate those found to have operated an unlawful enterprise.
It also shows the importance of establishing the solvency or insolvency of a respondent and identifying the creditors of the unlawful enterprise.
Most importantly, the exercise is not to benefit liquidators, but the actual creditors of the estate.
[79] The repayment administrator is also obliged to afford the person subject to a direction a reasonable period of time to advance a repayment plan that would benefit the creditors.
A mere ten-day period afforded to the Dlaminis for the payment of such a large amount of money cannot be said to be reasonable.
It was not in the interest of creditors.
It merely sets up a person under the directive for the deeming provision to come into operation.
[80] Lastly, on the question whether the high court exercised its discretion judicially, our view is that the inclination of the high court to exercise its discretion against the granting of a sequestration order cannot be faulted in the context of the facts of this case.
The high court, contrary to what the majority judgment concluded, gave about five reasons for this finding.
Nothing suggests that the discretion was not judicially exercised.
The delay, considered from the time when the repayment administrator was authorised to investigate, which ran into a number of years, is one of the factors that influenced it to
34 exercise its discretion in the dismissal of the application and not as a stand-alone ground as the majority judgment claims.
[81] In the circumstances, we would have dismissed the appeal with costs.
__________________ YT MBATHA JUDGE OF APPEAL ___________________ AM KGOELE JUDGE OF APPEAL
35 Appearances For the appellant: J E Smit SC Instructed by: Werksmans Attorneys, Johannesburg Symington De Kok Incorporated, Bloemfontein For the respondents: W J Roos Instructed by: Leofi Leshabana Incorporated Attorneys, Pretoria Moroka 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: 02 October 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 The Prudential Authority v Dlamini and Another (36/2023) [2024] ZASCA 133 (02 October 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal, with costs, against the decision of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court).
Mr Mkhululi Dlamini and Mrs Nosipho Dlamini (the Dlaminis) participated in the Travel Ventures International scheme (TVI scheme) in 2009.
The business of TVI was modelled on a scheme which marketed the sale of travel vouchers which purportedly provided the recipient with significant discounts for international travel and accommodation.
The Dlaminis opened various bank accounts into which they deposited money they received from the investors.
The same bank accounts were used to make payments to the investors.
Following a directive issued by the Governor in terms of s 12 of the South African Reserve Bank Act 90 of 1989 (SARB Act), and the subsequent inspection of the Dlaminis’ affairs, they were found to have obtained money by conducting the business of a bank without being registered as a bank and without authorisation to do so.
The inspection therefore confirmed that the Dlaminis received money unlawfully and in contravention of the provisions of the SARB Act.
On 14 March 2016, the Dlaminis were in formed in writing that the inspection that had been conducted revealed that the true amount of money unlawfully obtained by them was R2 827 450.
They were further directed to repay this amount within a period of ten days with interest at 9 percent, per annum from date of the directive or alternatively, to make a repayment plan.
The Dlaminis were advised that they had a right to review or appeal against the directive under s 9(1) of the Banks Act 94 of 1990 (the Banks Act) within 30 days after the directive.
The Dlaminis subsequently failed to repay the true amount of money unlawfully obtained within the ten-day period or make a repayment plan or review or appeal against the directive within the said 30-day period.
The Appellant subsequently applied for the sequestration of the Dlaminis, firstly, on the grounds that they had committed an act of insolvency by failing to comply with the directive issued in terms of s 83(1) of the Banks Act directing them to repay the money they had obtained by carrying on the business of a bank in contravention of that Act.
Secondly, in terms of s 84(1A)(a), the Dlaminis were factually insolvent.
The high court dismissed the application on the basis that the appellant had failed to show that the Dlaminis were prima facie insolvent and relied further upon the exercise of its discretion.
The appeal was with the leave of the high court.
The issues before the SCA were therefore, firstly, whether ss 83 and 84 of the Banks Act required proof of factual insolvency for the sequestration of a person under those sections, or whether mere proof of non-compliance with a directive issued under s 83 was a sufficient ground for sequestration.
Secondly, whether this Court may interfere with the high court’s discretion to refuse the application.
2 In addressing these issues, the SCA, in a majority judgment penned by Zondi JA (Seegobin and Keightley AJJA concurring) found that the evidence established that the Dlaminis obtained money through their participation in the TVI scheme which entailed carrying on the business of a bank without being authorised to do so.
The amount which they were directed to repay was disclosed in the directive that was issued and they failed to repay it as directed.
In terms of s 83, they were deemed to have committed an act of insolvency and the question of proof of factual insolvency became irrelevant.
It was held further in regard to the high court’s refusal to grant a sequestration order on the ground of the appellant’s unreasonable delay in bringing the application that the high court misdirected itself.
The delay was held not attributable to the appellant.
The high court ignored the period of delay that occurred when the parties attempted to settle the matter and its failure to consider that relevant fact constituted a material misdirection and it could not be said that it exercised its discretion judiciously.
This Court, because of the material misdirection committed by the high court, was entitled to interfere with the exercise of the discretion by the high court.
As a result, the appeal was upheld and the order of the high court was set aside and replaced with an order placing the Dlaminis under provisional sequestration.
The Master of the Kwa-Zulu Natal Division of the High Court, Pietermaritzburg (‘the Master’), was directed to appoint the person nominated by the appellant to act as provisional trustee of the Dlaminis’ joint estate, in accordance with the provisions of s 84(1A)(b) of the Banks Act 94 of 1990.
A rule nisi was issued calling upon all persons with a legitimate interest to advance reasons, if any, on a date to be determined by the court, why the estate of the respondents should not be placed under final sequestration in the hands of the Master.
The costs of the application were ordered to be costs in the administration of the insolvent estate.
The minority judgment, per Mbatha and Kgoele JJA, reasoned that the central issues were in fact, firstly, whether in light of the deeming provision in s 83(3)(b), there was any need to establish that the Dlaminis were insolvent.
The second issue is whether the appellant made a prima facie case for the provisional sequestration of the Dlaminis and lastly, whether this Court may interfere with the discretion exercised by the high court in refusing to grant the provisional order.
In dealing with these issues, the learned judges took the view that the issuing of a s 83(1) directive and its non-compliance was not a stand-alone ground for the appellant to sequestrate or liquidate the Dlaminis.
In interpreting s 83(3)(b), the minority judgement reasoned that the section refers to the failure to adhere to the notice of the repayment of the money, which was deemed to be an act of insolvency.
The learned judges further pointed out that the section confers on the appellant a competence to apply for the sequestration of a person who fails to comply with the repayment directive, thus meaning that the deeming provision only provided the appellant with locus standi to apply for the sequestration or liquidation of such a person and not a cause of action.
In interpreting s 84(1A)(a), the minority judgment found that the appellant was required to determine whether the Dlaminis were technically or legally insolvent, in order to establish a prima facie case for their provisional sequestration.
In coming to a conclusion of whether the appellant had established a prima facie case against the Dlamini’s, the minority judgement found that the appellant had failed to establish a prima facie case against the Dlamini’s.
It was found the that the repayment administrator misconstrued the principles applicable to the sequestration of a natural person with those applicable to a juristic person; the valuation method of the Dlaminis’ property fell short of the fundamental requirements of a valuation; and the high court was therefore correct in finding that the repayment administrator failed to prove that the Dlaminis’ liabilities exceeded their assets and were therefore insolvent as is required in terms of the Insolvency Act 24 of 1936.
In the premises, the learned judges held that the findings of the high court cannot be faulted and that indeed it exercised its direction judicially and this Court was therefore not entitled to interfere with its discretion to refuse the granting of the provisional order.
The minority judgment would therefore have dismissed the appeal with costs.
~~~~ends~~~~ |
4196 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 189/2023 In the matter between: MOLADORA TRUST APPELLANT and MAGALONE MEREKI FIRST RESPONDENT TOPIES MEREKI SECOND RESPONDENT DIKHOTSO MEREKI THIRD RESPONDENT MAGALONE MEREKI FOURTH RESPONDENT DEPARTMENT OF AGRICULTURE, RURAL DEVELOPMENT AND LAND REFORM FIFTH RESPONDENT Neutral citation: Moladora Trust v Mereki and Others (189/2023) [2024] ZASCA 37 (3 April 2024) Coram: PONNAN, MATOJANE and WEINER JJA Heard: 15 March 2024 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 by release to SAFLII.
The date and time for hand-down is deemed to be 11h00 on 3 April 2024.
2 Summary: Land occupied in terms of s 3(4) of the Extension of Security of Tenure Act No 62 of 1997 – no express agreement or consent for occupier to graze livestock on such land – Land Claims Court finding tacit consent/agreement of owner – defence of tacit consent/agreement not advanced by respondent occupiers.
3 ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Land Claims Court (Cowen J, sitting as court of first instance): 1 The appeal is upheld.
2 There is no order for costs.
3 The order of the Land Claims Court is set aside and replaced with the following: ‘(a) The first, second and third respondents are ordered to forthwith remove all their grazing animals, including but not limited to cattle, goats, horses and sheep (livestock) from the applicant’s farm, the Remainder of the property Wildebeeslaagte number 282, district Dr Kenneth Kaunda, North West Province (the farm).
(b) Should the first, second and third respondents fail to comply with paragraph 3(a) above within 30 (thirty) days from the date of the order, the Sheriff of the High Court or his deputy is ordered, with the assistance of the South African Police Services and the Pound Master for the district within which the farm is situated or his/her lawful substitute, to remove and impound the livestock.
(c) The first, second and third respondents, subject to compliance with paragraph 3(a), are interdicted and restrained from returning and keeping any livestock on the farm, without the prior consent of the applicant.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ Weiner JA (Ponnan and Matojane JJA concurring): [1] The appellant, the Moladora Trust (the trust), is the owner of the property described as the Remainder of the farm Wildebeeslaagte number 282, district Dr
4 Kenneth Kaunda, North West Province (the farm).
The first, second and third respondents1 (the Mereki children) are occupiers as defined in the Extension of Security of Tenure Act No 62 of 1997 (ESTA), by virtue of the right of their mother, the late Mrs Meraki, to occupy a portion of the farm in terms of s 3(4) of ESTA.2 The Mereki children are the major children of Mrs Mereki, who was employed on the farm and who died in or before 2017.
They resided on the farm with Mrs Mereki and, since her death, have continued to do so.
[2] The Department of Agriculture, Rural Development and Land Reform is the fifth respondent (the Department) but has not taken part in the proceedings to date.
The South African Human Rights Commission and the Association of Rural Advancement applied to be admitted as amici curiae in the matter.3 [3] The trust launched an application in the Land Claims Court (the LCC), on 11 May 2022, seeking the following relief: ‘1.
That the First to Fourth Respondents be ordered to forthwith remove all their grazing animals, including but not limited to cattle, goats, horses and sheep from the Applicant’s farm, the Remainder of the farm Wildebeeslaagte number 282, district Dr Kenneth Kaunda, North West Province (“the farm”).
2.
That should the First to Fourth Respondents fail to adhere to the order prayed for in (a) within 30 (thirty) days from date of the order, the Sheriff of the High Court or his deputy be ordered to, with the assistance of the South African Police Services and the Pound Master for the district within which the farm is situated or his/her lawful substitute, remove and impound such animals to which the order in the above is applicable.
1 The citation of the fourth respondent is an error, being a duplication of the first respondent.
Further reference to the Mereki children will be a reference to the first to third respondents.
2 Section 3(4) of ESTA provides as follows: ‘3.
Consent to reside on land .
.
.
(4) For the purposes of civil proceedings in terms of this Act, a person who has continuously and openly resided on land for a period of one year shall be presumed to have consent unless the contrary is proved.’ 3 The application was granted, but in view of the decision on the facts of this matter, this Court does not have to deal with the legal issues raised by the amici.
5 3.
That the First and Fourth Respondents, subject to compliance with (a) above, be interdicted and restrained from returning and keeping any number of livestock on the farm, without prior arrangement with the Applicant.
4.
That the First to Fourth Respondents and/or any person associated with them be interdicted and restrained from interfering with the execution of this order in any way whatsoever.
5.
That the First to Fourth Respondents be ordered to pay the costs of the application, jointly and severally the one to pay the other to be resolved, alternatively that the First to Fifth Respondents be ordered to pay the costs of the Application, jointly and severally, in the event of the Fifth Respondent opposing the relief sought.
6.
That leave be granted to the Applicant to approach this Court for further relief against any other person/s and to join such person/s should it become known that other person/s, other than the First to Fourth Respondents are keeping livestock, as set in paragraph (a) above without the Applicant’s consent and to supplement the papers where necessary.’ No relief was sought for the eviction of the Mereki children and their occupation of the farm has not been threatened or terminated.
[4] The LCC held that a tacit agreement had been concluded and tacit consent had been granted by the trust to the Mereki children to keep livestock and exercise grazing rights on the farm.
As the trust had not invoked the provisions of s 8 of ESTA, the termination of the grazing rights by the trust could not be upheld.
This appeal is with the leave of the LCC.
[5] The application was served on 6 June 2022, on the Mereki children,4 but they did not appear at the hearing, nor did they file any affidavits in response to the application.5 Accordingly, the facts alleged by the trust remained uncontested.
4 By service on Ms Kediemetse Lephadi (Tenant), in control at the defendants’ chosen domicilium citandi et executandi residence, who accepted service on behalf of the defendants.
The notice of set down was served on 13 July 2022, by affixing it at the main gate as the Sheriff noted on the return of service that ‘[t]he Respondents was very aggressive towards us, refuse to communicate by taking this Notice he called the police for us, and they did arrive at given address.
Notice on the respondents, but still they refuse to take this Notice, that’s why it was served by affixing at the main gate.’ 5 The Mereki children also did not deny receipt of the letters, the application and the notice of set down.
6 Heads of argument were filed on behalf of the Mereki children and they were represented in this Court at the hearing.
It is not disputed that the Mereki children had never sought nor obtained express consent to keep livestock on the farm and that no express agreement was concluded with the trust in this regard.
[6] After Mrs Mereki died, efforts were made by Mr Marius Nel (Mr Nel), on behalf of the trust, to inform the Mereki children that they did not have consent to keep livestock on the farm.
Mr Nel contends that during these incidents, the Mereki children were abusive and aggressive towards him and informed him that they would not remove their livestock.
The attempts to engage with the Mereki children proved fruitless.
Thus, on 31 October 2017, a letter was addressed to each of the Mereki children, informing them that they had never obtained permission to keep livestock on the farm and they were given 30 days’ notice to remove their livestock.
The letter was served personally on the first respondent on behalf of all three respondents on 9 January 2018.
[7] Mr Nel emphasises that the keeping of livestock has an immediate impact on available grazing on the farm and may cause damage to the natural vegetation on the farm.
The ownership of the livestock is also unclear and there is nothing to suggest that they are healthy or have been treated for disease.
[8] During August 2020, Mr Nel was contacted by officials of the Department on behalf of the Mereki children.
Allegations had been made by the children that the trust had reduced the grazing area of the Mereki children and that Mr Nel had caused a fire which had burnt their grazing area.
Mr Nel denied the allegations, but was threatened with a court application by the Department.
This elicited a written response from the trust in a letter dated 21 August 2020, wherein it again recorded that the Mereki children had never sought permission to keep livestock
7 on the farm.
The accusations levelled at the trust were again denied.
No response was received from the Department and no application was launched.
[9] A further letter, dated 23 September 2020, was addressed to the Mereki children informing them of the previous letters and recording that a fire had occurred on the farm, which had an adverse effect on the available grazing land.
It was repeated that no consent had been given for the Mereki children to keep livestock and allow them to graze on the farm.
The Sheriff, who had attempted to serve the letters on the Mereki children on 5 October 2020, deposed to an affidavit stating the following: ‘With our arrival people were aggressive and extremely violent.
The interpreter tried to translate the meaning of the letter and explain the contents thereof but they said they do not know who the Court is and refused to take the document.
We tried to get hold of the recipient of the letter but as the people got more violent we served the letter on A Shuping.’ There was no response to this letter.
[10] It is not disputed by the Mereki children, and it was accepted by the LCC, that express consent to graze livestock was not given and the rights under the agreement with Mrs Mereki did not automatically devolve upon the Mereki children, upon her death.6 [11] That ought to have been the end of the matter.
However, the LCC took it upon itself to consider whether there could have been a tacit agreement or tacit consent pursuant to which the Mereki children had been grazing their livestock on the farm.
This, the LCC did in circumstances where no such case had been advanced by the Mereki children.
This was found, despite reference to the efforts 6 Adendorff’s Boerdery v Shabalala and Others [2017] ZASCA 37 para 28; Loskop Landgoed Boerdery (Pty) Ltd and Others v Petrus Moeleso and Others [2022] ZASCA 53 para 14, where this Court held that the right of an occupier to keep or graze livestock on another person’s farm or land is not a right which derives from ESTA, but a personal right which derives from consent between the occupier and the land owner or person in charge.
8 to communicate with the Mereki children, the correspondence informing the Mereki children that they had no permission to graze livestock on the farm, and the trust’s unequivocal denial that any agreement was concluded, or that any consent had been given, none of which was disputed.
[12] The finding of the LCC that tacit consent to graze livestock had been granted and that there was a tacit agreement with the trust to that effect was thus not based on any proper factual foundation.7 The test to be applied in dealing with whether there was tacit consent or a tacit agreement is whether the party alleging the existence of the tacit contract has shown on a balance of probabilities unequivocal conduct on the part of the other party that proves that it intended to enter into a contract with it.8 This issue did not arise in this case, as the version of the trust, which was that there was no agreement, either express or tacit between the parties, was not contested.
[13] Instead, the conclusion reached by the LCC rested on a foundation that was purely conjectural, not foreshadowed in the papers and of which the trust had not been forewarned.
It follows that neither the approach, nor the conclusion reached by the LCC can be supported on appeal.
Consequently, the appeal must succeed.
[14] The trust has not sought costs against the Mereki children.
To the extent that the relief sought by the trust before the LCC conduces to confusion, the order that issues, although in substance no different to the relief sought by the trust before the LCC, has been modified somewhat.
7 Moladora Trust v Mereki and Others [2022] ZALCC 32; 2023 (3) SA 209 (LCC).
8 Buffalo City v Nurcha Development Finance (Pty) Ltd and Others [2018] ZASCA 122; 2019 (3) SA 379 (SCA) paras 20 and 22; Buffalo City Metropolitan Municipality v Metgovis (Pty) Limited [2019] ZACC 9 paras 16-22
9 [15] In the result, the following order is made: 1 The appeal is upheld.
2 There is no order as to costs.
3 The order of the Land Claims Court is set aside and replaced with the following: ‘(a) The first, second and third respondents are ordered to forthwith remove all their grazing animals, including but not limited to cattle, goats, horses and sheep (livestock) from the applicant’s farm, the Remainder of the property Wildebeeslaagte number 282, district Dr Kenneth Kaunda, North West Province (the farm).
(b) Should the first, second and third respondents fail to comply with paragraph 3(a) above within 30 (thirty) days from the date of the order, the Sheriff of the High Court or his deputy is ordered, with the assistance of the South African Police Services and the Pound Master for the district within which the farm is situated or his/her lawful substitute, to remove and impound the livestock.
(c) The first, second and third respondents, subject to compliance with paragraph 3(a), are interdicted and restrained from returning and keeping any livestock on the farm, without the prior consent of the applicant.’ _______________________ S E WEINER JUDGE OF APPEAL
10 Appearances For the appellants: M G Roberts SC with E Roberts Instructed by: Moolman & Pienaar Inc, Potchefstroom Pieter Skein Attorneys, Bloemfontein For the first to second respondents: V A Mnyameni with M S Sebotha and D Somo Instructed by: Legal Aid South Africa, Vryburg Legal Aid South Africa, 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 April 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 Moladora Trust v Mereki and Others (189/2023) [2024] ZASCA 37 (3 April 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal with no order as to costs.
It further set aside and substituted the order of the Land Claims Court (LCC).
The appellant, the Moladora Trust (the trust) is the owner of the property described as the Remainder of the farm Wildebeeslaagte number 282, district Dr Kenneth Kaunda, North West Province (the farm).
The first, second and third respondents (the Mereki Children) are occupiers as defined in the Extension of Security of Tenure Act No 62 of 1997 (ESTA), by virtue of the right of their mother, the late Mrs Mereki, to occupy a portion of the farm in terms of s 3(4) of ESTA.
The Mereki children are the major children of Mrs Mereki, who was employed on the farm and who died in or before 2017.
They resided on the farm with Mrs Mereki and, since her death, have continued to do so.
The Department of Agriculture, Rural Development and Land Reform is the fifth respondent but has not taken part in the proceedings to date.
On 11 May 2022, the trust launched an application in the LCC seeking, essentially, that the Mereki children, remove all their animals grazing on the property and be interdicted and restrained from returning and keeping any number of livestock on the farm, without prior arrangement with the trust.
No relief was sought for the eviction of the Mereki children and their occupation of the farm.
The application was served on the Mereki children, but they did not appear at the hearing, nor did they file any affidavits in response to the application.
Accordingly, the facts alleged by the trust remained uncontested.
It was not disputed that the Mereki children had never sought nor obtained express consent to keep livestock on the farm and that no express agreement was concluded with the trust in this regard.
The LCC held that a tacit agreement had been concluded and tacit consent had been granted to the Mereki children to keep the livestock and exercise grazing rights on the farm.
This, despite no such case being advanced by the children and the uncontested version of the trust that no agreement, express or tacit had been concluded.
In the result, the SCA held that the conclusion reached by the LCC rested on a foundation that was conjecture, not foreshadowed in the papers and of which the appellants had not been forewarned.
The SCA accordingly upheld the appeal with no order as to costs and set aside and substituted the order of the LCC.
It granted the trust’s application ordering the children to remove their livestock from the farm.
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4254 | non-electoral | 2024 | THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1054/2022 In the matter between: CITY OF EKURHULENI METROPOLITAN MUNICIPALITY APPELLANT and TSHEPO GUGU TRADING CC FIRST RESPONDENT SOWETO STEEL STRUCTURAL ENGINEERING (PTY) LTD SECOND RESPONDENT Neutral citation: City of Ekurhuleni Metropolitan Municipality v Tshepo Gugu Trading CC and Another (1054/2022) [2024] ZASCA 81 (28 May 2024) Coram: MOLEMELA P, SCHIPPERS AND HUGHES JJA AND SEEGOBIN AND MBHELE AJJA Heard: 20 February 2024 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 of the judgment is deemed to be 11h00 on 28 May 2024.
2 Summary: Property law – spoliation (mandament van spolie) requirements – municipality dismantling and removing respondent’s billboard on municipal land – erected contrary to by-law – application to regularise billboard – settlement agreement – operative for two years – agreement lapsing – whether status quo ante should be restored.
ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Molahlehi, Adams and Mahalelo JJ, sitting as a court of first instance): 1 The application for special leave to appeal succeeds.
2 The appeal is upheld with costs, such costs to include the costs of the employment of two counsel.
3 The order of the full court is set aside and replaced with the following: ‘The appeal is dismissed with costs.’
3 JUDGMENT Seegobin and Mbhele AJJA (Molemela P, Schippers and Hughes JJA concurring): Introduction [1] This is an application for special leave to appeal by the City of Ekurhuleni Metropolitan Municipality (the municipality) in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 (the Act), against the judgment and order of the Gauteng Division of the High Court, Johannesburg (Molahlehi, Adams and Mahalelo JJ) (the full court) delivered on 13 September 2022.
On 2 March 2023 this Court referred the application for oral argument in terms of s 17(2)(d)1 of the Act.
Relevant background [2] The municipality is the owner of the immovable property situated at Portion 988, Elandsfontein 90-IR described as ‘Gillooly’s Farm’ (the site).
The respondent, Tshepo Gugu Trading CC (the respondent), owns a large billboard.
In March 2016, the respondent installed the billboard on the site.
[3] On 5 August 2016 the municipality launched an application in the Gauteng Division of the High Court, Johannesburg (the high court) for an order directing the respondent to remove the billboard and to restore the site to its original state.
The basis for that application was that the respondent had erected the billboard in contravention of the municipality’s Billboards and Display of Advertisements By- 1 Section 17(2)(d) reads: ‘The judges considering an application referred to in paragraph (b) may dispose of the application without the hearing of oral argument, but may, if they are of the opinion that the circumstances so require, order that it be argued before them at a time and place appointed, and may, whether or not they have so ordered, grant or refuse the application or refer it to the court for consideration.’
4 laws of 13 March 2017 (the By-laws) and the Local Government Municipal Systems Act 32 of 2000 (the Systems Act).
[4] The relief sought by the municipality was the following: ‘1.
The respondent is ordered to remove the billboard, and to restore Portion 988 of Elandsfontein 90-IR to its state prior to the respondent’s construction of the billboard; 2.
Should the respondent fail to remove the billboard or part thereof within 60 days of the Court’s order, the applicant is authorised to take all necessary steps to remove the billboard including the authorisation of the sheriff or a suitable alternative contractor to remove the billboard, in which event those costs are to be paid by the respondent.
3.
It is declared that the applicant’s decision of 23 June 2015 to approve the respondent’s application to construct the billboard (“the decision”) has lapsed.
4.
In the alternative to prayer 3: 4.1 The time period of 180 days in terms of section 7 of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”) in which to bring a review of the decision is extended in terms of section 9 of PAJA to the date on which this application was served on the respondent.
4.2 The decision is reviewed and set aside.
5.
The respondent shall pay the costs of this application in the event of its opposition.’ [5] The respondent opposed the application and filed a counter-application.
Those applications were settled in terms of a written settlement agreement between the parties that was made an order of court by Victor J (the Victor J order).
The relevant parts of the order read as follows: ‘3.
THE REGULARISATION APPLICATION 3.1 The respondent will submit an application to the applicant for approval of the Billboard at its current size and/or an application for the approval of an electrical billboard at the same location as the current Billboard (“the regularisation application”).
3.2 The respondent will submit the regularisation application within 30 calendar days of this agreement.
5 3.3 The regularisation application must be submitted by the respondent and will be decided by the [applicant] in accordance with the [applicant’s] Billboards and the Display of Advertisements By-laws dated 30 March 2017 and the Municipality Systems Act 32 of 2000.
3.4 The regularisation application must be decided within 30 days of its receipt by the [municipality].
3.5 Nothing in this agreement fetters the discretion of the applicant and/or its delegated officials and/or committees in respect of the determination of the regularisation application.
3.6 In the event that the regularisation application is unsuccessful, the applicant will: 3.6.1 Either remove the Billboard within 60 calendar days or such further period as agreed to between the parties, the costs of which removal are to be paid for by the respondent; 3.6.2 Or reduce the Billboard’s size to 81m² within 60 calendar days or such further period as agreed to between the parties, in which event the Billboard may remain erected until the fifth anniversary of the decision pursuant to which it is erect; 3.7 In the event that the applicant fails to remove the Billboard or reduce its size to 81m² within 60 calendar days or such further period as agreed to between the parties, the [municipality] will be entitled to remove the Billboard or cause the Billboard to be removed by a contractor, the reasonable costs of which will be carried paid by the respondent.
3.8 The respondent will have the right to seek to review and/or appeal any decision made in respect of the regularisation application.
4.
In the event that the respondent exercises its right to review and/or appeal any decision made in respect of the regularisation application its obligation to remove or reduce the size of the Billboard in terms of paragraph 3.6 remains binding unless: 4.1 The applicant agrees to suspend the operation of paragraph 3.6; or 4.2 A court grants an interdict suspending the operation of paragraph 3.6.
5.
RENTAL IN RESPECT OF THE BILLBOARD 5.1 The parties will endeavour to conclude a lease agreement in respect of the Billboard and/or its successor in accordance with the applicant’s ordinary terms for leases of such a nature and in compliance with the applicant’s tariffs schedule, a copy of which is attached hereto as annexure A.
5.2 Pending the conclusion of a lease agreement, the following arrangement will apply: 5.2.1 The respondent will pay rental in respect of the Billboard from 11 September 2018 to the date that the Billboard is removed.
6 5.2.2 The rental payable will be fixed in accordance with the applicant’s Real Estate Tariffs, being 20% of the gross income received by the media owner (namely the respondent) from the advertiser.
5.2.3 On the first day of each month commencing 1 October 2018, the respondent will provide to the applicant a statement and debatement of 20% of the gross income earned by the respondent from advertisers in the preceding month.
6.
ARREAR RENTAL IN RESPECT OF THE BILLBOARD 6.1 The respondent will pay arrear rental in respect of the Billboard from the date that the Billboard was erected and/or began displaying advertisements 11 September 2018.
6.2 The arrear rental is fixed in accordance with the applicant’s Real Estate Tariffs, being 20% of the gross income received by the media owner (namely the respondent) from the advertiser.
6.3 By 9 October 2018, the respondent is to provide to the applicant a statement and debatement of 20% of the gross income received from advertisers in respect of the Billboard from the Billboard’s erection up to and including 11 September 2018.
7.
THE DURATION OF THIS AGREEMENT 7.1 Unless novated by a further agreement (including any further agreement concluded following an approval of the regularisation application), this agreement will operate for a period of two years, namely until 11 September 2020.’ [6] In essence, the Victor J order granted the respondent an opportunity to regularise its non-compliance with the By-laws that governed the construction of billboards on the municipality’s land.
The respondent agreed to bring an application to regularise the erection of the billboard by 11 September 2020.
The order further made provision for payment of rental to the municipality with effect from 11 September 2018, and the respondent undertook to provide the municipality with a statement and debatement of 20% of the gross income which it earned from its advertisers.
The statement was to be provided on the first day of each month commencing 1 October 2018.
Furthermore, paragraph 6 of the order required the respondent to pay arrear rental in respect of the billboard from the date the billboard
7 was installed and/or when it began displaying advertisements, such date being 11 September 2018.
[7] Pursuant to the Victor J order, the respondent submitted its regularisation application on 9 October 2018.
It failed, however, to make payment of the prescribed fees in terms of sections 54 and 64 of the By-laws to enable the municipality to consider the application.2 In a flurry of correspondence that passed between the parties, the respondent admitted firstly, that it had failed to pay the prescribed fees but explained that it was waiting to meet with the municipal manager to obtain the municipality’s banking details and hand over two cheques.
Secondly, that the billboard was not in compliance with the municipality’s By-laws.
The municipality’s attorneys acknowledged receipt of the regularisation application on 9 November 2018.
They indicated that the municipality was willing to consider such application subject to the prescribed fees being paid.
2 Sections 54 and 64 of the By-laws provide as follows: ‘54.
Damage to Municipality property – (1) No person shall intentionally or negligently, in the course of erecting or removing any advertising sign, advertising structure, poster or banner cause damage to any tree, electric service or other Municipality installation or property.
(2) Any costs incurred by Municipality for repair to damaged trees, environment, electric standard, service or any Municipality property, will be for the account of the responsible persons.
64.
Tariffs – (1) The Municipality shall determine tariffs or fees from time to time in accordance with Section 4(c) of the Local Government Systems Act, Act 32 of 2000 and also in accordance with the provision of the Municipal Finance Management Act, 2003 (Act No.
56 of 2003).
(2) All refundable deposits will be forfeited to the Municipality in the event of non-compliance of any of the foregoing By-laws or its approved procedural guidelines.
(3) Every person who applies to the Municipality for permission of an advertising sign or advertisement to be displayed, must on making the application, pay to the Municipality the tariff determined therefore, and no application will be considered until such tariff has been paid.
(4) The set of rates as drawn up by Municipality and revised from time to time, as appropriate, shall apply.
(5) The payment of any tariff in terms of this By-law shall not absolve any person from criminal liability arising from his failure to pay nor shall the fact that a person has been convicted of an offence under this By-law relieve him from the liability to pay the appropriate tariffs in terms of these By-laws.’ (6) Any amount due by a person in terms of the provisions of this by-law, will be a debt due and payable to the Municipality and shall be recovered by the Municipality in any competent Court of Law.
(7) All tariffs and monies must be paid at the Municipality or at such other places as shall be determined by the Municipality, from time to time.’
8 [8] The respondent in the meantime failed to pay any rental due in accordance with the Victor J order.
It further failed to provide the municipality with a statement of income earned from its advertisers.
On 26 November 2019 the municipality launched an application in the high court for an order compelling the respondent to disclose certain financial information regarding the amount of revenue it earned from the billboard (the debatement application).
The debatement application as well as a counter-application filed by the respondent are still pending before the high court.
[9] On 23 January 2020 the municipality addressed a letter to the respondent in terms of which the respondent was given a deadline to pay the prescribed fees by the end of February 2020, failing which the municipality would have no option but to exercise its right to remove the billboard at the respondent’s expense.
Once again, however, the respondent failed to pay the prescribed fees as required by the By-laws.
On 23 June 2020 the respondent was advised that the placement of any advertisement on the billboard would be unlawful and that it should desist from doing so.
The municipality further advised that it was currently sourcing contractors to remove the billboard from its site.
The response from the respondent, through its attorneys on 30 June 2020 was that any removal of the billboard without the respondent’s consent and without a court order would amount to a spoliation, entitling it to an appropriate remedy.
[10] The municipality, purportedly acting in terms of paragraphs 3 and 4 of the Victor J order, secured the assistance of Soweto Steel Structural Engineering (Pty) Ltd, the second respondent, to dismantle and remove the billboard on 20 August 2020.
The respondent in turn brought an urgent application for a mandament van spolie which served before Wepener J on the same day.
The application was opposed
9 by the municipality.
By agreement between the parties, Wepener J granted an order in the following terms: ‘.
.
.
2.
Pending the final hearing of the matter the First and Second Respondents and anyone under the First Respondent’s mandate are interdicted, ordered and directed to forthwith: 2.1 cease and desist from taking any further steps, or continuing to take steps to dismantle and remove the billboard (“the property”) situate at Portion 988 of Elandsfontein 90-IR described as Gillooly’s Farm (“the Site”), or take any other steps to damage the Property or render same non-functional.’ [11] In its answering papers the municipality averred that the respondent had simply failed to comply with the provisions of paragraphs 3.1, 3.2 and 3.3 of the Victor J order in that it had failed to submit a competent and complete regularisation application within 30 days of that order.
The municipality took the point that this failure absolved it from making any decision in the matter.
It averred that despite repeated requests to the respondent, as evidenced by the correspondence referred to in its affidavit, the latter had simply failed to comply with the terms of the settlement agreement and the court order.
According to the municipality, this non-compliance entitled it to invoke the provisions of paragraphs 3.6 and 3.7 of the order.
The respondent was therefore obliged to either remove the billboard or reduce its size to 81m² within a period of 60 days or such further period as may be agreed to between the parties.
[12] The spoliation application was eventually determined by Senyatsi J (the court of first instance).
Although the court of first instance found that the respondent was in peaceful possession of the billboard, it nonetheless refused to grant it any relief on the basis that: (a) the municipality had dismantled the billboard and reduced it to a pile of steel structures; (b) it was not possible to restore the status quo ante as the billboard had been dismantled; and (c) the remedy of spoliation had become moot
10 because the order made on 11 September 2018 by Victor J had expired in September 2020.
The respondent was granted leave to appeal to the full court.
[13] The full court accepted that the respondent was in peaceful possession of the billboard when it was dispossessed of it by the municipality.
On this basis the full court identified the following two issues for determination.
The first was whether the impossibility of restoring the billboard was raised in the founding papers to warrant the court of first instance’s consideration in that regard.
The second was whether the facts of the case supported the conclusion by the court of first instance that there was an impossibility of restoring possession of the billboard.
The full court disagreed with the findings of the court of first instance.
It found that the court had made erroneous factual findings contained in the municipality’s answering affidavit resulting in unfairness to the respondent.
[14] With regard to the first issue, the full court found that this was not an issue that had been raised by the municipality in its answering papers.
The issue was raised for the first time in the municipality’s heads of argument.
It held that the court of first instance, in concluding that the remedy of mandament van spolie did not find application in the matter before it, did so on the basis of facts that were not properly pleaded.
As to the second issue, the full court reasoned that the court of first instance had not found that the billboard no longer existed but rather that the municipality and Soweto Steel had merely dismantled the billboard.
The full court concluded that the integrity or functioning of the billboard was not destroyed and that it had simply been dismantled.
On this basis there was no reason why, so the full court held, that possession could not be restored to the respondent.
11 Test for special leave [15] For the municipality to succeed in its application for special leave, it is required to show something more than the existence of reasonable prospects of success on appeal.3 In Cook v Morrison and Another,4 this Court held: ‘The existence of reasonable prospects of success is a necessary but insufficient precondition for the granting of special leave.
Something more, by way of special circumstances, is needed.
These may include that the appeal raises a substantial point of law; or that the prospects of success are so strong that a refusal of leave would result in a manifest denial of justice; or that the matter is of very great importance to the parties or to the public.
This is not a closed list .
.
.’ [16] The test of what constitutes a reasonable prospect of success is well established.
The municipality is required to convince this Court that there is a ‘realistic chance on appeal’.
In other words, it is required to demonstrate that ‘there is a sound rational basis to conclude that there is a reasonable prospect of success on appeal’.5 It is further required to show that ‘something more by way of special circumstances, is needed’.6 [17] Before this Court, the primary contention advanced by the municipality was that it had acted lawfully in terms of a valid court order when it removed the illegally constructed billboard from its site.
Its case was that it did not take the law into its own hands as the order of Victor J entitled it to remove the billboard in circumstances where the respondent had failed to comply fully with the terms of that order.
It was submitted that the respondent had been placed on notice on several occasions to comply with the order and to submit a fully compliant regularisation application in terms of the By-laws but it failed to do so.
It was contended that ordering restoration 3 P A F v S C F [2022] ZASCA 101; 2022 (6) SA 162 (SCA) para 24.
4 Cook v Morrison and Another [2019] ZASCA 8; [2019] 3 All SA 673 (SCA); 2019 (5) SA 51 (SCA) para 8.
5 MEC for Health, Eastern Cape v Mkhitha and Another (1221/2015) [2016] ZASCA 176 (25 November 2016) paras 16-17.
6 Cook v Morrison and Another para 8.
12 of the billboard to the respondent in these circumstances would amount to sanctioning an illegality.
[18] There was no dispute that at the time the municipality took steps to remove the billboard from its site, the respondent was in peaceful and undisturbed possession of it.
The central issue, however, was whether the full court was correct in ordering the restoration of the status quo ante.
[19] The underlying principles governing the common law remedy of a mandament van spolie are well-established.
As far back as in 1906, Innes CJ in Nino Bonino v De Lange,7 enunciated the principle underlying the mandament van spolie as follows: ‘It is a fundamental principle that no man is allowed to take the law into his own hands; no one is permitted to dispossess another forcibly or wrongfully and against his consent of the possession of property, whether movable or immovable.
If he does so, the court will summarily restore the status quo ante, and will do that as a preliminary to any inquiry or investigation into the merits of the dispute.’ [20] In Tswelopele Non-Profit Organisation and Others v City of Tshwane Metropolitan Municipality and Others,8 this Court explained the remedy as follows: ‘Under [the mandament van spolie], anyone illicitly deprived of property is entitled to be restored to possession before anything else is debated or decided (spoliatus ante omnia restituendus est).
Even an unlawful possessor – a fraud, a thief or a robber – is entitled to the mandament’s protection.
The principle is that illicit deprivation must be remedied before the courts will decide competing claims to the object or property.’ 7 Nino Bonino v De Lange 1906 TS 120 at 122.
8 Tswelopele Non-Profit Organisation and Others v City of Tshwane Metropolitan Municipality [2007] ZASCA 70; [2007] SCA 70 (RSA); 2007 (6) SA 511 (SCA) para 21.
13 [21] In Ngqukumba v Minister of Safety and Security and Others,9 the Constitutional Court described the remedy as follows: ‘The essence of the mandament van spolie is the restoration before all else of unlawfully deprived possession to the possessor.
It finds expression in the maxim spoliatus ante omnia restituendus est (the despoiled person must be restored to possession before all else).
The spoliation order is meant to prevent the taking of possession otherwise than in accordance with the law.
Its underlying philosophy is that no one should resort to self-help to obtain or regain possession.
The main purpose of the mandament van spolie is to preserve public order by restraining persons from taking the law into their own hands and by inducing them to follow due process.’ [22] It is trite that in order to obtain a mandament van spolie an applicant has to show that (a) she or he was in peaceful and undisturbed possession of the thing, and (b) she or he was unlawfully deprived of such possession.
In view of the strict requirements of the remedy, there are a limited number of defences which a respondent can raise in spoliation proceedings.
As the authors of LAWSA point out: ‘No spoliation is committed where a person is lawfully deprived of his or her possession.
The respondent can justify his or her dispossession of the applicant by showing that the applicant has genuinely and freely consented to give up his or her possession or that he or she was authorised by a court order or by statute to dispossess the applicant….’10 [23] Whilst the first requirement poses no difficulty in the present matter, the second requirement has to be considered.
The question that arises is whether the municipality had ‘unlawfully’ deprived the respondent of possession of the billboard when it took steps to dismantle it on 20 August 2020.
To answer this question, it is necessary to have regard to the underlying reasons for the conclusion of the settlement agreement and the Victor J order.
The conclusion of the settlement agreement must be seen in context and against the background facts set out above.
9 Ngqukumba v Minister of Safety and Security and Others [2014] ZACC 14; 2014 (7) BCLR 788 (CC); 2014 (5) SA 112 (CC); 2014 (2) SACR 325 (CC) para 10.
10 27 LAWSA 2 ed para 108.
14 The fact that the respondent was required to submit a regularisation application in compliance with the By-law and within the time frames stipulated in the agreement, points to an acknowledgement on its part that its conduct in installing the billboard on the municipality’s site was unlawful and had to be rectified.
The consequences of not complying with the By-laws were fully spelt out in paragraph 3.7 of the Victor J order.
The terms of the court order made it plain that in the event of any non-compliance by the respondent, the municipality would be entitled to remove the offending billboard.
[24] The court order empowered the municipality to remove and dismantle the structure in the event that the regularisation application was unsuccessful.
The regularisation process had to, in terms of the court order, be done in conformity with the applicable By-laws.
The order explicitly stated that mere submission of the regularisation application was not a fait accompli.
The application had to comply with all the prescripts of the relevant By-laws.
Clause 3.5 clearly spelt out that the municipality’s discretion was not fettered by the agreement between the parties.
Relevant By-laws [25] It is common cause that the billboard was illegally constructed in that its size and proximity to the intersection contravened the municipality By-laws governing outdoor advertising.
It remained an illegal structure until it was dismantled.
The relevant By-laws in this respect are the following.
Section 3(1) of the By-laws provides: ‘These By-laws apply to all outdoor advertising in the area of jurisdiction of the Ekurhuleni Metropolitan Municipality and are binding on all persons, including the State, state organs, state agencies and all state institutions, seeking to display or erect advertising signs or advertisements.’ Section 52(5) provides: ‘Every application must be accompanied by the prescribed application fee and, where applicable, a deposit as determined by the Municipality from time to time.’
15 Section 52(14) provides that: ‘An application which has shown no substantive progress due to any act or omission on the part of the applicant shall be deemed to have lapsed one year after date of submission to the Municipality, unless motivation to the contrary is supplied to the satisfaction of the Municipality or delegated department.’ Section 64(3) provides as follows: ‘Every person who applies to the Municipality for permission of an advertising sign or advertisement to be displayed, must on making the application, pay to the Municipality the tariff determined, therefore, and no application will be considered until such tariff has been paid.’11 [26] One of the requirements that had to be met for a successful application was payment of the prescribed fees at the time the application was lodged.
Despite numerous requests from the municipality for the respondent to comply with this requirement, it failed to do so.
The respondent instead came up with new proposals which contradicted the terms of the court order.
Amongst the proposals made was that the billboard be left intact in exchange for the respondent performing certain functions in favour of the municipality.12 [27] The municipality was not authorised to consider the regularisation application without the prescribed fees being paid.
Doing so would be to violate its own By-laws.
The failure to pay the prescribed fees meant that the respondent had submitted a non-compliant regularisation application.
Absent a compliant regularisation application there was no obligation on the municipality to consider the application.
11 Ekurhuleni Billboards and Display of Advertisements By-Laws of 30 March 2017.
12 Tshepo Gugu proposed to: ‘b) Take up responsibility to maintain Gillooly’s farm and keep it in excellent landscaping condition; c) Employ 10 Ekurhuleni Youth and empower them with landscaping skills; d) Taking occupation of dilapidated buildings at Gillooly’s farm and establish a thriving Nursery & Landscaping College; e) Establish a township greening and tree planting project from the Nursery and empower, beautify and greenize the Townships of Ekurhuleni on an ongoing and full time basis.’
16 [28] Section 52(14) of the By-laws provides that every application which has not shown substantive progress lapses after 12 months from the date of submission.
The respondent's application lapsed on 7 October 2019.
Despite this, it only attempted to make payment sometime in November 2019, long after the 12 months had lapsed.
It is clear from the wording of s 52(14) that the section affords an applicant time to remedy whatever defect might exist in the application within 12 months from date of submission, thereafter such application lapses.
[29] Notwithstanding the fact that the application had not shown progress for a period of 12 months, due to non-payment of the prescribed fee, the municipality wrote to the respondent on 23 January 2020, more than 15 months from the date of submission, requesting it to pay the prescribed fee before 28 February 2020, failing which the municipality would be left with no option but to remove the billboard.
This letter served to clear up any misunderstanding and/or confusion that might have existed on the part of the respondent, for whatever reason.
The municipality also clarified to whom and how such payment had to be made.13 Despite all of this the respondent failed to comply, leaving the municipality with no option but to enforce the terms of the court order.
[30] Consequently, we find that the municipality was justified in taking steps to dismantle the billboard as it did on 20 August 2020: in the particular circumstances, the respondent was not in lawful possession of the billboard.
Allowing this structure to remain on the municipality’s land, would be to sanction an illegality.
From the outset, the respondent was fully aware that the erection of the billboard was in violation of the By-laws.
13 ‘City planning deals with all applications for Outdoor Advertising.
All applications for outdoor advertising should be submitted together with an agreement as well as the fee for the administration of the lease.
All monies must be paid to Ekurhuleni finance building and a copy of the proof of such payment handed to the relevant person accepting applications, must be submitted to the municipality.’
17 Mootness [31] A further point raised by the municipality was that, at the time the respondent had approached the full court the appeal was moot.
The Victor J order had a two-year lifespan.
The settlement agreement provided that ‘unless novated by a further agreement (including any further agreement concluded following an approval of the regularisation application), this agreement will operate for a period of two years, namely until 11 September 2020’.
[32] The jurisprudence on mootness is trite.
Courts generally shy away from entertaining issues that are no longer relevant and have no practical effect.
The limited resources of courts should be directed at dealing with live disputes.
In Police and Prisons Civil Rights Union v South African Correctional Service Workers’ Union and Others (Police and Prisons Civil Rights Union),14 the Constitutional Court, however, reiterated that mootness should not be an absolute bar to the justiciability of an issue.
The court may entertain an appeal, even if moot, where the interests of justice so dictates.15 The determination whether the interests of justice so dictate involves an exercise of a discretion by the court after considering various factors, including whether the order will have some practical effect as well as the extent of its importance to the parties or to others.16 [33] The full court found that the municipality had wrongfully interfered with the respondent’s peaceful possession, since the power or authority of the municipality to remove the billboard depended on the rejection of the regularisation application, 14 Police and Prisons Civil Rights Union v South African Correctional Services Workers' Union and Others [2018] ZACC 24; [2018] 11 BLLR 1035 (CC); 2018 (11) BCLR 1411 (CC); (2018) 39 ILJ 2646 (CC); 2019 (1) SA 73 (CC) paras 43-44; Solidariteit Helpende Hand NPC and Others v Minister of Cooperate Governance and Traditional Affairs [2023] ZASCA 35 paras 12-14.
15 Independent Electoral Commission v Langeberg Municipality [2001] ZACC 23; 2001 (3) SA 925 (CC); 2001 (9) BCLR 883 (CC) para 9.
See also: Minister of Mineral Resources v Sishen Iron Ore Company (Pty) Ltd [2013] ZACC 45; 2014 (2) SA 603 (CC); 2014 (2) BCLR 212 (CC) para 104.
16 Ibid fn 14 para 44.
18 which did not materialise.
By focussing solely on the issue of restoring possession to the respondent, the full court ignored the terms of the court order and the failure on the part of the respondent to regularise its otherwise illegal installation.
In so doing, the full court had erred.
[34] As mentioned already, the regularisation application lapsed on 7 October 2019 as a result of non-compliance by the respondent with s 64(3) of the By-laws.
The municipality, however, afforded the respondent a further extension until 28 February 2020 to comply.
The municipality commenced with the dismantling of the Billboard only on 20 August 2020, almost seven months after its letter of 23 January 2020.
The municipality was therefore within its rights to invoke sub-paragraphs 3.6 and 3.7 of the Victor J order.
[35] The above conclusion renders it unnecessary to deal with whether the restoration of the status quo ante was competent in the circumstances where the billboard was partially dismantled.
From the photos on record, it is clear that the display screen, media player and control system had been removed and all that was remaining is the steel frame.
Although the court would ordinarily order the restoration of the status quo ante, the difficulty facing the respondent is that the structure that is sought to be restored in any event violates the By-laws in terms of both its size and location.
[36] This Court in Eskom Holdings SOC Limited v Masinda17 found that ‘although it is correct that spoliation requires restoration of possession as a precursor to determining the existence of the parties’ rights .
.
.
, there may well be circumstances in which a court will decline to issue spoliation .
.
.’.
One such circumstance, is where the status quo ante is to be restored through unlawful means and through placing the 17 Eskom Holdings SOC Limited v Masinda [2019] ZASCA 98; 2019 (5) SA 386 (SCA) para 12.
19 members of the public in danger.
It is for this reason that the size and location of billboards is prescribed in the By-laws.
[37] In conclusion, we deem it necessary to compare the situation that faced the municipality herein with that faced by the respondent in Ngqukumba v Minister of Safety and Security (Ngqukumba).18 This was a case involving the spoliation of a motor vehicle, the engine and chassis numbers of which had been altered.
In upholding the appeal, the Constitutional Court reasoned thus: ‘It seems to me that on this subject the Supreme Court of Appeal proceeds from the premise that a tampered vehicle is no different from an article the possession of which would be unlawful under all circumstances.
That is an erroneous premise because possession of a tampered vehicle will be unlawful only if it is ‘without lawful cause’.
That leads me to a crucial point of departure.
It is that in this case we are not concerned with objects the possession of which by ordinary individuals would be unlawful under all circumstances.
Had we been concerned with objects of that nature, then the mandament van spolie might well not be available, but that issue is not before us and need not be decided.
The fact that we are here concerned with an article that may be possessed quite lawfully makes all the difference.
On the assumption that an individual can never possess heroin lawfully, the Supreme Court of Appeal’s heroin example is not apt.
At the risk of repetition, the simple point of distinction is that an individual can possess a tampered vehicle if there is lawful cause for its possession.’ [38] We consider that unlike in Ngqukumba, where the unlawful possession of a tampered vehicle had not yet been determined, in the current matter it is not in dispute that from the time of its erection, the billboard did not comply with the law – it is an illegal structure.
The respondent was aware of this fact throughout.
In our view, no court is permitted to countenance a glaring illegality.
Nor should a court turn a blind eye on the prescripts of the law and the importance of observing them.
After all, the By-laws are designed to maintain order, ensure public safety, and create 18 Ibid fn 9 para 15.
20 harmonious living environments.
They also play a vital role in promoting sound business interests and competition as well as regulating community life.
[39] Having found that the municipality had acted within the confines of the court order, both the application for special leave and the appeal ought to succeed.
There is no reason why costs should not follow the result.
Order [40] We accordingly make the following order: 1 The application for special leave to appeal succeeds.
2 The appeal is upheld with costs, such costs to include the costs of the employment of two counsel.
3 The order of the full court is set aside and replaced with the following: ‘The appeal is dismissed with costs.’ __________________________ R SEEGOBIN ACTING JUDGE OF APPEAL __________________________ N M MBHELE ACTING JUDGE OF APPEAL
21 Appearances For the applicant: P Strathern SC (with him E Sithole) Instructed by: AF van Wyk Attorneys, Johannesburg Webbers Attorneys, Bloemfontein For the respondent: W Krog Instructed by: Le Mottée Rossle Attorneys, Johannesburg Badenhorst 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: 28 May 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 City of Ekurhuleni Metropolitan Municipality v Tshepo Gugu Trading CC and Another (1054/2022) [2024] ZASCA 81 (28 May 2024) Today the Supreme Court of Appeal (SCA) handed down judgment granting the application for special leave to appeal and further upheld the appeal, with costs, including those of two counsel where so employed, against the decision of the Gauteng Division of the High Court, Johannesburg (the full court).
The municipality was the owner of the immovable property situated at Portion 988, Elandsfontein 90-IR described as ‘Gillooly’s Farm’ (the site).
The respondent, Tshepo Gugu Trading CC (the respondent), owned a large billboard.
In March 2016, the respondent installed the billboard on the site.
On 5 August 2016 the municipality launched an application in the Gauteng Division of the High Court, Johannesburg (the high court) for an order directing the respondent to remove the billboard and to restore the site to its original state.
The basis for that application was that the respondent had erected the billboard in contravention of the municipality’s Billboards and Display of Advertisements By-laws of 13 March 2017 (the By-laws) and the Local Government Municipal Systems Act 32 of 2000 (the Systems Act).
The respondent opposed the application and filed a counter-application.
Those applications were settled in terms of a written settlement agreement between the parties that was made an order of court per Victor J.
However, the respondent did not comply with its obligations in terms of the said court order.
On 23 January 2020 the municipality addressed a letter to the respondent requesting that it complies with the order, failing which, the municipality would have no option but to exercise its right to remove the billboard at the respondent’s expense.
The response from the respondent, through its attorneys on 30 June 2020 was that any removal of the billboard without the respondent’s consent and without a court order would amount to a spoliation, entitling it to an appropriate remedy.
The municipality nonetheless, acting on the Victor J order, dismantled and removed the billboard on 20 August 2020.
The respondent in turn brought an urgent application for a mandament van spolie which served before Wepener J on the same day.
The application was opposed by the municipality.
Wepener J granted an order interdicting the municipality from taking any further steps, or continuing to take steps to dismantle and remove the billboard.
The Municipality, however, submitted that the respondent had simply failed to comply with the provisions of the Victor J order and this non-compliance entitled it to invoke the provisions of that order.
The spoliation application was eventually determined by Senyatsi J (the court of first instance).
Although the court of first instance found that the respondent was in peaceful possession of the billboard, it nonetheless refused to grant it any relief on the basis that: (a) the municipality had dismantled the billboard and reduced it to a pile of steel structures; (b) it was not possible to restore the status quo ante as the billboard had been dismantled; and (c) the remedy of spoliation had become moot because the order made on 11 September 2018 by Victor J had expired in September 2020.
The respondent was granted leave to appeal to the full court.
Before the full court, two issues were raised: first was whether the impossibility of restoring the billboard was raised in the founding papers to warrant the court of first instance’s consideration in that regard.
The second was whether the facts of the case supported the conclusion by the court of first instance
2 that there was an impossibility of restoring possession of the billboard.
With regard to the first issue, the full court found that that was not an issue that had been raised by the municipality in its answering papers.
The issue was raised for the first time in the municipality’s heads of argument.
It held that the court of first instance, in concluding that the remedy of mandament van spolie did not find application in the matter before it, did so on the basis of facts that were not properly pleaded.
As to the second issue, the full court reasoned that the court of first instance had not found that the billboard no longer existed but rather that the municipality had merely dismantled the billboard.
The full court concluded that the integrity or functioning of the billboard was not destroyed and that it had simply been dismantled.
On that basis there was no reason why, so the full court held, that possession could not be restored to the respondent.
Aggrieved by the full court’s decision, the municipality lodged an application to this Court for special leave in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 (the Act), against the decision of the full court.
Before this Court, the primary contention advanced by the municipality was that it had acted lawfully in terms of a valid court order when it removed the illegally constructed billboard from its site.
Its case was that it did not take the law into its own hands as the order of Victor J entitled it to remove the billboard in circumstances where the respondent had failed to comply fully with the terms of that order.
It was submitted that the respondent had been placed on notice on several occasions to comply with the order and to submit a fully compliant regularisation application in terms of the By-laws but it failed to do so.
It was contended that ordering restoration of the billboard to the respondent in these circumstances would amount to sanctioning an illegality.
The central issue before this Court was whether the full court was correct in ordering the restoration of the status quo ante.
The SCA held that full court had erred by finding that the municipality had wrongfully interfered with the respondent’s peaceful possession as it only focused on the issue of restoring possession to the respondent.
The full court, according to the SCA, ignored the terms of the court order and the failure on the part of the respondent to regularise its otherwise illegal installation.
The SCA further held that the Municipality had on numerous occasions given the respondent time to comply with its By-laws and the respondent failed on each occasion to comply.
The municipality commenced with the dismantling of the Billboard only on 20 August 2020, almost seven months after its letter of 23 January 2020.
The municipality was therefore within its rights to invoke the provisions of the Victor J order.
In addition, the SCA held that it would be unnecessary to deal with whether the restoration of the status quo ante was competent in the circumstances where the billboard was partially dismantled as it was clear that the display screen, media player and control system had been removed and all that was remaining was the steel frame.
The Court also held that, although the court would ordinarily order the restoration of the status quo ante, the difficulty facing the respondent was that the structure that was sought to be restored in any event violated the By-laws in terms of both its size and location.
The SCA also held that from the time of its erection, the billboard did not comply with the law – it was an illegal structure.
The respondent was aware of this fact throughout.
Furthermore, according to the SCA, no court was permitted to countenance a glaring illegality.
Nor should a court turn a blind eye on the prescripts of the law and the importance of observing them.
After all, the By-laws were designed to maintain order, ensure public safety, and create harmonious living environments.
They also played a vital role in promoting sound business interests and competition as well as regulating community life.
As a result, the SCA held that the municipality had acted within the confines of the court order, and therefore, both the application for special leave and the appeal ought to succeed.
~~~~ends~~~~ |